CH2M HILL Companies, Ltd.
(Exact name of registrant as specified in its charter)

Securities registered pursuant to Section 12(g) of the Act:
CH2M HILL common stock, Par Value $0.01 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price as of June 30, 2008 was approximately $459.7 million. For purposes of this calculation, it is assumed that the registrant's affiliates include the registrant's Board of Directors, its executive officers and certain of its employee benefit plans. The registrant disclaims the existence of any control relationship between it and such employee benefit plans.

As of February 11, 2009, there were 31,707,644 shares of the registrant's common stock outstanding.

Portions of the definitive Proxy Statement for the 2009 Annual Meeting of Shareholders are incorporated by reference in Part III of this Annual Report on Form 10-K where indicated.

CH2M HILL COMPANIES, LTD. AND SUBSIDIARIES

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS


		Page
PART I.
Item 1.	Business	4
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	20
Item 2.	Properties	20
Item 3.	Legal Proceedings	20
Item 4.	Submission of Matters to a Vote of Security Holders	21
PART II.
Item 5.	Market for Registrant's Common Equity and Related Shareholder Matters	22
Item 6.	Selected Financial Data	28
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 8.	Financial Statements and Supplementary Data	42
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	42
Item 9A.	Controls and Procedures	42
Item 9B.	Other Information	43
PART III.
Item 10.	Directors, Executive Officers and Corporate Governance	44
Item 11.	Executive Compensation	44
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	44
Item 13.	Certain Relationships and Related Transactions, and Director Independence	44
Item 14.	Principal Accountant Fees and Services	45
PART IV.
Item 15.	Exhibits and Financial Statement Schedules	46
SIGNATURES

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on our behalf. We may from time-to-time make statements that are "forward-looking," including statements contained in this Annual Report on Form 10-K and other filings with the Securities and Exchange Commission (SEC) and in reports to our shareholders. Such statements may, for example, express expectations or projections about future actions that we may take or about developments beyond our control including changes in domestic or global economic conditions. These statements are made on the basis of our management's views and assumptions as of the time the statements are made and we undertake no obligation to update these statements. Our actual results may differ significantly from the results discussed in the forward-looking statements. General factors that might cause such differences include, but are not limited to:

For more information on these and other risk factors that may affect our business, refer to Item 1A. included in this Annual Report on Form 10-K.

We are one of the largest professional engineering services firms worldwide and are employee-owned. Our business provides engineering, construction, operations, major project management and technical services to municipal, state, federal and private sector clients worldwide. Founded in 1946, we have approximately 24,000 employees worldwide.

We believe we provide our clients with innovative project delivery using cost-effective approaches and advanced technologies. We continuously monitor acquisition and investment opportunities that will expand our portfolio of services, add value to the projects undertaken for clients, or enhance our capital strength. We believe that we are well positioned geographically, technically and financially to compete worldwide in the key markets we have elected to pursue and the clients we serve.

Our Federal segment generally provides a comprehensive range of services to the U.S. federal government and to international governments. Our Civil Infrastructure segment generally provides a comprehensive range of services to various state, local, and provincial governments. Our Industrial segment generally provides a comprehensive range of services to private sector companies. Financial information for each segment for each of the last three years, including 2008, is included in Note 15 of the Notes to Consolidated Financial Statements in Item 15 of this Annual Report on Form 10-K.

The following table summarizes our primary client types, revenues and key markets served by each of our operating segments.

Operating Segment	Client Type			Key Markets

Federal	U.S. Federal Government	26	%	•	Nuclear
	and Governmental			•	Environmental Services
	Authorities			•	Government Facilities and Infrastructure
Civil Infrastructure	State and Local Governments	28	%	•	Water, Wastewater and Water Resources
				•	Transportation
				•	Water and Wastewater Operations and Maintenance
				•	City Operations
Industrial	Private Sector	46	%	•	Information Technology—Enterprise Management Solutions
				•	Energy, Chemicals and Industrial Systems
				•	Manufacturing and Life Sciences
				•	Electronics and Advanced Technology
				•	Power

We provide our services to a broad range of domestic and international clients, including federal governments, state, local and provincial governments and private sector businesses. We perform services as the prime contractor, as subcontractors, or through joint ventures or partnership agreements with other service providers. The demand for our services generally comes from budgeting and capital

spending decisions made by our clients. The following table shows representative clients by each of our operating segments:

Federal				Civil Infrastructure				Industrial

• • • • • • • • • • • •		U.S. Department of Energy (DOE) U.S. Department of Defense U.S. Air Force U.S. Navy U.S. Army Corps of Engineers U.S. Agency for International Development U.S. Environmental Protection Agency U.S. Federal Emergency Management Agency United Kingdom Atomic Energy Authority London 2012 Olympic Delivery Authority Emirates Nuclear Energy Corporation Republic of Korea Ministry of Defense		• • • • • •		U.S. cities Foreign cities U.S. airports and seaports U.S. and State Departments of Transportation Water and Wastewater Municipalities Panama Canal Authority		• • • • • • • •		Major oil and gas companies, refiners and pipeline operators Microelectronics manufacturers Power utilities Pharmaceutical and biotechnology companies Automotive, food and beverage, metals and consumer product manufacturers Chemicals, bioprocessing and refining companies Wireless network operators Metals and mining

The following is a description of each of our key markets and the services we provide.

Nuclear. We provide program management, integration, engineering, design, construction management and a broad array of technical services for the DOE, U.S. and international commercial nuclear utility customers and various nuclear research, development and demonstration facilities. We manage various aspects of the implementation of new nuclear power plants and related facilities, and the decommissioning (characterization, decontamination, dismantling and demolition), remediation and/or closure of weapons production facilities and research reactors, and are involved in the siting, permitting and design of nuclear waste treatment and handling facilities. Additionally, we provide services for special nuclear material processing and operations.

Environmental Services. We provide program management, compliance and environmental consulting for contaminated site assessment and remediation projects (including remediation of unexploded ordnance and chemical and biological agents). We provide ecological and natural resource and sediment damage assessments, strategic environmental management and permitting services, environmental liability management services, ordnance and explosives management services, site investigations, remedial design, implementation and construction services, treatment systems for hazardous and toxic waste contaminated properties, and sustainable development planning and design services.

Government Facilities and Infrastructure. We provide lifecycle services for facilities and infrastructure to the U.S. federal and other national governments. Services include planning, consulting, design, engineering, program management, design/build, contingency planning and logistics support, and operations and maintenance. Operations and maintenance activities include outsourcing of facilities

maintenance and management, utilities operations and maintenance, environmental support, other base operating services and minor capital construction projects. Contracts are typically long-term. Contingency planning and logistics support services include technical support, material expediting, supply and value chain management, transportation and distribution, and deployment logistics.

Water, Wastewater and Water Resources. We provide a complete range of services for the planning, design/build, construction, construction management and program management of water supply and delivery systems, and wastewater collection and treatment facilities. Services are provided for new and expanded water storage, transmission, treatment (including desalination plants and membrane technology) and disposal systems, wastewater distribution systems, and wastewater collection and conveyance systems. Additionally, we provide water resources management, environmental restoration and watershed management, ground water modeling and protection, wastewater reclamation and reuse, biosolids management and financial planning.

Transportation. We provide consulting, engineering and construction services for airports, highways, bridges, seaports, railroads and transit systems. These services include transportation planning, environmental planning, project siting, permitting, design, construction and program management, management consulting and design/build delivery.

Operations and Maintenance. We provide water, wastewater and public works operations and maintenance services, including startup and performance testing, consulting, asset management, facility operations, and on-going maintenance and management. The facility operations services include water and wastewater treatment, collection and distribution, equipment and process maintenance, and replacement and site grounds maintenance. We provide operational support services to cities. These services include business operations such as accounting, human resources, procurement, public works, community development, and parks and recreation functions. Services are provided for new city start-up and on-going support of operations typically for a five year contract period.

Information Technology—Enterprise Management Solutions. We provide program management, consulting, integration and managed services for specialized information technology, software and integrated security industries. We are focused on infrastructure and asset management along with geospatial program management solutions for all customers within the government and industrial sectors. We also are focused on new and emerging program management and deployment opportunities within the next generation of WiFi/WiMax information management systems.

Energy, Chemicals, and Industrial Systems. We provide a broad array of life cycle services to the energy, mining, and chemicals markets. The energy markets include upstream oil and gas, oil sands, refining, biofuels, pipelines and terminals, and clean energy application projects such as gasification, wind, solar and carbon offset. Our services include major program management, consulting, front end engineering and design (FEED Services), engineering-procurement-construction (EPC) projects, fabrication and module assembly of client-owned facilities, construction services, operations and maintenance (O&M), integrated planning, permitting, and EPC delivery and sustaining services to reduce cycle times and to meet the energy needs of the future in a sustainable manner. We also provide consulting and project delivery services for a diverse portfolio of projects including greenhouse gas management, energy conservation (e.g., LEED certification), water technology/management, process optimization and waste minimization. We also bring our clients specialized know-how in planning, logistics, modular design and construction, constructing, and maintaining facilities in extreme climatic conditions throughout the Arctic region (including Alaska, Russia, and Canada), South America and the Middle East.

We also provide a broad array of life cycle services to industrial markets to improve the performance and operations of industrial facilities. These services typically include consulting, design, project delivery, licensing, air quality management, environmental, health and safety auditing and

performance, regulatory compliance, renewable energy and facility sustainability analysis, risk assessment and ecosystems management.

Manufacturing and Life Sciences. We provide a full range of EPC, project management, and program management services to the automotive, aerospace and aviation, food and beverage, metals, and consumer product sectors of the manufacturing industry. Additionally, we provide consulting and technology services for lean and agile manufacturing, supply chain and logistics management, manufacturing, packaging and material handling technology and strategic initiatives for optimizing customer operations. We provide EPC management and validation services to major pharmaceuticals and biotech companies focusing on active pharmaceutical ingredients, fill/finish, and integrated project delivery, including validation and commissioning.

Electronics and Advanced Technology. We provide program management, consulting, planning, architectural and engineering design, construction services and products, and facility support/optimization to manufacturing clients in the high-technology research and manufacturing markets including circuit, wafer, foundry, nanotechnology, research laboratory, data center and flat panel display industries. Our clients typically require integrated design and construction services for complex manufacturing systems, including cleanrooms, ultrapure water and wastewater systems, chemical and gas systems and production tools.

Power. We provide engineering and EPC services to regulated and nonregulated sectors of the power industry, including new generation capacity utilizing gas, coal, and alternative fuel technologies, industrial co-generation and environmental compliance-driven projects. These services include integrated EPC and startup competencies that employ enhanced engineering and management tools.

The market for our design, consulting, engineering construction, operations and maintenance, and program management services is highly competitive. We compete with large multinational firms as well as smaller firms with less resources who offer lower prices for particular services. In addition, some of our clients, including government agencies, occasionally utilize their own internal resources to perform design, engineering and construction services where we might have been the service provider.

Numerous mergers and acquisitions in the engineering services industry have resulted in a group of large firms that offer a full complement of single-source services including studies, designs, construction, operations, maintenance and in some instances, facility ownership. Included in the current trend is movement towards larger program and contract awards and longer-term contract periods for a full suite of services, (e.g., 5 to 20 year full-service contracts). While these larger, longer, more comprehensive contracts require us to have substantially greater financial and human capital than in the past, we compete effectively for these full service programs.

To our knowledge, no single company or group of companies currently dominates any significant portion of the engineering services markets. Competition in the engineering services industry is based on quality of performance, reputation, expertise, price, technology, customer relationships, range of service offerings and domestic and international office networks. For additional information regarding competition, see "Risk Factors—Our industry is highly competitive" in Item 1A of this Annual Report on Form 10-K.

The following table provides backlog revenues by operating segment for the years ended December 31:

We define backlog as contracted task orders less previously recognized revenue on such task orders. Our backlog does not reflect any future activities related to unconsolidated joint ventures. Many of our contracts require us to provide services that span over a number of fiscal quarters and often over fiscal years. U.S. government agencies operate under annual fiscal appropriations by Congress and fund various federal contracts only on an incremental basis. The same is true of many state, local and foreign contracts. For more information on backlog, see "Risk Factors—Our backlog is subject to unexpected adjustments and cancellations and is, therefore, an uncertain indicator of our future performance" in Item 1A of this Annual Report on Form 10-K. The increase in the Federal segment backlog is due to the award of an environmental services contract as well as a nuclear services project in Abu Dhabi. These projects were both awarded in the 4th quarter of 2008. The decrease in the Industrial segment backlog was due to fewer significant awards as compared to the prior period, and working off prior period backlog.

In addition, for information regarding CH2M HILL, including free copies of filings with the Securities and Exchange Commission (SEC), please visit our web site at www.ch2m.com. The SEC filings, which include our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K are located in the About Us/Employee Ownership section of our web site and are made available as soon as practicable after they are filed with the SEC.

You should carefully consider the following factors and other information contained in this Annual Report on Form 10-K before deciding to invest in our common stock.

Unpredictable economic cycles, uncertain demand for our engineering capabilities and related services, and failure by our major customers to pay our fees, could cause our revenues to fluctuate.

Demand for our engineering and other services is affected by the general level of economic activity in the markets in which we operate, both in the U.S. and internationally. Our customers, particularly our private sector customers, and the markets in which we compete to provide services, are likely to experience periods of economic decline from time-to-time. In particular, world markets are experiencing extraordinarily volatile prices, including oil and raw materials prices, which could reduce or curtail projects by industrial customers. Similarly, the prolonged downturns in the telecommunications and semiconductor markets have subsided to a limited degree, but our customers in those markets have been slower than expected in starting new capital expenditure programs.

Adverse economic conditions may decrease our customers' willingness to make capital expenditures or otherwise reduce their spending to purchase our services, which could result in diminished revenues and margins for our business. In addition, adverse economic conditions could alter the overall mix of services that our customers seek to purchase, and increased competition during a period of economic decline could force us to accept contract terms that are less favorable to us than we might be able to negotiate under other circumstances. Changes in our mix of services or a less favorable contracting environment may cause our revenues and margins to decline. Moreover, our customers may experience difficult business climates from time-to-time and could delay or fail to pay our fees as a result. If a customer failed to pay a significant outstanding fee, our financial results could be adversely affected and our stock price could be reduced.

The uncertainty of large-scale domestic and international projects makes it particularly difficult to predict whether and when we will receive a contract award. The uncertainty of contract award timing can present difficulties in matching our workforce size with our contract needs. If an expected contract award is delayed or not received, we could incur costs resulting from reductions in staff or redundancy of facilities that would have the effect of reducing our profits.

Changes and fluctuations in government's spending priorities could adversely affect our revenue expectations.

Because a substantial part of our overall business is generated either directly or indirectly as a result of federal and local government regulatory and infrastructure priorities, shifts in these priorities due to changes in policy imperatives or economic conditions are often unpredictable and may affect our revenues.

Political instability in key regions around the world coupled with the U.S. federal government's commitment to the war on terror put at risk federal discretionary spending, including spending on infrastructure projects that are of particular importance to our business. At the state and local levels, the need to compensate for reductions in the federal matching funds, as well as financing of federal unfunded mandates, creates tremendous pressures to cut back on infrastructure project expenditures as well. While we have won and are continuing to seek federal contracts related to changing U.S. federal government priorities, such as unforeseen disaster response, rebuilding Iraq and Afghanistan, and some other projects that reflect current government focus, there can be no assurances that potential reduction of federal infrastructure project funding would not adversely affect our business.

Environmental regulations and related compliance investigations are expensive, may adversely impact our project performance and could expose us to environmental liability.

The assessment, analysis, remediation, handling, management and disposal of hazardous substances represent a significant portion of our business and involve significant risks. As a result, we are subject to a variety of environmental laws and regulations governing, among other things, discharges of pollutants and hazardous substances to air and water and the handling and disposal of hazardous waste including nuclear materials and related record keeping requirements. These laws and regulations and related investigations into our compliance, as it pertains to facility operations and remediation of hazardous substances, can cause project delays and, substantial management time commitment and may significantly add to our costs. Violations of these environmental laws and regulations could subject us to civil and criminal penalties and other liabilities, which can be very large. Although we have not been subject to any material civil or criminal penalties for violations of these laws to date, we have had to expend funds and divert resources to respond to reviews that have had a negative impact on the profitability of some projects. While the costs of these reviews have not been material to our consolidated results of operations in the past, additional or expanded reviews or proceedings relating to these laws, or any substantial fines or penalties, could affect our profitability and our stock price in the future, or could adversely affect our ability to compete for new business. Moreover, these laws and

regulations may become more stringent, or may be more stringently enforced in the future, which could increase our costs of operations and reduce our profitability.

We may not be successful in growing through acquisitions or integrating effectively and efficiently any businesses and operations we may acquire.

Our success depends on our ability to continually enhance and broaden our service offerings in response to changing customer demands, technology, and competitive pressures. Numerous mergers and acquisitions in our industry have resulted in a group of larger firms that offer a full complement of single-source services including studies, design, engineering, procurement, construction, operations, maintenance and, in some instances, facility ownership. To remain competitive, we may acquire new and complementary businesses to expand our portfolio of services, add value to the projects undertaken for clients or enhance our capital strength. We do not know if we will be able to complete any future acquisitions or whether we will be able to successfully integrate any acquired businesses, operate them profitably, or retain their key employees.

Even if we do identify suitable acquisition candidates, we anticipate significant competition when trying to acquire these candidates, and there can be no assurance that we will be able to acquire such candidates at reasonable prices or on favorable terms. Some of the competing buyers may be stronger financially than we are. As a result of this competition, we may not succeed in acquiring suitable candidates or may have to pay more than we would prefer to make an acquisition. If we cannot identify or successfully acquire suitable acquisition candidates, we may not be able to successfully expand our operations. Further, there can be no assurance that we will be able to generate sufficient cash flow from an acquisition to service any indebtedness incurred to finance such acquisitions or realize any other anticipated benefits. Nor can there be any assurance that our profitability will be improved by any one or more acquisitions. Any acquisition may involve operating risks, such as:

Inability to secure adequate bonding would impact our ability to win projects.

As is customary in our industry, we are often required to provide performance and surety bonds to customers in connection with our construction, EPC and fixed price projects. These bonds indemnify the customer if we fail to perform our obligations under the contract. Failure to provide a bond on terms and conditions desired by a customer may result in an inability to compete for or win a project. Historically we have had and continue to have good relationships with our sureties and have a strong bonding capacity. The issuance of bonds under any bonding facilities, however, is at the sureties' sole discretion. Bonds may be more difficult to obtain in the future or they may only be available at significant additional cost. There can be no assurance that bonds will continue to be available to us on

reasonable terms. Our inability to obtain adequate bonding may result in our ineligibility to bid for construction, EPC and fixed price projects, which could have a material adverse effect on our growth and financial condition.

It can be difficult or expensive to obtain the insurance we need for our business operations.

As part of our business operations, we maintain insurance both as a corporate risk management strategy and to satisfy the requirements of many of our contracts. Insurance products go through market fluctuations and can become expensive and sometimes very difficult to obtain. Although in the past we have generally been able to cover our insurance needs, there can be no assurances that we can secure all necessary or appropriate insurance in the future. Our failure to obtain such insurance, could lead to uninsured losses that could materially adversely affect our results of operations or financial condition.

Our risk management personnel continuously monitor the developments in the insurance market. The financial stability of the insurance and surety providers is one of the major factors that we have taken into account when buying our insurance coverage. Currently our insurance and bonds are purchased from several of the world's leading and financially stable providers often in layered insurance or co-surety arrangements. The built-in redundancy of such arrangements usually enables us to call upon existing insurance and surety suppliers to fill gaps that may arise if other such suppliers become financially unstable.

The success of our joint ventures depends on the satisfactory performance by our joint venture partners of their joint venture obligations. The failure of our joint venture partners to perform their joint venture obligations could impose on us additional financial and performance obligations that could result in reduced profits or, in some cases, significant losses for us with respect to the projects that our joint ventures undertake.

We enter into joint ventures as part of our business. The success of these joint ventures depends, in large part, on the satisfactory performance of our joint venture partners meeting their obligations. If our joint venture partners fail to satisfactorily perform their joint venture obligations as a result of financial or other difficulties, the joint venture may be unable to adequately perform or deliver its contracted services. Under these circumstances, we may be required to make additional investments and provide additional services to ensure the adequate performance and delivery of the contracted services. These additional obligations could result in reduced profits or, in some cases, significant losses for us with respect to the joint venture.

We may be restricted in our ability to access the cash flows or assets from our subsidiaries and joint venture partners upon which we are substantially dependent.

We are dependent on the cash flows generated by our subsidiaries and, consequently, on their ability to collect on their respective accounts receivables. Substantially all of our cash flows necessary to meet our operating expenditures are generated by our subsidiaries. The financial condition and operational requirements of our subsidiaries may limit our ability to obtain cash from them. In addition, we conduct some operations through foreign subsidiaries and joint ventures. We do not manage all of these entities. Even in those joint ventures that we manage, we are often required to consider the interests of our joint venture partners in connection with decisions concerning the operations of the joint ventures. Arrangements involving these foreign subsidiaries and joint ventures may restrict us from gaining access to the cash flows or assets of these entities. In addition, these foreign subsidiaries and joint ventures sometimes face governmentally imposed restrictions on their abilities to transfer funds to us.

Our dependence on subcontractors and equipment manufacturers could adversely affect us.

We rely on third-party subcontractors as well as third-party equipment manufacturers to complete our projects. To the extent that we cannot engage subcontractors or acquire equipment or materials, our ability to complete a project in a timely fashion or at a profit may be impaired. If the amount we are required to pay for these goods and services exceeds the amount we have estimated in bidding for fixed-price contracts, we could experience losses in the performance of these contracts. In addition, if a subcontractor or a manufacturer is unable to deliver its services, equipment or materials according to the negotiated terms for any reason, including the deterioration of its financial condition, we may be required to purchase the services, equipment or materials from another source at a higher price. This may reduce the profit to be realized or result in a loss on a project for which the services, equipment or materials were needed.

In 2008, we derived approximately 18% of our revenues from operations outside of the U.S. compared to 15% in 2007. Conducting business internationally is subject to a variety of risks including:

We do not know the impact that such regulatory, geopolitical and other factors may have on our business in the future.

Special risks associated with doing business in highly corrupt environments.

Our international business operations include projects in developing countries and countries torn by war and conflict. Many of these countries are rated poorly by Transparency International, the independent watchdog organization for government and institutional corruption around the world. To the extent we operate outside of the U.S., we are subject to the Foreign Corrupt Practices Act (FCPA), which generally prohibits U.S. companies and their intermediaries from paying or offering anything of value to foreign government officials for the purpose of obtaining or keeping business, or otherwise receiving discretionary favorable treatment of any kind. In particular, we may be held liable for actions taken by our local partners, subcontractors and agents even though such parties are not always subject to our control. Any determination that we have violated the FCPA (whether directly or through acts of others, intentionally or through inadvertence) could result in sanctions that could have a material adverse effect on our business and on our ability to secure U.S. federal government contracts. While our staff is trained on the FCPA issues and we have procedures and controls in place to monitor

compliance, situations outside of our control may arise that could potentially put us in violation of the FCPA inadvertently and thus negatively impact our business.

Government contracts present risks of termination for convenience, adjustment of payments received, restrictions on ability to compete for government work and funding constraints.

In 2008, we derived approximately 26% of our total revenues from contracts with the U.S. federal government and foreign national governments. We own equity interests in joint ventures with revenues attributable primarily or entirely to contracts with U.S. federal government clients. The following risks are inherent in U.S. federal government contracts:

Our ability to secure new government contracts and our revenues from existing government contracts could be adversely affected by any one or a combination of the factors listed above.

Many of our projects are funded under federal, state and local government contracts and if we are found to have violated the terms of the government contracts or applicable statutes and regulations, we are subject to the risk of suspension or debarment from government contracting activities, which could have a material adverse affect on our business and results of operations.

If we fail to comply with the terms of one or more of our government contracts or governmental statutes and regulations, or if any of our companies or employees are indicted or convicted on criminal charges (including misdemeanors) relating to any of our government contracts, in addition to any civil or criminal penalties and costs we may incur, we could be suspended or debarred from government contracting activities for a period of time. Some federal and state statutes and regulations provide for automatic debarment in certain circumstances, such as upon a conviction for a violation. The suspension or debarment in any particular case may be limited to the facility, contract or subsidiary involved in the violation or could be applied to the whole CH2M HILL family of companies if the circumstances were deemed severe enough. Even a narrow suspension or debarment could result in negative publicity that could adversely affect our ability to renew contracts and to secure new contracts, both with governments and private customers, which could materially and adversely affect our business and results of operations.

Ongoing government investigations of VECO Corporation could have an adverse effect on our reputation in the business community or future business operations.

On September 7, 2007, we acquired VECO Corporation (VECO) and substantially all of its operating businesses. Prior to the acquisition, on May 2, 2007, the founder, then chief executive officer, and principal shareholder of VECO, Bill Allen, entered into a plea agreement with the U.S. Department of Justice pursuant to which he pled guilty to certain criminal charges involving bribery of public officials, violation of campaign contribution laws, and tax fraud. In connection with the investigation of the allegations against Mr. Allen, the U.S. Department of Justice, the Internal Revenue Service and certain State of Alaska government agencies commenced investigations of VECO and certain of its employees. In the process of reviewing VECO's business and operations prior to the acquisition, we engaged in special due diligence designed to address concerns related to the conduct of VECO's past operations and various investigations underway by the Department of Justice, the Internal Revenue Service and certain State of Alaska government agencies. Although we were satisfied with the results of the due diligence review, no assurances can be given that the ongoing investigations will not result in civil or criminal charges against VECO, now a CH2M HILL subsidiary. Any such charges and related publicity could have an adverse effect on our reputation in the business community or future business operations.

Our backlog is subject to unexpected adjustments and cancellations and is, therefore, an uncertain indicator of our future performance.

Our backlog at December 31, 2008 was $8.2 billion. We cannot assure that the revenues projected in our backlog will be realized or, if realized, will result in profits. Projects may remain in our backlog for an extended period of time prior to project execution and, once project execution begins, it may occur unevenly over the current and multiple future periods. In addition, our ability to earn revenues from our backlog depends on the availability of funding for various U.S. federal, state, local and foreign government agencies. Most of our domestic and international industrial clients have termination for convenience provisions in their contracts. Therefore, project terminations, suspensions or reductions in scope may occur from time-to-time with respect to contracts reflected in our backlog. Some backlog reductions would adversely affect the revenue and profit we actually receive from contracts reflected in our backlog. Future project cancellations and scope adjustments could further reduce the dollar amount of our backlog and the revenues and profits that we actually earn.

We could sustain losses on contracts that contain "fixed price" or "not to exceed" pricing provisions if our costs exceed the fixed or maximum prices.

In 2008, we derived approximately 34% of our revenues from "fixed price" contracts and approximately 46% of our revenues from time-and-materials contracts, most of which had "not to exceed" price limits. Under "fixed price" contracts, we agree to deliver projects for a definite, predetermined price regardless of our actual costs incurred over the life of the project. Under time-and-materials contracts with "not to exceed" provisions, we are compensated for the labor hours expended at agreed-upon hourly rates plus cost of materials used; however, there is a stated maximum compensation for the services to be provided under the contract. Many fixed price and "not to exceed" contracts involve large industrial facilities and public infrastructure projects and present the risk that our costs to complete a project may exceed the fixed price or "not to exceed" price agreed upon with the client. The fixed or maximum fees negotiated for such projects may not cover our actual costs and desired profit margins. If our actual costs for a fixed or "not to exceed" price project are higher than we expect, our profit margins on the project will be reduced or we could suffer a loss.

Rising inflation, interest rates and/or construction costs could reduce the demand for our services as well as decrease our profit on our existing contracts, in particular with respect to our fixed price contracts.

Because a significant portion of our revenues is earned from time-and-materials type contracts, guaranteed maximum price contracts and fixed price contracts, as well as contracts that base significant financial incentives on our ability to keep costs down, we bear some or all of the risk of rising inflation with respect to those contracts. In addition, rising inflation, interest rates and/or construction costs could reduce the demand for our services. Furthermore, if we expand our business into markets and geographic areas where "fixed price" work is more prevalent, inflation may have a larger impact on our results of operations in the future. Therefore, increases in inflation, interest rates and/or construction costs could have a material adverse impact on our business and financial results.

We are engaged in a highly competitive business in which most of our contracts with public sector clients are awarded through a competitive bidding process that places no limit on the number or type of potential service providers. The process usually begins with a government agency request for proposal that delineates the size and scope of the proposed contract. The government agency evaluates the proposals on the basis of technical merit and cost. In the water, wastewater and water resources markets, some contracts are awarded through qualification selection processes that vary among projects.

In both the private and public sectors, acting either as a prime contractor or as a subcontractor, we may join with other firms that we otherwise compete with to form a team to compete for a single contract. Because a team can often offer stronger combined qualifications than any firm standing alone, these teaming arrangements can be very important to the success of a particular contract competition or proposal. Consequently, we maintain a network of relationships with other companies to form teams that compete for particular contracts and projects. Failure to maintain technical and price competitiveness, as well as failure to maintain access to strong teaming partners may impact our ability to win work.

Because our projects are often large and can affect many people, our failure to make judgments and recommendations in accordance with applicable professional standards could result in large damages and, perhaps, punitive damages. Our engineering practice involves professional judgments regarding the planning, design, development, construction, operations and management of industrial facilities and public infrastructure projects. Although we have adopted a range of insurance, risk

management and risk avoidance programs designed to reduce potential liabilities, there can be no assurance that such programs will protect us fully from all risks and liabilities.

Our inability to attract and retain professional personnel could adversely affect our business.

Our ability to attract, retain and expand our staff of qualified engineers and technical professionals will be an important factor in determining our future success and growth. A shortage of qualified technical professionals currently exists in the engineering industry. The market for these professionals is competitive in the U.S. and internationally. We cannot assure that we will continue to be successful in attracting and retaining such professionals. Since we derive a significant part of our revenues from services performed by our professional staff, our failure to retain and attract professional staff could adversely affect our business by impacting our ability to complete our projects and secure new contracts.

A reduction in the scope of environmental regulations or changes in government environmental policies could adversely affect our revenues.

A substantial portion of our business is generated either directly or indirectly as a result of federal, state, local and foreign laws and regulations related to environmental matters. Changes in environmental regulations could affect our business more significantly than they would affect some other engineering firms. Accordingly, a reduction in the number or scope of these laws and regulations, or changes in government policies regarding the funding, implementation or enforcement of such laws and regulations, could significantly reduce the size of one of our most important markets and limit our opportunities for growth or reduce our revenues below their current levels. In addition, any significant effort by government agencies to reduce the role of private contractors in regulatory programs, including environmental compliance projects, could have the same adverse effects.

Percentage-of-completion accounting used for our engineering and construction contracts can result in overstated or understated profits or losses.

The revenue for our engineering and construction contracts is accounted for on the percentage-of-completion method of accounting. This method of accounting requires us to calculate revenues and profit to be recognized in each reporting period for each project based on our predictions of future outcomes, including our estimates of the total cost to complete the project, project schedule and completion date, the percentage of the project that is completed and the amounts of any probable unapproved change orders. Our failure to accurately estimate these often subjective factors could result in reduced profits or losses for certain contracts.

Actual results could differ from the estimates and assumptions used to prepare our financial statements.

In order to prepare financial statements in conformity with generally accepted accounting principles in the United States of America, we are required to make estimates and assumptions as of the date of the financial statements which affect the reported values of our assets, liabilities, revenues and expenses, and disclosures of contingent assets and liabilities. Areas requiring significant estimates by us include:

Systems failures could disrupt our business and impair our ability to effectively provide our products and services to our customers, which could damage our reputation and adversely affect our operating results.

As a global company, we are heavily reliant on computer, information and communications technology and related systems in order to properly operate. From time to time, we may be subject to systems failures, including network, software or hardware failures, whether caused by us, third-party service providers, intruders or hackers, computer viruses, natural disasters, power shortages or terrorist attacks. Such failures could cause loss of data and interruptions or delays in our or our customers' businesses and could damage our reputation. In addition, the failure or disruption of our communications or utilities could cause us to interrupt or suspend our operations or otherwise adversely affect our business. Our property and business interruption insurance may be inadequate to compensate us for all losses that may occur as a result of any system or operational failure or disruption and, as a result, our actual results could differ materially from those anticipated.

Our businesses could be materially and adversely affected by severe weather.

We typically remain obligated to perform our services after a natural disaster unless the contract contains a force majeure clause relieving us of our contractual obligations in such an extraordinary event. If we are not able to react quickly to force majeure, our operations may be affected significantly, which would have a negative impact on our financial condition, results of operations or cash flows.

Absence of a public market may prevent you from selling your stock and cause you to lose all or part of your investment.

There is no public market for our common stock. While we intend the internal market to provide liquidity to shareholders, there can be no assurance that there will be enough orders to purchase shares to permit shareholders to sell their shares on the internal market, or that a regular trading market will be sustained in the future. The price in effect on any trade date may not be attractive enough to both buyers and sellers to result in a balanced market because the price will be fixed in advance by our Board of Directors, using their judgment of the fair market value of our common stock, and not by actual market trading activity. Moreover, although we may enter the internal market as a buyer of common stock if there are more sell orders than buy orders, we have no obligation to engage in internal market transactions and will not guarantee market liquidity. Consequently, insufficient buyer demand could cause sell orders to be prorated, or could prevent the internal market from opening on

any particular trade date. Insufficient buyer demand could cause shareholders to suffer a total loss of investment or substantial delay in their ability to sell their common stock. No assurance can be given that shareholders desiring to sell all or a portion of their shares of common stock will be able to do so. Accordingly, the investment in our common stock is suitable for you only if you have limited need for liquidity in your investment.

Transfer restrictions on our common stock could prevent you from selling your common stock and cause you to lose all or part of your investment.

Since all of the shares of our common stock are subject to transfer restrictions, you will generally only be able to sell your common stock through our internal market on the four trade dates in each year. Unlike shares that are actively traded in the public markets, you may not be able to sell at a particular time even though you would like to do so. Our common stock price could decline between the time you want to sell and the time you become able to sell. For a detailed discussion of the transfer restrictions on our common stock, see "Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities" in Item 5 of this Annual Report on Form 10-K.

Our stock prices are and will continue to be determined by our Board of Directors' judgment of fair market value and not by market trading activity.

The offering prices at each trade date will be established by our Board of Directors approximately four weeks before each trade date. In establishing the price, our Board of Directors will take into consideration the factors that are described in Item 5 of this Annual Report on Form 10-K. Our Board of Directors will, however, set the offering price in advance of each trade date, and all trades on our internal market will take place at the price established for each trade date. Therefore, market trading activity on any given trade date cannot affect the price on that trade date. This is a risk to you because our common stock price will not change to reflect supply of and demand for shares on a given trade date as it would in a public market. You may not be able to sell shares or you may have to sell your shares at a price that is lower than the price that would prevail if the internal market price could change on a given trade date to reflect supply and demand. Our Board of Directors intends to use the common stock valuation methods that result in offering prices that represent fair market value. The valuation method for our common stock is subject to change at the discretion of our Board of Directors.

The limited market and transfer restrictions on our common stock will likely have anti-takeover effects.

Only our employees, directors, eligible consultants and employee benefit plans may own our common stock and participate in our internal market. In addition, we have imposed significant restrictions on the transfer of our common stock other than through sales on our internal market. These limitations make it extremely difficult for a potential acquirer who does not have the prior consent of our Board of Directors to acquire control of our company, regardless of the price per share an acquirer might be willing to pay and whether or not our shareholders would be willing to sell at that price.

Future returns on our common stock may be significantly lower than historical returns.

We cannot assure you that our common stock will provide returns in the future comparable to those achieved historically or that the price will not decline.

The stock price could be subject to significant fluctuations. The volatility is expected to result from the impact on our stock price of:

Finally, the market factor used in the formula may change from quarter to quarter, as appropriate, to reflect changing business, financial, investment and market conditions.

Restrictions in our restated articles of incorporation and bylaws may discourage takeover attempts that you might find attractive.

Our restated articles of incorporation and bylaws may discourage or prevent attempts to acquire control of us that are not approved by our board of directors, including transactions in which stockholders might receive a premium for their shares above the stock price. Our stockholders may view such a takeover attempt favorably. In addition, the restrictions may make it more difficult for our stockholders to elect directors not endorsed by us.

We do not currently have any unresolved written comments from the Staff of the SEC regarding our periodic or current reports under the Securities Exchange Act of 1934.

Our operations are conducted at both owned and leased properties in several countries throughout the world. Our corporate headquarters are located in Englewood, Colorado, where we lease approximately 155,000 square feet of space. The lease on our corporate headquarters building expires in 2017, with an option to extend the term twice for either a ten or five year term. The office space that we lease is based upon commercially available terms. We believe that our existing facilities are adequate for the present needs of our business and that suitable additional or substitute space will be available as needed to accommodate any expansion of operations.

We are a party to various contractual guarantees and legal actions arising in the normal course of our business. From time to time, agencies of the U.S. government investigate whether we conduct our operations in accordance with applicable regulatory requirements. Because a large portion of our business comes from federal, state, and municipal sources, our procurement practices at times are subject to review and occasional investigations by U.S. and state attorneys offices. Such state and U.S. government investigations, whether relating to government contracts or conducted for other reasons, could result in administrative, civil or criminal liabilities, including repayments, fines or penalties. These investigations often take years to complete and many result in no adverse action. Damages assessed in connection with and the cost of defending any such actions could be substantial. While the outcomes of pending proceedings are often difficult to predict, as of the date of this filing, our management believes that no ongoing litigation or investigation is likely to result in a material adverse impact on our consolidated financial statements.

In September 7, 2007, we acquired VECO and substantially all of its operating businesses. Prior to the acquisition, on May 2, 2007, the founder, then chief executive officer and principal shareholder of VECO, Bill Allen, entered into a plea agreement with the U.S. Department of Justice pursuant to

which he agreed to plead guilty to certain criminal charges involving bribery of public officials, violation of campaign contribution laws, and tax fraud. In connection with the investigation of the allegations against Mr. Allen, the U.S. Department of Justice, the Internal Revenue Service and certain State of Alaska government agencies commenced investigations of VECO and certain of its other employees. In the process of reviewing VECO's business and operations prior to the acquisition, we engaged in special due diligence designed to address concerns related to the conduct of VECO's past operations and various investigations underway by the Department of Justice, the Internal Revenue Service and certain State of Alaska government agencies. Although we were satisfied with the results of the due diligence review, no assurances can be given that the ongoing investigations will not result in civil or criminal charges against VECO, now a subsidiary of ours. Any such charges and related publicity could have an adverse effect on our reputation in the business community or future business operations.

On July 27, 2007, our subsidiary, CH2M Hanford Group ("CH2M Hanford") caused a spill of approximately 85 gallons of radioactive waste, during routine maintenance operations on the Hanford Reservation owned by the U.S. Department of Energy ("DOE"). No one was injured, and the DOE's accident investigation concluded that "[because] of low concentrations and short duration of the exposure, it is not likely that the spill event caused an overexposure or chronic health impacts." CH2M Hanford took all prompt and appropriate steps to formulate and implement a corrective action plan that has been accepted by the DOE. In connection with the event, the DOE's Office of Health, Safety and Security has conducted an investigation under its Price Anderson Act nuclear safety authority. The DOE has not yet taken any formal action against CH2M Hanford as a result of this investigation. The DOE has broad discretion in setting fines, but it takes into account a contractor's prompt acceptance of responsibility and the formulation of an appropriate corrective action plan, which is what we have done to what we believe to be the DOE's satisfaction. The Washington Department of Ecology imposed a fine of $500,000 to DOE under the Tri-Party Agreement as a result of the spill. A settlement agreement was negotiated whereby $250,000 of the fine was held in abeyance for twelve months pending no further incidents, we contributed certain equipment to the Tri-County emergency response team and the DOE performed services to improve emergency radio response. Finally, the Environmental Protection Agency ("EPA") proposed to fine both the DOE and us in connection with the spill. We ultimately settled that fine for an immaterial amount. Our management does not believe that this event will materially impact our business or results of operations.

No items were submitted to a vote of security holders during the fourth quarter of 2008.

Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

We are employee owned. As a result, our stock is only available to certain employees, directors, eligible consultants and benefit plans. There is no market for our stock with the general public. In order to provide liquidity for our shareholders, an internal market (Internal Market) is maintained through an independent broker, currently Neidiger, Tucker and Bruner, Inc. (NTB).

The Internal Market permits existing shareholders to offer to sell or purchase shares of our common stock on predetermined days (each, a Trade Date). Generally, there are four Trade Dates each year which typically occur approximately four weeks after the quarterly meetings of our Board of Directors. Currently our Board of Directors meetings are scheduled for February, May, August and November. All sales of our common stock are made at the price determined by our Board of Directors pursuant to the valuation methodology described below.

All sales of common stock on the Internal Market are restricted to the following authorized buyers:

We may impose limitations on the number of shares that an individual may purchase when there are more buy orders than sell orders for a particular Trade Date. After our Board of Directors determines the stock price for use on the next Trade Date, which is approximately four weeks prior to such Trade Date, all shareholders, employees, directors and eligible consultants will be advised as to the new stock price and the next Trade Date.

Our Internal Market is managed through an independent broker, currently NTB, which acts upon instructions from the buyers and sellers to effect trades at the stock price set by our Board of Directors and in accordance with the Internal Market rules. NTB does not play a role in determining the price of our common stock and is not affiliated with us. Individual stock ownership account records are currently maintained by our in-house transfer agent.

We may purchase shares if the Internal Market is under-subscribed. We may, but are not obligated to, purchase shares of common stock on the Internal Market on any Trade Date at the price in effect on that Trade Date, but only to the extent that the number of shares offered for sale by shareholders exceeds the number of shares sought to be purchased by authorized buyers. The decision as to whether or not we will purchase shares in the Internal Market, if the Internal Market is under-subscribed, is solely within our discretion and we will not notify investors as to whether or not we will participate prior to the Trade Date. Investors should understand that there can be no assurance that they will be able to sell their CH2M HILL stock without substantial delay or that their stock will be able to be sold at all on the Internal Market. We will consider a variety of factors including our cash position, financial performance and number of shares outstanding in making the determination as to whether to participate in an under-subscribed market. The terms of our existing unsecured revolving line of credit do not play a role in the decision as to whether to buy shares in the Internal Market. To date, no other factors have been considered by us in our decisions as to whether or not to participate in an under-subscribed market.

If the aggregate number of shares offered for sale on the Internal Market on any Trade Date is greater than the number of shares sought to be purchased, shareholder offers to sell will be accepted as follows:

We may sell shares if the Internal Market is over-subscribed. To the extent that the aggregate number of shares sought to be purchased exceeds the aggregate number of shares offered for sale, we may, but are not obligated to, sell authorized but unissued shares of common stock on the Internal Market at the price in effect on that Trade Date to satisfy purchase demands. The decision as to whether or not we will sell shares in the Internal Market, if the Internal Market is over-subscribed, is solely within our discretion and we will not notify investors as to whether or not we will participate prior to the Trade Date. Investors should understand that there can be no assurance that they will be able to buy as many shares as they would like on a given Trade Date. We will consider a variety of factors including our cash position, financial performance and number of shares outstanding in making the determination as to whether to participate in an over-subscribed market. The terms of our existing unsecured revolving line of credit do not play a role in the decision as to whether to sell shares in the Internal Market. To date, no other factors have been considered by us in our decisions as to whether or not to participate in an over-subscribed market.

If the aggregate purchase orders exceed the number of shares available for sale and we choose not to issue additional shares, the following prospective purchasers will have priority to purchase shares, in the order listed:

All sellers on the Internal Market, other than us and the trustees of the 401(k) Plan, will pay NTB a commission equal to two percent of the proceeds from such sales. Employees who sell their common stock upon retirement from CH2M HILL will have the option to sell the common stock they own on the Internal Market and pay a commission on the sale or to sell to us without paying a commission. In the latter case, the employee will sell their common stock to us at the price in effect on the date of their termination in exchange for a four-year note at a market interest rate determined biannually. No commission is paid by buyers on the Internal Market.

Our Board of Directors will determine the price, which is intended to be the fair market value, of the shares of our common stock to be used for buys and sells on each Trade Date pursuant to the valuation methodology described below. The price per share of our common stock generally is set as follows:

In order to determine the fair market value of the common stock in the absence of a public trading market, our Board of Directors felt it appropriate to develop a valuation methodology to use as

a tool to determine a price that would be a valid approximation of the fair market value. In determining the fair market value stock price, our Board of Directors believes that the use of a going concern component (i.e., net income, which we call profit after tax, as adjusted by the market factor) and a book value component (i.e., total shareholders' equity) is important. Our Board of Directors believes that the process we have developed reflects modern equity valuation techniques and is based on those factors that are generally used in the valuation of equity securities.

The existence of an over-subscribed or under-subscribed market on any given Trade Date will not affect the stock price on that Trade Date. However, our Board of Directors, when determining the stock price for a future Trade Date, may take into account the fact that there have been under-subscribed or over-subscribed markets on prior Trade Dates.

Market Factor ("M"). "M" is the market factor, which is subjectively determined in the sole discretion of our Board of Directors. In determining the market factor, our Board of Directors will take into account factors the directors considered to be relevant in determining the fair market value of our common stock, including:

Our Board of Directors has not assigned predetermined weights to the various factors it may consider in determining the market factor. A market factor greater than one would increase the price per share and a market factor less than one would decrease the price per share.

In its discretion, our Board of Directors may change, from time-to-time, the market factor used in the valuation process. Our Board of Directors could change the market factor, for example, following a change in general market conditions that either increased or decreased stock market equity values for companies comparable to us, if our Board of Directors felt that the market change was applicable to our common stock as well. Our Board of Directors will not make any other changes in the method of determining the price per share of common stock unless in the good faith exercise of its fiduciary duties and, if appropriate, after consultation with its professional advisors, our Board of Directors determines that the method for determining the price per share of common stock no longer results in a stock price that reasonably reflects our fair market value on a per share basis.

As part of the total mix of information that our Board of Directors considers in determining the "M" factor, our Board of Directors also may take into account company appraisal information prepared by The Environmental Financial Consulting Group, Inc. (EFCG), an independent appraiser engaged by the trustees of our benefit plans. In setting the stock price, our Board of Directors compares the total of the going concern and book value components used in the valuation methodology to the enterprise value of the Company in the appraisal provided by EFCG. If, after such comparison, our Board of Directors concludes that its initial determination of the "M" factor should be re-examined, our Board of Directors may review, and if appropriate adjust, the "M" factor. Since the inception of the program on January 1, 2000, the total of the going concern and book value components used by our Board of Directors in setting the price for our stock has always been within the enterprise appraisal range provided quarterly by EFCG.

This "M" component of our stock price valuation remained unchanged since the inception of the current ownership program in 2000 until the November 9, 2007 valuation, when it was changed by the Board of Directors from 1.0 to 1.2.

Profit After Tax ("P"). "P" is profit after tax, otherwise referred to as net income, for the four fiscal quarters immediately preceding the Trade Date. Our Board of Directors, at its discretion, may exclude nonrecurring or unusual transactions from the calculation. Nonrecurring or unusual transactions are developments that the market would not generally take into account in valuing an equity security. A change in accounting rules, for example, could increase or decrease net income without changing the fair market value of our common stock. Similarly, such a change could fail to have an immediate impact on the value of our common stock, but still have an impact on the value of our common stock over time. As a result, our Board of Directors believes that in order to determine the fair market value of our common stock, it needs the ability to review unusual events that affect net income. In the past, our Board of Directors has excluded unusual items from the calculation of "P", including nonrecurring revenue from Kaiser-Hill Company, LLC and a write off of an investment in an international telecommunications company. Because "P" is calculated on a four quarter basis, an exclusion impacts the calculation of fair market value for four consecutive quarters. Our Board of Directors may determine to exclude other future unusual or non-recurring items from the calculation of "P".

Total Shareholders' Equity ("SE"). "SE" is total shareholders' equity, which includes intangible items, as set forth on our most recent available quarterly or annual financial statements. Our Board of Directors, at its discretion, may exclude from the Shareholders' Equity parameter nonrecurring or unusual transactions that the market would not generally take into account in valuing an equity security. The exclusions from Shareholders' Equity will generally be those transactions that are non-cash and are reported as "accumulated other comprehensive income (loss)" on the face of our consolidated balance sheet. For example, during 2006, 2007 and 2008, our Board of Directors excluded, and will continue to exclude, a non-cash reduction in shareholders' equity related to the accounting for our defined benefit pension and other postretirement plans. Because this adjustment is unusual and will fluctuate from period to period, our Board of Directors excluded it from the "SE" parameter for stock valuation purposes. Similarly, other items that are reported as components of "accumulated other comprehensive income (loss)" are excluded from "SE" and include items such as unrealized gains/losses on securities and foreign currency translation adjustments.

Common Stock Outstanding ("CS"). "CS" is the weighted-average number of shares of our common stock outstanding during the four fiscal quarters immediately preceding the Trade Date, calculated on a fully-diluted basis. By "fully-diluted" we mean that the calculations are made as if all outstanding options to purchase our common stock had been exercised and other "dilutive" securities were converted into shares of our common stock. In addition, an estimate of the weighted-average number of shares that we reasonably anticipate will be issued under our stock-based compensation programs and employee benefit plans is included in this calculation.

The "CS" calculation is done on a fully-diluted basis since we believe that taking into account the issuance of all securities that will affect the per share value is a better representation of the share value over time. We have more than a 30-year history in making annual grants of stock-based compensation. Therefore, we believe that we have sufficient information to reasonably estimate the number of such "to be issued" shares. This approach avoids an artificial variance in share value during the first calendar quarter of each year when the bulk of shares of our common stock are issued by us pursuant to our employee benefit plans and stock-based compensation programs.

The following table shows a comparison of the "CS" value actually used by our Board of Directors to calculate stock prices on the dates indicated versus the year-to-date weighted-average number of

shares of common stock as reflected in the diluted earnings per share calculation in our financial statements for the past three years.

(in thousands) Effective Date

February 10, 2006	33,904	32,482
May 11, 2006	34,153	33,030
August 11, 2006	34,351	33,179
November 10, 2006	34,497	33,135
February 9, 2007	34,570	33,047
May 10, 2007	34,611	33,027
August 10, 2007	34,690	33,254
November 9, 2007	34,943	33,326
February 8, 2008	35,322	33,508
May 8, 2008	35,617	34,440
August 15, 2008	35,858	34,568
November 7, 2008	35,929	34,545
February 13, 2009	35,735	34,376

Constant 7.8. In the course of developing this valuation methodology, it became apparent to our Board of Directors that a multiple would be required in order for the stock price derived by this methodology to approximate our historical, pre-Internal Market stock price. Another objective of our Board of Directors when developing the valuation methodology was to establish the fair market value of our common stock using a market factor of 1.0. We believe that it was important to begin the Internal Market program with an "M" factor equal to 1.0 in order to make it easier for shareholders to understand future changes, if any, to the market factor.

Therefore, the constant 7.8 was introduced into the formula. The constant 7.8 is the multiple that our Board of Directors determined necessary (i) for the new stock price to approximate our historical stock price derived using the pre-Internal Market formula as well as (ii) to allow the use of the market factor of 1.0 at the beginning of the Internal Market program.

We intend to announce the new stock price and the Trade Date approximately four weeks prior to each Trade Date. The information will be delivered by the broker to all employees, eligible consultants and eligible participants in the internal market. In addition, we will file a Current Report on Form 8-K disclosing the new stock price and all components used by our Board of Directors in determining such price in accordance with the valuation methodology described above. Trade Dates are expected to occur approximately 75 days after the end of each quarter.

We will also distribute the most current prospectus for our common stock and our audited annual financial statements to all shareholders, as well as other employees and eligible consultants, and to participants in the Internal Market through the employee benefit plans. Such information will be distributed at the same time as our annual reports and proxy information. Solicitations are distributed for voting instructions from shareholders and participants in the employee benefit plans each year.

Starting in 2000, with the introduction of the Internal Market and its quarterly trades, our Board of Directors reviews the common stock price quarterly using the valuation methodology described above to set the price for the common stock. The prices of our common stock for the past three years, along with the various factors and values used by our Board of Directors to determine such stock prices on each date, are as follows:

Effective Date		P		SE		CS

		(in thousands)		(in thousands)		(in thousands)
February 10, 2006	1.0		38,367		335,301		33,904	18.72	11.9	%
May 11, 2006	1.0		35,143		334,897		34,153	17.83	(4.8	)%
August 11, 2006	1.0		38,074		345,509		34,351	18.70	4.9	%
November 10, 2006	1.0		37,479		354,464		34,497	18.75	0.3	%
February 9, 2007	1.0		38,901		375,206		34,570	19.63	4.7	%
May 10, 2007	1.0		43,804		381,932		34,611	20.91	6.5	%
August 10, 2007	1.0		48,656		412,028		34,690	22.82	9.1	%
November 9, 2007	1.2		56,782		444,803		34,943	27.94	22.4	%
February 8, 2008	1.2		64,550		466,926		35,322	30.32	8.5	%
May 8, 2008	1.2		69,624		463,434		35,617	31.31	3.3	%
August 15, 2008	1.2		68,031		464,561		35,858	30.71	(1.9	)%
November 7, 2008	1.2		66,816		480,313		35,929	30.77	0.2	%
February 13, 2009	1.2		71,918		438,318		35,735	31.10	1.1	%

As of February 11, 2009, there were 9,201 holders of record of our common stock. As of such date, all of our common stock of record was owned by our current employees, directors, eligible consultants, and by our various employee benefit plans.

We have never declared or paid any cash dividends on our capital stock and no cash dividends are contemplated in the foreseeable future. We intend to retain any future earnings to finance the growth and development of our business. Under our existing unsecured revolving line of credit, payment of dividends would represent a violation of our covenants.

The following table covers the purchases of our securities by CH2M HILL during the quarter ended December 31, 2008:

The selected financial data presented below under the captions "Selected Statement of Operations Data" and "Selected Balance Sheet Data" as of and for each of the years in the five-year period ended December 31, 2008, are derived from the consolidated financial statements of CH2M HILL Companies, Ltd. and subsidiaries, which financial statements have been audited by KPMG LLP, an independent registered public accounting firm. The consolidated financial statements as of December 31, 2008 and 2007, and the results of operations and cash flows for each of the years in the three-year period ended December 31, 2008, and the report thereon, are included in Item 15 of this Annual Report on Form 10-K. The following information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7, and the consolidated financial statements and related notes thereto, included in this Annual Report on Form 10-K.

The comparability of the following selected financial data has been impacted by the adoption of Statement of Financial Accounting Standards (SFAS) No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R), on December 31, 2007; the adoption of Financial Accounting Standards Board (FASB) Interpretation No. (FIN) 48, Accounting for Uncertainty in Income Taxes, on January 1, 2007; the adoption of SFAS No. 123(R), Share-Based Payment, on January 1, 2006 and the adoption of FIN 46(R), Consolidation of Variable Interest Entities, on January 1, 2005.

		Years Ended December 31,

($ in millions, except per share data)		2008			2007			2006		2005			2004
Selected Statement of Operations Data:
Revenues		$	5,589.9	(a)	$	4,376.2		$	4,006.9	$	3,152.2		$	2,715.4
Operating income			73.0			79.1			63.7		134.1	(b)		51.2
Net income			32.1			66.0			38.9		81.6	(b)		32.3
Net income per common share
	Basic	$	0.96		$	2.01		$	1.20	$	2.56	(b)	$	1.03
	Diluted	$	0.93		$	1.97		$	1.18	$	2.51	(b)	$	1.01
Selected Balance Sheet Data:
Total assets		$	1,971.8		$	1,909.9		$	1,279.5	$	1,103.9		$	829.9
Long-term debt, including current maturities			175.8			197.8	(c)		0.6		4.1			7.0
Total shareholders' equity			384.2			463.5			366.0		320.0			229.9

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis explains our general financial condition, changes in financial condition and results of operations as a whole and each of our operating segments including:

The following discussion contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those described herein. You should read this section in conjunction with Item 1A "Risk Factors" and the consolidated financial statements and notes thereto contained in this Annual Report on Form 10-K.

We are one of the largest engineering services firms worldwide and are employee-owned. Our business provides engineering, construction, operation, major project management and technical services to municipal, state, federal and private sector clients worldwide. Founded in 1946, we operate in approximately 40 countries and have approximately 24,000 employees worldwide.

The engineering and construction industry continues to undergo substantial change as public and private clients privatize and outsource many of the services that were formerly provided internally. Numerous mergers and acquisitions in the industry have resulted in a group of larger firms that offer a full complement of single-source services including studies, designs, construction, operations, maintenance and in some instances, facility ownership. Included in the current trend is the movement towards longer-term contracts for the expanded array of services, e.g., 5 to 20 year contracts. These larger, longer, more full-service contracts require us to have substantially greater financial capital than has historically been necessary to remain competitive. We believe that our diversified business portfolio allows us to provide our clients with innovative project delivery using cost-effective approaches and advanced technologies.

We believe that we are well positioned geographically, technically and financially to compete worldwide in the key markets we have elected to pursue and the clients we serve. The combination of our expanding domestic and global reach and diverse service portfolio also positions us to capitalize on client-driven changes in the market. For example, projects in the engineering services market are increasingly global in scope, and clients around the world are increasingly focused on strategic global issues such as supply chain management, procurement, sustainability, and cross-sector innovation. These issues cut across our client and service portfolios. We believe that our strategic focus on full service project delivery, using cross functional business capabilities and finding innovative technological solutions for clients, position us to capitalize on these market forces.

We provide services to our clients through three operating segments: Federal, Civil Infrastructure and Industrial. The structure is intended to provide for better decision making on an enterprise-wide basis. Our Federal segment generally provides a comprehensive range of services to the U.S. federal government and to international governments. Our Civil Infrastructure segment generally provides a comprehensive range of services to various state, local, and provincial governments. Our Industrial segment generally provides a comprehensive range of services to various private sector clients.

We continuously monitor acquisition and investment opportunities that will expand our portfolio of services, add value to the projects undertaken for clients, or enhance our capital strength. During 2007 and the first quarter of 2008, we completed several acquisitions that we expect will expand our services into new markets and new geographical locations. One of the 2007 acquisitions expanded our presence in the water sector providing wastewater management services. Two of the acquisitions during 2007 are part of our strategic initiative to expand operations into the energy industry. These services include engineering, construction and field support services, as well as engineering services for pipeline and related facilities. The acquisition made during the first quarter of 2008 expanded our transportation consulting engineering services providing marine, coastal, and municipal engineering services.

The most significant of the transactions is the acquisition of VECO Corporation, which occurred on September 7, 2007. CH2M HILL purchased the outstanding stock of VECO and substantially all of VECO's operating businesses. The results of VECO have been included in the consolidated financial statements since that date and are included in the Industrial operating segment.

Results of Operations for the Year Ended December 31, 2008 Compared to 2007

Revenue increased for the year ended December 31, 2008, compared to the same period in the prior year by $225.0 million or 18.0%. There was a significant increase in work performed by our environmental service business attributable to strong performance in our consulting and full-service business in the southern U.S. and Canadian markets. The revenues in our government facilities and infrastructure business increased due to increased volumes in the Pacific and domestic logistics businesses resulting from various new full service projects with the Army and Air Force. In addition, we have experienced an increase in our operations and maintenance offerings of our facilities business group. The positive results were partially offset by our decreased revenue in the nuclear business due to the completion of the building demolition and final waste shipment at the Mound project site in July 2008. However, we have recently completed transition activities related to a significant remediation contract at the DOE's Hanford facility and work is expected to increase on this project.

Operating income decreased during the year ended December 31, 2008, compared to last year, by $5.7 million or 7.9%. The decrease was primarily associated with an increase of costs related to strategic initiatives as well as an increase in project delivery costs at the nuclear storage facility project in Canada. The decrease is partially offset by increased operating income associated with the increased revenues discussed above generated by our environmental services business as well as equity in earnings generated as a result of our performance related to the London 2012 Olympic Delivery Authority project. Our CH2M HILL-WG Idaho, LLC joint venture project continues to perform well and had earnings in excess of the prior year. We have begun to perform significant activities in 2008 on our base relocation project in Korea and these also generated margins in excess of prior years'.

Revenue increased for the year ended December 31, 2008, compared to last year by $80.7 million or 5.6%. The increase in the period is attributable to growth in our international markets including Australia and United Arab Emirates related to the start up of large design/build projects and major program management assignments in those locations. Revenues also increased in our operations and maintenance business due to strong growth in our municipal services projects in the southern U.S. and an increase in our industrial operations and maintenance business. These increased revenues have been partially offset due to volume decreases caused by the recent economic uncertainties as well as recent delays/cancellations of infrastructure projects in the U.S.

Operating income decreased during 2008 compared to the prior year by $30.9 million or 42.3%. The decrease is attributable to various project delivery issues and cost escalation in our design/build projects. During the second half of 2008, we recognized a significant loss on a Canadian transportation project held within one of our joint ventures. In addition, we also experienced significant cost growth on a water project in Australia and two plants in the western U.S., all of which were held within joint

ventures and recognized in our earnings in equity investments. This decline in operating profit was partially offset by increased earnings associated with the revenues discussed above related to our water business having favorable growth in the international markets and our operations and maintenance business expanding its city service operations.

Excluding the VECO and Trigon EPC, LLC (Trigon) acquisitions, revenue increased by $121.0 million for the year ended December 31, 2008 compared to the same period in the prior year. The increase is primarily attributable to growth in our power business driven by significant engineering, procurement and construction (EPC) contracts with major utility companies in the U.S. and Australia. This increase was partially offset by the completion of several large projects late in the prior year in the manufacturing and life science business. In addition, we have experienced delays and cancellations of several new manufacturing facilities due to the global economic conditions. Our electronics and advanced technology business unit has been negatively impacted by the decline in construction projects and new-plant investments in the semi-conductor markets however their consulting business has remained strong. We also experienced a significant downsizing of a large telecom project in Spain and ultimately restructured these operations.

The operations of VECO and Trigon which were acquired in September and October 2007, respectively, accounted for $1,032.8 million of revenues in 2008 compared to approximately $245.9 million in 2007.

Operating income increased for the year ended December 31, 2008 compared to 2007 by $39.0 million, a significant change over the year. This increase is primarily attributable to the first full year of VECO and Trigon operations post-acquisition. They experienced strong operating performance during 2008; however the industrial operating results were negatively impacted by non-cash amortization charges related to these acquisitions of $36.4 million and $10.0 million in 2008 and 2007, respectively. The operating income of our energy group will continue to be affected by these non-cash costs for another five years; however, the adverse affect on operating income will decrease each year as the amortization expense decreases. In addition, this increase in profit was partially offset by increased overhead and business development costs in our power business in addition to incurring higher than expected start-up costs on two power projects. Further, the manufacturing and life sciences business has experienced lower volume of work as well as lower full-service margins and lower employee utilization during 2008. The Industrial client group has begun to reduce overhead costs in response to the lower volume levels being experienced. In June 2008, we announced the downsizing of a portion of our Spanish industrial operations and incurred related costs totaling $10.5 million during the second half of 2008.

Results of Operations for the Year Ended December 31, 2007 Compared to 2006

Revenue decreased for the year ended December 31, 2007, compared to the same period in the prior year by $189.1 million or 13.2%. The decrease in 2007 was primarily due to the completion of Hurricane Katrina relief and clean-up efforts and the Mound Nuclear Closure project in 2006. The effects of these large project completions were partially offset by significant growth related to a clean-up project in Ohio, additional services performed for an underground waste tank clean-up project in Southeast Washington, and expanded services performed in Saudi Arabia and Australia. The amount of work performed for the London 2012 Olympic Delivery Authority during the year increased in 2007 as the project commenced. We expect continued growth for the next several years.

Operating income decreased during the year ended December 31, 2007, compared to last year, by $15.4 million or 17.6%. This decrease was comprised of an increase in equity in earnings year over year of $17.1 million partially offset by a decrease in operating income from other projects of $36.7 million. The increase in equity in earnings of $17.1 million was primarily the result of work performed for several nuclear projects, including the London 2012 Olympic Delivery Authority, that recorded favorable operating results. The decrease of $36.7 million was directly associated with the completion of the Hurricane Katrina cleanup efforts partially offset by incentive fees earned from a large nuclear project which achieved contractual milestones in 2006.

Revenue increased for the year ended December 31, 2007, compared to last year by $153.2 million or 11.8%. In 2007 we saw continued growth in water and transportation through design/build projects, program management and consulting services both domestically and internationally. Growth in North American consulting services was primarily due to design and program management services for municipal clients in the eastern U.S. and Canada, while the design/build growth was primarily due to water treatment projects in southern California and Hawaii. Our revenue also increased from the prior year due to increased transportation program management projects in California and Washington. The growth in our international markets was primarily due to new or continued water projects in Australia, United Arab Emirates, Singapore and Iraq as well as transportation projects including the canal expansion project in Panama and work performed on the Mumbai International Airport.

Operating income increased during 2007, compared to the prior year by $11.7 million or 19.1%. The increase was comprised of an increase in equity in earnings year over year of $9.3 million partially offset by a decrease in operating income from other projects of $5.8 million. The increase in equity in earnings of $9.3 million in 2007 was primarily due to the favorable operating results on new transportation and water projects. The remaining decrease in operating income is a result of favorable operating results in the operations and maintenance business partially offset by certain project delivery issues.

Revenue increased by $405.3 million or 31.8% for the year ended December 31, 2007, compared to the year ended December 31, 2006. Approximately $245.9 million of the growth related to the acquisition of VECO and Trigon in September and October of 2007, respectively. The results of these energy services companies from the date of acquisition through December 31, 2007 are included in this segment's operating results.

The remaining increase in the Industrial segment revenue was driven by growth from four EPC contracts with major utility companies in the U.S. to build power generation facilities. Our electronics and advanced technology business realized growth in design build projects, including a large project in Singapore. During the same period, the manufacturing and life sciences business experienced a

decrease in service revenue due to the completion of several large projects earlier in 2007 that had provided significant revenue in 2006.

The Industrial segment had an operating loss of $16.5 million during 2007 compared to an operating loss of $68.6 million for the prior year, representing an improvement of 75.9%. The improvement of $52.1 million during 2007 was attributable to improved margins across several of the businesses in this segment, which were partially offset by a loss recognized by our energy services businesses. Most notably the power and electronics and advanced technology businesses realized significant margin improvements in 2007 consistent with the increase in revenues for the same period. The improvement in the power business was primarily due to significant growth in EPC contracts for the period as discussed above. A higher percentage of design/build work versus other services in the electronics and advanced technology business also resulted in significantly higher margins. Furthermore, we had experienced a significant loss in the prior period related to a manufacturing facility project whose costs increased significantly as a result of the absorption of commodities and skilled laborers by Hurricane Katrina clean-up efforts. These improvements were partially offset by a loss of approximately $12.9 million in the energy services business primarily resulting from the recognition of depreciation and amortization on the intangible assets and the real and personal property acquired from VECO and Trigon.

Corporate expenses represent centralized management costs that are not allocable to individual operating segments and primarily include expenses associated with administrative compliance functions such as legal, treasury, accounting, tax and general business development efforts. Corporate expenses for the year ended December 31, 2008 were $57.9 million compared to $49.4 million in 2007, and $16.5 million in 2006. The increase of $8.5 million in 2008 compared to the prior year is consistent with our growth and is primarily due to expenditures for strategic initiatives and business development efforts undertaken in the current year, partially offset by cost reduction efforts that began in the fourth quarter of 2008.

The increase in 2007 compared to 2006 is primarily due to a $7.8 million lease termination fee and a $1.0 million write-off of deferred financing lease costs associated with the purchase of CH2M HILL's corporate headquarters and the subsequent sale-leaseback of these properties in September 2007. In addition, expenditures for strategic initiatives and business development efforts undertaken in 2007 added to this variance.

The income tax provisions for the years ended December 31, 2008, 2007 and 2006 are as follows:

The effective tax rate for the year ended December 31, 2008 was negatively impacted by foreign and state operating losses which do not meet the "more likely than not" realization criteria and was favorably impacted by the recognition of additional research and experimental tax credits for prior years. Our effective tax rate continues to be impacted by the effect of state income taxes, unrealized foreign net operating losses in selected countries, the Section 199 domestic production deduction and disallowed portions of meals and entertainment expenses. The significant decrease in the effective tax rate for the year ended December 31, 2007 compared to 2006 and 2008 was primarily due to the impacts of the settlement with the Internal Revenue Service with respect to the research and

experimentation credit for the years 1996 through 2003, as well as the extraterritorial income exclusion for the years 2001 through 2003.

We must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely, we must increase our tax provision by recording a valuation allowance for the deferred tax assets that we estimate will not ultimately be recoverable. As of December 31, 2008 and 2007, we reported a valuation allowance of $22.7 million and $20.2 million, respectively. Included in the total valuation allowance at December 31, 2008 is $4.0 million which was acquired with the VECO acquisition and will not have future income tax effect.

Our primary sources of liquidity are cash flows from operations and borrowings under our unsecured revolving line of credit. Our primary uses of cash are to fund our working capital, acquisitions, capital expenditures and purchases of stock presented on our internal market. Based on our total cash and credit capacity available at December 31, 2008 of $463.3 million, we believe that we have sufficient resources to fund our operations, any future acquisition and capital expenditure requirements, as well as purchases of stock presented on our internal market, should we choose to do so, for the next 12 months and beyond.

The following table reflects our available capacity as of December 31, 2008 (in millions):

Billings and collections on accounts receivable can impact our operating cash flows. We continuously monitor collection efforts and assess the allowance for doubtful accounts. Based on this assessment at December 31, 2008, we have deemed the allowance for doubtful accounts to be adequate; however, future economic conditions may adversely impact some of our clients' ability to pay our bills or the timeliness of their payments. Consequently, it may also impact our timing of cash receipts necessary to meet our operating needs.

Cash used in investing activities was $96.8 million in the twelve months ended December 31, 2008 compared to $121.9 million used in investing activities for the same period in 2007. Cash used in our investing activities relates to payments made for the purchase of property, plant, and equipment, investments in our joint ventures and business acquisitions. Historically, as a professional services organization, we have not had significant outflows of cash for capital expenditures. However, the operations of VECO require an increased level of capital spending. We spent $50.6 million and $20.7 million on capital expenditures in the twelve month period ended December 31, 2008 and 2007, respectively. The cash flow used in our investments in affiliates (net of distributions of capital received) increased to $23.8 million during 2008. The increase in this joint venture funding was primarily attributable to our CH2M HILL-WG Idaho, LLC project.

2008, we made distributions from the holdback to the selling shareholders of VECO of $12.7 million. At December 31, 2008, the outstanding balance payable under the holdback contingency was $51.3 million.

In addition to the investing activities related to the purchase of VECO, we acquired a consulting engineering company providing marine, coastal, and municipal and transportation engineering services. The cash used to complete the acquisition was $2.7 million.

We finance our operations, acquisitions and capital expenditures using a variety of capital vehicles. Depending on the applicable terms and conditions on new debt or equity offerings compared to the opportunity cost of using our internally generated cash we may either choose to finance new opportunities using leverage in the form of our revolving line of credit facility (RLOC), or other debt. In some instances we may use a combination of one or more of these financing mechanisms. As of December 31, 2008, our total outstanding debt obligations were approximately $175.9 million which included $100 million on our RLOC. The majority of the funds from these obligations financed our recent acquisitions, including the assumption and issuance of notes payable and mortgages related to property, plant and equipment.

The RLOC provides for $500.0 million of available capacity that expires on August 31, 2012. The credit agreement includes an option to increase the initial borrowing capacity by up to an additional $250.0 million. The RLOC is used for general corporate purposes and permitted acquisitions. It also provides that up to $250.0 million is available for the issuance of letters of credit to support various operating activities. At our option, the credit agreement bears interest at a rate equal to either the London InterBank Offered Rate (LIBOR) plus 0.75% to 1.50%, or the lender's applicable base rate less a discount rate up to 0.25% based on our ratio of funded debt to earnings before interest, taxes, depreciation and amortization. A commitment fee of approximately 0.10% to 0.25% per year on the unused portion of the line of credit is payable based on our ratio of funded debt to earnings before interest, taxes, depreciation and amortization. While we continue to carefully monitor the unfolding global financial situation to assess any impacts this might have on our banks in the RLOC and their ability to meet their legal funding obligations to us, the RLOC is a committed facility and we believe the potential financial exposure is limited.

During the first quarter of 2008, we entered into derivative financial transactions to reduce the effects of interest rate changes on cash flows due to changes in interest rates on our outstanding debt. As of December 31, 2008, we had fixed our interest rate exposure on $50.0 million of the outstanding RLOC balance. We do not enter into derivative transactions for speculative purposes. As of December 31, 2008, we had not designated these derivative instruments as effective hedges as defined by SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. Therefore, interest expense related to periodic settlements on these interest rate swaps and the change in fair market value of these interest rate swaps are recognized in earnings in the current period. These interest rate swaps expire in March 2010. The fair value of these derivative liabilities is approximately $1.0 million at December 31, 2008.

As of December 31, 2008, we had $100.0 million in borrowings outstanding on the RLOC. Additionally we had issued and outstanding letters of credit of $51.3 million reserved against the RLOC's borrowing base.

For the twelve months ending December 31, 2008, repurchases of stock were $109.4 million compared to $36.9 million for the same period in the prior year.

Depreciation and amortization expense for the year ended December 31, 2008 of $92.1 million was $56.9 million greater than the same period in 2007. This significant increase is the result of a full year

of operations of VECO and Trigon. VECO was acquired in September 2007 and Trigon was acquired in October 2007. As part of the acquisitions we allocated approximately $58.2 million and $56.2 million to customer relationships and backlog acquired, respectively. Additionally, we acquired approximately $180.8 million of fixed assets in these acquisitions. As a result of these acquisitions, we recognized $36.4 million and $10.0 million of amortization expense related to intangible assets during 2008 and 2007, respectively. We recognized $40.0 and $12.8 million of depreciation expense related to fixed assets during 2008 and 2007, respectively.

We have interests in multiple joint ventures, some of which are considered variable interest entities under FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities (FIN46 (R)). These entities facilitate the completion of contracts that are jointly owned with our joint venture partners. These joint ventures are formed to leverage the skills of the respective partners and include consulting, construction, design, project management and operations and maintenance contracts. Our risk of loss on joint ventures is similar to what the risk of loss would be if the project was self-performed, other than the fact that the risk is shared with our partners.

There were no substantial changes to other off-balance sheet arrangements or contractual commitments during the twelve months ended December 31, 2008.

We maintain a variety of commercial commitments that are generally made available to provide support for various provisions in engineering and construction contracts. Letters of credit are provided to clients in the ordinary course of the contracting business in lieu of retention or for performance and completion guarantees on engineering and construction contracts. We post surety and bid bonds, which are contractual agreements issued by a surety, for the purpose of guaranteeing our performance on contracts and to protect owners and are subject to full or partial forfeiture for failure to perform obligations arising from a successful bid. We also carry substantial premium paid, traditional insurance for our business risks including professional liability and general casualty insurance and other coverage which is customary in our industry.

We believe that we will be able to continue to have access to professional liability and general casualty insurance, as well as bonds, with sufficient coverage limits, and on acceptable financial terms necessary to support our business. The cost of such coverage has increased and is expected to continue to increase in the short term. Such cost increases are expected to range annually between 5.0% and 10.0% for various insurance policies and surety bonds. We do not believe that such increases will have a material impact on our business. See "Risk Factors—It can be difficult or expensive to obtain the insurance we need for our business operations" in Item 1A of this Annual Report on Form 10-K for additional information.

Our risk management personnel continuously monitor the developments in the insurance market. The financial stability of the insurance and surety providers is one of the major factors that we take into account when buying our insurance coverage. Currently our insurance and bonds are purchased from several of the world's leading and financially stable providers often in layered insurance or co-surety arrangements. The built-in redundancy of such arrangements usually enables us to call upon existing insurance and surety suppliers to fill gaps that may arise if other such suppliers become financially unstable.

Contractual obligations outstanding as of December 31, 2008 are summarized below:

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. of America (U.S. GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect both the results of operations as well as the carrying values of our assets and liabilities. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We base estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities as of the date of the financial statements that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Although our significant accounting policies are described in the Notes to Consolidated Financial Statements in Item 15 of this Annual Report on Form 10-K, below is a summary of our most critical accounting policies.

We earn our revenues from different types of services under a variety of different types of contracts, including cost-plus, fixed-price and time-and-materials. To recognize revenue, we evaluate each contractual arrangement to determine the appropriate authoritative literature to apply. We recognize revenue and profit for most of our contracts on the percentage-of-completion method where progress towards completion is measured by relating the actual cost of work performed to date to the current estimated total cost of the respective contracts. In making such estimates, judgments are required to evaluate potential variances in schedule, the cost of materials and labor, productivity, liability claims, contract disputes, or achievement of contract performance standards.

Change orders are included in total estimated contract revenue when it is probable that the change order will result in an addition to contract value and can be reliably estimated. Losses on construction and engineering contracts in process are recognized in their entirety when the loss becomes evident and the amount of loss can be reasonably estimated.

We have a history of making reasonable estimates of the extent of progress towards completion, total contract revenue and total contract costs on our engineering and construction contracts. However, due to uncertainties inherent in the estimation process, actual total contract revenue and completion costs can vary from estimates.

Below is a description of the three basic types of contracts from which we may earn revenues under the percent complete basis.

Cost-Plus Contracts. Cost-plus contracts can be cost plus a fixed fee or rate, or cost plus an award fee. Under these types of contracts, we charge our clients for our costs, including both direct and indirect costs, plus a fixed negotiated fee or award fee. We generally recognize revenue based on the actual labor costs and non-labor costs we incur, plus the portion of the fixed fee or award fee we have earned to date. If the actual labor hours and other costs we expend are lower than the total number of hours and other costs we have estimated, our revenues related to cost recoveries from the project will be lower than originally estimated. If the actual labor hours and other costs we expend exceed the original estimate, we must obtain a change order, contract modification, or successfully prevail in a claim in order to receive payment for the additional costs.

In the case of a cost-plus award fee, we include in the total contract value the portion of the fee that we are probable of receiving. Award fees are influenced by the achievement of contract milestones, cost savings and other factors.

Fixed Price Contracts. Under fixed price contracts, our clients pay us an agreed amount negotiated in advance for a specified scope of work. For engineering and construction contracts, we recognize revenue on fixed price contracts using the percentage-of-completion method. For operations and maintenance contracts, we recognize revenue on fixed price contracts using the straight-line method over the life of the contract. Prior to completion, our recognized profit margins on any fixed price contract depend on the accuracy of our estimates and will increase to the extent that our actual costs are below the original estimated amounts. Conversely, if our costs exceed these estimates, our profit margins will decrease and we may realize a loss on a project. If our actual costs exceed the original estimate, we attempt to obtain a change order or contract modification.

Time-and-Materials Contracts. Under our time-and-materials contracts, we negotiate hourly billing rates and charge our clients based on the actual time that we expend on a project. In addition, clients reimburse us for our actual out-of-pocket costs of materials and other direct expenditures that we incur in connection with our performance under the contract. Our profit margins on time-and-materials contracts fluctuate based on actual labor and overhead costs that we directly charge or allocate to contracts compared with the negotiated billing rate and markup on other direct costs. Some of our time-and-materials contracts are subject to maximum contract values, and accordingly, revenue under these contracts are recognized under the percentage-of-completion method. Revenue on contracts that are not subject to maximum contract values are recognized based on the actual number of hours we spend on the projects plus any actual out-of-pocket costs of materials and other direct expenditures that we incur on the projects. Our time-and-materials contracts generally include annual billing rate escalation provisions.

Operations and Maintenace Contracts. A portion of our contracts are operations and maintenance type contracts. Typically, these contracts may include fixed and variable components along with incentive fees. Revenue is recognized on operations and maintenance contracts on a straight-line basis over the life of the contract once we have an arrangement, delivery has occurred, the price is fixed or determinable and collectibility is reasonably assured.

In determining net income for financial statement purposes, we must make estimates and judgments in the calculation of tax assets and liabilities and in the determination of the recoverability of the deferred tax assets. The tax assets and liabilities arise from temporary differences between the tax return and the financial statement recognition of revenue and expenses. We must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely, we must

increase our tax provision by recording a valuation allowance for the deferred tax assets that we estimate will not ultimately be recoverable.

In addition, the calculation of our income tax provision involves uncertainties in the application of complex tax regulations. For income tax benefits to be recognized, a tax position must be more likely than not to be sustained upon ultimate settlement.

We have two frozen and one active noncontributory defined benefit pension plans, a medical benefit plan for retired employees and other benefit plans. The determination of pension plan expense and the requirements for funding our pension plans are based on a number of actuarial assumptions. These valuations include many assumptions, but the two most critical assumptions are the discount rate and the expected long-term rate of return on plan assets. For our medical benefit plan, which provides certain health care benefits to qualified retired employees, critical assumptions in determining the employee benefit expense are the discount rate applied to benefit obligations and the assumed health care cost trend rates used in the calculation of benefit obligations. We use judgment in selecting these assumptions each year because we have to consider not only current market conditions, but also make judgments about future market trends, changes in the interest rates and equity market performance. We also have to consider factors like the timing and amounts of expected contributions to the plans and benefit payments to plan participants.

On December 31, 2007, the Company adopted Statement of Accounting Standard 158 "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R)" (SFAS 158). According to SFAS 158, the funded status of a benefit plan is measured as the difference between plan assets at fair value and the benefit obligation. In accordance with SFAS 158, we record long-term assets for overfunded plans and liabilities for underfunded plans, with a corresponding entry recorded to accumulated other comprehensive loss, net of tax. On December 31, 2008, the Company changed its measurement date from October 31 to December 31 in accordance with SFAS 158.

On January 1, 2007, we adopted Financial Accounting Standards Board (FASB) Interpretation No. (FIN) 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 establishes a process to measure the impact of an uncertainty associated with an income tax position. Under FIN 48, the effect of an income tax position on the income tax provision must be recognized at the amount that is more likely than not to be sustained upon examination by the relevant taxing authority. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. Under our previous policy, tax positions were recognized to the extent they were probable of being sustained. As a result of the implementation of FIN 48, we recognized a $1.4 million decrease in the liability for uncertain tax positions, which was accounted for as an increase to the January 1, 2007 balance of retained earnings.

opening balance of retained earnings. At the February 6, 2008 FASB meeting, it was agreed to defer for one year the effective date of SFAS 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (that is, at least annually). CH2M HILL adopted SFAS 157 on January 1, 2008.

On December 31, 2007, we adopted SFAS No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of SFAS No. 87, 88, 106 and 132(R) (SFAS 158), which requires employers to recognize the funded status of pension and other postretirement benefit plans on the balance sheet and to recognize changes in the funded status through comprehensive income in the year in which the changes occur. SFAS 158 also requires plan assets and benefit obligations to be measured as of the balance sheet date beginning December 31, 2008.

On January 1, 2006, we adopted the provisions of, and account for stock-based compensation in accordance with Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004) (SFAS 123(R)), Share-Based Payment. We elected the prospective method of adoption, under which prior periods are not revised for comparative purposes. Under the prospective method, the provisions of SFAS 123(R) apply to new grants after January 1, 2006. Accordingly, at the adoption date, SFAS 123(R) had no impact on our consolidated financial position, results of operations or cash flows. SFAS 123(R) was not applied to our Payroll Deduction Stock Purchase Plan (PDSPP) as the plan is available to all shareholders and incorporates no option features such as a look-back period. Accordingly, no compensation cost is recognized in the financial statements for the PDSPP.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (SFAS 141(R)). SFAS 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS 141(R) is effective for us beginning January 1, 2009. This will change the accounting for acquisitions beginning January 1, 2009.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51 (SFAS 160). SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent's ownership interest and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS 160 is effective for us beginning January 1, 2009.

In the ordinary course of our operations we are exposed to certain market risks, primarily changes in foreign currency exchange rates and interest rates. This risk is monitored to limit the effect of foreign currency exchange rate and interest rate fluctuations on earnings and cash flows.

Foreign currency exchange rates. We are exposed to foreign currency exchange risks in the normal course of our international business operations. Our investments in foreign subsidiaries with a functional currency other than the U.S. dollar are generally considered long-term. From time to time we engage in forward foreign exchange contracts to selectively manage these exposures through the use of derivative instruments to mitigate our market risk from these exposures. The objective of our risk management is to protect our cash flows related to sales of services from market fluctuations in current

rates. A five percent change in foreign currency rates would not have a significant impact on our financial position, results of operations or cash flows.

Interest rates. Our interest rate exposure is generally limited to our unsecured revolving credit agreement, purchase of interest bearing short-term investments and the holdback contingency balance outstanding related to our acquisition of VECO. There was $100.0 million and $51.3 million outstanding under the unsecured revolving credit agreement and holdback contingency, respectively, at December 31, 2008. We have assessed the market risk exposure on these financial instruments and determined that any significant changes to the fair value of these instruments would not have a material impact on our consolidated results of operations, financial position or cash flows. Based upon the amount outstanding under the unsecured revolving credit agreement and the holdback contingency, a one percentage point change in the assumed interest rate would change our annual interest expense by approximately $1.5 million.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

We carried out an evaluation as of the last day of the period covered by this Annual Report on Form 10-K, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (a) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is timely recorded, processed, summarized and reported and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As described elsewhere in this Report Form 10-K, the Company completed the VECO acquisition in September 2007. The Company completed the documentation and testing of these controls, and has included the results of testing internal control over financial reporting within VECO in the evaluation as of December 31, 2008.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of

the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on our evaluation under the framework in Internal Control—Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2008.

The effectiveness of our internal control over financial reporting as of December 31, 2008 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included herein on page F-2.

The following table shows our directors and executive officers as of December 31, 2008:

Name		Title

Robert G. Card	56	Director and Senior Vice President
Carolyn Chin	61	Director
William T. Dehn	62	Director
Donald S. Evans	58	Vice Chairman of the Board and Senior Vice President
Jerry D. Geist	74	Director
Garry M. Higdem	55	Director and Senior Vice President
Mark A. Lasswell	54	Director and Senior Vice President
Lee A. McIntire	59	President and Chief Operating Officer*
Michael C. McKelvy	49	Senior Vice President
Joan M. Miller	51	Director
Ralph R. Peterson	64	Chairman of the Board and Chief Executive Officer*
David B. Price	63	Director
Jacqueline C. Rast	47	Director and Senior Vice President
M. Catherine Santee	47	Chief Financial Officer and Director
Thomas G. Searle	55	Senior Vice President
JoAnn Shea	44	Chief Accounting Officer
Michael A. Szomjassy	57	Director
Nancy R. Tuor	60	Senior Vice President
Barry L. Williams	64	Director

* On September 17, 2008, Ralph R. Peterson announced his resignation as Chief Executive Officer effective December 31, 2008. He will remain Chairman of the Board until the end of his term in May 2009. Mr. Peterson has served as our Chief Executive Officer since 1991 and as Chairman of the Board since 2000. Mr. Lee A. McIntire, CH2M HILL's President and Chief Operating Officer, replaced Mr. Peterson as our Chief Executive Officer on January 1, 2009.

The information required under this Item is contained in the Proxy Statement under the captions "Proposal 1—Election of Directors" and "Corporate Governance" and is incorporated herein by reference.

See the information set forth under "Executive Compensation" in the Proxy Statement, which is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

See the information set forth under "Security Ownership of Certain Shareholders and Management" in the Proxy Statement, which is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

See the information set forth under "Audit Subcommittee" in the Proxy Statement which is incorporated herein by reference.

In accordance with Regulation S-X Rule 3-09, we furnish separate financial statements of significant subsidiaries not consolidated and 50% or less owned persons. The Company is required to include the balance sheets of Golden Crossing Constructors Joint Venture and CLM Delivery Partner, Limited as of December 31, 2008 and 2007, and the related statements of income, partners' equity, and cash flows for each of the years in the three-year period ended December 31, 2008. In accordance with Regulation S-X Rule 3.09, as the unconsolidated subsidiaries are foreign filers and are private entities, the financial statements of these entities will be filed as an amendment to this periodic report within six months of filing.

All financial statement schedules have been omitted because the required information is included in the consolidated financial statements or notes thereto, or because such schedules are not applicable.

Exhibit Number			Description

	10.1		CH2M HILL Retirement and Tax-Deferred Savings Plan, as amended and restated effective June 1, 2000 filed as Exhibit 10.1 on Form 10-K, on March 29, 2000
	10.2		CH2M HILL Companies, Ltd. 1999 Stock Option Plan, as amended and restated on November 12, 1999 filed as Exhibit 10.3 on Form 10-K, on March 29, 2000
	10.3		CH2M HILL Companies, Ltd. Deferred Compensation Retirement Plan effective January 1, 2000 filed as Exhibit 10.21 on Form 10-K, on March 20, 2001
	10.4		CH2M HILL Companies, Ltd. Executive Deferred Compensation Plan effective January 1, 2000 filed as Exhibit 10.22 on Form 10-K, on March 20, 2001
	10.5		CH2M HILL Companies, Ltd. Deferred Compensation Plan effective January 1, 2001 filed as Exhibit 10.23 on Form 10-K, on March 20, 2001
	10.6		CH2M HILL Companies, Ltd. Restricted Stock Policy and Administration Plan effective January 1, 2000 filed as Exhibit 10.25 on Form 10-K, on March 20, 2001
	10.7		CH2M HILL Companies, Ltd. Short Term Incentive Plan effective January 1, 2000 filed as Exhibit 10.26 on Form 10-K, on March 20, 2001
	10.8		CH2M HILL Companies, Ltd. 2004 Stock Option Plan filed as Appendix A on Schedule 14A Definitive Proxy Statement, on March 26, 2004
	10.9		CH2M HILL Companies, Ltd. Payroll Deduction Stock Purchase Plan as amended and restated effective January 1, 2004 filed as Appendix B on Schedule 14A Definitive Proxy Statement, on March 26, 2004
	10.10		CH2M HILL Companies, Ltd. Amended and Restated Executive Officers Long Term Incentive Plan effective January 1, 2005, as amended and restated on May 8, 2008 filed as Exhibit 10.1 on Form 10-Q on May 8, 2008
	10.11		CH2M HILL Companies, Ltd. Amended and Restated Long Term Incentive (LTI) Plan effective January 1, 2005 filed as Exhibit 10.15 on form 10-K on February 23, 2007
	10.12		Transition Arrangements Agreement between CH2M HILL Companies, Ltd. and Ralph R. Peterson filed as Exhibit 10.1 on Form 10-Q, on November 4, 2008
	10.13		Change of Control Agreement between CH2M HILL Companies, Ltd. and Robert G. Card filed as Exhibit 10.2 on Form 10-Q, on November 4, 2008
	10.14		Change of Control Agreement between CH2M HILL Companies, Ltd. and Lee A. McIntire filed as Exhibit 10.3 on Form 10-Q, on November 4, 2008
	10.15		Change of Control Agreement between CH2M HILL Companies, Ltd. and M. Catherine Santee filed as Exhibit 10.4 on Form 10-Q, on November 4, 2008
	10.16		Change of Control Agreement between CH2M HILL Companies, Ltd. and Jacqueline C. Rast filed as Exhibit 10.5 on Form 10-Q, on November 4, 2008
	10.17		Change of Control Agreement between CH2M HILL Companies, Ltd. and Michael E. McKelvy filed as Exhibit 10.6 on Form 10-Q, on November 4, 2008
	10.18		Change of Control Agreement between CH2M HILL Companies, Ltd. and Mark A. Laswell filed as Exhibit 10.7 on Form 10-Q, on November 4, 2008

Exhibit Number			Description

	10.25		Contract with Neidiger, Tucker, Bruner, Inc., filed as Exhibit 99.1 on Form 8-K, on June 24, 2002
	10.26		Amended and Restated Credit Facility closed on September 6, 2007, by and among CH2M HILL Companies, Ltd. and certain of its wholly owned subsidiaries. Wells Fargo Bank, National Association, as agent and sole arranger, and other lenders as party thereto (certain portions of this exhibit have been omitted and filed separately with the Commission pursuant to a request for confidential treatment under Rule 24b-2 as promulgated under the Securities Exchange Act of 1934) filed as exhibit 10.1 to CH2M HILL's Current Report on Form 8-K (Commission File No. 000-27261) on September 13, 2007
	10.27		Agreement of Purchase and Sale executed on September 26, 2007 (dated September 11, 2007) by and between CH2M HILL, Inc. and WELLS REIT II—South Jamaica Street, LLC filed as exhibit 10.44 to CH2M HILL's Current Report on Form 8-K (Commission File No. 000-27261) on September 27, 2007
	10.28		Lease Agreement dated as of September 26, 2007, by and between CH2M HILL, Inc. and WELLS REIT II—South Jamaica Street, LLC filed as exhibit 10.43 to CH2M HILL's Current Report on Form 8-K (Commission File No. 000-27261) on September 27, 2007 and incorporated herein

We have audited the accompanying consolidated balance sheets of CH2M HILL Companies, Ltd. and subsidiaries (the Company) as of December 31, 2008 and 2007, and the related consolidated statements of income, shareholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2008. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CH2M HILL Companies, Ltd. and subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

As discussed in note 1 to the accompanying consolidated financial statements, effective December 31, 2007, the Company adopted Statement of Financial Accounting Standards No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R) and effective January 1, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), CH2M HILL Companies, Ltd. and subsidiaries internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 23, 2009 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

We have audited CH2M HILL Companies, Ltd. and subsidiaries (the Company) internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, CH2M HILL Companies Ltd. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of CH2M HILL Companies, Ltd. and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income, shareholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2008, and our report dated February 23, 2009 expressed an unqualified opinion on those consolidated financial statements.

CH2M HILL COMPANIES, LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

(Dollars in thousands)

				December 31, 2008			December 31, 2007

ASSETS
Current assets:
	Cash and cash equivalents			$	114,282		$	124,105
	Available-for-sale securities				327			2,705
	Receivables, net—
		Client accounts			670,243			670,984
		Unbilled revenue			446,763			391,502
		Other			13,280			10,563
	Current deferred income taxes				50,246			60,415
	Prepaid expenses and other current assets				82,395			57,285

			Total current assets		1,377,536			1,317,559
Investments in unconsolidated affiliates					37,322			35,285
Property, plant and equipment, net					214,037			214,348
Goodwill					134,840			126,690
Intangible assets, net					88,819			125,933
Deferred income taxes					82,326			26,968
Other assets					36,961			63,163

			Total assets	$	1,971,841		$	1,909,946

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Current portion of long-term debt			$	24,652		$	12,458
	Accounts payable and accrued subcontractor costs				447,747			401,511
	Billings in excess of revenue				289,230			255,862
	Accrued payroll and employee related liabilities				278,684			248,704
	Current income tax payable				—			4,099
	Other accrued liabilities				93,309			113,271

			Total current liabilities		1,133,622			1,035,905
Long-term employee related liabilities and other					300,247			224,215
Long-term debt					151,223			185,329

			Total liabilities		1,585,092			1,445,449
Minority interest					2,518			964
Commitments and contingencies (Note 16)
Shareholders' equity:
	Preferred stock, Class A $0.02 par value, 50,000,000 shares authorized; none issued				—			—
	Common stock, $0.01 par value, 100,000,000 shares authorized; 31,604,336 and 33,158,068 issued and outstanding at December 31, 2008 and 2007, respectively				316			332
	Additional paid-in capital				9,947			70,596
	Retained earnings				428,054			395,998
	Accumulated other comprehensive loss				(54,086	)		(3,393	)

			Total shareholders' equity		384,231			463,533

			Total liabilities and shareholders' equity	$	1,971,841		$	1,909,946

The accompanying notes are an integral part of these consolidated financial statements.

CH2M HILL COMPANIES, LTD. AND SUBSIDIARIES

Consolidated Statements of Income

(Dollars in thousands except per share amounts)

			For The Years Ended

			December 31, 2008			December 31, 2007			December 31, 2006
Gross revenue			$	5,589,906		$	4,376,238		$	4,006,944
Equity in earnings of joint ventures and affiliated companies				34,232			44,184			17,000
Operating expenses:
	Direct cost of services and overhead			(4,507,738	)		(3,507,770	)		(3,285,571	)
	General and administrative			(1,027,225	)		(831,637	)		(673,857	)
	Minority interest			(16,194	)		(1,897	)		(879	)

Operating income				72,981			79,118			63,637
Other income (expense):
	Interest income and other			2,405			4,331			2,550
	Interest expense			(15,833	)		(5,728	)		(2,506	)

Income before provision for income taxes				59,553			77,721			63,681
Provision for income taxes				(27,497	)		(11,722	)		(24,780	)

Net income			$	32,056		$	65,999		$	38,901

Net income per common share:
		Basic	$	0.96		$	2.01		$	1.20
		Diluted	$	0.93		$	1.97		$	1.18
Weighted average number of common shares:
		Basic		33,486,512			32,864,202			32,419,751
		Diluted		34,376,259			33,507,802			33,046,914

The accompanying notes are an integral part of these consolidated financial statements.

CH2M HILL COMPANIES, LTD. AND SUBSIDIARIES

Consolidated Statements of Shareholders' Equity and Comprehensive Income

(Dollars in thousands)

				Common Stock											Accumulated Other Comprehensive Loss

				Common Stock						Additional Paid-In Capital			Retained Earnings					Total Shareholders' Equity
				Shares			Amount			Additional Paid-In Capital			Retained Earnings					Total Shareholders' Equity
Balance at December 31, 2005					31,892,048		$	319		$	45,325		$	289,658	$	(15,322	)	$	319,980
	Net income							—			—			38,901		—			38,901
	Other comprehensive income (loss):
		Foreign currency translation adjustments						—			—			—		4,844			4,844
		Minimum pension liability adjustment						—			—			—		2,439			2,439
		Unrealized loss on equity investments						—			—			—		(1,134	)		(1,134	)

			Comprehensive income																45,050
	Shares issued in connection with stock based compensation and employee benefit plans				1,667,543			17			28,936			—		—			28,953
	Shares purchased and retired				(1,450,391	)		(15	)		(27,931	)		—		—			(27,946	)

Balance at December 31, 2006					32,109,200			321			46,330			328,559		(9,173	)		366,037
	Net income							—			—			65,999		—			65,999
	Other comprehensive income (loss):
		Foreign currency translation adjustments						—			—			—		6,867			6,867
		Minimum pension liability adjustment						—			—			—		8,641			8,641
		Unrealized loss on equity investments						—			—			—		(1,284	)		(1,284	)

			Comprehensive income																80,223
	Impact of adoption of SFAS 158							—			—			—		(8,444	)		(8,444	)
	Cumulative effect of change in accounting principle							—			—			1,440		—			1,440
	Shares issued in connection with stock based compensation and employee benefit plans				2,091,252			21			45,180			—		—			45,201
	Shares purchased and retired				(1,042,384	)		(10	)		(20,914	)		—		—			(20,924	)

Balance at December 31, 2007					33,158,068			332			70,596			395,998		(3,393	)		463,533
	Net income							—			—			32,056		—			32,056
	Other comprehensive loss:
		Foreign currency translation adjustments						—			—			—		(17,269	)		(17,269	)
		Benefit plan adjustments						—			—			—		(32,125	)		(32,125	)
		Unrealized loss on equity investments						—			—			—		(1,299	)		(1,299	)

			Comprehensive loss																(18,637	)
	Shares issued in connection with stock based compensation and employee benefit plans				1,512,164			15			31,520			—		—			31,535
	Shares purchased and retired				(3,065,896	)		(31	)		(92,169	)		—		—			(92,200	)

Balance at December 31, 2008					31,604,336		$	316		$	9,947		$	428,054	$	(54,086	)	$	384,231

The accompanying notes are an integral part of these consolidated financial statements.

CH2M HILL COMPANIES, LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Dollars in thousands)

					For The Years Ended

					December 31, 2008			December 31, 2007			December 31, 2006
Cash flows from operating activities:
	Net income				$	32,056		$	65,999		$	38,901
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization				92,022			35,119			13,823
		Stock-based employee compensation expense				43,654			51,266			37,403
		Net loss/(gain) on disposal of property, plant and equipment				249			1,013			(1,845	)
		Allowance for uncollectible accounts				2,172			1,952			3,523
		Deferred income tax benefit				(24,789	)		(55,339	)		(56,524	)
		Distributed/(undistributed) earnings of unconsolidated affiliates				21,175			(6,071	)		91,263
		Changes in current assets and liabilities, net of businesses acquired:
			Receivables and unbilled revenue			18,783			(53,869	)		(142,468	)
			Prepaid expenses and other			22,376			(21,413	)		(7,720	)
			Accounts payable and accrued subcontractor costs			3,670			45,351			55,581
			Billings in excess of revenues			24,613			104,264			26,993
			Employee related liabilities			4,447			32,855			31,078
			Other accrued liabilities			(4,860	)		(3,798	)		9,685
			Current taxes receivable/payable			(83	)		(107,042	)		(4,592	)
			Long-term employee related liabilities and other			9,371			(16,718	)		22,863

				Net cash provided by operating activities		244,856			73,569			117,964
Cash flows from investing activities:
	Capital expenditures					(50,622	)		(20,679	)		(13,134	)
	Acquisitions and earnout payments, net of cash acquired					(24,570	)		(176,116	)		(2,018	)
	Investments in affiliates, net of distributions of capital					(23,774	)		5,999			(11,673	)
	Purchases of available-for-sale investments					(6,975	)		(224,440	)		(76,131	)
	Proceeds from sale of available-for-sale investments					8,032			252,050			48,541
	Proceeds from sale-leaseback of buildings, net and other					1,124			41,267			6,538

				Net cash used in investing activities		(96,785	)		(121,919	)		(47,877	)
Cash flows from financing activities:
	Borrowings on long-term debt					1,072,318			441,402			456,900
	Payments on long-term debt					(1,101,998	)		(350,736	)		(460,525	)
	Repurchases and retirements of stock					(109,395	)		(36,931	)		(37,145	)
	Excess tax benefits from stock-based compensation					6,881			3,425			2,606

				Net cash (used in) provided by financing activities		(132,194	)		57,160			(38,164	)
Effect of exchange rate changes on cash						(25,700	)		10,090			6,788

(Decrease)/increase in cash and cash equivalents						(9,823	)		18,900			38,711
Cash and cash equivalents, beginning of year					$	124,105			105,205			66,494

Cash and cash equivalents, end of year					$	114,282		$	124,105		$	105,205

Supplemental disclosures:
	Cash paid for interest				$	14,860		$	4,453		$	2,848
	Cash paid for income taxes				$	48,295		$	170,296		$	84,607

The accompanying notes are an integral part of these consolidated financial statements.

CH2M HILL COMPANIES, LTD. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

CH2M HILL Companies, Ltd. and subsidiaries (CH2M HILL) is a project delivery firm that was founded in 1946. CH2M HILL provides engineering, consulting, design, construction, procurement, operations and maintenance, and program management services to federal, state, municipal and local government entities and U.S. federal government agencies, as well as private industry, in the U.S. and internationally. CH2M HILL is an employee-owned Oregon corporation. A substantial portion of CH2M HILL's professional fees are derived from projects that are funded directly or indirectly by government entities.

The consolidated financial statements include the accounts of CH2M HILL and all of its wholly owned subsidiaries after elimination of all intercompany accounts and transactions. Partially owned affiliates and joint ventures are evaluated for consolidation in accordance with Financial Accounting Standards Board (FASB) Interpretation No. (FIN) 46 (revised December 2003), Consolidation of Variable Interest Entities (FIN 46(R)). The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the U.S. of America (U.S. GAAP). Certain amounts in prior years' consolidated financial statements have been reclassified to conform to the current year presentation.

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments and assumptions made when accounting for items and matters such as, but not limited to, revenue recognition, self insurance accruals, employee benefits, tax reserves, allowance for doubtful accounts, depreciation, amortization, asset valuations, reserves and other provisions and contingencies are reasonable, based on information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the periods presented. We also make estimates in our assessments of potential losses in relation to threatened or pending legal and tax matters. See Note 16—Commitments and Contingencies. Actual results could differ from our estimates.

CH2M HILL has authorized 100,000,000 shares of common stock, par value $0.01 per share, and 50,000,000 shares of Class A preferred stock, par value $0.02 per share. CH2M HILL's Restated Bylaws and Articles of Incorporation provide for the imposition of certain restrictions on the stock including, but not limited to, the right but not the obligation to repurchase shares upon termination of employment or affiliation, the right of first refusal and ownership limits.

All assets and liabilities of CH2M HILL's foreign subsidiaries are translated into U.S. dollars as of each balance sheet date. Revenues and expenses are translated at the average exchange rate for the period. Translation gains and losses are reflected in shareholders' equity as part of accumulated other

comprehensive loss. Transaction gains and losses are recognized as incurred in the consolidated statements of income.

CH2M HILL earns its revenue from different types of contracts, including cost-plus, fixed-price and time-and-materials. CH2M HILL evaluates each contractual arrangement to determine the appropriate authoritative literature to apply to recognize revenue. CH2M HILL primarily performs engineering and construction related services and recognizes revenue for these contracts on the percentage-of-completion method where progress towards completion is measured by relating the actual cost of work performed to date to the current estimated total cost of the respective contracts. In making such estimates, judgments are required to evaluate potential variances in schedule, the cost of materials and labor, productivity, liability claims, contract disputes, or achievement of contract performance standards.

Change orders are included in total estimated contract revenue when it is probable that the change order will result in an addition to contract value and can be estimated. Management evaluates when a change order is probable based upon its experience in negotiating change orders, the customer's written approval of such changes or separate documentation of change order costs that are identifiable. Losses on construction and engineering contracts in process are recognized in their entirety when the loss becomes evident and the amount of loss can be reasonably estimated.

CH2M HILL also performs operations and maintenance services. Revenue is recognized on operations and maintenance contracts on a straight-line basis over the life of the contract once CH2M HILL has an arrangement, delivery has occurred, the price is fixed or determinable and collectibility is reasonably assured.

Unbilled revenue represents the excess of contract revenue recognized over billings to date on contracts in process. These amounts become billable according to the contract terms, which usually consider the passage of time, achievement of certain milestones or completion of the project.

Billings in excess of revenue represent the excess of billings to date, per the contract terms, over revenue recognized on contracts in process.

CH2M HILL reduces accounts receivable by estimating an allowance for amounts that may become uncollectible in the future. Management determines the estimated allowance for uncollectible amounts based on their judgments in evaluating the aging of the receivables and the financial condition of CH2M HILL's clients, which may be dependent on the type of client and the client's current economic conditions.

CH2M HILL accounts for income taxes utilizing an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax effects of events that have been recognized in the financial statements or tax returns. In estimating future tax consequences, CH2M HILL generally considers all expected future events other than enactment of changes in the tax laws or rates. Deferred tax assets and liabilities are determined based on the difference between the tax bases of assets and liabilities and their reported amounts using enacted tax rates in effect for the year in which differences are expected to reverse. Annually, CH2M HILL determines the amount of undistributed foreign earnings invested indefinitely in its foreign operations. Deferred taxes are not provided on those earnings. In addition, the calculation of tax assets and liabilities involves uncertainties in the application of complex tax regulations. For income tax benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.

CH2M HILL maintains a cash management system which provides for cash in the bank sufficient to pay checks as they are submitted for payment and invests cash in excess of this amount in interest bearing short-term investments such as certificates of deposit and commercial paper. These investments have original short-term maturities of less than three months and are considered cash equivalents in the consolidated balance sheets and statements of cash flows.

Available-for-sale securities are carried at fair value, with unrecognized gains and losses reported in accumulated other comprehensive loss, net of taxes. Losses on available-for-sale securities are recognized when a loss is determined to be other than temporary or when realized. Fair values were estimated based on market prices, where available, or dealer quotes.

All additions, including betterments to existing facilities, are recorded at cost. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost of the assets and the related accumulated depreciation are removed from the accounts. Any gain or loss on retirements is reflected in operating income in the year of disposition.

Depreciation for owned property is based on the estimated useful lives of the assets using both straight-line and accelerated methods for financial statement purposes. Useful lives for buildings range from 10 to 30 years. Furniture, fixtures and equipment are depreciated over their useful lives from 2 to 10 years. Leasehold improvements are depreciated over the shorter of their estimated useful life or the remaining term of the associated lease.

CH2M HILL may acquire goodwill or other intangible assets in business combinations which are accounted for using the purchase method of accounting. Intangible assets are stated at fair value as of the date acquired in a business combination. CH2M HILL amortizes intangible assets with finite lives on a straight-line basis over their expected useful lives, currently up to seven years. Where there are no

legal, regulatory, contractual or other factors that would reasonably limit the useful life of the intangible asset, such as goodwill or tradenames, management has determined that those intangible assets have an indefinite life and therefore are not amortized.

Goodwill and intangible assets with indefinite lives are tested for impairment on an annual basis, or on an interim basis if events or circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment charge is recognized for any amount by which the carrying amount of goodwill or intangible assets with indefinite lives exceeds their fair value.

CH2M HILL reviews its finite-lived intangibles and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Assets which are held and used in operations are considered impaired if the undiscounted future cash flows from the asset do not exceed the net book value. If impaired, the assets are written down to their estimated fair value. CH2M HILL generally measures fair value by considering sale prices for similar assets or by discounting estimated future cash flows from the asset group using an appropriate discount rate.

Accumulated other comprehensive loss consists of foreign currency translation adjustments, benefit plan adjustments, net of tax of $18.6 million, and unrealized gains/losses on equity investments, net of tax of $0.1 million. These components are included in the consolidated statements of shareholders' equity and comprehensive income. Taxes are not provided on the foreign currency translation gains and losses as deferred taxes are not provided on the unremitted earnings of the foreign subsidiaries to which they relate.

The after-tax composition of accumulated other comprehensive loss consists of the following at December 31:

Financial instruments which potentially subject CH2M HILL to concentrations of credit risk consist principally of cash, cash equivalents, short term investments and trade receivables. CH2M HILL's cash, cash equivalents and short term investments are maintained in accounts held primarily in the U.S. with some accounts held by major banks and financial institutions located in Europe, Canada and Asia. Concentrations of credit risk relative to trade receivables are limited due to our diverse client base, which includes the U.S. federal government, various states and municipalities and a variety of U.S. and foreign corporations operating in a broad range of industries and geographic areas.

Contracts with the U.S. federal government and its prime contractors usually contain standard provisions for permitting the government to modify, curtail or terminate the contract for convenience of the government or such prime contractors if program requirements or budgetary constraints change. Upon such a termination, CH2M HILL is generally entitled to recover costs incurred, settlement expenses and profit on work completed prior to termination.

On January 1, 2007, CH2M HILL adopted Financial Accounting Standards Board (FASB) Interpretation No. (FIN) 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (FIN 48). FIN 48 establishes a process to measure the impact of an uncertainty associated with an income tax position. Under FIN 48, the effect of an income tax position on the income tax provision must be recognized at the amount that is more likely than not to be sustained upon examination by the relevant taxing authority. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. Under our previous policy, tax positions were recognized to the extent they were probable of being sustained. As a result of the implementation of FIN 48, we recognized a $1.4 million decrease in the liability for uncertain tax positions, which was accounted for as an increase to the January 1, 2007 balance of retained earnings. See Footnote 11 for further discussion of the impact of adopting FIN 48.

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements, (SFAS 157). This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles in the U.S., and expands disclosures about fair value measurements. The provisions of SFAS 157 apply under other accounting pronouncements that require or permit fair value measurements; it does not expand the use of fair value in any new circumstances. The provisions of this statement are to be applied prospectively as of the beginning of the fiscal year in which this statement is initially applied, with any transition adjustment recognized as a cumulative-effect adjustment to the opening balance of retained earnings. At the February 6, 2008 FASB meeting, it was agreed to defer for one year the effective date of SFAS 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (that is, at least annually). CH2M HILL adopted SFAS 157 on January 1, 2008.

On December 31, 2007, CH2M HILL adopted Statement of Financial Accounting Standard (SFAS) No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of SFAS No. 87, 88, 106 and 132(R) (SFAS 158), which requires employers to recognize the funded status of pension and other postretirement benefit plans on the balance sheet and to recognize changes in the funded status through comprehensive income in the year in which the changes occur. SFAS 158 also requires plan assets and benefit obligations to be measured as of the balance sheet date beginning December 31, 2008. See Footnote 14 for further discussion of the impact of adopting SFAS 158.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (SFAS 141(R)). SFAS 141(R) establishes principles and requirements for how an acquirer recognizes

and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141(R) also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS 141(R) is effective for CH2M HILL beginning January 1, 2009. This will change the accounting for acquisitions consummated after January 1, 2009.

Receivables are stated at net realizable values and consist of receivables billed to clients as well as receivables for which revenue has been earned but has not yet been billed. The U.S. federal government accounted for approximately 15% of CH2M HILL's net receivables at December 31, 2008 and 2007. No other customers exceeded 10% of total receivables at December 31, 2008 or 2007.

The change in the allowance for uncollectible accounts consists of the following for the years ended December 31:

CH2M HILL routinely enters into joint ventures to service the needs of its clients. Such arrangements are customary in the engineering and construction industry and generally are project specific and facilitate the completion of contracts that are jointly owned with CH2M HILL's joint venture partners. These joint ventures are formed to leverage the skills of the respective partners and include consulting, construction, design, project management and operations and maintenance contracts. CH2M HILL's risk of loss on joint ventures is similar to what the risk of loss would be if the project was self-performed, other than the fact that the risk is shared with CH2M HILL's partner.

CH2M HILL's interests in certain joint ventures are considered variable interest entities (VIE's) under FIN 46(R). A VIE is an entity with one or more of the following characteristics, (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support; (b) as a group, the holders of the equity investment at risk lack the ability to make certain decisions, or (c) the equity investors have voting rights that are not proportional to their economic interests. FIN 46(R) requires a VIE to be consolidated in the financial statements of the entity that is determined to be the primary beneficiary of the VIE. For VIE's where CH2M HILL is not the primary beneficiary and those entities which are unconsolidated voting interest entities, CH2M HILL accounts for its investments in affiliated unconsolidated companies primarily using the equity method of accounting.

CH2M HILL has classified entities identified as VIE's into two groups, the first of which includes those entities that CH2M HILL has consolidated under the guidance of FIN 46(R), as CH2M HILL is considered the primary beneficiary, and the second group which includes those entities which CH2M HILL was not required to consolidate. As of December 31, 2008, the assets and liabilities of VIE's that were consolidated were $142.9 million and $126.0 million, respectively. As of December 31, 2008, the assets and liabilities of the identified VIE's that were not consolidated were $255.9 million and $238.6 million, respectively.

As of December 31, 2008 and 2007, the investments in unconsolidated affiliates were $37.3 million and $35.3 million, respectively. CH2M HILL's proportionate share of net income or loss is included as equity in earnings of joint ventures and affiliated companies in the consolidated statements of income. In general, the equity investment in our joint ventures is equal to our current equity investment plus those entities' undistributed earnings. CH2M HILL provides certain services, including engineering, construction management and computer and telecommunications support, to these unconsolidated entities. For the years ended December 31, 2008, 2007 and 2006, CH2M HILL reported revenue from these services of $104.7 million, $78.2 million and $61.4 million, respectively. These services are billed to the joint ventures in accordance with the provisions of the joint venture agreements.

CH2M HILL has the following significant investments in affiliated unconsolidated companies accounted for under the equity method of accounting:



Domestic:
	AGVIQ—CH2M HILL Joint Venture I	49.0	%
	AGVIQ—CH2M HILL Joint Venture II	49.0	%
	AGVIQ—CH2M HILL Joint Venture III	49.0	%
	ATKINSON/CH2M HILL, Joint Venture	30.0	%
	CH2M HILL /URS Team, Joint Venture	50.0	%
	CH2M HILL/ Western Summit Constructors Joint Venture	50.0	%
	CH2M—WG Idaho, LLC	50.5	%
	Clark-Nexsen/CH2M HILL—Norfolk	50.0	%
	Coastal Estuary Services	49.9	%
	Connecting Idaho Partners	49.0	%
	HEBL, Inc.	100.0	%
	IAP-Hill, LLC	25.0	%
	Kaiser-Hill Company, LLC	50.0	%
	Milwaukee Transportation Partners, LLC	50.0	%
	MW/CH2M HILL HILL, Joint Venture	50.0	%
	Nana/VECO Joint Venture	50.0	%
	National Security Technologies, LLC	10.0	%
	OMI/Thames Water Stockton, Inc.	50.0	%
	Parsons CH2M HILL Program Management Consultants, Joint Venture	47.5	%
	Stockton D/B Joint Venture	50.0	%
	TIC/LG Groton II Joint Venture	25.0	%
	Washington Closure, LLC	30.0	%
Foreign:
	CH2M HILL BECA, Ltd.	50.0	%
	CH2M HILL—Kunwon PMC	54.0	%
	CH2M HILL/Parsons, Joint Venture	50.0	%
	CH2M PB JV, Pte, Ltd.	50.0	%
	CHDE Water	50.0	%
	CHBM Water Joint Venture	50.0	%
	CLM Delivery Partner, Limited	37.5	%
	Coniisa	33.3	%
	CPG Consultants—CH2M HILL NIP Joint Venture	50.0	%
	ECC-VECO, LLC	50.0	%
	EMH/APCC Joint Venture	40.0	%
	First Canadian Water Infrastructure	49.0	%
	Golden Crossing Constructors, Joint Venture	33.3	%
	Luggage Point Alliance	50.0	%
	Maroochy Alliance Joint Venture	40.0	%
	OMI BECA, Ltd.	50.0	%
	SMNM/VECO Joint Venture.	50.0	%
	Water Purification Scheme Alliance Joint Venture	50.0	%

Summarized unaudited financial information for CH2M HILL's unconsolidated affiliates as of and for the years ended December 31 is as follows:

The depreciation expense reflected in the consolidated statements of income totaled $55.2 million in 2008, $24.2 million in 2007 and $9.1 million in 2006.

The investment in securities held-to-maturity is due in April 2009 and accordingly is presented in other current assets as of December 31, 2008. See Note 9—Line of credit and long-term debt for further discussion.

On September 7, 2007, CH2M HILL purchased all of the outstanding stock of VECO and substantially all of VECO's operating businesses as part of a strategic initiative to expand operations into the energy industry. The results of VECO have been included in the consolidated financial statements since that date and are included in the Industrial operating segment. VECO's employees provide engineering, construction and field support services to the energy, resource and process industries in Alaska, Canada, the U.S., Russia and the Middle East.

In connection with the acquisition of VECO, the purchase agreement established a holdback contingency of $70.0 million relating to the potential future payment of known and unknown contingencies that may arise within three years after the date of acquisition. The amount is payable in various installments through September 2010. During 2008, CH2M HILL paid approximately $6.0 million of expenses on behalf of the former owners of VECO which were deemed distributions of the holdback contingency. In addition, during 2008, CH2M HILL made distributions from the holdback to the selling shareholders of VECO of $12.7 million. At December 31, 2008 and 2007, the outstanding balance payable under the holdback contingency was $51.3 million and $69.0 million, respectively.

In the fourth quarter of 2007, CH2M HILL acquired the assets and liabilities of Trigon EPC, LLC (Trigon) for $31.0 million. Trigon is an engineering consulting firm that provides engineering services for pipeline and related facilities, specializing in projects for the crude oil, refined products, natural gas and energy industries. The operating results of Trigon are included in the Industrial operating segment.

On February 29, 2008, CH2M HILL acquired Goldston Inc., a consulting engineering company providing marine, coastal, and municipal and transportation engineering services. The results of operations for this acquisition are reported in the Civil Infrastructure operating segment. The cost of the acquisition was $3.2 million.

Goodwill and the tradename were reviewed for impairment during the year ended December 31, 2008. Management's review of the recoverability of goodwill and the tradename indicated that there was no impairment. During 2008 and 2007, CH2M HILL recorded additional goodwill as a result of the acquisitions discussed above and earn-out targets being achieved on a previous acquisition.

($ in thousands)		Cost		Accumulated Amortization			Net finite-lived intangible assets

December 31, 2008
Contracts-in-place		$	2,513	$	(2,513	)	$	—
Contracted backlog			58,871		(38,038	)		20,833
Customer relationships			57,922		(10,651	)		47,271
Non-compete agreements and other			1,100		(711	)		389

	Total finite-lived intangible assets	$	120,406	$	(51,913	)	$	68,493

December 31, 2007
Contracts-in-place		$	2,513		(2,513	)	$	—
Contracted backlog			58,871		(9,679	)		49,192
Customer relationships			58,162		(2,338	)		55,824
Non-compete agreements and other			1,065		(474	)		591

	Total finite-lived intangible assets	$	120,611	$	(15,004	)	$	105,607

All intangible assets are being amortized over their expected lives up to seven years. The amortization expense reflected in the consolidated statements of income totaled $36.8 million in 2008, $11.0 million in 2007 and $4.7 million in 2006. These intangible assets are expected to be fully amortized in 2014. At December 31, 2008, the future estimated amortization expense related to these intangible assets is (in thousands):

Cash and cash equivalents, receivables, unbilled revenue, accounts payable and billings in excess of revenue are carried at cost, which approximates fair value due to their short maturities. Fair values of equity investments and short-term investments (available-for-sale securities), where a readily determinable market value exists, have been estimated using market prices or dealer quotes and are equal to the carrying value. The fair value of long-term debt, including the current portion, is estimated based on quoted market prices for the same or similar issues or on the current rates offered to CH2M HILL for debt of similar maturities. Management considers the market values and market prices level 1 inputs in accordance with the guidance of SFAS 157.

The estimated fair values of CH2M HILL's financial instruments as of December 31 are as follows:

CH2M HILL is party to a credit agreement which provides for a $500.0 million revolving credit facility (RLOC) which expires on August 31, 2012. The credit agreement includes an option to increase the initial borrowing capacity by up to an additional $250.0 million. While the credit agreement may be used for general corporate purposes and permitted acquisitions, it also provides that up to $250.0 million is available for the issuance of letters of credit to support various trade activities. At CH2M HILL's option, the credit agreement bears interest at a rate equal to either LIBOR plus 0.75% to 1.50%, or the lender's applicable base rate less a discount rate up to 0.25% based on CH2M HILL's ratio of funded debt to earnings before interest, taxes, depreciation and amortization. A commitment fee of approximately 0.10% to 0.25% per year on the unused portion of the line of credit is payable based on CH2M HILL's ratio of funded debt to earnings before interest, taxes, depreciation and

amortization. As of December 31, 2008, CH2M HILL had $100.0 million in borrowings outstanding on the RLOC.

In the first quarter, CH2M HILL entered into two derivative financial transactions to reduce the effects of interest rate changes on cash flows due to changes in interest rates on its outstanding debt. As of December 31, 2008, CH2M HILL had fixed its interest rate exposure on $50.0 million of the outstanding RLOC balance. The Company has not designated these derivative instruments as effective hedges as defined by SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and therefore, interest expense related to periodic settlements on these interest rate swaps and the change in fair value of these swap agreements is recognized in interest income and other in the current period. These interest rate swaps mature in March 2010. The fair value of these derivative liabilities are approximately $1.0 million at December 31, 2008.

The RLOC agreement contains financial and other covenants, as well as limitations on other indebtedness, liens, acquisitions, mergers and dispositions. The credit agreement also contains customary events of default, including a default of covenant, a material inaccuracy of representations or warranties, bankruptcy events, and a change in control. As of December 31, 2008, CH2M HILL was in compliance with the covenants required by the credit agreement.

At December 31, 2008, issued and outstanding letters of credit of $51.3 million were reserved against the borrowing base of the credit agreement, compared to $65.7 million at December 31, 2007.

CH2M HILL's nonrecourse and other long-term debt, as of December 31 consist of the following:

($ in thousands)		2008		2007

Nonrecourse:
	Mortgage payable in monthly installments to July 2020, secured by real estate, rents and leases. The note bears interest at 5.35%	$	14,277	$	15,126
	Mortgage payable in monthly installments to December 2016, secured by real estate. The note bears interest at 6.59%		3,734		4,591
	Mortgage payable in monthly installments to April 2009, secured by investment securities. The note bears interest at 8.06%		10,640		10,942

			28,651		30,659
Other:
	Revolving credit facility		100,000		116,000
	Equipment financing, due in monthly installments to September 2012, secured by equipment. These notes bear interest ranging from 6.00% to 8.00%		47,103		50,869
	Shareholder notes payable		121		259

Total debt			175,875		197,787
Less current portion of debt			24,652		12,458

Total long-term portion of debt		$	151,223	$	185,329

As a result of the acquisition of VECO, CH2M HILL holds U.S. Treasury securities as a contractual requirement for an outstanding nonrecourse mortgage. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because CH2M HILL has scheduled the maturity of these investments to meet debt service requirements of certain nonrecourse debt through April 2009 and has the ability and intent to hold these investments until maturity, these investments are classified as held-to-maturity and are included in prepaid and other assets. These investments are carried at cost, which approximates their fair value, and periodically evaluated for impairment. As of December 31, 2008, no impairment had occurred and the unrecognized holding losses are not significant.

At December 31, 2008, future principal payments on long-term debt are as follows (in thousands):

CH2M HILL has entered into certain noncancellable leases, which are being accounted for as operating leases. At December 31, 2008, future minimum lease payments are as follows (in thousands):

In September 2007, CH2M HILL exercised its option to purchase the properties comprising their corporate headquarters and three adjacent buildings located in Englewood, Colorado previously held under three operating lease arrangements for $95.9 million. As a result of exercising its purchase option, CH2M HILL paid a lease termination fee totaling $7.8 million and wrote off previously capitalized lease costs of $1.0 million. CH2M HILL contemporaneously sold these buildings to a third party for proceeds of $138.5 million and entered into an operating lease agreement to lease these buildings back from the new owner. The initial term of the lease is ten years, with an option to extend the term twice for either a ten or five year period. The sale resulted in a $42.6 million deferred gain which is being amortized over the 10 year term of the lease as a reduction of rent expense.

Rental expense charged to operations was $121.2 million, $119.4 million and $97.1 million during 2008, 2007 and 2006, respectively, including amortization of the deferred gain of $4.3 million, $1.4 million in 2008 and 2007, respectively. Certain of CH2M HILL's operating leases contain provisions for a specific rent-free period. CH2M HILL accrues rental expense during the rent-free period based on total expected rent payments to be made over the life of the related lease.

Income before provision for income taxes for the years ended December 31 consists of the following:

The provision for income taxes for the years ended December 31 consists of the following:

($ in thousands)				2008			2007			2006

Current income tax expense:
	Federal			$	38,715		$	29,967		$	58,458
	Foreign				(1,154	)		12,983			10,423
	State and local				14,725			12,438			12,423

		Total current income tax expense			52,286			55,388			81,304
Deferred income tax benefit:
	Federal				(22,507	)		(36,819	)		(44,048	)
	Foreign				2,462			3,797			(3,115	)
	State				(4,744	)		(10,644	)		(9,361	)

		Total deferred income tax benefit			(24,789	)		(43,666	)		(56,524	)

			Total income tax expense	$	27,497		$	11,722		$	24,780

The reconciliations of income tax computed at the U.S. federal statutory tax rate to CH2M HILL's effective income tax rate for the years ended December 31 are as follows:

($ in thousands)		2008			2007			2006

Pretax income		$	59,553		$	77,721		$	63,681
Federal statutory rate			35	%		35	%		35	%

Expected tax expense			20,844			27,202			22,288
Reconciling items:
	State income taxes, net of federal benefit		5,620			2,064			1,636
	Permanent expenses, exclusions and credits		(7,044	)		832			1,966
	Foreign permanent expenses, taxes, credits and other		7,136			(1,164	)		3,418
	Tax settlements		—			(15,259	)		—
	Other		941			(1,953	)		(4,528	)

Provision for income taxes		$	27,497		$	11,722		$	24,780

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31 are as follows:

($ in thousands)			2008			2007

Deferred tax assets:
	Net operating loss carryforwards		$	14,962		$	20,388
	Investments in affiliates			1,471			7,153
	Deferred recognition of income until collection occurs			15,734			4,763
	Accrued employee benefits			165,253			131,085

	Total deferred tax assets			197,420			163,389
	Valuation allowance			(22,700	)		(20,205	)

	Net deferred tax assets			174,720			143,184
Deferred tax liabilities:
	Depreciation and amortization			42,148			55,801

		Net deferred tax asset	$	132,572		$	87,383

A valuation allowance is required to be established for those deferred tax assets that it is more likely than not that they will not be realized. The above valuation allowances relate primarily to foreign net operating losses of $46.2 million and $66.7 million for the years ended December 31, 2008 and 2007, respectively. Included in the total valuation allowance at December 31, 2008 is $4.0 million which was acquired with the VECO acquisition, which will not have future income tax effect. Taxable income within the applicable foreign subsidiary must be reported in order for the deferred tax asset to be realized. The foreign net operating losses can be carried forward for varying terms depending on the foreign jurisdiction.

Undistributed earnings of CH2M HILL's foreign subsidiaries amounted to approximately $44.3 million at December 31, 2008. These earnings are considered to be indefinitely reinvested. Accordingly, no provision for U.S. federal and state income taxes or foreign withholding taxes has been made. Upon distribution of those earnings, CH2M HILL would be subject to U.S. income taxes

(subject to a reduction for foreign tax credits) and withholding taxes payable to the various foreign countries. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable; however, the potential foreign tax credit associated with the deferred income would be available to reduce the resulting U.S. tax liabilities.

The tax benefit from share-based compensation awards for the years ended December 31, 2008 and 2007 was $6.9 million and $3.5 million, respectively. These amounts are reflected as additions to additional paid-in capital in the consolidated statements of shareholders' equity and comprehensive income and are reported as financing activities in the 2008 and 2007 consolidated statements of cash flows.

As of December 31, 2008 and 2007, we had $25.4 million and $10.6 million, respectively, recorded as a liability for uncertain tax positions. While our 2008 effective tax rate was favorably impacted by the recognition of additional research and experimentation tax credits for prior years, an additional liability for the uncertainty related to research and experimentation credits was also established. A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 31, 2008 is as follows (in thousands):

Included in the balance at December 31, 2008, are $21.2 million in tax positions that if recognized would affect the effective tax rate. It is also reasonably possible that of the total amount of unrecognized tax benefits at December 31, 2008, the reserve could experience a significant change within twelve months of the reporting date related to federal and state research and experimentation tax credits as a result of tax authority settlement and statute expiration. The estimated range of unrecognized change is zero to approximately $5.5 million as of December 31, 2008.

CH2M HILL recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2008 and December 31, 2007, CH2M HILL has approximately $3.8 million and $1.5 million, respectively, of accrued interest and penalties related to uncertain tax positions.

CH2M HILL files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as the U.S. and Canada. With few exceptions, CH2M HILL is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities in major tax jurisdictions for years before 2001.

Basic earnings per share (EPS) excludes the dilutive effect of common stock equivalents and is computed by dividing net income by the weighted-average number of shares outstanding during the period. Diluted EPS includes the dilutive effect of common stock equivalents, which consists of stock options, and is computed using the weighted-average number of shares and common stock equivalents outstanding during the period.

Reconciliations of basic and diluted EPS for the years ended December 31 are as follows:

CH2M HILL has two nonqualified deferred compensation plans that provide benefits payable to officers and certain highly compensated employees at specified future dates, upon retirement, or death. Under one plan, a participant could elect to defer base compensation and incentive compensation, in cash or common stock. Under another plan, a participant, whose 401(k) Plan contributions are limited by the Employee Retirement Income Security Act (ERISA), could elect to defer additional base compensation to which CH2M HILL may make a matching contribution. It is also used by CH2M HILL to provide additional retirement benefits for certain of its senior executives at levels to be determined from time-to-time by the Board of Directors.

These deferred compensation plans are unfunded; therefore, benefits are paid from the general assets of CH2M HILL. The participant's cash deferrals earn a return based on the participant's investment in several hypothetical investment options. Each hypothetical investment option is based on an investment fund that is similar to the 401(k) Plan. All deferrals of common stock must remain invested in common stock and are distributed in common stock.

During 2008, the return on the plan assets exceed the liability due to plan participants by $14.3 million and thus compensation expense was decreased by this amount. Compensation expense was $4.3 million, and $4.1 million for the years ended December 31, 2007, and 2006, respectively. The total of participant deferrals, which is reflected in long-term employee related liabilities and other, was $33.8 million and $44.5 million at December 31, 2008 and 2007, respectively. The decrease in liabilities is a result of declines in market values.

CH2M HILL's 1999 and 2004 stock option plans were approved by the Board of Directors and shareholders to reserve 8,000,000 and 5,000,000 shares, respectively, of CH2M HILL common stock for issuance upon exercise of stock options granted under these plans. Stock options are granted at an exercise price equal to the fair market value of CH2M HILL's common stock at the date of grant. Stock options granted generally become exercisable 25%, 25% and 50% after one, two and three years, respectively, and have a term of five years from date of grant. The 1999 stock option plan expired on December 31, 2008. The following table summarizes the activity relating to the 1999 and 2004 stock option plans during 2008:

The weighted-average remaining contractual term for all options outstanding at December 31, 2008 and 2007 was 2.8 years, and the aggregate intrinsic value was $38.1 million and $45.8 million, respectively. The weighted-average remaining contractual term for options vested and exercisable at December 31, 2008 and 2007 was 1.7 years and 1.5 years, respectively, and the aggregate intrinsic value was $23.7 million and $25.6 million, respectively. The remaining unrecognized compensation expense related to nonvested awards as of December 31, 2008 is $7.0 million. CH2M HILL expects to recognize this compensation expense over the weighted average remaining recognition period of 1.7 years, subject to forfeitures that may occur during that period. CH2M HILL received $3.5 million, $2.9 million and $3.3 million from options exercised during the years ended December 31, 2008, 2007 and 2006, respectively. CH2M HILL's stock option plans also allow participants to satisfy the exercise price by tendering shares of company stock that have been owned by the participants for at least six months. The intrinsic value associated with exercises was $13.1 million, $8.7 million and $6.7 million during the years ended December 31, 2008, 2007 and 2006, respectively.

CH2M HILL adopted SFAS 123(R) on January 1, 2006, using the prospective method. The provisions of SFAS 123(R) apply to new grants on or after January 1, 2006. CH2M HILL measures the fair value of each stock option grant at the date of grant using a Black-Scholes option pricing model. The weighted-average grant date fair value of options granted during the twelve months ended

December 31, 2008 and 2007 was $5.90 and $4.49, respectively. The following assumptions were used in determining the fair value of options granted during 2008 and 2007:

CH2M HILL estimates the expected term of options granted based on historical experience of employee exercise behavior. CH2M HILL estimates the volatility of its common stock by using the weighted-average of historical volatility over the same period as option term. CH2M HILL uses the Treasury Yield Curve rates for the risk-free interest rate in the option valuation model with maturities similar to the expected term of the options. CH2M HILL does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option valuation model. CH2M HILL is required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. CH2M HILL uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation expense only for those awards that are expected to vest. All stock-based payment awards are amortized on a straight-line basis over the requisite service periods of the awards.

The total compensation expense recognized under SFAS 123(R) for stock options granted in 2008, 2007 and 2006 was $4.1 million, $2.2 million and $0.5 million, respectively. No compensation expense related to stock options was required prior to the adoption of SFAS 123(R) on January 1, 2006.

In November 1999, CH2M HILL established the Payroll Deduction Stock Purchase Plan (PDSPP) which provides for the purchase of common stock at 90% of the market value as of the date of purchase through payroll deductions by participating employees. CH2M HILL has reserved 13,000,000 shares of common stock to be issued under the PDSPP. Eligible employees may purchase common stock totaling up to 15% of an employee's compensation through payroll deductions. An employee cannot purchase more than $25,000 of common stock under the PDSPP in any calendar year. The PDSPP is intended to qualify under Section 423 of the Internal Revenue Code (IRC). The PDSPP is not intended to qualify under Section 401(a) of the IRC and is not subject to ERISA. Our PDSPP is non-compensatory under SFAS 123(R) since the plan is available to all shareholders and incorporates no option features such as a look-back period. Accordingly, no compensation expense is recognized in the financial statements for the PDSPP. During the years ended December 31, 2008, 2007 and 2006, a total of 784,125 shares, 667,407 shares and 712,919 shares, respectively, were issued under the PDSPP, for total proceeds of $21.7 million, $13.5 million and $11.9 million, respectively.

In January 2000, CH2M HILL established the Phantom Stock Plan, which provides eligible individuals with added incentives to continue in the long-term service of CH2M HILL. Eligible individuals are generally individuals who are not residents of the U.S. Phantom stock grants are 100% vested on the grant date and may be redeemed after six months from the grant date. The value of

phantom stock is equal to the fair market value of CH2M HILL's common stock. All amounts granted under the Phantom Stock Plan are payable in cash only and are generally granted in connection with the short and long term incentive plans. Compensation expense under this plan is based on the value of the units on the date of grant.

During the years ended December 31, 2008, 2007 and 2006, a total of 2,050, 3,619 and 2,120 phantom stock units, respectively, were granted under the Phantom Stock Plan. At December 31, 2008, there were 60,969 units outstanding.

The weighted-average fair values of the units granted under the Phantom Stock Plan during 2008, 2007 and 2006 were $30.32, $19.63 and $18.72, respectively.

Compensation expense related to the Phantom Stock Plan during 2008, 2007 and 2006 was $0.3 million, $0.8 million, and $0.4 million, respectively.

The following table summarizes the activity relating to the Phantom Stock Plan during 2008:

In February 1999, CH2M HILL established the Stock Appreciation Rights (SARs) Plan. Eligible individuals are generally individuals who are not residents of the U.S. SARs are granted at an exercise price equal to the fair market value of CH2M HILL's common stock and generally become exercisable 25%, 25% and 50% after one, two and three years, respectively, and have a term of five years from the date of the grant. All amounts granted under the SARs Plan are payable in cash only. Compensation expense under this plan is based on the vesting provisions and the fair market value of CH2M HILL's common stock.

Compensation expense related to the SARs Plan amounted to $0.4 million, $1.3 million and $0.5 million in 2008, 2007 and 2006, respectively.

The following table summarizes the activity relating to the SARs Plan during 2008:

In January 2000, CH2M HILL established the Short Term Incentive Plan (STIP) to aid in the motivation, recruitment, retention and reward of employees. Management determines which employees, directors, and eligible consultants participate in the STIP. During the years ended December 31, 2008, 2007 and 2006, a total of 604,333 shares, 634,680 shares and 599,471 shares, respectively, were issued under the STIP.

The fair values of the shares issued under the STIP during 2008, 2007 and 2006 were $30.32, $19.63 and $18.72, respectively.

Compensation expense related to common stock awards under the STIP amounted to $11.2 million, $18.8 million and $12.6 million in 2008, 2007 and 2006, respectively.

In January 1999, CH2M HILL established the Long Term Incentive Plan (LTIP) to reward certain executives, project managers, and technologists for the creation of value in the organization through the achievement of specific long-term (3 year) goals of earnings growth and strategic initiatives. The Board of Directors of CH2M HILL determines which employees are eligible to participate in the LTIP in any program year and a new plan is established each year.

During the years ended December 31, 2008, 2007 and 2006, a total of 262,837 shares, 364,825 shares and 181,351 shares, respectively, were issued under the LTIP at a fair value of $30.32, $19.63 and $18.72 per share, respectively.

Compensation expense related to common stock awards under the LTIP amounted to $11.8 million, $11.1 million and $9.4 million in 2008, 2007 and 2006, respectively.

In January 2000, CH2M HILL established the Restricted Stock Plan which provides eligible individuals with added incentives to continue in the long-term service of CH2M HILL. The awards are made for no consideration and vest over various periods, but are considered outstanding at the time of grant. During the years ended December 31, 2008, 2007 and 2006, a total of 70,405 shares, 263,942 shares and 357,783 shares, respectively, were granted under the Restricted Stock Plan.

CH2M HILL recognizes compensation costs, net of estimated forfeitures, over the vesting term based on the fair value of the restricted stock at the date of grant. The amount of compensation expense recognized under the Restricted Stock Plan was $3.8 million, $3.0 million and $2.6 million for the years ended December 31, 2008, 2007 and 2006, respectively. In determining the amount of compensation expense, CH2M HILL has estimated that forfeitures of restricted stock shares will be less than 2% of total restricted stock shares outstanding based upon prior experience. As of December 31, 2008, there was $5.7 million of unrecognized compensation costs related to non-vested restricted stock grants. The cost is expected to be recognized over a weighted average period of 2.9 years.

The following table summarizes the activity relating to the Restricted Stock Plan during 2008:

The weighted-average fair values of the shares granted under the Restricted Stock Plan during 2008, 2007 and 2006 were $30.71, $22.72 and $18.08, respectively.

The Retirement and Tax-Deferred Savings Plan (401(k) Plan) is a profit sharing plan that includes a cash or deferred arrangement that is intended to qualify under Sections 401(a) and 401(k) of the Internal Revenue Code. Employees are eligible to participate in the 401(k) Plan on the first date of hire with respect to employee contributions and matching contributions. Each eligible employee begins to participate in the 401(k) Plan with respect to defined contributions as of the first day of the first month that begins on or after the eligible employee completes a twelve-month period of service during which the employee is credited with at least 1,000 hours of service.

The 401(k) Plan allows for both matching cash and stock contributions. Matching contributions may be made in an amount that is based on a percentage of the employee's contributions for the calendar quarter up to 4% of the employee's base compensation.

Participants of the 401(k) Plan are, at all times, 100% vested in the employee contribution account. Amounts allocated to a participant's defined contribution account and matching contribution account generally vest over six years of completed service.

Expenses related to matching contributions made in cash for the 401(k) Plan for 2008, 2007 and 2006 were $25.9 million, $22.6 million and $18.7 million, respectively. Expenses related to defined contributions made in common stock for the 401(k) Plan for 2008, 2007 and 2006 were $14.9 million, $12.1 million and $10.9 million, respectively.

CH2M HILL has three noncontributory defined benefit pension plans. Plan benefits in two of the plans were frozen while one plan remains active. Benefits are based on years of service and compensation during the span of employment.

CH2M HILL sponsors a medical benefit plan for retired employees of certain subsidiaries. The plan is contributory, and retiree premiums are based on years of service at retirement. The benefits contain limitations and a cap on future cost increases. CH2M HILL funds postretirement medical benefits on a pay-as-you-go basis.

CH2M HILL also has a supplemental executive retirement plan that will provide an additional retirement benefit to certain senior executives if they remain employed and retire from CH2M HILL on or after age 65. The amount of the annual benefit, which may change from time-to-time based on the decision of the Board of Directors of CH2M HILL, currently is equal to 50% of the participant's projected base salary for fiscal year 2008. The benefit is reduced by the value of the offsetting retirement benefits paid by CH2M HILL under other plans. For the years ended December 31, 2008, 2007 and 2006, CH2M HILL expensed $0.8 million, $1.0 million, and $1.4 million, respectively, for the anticipated benefit obligations.

On December 31, 2007, the Company adopted SFAS 158 which requires employers to (i) recognize the funded status of their defined benefit pension and other postretirement plans on the consolidated balance sheet, (ii) recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost and (iii) measure defined benefit plan assets and obligations as of the date of the employer's statement of financial position. The Company adopted the recognition and disclosure requirements of SFAS 158 as of December 31, 2007. The impact of adopting these provisions was an increase in net liabilities for pension and postretirement health care benefits of $14.0 million and an increase in accumulated other comprehensive loss of $8.4 million, net of taxes. In accordance with SFAS 158, the Company changed its measurement date from October 31 to December 31 in 2008. The impact of the change in the measurement date was not significant and proportionaltely allocated to current period benefit cost and AOCI.

The Company expects to make contributions of $1.4 million to the pension plans in 2009. The pension, non-qualified pension and post-retirement healthcare benefit payments, including expected future services, are expected to be paid from plan assets and operating cash flow as follows:

The measurement dates used to determine pension, non-qualified pension and other post-retirement benefits for the plans are December 31, 2008, and October 31 for 2007 and 2006. The actuarial assumptions used to compute the net pension benefit expense, non-qualified pension benefit

expense and post-retirement benefit expense are based upon information available as of the beginning of the year, as presented in the following table.

		Pension Plans									Non-Qualified Pension Plans									Post-Retirement Benefit Plans

		2008			2007			2006			2008			2007			2006			2008			2007			2006
Actuarial assumptions at beginning of year:
	Discount rate		6.25	%		5.80	%		5.75	%		6.25	%		5.80	%		5.75	%		6.25	%		5.80	%		5.75	%
	Rate of compensation increase		4.00	%		4.00	%		4.00	%		na			na			na			na			na			na
	Expected long-term rate of return on plan assets		8.00	%		8.00	%		8.00	%		na			na			na			na			na			na
	Initial healthcare costs trend rate		na			na			na			na			na			na			6.51	%		6.51	%		6.65	%
	Ultimate healthcare cost trend rate		na			na			na			na			na			na			4.50	%		4.50	%		4.05	%
	Year ultimate trend rate is reached		na			na			na			na			na			na			2011			2011			2011

The components of the pension benefit expense, non-qualified pension benefit expense and post-retirement benefit expense for the years ended December 31 are detailed below:

	Pension Plans									Non-Qualified Pension Plans						Post-Retirement Benefit Plans

($ in thousands)	2008			2007			2006			2008		2007		2006		2008		2007		2006
Service costs	$	4,229		$	4,267		$	4,128		$	168	$	275	$	249	$	3,510	$	2,988	$	1,475
Interest costs		9,213			8,649			8,183			324		325		357		2,655		2,005		1,287
Expected return on plan assets		(11,550	)		(9,866	)		(9,012	)		—		—		—		—		—		—
Amortization of transition (asset)/obligation		(2	)		(9	)		(9	)		—		—		—		349		299		299
Amortization of prior service costs		87			87			87			297		297		413		394		541		27
Recognized net actuarial loss (gain)		91			1,674			2,066			6		100		334		203		209		—

Net expense included in current income	$	2,068		$	4,802		$	5,443		$	795	$	997	$	1,353	$	7,111	$	6,042	$	3,088

The actuarial assumptions used to compute the benefit obligations for the plans which are based upon information available as of December 31 are:

The discount rate assumptions are set annually based on several factors such as: a) the prevailing market rates for high-quality, fixed-income debt instruments that, if the obligation was settled at the measurement date, would provide the necessary future cash flows to pay the benefit obligation when due and b) the duration of the plan liabilities as compared to the Citigroup pension discount curve.

The following table summarizes the change in benefit obligation for the pension, non-qualified pension and post-retirement benefit plans and change in plan assets for the pension plans for the years ended December 31:

		Pension Plans						Non-Qualified Pension Plans						Post-Retirement Benefit Plans

($ in thousands)		2008			2007			2008			2007			2008			2007
Benefit obligation accrued at beginning of year		$	150,263		$	151,739		$	5,305		$	5,771		$	36,838		$	25,731
	Service cost		4,229			4,267			168			275			3,514			2,987
	Interest cost		9,213			8,649			330			325			2,658			2,005
	Plan contributions		—			—			—			—			2,527			1,192
	Actuarial loss (gain)		3,788			(9,514	)		1,564			(833	)		273			7,358
	Benefits paid		(6,421	)		(4,878	)		(953	)		(233	)		(3,909	)		(2,435	)

Benefit obligation at end of year		$	161,072		$	150,263		$	6,414		$	5,305		$	41,901		$	36,838

Fair value of plan assets at beginning of year			146,395			124,799			—			—			—			—
	Actual (loss) gain on plan assets		(37,329	)		21,996			—			—			—			—
	Employer & employee contributions		2,812			4,478			—			—			—			—
	Benefits paid		(6,421	)		(4,878	)		—			—			—			—

Fair value of plan assets at end of year		$	105,457		$	146,395			—			—			—			—

The weighted-average asset allocations for the benefit plans as of December 31, 2008 and 2007 by asset category are as follows:

The investment philosophy for the pension plans is based on a balanced asset approach allocated primarily between equity securities and debt securities. At December 31, 2008, the equity security holdings were distributed in large and small cap index funds and an international fund. The debt securities consist of two fixed income funds. The Company uses long-term historical actual return experience with consideration of the expected investment mix of the plans' assets, as well as future estimates of long-term investment returns to develop its expected rate of return assumption used in calculating the net periodic pension cost.

The following table summarizes the effect of a 1% change in the health care cost trend rate (HCCTR) on the postretirement obligation and costs:

The following table presents the funded status of the pension, non-qualified pension and post-retirement benefit plans at December 31, 2008:

($ in thousands)			Pension Plans			Non-Qualified Pension Plans			Post-Retirement Benefit Plans

Projected benefit obligation			$	161,072		$	6,414		$	—
Accumulated benefit obligation				—			—			41,901
Fair value of plan assets				105,457			—			—

Underfunded status			$	(55,615	)	$	(6,414	)	$	(41,901	)

Amounts recognized in accumulated other comprehensive income consist of:
	Net actuarial loss		$	63,324		$	1,678		$	6,586
	Net prior service cost			343			712			3,289
	Transition obligation (asset)			—			—			1,147

		Total	$	63,667		$	2,390		$	11,022

Amounts to be recognized in 2009 as a component of net periodic cost:
	Net actuarial loss		$	4,382		$	171		$	185
	Transition obligation (asset)			—			—			299
	Net prior service cost (credit)			87			297			336

		Total	$	4,469		$	468		$	820

The following table presents the funded status of the pension, non-qualified pension and post-retirement benefit plans at December 31, 2007:

			Pension Plans

			Pension Plans					Non-Qualified Pension Plans			Post-Retirement Benefit Plans
($ in thousands)			Overfunded		Underfunded			Non-Qualified Pension Plans			Post-Retirement Benefit Plans
Projected benefit obligation			$	94,293	$	55,970		$	5,305		$	—
Accumulated benefit obligation				—		—			—			36,838
Fair value of plan assets				95,812		50,583			—			—

Funded (unfunded) status			$	1,519	$	(5,387	)	$	(5,305	)	$	(36,838	)

Amounts recognized in accumulated other comprehensive income consist of:
	Net actuarial loss		$	10,562	$	515		$	124		$	6,791
	Net prior service cost			—		444			1,008			3,705
	Transition obligation (asset)			—		(2	)		—			1,496

		Total	$	10,562	$	957		$	1,132		$	11,992

Amounts to be recognized in 2008 as a component of net periodic cost:
	Net actuarial loss		$	91	$	—		$	6		$	28
	Transition obligation (asset)			—		(2	)		—			299
	Net prior service cost (credit)			—		87			297			541

		Total	$	91	$	85		$	303		$	868

CH2M HILL provides services to clients through three operating segments: Federal, Civil Infrastructure and Industrial. The structure is intended to provide for better decision making on an enterprise-wide basis. The Federal segment generally provides a comprehensive range of services to the U.S. federal government and to international governments. The Civil Infrastructure segment generally provides a comprehensive range of services to various state and local governments including foreign cities. The Industrial segment generally provides a comprehensive range of services to various private sector clients.

CH2M HILL evaluates performance based on several factors, of which the primary financial measure is operating income. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. CH2M HILL uses operating income (loss) as its measurement of segment profit (loss). Other includes the elimination of unallocated corporate expenses.

Certain financial information for each segment is provided below (in thousands):

In September and October of 2007, the Company acquired VECO and Trigon, respectively, and as a result revenue and depreciation and amortization reported by the Industrial segment increased substantially. Substantially all of CH2M HILL's $134.8 million of goodwill is allocated to the Industrial segment. During 2008, a significant loss was recognized in the Civil Infrastructure segment on a transportation project held within one of our joint ventures. The equity in earnings in our Federal segment has increased year over year due to favorable results related to the London 2012 Olympic Delivery Authority Project. During the year ended 2006, the Industrial segment recognized a loss related to a manufacturing facility project. This project experienced increased costs due to project delivery issues and increased commodity prices. In addition, the clean up efforts required from Hurricane Katrina caused significant shortages in experienced craft laborers in the area and thus materially increased wage rates and reduced overall productivity. After completion of this contract in 2006, CH2M HILL experienced significant operational improvements in 2007.

CH2M HILL derived approximately 26%, 28% and 35% of its total revenues from contracts with the U.S. federal government in 2008, 2007 and 2006, respectively.

Revenue is attributed to the country in which the services are performed. Although CH2M HILL provides services in numerous countries, no single country outside of the U.S. accounted for a significant portion of the total consolidated revenue. Total U.S. and international revenue for the years ended December 31 were as follows:

CH2M HILL maintains a variety of commercial commitments that are generally made available to provide support for various provisions in its engineering and construction contracts. Letters of credit are provided to clients in the ordinary course of the contracting business in lieu of retention or for performance and completion guarantees on engineering and construction contracts. CH2M HILL also posts surety bonds, which are contractual agreements issued by a surety, for the purpose of guaranteeing our performance on contracts. Bid bonds are also issued by a surety to protect owners and are subject to full or partial forfeiture for failure to perform obligations arising from a successful bid.

Commercial commitments outstanding as of December 31, 2008 are summarized below:

CH2M HILL is party to various contractual guarantees and legal actions arising in the normal course of business. Because a large portion of CH2M HILL's business comes from federal, state and municipal sources, CH2M HILL's procurement practices at times are also subject to review and occasional investigations by U.S. and state attorneys offices. Such state and U.S. government investigations, whether relating to government contracts or conducted for other reasons, could result in administrative, civil or criminal liabilities, including repayments, fines or penalties or could lead to suspension or debarment from future U.S. government contracting. These investigations often take years to complete and many result in no adverse action. Damages assessed in connection with and the cost of defending any such actions could be substantial. While the outcomes of pending proceedings are often difficult to predict, CH2M HILL's management estimates that the levels of insurance coverage (after retentions and deductibles) are generally adequate to cover CH2M HILL's liabilities, if any, with regard to such claims. Any amounts that are probable of payment including legal fees incurred to defend, by CH2M HILL are accrued when such amounts are estimable.

On July 27, 2007, our subsidiary, CH2M Hanford Group ("CH2M Hanford") caused a spill of approximately 85 gallons of radioactive waste, during routine maintenance operations on the Hanford Reservation owned by the U.S. Department of Energy ("DOE"). No one was injured, and the DOE's accident investigation concluded that "[because] of low concentrations and short duration of the exposure, it is not likely that the spill event caused an overexposure or chronic health impacts." CH2M Hanford took all prompt and appropriate steps to formulate and implement a corrective action plan that has been accepted by the DOE. In connection with the event, the DOE's Office of Health, Safety and Security has conducted an investigation under its Price Anderson Act nuclear safety authority. The DOE has not yet taken any formal action against CH2M Hanford as a result of this investigation. The DOE has broad discretion in setting fines, but it takes into account a contractor's prompt acceptance of responsibility and the formulation of an appropriate corrective action plan, which is what CH2M HILL has done to what we believe to be the DOE's satisfaction. The Washington Department of Ecology imposed a fine of $500,000 to DOE under the Tri-Party Agreement as a result of the spill. A settlement agreement was negotiated whereby $250,000 of the fine was held in abeyance for twelve months pending no further incidents, CH2M HILL contributed certain equipment to the Tri-County emergency response team and the DOE performed services to improve emergency radio response. Finally, the Environmental Protection Agency ("EPA") proposed to fine both the DOE and CH2M HILL in connection with the spill. CH2M HILL ultimately settled that fine for an immaterial amount. CH2M HILL's management does not believe that this event will materially impact CH2M HILL's business or results of operations.

On September 7, 2007, CH2M HILL acquired VECO and substantially all of its operating businesses. Prior to the acquisition, on May 2, 2007, the founder, then chief executive officer and principal shareholder of VECO, Bill Allen, entered into a plea agreement with the U.S. Department of Justice pursuant to which he agreed to plead guilty to certain criminal charges involving bribery of public officials, violation of campaign contribution laws, and tax fraud. In connection with the investigation of the allegations against Mr. Allen, the U.S. Department of Justice, the Internal Revenue Service and certain State of Alaska government agencies commenced investigations of VECO and certain of its other employees. In the process of reviewing VECO's business and operations prior to the acquisition, CH2M HILL engaged in special due diligence designed to address concerns related to the conduct of VECO's past operations and various investigations underway by the Department of Justice, the Internal Revenue Service and certain State of Alaska government agencies. Although CH2M HILL was satisfied with the results of the due diligence review, no assurances can be given that the ongoing investigations will not result in civil or criminal charges against VECO, now a subsidiary of CH2M HILL. Any such charges and related publicity could have an adverse effect on CH2M HILL's reputation in the business community or future business operations.

CH2M HILL's quarterly financial information for the years ended December 31, 2008 and 2007 is as follows:

(In thousands except per share amounts)		First Quarter		Second Quarter		Third Quarter		Fourth Quarter		For the Year Ended

2008
Revenue		$	1,254,653	$	1,339,640	$	1,446,979	$	1,548,634	$	5,589,906
Operating income			12,112		9,927		19,454		31,488		72,981
Net income			5,832		2,925		9,910		13,389		32,056
Net income per common share
	Basic	$	0.17	$	0.09	$	0.29	$	0.40	$	0.96
	Diluted	$	0.17	$	0.08	$	0.29	$	0.40	$	0.93
2007
Revenue		$	959,091	$	1,000,755	$	1,162,178	$	1,254,214	$	4,376,238
Operating income			12,071		22,505		21,949		22,593		79,118
Net income			8,009		24,685		18,488		14,817		65,999
Net income per common share
	Basic	$	0.25	$	0.75	$	0.56	$	0.45	$	2.01
	Diluted	$	0.24	$	0.74	$	0.55	$	0.44	$	1.97

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Englewood, Douglas County, State of Colorado, on February 23, 2009.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates stated, through their attorney-in-fact as appointed in the power of attorney of February 23, 2009 included as Exhibit 24.1 filed herewith.


(MARK ONE)
ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO


Oregon		93-0549963
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

9191 South Jamaica Street, Englewood, CO		80112-5946
(Address of principal executive offices)		(Zip Code)


Large accelerated filer o		Accelerated filer ý		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

($ in millions)	2008		2007

Federal	$	4,271.0	$	935.6
Civil Infrastructure		2,015.4		2,015.1
Industrial		1,927.7		2,594.2

	$	8,214.1	$	5,544.9

	2008								2007							Change

($ in millions)	Revenue		Equity in Earnings			Operating Income (Loss)			Revenue		Equity in Earnings		Operating Income (Loss)			Revenue				Equity in Earnings			Operating Income (Loss)
Federal	$	1,471.6	$	41.3		$	66.3		$	1,246.6	$	30.0	$	72.0		$	225.0	18.0	%	$	11.3		$	(5.7	)	(7.9	%)
Civil Infrastructure		1,532.2		(12.1	)		42.1			1,451.5		12.9		73.0			80.7	5.6	%		(25.0	)		(30.9	)	(42.3	%)
Industrial		2,586.1		5.0			22.5			1,678.2		1.3		(16.5	)		907.9	54.1	%		3.7			39.0		236.4	%
Corporate		—		—			(57.9	)		—		—		(49.4	)		—	—			—			(8.5	)	17.2	%

Total	$	5,589.9	$	34.2		$	73.0		$	4,376.3	$	44.2	$	79.1		$	1,213.6	27.7	%	$	(10.0	)	$	(6.1	)	(7.7	%)

Period			Average Price Paid per Share

October(a)		4,598	$	31.25	—	—
November		—		—	—	—
December(a)(b)		2,008,457	$	30.77	—	—

	Total	2,013,055	$	30.77	—	—


Cash on hand					$	114.3
Available for sale securities						0.3
Line of credit capacity		$	500.0
Outstanding borrowings			(100.0	)
Issued letters of credit			(51.3	)

	Net credit capacity available					348.7

	Total available capacity				$	463.3

		Amount of Commitment Expiration Per Period

($ in millions) Contractual Obligations		Less than 1 Year		1-3 Years		4-5 Years		Over 5 Years		Total Amount Committed
Letters of credit		$	45.0	$	6.3	$	—	$	—	$	51.3
Total debt			24.7		28.1		111.5		11.6		175.9
Interest payments			8.1		13.6		5.7		6.6		34.0
Operating lease obligations			129.3		184.7		129.3		150.5		593.8
Surety and bid bonds			1,231.0		426.4		—		—		1,657.4

	Total	$	1,438.1	$	659.1	$	246.5	$	168.7	$	2,512.4


Report of Independent Registered Public Accounting Firm—KPMG LLP			F-1
Report on Internal Control Over Financial Reporting—KPMG LLP			F-2
Consolidated Balance Sheets at December 31, 2008 and 2007			F-3
Consolidated Statements of Income for the Years Ended December 31, 2008, 2007 and 2006			F-4
Consolidated Statements of Shareholders' Equity and Comprehensive Income for the Years Ended December 31, 2008, 2007 and 2006			F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006			F-6
Notes to Consolidated Financial Statements			F-7

Exhibit Number			Description

	3.1		Restated Articles of Incorporation of CH2M HILL Companies, Ltd. filed as Exhibit 3.1 on Quarterly Report on Form 10-Q on May 8, 2008 Amendment No. 2 on Form S-1 to Registration Statement on Form S-3, on August 3, 2001 (File No. 333-60700)
	3.2		Restated Bylaws of CH2M HILL Companies, Ltd. filed as Exhibit 3.2 on Quarterly Report on Form 10-Q on May 8, 2008

Exhibit Number			Description

	10.19		Change of Control Agreement between CH2M HILL Companies, Ltd. and Thomas G. Searle filed as Exhibit 10.8 on Form 10-Q, on November 4, 2008
	10.20		Change of Control Agreement between CH2M HILL Companies, Ltd. and Garry M. Higdem filed as Exhibit 10.9 on Form 10-Q, on November 4, 2008
	10.21		Change of Control Agreement between CH2M HILL Companies, Ltd. and JoAnn Shea filed as Exhibit 10.10 on Form 10-Q, on November 4, 2008
	10.22		Change of Control Agreement between CH2M HILL Companies, Ltd. and Joan M. Miller filed as Exhibit 10.11 on Form 10-Q, on November 4, 2008
	10.23		Change of Control Agreement between CH2M HILL Companies, Ltd. and Michael A. Szomjassy filed as Exhibit 10.12 on Form 10-Q, on November 4, 2008
	*10.24		CH2M HILL Companies, Ltd. 2009 Stock Option Plan, effective January 1, 2009

Exhibit Number			Description

	14.1		CH2M HILL Companies, Ltd. Ethics Code for Executive and Financial Officers filed as Exhibit 14.1 on Form 10-K on February 23, 2007

Exhibit Number			Description

	*31.1		Written Statement of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	*31.2		Written Statement of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit Number			Description

	*32.1		Written Statement of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
	*32.2		Written Statement of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

Exhibit Number			Description

	99.1		Internal Market Rules, filed as Exhibit 99 to Registration Statement on Form S-1 on March 15, 1999 (File No. 333-74427)

Exhibit Number			Description

	*24.1		Power of Attorney authorizing signature

($ in thousands)		2008		2007

FINANCIAL POSITION:
	Current assets	$	485,684	$	509,587
	Noncurrent assets		85,056		67,574

		$	570,740	$	577,161

	Current liabilities	$	413,177	$	424,202
	Noncurrent liabilities		50,255		45,504
	Owners' equity		107,308		107,455

		$	570,740	$	577,161

($ in thousands)		2008		2007		2006

RESULTS OF OPERATIONS:
	Revenue	$	2,370,361	$	2,357,988	$	1,308,959
	Direct costs		2,273,332		2,209,273		1,258,642

	Gross margin		97,029		148,715		50,317
	General and administrative expenses		5,901		5,403		9,224

	Operating income		91,128		143,312		41,093
	Other income, net		2,790		2,654		4,403

	Net income	$	93,918	$	145,966	$	45,496

($ in thousands)	2008			2007

Foreign currency translation adjustments	$	(6,808	)	$	10,461
Benefit plan adjustments, net of tax		(47,033	)		(14,908	)
Unrealized (loss) gain on equity investments, net of tax		(245	)		1,054

	$	(54,086	)	$	(3,393	)

($ in thousands)		2008			2007			2006

Balance at beginning of year		$	6,963		$	8,317		$	5,992
	Provision charged to expense		2,172			1,952			3,523
	Accounts written off		(4,344	)		(3,436	)		(1,051	)
	Other		(608	)		130			(147	)

Balance at end of year		$	4,183		$	6,963		$	8,317

($ in thousands)		2008			2007

Land		$	25,409		$	15,171
Buildings			66,775			59,892
Furniture, fixtures and equipment			189,210			180,923
Leasehold improvements			44,387			32,017

			325,781			288,003
Less: Accumulated depreciation			(111,744	)		(73,655	)

	Net property, plant and equipment	$	214,037		$	214,348

($ in thousands)	2008		2007

Employee benefit plan assets	$	34,448	$	49,489
Investment securities held-to-maturity		—		10,741
Other		2,513		2,933

	$	36,961	$	63,163

Year Ending:

2009	$	27,746
2010		10,547
2011		8,515
2012		8,515
2013		8,274
Thereafter		4,896

	$	68,493

		2008				2007

		Carrying Amount		Fair Value		Carrying Amount		Fair Value
($ in thousands)
	Long-term debt, including current portion	$	175,875	$	177,087	$	197,787	$	197,013

Year Ending:

2009	$	129,266
2010		103,100
2011		81,562
2012		70,476
2013		58,829
Thereafter		150,455

	$	593,688

($ in thousands)	2008		2007		2006

U.S. income	$	55,891	$	72,463	$	84,628
Foreign income (loss)		3,662		5,258		(20,947	)

Income before taxes	$	59,553	$	77,721	$	63,681


Balance at January 1, 2008	$	9,020
Additions for current year tax positions		6,086
Additions for prior year tax positions		10,467
Reductions for prior year tax positions		(2,408	)
Settlement with taxing authorities		(820	)
Reductions as a result of lapse of applicable statue of expirations		(704	)

Balance at December 31, 2008	$	21,641

($ in thousands)		2008		2007		2006

Numerator:
	Net income	$	32,056	$	65,999	$	38,901

Denominator:
	Basic weighted-average shares outstanding		33,487		32,864		32,420
	Dilutive effect of common stock equivalents		889		644		627

	Diluted adjusted weighted-average shares outstanding, assuming conversion of common stock equivalents		34,376		33,508		33,047

Basic net income per share		$	0.96	$	2.01	$	1.20

Diluted net income per share		$	0.93	$	1.97	$	1.18

Stock Options:			Weighted Average Exercise Price

Outstanding at December 31, 2007	4,118,917		$	16.83
Granted	1,000,792		$	31.17
Exercised	(1,043,920	)	$	13.21
Forfeited	(103,030	)	$	22.95
Expired	(33,465	)	$	13.26

Outstanding at December 31, 2008	3,939,294		$	21.21

Exercisable at December 31, 2008	1,620,051		$	16.14
Available for future grants	2,368,950



Risk-free interest rate	2.97%	4.98%
Expected dividend yield	0.00%	0.00%
Expected option life	4.25 Years	4.26 Years
Expected stock price volatility	15.82%	11.36%



Balance at December 31, 2007	76,526
Granted	2,050
Exercised	(17,607	)
Cancelled	—

Balance at December 31, 2008	60,969

			Weighted Average Exercise Price

Balance at December 31, 2007	140,713		$	14.29
Granted	9,800		$	31.29
Exercised	(65,548	)	$	12.73
Cancelled	(4,612	)	$	21.56

Balance at December 31, 2008	80,353		$	17.25

			Weighted Average Grant Date Fair Value

Balance at December 31, 2007	614,507		$	19.51
Granted	70,405		$	30.71
Vested	(136,218	)	$	18.47
Cancelled and expired	(10,913	)	$	22.98

Balance at December 31, 2008	537,781		$	21.16

($ in thousands)	Pension Plans		Non-Qualified Pension Plans		Post-Retirement Benefit Plans

2009	$	6,312	$	131	$	1,356
2010		6,839		2,919		1,567
2011		7,384		120		1,771
2012		8,241		675		2,026
2013		9,034		109		2,252
2014-2018		58,277		7,014		14,595

	$	96,087	$	10,968	$	23,567

		Pension Plans

		2008			2007
Equity			49	%		76	%
Debt			50	%		23	%
Real estate			0	%		0	%
Other			1	%		1	%

	Total		100	%		100	%

($ in thousands)		2008			2007

Effect of 1% increase in HCCTR as of December 31 on:
	Postretirement benefit obligation	$	580		$	494
	Total of service and interest cost components		112			113
Effect of 1% decrease in HCCTR for the year ended December 31 on:
	Postretirement benefit obligation		(378	)		(324	)
	Total of service and interest cost components		(85	)		(80	)

2008	Federal		Civil Infrastructure			Industrial		Other			Financial Statement Balances

Revenue from external customers	$	1,471,627	$	1,532,226		$	2,586,053	$	—		$	5,589,906
Equity in earnings of joint ventures and affiliated companies		41,371		(12,137	)		4,998		—			34,232
Depreciation and amortization		3,447		7,052			81,523		—			92,022
Operating income (loss)		66,319		42,112			22,475		(57,925	)		72,981
Segment assets		617,779		564,522			789,540		—			1,971,841

2007	Federal		Civil Infrastructure		Industrial			Other			Financial Statement Balances

Revenue from external customers	$	1,246,570	$	1,451,506	$	1,678,162		$	—		$	4,376,238
Equity in earnings of joint ventures and affiliated companies		30,006		6,987		7,191			—			44,184
Depreciation and amortization		3,097		3,931		28,091			—			35,119
Operating income (loss)		71,955		73,048		(16,492	)		(49,393	)		79,118
Segment assets		509,097		501,478		899,371			—			1,909,946