Guarantees

12 Months Ended

Dec. 31, 2011

Guarantees

Guarantees

19.Guarantees

In connection with the sale of its NORESCO domestic operations in December 2005, the Company agreed to maintain in place guarantees of certain warranty obligations of NORESCO.  The savings guarantees provided that once the energy-efficiency construction was completed by NORESCO, the customer would experience a certain dollar amount of energy savings over a period of years.  The undiscounted maximum aggregate payments that may be due related to these guarantees is approximately $213 million as of December 31, 2011, extending at a decreasing amount for approximately 16 years.  In addition, the Company agreed to maintain in place certain outstanding payment and performance bonds, letters of credit and other guarantee obligations supporting NORESCO’s obligations under certain customer contracts, existing leases and other items with an undiscounted maximum exposure to the Company as of December 31, 2011 of approximately $35 million, of which approximately $34 million relates to bonds that were to have been terminated as of December 31, 2010 for work completed under the underlying contracts. The Company is working with NORESCO to resolve any open matters with respect to these bonds.

In exchange for the Company’s agreement to maintain these guarantee obligations, the purchaser of the NORESCO business and NORESCO agreed, among other things, that NORESCO would fully perform its obligations under each underlying agreement and agreed to reimburse the Company for any loss under the guarantee obligations, provided that the purchaser’s reimbursement obligation will not exceed $6 million in the aggregate and will expire on November 18, 2014.  In 2008, the original purchaser of NORESCO sold its interest in NORESCO and transferred its obligations to a third-party.  In connection with that event, the new owner delivered to the Company a $1 million letter of credit supporting its obligations.

The NORESCO guarantees are exempt from FASB ASC Topic 460, Guarantees.  The Company has determined that the likelihood it will be required to perform on these arrangements is remote and any potential payments are expected to be immaterial to the Company’s financial position, results of operations and liquidity.  As such, the Company has not recorded any liabilities in its Consolidated Balance Sheets related to these guarantees.