10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2014

or

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission File Number: 0-10786

Aegion Corporation

(Exact name of registrant as specified in its charter)

Delaware	45-3117900
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
17988 Edison Avenue, Chesterfield, Missouri	63005-1195
(Address of principal executive offices)	(Zip Code)
(636) 530-8000
(Registrant’s telephone number, including area code)

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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company ¨

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

There were 37,381,538 shares of common stock, $.01 par value per share, outstanding at October 31, 2014.

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Consolidated Statements of Operations for the Quarters and Nine Months Ended September 30, 2014 and 2013	3
Consolidated Statements of Comprehensive Income for the Quarters and Nine Months Ended September 30, 2014 and 2013	4
Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013	5
Consolidated Statements of Equity for the Nine Months Ended September 30, 2014 and 2013	6
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013	7
Notes to Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3. Quantitative and Qualitative Disclosures About Market Risk	41
Item 4. Controls and Procedures	42
PART II—OTHER INFORMATION
Item 1. Legal Proceedings	43
Item 1A. Risk Factors	43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 6. Exhibits	44
SIGNATURE	45
INDEX TO EXHIBITS	46

2

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

AEGION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share amounts)

	For the Quarters Ended September 30,						For the Nine Months Ended September 30,
	2014			2013			2014			2013
Revenues	$	350,138		$	307,665		$	979,240		$	775,741
Cost of revenues	286,199			238,254			782,320			599,625
Gross profit	63,939			69,411			196,920			176,116
Operating expenses	66,977			47,956			169,666			130,112
Definite-lived intangible asset impairment	10,896			—			10,896			—
Earnout reversal	—			(2,844		)	—			(2,844		)
Acquisition-related expenses	—			2,267			539			4,175
Operating income (loss)	(13,934		)	22,032			15,819			44,673
Other income (expense):
Interest expense	(3,258		)	(5,454		)	(9,693		)	(10,033		)
Interest income	102			40			479			158
Other	(367		)	(522		)	(1,830		)	6,561
Total other expense	(3,523		)	(5,936		)	(11,044		)	(3,314		)
Income (loss) before taxes on income	(17,457		)	16,096			4,775			41,359
Taxes on income (loss)	(1,356		)	3,164			4,217			7,985
Income (loss) before equity in earnings of affiliated companies	(16,101		)	12,932			558			33,374
Equity in earnings of affiliated companies	—			1,691			677			3,903
Income (loss) from continuing operations	(16,101		)	14,623			1,235			37,277
Loss from discontinued operations	(130		)	(558		)	(626		)	(6,456		)
Net income (loss)	(16,231		)	14,065			609			30,821
Non-controlling interests	(823		)	(127		)	(880		)	(959		)
Net income (loss) attributable to Aegion Corporation	$	(17,054	)	$	13,938		$	(271	)	$	29,862
Earnings per share attributable to Aegion Corporation:
Basic:
Income (loss) from continuing operations	$	(0.45	)	$	0.37		$	0.01		$	0.94
Loss from discontinued operations	—			(0.01		)	(0.02		)	(0.17		)
Net income (loss)	$	(0.45	)	$	0.36		$	(0.01	)	$	0.77
Diluted:
Income (loss) from continuing operations	$	(0.45	)	$	0.37		$	0.01		$	0.93
Loss from discontinued operations	—			(0.01		)	(0.02		)	(0.17		)
Net income (loss)	$	(0.45	)	$	0.36		$	(0.01	)	$	0.76

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

3

AEGION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)

	For the Quarters Ended September 30,						For the Nine Months Ended September 30,
	2014			2013			2014			2013
Net income (loss)	$	(16,231	)	$	14,065		$	609		$	30,821
Other comprehensive income:
Currency translation adjustments	(16,693		)	(1,093		)	(17,473		)	(11,447		)
Pension activity, net of tax	(8		)	8			(3		)	16
Deferred gain (loss) on hedging activity, net of tax(1)	453			(484		)	641			(333		)
Total comprehensive income (loss)	(32,479		)	12,496			(16,226		)	19,057
Comprehensive income attributable to non-controlling interests	(285		)	(290		)	(308		)	(840		)
Comprehensive income (loss) attributable to Aegion Corporation	$	(32,764	)	$	12,206		$	(16,534	)	$	18,217

__________________________

⁽¹⁾ Amounts presented net of tax of $298 and ($345) for the quarters ended September 30, 2014 and 2013, respectively, and $422 and ($219) for the nine months ended September 30, 2014 and 2013, respectively.

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

4

AEGION CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited) (in thousands, except share amounts)

	September 30, 2014			December 31, 2013
Assets
Current assets
Cash and cash equivalents	$	115,941		$	158,045
Restricted cash	623			483
Receivables, net of allowances of $9,822 and $3,441, respectively	266,883			231,775
Retainage	35,923			30,831
Costs and estimated earnings in excess of billings	105,170			79,999
Inventories	59,225			58,768
Prepaid expenses and other current assets	41,459			38,522
Current assets of discontinued operations	4,789			5,435
Total current assets	630,013			603,858
Property, plant & equipment, less accumulated depreciation	169,873			182,303
Other assets
Goodwill	347,236			348,680
Identified intangible assets, less accumulated amortization	189,974			209,283
Investments	—			9,101
Deferred income tax assets	2,627			6,957
Other assets	13,276			14,315
Total other assets	553,113			588,336
Non-current assets of discontinued operations	2,191			2,921
Total Assets	$	1,355,190		$	1,377,418
Liabilities and Equity
Current liabilities
Accounts payable	$	93,548		$	80,417
Accrued expenses	111,785			105,466
Billings in excess of costs and estimated earnings	30,355			24,978
Current maturities of long-term debt and line of credit	26,399			22,024
Current liabilities of discontinued operations	1,721			2,070
Total current liabilities	263,808			234,955
Long-term debt, less current maturities	357,802			366,616
Deferred income tax liabilities	29,629			38,217
Other non-current liabilities	12,299			10,512
Non-current liabilities of discontinued operations	224			197
Total liabilities	663,762			650,497
Commitments and Contingencies – Note 8
Equity
Preferred stock, undesignated, $.10 par – shares authorized 2,000,000; none outstanding	—			—
Common stock, $.01 par – shares authorized 125,000,000; shares issued and outstanding 37,374,331 and 37,983,114, respectively	374			380
Additional paid-in capital	216,575			236,128
Retained earnings	470,537			470,808
Accumulated other comprehensive income (loss)	(14,211		)	2,052
Total stockholders’ equity	673,275			709,368
Non-controlling interests	18,153			17,553
Total equity	691,428			726,921
Total Liabilities and Equity	$	1,355,190		$	1,377,418

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

5

AEGION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(in thousands, except number of shares)

	Common Stock					Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income			Non- Controlling Interests			Total Equity
	Shares		Amount
BALANCE, December 31, 2012	38,952,561		$	390		$	257,209		$	426,457		$	15,260		$	16,804		$	716,120
Net income	—		—			—			29,862			—			959			30,821
Issuance of common stock upon stock option exercises, including tax benefit	29,511		—			899			—			—			—			899
Restricted shares issued	431,877		4			—			—			—			—			4
Issuance of shares pursuant to restricted stock units	11,112		—			—			—			—			—			—
Issuance of shares pursuant to deferred stock unit awards	5,313		—			—			—			—			—			—
Forfeitures of restricted shares	(20,704	)	—			—			—			—			—			—
Shares repurchased and retired	(833,552	)	(8		)	(19,009		)	—			—			—			(19,017		)
Equity-based compensation expense	—		—			5,090			—			—			—			5,090
Currency translation adjustment and derivative transactions, net	—		—			—			—			(11,645		)	(119		)	(11,764		)
BALANCE, September 30, 2013	38,576,118		$	386		$	244,189		$	456,319		$	3,615		$	17,644		$	722,153
BALANCE, December 31, 2013	37,983,114		$	380		$	236,128		$	470,808		$	2,052		$	17,553		$	726,921
Net income (loss)	—		—			—			(271		)	—			880			609
Issuance of common stock upon stock option exercises	526,359		5			8,206			—			—			—			8,211
Restricted shares issued	226,483		2			—			—			—			—			2
Issuance of shares pursuant to restricted stock units	15,277		—			—			—			—			—			—
Issuance of shares pursuant to deferred stock unit awards	31,794		—			—			—			—			—			—
Forfeitures of restricted shares	(75,006	)	(1		)	—			—			—			—			(1		)
Shares repurchased and retired	(1,333,690	)	(12		)	(31,051		)	—			—			—			(31,063		)
Equity-based compensation expense	—		—			4,201			—			—						4,201
Purchase of non-controlling interest	—		—			(909		)	—			—			292			(617		)
Currency translation adjustment and derivative transactions, net	—		—			—			—			(16,263		)	(572		)	(16,835		)
BALANCE, September 30, 2014	37,374,331		$	374		$	216,575		$	470,537		$	(14,211	)	$	18,153		$	691,428

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

6

AEGION CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (in thousands)

	For the Nine Months Ended September 30,
	2014			2013
Cash flows from operating activities:
Net income	$	609		$	30,821
Loss from discontinued operations	626			6,456
	1,235			37,277
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization	32,984			29,126
Gain on sale of fixed assets	(65		)	(815		)
Equity-based compensation expense	4,201			5,090
Deferred income taxes	(3,797		)	(1,523		)
Equity in earnings of affiliated companies	(677		)	(3,903		)
Non-cash restructuring charges	17,187			—
Fixed asset impairment	11,870			—
Definite-lived intangible asset impairment	10,896			—
Gain on sale of interests in German joint venture	—			(11,771		)
Debt issuance costs	—			1,964
Earnout reversal	—			(2,844		)
Loss on sale of interests in Bayou Coating, L.L.C.	472			—
Loss on foreign currency transactions	149			1,700
Other	881			(159		)
Changes in operating assets and liabilities (net of acquisitions):
Restricted cash	(142		)	(142		)
Return on equity of affiliated companies	684			4,027
Receivables net, retainage and costs and estimated earnings in excess of billings	(83,383		)	(11,144		)
Inventories	(4,732		)	(3,416		)
Prepaid expenses and other assets	(5,009		)	(5,044		)
Accounts payable and accrued expenses	25,511			2,932
Other operating	430			198
Net cash provided by operating activities of continuing operations	8,695			41,553
Net cash used in operating activities of discontinued operations	(90		)	(10,179		)
Net cash provided by operating activities	8,605			31,374
Cash flows from investing activities:
Capital expenditures	(25,118		)	(20,079		)
Proceeds from sale of fixed assets	1,140			1,856
Patent expenditures	(1,988		)	(469		)
Proceeds from sale of interests in Bayou Coating, L.L.C.	9,065			—
Sale of interests in German joint venture	—			18,300
Purchase of Brinderson, net of cash acquired	—			(143,763		)
Net cash used in investing activities of continuing operations	(16,901		)	(144,155		)
Net cash provided by investing activities of discontinued operations	90			774
Net cash used in investing activities	(16,811		)	(143,381		)
Cash flows from financing activities:
Proceeds from issuance of common stock upon stock option exercises, including tax effects	8,615			903
Repurchase of common stock	(31,051		)	(19,017		)
Purchase of non-controlling interest	(617		)	—
Payment of earnout related to acquistion of CRTS, Inc.	—			(2,112		)
Credit facility financing fees	—			(5,013		)
Proceeds on notes payable	1,284			1,541
Proceeds from line of credit	10,000			—
Proceeds from long-term debt	—			385,500
Principal payments on long-term debt	(15,477		)	(249,125		)
Net cash provided by (used in) financing activities	(27,246		)	112,677
Effect of exchange rate changes on cash	(6,652		)	(7,659		)
Net decrease in cash and cash equivalents for the period	(42,104		)	(6,989		)
Cash and cash equivalents, beginning of period	158,045			133,676
Cash and cash equivalents, end of period	$	115,941		$	126,687

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

7

AEGION CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.    GENERAL

The accompanying unaudited consolidated financial statements of Aegion Corporation and its subsidiaries (collectively, “Aegion” or the “Company”) reflect all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s financial position as of September 30, 2014 and the results of operations and statements of comprehensive income for the quarters and nine-month periods ended September 30, 2014 and 2013 and the statements of equity and cash flows for the nine-month periods ended September 30, 2014 and 2013. The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the requirements of Form 10-Q and Article 10 of Regulation S-X and, consequently, do not include all information or footnotes required by GAAP for complete financial statements or all the disclosures normally made in an Annual Report on Form 10-K. Accordingly, the unaudited consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s 2013 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2014.

The results of operations for the quarter and nine-month period ended September 30, 2014 are not necessarily indicative of the results to be expected for the full year.

Acquisitions/Strategic Initiatives/Divestitures

Energy and Mining Segment

On October 6, 2014, the Company’s board of directors approved a realignment and restructuring plan (“2014 Restructuring Plan”) as discussed further in Notes 2 and 12. As part of the 2014 Restructuring Plan, the Company made the decision to shutter two older and redundant fusion bonded epoxy coating plants and terminate certain land leases at The Bayou Companies, LLC’s (“Bayou”) Louisiana facility. The actions taken to restructure Bayou’s Louisiana operations allow Bayou to cost effectively meet market demand, for both onshore and offshore projects, by optimizing pipe coating activities and reducing fixed costs. The repositioning of Bayou’s Louisiana facility will also include additional capital investments in the remaining coating facilities over the next two to three years to augment Bayou’s competitive position.

On March 31, 2014, the Company sold its forty-nine percent (49%) interest in Bayou Coating, L.L.C. (“Bayou Coating”) to Stupp Brothers Inc. (“Stupp”), the holder of the remaining fifty-one percent (51%) interest in Bayou Coating. Stupp purchased the interest by exercising an existing option to acquire the Company’s interest in Bayou Coating at a purchase price equal to $9.1 million, which represented forty-nine percent (49%) of the book value of Bayou Coating as of December 31, 2013. Such book value was determined on the basis of Bayou Coating’s federal information tax return for 2013 and approximated the Company’s book value of its investment in Bayou Coating as of December 31, 2013. The Company had previously received an indication from Stupp of its intent to exercise such option and, in the second quarter of 2013 in connection with such indication, the Company recognized a non-cash charge of $2.7 million ($1.8 million post-tax) related to the goodwill allocated to the joint venture as part of the purchase price accounting associated with the 2009 acquisition of Bayou. The non-cash charge represented the Company’s then current estimate of the difference between the carrying value of the investment on the balance sheet and the amount the Company would receive in connection with the exercise. During the first quarter of 2014, the difference between the Company’s recorded gross equity in earnings of affiliated companies of approximately $1.2 million and the final equity distribution settlement of $0.7 million resulted in a loss of approximately $0.5 million that is recorded in other income (expense) on the consolidated statement of operations.

Prior to March 2014, the Company held a fifty-nine (59%) equity interest in Delta Double Jointing, LLC (“Bayou Delta”) through which the Company offers pipe jointing and other services for the steel-coated pipe industry. The remaining forty-one percent (41%) was held by Bayou Coating. On March 31, 2014, the Company acquired this forty-one percent (41%) interest from Bayou Coating by exercising its existing option at a purchase price equal to $0.6 million. As a result, Bayou Delta is now a wholly owned subsidiary of the Company.

On July 1, 2013, the Company acquired the equity interests of Brinderson, L.P., a California limited partnership, General Energy Services, a California corporation, and Brinderson Constructors, Inc., a California corporation (collectively, “Brinderson”). Brinderson is a leading integrated service provider of maintenance, construction, engineering and turnaround activities for the upstream and downstream oil and gas markets. The transaction purchase price was $150.0 million, which resulted in a cash purchase price at closing of $147.6 million after working capital adjustments and an adjustment to account for cash held in the business at closing. The cash purchase price was funded by borrowings under the Company’s $650.0 million senior secured credit facility as discussed in Note 5.

8

During the second quarter of 2013, the Company’s board of directors approved a plan of liquidation for its Bayou Welding Works (“BWW”) business in an effort to improve the Company’s overall financial performance and align the operations with its long-term strategic objectives. BWW provided specialty welding and fabrication services from its facility in New Iberia, Louisiana. Financial results for BWW were part of the Company’s Energy and Mining segment for financial reporting purposes. BWW ceased bidding new work and substantially completed all ongoing projects during the second quarter of 2013. As a result of the closure of BWW, Aegion recognized a pre-tax, non-cash charge of approximately $3.9 million ($2.4 million after-tax, or $0.06 per diluted share) to reflect the impairment of goodwill and intangible assets. The Company also recognized additional non-cash impairment charges for equipment and other assets of approximately $1.1 million on a pre-tax basis ($0.7 million on an after-tax basis, or $0.02 per diluted share), which also was recorded in the second quarter of 2013. The Company expects the cash liquidation value to approximate net asset value. Net asset value is determined using recorded amounts for assets and liabilities, which are based on Level 3 inputs as defined in Note 11. The Company also incurred cash charges to exit the business of approximately $0.1 million on a pre-tax and post-tax basis, which included property, equipment and vehicle lease termination and buyout costs, employee termination benefits and retention incentives, among other ancillary shut-down expenses. Final liquidation of BWW’s assets is expected to occur by the end of 2014.

Water and Wastewater Segment

On October 6, 2014, the Company’s board of directors approved the 2014 Restructuring Plan, which included the decision to exit Insituform’s contracting markets in France, Switzerland, India, Hong Kong, Malaysia and Singapore. This decision was made taking into account market size, bid table consistency, supportive governmental bid process, length of cash collection cycles and operating results in each country. Activities with respect to Insituform’s contracting operations in France, Switzerland, India, Hong Kong, Malaysia and Singapore are expected to be concluded by the end of the third quarter of 2015 as Insituform completes existing backlog in the affected countries. See further discussion in Notes 2 and 12.

In June 2013, the Company sold its fifty percent (50%) interest in Insituform Rohrsanierungstechniken GmbH (“Insituform-Germany”) to Per Aarsleff A/S, a Danish company (“Aarsleff”). Insituform-Germany, a company that was jointly owned by Aegion and Aarsleff, is active in the business of no-dig pipe rehabilitation in Germany, Slovakia and Hungary. The sale price was €14.0 million, approximately $18.3 million. The sale resulted in a gain on sale of approximately $11.3 million (net of $0.5 million of transaction expenses). In connection with the sale, Insituform-Germany also entered into a tube supply agreement with the Company whereby Insituform-Germany will purchase on an annual basis at least GBP 2.3 million, approximately $3.6 million, of felt cured-in-place pipe (“CIPP”) liners during the two-year period from June 26, 2013 to June 30, 2015.

Purchase Price Accounting

The Company accounts for its acquisitions in accordance with FASB ASC 805, Business Combinations. The Company records definite-lived intangible assets at their determined fair value related to customer relationships, backlog, trade names and trademarks and patents and other acquired technologies. Acquisitions generally result in goodwill related to, among other things, purchase price, growth opportunities and market potential. The goodwill associated with the Brinderson acquisition is deductible for tax purposes. At September 30, 2014, the Company had substantially completed its accounting for Brinderson with the exception of final working capital adjustments. During the second quarter of 2014, certain pre-acquisition matters were identified by the Company where a loss is both probable and reasonably estimable. Accordingly, the Company increased recorded goodwill by $14.5 million and adjusted its purchase price accounting retroactively to the measurement period, July 1, 2013. The Company has provided claim notices related to these uncertainties; however, no escrow receivable was recorded as of September 30, 2014. To the extent the Company receives notification or cash in future periods, these adjustments would be recorded through purchase accounting consistent with FASB ASC 805, Business Combinations. As the Company completes its final accounting for this acquisition, future adjustments related to working capital, escrow and related contingencies could occur.

The Brinderson acquisition made the following contributions to the Company’s revenues and profits (in thousands):

	Quarter Ended September 30, 2014		Nine Months Ended September 30, 2014
Revenues	$	77,353	$	225,940
Net income	3,503		8,430

9

The following unaudited pro forma summary presents combined information of the Company as if the Brinderson acquisition had occurred at the beginning of the year preceding its acquisition (in thousands):

	Nine Months Ended September 30, 2013
Revenues	$	885,842
Net income (1)	40,889

_____________________

⁽¹⁾  Includes pro-forma adjustments for purchase price depreciation and amortization as if those intangibles were recorded at the beginning of the year preceding the acquisition date.

The transaction purchase price to acquire Brinderson was $150.0 million, which resulted in a cash purchase price at closing of $147.6 million after preliminary working capital adjustments and an adjustment to account for cash held in the business at closing.

The following table summarizes the fair value of identified assets and liabilities of the Brinderson acquisition at its acquisition date (in thousands):

Cash	$	3,842
Receivables and cost and estimated earnings in excess of billings	28,353
Prepaid expenses and other current assets	655
Property, plant and equipment	6,848
Identified intangible assets	60,210
Other assets	1,071
Accounts payable, accrued expenses and billings in excess of cost and estimated earnings	(30,622		)
Total identifiable net assets	$	70,357
Total consideration recorded	$	147,605
Less: total identifiable net assets	70,357
Goodwill at September 30, 2014	$	77,248

During the second quarter of 2014, and in connection with the 2012 acquisition of Fyfe Group LLC’s Asian operations (“Fyfe Asia”), the Company agreed to a working capital settlement with the previous owners, which increased the purchase price and related goodwill by $1.1 million.

2.    ACCOUNTING POLICIES

Revenues

Revenues include construction, engineering and installation revenues that are recognized using the percentage-of-completion method of accounting in the ratio of costs incurred to estimated final costs. Revenues from change orders, extra work and variations in the scope of work are recognized when it is probable that they will result in additional contract revenue and when the amount can be reliably estimated. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and equipment costs. The Company expenses all pre-contract costs in the period these costs are incurred. Since the financial reporting of these contracts depends on estimates, which are assessed continually during the term of these contracts, recognized revenues and profit are subject to revisions as the contract progresses to completion. Revisions in profit estimates are reflected in the period in which the facts that give rise to the revision become known. If material, the effects of any changes in estimates are disclosed in the notes to the consolidated financial statements. When estimates indicate that a loss will be incurred on a contract, a provision for the expected loss is recorded in the period in which the loss becomes evident. Any revenue recognized is only to the extent costs have been recognized in the period. Additionally, the Company expenses all costs for unpriced change orders in the period in which they are incurred.

Revenues from Brinderson are derived mainly from multiple maintenance contracts under multi-year, long-term Master Service Agreements and alliance contracts, as well as, engineering and construction-type contracts. Brinderson enters into contracts with its customers that contain three principal types of pricing provisions: time and materials, cost plus fixed fee and

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fixed price. Although the terms of these contracts vary, most are made pursuant to cost reimbursable contracts on a time and materials basis under which revenues are recorded based on costs incurred at agreed upon contractual rates. Brinderson also performs services on a cost plus fixed fee basis under which revenues are recorded based upon costs incurred at agreed upon rates and a proportionate amount of the fixed fee or percentage stipulated in the contract.

Foreign Currency Translation

For the Company’s international subsidiaries, the local currency is generally the functional currency. Assets and liabilities of these subsidiaries are translated into U.S. dollars using rates in effect at the balance sheet date while revenues and expenses are translated into U.S. dollars using average exchange rates. The cumulative translation adjustment resulting from changes in exchange rates are included in the Consolidated Balance Sheets as a component of accumulated other comprehensive income (loss) in total stockholders’ equity. Net foreign exchange transaction gains (losses) are included in other income (expense) in the Consolidated Statements of Operations. Due to the strengthening of the U.S. Dollar, there was a substantial decrease with respect to certain functional currencies and their relation to the U.S. Dollar during the third quarter of 2014, most notably the Canadian Dollar, British Pound and Euro.

The Company’s accumulated other comprehensive income is comprised of three main components: (i) currency translation; (ii) derivatives; and (iii) gains and losses associated with the Company’s defined benefit plan in the United Kingdom.

As of September 30, 2014 and 2013, the Company had accumulated income (loss) of $(13.9) million and $2.1 million, respectively, related to currency translation adjustments, $(0.1) million and $1.3 million, respectively, related to derivative transactions and $(0.2) million and $0.2 million, respectively, related to pension activity in accumulated other comprehensive income.

Taxation

The Company provides for estimated income taxes payable or refundable on current year income tax returns as well as the estimated future tax effects attributable to temporary differences and carryforwards, based upon enacted tax laws and tax rates, and in accordance with FASB ASC 740, Income Taxes (“FASB ASC 740”). FASB ASC 740 also requires that a valuation allowance be recorded against any deferred tax assets that are not likely to be realized in the future. Refer to Note 7 for additional information regarding taxes on income.

Long-Lived Assets

Property, plant and equipment and other identified intangibles (primarily customer relationships, patents and acquired technologies, trademarks, licenses, contract backlog and non-compete agreements) are recorded at cost and, except for goodwill and certain trademarks, are depreciated or amortized on a straight-line basis over their estimated useful lives. Changes in circumstances such as technological advances, changes to the Company’s business model or changes in the Company’s capital strategy can result in the actual useful lives differing from the Company’s estimates. If the Company determines that the useful life of its property, plant and equipment or its identified intangible assets should be changed, the Company would depreciate or amortize the net book value in excess of the salvage value over its revised remaining useful life, thereby increasing or decreasing depreciation or amortization expense.

Long-lived assets, including property, plant and equipment and other intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such impairment tests are based on a comparison of undiscounted cash flows to the recorded value of the asset. The estimate of cash flow is based upon, among other things, assumptions about expected future operating performance. The Company’s estimates of undiscounted cash flow may differ from actual cash flow due to, among other things, technological changes, economic conditions, changes to its business model or changes in its operating performance. If the sum of the undiscounted cash flows (excluding interest) is less than the carrying value, the Company recognizes an impairment loss, measured as the amount by which the carrying value exceeds the fair value of the asset.

On October 6, 2014, the Company’s board of directors approved the 2014 Restructuring Plan as discussed further in Note 12. As part of the 2014 Restructuring Plan, the Company evaluated the long-lived assets of its global operations affected by the restructuring initiative. In the early stages of the evaluation process, the Company reviewed the financial performance of all at risk asset groups within each affected reporting unit. Due to the ongoing weak economic conditions and weak economic outlook for certain at risk asset groups, the Company decided to no longer focus on the possible growth opportunities within these businesses; therefore, the Company would no longer provide cash flow or operational support to these businesses. This decision was deemed a significant adverse change in the extent or manner in which the asset is currently being used, and as such, the Company performed an asset impairment review as of September 30, 2014 for all of its at risk asset groups within each of the affected reporting units in accordance with ASC 360 Property, Plant and Equipment (“FASB ASC 360”).

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The affected asset groups include: (i) the Bayou and Bayou Delta asset groups within the Bayou reporting unit (“Bayou Reporting Unit”); (ii) the France and Switzerland asset groups within the European Sewer and Water Rehabilitation (“Europe”) reporting unit; and (iii) the Singapore, Hong Kong, Malaysia and India asset groups within the Asia-Pacific Sewer and Water Rehabilitation (“Asia-Pacific”) reporting unit. The results of the Bayou Reporting Unit and its related asset groups are reported within the Energy and Mining reportable segment. The results of Europe and Asia-Pacific and their related asset groups are reported within the Water and Wastewater reportable segment.

The assets of each asset group represent the lowest level for which identifiable cash flows can be determined independent of other groups of assets and liabilities. The Company developed internal forward business plans under the guidance of local and regional leadership to determine the undiscounted expected future cash flows derived from each of the at risk asset groups’ long-lived assets. Such were based on management’s best estimates considering the likelihood of various outcomes. Based on the internal projections, the Company determined that the undiscounted expected future cash flows for all of the at risk asset groups referenced above were less than the carrying value of the assets, and as a result, engaged a third-party valuation firm to assist in determining the fair value of long-lived assets at these at risk asset groups.

In order to determine the impairment amount of long-lived assets, the Company first determined the fair value of each key component of its long-lived assets at each asset group. For property and equipment, the Company primarily utilized the cost and market approaches, which involved the use of significant estimates and assumptions such as salvage and scrap market data and producer price indices. The Company also considered functional and economic obsolescence related to the business and the assets. Based upon the results of the analysis, the at risk asset groups with a fair value less than the carrying value of their respective assets included Bayou, Bayou Delta, France, Malaysia and India. Accordingly, the Company recorded a total impairment charge of $11.9 million in the quarter and nine months ended September 30, 2014, which consisted of $10.9 million related to Bayou, $0.4 million related to Bayou Delta, $0.2 million related to France, $0.3 million related to Malaysia and $0.1 million related to India. The impairment charge was primarily recorded to cost of revenues in the Consolidated Statements of Operations.

Included within the impairment assessment were Bayou-related intangible assets such as tradenames and customer relationships that were also tested on an undiscounted cash flow basis. For customer relationships, the undiscounted expected future cash flows were less than the carrying value; thus, the Company engaged a third-party valuation firm to assist in determining the fair value of customer relationships recorded at Bayou. In order to determine the impairment amount of the customer relationships intangible asset, the Company calculated the fair value of the intangible based on the multi-period excess earnings method, which utilizes discounted cash flows to evaluate the net earnings attributable to the asset being measured. Key assumptions used in assessment include the discount rate (based on weighted-average cost of capital), revenue growth rates, contributory asset charges and working capital needs, which were based on current market conditions and were consistent with internal management projections.

Based on the results of the valuation, the carrying amount of the customer relationship intangible asset at Bayou exceeded the fair value and resulted in a full impairment as of September 30, 2014. Accordingly, the Company recorded a $10.9 million impairment charge for the quarter and nine months ended September 30, 2014. The impairment charge was recorded to definite-lived intangible asset impairment in the Consolidated Statements of Operations.

The fair value estimates described above were determined using observable inputs and significant unobservable inputs, which are based on level 3 inputs as defined in Note 11.

Goodwill

Goodwill represents the excess of the purchase price of an acquisition over the fair value of the net assets acquired. Under FASB ASC 350, Intangibles–Goodwill and Other (“FASB ASC 350”), the Company assesses recoverability of goodwill on an annual basis or when events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable. The annual assessment was last completed as of October 1, 2013. See Note 4 for additional information regarding goodwill by operating segment. Factors that could potentially trigger an interim impairment review include (but are not limited to):

• significant underperformance of a reporting unit relative to expected, historical or forecasted future operating results;

• significant negative industry or economic trends;

• significant changes in the strategy for a reporting unit including extended slowdowns in a segment’s market;

• a decrease in the Company’s market capitalization below its book value; and

• a significant change in regulations.

As a result of the 2014 Restructuring Plan, the Company evaluated the goodwill of its global operations affected by the restructuring initiative and determined that a triggering event had occurred. As such, the Company performed a goodwill

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impairment review for each affected reporting unit as of September 30, 2014. The Company’s reporting units adversely affected by the 2014 Restructuring Plan were Bayou, Europe and Asia-Pacific. In accordance with the provisions of FASB ASC 350, the Company determined the fair value of its reporting units and compared such fair value to the carrying value of those reporting units. For all three reporting units, fair value exceeded carrying value.

Fair value of reporting units is determined using a combination of two valuation methods: a market approach and an income approach with each method given equal weight in determining the fair value assigned to each reporting unit. Absent an indication of fair value from a potential buyer or similar specific transaction, the Company believes the use of these two methods provides a reasonable estimate of a reporting unit’s fair value. Assumptions common to both methods are operating plans and economic outlooks, which are used to forecast future revenues, earnings and after-tax cash flows for each reporting unit. These assumptions are applied consistently for both methods.

The market approach estimates fair value by first determining earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples for comparable publicly-traded companies with similar characteristics of the reporting unit. The EBITDA multiples for comparable companies are based upon current enterprise value. The enterprise value is based upon current market capitalization and includes a control premium. Management believes this approach is appropriate because it provides a fair value estimate using multiples from entities with operations and economic characteristics comparable to the Company’s reporting units.

The income approach is based on forecasted future (debt-free) cash flows that are discounted to present value using factors that consider timing and risk of future cash flows. Management believes this approach is appropriate because it provides a fair value estimate based upon the reporting unit’s expected long-term operating cash flow performance. Discounted cash flow projections are based on financial forecasts developed from operating plans and economic outlooks, growth rates, estimates of future expected changes in operating margins, terminal value growth rates, future capital expenditures and changes in working capital requirements. Estimates of discounted cash flows may differ from actual cash flows due to, among other things, changes in economic conditions, changes to business models, changes in the Company’s weighted average cost of capital, or changes in operating performance.

The discount rate applied to the estimated future cash flows is one of the most significant assumptions utilized under the income approach. Management determines the appropriate discount rate for each of the Company’s reporting units based on the weighted average cost of capital (“WACC”) for each individual reporting unit. The WACC takes into account both the pre-tax cost of debt and cost of equity (a major component of the cost of equity is the current risk-free rate on twenty year U.S. Treasury bonds). As each reporting unit has a different risk profile based on the nature of its operations, including market-based factors, the WACC for each reporting unit may differ. Accordingly, the WACCs were adjusted, as appropriate, to account for company-specific risks associated with each reporting unit.

Other significant assumptions used in the Company’s goodwill review included: (i) annual revenue growth rates generally ranging from 2% to 7%; (ii) sustained or slightly increased gross margins; (iii) peer group EBITDA multiples; and (iv) terminal values for each reporting unit using a long-term growth rate of 2.5% to 3.0%. If actual results differ from estimates used in these calculations, we could incur future impairment charges.

For the Bayou Reporting Unit, the excess of fair value in relation to its carrying value was 10.2%. The values derived from both the income approach and market approach decreased from the October 1, 2013 analysis; however, the fair value in relation to its carrying value improved from the prior year due to a decrease in carrying value as of the valuation dates. During the first nine months of 2014, the carrying value at the Bayou Reporting Unit was lowered due to the sale of its interest in Bayou Coating as described in Note 1 and the impairment of tangible and intangibles assets described above. The fair value for the Bayou Reporting Unit decreased $48.0 million, or 30.9%, from the prior year analysis due to the suspension of a material contract, a lack of project activity available in the Gulf of Mexico market and customer-driven project delays. The impairment analysis assumed a weighted average cost of capital of 13.5% and a long-term growth rate of 3%. The analysis also included an annual revenue growth rate of approximately 5%; modestly higher than the prior year actual results, but at a level that is below our five-year average. Projected cash flows anticipate a modest recovery in the Gulf of Mexico market beginning in 2015. The Company noted improved visibility into larger bidding opportunities for deep water drilling activities in the Gulf of Mexico; however, there is a significant lead time from drilling to the point of building the pipeline infrastructure, or gather lines, to bring oil and natural gas onshore for refinement. This extended lead time creates added uncertainty and could have a material negative impact on long-term projected cash flows. Additionally, projected cash flows related to the Bayou Reporting Unit’s new insulation facility located in Louisiana are subject to final operational testing and largely dependent, in 2015 and 2016, on a single, large customer with a long-standing history with the Company. The Bayou Reporting Unit’s Canadian coating operation, while not as reliant on larger projects, is dependent upon overall increased project activity in order to realize the cash flow projections included in the impairment analysis. If any of these assumptions do not materialize in a manner consistent with the Company’s expectations, there is risk of impairment to recorded goodwill.

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For Europe, the excess of fair value in relation to its carrying value was 9.3%. The values derived from both the income approach and market approach decreased from the October 1, 2013 analysis, and the fair value in relation to its carrying value declined from the prior year due to exiting certain European operations. The fair value for Europe decreased $8.2 million, or 9.5%, from the prior year analysis. The impairment analysis assumed a weighted average cost of capital of 14.0% and a long-term growth rate of 2.5%. The analysis also included an annual revenue growth rate of approximately 5%; slightly below the prior year results, and certain cost savings expected to be achieved through the 2014 Restructuring Plan. In addition, projected cash flows were also based, in part, on the successful closure of the Insituform contacting operations in France and Switzerland. If any of these assumptions do not materialize in a manner consistent with the Company’s expectations, there is risk of impairment to recorded goodwill.

For Asia-Pacific, the excess of fair value in relation to its carrying value was 12.1%. The values derived from both the income approach and market approach decreased from the October 1, 2013 analysis, and the fair value in relation to its carrying value declined from the prior year due to exiting certain Asia-Pacific operations, many of which, however, were underperforming. The fair value for Asia-Pacific decreased $18.0 million, or 36.4%, from the prior year analysis. The impairment analysis assumed a weighted average cost of capital of 14.0% and a long-term growth rate of 3.0%. The analysis also included an annual revenue growth rate of approximately 5% for the remaining operations and certain cost savings expected to be achieved through the 2014 Restructuring Plan. In addition, projected cash flows were also based, in part, on the successful closure of the Insituform contracting operations in India, Hong Kong, Malaysia and Singapore. If any of these assumptions do not materialize in a manner consistent with the Company’s expectations, there is risk of impairment to recorded goodwill.

The total value of goodwill recorded at September 30, 2014 for the Bayou, Europe and Asia-Pacific reporting units was $29.7 million, $20.4 million and $5.3 million, respectively. The Company will perform its annual goodwill assessment for all of its reporting units as of October 1, 2014.

Investments in Affiliated Companies

On March 31, 2014, the Company sold its forty-nine percent (49%) interest in Bayou Coating to Stupp, the holder of the remaining fifty-one percent (51%) interest in Bayou Coating. Stupp purchased the interest by exercising an existing option to acquire the Company’s interest in Bayou Coating at a purchase price equal to $9.1 million. The Company had previously received an indication from Stupp of its intent to exercise such option and, in the second quarter of 2013 in connection with such indication, the Company recognized a non-cash charge of $2.7 million ($1.8 million post-tax) related to the goodwill allocated to the joint venture as part of the purchase price accounting associated with the 2009 acquisition of Bayou. The non-cash charge represented the Company’s then current estimate of the difference between the carrying value of the investment on the balance sheet and the amount the Company would receive in connection with the exercise. During the first quarter of 2014, the difference between the Company’s recorded gross equity in earnings of affiliated companies of approximately $1.2 million and the final equity distribution settlement of $0.7 million resulted in a loss of approximately $0.5 million that is recorded in other income (expense) on the consolidated statement of operations.

Prior to March 2014, the Company held a fifty-nine (59%) equity interest in Bayou Delta through which the Company offers pipe jointing and other services for the steel-coated pipe industry. The remaining forty-one percent (41%) was held by Bayou Coating. On March 31, 2014, the Company acquired this forty-one percent (41%) interest from Bayou Coating by exercising its existing option at a purchase price equal to $0.6 million. As a result, Bayou Delta is now a wholly owned subsidiary of the Company.

In June 2013, the Company sold its fifty percent (50%) interest in Insituform-Germany to Aarsleff. Insituform-Germany, a company that was jointly owned by Aegion and Aarsleff, is active in the business of no-dig pipe rehabilitation in Germany, Slovakia and Hungary. The sale price was €14.0 million, approximately $18.3 million. The sale resulted in a gain on the sale of approximately $11.3 million (net of $0.5 million of transaction expenses). In connection with the sale, Insituform-Germany also entered into a tube supply agreement with the Company whereby Insituform-Germany will purchase on an annual basis at least GBP 2.3 million, approximately $3.6 million, of felt cured-in-place pipe (“CIPP”) liners during the two-year period from June 26, 2013 to June 30, 2015.

Investments in entities in which the Company does not have control or is not the primary beneficiary of a variable interest entity, and for which the Company has 20% to 50% ownership or has the ability to exert significant influence, are accounted for by the equity method. At December 31, 2013, the investment in affiliated companies on the Company’s consolidated balance sheets was $9.1 million. Due to the sale of Bayou Coating, the balance was zero at September 30, 2014.

Net income presented below for the quarters ended September 30, 2014 and 2013 includes Bayou Coating’s previously held forty-one percent (41%) interest in Bayou Delta, which is eliminated for purposes of determining the Company’s equity in earnings of affiliated companies because Bayou Delta is consolidated in the Company’s financial statements as a result of its additional ownership through another Company subsidiary.

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The Company’s equity in earnings of affiliated companies for all periods presented below includes acquisition-related depreciation and amortization expense and is net of income taxes associated with these earnings. Financial data for these investments in affiliated companies for each of the nine month periods ended September 30, 2014 and 2013 is summarized in the following table (in thousands):

	Nine Months Ended September 30,
Income statement data	2014		2013 (1)
Revenue	$	9,088	$	75,986
Gross profit	3,489		21,753
Net income	2,413		13,624
Equity in earnings of affiliated companies	677		3,903

_____________________

⁽¹⁾    Includes the financial data of Insituform-Germany through its sale in June 2013.

Investments in Variable Interest Entities

The Company evaluates all transactions and relationships with variable interest entities (“VIE”) to determine whether the Company is the primary beneficiary of the entities in accordance with FASB ASC 810, Consolidation.

The Company’s overall methodology for evaluating transactions and relationships under the VIE requirements includes the following two steps:

• determine whether the entity meets the criteria to qualify as a VIE; and

• determine whether the Company is the primary beneficiary of the VIE.

In performing the first step, the significant factors and judgments that the Company considers in making the determination as to whether an entity is a VIE include:

• the design of the entity, including the nature of its risks and the purpose for which the entity was created, to determine the variability that the entity was designed to create and distribute to its interest holders;

• the nature of the Company’s involvement with the entity;

• whether control of the entity may be achieved through arrangements that do not involve voting equity;

• whether there is sufficient equity investment at risk to finance the activities of the entity; and

• whether parties other than the equity holders have the obligation to absorb expected losses or the right to receive residual returns.

If the Company identifies a VIE based on the above considerations, it then performs the second step and evaluates whether it is the primary beneficiary of the VIE by considering the following significant factors and judgments:

• whether the entity has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance; and

• whether the entity has the obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity.

Based on its evaluation of the above factors and judgments, as of September 30, 2014, the Company consolidated any VIEs in which it was the primary beneficiary.

Financial data for consolidated variable interest entities are summarized in the following table (in thousands):

Balance sheet data	September 30, 2014		December 31, 2013
Current assets	$	58,646	$	55,960
Non-current assets	44,769		47,606
Current liabilities	25,697		27,335
Non-current liabilities	37,215		36,761

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	Nine Months Ended September 30,
Income statement data	2014		2013
Revenue	$	58,942	$	62,650
Gross profit	9,370		10,179
Net income	714		2,040

Newly Issued Accounting Pronouncements

In April 2014, the FASB issued guidance that changes the criteria for determining which disposals can be presented as discontinued operations and modifies the related disclosure requirements. Under the new guidance, a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results and is disposed of or classified as held for sale. The standard also introduces several new disclosures. The guidance applies prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date and is effective for annual and interim periods beginning after December 15, 2014, with earlier adoption permitted. The Company does not expect that the adoption of this standard will have a material effect on its financial statements.

In May 2014, the FASB issued guidance that supersedes revenue recognition requirements regarding contracts with customers to transfer goods or services or for the transfer of nonfinancial assets. Under the new guidance, entities are required to recognize revenue in order to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step analysis to be performed on transactions to determine when and how revenue is recognized. This new guidance is effective retroactively in fiscal years beginning after December 15, 2016. The Company is currently evaluating the effect the guidance will have on its financial condition and results of operations.

3.    SHARE INFORMATION

Earnings per share have been calculated using the following share information:

	Quarters Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Weighted average number of common shares used for basic EPS	37,406,061	38,672,441	37,752,472	38,836,276
Effect of dilutive stock options and restricted and deferred stock unit awards	—	398,932	360,317	392,349
Weighted average number of common shares and dilutive potential common stock used in dilutive EPS	37,406,061	39,071,373	38,112,789	39,228,625

The Company excluded 312,091 stock options and restricted and deferred stock units for the quarter ended September 30, 2014 from the diluted earnings per share calculation for the Company’s common stock because of the reported net loss for the period. Additionally, the Company excluded 200,665 and 159,639 stock options for the quarters ended September 30, 2014 and 2013, respectively, and 200,665 and 159,639 stock options for the nine-month periods ended September 30, 2014 and 2013, respectively, from the diluted earnings per share calculations for the Company’s common stock because they were anti-dilutive as their exercise prices were greater than the average market price of common shares for each period.

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4.    GOODWILL AND IDENTIFIED INTANGIBLE ASSETS

Goodwill and identified intangible assets consist of the following:

Goodwill

(In thousands)
	Energy and Mining			Water and Wastewater			Commercial and Structural			Total
Beginning balance at January 1, 2014	$	153,110		$	130,078		$	65,492		$	348,680
Additions to goodwill through acquisitions (1)	—			—			1,098			1,098
Foreign currency translation	(609		)	(1,845		)	(88		)	(2,542		)
Balance at September 30, 2014	$	152,501		$	128,233		$	66,502		$	347,236

__________________________

⁽¹⁾  During the second quarter of 2014, the Company recorded goodwill of $1.1 million related to the 2012 acquisition of Fyfe Asia (see Note 1).

Identified Intangible Assets

(In thousands)		September 30, 2014							December 31, 2013
	Weighted Average Useful Lives (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
License agreements	6	$	3,912	$	(3,094	)	$	818	$	3,917	$	(2,977	)	$	940
Backlog	0	4,736		(4,736		)	—		4,745		(4,745		)	—
Leases	12	2,067		(588		)	1,479		2,067		(477		)	1,590
Trademarks	16	21,648		(4,941		)	16,707		21,394		(4,167		)	17,227
Non-competes	4	1,140		(817		)	323		1,140		(753		)	387
Customer relationships (1)	14	147,704		(12,517		)	135,187		182,703		(28,287		)	154,416
Patents and acquired technology	16	59,152		(23,692		)	35,460		57,419		(22,696		)	34,723
		$	240,359	$	(50,385	)	$	189,974	$	273,385	$	(64,102	)	$	209,283

__________________________

⁽¹⁾  During the third quarter of 2014, the Company recorded an intangible asset impairment of $10.9 million related to realignment efforts at Bayou (see Note 2).

Amortization expense was $3.6 million and $3.7 million for the quarters ended September 30, 2014 and 2013, respectively, and $10.6 million and $8.8 million for the nine-month periods ended September 30, 2014 and 2013, respectively. Estimated amortization expense by year is as follows (in thousands):

2014	$	14,224
2015	13,509
2016	13,516
2017	13,469
2018	13,391

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5.    LONG-TERM DEBT AND CREDIT FACILITY

Financing Arrangements

In July 2013, in connection with the Brinderson acquisition, the Company entered into a $650.0 million senior secured credit facility (the “Credit Facility”) with a syndicate of banks. Bank of America, N.A. served as the administrative agent. Merrill Lynch Pierce Fenner & Smith Incorporated, JPMorgan Securities LLC and U.S. Bank National Association acted as joint lead arrangers and joint book managers in the syndication of the Credit Facility. The Credit Facility consists of a $300.0 million five-year revolving line of credit and a $350.0 million five-year term loan facility, each with a maturity date of July 1, 2018. The Company borrowed the entire term loan and drew $35.5 million against the revolving line of credit from the Credit Facility on July 1, 2013 for the following purposes: (1) to pay the $147.6 million cash purchase price for the Company’s acquisition of Brinderson, L.P. and related entities, which closed on July 1, 2013; (2) to retire $232.3 million in indebtedness outstanding under the Company’s prior credit facility; and (3) to fund expenses associated with the Credit Facility and the Brinderson acquisition. Additionally, the Company used $7.0 million of its cash on hand to fund these transactions.

Generally, interest will be charged on the principal amounts outstanding under the Credit Facility at the British Bankers Association LIBOR rate plus an applicable rate ranging from 1.25% to 2.25% depending on the Company’s consolidated leverage ratio. The Company can also opt for an interest rate equal to a base rate (as defined in the credit documents) plus an applicable rate, which also is based on the Company’s consolidated leverage ratio. The applicable one month LIBOR borrowing rate (LIBOR plus Company’s applicable rate) as of September 30, 2014 was approximately 2.10%.

The Company’s indebtedness at September 30, 2014 consisted of $325.9 million outstanding from the $350.0 million term loan under the Credit Facility and $45.5 million on the line of credit under the Credit Facility. In July 2014, the Company borrowed $10.0 million on the line of credit for working capital needs. Additionally, the Company and Wasco Coatings UK Ltd. (“Wasco Energy”) loaned Bayou Wasco Insulation, LLC (“Bayou Wasco”), a joint venture between the Company and Wasco Energy, an aggregate of $14.0 million for the purchase of capital assets in 2012 and 2013. Additionally, during September 2014, the Company and Wasco Energy agreed to loan Bayou Wasco an additional $2.6 million for working capital needs increasing the total to $16.6 million. Of such amount, $8.1 million (representing funds loaned by Wasco Energy) was designated as third-party debt in the Company’s consolidated financial statements. In February 2014, the Company and Wasco Energy agreed to a five-year term on the funds loaned; therefore, the amounts are classified as long-term debt as of September 30, 2014. In connection with the formation of Bayou Perma-Pipe Canada, Ltd. (“BPPC”), the Company and Perma-Pipe Canada, Inc. loaned BPPC an aggregate of $8.0 million for the purchase of capital assets and for operating purposes. Additionally, during January 2012, the Company and Perma-Pipe Canada, Inc. agreed to loan BPPC an additional $6.2 million for the purchase of capital assets increasing the total to $14.2 million. Of such amount, $4.5 million was designated as third-party debt in the Company’s consolidated financial statements. The Company also held $0.1 million of third party notes and bank debt at September 30, 2014.

As of September 30, 2014, the Company had $20.7 million in letters of credit issued and outstanding under the Credit Facility. Of such amount, $11.4 million was collateral for the benefit of certain of our insurance carriers and $9.3 million was for letters of credit or bank guarantees of performance or payment obligations of foreign subsidiaries.

The Company’s indebtedness at December 31, 2013 consisted of $341.3 million outstanding from the term loan under the Credit Facility and $35.5 million on the line of credit under the Credit Facility. Additionally, the Company designated $11.7 million of debt held by its joint ventures (representing funds loaned by its joint venture partners) as third-party debt in the consolidated financial statements and held $0.1 million of third party notes and bank debt at December 31, 2013.

At September 30, 2014 and December 31, 2013, the estimated fair value of the Company’s long-term debt was approximately $383.9 million and $380.1 million, respectively. Fair value was estimated using market rates for debt of similar risk and maturity and a discounted cash flow model, which are based on Level 3 inputs as defined in Note 11.

In July 2013, the Company entered into an interest rate swap agreement, for a notional amount of $175.0 million that is set to expire in July 2016. The notional amount of this swap mirrors the amortization of a $175.0 million portion of the Company’s $350.0 million term loan drawn from the Credit Facility. The swap requires the Company to make a monthly fixed rate payment of 0.87% calculated on the amortizing $175.0 million notional amount, and provides for the Company to receive a payment based upon a variable monthly LIBOR interest rate calculated on the amortizing $175.0 million notional amount. The annualized borrowing rate of the swap at September 30, 2014 was approximately 2.19%. The receipt of the monthly LIBOR-based payment offsets a variable monthly LIBOR-based interest cost on a corresponding $175.0 million portion of the Company’s term loan from the Credit Facility. This interest rate swap is used to partially hedge the interest rate risk associated with the volatility of monthly LIBOR rate movement, and will be accounted for as a cash flow hedge.

The Credit Facility is subject to certain financial covenants, including a consolidated financial leverage ratio and consolidated fixed charge coverage ratio. On October 6, 2014, the Company amended the Credit Facility’s defined terms for income and fixed charges to allow for the add-back of certain cash and non-cash charges related to the 2014 Restructuring Plan

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when calculating the Company’s compliance with the consolidated financial leverage ratio and consolidated fixed charge coverage ratio. Subject to the specifically defined terms and methods of calculation as set forth in the Credit Facility’s credit agreement, as amended, the financial covenant requirements, as of each quarterly reporting period end, are defined as follows:

• Consolidated financial leverage ratio compares consolidated funded indebtedness to Credit Facility defined income. The initial maximum amount was not to exceed 3.75 to 1.00, but decreased, as scheduled, to not more that 3.50 to 1.00 beginning with the quarter ended June 30, 2014. At September 30, 2014, the Company’s consolidated financial leverage ratio was 2.89 to 1.00 and, using the Credit Facility defined income, the Company had the capacity to borrow up to approximately $80.4 million of additional debt.

• Consolidated fixed charge coverage ratio compares Credit Facility defined income to Credit Facility defined fixed charges with a minimum permitted ratio of not less than 1.25 to 1.00. At September 30, 2014, the Company’s fixed charge ratio was 1.28 to 1.00.

At September 30, 2014, the Company was in compliance with all of its debt and financial covenants as required under the Credit Facility.

6.    STOCKHOLDERS’ EQUITY AND EQUITY COMPENSATION

Share Repurchase Plan

In February 2014, the Company’s board of directors authorized the open market repurchase of up to $20.0 million of the Company’s common stock to be made during 2014. Once a repurchase is complete, the Company promptly retires the shares. The Company also is authorized to utilize up to $10.0 million in cash to purchase shares of the Company’s common stock in each calendar year in connection with the Company’s equity compensation programs for employees and directors. The participants in the Company’s equity plans may surrender shares of previously issued common stock in satisfaction of tax obligations arising from the vesting of restricted stock awards under such plans, in connection with the exercise of stock option awards, and with the lapse of restricted periods of deferred stock unit awards. The deemed price paid is the closing price of the Company’s common stock on the Nasdaq Global Select Market on the date that the restricted stock vests, the shares of the Company’s common stock are surrendered in exchange for stock option exercises or the lapse of the restricted periods of deferred stock unit awards. In addition, in connection with the exercise of employee stock options, the option holder may elect a “net, net” exercise, such that the option holder receives a number of shares equal to (1) the built-in gain in the option shares divided by the market price of the Company’s common stock on the date of exercise, less (2) a number of shares equal to the taxes due upon the exercise of the option divided by the market price of the Company’s common stock on the date of exercise. The shares of Company common stock surrendered to the Company for taxes due on the exercise of the option are deemed repurchased by the Company.

During the nine-month period ended September 30, 2014, the Company acquired 860,761 shares of the Company’s common stock for $20.0 million ($23.24 average price per share) through the open market repurchase program discussed above and 53,286 shares of the Company’s common stock for $1.2 million ($22.66 average price per share) in connection with the satisfaction of tax obligations from the vesting of restricted stock, exercise of stock options and distribution of deferred stock units. In addition, during the nine-month period ended September 30, 2014, the Company acquired 419,643 shares of the Company’s common stock in connection with “net, net” exercises of employee stock options for a gross value of $9.9 million ($1.4 million in cash value). Once repurchased, the Company immediately retired all such shares.

Equity-Based Compensation Plans

At September 30, 2014, the Company had two active equity-based compensation plans under which awards may be made, including stock appreciation rights, restricted shares of common stock, performance awards, stock options and stock units. The Company’s 2013 Employee Equity Incentive Plan (the “2013 Employee Plan”) has 2,895,000 shares of the Company’s common stock reserved for issuance and, at September 30, 2014, 1,953,034 shares of common stock were available for issuance. The Company’s 2011 Non-Employee Director Equity Incentive Plan (“2011 Director Plan”) has 250,000 shares of the Company’s common stock registered for issuance and, at September 30, 2014, 135,396 shares of common stock were available for issuance.

Stock Awards

Stock awards, which include shares of restricted stock, restricted stock units and restricted performance units, are awarded from time to time to executive officers and certain key employees of the Company. Stock award compensation is recorded based on the award date fair value and charged to expense ratably through the requisite service period. The forfeiture of

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unvested restricted stock, restricted stock units and restricted performance units causes the reversal of all previous expense recorded as a reduction of current period expense.

The following table summarizes all stock award activity during the nine months ended September 30, 2014:

	Stock Awards		Weighted Average Award Date Fair Value
Outstanding at January 1, 2014	555,025		$	22.79
Restricted shares awarded	226,483		23.81
Restricted stock units awarded	230,324		24.20
Restricted shares distributed	(117,086	)	23.69
Restricted stock units distributed	(15,277	)	21.25
Restricted shares forfeited	(75,006	)	23.47
Restricted stock units forfeited	(96,976	)	24.66
Outstanding at September 30, 2014	707,487		$	23.13

Expense associated with stock awards was $2.8 million in each of the nine month periods ended September 30, 2014 and 2013. Unrecognized pre-tax expense of $11.4 million related to stock awards is expected to be recognized over the weighted average remaining service period of 2.06 years for awards outstanding at September 30, 2014.

Expense associated with stock awards was $1.0 million and $0.8 million for the quarters ended September 30, 2014 and 2013, respectively.

Deferred Stock Unit Awards

Deferred stock units generally are awarded to directors of the Company and represent the Company’s obligation to transfer one share of the Company’s common stock to the grantee at a future date and generally are fully vested on the date of grant. The expense related to the issuance of deferred stock units is recorded as of the date of the award.

The following table summarizes all deferred stock unit activity during the nine months ended September 30, 2014:

	Deferred Stock Units		Weighted Average Award Date Fair Value
Outstanding at January 1, 2014	214,455		$	19.56
Awarded	32,904		23.96
Distributed	(31,794	)	19.70
Outstanding at September 30, 2014	215,565		$	20.18

There was no expense associated with awards of deferred stock units for the quarters ended September 30, 2014 and 2013. Expense associated with awards of deferred stock units for the nine months ended September 30, 2014 and 2013 was $0.8 million and $0.9 million, respectively.

Stock Options

Stock options on the Company’s common stock are awarded from time to time to executive officers and certain key employees of the Company. Stock options granted generally have a term of seven to ten years and an exercise price equal to the market value of the underlying common stock on the date of grant.

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The following table summarizes all stock option activity during the nine months ended September 30, 2014:

	Shares		Weighted Average Exercise Price
Outstanding at January 1, 2014	1,208,824		$	18.54
Granted	38,820		24.21
Exercised	(526,359	)	16.36
Canceled/Expired	(196,802	)	24.37
Outstanding at September 30, 2014	524,483		$	18.95
Exercisable at September 30, 2014	460,364		$	19.00

Expense associated with stock option grants was $0.1 million and $0.4 million in the quarters ended September 30, 2014 and 2013, respectively. In the nine months ended September 30, 2014 and 2013, the Company recorded expense of $0.6 million and $1.4 million, respectively, related to stock option grants. Unrecognized pre-tax expense of $0.2 million related to stock option grants is expected to be recognized over the weighted average remaining contractual term of 0.90 years for awards outstanding at September 30, 2014.

Financial data for stock option exercises are summarized in the following table (in thousands):

	Nine Months Ended September 30,
	2014		2013
Amount collected from stock option exercises	$	8,614	$	738
Total intrinsic value of stock option exercises	3,771		131
Tax benefit of stock option exercises recorded in additional paid-in-capital	6		55
Aggregate intrinsic value of outstanding stock options	2,381		6,983
Aggregate intrinsic value of exercisable stock options	2,138		5,962

The intrinsic value calculations are based on the Company’s closing stock price of $22.25 and $23.72 on September 30, 2014 and 2013, respectively.

The Company uses a binomial option-pricing model for valuation purposes to reflect the features of stock options granted. The fair value of stock options awarded during the nine-month periods ended September 30, 2014 and 2013 were estimated at the date of grant based on the assumptions presented in the table below. Volatility, expected term and dividend yield assumptions were based on the Company’s historical experience. The risk-free rate was based on a U.S. treasury note with a maturity similar to the option grant’s expected term.

	Nine Months Ended September 30,
	2014	2013
Grant-date fair value	$11.27	$12.92
Volatility	41.6%	49.8%
Expected term (years)	7.0	7.0
Dividend yield	—%	—%
Risk-free rate	2.3%	1.1%

7.    TAXES ON INCOME

The effective tax rates in the third quarter and first nine-months of 2014 were unfavorably impacted by a relatively small income tax benefit recorded on significant pre-tax charges related to the restructuring initiative and the impact of discrete tax items that were primarily the result of establishing valuation allowances on net operating losses in jurisdictions where the Company will not have the ability to generate future taxable income.

The Company’s effective tax rate for continuing operations was 7.8% and 88.3% in the quarter and nine-month period ended September 30, 2014, respectively, compared to 19.7% and 19.3% in the corresponding periods in 2013. The low

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effective tax rate on the pre-tax loss and the high effective tax rate on pre-tax income for the quarter and nine-month period ended September 30, 2014, respectively, were negatively influenced by recording no tax benefit on losses in jurisdictions where valuation allowances were recorded against deferred tax assets.

8.    COMMITMENTS AND CONTINGENCIES

Litigation

The Company is involved in certain litigation incidental to the conduct of its business and affairs. Management, after consultation with legal counsel, does not believe that the outcome of any such litigation, individually or in the aggregate, will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.

Contingencies

In connection with the Brinderson acquisition, certain pre-acquisition matters were identified during the quarter ended June 30, 2014 where a loss is both probable and reasonably estimable. The Company identified the range of possible loss from zero to $24 million. The Company establishes liabilities in accordance with FASB ASC Subtopic No. 450-20, Contingencies – Loss Contingencies, and, accordingly, recorded a $14.5 million accrual for such matters as part of its purchase price accounting for Brinderson (see Note 1). The Company believes it has meritorious defenses against certain of these matters.

Purchase Commitments

The Company had no material purchase commitments at September 30, 2014.

Guarantees

The Company has many contracts that require the Company to indemnify the other party against loss from claims, including claims of patent or trademark infringement or other third party claims for injuries, damages or losses. The Company has agreed to indemnify its surety against losses from third-party claims of subcontractors. The Company has not previously experienced material losses under these provisions and, while there can be no assurances, currently does not anticipate any future material adverse impact on its consolidated financial position, results of operations or cash flows.

The Company regularly reviews its exposure under all its engagements, including performance guarantees by contractual joint ventures and indemnification of its surety. As a result of the most recent review, the Company has determined that the risk of material loss is remote under these arrangements and has not recorded a liability for these risks at September 30, 2014 on its consolidated balance sheet.

9.    SEGMENT REPORTING

The Company operates in three distinct markets: energy and mining; water and wastewater; and commercial and structural services. Management organizes the Company around differences in products and services. As such, the Company is organized into three reportable segments: Energy and Mining; Water and Wastewater; and Commercial and Structural. Each reportable segment has a senior operating vice president who reports to the chief operating decision maker (“CODM”). The operating results and financial information reported by each segment are evaluated separately, regularly reviewed and used by the CODM to evaluate segment performance, allocate overall resources and determine management incentive compensation.

During the first quarter of 2014, the Company reorganized its North American Water and Wastewater and International Water and Wastewater reportable segments into a single, reportable segment titled Water and Wastewater. As a result of this reorganization, the entire Water and Wastewater segment reports to the Senior Vice President - Water and Wastewater, who, in turn, reports to the CODM. During 2014, all filings with the Securities and Exchange Commission (“SEC”) have combined these two previously reported segments into a single Waste and Wastewater segment.

The following disaggregated financial results have been prepared using a management approach that is consistent with the basis and manner with which management internally disaggregates financial information for the purpose of making internal operating decisions. Financial results for discontinued operations have been removed for all periods presented. The Company evaluates performance based on stand-alone operating income (loss).

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Financial information by segment was as follows (in thousands):

	Quarters Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenues:
Energy and Mining	$	197,510		$	168,708		$	557,028		$	385,991
Water and Wastewater	135,649			122,149			371,493			341,680
Commercial and Structural	16,979			16,808			50,719			48,070
Total revenues	$	350,138		$	307,665		$	979,240		$	775,741
Gross profit:
Energy and Mining	$	29,380		$	37,118		$	100,856		$	87,678
Water and Wastewater	26,719			26,473			76,078			71,210
Commercial and Structural	7,840			5,820			19,986			17,228
Total gross profit	$	63,939		$	69,411		$	196,920		$	176,116
Operating income (loss):
Energy and Mining	$	(9,757	)	$	12,874		$	5,661		$	24,481
Water and Wastewater	(5,450		)	10,071			10,224			21,672
Commercial and Structural	1,273			(913		)	(66		)	(1,480		)
Total operating income (loss)	$	(13,934	)	$	22,032		$	15,819		$	44,673

The following table summarizes revenues, gross profit and operating income by geographic region (in thousands):

	Quarters Ended September 30,					Nine Months Ended September 30,
	2014			2013		2014			2013
Revenues(1):
United States	$	242,795		$	202,353	$	681,043		$	496,544
Canada	55,742			56,026		139,817			131,172
Europe	20,096			20,605		63,887			65,592
Other foreign	31,505			28,681		94,493			82,433
Total revenues	$	350,138		$	307,665	$	979,240		$	775,741
Gross profit:
United States	$	40,507		$	43,838	$	132,790		$	111,006
Canada	13,893			14,351		32,889			31,753
Europe	3,544			4,769		12,846			15,453
Other foreign	5,995			6,453		18,395			17,904
Total gross profit	$	63,939		$	69,411	$	196,920		$	176,116
Operating income (loss):
United States	$	(12,955	)	$	8,941	$	604		$	16,067
Canada	10,359			10,397		21,911			20,622
Europe	(687		)	1,106		692			3,928
Other foreign	(10,651		)	1,588		(7,388		)	4,056
Total operating income (loss)	$	(13,934	)	$	22,032	$	15,819		$	44,673

__________________________

⁽¹⁾  Revenues are attributed to the country of origin for the Company’s legal entities. For a significant majority of its legal entities, the country of origin relates to the country or geographic area that it services.

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10.    DISCONTINUED OPERATIONS

During the second quarter of 2013, the Company’s board of directors approved a plan of liquidation for its BWW business in an effort to improve the Company’s overall financial performance and align the operations with its long-term strategic objectives. BWW provided specialty welding and fabrication services from its facility in Louisiana. Financial results for BWW were part of the Company’s Energy and Mining segment for financial reporting purposes.

BWW ceased bidding new work and substantially completed all ongoing projects during the second quarter of 2013. As a result of the closure of BWW, Aegion recognized a pre-tax, non-cash charge of approximately $3.9 million ($2.4 million after-tax, or $0.06 per diluted share) to reflect the impairment of goodwill and intangible assets. The Company also recognized additional non-cash impairment charges for equipment and other assets of approximately $1.1 million on a pre-tax basis ($0.7 million on an after-tax basis, or $0.02 per diluted share), which also was recorded in the second quarter of 2013. The Company expects the cash liquidation value to approximate net asset value as shown in the table below. Net asset value is determined using recorded amounts for assets and liabilities, which are based on Level 3 inputs as defined in Note 11. The Company also incurred cash charges to exit the business of approximately $0.1 million on a pre-tax and post-tax basis, which included property, equipment and vehicle lease termination and buyout costs, employee termination benefits and retention incentives, among other ancillary shut-down expenses. Final liquidation of BWW’s assets is expected to occur by the end of 2014.

Operating results for discontinued operations are summarized as follows (in thousands):

	Quarters Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenues	$	—		$	744		$	—		$	8,864
Gross loss	—			(837		)	(67		)	(4,077		)
Operating expenses	215			210			617			1,828
Closure charges of welding business	—			—			—			5,019
Operating loss	(215		)	(1,047		)	(684		)	(10,924		)
Interest expense	—			—			—			(25		)
Other income (expense)	(1		)	—			(74		)	207
Loss before income tax	(216		)	(1,047		)	(758		)	(10,742		)
Tax benefit	86			489			132			4,286
Net loss	(130		)	(558		)	(626		)	(6,456		)

Balance sheet data for discontinued operations was as follows (in thousands):

	September 30, 2014		December 31, 2013
Restricted cash	$	1,193	$	1,193
Receivables, net	3,471		4,038
Prepaid expenses and other current assets	125		204
Property, plant and equipment, less accumulated depreciation	955		1,118
Deferred tax assets	1,236		1,803
Total assets	$	6,980	$	8,356
Accounts payable	$	1,566	$	2,050
Accrued expenses	155		20
Deferred tax liabilities	224		197
Total liabilities	$	1,945	$	2,267

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11.    DERIVATIVE FINANCIAL INSTRUMENTS

As a matter of policy, the Company uses derivatives for risk management purposes, and does not use derivatives for speculative purposes. From time to time, the Company may enter into foreign currency forward contracts to hedge foreign currency cash flow transactions. For cash flow hedges, gain or loss is recorded in the consolidated statements of operations upon settlement of the hedge. All of the Company’s hedges that are designated as hedges for accounting purposes were highly effective; therefore, no notable amounts of hedge ineffectiveness were recorded in the Company’s consolidated statements of operations for the outstanding hedged balance. During each of the quarters ended September 30, 2014 and 2013, the Company recorded less than $0.1 million as a gain on the consolidated statements of operations in the other income (expense) line item upon settlement of the cash flow hedges. At September 30, 2014, the Company recorded a net deferred gain of $0.6 million related to the cash flow hedges in other current assets and other comprehensive income on the consolidated balance sheets and on the foreign currency translation adjustment and derivative transactions line of the consolidated statements of equity. The Company presents derivative instruments in the consolidated financial statements on a gross basis. The gross and net difference of derivative instruments are considered to be immaterial to the financial position presented in the financial statements.

The Company engages in regular inter-company trade activities with, and receives royalty payments from its wholly-owned Canadian entities, paid in Canadian Dollars, rather than the Company’s functional currency, U.S. Dollars. In order to reduce the uncertainty of the U.S. Dollar settlement amount of that anticipated future payment from the Canadian entities, the Company uses forward contracts to sell a portion of the anticipated Canadian Dollars to be received at the future date and buys U.S. Dollars.

In July 2013, the Company replaced its interest rate swap agreement with a notional amount of $83.0 million with an interest rate swap agreement with a notional amount of $175.0 million, which is set to expire in July 2016. The notional amount of this swap mirrors the amortization of a $175.0 million portion of the Company’s $350.0 million term loan drawn from the Credit Facility. The swap requires the Company to make a monthly fixed rate payment of 0.87% calculated on the amortizing $175.0 million notional amount, and provides for the Company to receive a payment based upon a variable monthly LIBOR interest rate calculated on the amortizing $175.0 million notional amount. The receipt of the monthly LIBOR-based payment offsets a variable monthly LIBOR-based interest cost on a corresponding $175.0 million portion of the Company’s term loan from the Credit Facility. This interest rate swap is used to partially hedge the interest rate risk associated with the volatility of monthly LIBOR rate movement, and will be accounted for as a cash flow hedge.

The following table provides a summary of the fair value amounts of our derivative instruments, all of which are Level 2 (as defined below) inputs (in thousands):

Designation of Derivatives	Balance Sheet Location	September 30, 2014		December 31, 2013
Derivatives Designated as Hedging Instruments:
Forward Currency Contracts	Prepaid expenses and other current assets	$	607	$	24
	Total Assets	$	607	$	24
Interest Rate Swaps	Other non-current liabilities	$	740	$	1,220
	Total Liabilities	$	740	$	1,220
Derivatives Not Designated as Hedging Instruments:
Forward Currency Contracts	Prepaid expenses and other current assets	$	292	$	878
	Total Assets	$	292	$	878
	Total Derivative Assets	$	899	$	902
	Total Derivative Liabilities	740		1,220
	Total Net Derivative Asset (Liability)	$	159	$	(318	)

FASB ASC 820, Fair Value Measurements (“FASB ASC 820”), defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements for interim and annual reporting periods. The guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1 – defined as quoted prices in active markets for identical instruments; Level 2 – defined as inputs other than

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quoted prices in active markets that are either directly or indirectly observable; and Level 3 – defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. In accordance with FASB ASC 820, the Company determined that the instruments summarized below are derived from significant observable inputs, referred to as Level 2 inputs.

The following table represents assets and liabilities measured at fair value on a recurring basis and the basis for that measurement (in thousands):

	Total Fair Value at September 30, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Forward Currency Contracts	$	899	$	—	$	899	$	—
Total	$	899	$	—	$	899	$	—
Liabilities:
Interest Rate Swap	$	740	$	—	$	740	$	—
Total	$	740	$	—	$	740	$	—

	Total Fair Value at December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Forward Currency Contracts	$	902	$	—	$	902	$	—
Total	$	902	$	—	$	902	$	—
Liabilities:
Interest Rate Swap	$	1,220	$	—	$	1,220	$	—
Total	$	1,220	$	—	$	1,220	$	—

The following table summarizes the Company’s derivative positions at September 30, 2014:

	Position	Notional Amount		Weighted Average Remaining Maturity In Years	Average Exchange Rate
Canadian Dollar/USD	Sell	$	33,225,371	0.2	1.12
Singapore Dollar/USD	Sell	$	1,973,834	0.2	1.28
Hong Kong Dollar/USD	Sell	$	1,558,146	0.2	7.77
Australian Dollar/USD	Sell	$	3,030,088	0.2	0.87
USD/British Pound	Sell	£	1,900,000	0.2	1.62
EURO/British Pound	Sell	£	8,000,000	0.2	0.78
Interest Rate Swap		$	162,968,750	1.8

The Company had no transfers between Level 1, 2 or 3 inputs during the nine months ended September 30, 2014. Certain financial instruments are required to be recorded at fair value. Changes in assumptions or estimation methods could affect the fair value estimates; however, we do not believe any such changes would have a material impact on our financial condition, results of operations or cash flows. Other financial instruments including cash and cash equivalents and short-term borrowings, including notes payable, are recorded at cost, which approximates fair value, which are based on Level 2 inputs as previously defined.

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12.    SUBSEQUENT EVENT

On October 6, 2014, the Company’s board of directors approved the 2014 Restructuring Plan and delegated authority to the Company’s management to determine final actions with respect to 2014 Restructuring Plan. The 2014 Restructuring Plan is intended to exit low-return businesses and reduce the size and cost of the Company’s overhead structure to improve gross margins and profitability in the long term.

The 2014 Restructuring Plan includes exiting certain unprofitable international locations for the Company’s Water and Wastewater business, consolidating the Company’s worldwide Commercial and Structural business with the Company’s global Water and Wastewater business and eliminating certain idle facilities in the Company’s Bayou Louisiana coatings operations. Effective in the fourth quarter of 2014, the Company will realign its existing three reportable segments into three new reportable segments: Infrastructure Solutions; Corrosion Protection; and Energy Services. The reportable segments will be the same as the Company’s operating segments, which correspond to its management organizational structure. Each new reportable segment will have a operating president who will report to the CODM. The operating results and financial information reported by each of the new segments will be evaluated separately, regularly reviewed and used by the CODM to evaluate segment performance, allocate resources and determine management incentive compensation. All future SEC filings will reflect these new reportable segments.

As part of the 2014 Restructuring Plan, the Company recognized the following non-cash, pre-tax charges totaling $40.0 million for the quarter and nine months ended September 30, 2014 (in thousands):

	Fixed Asset Impairment		Definite-lived Intangible Asset Impairment		Non-Cash Restructuring Charges		Total Restructuring Charges
Cost of revenues	$	11,834	$	—	$	3,106	$	14,940
Operating expenses	36		—		14,081		14,117
Definite-lived intangible asset impairment	—		10,896		—		10,896
	$	11,870	$	10,896	$	17,187	$	39,953

The non-cash, pre-tax charge of $40.0 million includes $22.2 million related to the impairment of certain long-lived assets and definite-lived intangible assets for Bayou’s coating operations in Louisiana, which is reported in the Energy and Mining reportable segment, and $17.8 million related to inventory obsolescence, impairment of certain long-lived assets, bad debt expense, write-off of certain other current assets and a legal accrual related to disputed work performed for the Company’s European and Asia-Pacific operations, which are reported in the Water and Wastewater reportable segment.

Included in the 2014 Restructuring Plan is a reduction of the Company’s overhead expenses and related elimination of approximately 170 full-time positions out of approximately 6,000 employees worldwide. The Company expects pre-tax cash charges of $15 million to $18 million to be incurred from the fourth quarter of 2014 through the third quarter of 2015 for related employee severance, extension of benefits, employment assistance programs and other costs associated with the restructuring. Additional non-cash charges related to the various restructured operations could potentially be recorded between the fourth quarter of 2014 and the third quarter of 2015.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is management’s discussion and analysis of certain significant factors that have affected our financial condition, results of operations and cash flows during the periods included in the accompanying unaudited consolidated financial statements. This discussion should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2013.

We believe that certain accounting policies could potentially have a more significant impact on our consolidated financial statements, either because of the significance of the consolidated financial statements to which they relate or because they involve a higher degree of judgment and complexity. A summary of such critical accounting policies can be found in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Annual Report on Form 10-K for the year ended December 31, 2013.

Forward-Looking Information

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. We make forward-looking statements in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this Quarterly Report on Form 10-Q that represent our beliefs or expectations about future events or financial performance. These forward-looking statements are based on information currently available to us and on management’s beliefs, assumptions, estimates and projections and are not guarantees of future events or results. When used in this report, the words “anticipate,” “estimate,” “believe,” “plan,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Such statements are subject to known and unknown risks, uncertainties and assumptions, including those referred to in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission on February 28, 2014, and in our subsequent Quarterly Reports on Form 10-Q, including this report. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. In addition, our actual results may vary materially from those anticipated, estimated, suggested or projected. Except as required by law, we do not assume a duty to update forward-looking statements, whether as a result of new information, future events or otherwise. Investors should, however, review additional disclosures made by us from time to time in our filings with the Securities and Exchange Commission. Please use caution and do not place reliance on forward-looking statements. All forward-looking statements made by us in this report are qualified by these cautionary statements.

Executive Summary

We are a global leader in infrastructure protection and maintenance, providing proprietary technologies and services: (i) to protect against the corrosion of industrial pipelines; (ii) to rehabilitate and strengthen water, wastewater, energy and mining piping systems and buildings, bridges, tunnels and waterfront structures; and (iii) to utilize integrated professional services in engineering, procurement, construction, maintenance and turnaround services for a broad range of energy related industries. Our business activities include manufacturing, distribution, maintenance, construction, installation, coating and insulation, cathodic protection, research and development and licensing. Our acquisition of Brinderson, L.P. and related entities (“Brinderson”) on July 1, 2013 opens new markets for us through the maintenance, engineering and construction services for downstream and upstream facilities in the North American oil and gas market. Our products and services are currently utilized and performed in more than 80 countries across six continents. We believe that the depth and breadth of our products and services platform make us a leading “one-stop” provider for the world’s infrastructure rehabilitation and protection needs.

During the first quarter of 2014, we reorganized our Water and Wastewater businesses to bring all of our global operations under one central leadership team. In connection with this management reorganization, we combined our North American Water and Wastewater and International Water and Wastewater reportable segments into one reportable segment titled Water and Wastewater. As a result, we are currently organized into three reportable segments: Energy and Mining; Water and Wastewater; and Commercial and Structural.

In October 2014, we announced a realignment of our businesses into three new platforms with unique leadership teams. Infrastructure Solutions will combine the Water & Wastewater and Commercial & Structural segments and focus on rehabilitation and strengthening of infrastructure assets such as pipelines, transportation assets and other structures. Corrosion Protection will retain all of the businesses comprising the current Energy & Mining platform (excluding Brinderson) and provide rehabilitation and corrosion protection services, primarily for oil, gas and mining pipelines in North America, the Middle East and South America. Energy Services will consist of Brinderson’s operations with respect to long-term maintenance contracts and other services including engineering, turnaround and small capital construction for the upstream and downstream oil and gas markets, primarily in California. The realignment focuses on streamlining the organization to improve

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execution and enhance growth and profitability. Effective in the fourth quarter of 2014, we will adjust our reporting segments to reflect these changes.

Market changes between the segments are typically independent of each other, unless a macroeconomic event affects the water and wastewater rehabilitation markets, the oil, mining and gas markets and the commercial and structural markets concurrently. These changes exist for a variety of reasons, including, but not limited to, local economic conditions, weather-related issues and levels of government funding.

Our long-term strategy consists of:

• expanding our position in the growing and profitable energy and mining sectors through organic growth, selective acquisitions of companies, formation of strategic alliances and by conducting complimentary product and technology acquisitions;

• capitalizing on energy services opportunities afforded by “nested” customer relationships — fostering growth across our subsidiaries, increasing cross selling opportunities and generating a greater stream of recurring revenues, thereby reducing project volatility;

• growing market opportunities in the infrastructure solutions sector through: (i) continued customer acceptance of current products and technologies; (ii) expansion of our product and service offerings with respect to protection, rehabilitation and restoration of a broader group of infrastructure assets, including an increased focus on third-party product sales; and (iii) leveraging our premier brands and experience of successfully innovating and delivering technologies and services through selective acquisitions of companies and technologies and through strategic alliances; and

• expanding all of our businesses in key emerging markets such as Asia and the Middle East.

Acquisitions/Strategic Initiatives/Divestitures

On October 6, 2014, our board of directors approved a realignment and restructuring plan (the “2014 Restructuring Plan”). The 2014 Restructuring Plan is intended to exit low-return businesses and reduce the size and cost of our overhead structure to improve gross margins and profitability in the long term.

The 2014 Restructuring Plan includes exiting certain unprofitable international locations for our Water and Wastewater business, consolidating our worldwide Commercial and Structural business with our global Water and Wastewater business and eliminating certain idle facilities in our Bayou Louisiana coatings operations. Effective in the fourth quarter of 2014, we will realign our existing three reportable segments into three new reportable segments: Infrastructure Solutions; Corrosion Protection; and Energy Services. All future Securities and Exchange Commission (“SEC”) filings will reflect these new reportable segments.

Included in the restructuring initiative is a reduction of our overhead expense and related elimination of approximately 170 full-time positions out of approximately 6,000 employees worldwide.

The 2014 Restructuring Plan is expected to generate annual savings of $8 million to $11 million, or $0.15 to $0.20 per diluted share, with $0.03 to $0.04 per diluted share expected to be recognized in the fourth quarter of 2014.

See Notes 1, 10 and 12 to the consolidated financial statements contained in this report for a detailed discussion regarding acquisitions, strategic initiatives and divestitures.

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Results of Operations – Quarters and Nine-Month Periods Ended September 30, 2014 and 2013

Overview – Consolidated Results

Key financial data for our consolidated operations was as follows:

(dollars in thousands)	Quarters Ended September 30,						Increase (Decrease)
	2014			2013			$			%
Revenues	$	350,138		$	307,665		$	42,473		13.8	%
Gross profit	63,939			69,411			(5,472		)	(7.9	)
Gross profit margin	18.3		%	22.6		%	n/a			(430	)bp
Operating expenses	66,977			47,956			19,021			39.7
Definite-lived intangible asset impairment	10,896			—			10,896			100.0
Earnout reversal	—			(2,844		)	(2,844		)	(100.0	)
Acquisition-related expenses	—			2,267			(2,267		)	(100.0	)
Operating income (loss)	(13,934		)	22,032			(35,966		)	(163.2	)
Operating margin	(4.0		)%	7.2		%	n/a			(1,120	)bp
Income (loss) from continuing operations	(16,101		)	14,623			(30,724		)	(210.1	)

(dollars in thousands)	Nine Months Ended September 30,						Increase (Decrease)
	2014			2013			$			%
Revenues	$	979,240		$	775,741		$	203,499		26.2	%
Gross profit	196,920			176,116			20,804			11.8
Gross profit margin	20.1		%	22.7		%	n/a			(260	)bp
Operating expenses	169,666			130,112			39,554			30.4
Definite-lived intangible asset impairment	10,896			—			10,896			100.0
Earnout reversal	—			(2,844		)	(2,844		)	(100.0	)
Acquisition-related expenses	539			4,175			(3,636		)	(87.1	)
Operating income	15,819			44,673			(28,854		)	(64.6	)
Operating margin	1.6		%	5.8		%	n/a			(420	)bp
Income from continuing operations	1,235			37,277			(36,042		)	(96.7	)

On October 6, 2014, our board of directors approved a realignment and restructuring plan (the “2014 Restructuring Plan”) and delegated authority to the management team to determine final actions with respect to 2014 Restructuring Plan. The 2014 Restructuring Plan is intended to exit low-return businesses and reduce the size and cost of our overhead structure to improve gross margins and profitability in the long term (see Note 12 to the consolidated financial statements contained in this report). As part of the 2014 Restructuring Plan, we recognized a non-cash, pre-tax charge totaling $40.0 million ($33.0 million post-tax) for the quarter and nine months ended September 30, 2014. The non-cash, pre-tax charge of $40.0 million includes $22.2 million related to the impairment of certain long-lived assets and definite-lived intangible assets for Bayou’s coating operations in Louisiana, which is reported in the Energy and Mining reportable segment, and $17.8 million related to inventory obsolescence, impairment of certain long-lived assets, bad debt expense, write-off of certain other current assets and a legal accrual related to disputed work performed by our European and Asia-Pacific operations, which are reported in the Water and Wastewater reportable segment.

Consolidated income from continuing operations for the quarter ended September 30, 2014 decreased $30.7 million, or 210.1%, to a loss of $16.1 million from income of $14.6 million in the prior year quarter. Excluding the non-cash, pre-tax charge of $40.0 million ($33.0 million post-tax) related to the 2014 Restructuring Plan, consolidated income from continuing operations for the quarter ended September 30, 2014 increased $2.3 million, or 15.7%, to $16.9 million. Net of the 2014 Restructuring Plan charge, the increase in consolidated income from continuing operations was primarily the result of improved profitability of our Water and Wastewater segment, increased revenues and profitability from Brinderson, lower acquisition-related expenses and bank fees recorded in the third quarter of 2013, partially offset by decreased profitability in our robotic coating and industrial linings operations and a higher effective income tax rate in third quarter 2014. Operating income decreased $36.0 million, or 163.2%, due to the non-cash charges related to the 2014 Restructuring Plan. Net of these charges,

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operating income increased $4.0 million principally due to the Water and Wastewater segment, which contributed $2.2 million more in operating income in the third quarter of 2014 than the prior year quarter, and a $2.3 million quarter over quarter increase in operating income from Brinderson.

For the nine months ended September 30, 2014, consolidated income from continuing operations decreased $36.0 million, or 96.7%, to $1.2 million from $37.2 million in the prior year period. Excluding the non-cash, pre-tax charge of $40.0 million ($33.0 million post-tax) related to the 2014 Restructuring Plan, consolidated income from continuing operations for the nine months ended September 30, 2014 decreased $3.0 million, or 8.0%, to $34.2 million. Net of the 2014 Restructuring Plan charge, the decrease was primarily attributable to the second quarter 2013 sale of our 50% interest in our joint venture in Germany, which resulted in a gain of $7.9 million (post-tax). Excluding this item, income from continuing operations increased $4.9 million, or 16.7%, compared to the prior year period primarily due to the contribution from our July 2013 acquisition of Brinderson, improved profitability of the Water and Wastewater segment, a reduction of acquisition-related expenses and bank fees recorded in the third quarter of 2013, partially offset by higher interest costs as a result of higher principal balances year over year due to the Brinderson acquisition and a higher effective income tax rate in first nine months of 2014. Operating income decreased $28.9 million, or 64.6%, due to the non-cash charges related to the 2014 Restructuring Plan. Net of these charges, operating income increased $11.1 million, or 24.8%, principally due to the Water and Wastewater segment, which contributed $6.3 million more in operating income in the first nine months of 2014 than in the prior year period, a $10.7 million year over year increase in operating income from Brinderson and lower acquisition-related expenses, partially offset by lower profits due to a slowdown in activity on the Wasit project in our robotic coating operations and decreased project activities in our industrial linings operations.

Total revenues for the quarter ended September 30, 2014 increased $42.5 million, or 13.8%, to $350.1 million from $307.7 million in the prior year quarter primarily due to strong execution in the Water & Wastewater segment and increased revenues from Brinderson. For the nine months ended September 30, 2014, revenues increased $203.5 million, or 26.2%, to $979.2 million from $775.7 million in the prior year period. This increase was primarily due to the addition of Brinderson in July 2013, which contributed $148.6 million in revenues during the first six months of 2014 with no revenues in the prior year period. Additionally, the Water & Wastewater segment increased revenues $29.8 million in the nine months ended September 30, 2014 compared to the prior period.

Operating expenses increased $19.0 million, or 39.7%, for the third quarter of 2014 compared to the same quarter of 2013. Excluding non-cash charges of $14.1 million related to the 2014 Restructuring Plan, operating expenses increased $4.9 million, or 10.2%, primarily due to investments made to enhance sales and business development activities in the Middle East and North American Commercial and Structural markets and project execution investments at Brinderson and the North American Water and Wastewater operations. For the nine months ended September 30, 2014, operating expenses increased $39.6 million, or 30.4%, compared to the prior year period. Excluding non-cash charges of $14.1 million related to the 2014 Restructuring Plan, operating expenses increased $25.5 million, or 19.6%, primarily due to the addition of Brinderson, which contributed $13.9 million in operating expenses during the first six months of 2014 with no amount in the first six months of 2013. Exclusive of Brinderson, operating expenses increased, as a percentage of revenue, for the nine-months ended September 30, 2014 compared to the prior year period due to increased costs related to building certain sales and operational organizations.

Contract Backlog

Contract backlog is our expectation of revenues to be generated from received, signed and uncompleted contracts, the cancellation of which is not anticipated at the time of reporting. The Company assumes that these signed contracts are funded. For its government or municipal contracts, the Company’s customers generally obtain funding through local budgets or pre-approved bond financing. The Company has not undertaken a process to verify funding status of these contracts and, therefore, cannot reasonably estimate what portion, if any, of its contracts in backlog have not been funded. However, the Company has little history of signed contracts being canceled due to the lack of funding. Contract backlog excludes any term contract amounts for which there are not specific and determinable work releases or values beyond a renewal date in the forward 12-month period. Projects where we have been advised that we are the low bidder, but have not formally been awarded the contract, are not included. Although backlog represents only those contracts and Master Service Agreements (“MSAs”) that are considered to be firm, there can be no assurance that cancellation or scope adjustments will not occur with respect to such contracts.

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The following table sets forth our consolidated backlog by segment (in millions):

	September 30, 2014		June 30, 2014		December 31, 2013		September 30, 2013
Energy and Mining (1)	$	419.7	$	463.5	$	429.1	$	384.7
Water and Wastewater	292.0		317.3		280.1		284.7
Commercial and Structural	40.2		48.4		49.8		48.2
Total backlog	$	751.9	$	829.2	$	759.0	$	717.6

__________________________

⁽¹⁾  September 30, 2014, June 30, 2014, December 31, 2013 and September 30, 2013 included backlog for Brinderson of $219.3 million, $248.1 million, $268.3 million and $209.2 million, respectively. Brinderson backlog represents expected unrecognized revenues to be realized under long-term MSAs and other signed contracts. If the remaining term of these arrangements exceeds 12 months, the unrecognized revenues attributable to such arrangements included in backlog are limited to only the next 12 months of expected revenues.

Within our Energy and Mining and Commercial and Structural segments, certain contracts are performed through our variable interest entities, in which we own a controlling portion of the entity. As of September 30, 2014, 10.8% and 1.8% of our Energy and Mining backlog and Commercial and Structural backlog, respectively, related to these variable interest entities. With the exception of Brinderson, a substantial majority of our contracts in these two segments are fixed price contracts with individual private businesses and municipal and federal government entities across the world.

Within our Water and Wastewater segments, all of our projects are performed through our wholly-owned subsidiaries and a substantial majority of those projects are fixed price contracts with individual municipalities across the world.

Energy and Mining Segment

Key financial data for our Energy and Mining segment was as follows:

(dollars in thousands)	Quarters Ended September 30,						Increase (Decrease)
	2014			2013			$			%
Revenues	$	197,510		$	168,708		$	28,802		17.1	%
Gross profit	29,380			37,118			(7,738		)	(20.8	)
Gross profit margin	14.9		%	22.0		%	n/a			(710	)bp
Operating expenses	28,241			24,821			3,420			13.8
Definite-lived intangible asset impairment	10,896			—			10,896			100.0
Earnout reversal	—			(2,844		)	(2,844		)	(100.0	)
Acquisition-related expenses	—			2,267			(2,267		)	(100.0	)
Operating income (loss)	(9,757		)	12,874			(22,631		)	(175.8	)
Operating margin	(4.9		)%	7.6		%	n/a			(1,250	)bp

(dollars in thousands)	Nine Months Ended September 30,						Increase (Decrease)
	2014			2013			$			%
Revenues	$	557,028		$	385,991		$	171,037		44.3	%
Gross profit	100,856			87,678			13,178			15.0
Gross profit margin	18.1		%	22.7		%	n/a			(460	)bp
Operating expenses	83,760			61,866			21,894			35.4
Definite-lived intangible asset impairment	10,896			—			10,896			100.0
Earnout reversal	—			(2,844		)	(2,844		)	(100.0	)
Acquisition-related expenses	539			4,175			(3,636		)	(87.1	)
Operating income	5,661			24,481			(18,820		)	(76.9	)
Operating margin	1.0		%	6.3		%	n/a			(530	)bp

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Revenues

Revenues in our Energy and Mining segment increased $28.8 million, or 17.1%, in the third quarter of 2014 compared to the third quarter of 2013. This increase was primarily due to increased turnaround and maintenance activities at Brinderson and increased project work related to our cathodic protection operations and our Canadian coating operations. Partially offsetting the increase in revenues was a decrease related to reduced project activity in both our industrial linings operations and our coating operations in Louisiana. The decrease in our industrial lining operations was primarily due to more difficult market conditions in certain international markets, most notably in the South American mining market and our completion in 2013 of a large project in Morocco that contributed $5.3 million in revenues during the third quarter of 2013 with no revenue in 2014. The decrease in our coating operations in Louisiana was primarily due to delays from customer driven timing of project activity.

Revenues increased $171.0 million, or 44.3%, for the nine months ended September 30, 2014 compared to the prior year period due to the addition of Brinderson, which contributed $148.6 million in additional revenues during the first half 2014. Exclusive of Brinderson’s six-month contribution, revenues increased $22.5 million, or 5.8%, primarily due to an increase in project work resulting in increased revenues in our domestic and international cathodic protection operations, our robotic coating operations and our Canadian coating operations. Partially offsetting these increases was reduced project activity in both our industrial linings operations and our coating operations in Louisiana. The decrease in our industrial lining operations was primarily due to the 2013 completion of a large project in Morocco which contributed $15.8 million in revenue during the first nine months of 2013 with no revenue in 2014. The decrease in project activity in our coating operations in Louisiana was primarily due the decrease in scope of a large project with a single client and delays from customer driven timing of project activity.

Our Energy and Mining segment contract backlog at September 30, 2014 was $419.7 million, which represented a $43.8 million, or 9.4%, decrease compared to June 30, 2014, but a $35.0 million, or 9.1%, increase compared to September 30, 2013. The decrease from the prior quarter was primarily due to the suspension of a $34 million onshore coatings project that was signed in the second quarter of 2014 for our coating operations in Louisiana and a seasonal decrease in Brinderson’s backlog related to work-down of certain maintenance contracts that are up for renewal in the fourth quarter of 2014. As a result of the suspension of the $34 million onshore coatings project, anticipated pipe coating activities were canceled, thereby, effectively converting this project into a long-term pipe storage contract for the foreseeable future. The increase in backlog at September 30, 2014 compared to September 30, 2013, was a result of an increase in signed contracts related to project activity in all operations of the Energy and Mining segment except for the industrial linings operations which experienced a decline.

Brinderson’s backlog represents expected revenues to be realized under long-term MSAs and other signed contracts. If the remaining term of the arrangements exceeds 12 months, the unrecognized revenues attributable to such arrangements included in backlog are limited to only the next 12 months of expected revenues. At the date of acquisition, July 1, 2013, this backlog was $201.0 million and has increased 9.1% during our ownership to $219.3 million at September 30, 2014.

Gross Profit and Gross Profit Margin

Gross profit decreased $7.7 million, or 20.8%, and gross profit margin decreased 710 basis points to 14.9% in the third quarter of 2014 compared to the third quarter of 2013. As part of the 2014 Restructuring Plan, we recognized a non-cash charge of $11.3 million related to asset impairment of long-lived assets in our Bayou coating operation in Louisiana for the quarter and nine months ended September 30, 2014. Exclusive of the impairment charge, gross profit increased $3.6 million, or 9.7%, and gross profit margin decreased 140 basis points to 20.6% in the third quarter of 2014 compared to the third quarter of 2013 primarily due to Brinderson’s quarter over quarter increased gross profit contribution and its related lower margin work. Additionally, gross profit and gross profit percentage increased in our coating operations as a result of higher margin work. Offsetting the overall increase in gross profit was a decrease related to a slowdown in activity on the Wasit project in our robotic coating operations and decreased project activity in our industrial linings operations.

Gross profit increased $13.2 million, or 15.0%, and gross profit margin decreased 460 basis points to 18.1% for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013. Exclusive of the $11.3 million impairment charge discussed above, gross profit increased $24.5 million, or 28.0%, and gross profit margin decreased 260 basis points to 20.1% for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013. The increase in gross profit and related decrease in gross profit margin were primarily due to Brinderson’s contribution and the related lower margin work in the first six months of 2014, which totaled $22.3 million of gross profit at 15.0% gross margins, with no amount in the first six months of 2013. Exclusive of the impairment charge and Brinderson’s non-comparable contribution, gross profit increased $2.2 million and gross profit margin decreased 70 basis points to 22.0% for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013.

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Operating Expenses

Operating expenses in our Energy and Mining segment increased $3.4 million, or 13.8%, in the third quarter of 2014, and $21.9 million, or 35.4%, in the nine months ended September 30, 2014 compared to the prior year periods. As a percentage of revenues, operating expenses were 14.3% and 15.0% for the quarter and nine-month period ended September 30, 2014, respectively, compared to 14.7% and 16.0% in the comparable periods in 2013, respectively. Exclusive of Brinderson’s six-month contribution, operating expenses increased $8.0 million, or 12.9%, in the nine-month period ended September 30, 2014 compared to the prior year period primarily due to an increase in our cathodic protection operations as we expanded our operations into the Middle East and increased sales and administrative functions within our robotic and field service coatings operations.

Operating Income and Operating Margin

Operating income decreased $22.6 million to a loss of $9.8 million in the third quarter of 2014 compared to income of $12.9 million in the third quarter of 2013. In the nine-month period ended September 30, 2014, operating income decreased by $18.8 million, or 76.9%, to $5.7 million compared to $24.5 million in the prior year period. Operating margin was (4.9)% and 7.6% in the quarters ended September 30, 2014 and 2013, respectively, and 1.0% and 6.3% in the nine-month periods ended September 30, 2014 and 2013, respectively. Exclusive of Brinderson’s six-month contribution, operating income decreased $27.2 million, or 111.2%, on a year-over-year basis, due primarily to non-cash impairments charges related to Bayou’s coating operations in Louisiana as described below, lower gross margins, increased operating expenses and earnout reversals recognized in 2013, partially offset by lower acquisition-related expenses.

As part of the 2014 Restructuring Plan, the Company recognized non-cash charges of $11.3 million and $10.9 million in the third quarter of 2014 related to asset impairments of tangible fixed assets and asset impairments of definite-lived intangible assets for its Bayou coating operations in Louisiana, respectively. Exclusive of Bayou’s non-cash impairment charges totaling $22.2 million, operating income in the third quarter of 2014 decreased $0.4 million, or 3.3%, compared to the third quarter of 2013 and operating income in the first nine months of 2014 increased $4.0 million, or 14.6%, compared to the first nine months of 2013.

Water and Wastewater Segment

Key financial data for our Water and Wastewater segment was as follows:

(dollars in thousands)	Quarters Ended September 30,						Increase (Decrease)
	2014			2013			$			%
Revenues	$	135,649		$	122,149		$	13,500		11.1	%
Gross profit	26,719			26,473			246			0.9
Gross profit margin	19.7		%	21.7		%	n/a			(200	)bp
Operating expenses	32,169			16,402			15,767			96.1
Operating income (loss)	(5,450		)	10,071			(15,521		)	(154.1	)
Operating margin	(4.0		)%	8.2		%	n/a			(1,220	)bp

(dollars in thousands)	Nine Months Ended September 30,						Increase (Decrease)
	2014			2013			$			%
Revenues	$	371,493		$	341,680		$	29,813		8.7	%
Gross profit	76,078			71,210			4,868			6.8
Gross profit margin	20.5		%	20.8		%	n/a			(30	)bp
Operating expenses	65,854			49,538			16,316			32.9
Operating income	10,224			21,672			(11,448		)	(52.8	)
Operating margin	2.8		%	6.3		%	n/a			(350	)bp

Revenues

Revenues in our Water and Wastewater segment increased $13.5 million, or 11.1%, in the third quarter of 2014 compared to the third quarter of 2013. The growth came primarily from increased volume activity in our North American contracting operation as revenues grew $14.4 million from the prior year period. Our North American operation has experienced good market conditions and success in project acquisitions over the last year and has increased capacity to capitalize on a strong

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backlog position as of September 30, 2014. Revenues decreased $0.9 million collectively in our European and Asia-Pacific operations.

Revenues increased $29.8 million, or 8.7%, for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013. Revenues increased $35.2 million in our North American operations primarily due to increased volume activity in our contracting operation despite poor weather conditions that persisted much of the first quarter of 2014. Revenues decreased $5.4 million collectively in our European and Asia-Pacific operations.

Our Water and Wastewater segment contract backlog was $292.0 million at September 30, 2014, which was a decrease of $25.3 million, or 8.0%, from the record backlog levels at June 30, 2014, but an increase of $7.3 million, or 2.6%, from backlog at September 30, 2013 as our North American operations continues to benefit from solid municipal spending. The segment continues to see improved bidding performance and several new project wins were added into backlog, primarily in the first half of 2014.

Gross Profit and Gross Profit Margin

Gross profit increased $0.2 million, or 0.9%, and gross profit margin increased 200 basis points in the third quarter of 2014 compared to the third quarter of 2013. The increase in gross profit was primarily due to increased activity in our contracting operation in North America. The increase in gross profit margin was primarily due to continued efficiency improvements in contracting installation services and manufacturing business for our North American operations. Gross profit and gross margin in our European and Asia-Pacific operations were flat despite declining revenues. As part of the 2014 Restructuring Plan, we recognized a non-cash charge of $3.7 million in our European and Asia-Pacific operations for the quarter ended September 30, 2014.

Gross profit increased $4.9 million, or 6.8%, and gross profit margin increased 30 basis points for the nine months ended September 30, 2014 compared to nine months ended September 30, 2013. The increase in gross profit was primarily due to increased activity in our contracting installation services and an improved project mix, which shifted from small to more medium and large diameter work in our North American operations. Offsetting the increase in gross profit, were decreases primarily due to isolated project remediation efforts in our European operations and certain project delays that negatively impacted profitability in our Asian operations. As part of the 2014 Restructuring Plan, we recognized a non-cash charge of $3.7 million in our European and Asia-Pacific operations in the third quarter of 2014, and the non-cash charge is reflected in gross profit for the nine months ended September 30, 2014. The non-cash charge of $3.7 million related to inventory obsolescence totaling $3.1 million and an asset impairment charge to long-lived assets totaling $0.6 million.

Operating Expenses

Operating expenses in our Water and Wastewater segment increased $15.8 million, or 96.1%, in the third quarter of 2014, and $16.3 million, or 32.9%, in the nine months ended September 30, 2014 compared to the prior year periods. As a percentage of revenues, operating expenses were 23.7% and 17.7% for the quarter and nine-month period ended September 30, 2014, respectively, compared to 13.4% and 14.5% in the comparable periods in 2013, respectively. As part of the 2014 Restructuring Plan, we recognized a non-cash charge of $14.1 million in our European and Asia-Pacific operations for the quarter and nine months ended September 30, 2014. Exclusive of these charges, operating expenses have remained relatively steady due to efficiencies gained over the last two years in project management, along with operational and administrative realignments.

Operating Income and Operating Margin

Operating income decreased $15.5 million to a loss of $5.5 million in the third quarter of 2014 compared to income of $10.1 million in the third quarter of 2013. In the nine-month period ended September 30, 2014, operating income decreased $11.4 million, or 52.8%, to $10.2 million compared to $21.7 million in the prior year period. Operating margin was (4.0)% and 8.2% in the quarters ended September 30, 2014 and 2013, respectively, and 2.8% and 6.3% in the nine-month periods ended September 30, 2014 and 2013, respectively.

As part of the 2014 Restructuring Plan, we recognized a non-cash charge of $17.8 million in our European and Asia-Pacific operations for the quarter and nine months ended September 30, 2014. The non-cash charge of $17.8 million consisted of a non-cash charge to gross profit totaling $3.7 million and a non-cash charge to operating expenses totaling $14.1 million and is described in the related sections above. Exclusive of these charges, operating income increased $2.2 million, or 21.8%, in the third quarter of 2014, and $6.3 million, or 28.9%, in the nine months ended September 30, 2014 compared to the prior year periods.

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Commercial and Structural Segment

Key financial data for our Commercial and Structural segment was as follows:

(dollars in thousands)	Quarters Ended September 30,						Increase (Decrease)
	2014			2013			$			%
Revenues	$	16,979		$	16,808		$	171		1.0	%
Gross profit	7,840			5,820			2,020			34.7
Gross profit margin	46.2		%	34.6		%	n/a			1,160	bp
Operating expenses	6,567			6,733			(166		)	(2.5	)
Operating income (loss)	1,273			(913		)	2,186			239.4
Operating margin	7.5		%	(5.4		)%	n/a			1,290	bp

(dollars in thousands)	Nine Months Ended September 30,						Increase (Decrease)
	2014			2013			$		%
Revenues	$	50,719		$	48,070		$	2,649	5.5	%
Gross profit	19,986			17,228			2,758		16.0
Gross profit margin	39.4		%	35.8		%	n/a		360	bp
Operating expenses	20,052			18,708			1,344		7.2
Operating loss	(66		)	(1,480		)	1,414		95.5
Operating margin	(0.1		)%	(3.1		)%	n/a		300	bp

Revenues

Revenues in our Commercial and Structural segment were flat in the third quarter of 2014 compared to the third quarter of 2013.

Revenues increased $2.6 million, or 5.5%, during the nine-month period ended September 30, 2014 compared to the prior year period primarily due to increased installation revenues in our Asian operations. We continued to make progress to stabilize our North American business following the departure of four key employees in late 2012.

Our Commercial and Structural segment contract backlog was $40.2 million at September 30, 2014. This represented a decrease of $8.2 million, or 16.9%, compared to June 30, 2014 and a decrease of $8.0 million, or 16.6%, compared to September 30, 2013. Our visibility into North American prospects continues to improve, and we anticipate improvements in sales momentum and backlog in future quarters.

Gross Profit and Gross Profit Margin

Gross profit was $7.8 million in the third quarter of 2014, an increase of $2.0 million, or 34.7%, compared to $5.8 million in the third quarter of 2013. Gross profit margin increased 1,160 basis points during the third quarter of 2014 as compared to the third quarter of 2013 due to higher margin project work through improved bidding and execution, primarily in the North American and Asian operations, and favorable project close-outs.

Gross profit increased $2.8 million, or 16.0%, and gross profit margin increased 360 basis points for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013. The increase in gross profit was due to an increase in project work and related revenues in our Asian operations and an increase in gross profit margin in our North American operations.

Operating Expense

Operating expenses in our Commercial and Structural segment decreased $0.2 million, or 2.5%, in the third quarter of 2014 compared to the prior year period primarily due to cost control efforts. Operating expenses increased $1.3 million, or 7.2%, in the nine months ended September 30, 2014 compared to the prior year period as a result of investments made to hire experienced sales and business development professionals to restore the growth expected for this business. Our operating expense, as a percentage of revenues, is higher in our Commercial and Structural segment as compared to our other segments due to the investments being made in this segment to build the infrastructure necessary to achieve our near-term growth objectives.

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Operating Income (Loss) and Operating Margin

Operating income increased $2.2 million to $1.3 million in the third quarter of 2014 compared to a loss of $0.9 million in the third quarter of 2013 primarily due to higher margin project work through improved bidding and execution, primarily in the North American and Asian operations. In the nine-month period ended September 30, 2014, operating income increased $1.4 million to a loss of $0.1 million compared to a loss of $1.5 million in the prior year period. Operating margin was 7.5% and (5.4)% in the quarters ended September 30, 2014 and 2013, respectively, and (0.1)% and (3.1)% in the nine-month periods ended September 30, 2014 and 2013, respectively.

Other Income (Expense)

Interest Income and Expense

Interest income increased $0.1 million and $0.3 million in the quarter and nine-month period ended September 30, 2014, respectively, compared to the same periods in 2013, primarily due to higher international cash balances throughout the periods. Interest expense decreased $2.2 million and $0.3 million in the quarter and nine-month period ended September 30, 2014, respectively, compared to the same periods in 2013. In the third quarter of 2013, we recognized approximately $2.0 million related to certain bank fees associated with the our new credit facility. For the nine-month period ended September 30, 2014, outstanding loan principal balances increased year over year due to our July 1, 2013 acquisition of Brinderson.

Other Income (Expense)

Other income (expense) decreased by $0.2 million in the quarter ended September 30, 2014 compared to the prior year period primarily due to lower foreign currency losses due to the revaluation of certain asset and liability balances. Other income (expense) decreased by $8.4 million in the first nine months of 2014 compared to the prior year period primarily due to activity in the second quarter of 2013, which included a $11.3 million gain recognized on the sale of our interest in our German joint venture, partially offset by a non-cash charge of $2.7 million related to a write-down of the investment in our Bayou joint venture as part of the purchase price accounting associated with our 2009 acquisition of The Bayou Companies L.L.C (“Bayou”) (as discussed in Note 1 to the consolidated financial statements contained in this report). The first nine months of 2013 also included higher foreign currency losses due to the revaluation of certain asset and liability balances, while the first nine months of 2014 included the $0.5 million loss recognized in the first quarter of 2014 on the sale of our 49% interest in Bayou Coating (as discussed in Note 1 to the consolidated financial statements contained in this report).

Taxes on Income (Loss)

Taxes on income (loss) decreased $4.5 million during the third quarter of 2014 compared to the third quarter of 2013 and decreased $3.8 million during the nine-month period ended September 30, 2014 compared to the nine-month period ended September 30, 2013. Our effective tax rate for continuing operations was 7.8% and 88.3% in the quarter and nine-month period ended September 30, 2014, respectively, compared to 19.7% and 19.3% in the corresponding periods in 2013. The effective tax rates in the third quarter and first nine-months of 2014 were unfavorably impacted by a relatively small income tax benefit recorded on significant pre-tax charges related to the restructuring initiative and the impact of discrete tax items which were primarily the result of establishing valuation allowances on net operating losses in jurisdictions where we will not have the ability to generate future taxable income.

Equity in Earnings of Affiliated Companies

Equity in earnings of affiliated companies was zero and $1.7 million in the third quarters of 2014 and 2013, respectively. Equity in earnings of affiliated companies was $0.7 million and $3.9 million in the nine-month periods ended September 30, 2014 and 2013, respectively. These decreases were primarily due to there being no contributions from our former German joint venture, following its sale in June 2013, and only three months of 2014 contributions from Bayou Coating, which was sold on March 31, 2014 (as discussed in Note 1 to the consolidated financial statements contained in this report). As a result of the March 31, 2014 sale of Bayou Coating, we will not have any equity in earnings of affiliated companies for the remainder of the year.

Non-controlling Interests

Income attributable to non-controlling interests increased to $0.8 million in the third quarter of 2014 from $0.1 million in the third quarter of 2013, primarily due to improvements in our joint ventures in Canada and Mexico and lower losses from our joint venture in Morocco. Income attributable to non-controlling interests was $0.9 million and $1.0 million in the nine-month periods ended September 30, 2014 and 2013, respectively. This decrease was due to increased losses from our coating joint

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venture in Louisiana, partially offset by improvements in our coating joint venture in Canada and lower losses from our joint venture in Morocco.

Loss from Discontinued Operations

Loss from discontinued operations was $0.1 million and $0.6 million in the quarters ended September 30, 2014 and 2013, respectively, and $0.6 million and $6.5 million in the nine months ended September 30, 2014 and 2013, respectively. Our BWW business ceased bidding new work and substantially completed all ongoing projects during the second quarter of 2013.

Liquidity and Capital Resources

Cash and Cash Equivalents

(In thousands)	September 30, 2014		December 31, 2013
Cash and cash equivalents	$	115,941	$	158,045
Restricted cash	623		483

Restricted cash held in escrow relates to deposits made in lieu of retention on specific projects performed for municipalities and state agencies or advance customer payments and compensating balances for bank undertakings in Europe.

Sources and Uses of Cash

We expect the principal operational use of funds for the foreseeable future will be for capital expenditures, potential acquisitions, working capital, debt service and share repurchases. During the first nine months of 2014, capital expenditures were primarily for supporting growth in our Energy and Mining and Water and Wastewater operations, along with investments in new information technology systems to support the growth of our organization. For the full year of 2014, we expect slightly increased levels of capital expenditures compared to 2013 due to a full year of operations for Brinderson and to support growth of our Water and Wastewater business, primarily in North America.

At September 30, 2014, our cash balances were located worldwide for working capital and support needs. Given the breadth of our international operations, as of September 30, 2014 approximately 70% of our cash was denominated in currencies other than the United States dollar. We manage our worldwide cash requirements by reviewing available funds among the many subsidiaries through which we conduct business and the cost effectiveness with which those funds can be accessed. The repatriation of cash balances from certain of our subsidiaries could have adverse tax consequences or be subject to regulatory capital requirements; however, those balances are generally available without legal restrictions to fund ordinary business operations. With few exceptions, U.S. income taxes, net of applicable foreign tax credits, have not been provided on undistributed earnings of international subsidiaries. Our intention is to permanently reinvest these earnings.

Our primary source of cash is operating activities. We occasionally borrow under our line of credit’s available capacity to fund operating activities, including working capital investments. Our operating activities include the collection of accounts receivable as well as the ultimate billing and collection of costs and estimated earnings in excess of billings. At September 30, 2014, we believe our net accounts receivable and our costs and estimated earnings in excess of billings as reported on our consolidated balance sheet were fully collectible. At September 30, 2014, we had certain net receivables (as discussed in the following paragraph) that we believe will be collected but are being disputed by the customer in some manner, which has impacted or may meaningfully impact the timing of collection or require us to invoke our contractual rights to an arbitration or mediation process, or take legal action. If in a future period we believe any of these receivables are no longer collectible, we would increase our allowance for bad debts through a charge to earnings.

As of September 30, 2014, we had approximately $13.6 million in receivables related to certain projects in Texas, Georgia and Morocco that have been delayed in payment. We are in various stages of discussions, arbitration and/or litigation with the project clients regarding such receivables. Additionally, we had $4.4 million of receivables with a single customer associated with a large fabrication project that have been outstanding for various periods dating back to 2009 through 2013. In each of the above instances, the customer has failed to meet its payment obligations in the time frame set forth in the respective contracts. The Company believes that it has performed its obligations pursuant to such contracts. The Company believes the likelihood of success in each of these cases is probable and the Company is vigorously defending its position. During the quarter ended September 30, 2014, we collected approximately $2.3 million of the receivables associated with the project in Morocco.

During the third quarter of 2014 the Company recorded a reserve of approximately $2.2 million associated with receivables related to projects in India. Based upon the Company’s decision to exit the Indian CIPP contracting market, the Company believes that the collection of the Indian receivable is no longer probable.

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Cash Flows from Operations

Cash flows from operating activities of continuing operations provided $8.7 million in the first nine months of 2014 compared to $41.6 million provided in the first nine months of 2013. The decrease in operating cash flow from 2014 to 2013 was primarily related to the timing of working capital requirements, particularly related to receivables, partially offset by higher net income, as $11.8 million of income in the first nine months of 2013 was related to the sale of our German joint venture.

We used $66.6 million of cash for working capital during the nine-month period ended September 30, 2014 compared to $12.6 million used in the comparable period of 2013. The increased use of working capital was primarily due to a significant increase in revenues booked in September, which increased trade receivable by over $38 million compared to the second quarter of 2014. The Company expects to collect a significant portion of these receivables in the fourth quarter, which is typically the largest for cash collections. Excluding the change in receivables, the other elements of working capital provided $16.7 million in the nine-month period ended September 30, 2014 and used $1.4 million in the nine-month period ended September 30, 2013. This change was primarily related to higher accounts payable at Brinderson due to increased activity year over year. Our costs and estimated earnings in excess of billings was $105.2 million at September 30, 2014, an increase of $25.2 million from December 31, 2013. This increase was primarily attributable to seasonality, where we have increased project activity in the summer months, and billing requirements of certain projects within our North American Water and Wastewater business.

Unrestricted cash decreased to $115.9 million at September 30, 2014 from $158.0 million at December 31, 2013.

Cash Flows from Investing Activities

Cash flows from investing activities of continuing operations used $16.9 million during the nine months ended September 30, 2014 compared to $144.2 million used in the comparable period of 2013. During the first nine months of 2014, we sold our interests in Bayou Coating for a total sale price of $9.1 million. During the first nine months of 2013, we sold the equity interests in our German joint venture for a total sale price of €14 million (approximately $18.3 million) and used $143.8 million, net of cash acquired, to acquire Brinderson. We used $25.1 million in cash for capital expenditures in the first nine months of 2014 compared to $20.1 million in the prior year period. The higher capital expenditures during 2014 were primarily related to Brinderson and more maintenance capital in our North American Water and Wastewater business. In the first nine months of 2014 and 2013, $1.0 million of non-cash capital expenditures were included in accounts payable and accrued expenditures. Capital expenditures in the first nine months of 2014 and 2013 were partially offset by $1.1 million and $1.9 million, respectively, in proceeds received from asset disposals.

We anticipate up to approximately $35.0 million to be spent in 2014 on capital expenditures to support our global operations.

Cash Flows from Financing Activities

Cash flows from financing activities used $27.2 million during the first nine months of 2014 compared to $112.7 million provided in the first nine months of 2013. During 2013, we entered into a new credit facility and borrowed $147.6 million to fund the purchase of Brinderson and used $5.0 million for facility financing fees. During the first nine months of 2014 and 2013, we used net cash of $22.4 million and $18.1 million, respectively, to repurchase 1,333,690 and 833,552 shares, respectively, of our common stock through open market purchases and in connection with our equity compensation programs as discussed in Note 6 to the consolidated financial statements contained in this report. Additionally, in the nine-month period ended September 30, 2014, we borrowed $10.0 million on the line of credit under our credit facility for working capital needs and used cash of $15.5 million to pay down the principal balance of our term loans as discussed in Note 5 to the consolidated financial statements contained in this report. In the nine-month period ended September 30, 2013, we used cash of $249.1 million primarily to retire the previous credit facility.

Long-Term Debt

In July 2013, in connection with the Brinderson acquisition, we entered into a new $650.0 million senior secured credit facility (the “Credit Facility”) with a syndicate of banks. Bank of America, N.A. served as the administrative agent. Merrill Lynch Pierce Fenner & Smith Incorporated, JPMorgan Securities LLC and U.S. Bank National Association acted as joint lead arrangers and joint book managers in the syndication of the Credit Facility. The Credit Facility consists of a $300.0 million five-year revolving line of credit and a $350.0 million five-year term loan facility, each with a maturity date of July 1, 2018. We borrowed the entire term loan and drew $35.5 million against the revolving line of credit from the Credit Facility on July 1, 2013 for the following purposes: (1) to pay the $147.6 million cash purchase price for our acquisition of Brinderson, which closed on July 1, 2013; (2) to retire $232.3 million in indebtedness outstanding under our prior credit facility; and (3) to fund expenses associated with the Credit Facility and the Brinderson acquisition. Additionally, we used $7.0 million of our cash on hand to fund these transactions.

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Generally, interest will be charged on the principal amounts outstanding under the Credit Facility at the British Bankers Association LIBOR rate plus an applicable rate ranging from 1.25% to 2.25% depending on our consolidated leverage ratio. We can also opt for an interest rate equal to a base rate (as defined in the credit documents) plus an applicable rate, which also is based on our consolidated leverage ratio. The applicable one month LIBOR borrowing rate (LIBOR plus our applicable rate) as of September 30, 2014 was approximately 2.10%.

Our indebtedness at September 30, 2014 consisted of $325.9 million outstanding from the $350.0 million term loan under the Credit Facility and $45.5 million on the line of credit under the Credit Facility. In July 2014, the Company borrowed $10.0 million on the line of credit for working capital needs. Additionally, we and Wasco Coatings UK Ltd. (“Wasco Energy”), a subsidiary of Wah Seong Corporation, loaned Bayou Wasco an aggregate of $14.0 million for the purchase of capital assets in 2012 and 2013. Additionally, during September 2014, the Company and Wasco Energy agreed to loan Bayou Wasco an additional $2.6 million for working capital needs increasing the total to $16.6 million. Of such amount, $8.1 million (representing funds loaned by Wasco Energy) was designated as third-party debt in the Company’s consolidated financial statements. In February 2014, we and Wasco Energy agreed to a five-year term on the funds loaned; therefore, the amounts have been classified as long-term debt as of September 30, 2014. In connection with the formation of Bayou Perma-Pipe Canada, Ltd. (“BPPC”), we and Perma-Pipe Canada, Inc. loaned BPPC an aggregate of $8.0 million for the purchase of capital assets and for operating purposes. Additionally, during January 2012, we and Perma-Pipe Canada, Inc. agreed to loan BPPC an additional $6.2 million for the purchase of capital assets increasing the total to $14.2 million. Of such amount, $4.5 million was designated as third-party debt in our consolidated financial statements. We also held $0.1 million of third party notes and bank debt at September 30, 2014.

As of September 30, 2014, we had $20.7 million in letters of credit issued and outstanding under the Credit Facility. Of such amount, $11.4 million was collateral for the benefit of certain of our insurance carriers and $9.3 million was for letters of credit or bank guarantees of performance or payment obligations of foreign subsidiaries.

In July 2013, we entered into an interest rate swap agreement for a notional amount of $175.0 million that is set to expire in July 2016. The notional amount of this swap mirrors the amortization of a $175.0 million portion of our $350.0 million term loan drawn from the Credit Facility. The swap requires us to make a monthly fixed rate payment of 0.87% calculated on the amortizing $175.0 million notional amount, and provides that we receive a payment based upon a variable monthly LIBOR interest rate calculated on the amortizing $175.0 million notional amount. The annualized borrowing rate of the swap at September 30, 2014 was approximately 2.19%. The receipt of the monthly LIBOR-based payment offsets a variable monthly LIBOR-based interest cost on a corresponding $175.0 million portion of our term loan from the Credit Facility. This interest rate swap is used to partially hedge the interest rate risk associated with the volatility of monthly LIBOR rate movement, and will be accounted for as a cash flow hedge.

Our Credit Facility is subject to certain financial covenants, including a consolidated financial leverage ratio and consolidated fixed charge coverage ratio. On October 6, 2014, we amended the Credit Facility’s defined terms for income and fixed charges to allow for the add-back of certain cash and non-cash charges related to the 2014 Restructuring Plan when calculating our compliance with the consolidated financial leverage ratio and consolidated fixed charge coverage ratio. At September 30, 2014, based upon the financial covenants, as amended, we had the capacity to borrow up to approximately $80.4 million of additional debt under our Credit Facility. See Note 5 to the financial statements contained in this report for further discussion on our debt covenants. We were in compliance with all covenants, as amended, at September 30, 2014 and expect continued compliance for the foreseeable future.

We believe that we have adequate resources and liquidity to fund future cash requirements and debt repayments with cash generated from operations, existing cash balances and additional short- and long-term borrowing capacity for the next 12 months. We expect cash generated from operations to improve throughout the remainder of 2014 due to anticipated increased profitability, improved working capital management initiatives and additional cash flows generated from businesses acquired in 2011, 2012 and 2013.

Disclosure of Contractual Obligations and Commercial Commitments

There were no material changes in contractual obligations and commercial commitments from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013. See Note 8 to the consolidated financial statements contained in this report for further discussion regarding our commitments and contingencies.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk

We are exposed to the effect of interest rate changes and of foreign currency and commodity price fluctuations. We currently do not use derivative contracts to manage commodity risks. From time to time, we may enter into foreign currency forward contracts to fix exchange rates for net investments in foreign operations to hedge our foreign exchange risk.

Interest Rate Risk

The fair value of our cash and short-term investment portfolio at September 30, 2014 approximated carrying value. Given the short-term nature of these instruments, market risk, as measured by the change in fair value resulting from a hypothetical 100 basis point change in interest rates, would not be material.

Our objectives in managing exposure to interest rate changes are to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve these objectives, we maintain fixed rate debt whenever favorable; however, the majority of our debt at September 30, 2014 was variable rate debt. We partially mitigate interest rate risk through interest rate swap agreements, which are used to hedge the volatility of monthly LIBOR rate movement of our debt.

At September 30, 2014, the estimated fair value of our long-term debt was approximately $383.9 million. Fair value was estimated using market rates for debt of similar risk and maturity and a discounted cash flow model. Market risk related to the potential increase in fair value resulting from a hypothetical 100 basis point increase in our debt specific borrowing rates at September 30, 2014 would result in a $2.1 million increase in interest expense.

Foreign Exchange Risk

We operate subsidiaries and are associated with licensees and affiliated companies operating solely outside of the United States and in foreign currencies. Consequently, we are inherently exposed to risks associated with the fluctuation in the value of the local currencies compared to the U.S. dollar. At September 30, 2014, a substantial portion of our cash and cash equivalents was denominated in foreign currencies, and a hypothetical 10.0% change in currency exchange rates could result in an approximate $8.2 million impact to our equity through accumulated other comprehensive income.

In order to help mitigate this risk, we may enter into foreign exchange forward contracts to minimize the short-term impact of foreign currency fluctuations. We do not engage in hedging transactions for speculative investment reasons. There can be no assurance that our hedging operations will eliminate or substantially reduce risks associated with fluctuating currencies. At September 30, 2014, there were no material foreign currency hedge instruments outstanding. See Note 11 to the consolidated financial statements contained in this report for additional information and disclosures regarding our derivative financial instruments.

Commodity Risk

We have exposure to the effect of limitations on supply and changes in commodity pricing relative to a variety of raw materials that we purchase and use in our operating activities, most notably resin, iron ore, chemicals, staple fiber, fuel, metals and pipe. We manage this risk by entering into agreements with certain suppliers utilizing a request for proposal, or RFP, format and purchasing in bulk, and advantageous buying on the spot market for certain metals, when possible. We also manage this risk by continuously updating our estimation systems for bidding contracts so that we are able to price our products and services appropriately to our customers. However, we face exposure on contracts in process that have already been priced and are not subject to any cost adjustments in the contract. This exposure is potentially more significant on our longer-term projects.

We obtain a majority of our global resin requirements, one of our primary raw materials, from multiple suppliers in order to diversify our supplier base and thus reduce the risks inherent in concentrated supply streams. We have qualified a number of vendors in North America, Europe and Asia that can deliver, and are currently delivering, proprietary resins that meet our specifications.

Iron ore inventory balances are managed according to our anticipated volume of concrete weight coating projects. We obtain the majority of our iron ore from a limited number of suppliers, and pricing can be volatile. Iron ore is typically purchased near the start of each project. Concrete weight coating revenue accounts for a small percentage of our overall revenues.

The primary products and raw materials used by our Commercial and Structural segment in the manufacture of fiber reinforced polymer composite systems are carbon, glass, resins, fabric and epoxy raw materials. Fabric and epoxies are the largest materials purchased, which are currently purchased through a select group of suppliers, although we believe these and the other materials are available from a number of vendors. The price of epoxy historically is affected by the price of oil. In

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addition, a number of factors such as worldwide demand, labor costs, energy costs, import duties and other trade restrictions may influence the price of these raw materials.

Item 4. Controls and Procedures

Our management, under the supervision and with the participation of our Interim Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), has conducted an evaluation 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, as amended (the “Exchange Act”)), as of September 30, 2014. Based upon and as of the date of this evaluation, our Interim Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act (a) is recorded, processed, summarized and reported within the time period specified in the Securities and Exchange Commission’s rules and forms and (b) is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting that occurred during the nine-month period ended September 30, 2014 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in certain actions incidental to the conduct of our business and affairs. Management, after consultation with legal counsel, does not believe that the outcome of any such actions will have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

Item 1A. Risk Factors

Other than described below, there have been no material changes to the risk factors described in Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2013.

The actual timing, costs and benefits of the 2014 Restructuring Plan may differ from those currently expected, which may reduce our operating results.

On October 6, 2014, we announced the 2014 Restructuring Plan, a broad realignment and restructuring plan that is intended to exit low-return businesses and reduce the size and cost of our overhead structure to improve gross margins and profitability in the long term.

We expect to carry out the 2014 Restructuring Plan over the next 12 months. The 2014 Restructuring Plan includes exiting certain unprofitable international locations for our Water and Wastewater business, consolidating our worldwide Commercial and Structural business with our global Water and Wastewater business, eliminating certain idle facilities in our Bayou Louisiana coatings operations and eliminating approximately 170 full-time positions globally. We expect to incur significant charges related the 2014 Restructuring Plan, which will reduce our profitability in the periods incurred.

The 2014 Restructuring Plan is subject to various risks, which could result in the actual timing, costs and benefits of the plan differing from those currently anticipated. These risks and uncertainties include, among others that: (i) we may not be able to implement the 2014 Restructuring Plan in the timeframe currently planned; (ii) our costs related to the 2014 Restructuring Plan may be higher than currently estimated; and (iii) unanticipated disruptions to our operations may result in additional costs being incurred. We also cannot assure you that we will not undertake additional restructuring activities in the future. Because of these and other factors, we cannot predict whether we will realize the purpose and anticipated benefits of the 2014 Restructuring Plan, and if we do not, our business and results of operations may be adversely impacted.

Additionally, the 2014 Restructuring Plan may yield unintended consequences, such as:

• actual or perceived disruption of service or reduction in service standards to customers;

• the failure to preserve supplier relationships and distribution, sales and other important relationships and to resolve conflicts that may arise;

• attrition beyond our intended reduction in headcount and reduced employee morale, which may cause our employees who were not affected by the 2014 Restructuring Plan to seek alternate employment;

• increased risk of employment litigation; and

• diversion of management attention from ongoing business activities.

Changes in the industries within which we operate and market conditions could lead to charges related to discontinuances of certain of our businesses, asset impairment, workforce reductions or restructurings.

In response to changes in industry and market conditions, we may be required to strategically realign our resources and to consider restructuring, disposing of, or otherwise exiting businesses. Any resource realignment, or decision to limit investment in or dispose of or otherwise exit businesses, may result in the recording of special charges, such as asset write-offs, workforce reduction or restructuring costs or charges relating to consolidation of excess facilities or businesses. Our estimates with respect to the useful life or ultimate recoverability of our carrying basis of assets, including purchased intangible assets, could change as a result of such assessments and decisions. Further, our estimates relating to the liabilities for excess facilities are affected by changes in real estate market conditions.

We may incur impairments to goodwill or long-lived assets

We review our long-lived assets, including goodwill and other intangible assets, for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The valuation of goodwill and other intangible assets requires assumptions and estimates of many critical factors, including revenue and market growth, operating cash flows, market multiples and discount rates. Negative industry or economic trends, including reduced market prices of our common stock, reduced estimates of future cash flows, disruptions to our business, slower growth rates, or lack of growth in our relevant businesses, could lead to impairment charges against our long-lived assets, including goodwill and other intangible assets. If, in any period, our stock price decreases to the point where our fair value, as determined by our

43

market capitalization, is less than the book value of our assets, this could also indicate a potential impairment, and we may be required to record an impairment charge in that period, which could adversely affect our results of operations.

Crude oil and natural gas prices are extremely volatile. A substantial or extended decline in the price of crude oil and natural gas could adversely affect our results of operations.

The revenues from portions of our Energy & Mining and Commercial & Structural platforms are highly dependent on capital, rehabilitation and maintenance expenditures for oil and gas piping systems, oil refineries and other investments by oil and gas companies. The demand for these investments and the ability of our customers to borrow and obtain additional capital on attractive terms are substantially dependent upon crude oil and natural gas prices. As seen in the recent decline in crude prices, prices for crude oil and natural gas are subject to large fluctuations in response to relatively minor changes in supply and demand, market uncertainty and a variety of other factors that are beyond our control. Demand for the products and services we provide could decrease in the event of a sustained reduction in demand for crude oil or natural gas, while perceptions of long-term decline in crude oil and natural gas prices by oil and gas companies (some of our customers) can similarly reduce or defer major expenditures given the long-term nature of many large-scale projects.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
January 2014 (2)	77,976	$	21.68	—	$	20,000,000
February 2014 (1) (2)	38,096	22.37		25,400	19,412,131
March 2014 (1) (2)	123,003	23.83		117,300	16,618,299
April 2014 (1) (2)	91,222	23.87		91,083	14,443,983
May 2014 (1) (2)	309,143	24.09		114,740	11,736,386
June 2014 (1)	243,400	22.85		243,400	6,173,591
July 2014 (1) (2)	429,130	22.98		268,838	—
August 2014 (2)	21,720	24.38		—	—
September 2014	—	—		—	—
Total	1,333,690	$	23.28	860,761	—

_________________________________

⁽¹⁾  In February 2014, our board of directors authorized the open market repurchase of up to $20.0 million of our common stock to be made during 2014. This amount constituted the maximum open market repurchases currently authorized in any calendar year under the terms of our Credit Facility. Once a repurchase is complete, we promptly retired the shares.

⁽²⁾  In connection with approval of our Credit Facility, our board of directors approved the purchase of up to $10.0 million of our common stock in each calendar year in connection with our equity compensation programs for employees and directors. The number of shares purchased includes shares surrendered to us to pay the exercise price and/or to satisfy tax withholding obligations in connection with “net, net” exercises of employee stock options and/or the vesting of restricted stock or deferred stock units issued to employees and directors. For the nine months ended September 30, 2014, 419,643 shares were surrendered in connection with stock swap transactions and 53,286 shares were surrendered in connection with restricted stock and deferred stock units transactions. The deemed price paid was the closing price of our common stock on the Nasdaq Global Select Market on the date that the restricted stock or deferred stock units vested or the stock option was exercised. Once a repurchase is complete, we promptly retired the shares.

Item 6. Exhibits

The exhibits required to be filed as part of this Quarterly Report on Form 10-Q are listed on the Index to Exhibits attached hereto.

44

SIGNATURE

Pursuant to the requirements 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.

	AEGION CORPORATION
Date: November 7, 2014	/s/ David A. Martin
	David A. Martin
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

45

INDEX TO EXHIBITS

These exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.

10.1	Second Amendment to Credit Agreement, dated October 6, 2014 (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed on October 10, 2014).
10.2	Letter agreement, dated October 6, 2014, between Aegion Corporation and Charles R. Gordon (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed on October 10, 2014).
10.3	Form of Restricted Stock Agreement, dated October 8, 2014, between Aegion Corporation and Charles R. Gordon (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed on October 10, 2014).
10.4	Form of Performance Unit Award Agreement, dated October 8, 2014, between Aegion Corporation and Charles R. Gordon (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed on October 10, 2014).
10.5	Form of Inducement Restricted Stock Award Agreement, dated October 8, 2014, between Aegion Corporation and Charles R. Gordon (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed on October 10, 2014).
10.6	Form of Executive Change in Control Severance Agreement, dated as of October 6, 2014, between Aegion Corporation and each of Charles R. Gordon, David A. Martin and David F. Morris (incorporated by reference to Exhibit 10.1 to the current report on Form 8-K filed on October 10, 2014).
31.1	Certification of Charles R. Gordon pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
31.2	Certification of David A. Martin pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1	Certification of Charles R. Gordon pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.2	Certification of David A. Martin pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema Document*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document*

* In accordance with Rule 406T under Regulation S-T, the XBRL-related information in Exhibit 101 shall be deemed “furnished” and not “filed”.

46

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Charles R. Gordon, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Aegion Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions)

(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2014

/s/ Charles R. Gordon

Charles R. Gordon

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, David A. Martin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Aegion Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions)

(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 7, 2014

/s/ David A. Martin

David A. Martin

Executive Vice President and Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Aegion Corporation (the “Company”) for the quarter ended September 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, Charles R. Gordon, President and Chief Executive Officer of the Company, hereby certify as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 7, 2014

/s/ Charles R. Gordon

Charles R. Gordon

President and Chief Executive Officer

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Aegion Corporation (the “Company”) for the quarter ended September 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, David A. Martin, Executive Vice President and Chief Financial Officer of the Company, hereby certify as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 7, 2014

/s/ David A. Martin

David A. Martin

Executive Vice President and Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

XML

Note 3 - Share Information (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Earnings Per Share [Abstract]
Weighted Average Number Diluted Shares Outstanding Adjustment	312,091
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	200,665	159,639	200,665	159,639

XML

Note 9 - Segment Reporting (Details)	9 Months Ended
	Sep. 30, 2014 segment market
Note 8 - Segment Reporting (Details) [Line Items]
Number of Markets	3
Number of Reportable Segments	3
Water and Wastewater [Member]
Note 8 - Segment Reporting (Details) [Line Items]
Number of Reportable Segments	2

XML

Note 6 - Stockholders' Equity and Equity Compensation (Details) - Summary of Deferred Stock Unit Activity (Deferred Stock Units [Member], USD $)	9 Months Ended
	Sep. 30, 2014
Deferred Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Stock Awards - Outstanding	214,455
Weighted Average Award Date Fair Value - Outstanding (in Dollars per share)	$ 19.56
Awarded	32,904
Awarded (in Dollars per share)	$ 23.96
Shares distributed	(31,794)
Shares distributed (in Dollars per share)	$ 19.70
Stock Awards - Outstanding	215,565
Weighted Average Award Date Fair Value - Outstanding (in Dollars per share)	$ 20.18

XML

Note 9 - Segment Reporting (Details) - Financial Information by Segment (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenues:
Revenues	$ 350,138	$ 307,665	$ 979,240	$ 775,741
Gross profit:
Gross profit	63,939	69,411	196,920	176,116
Operating income (loss):
Operating income (loss)	(13,934)	22,032	15,819	44,673
Energy And Mining [Member]
Revenues:
Revenues	197,510	168,708	557,028	385,991
Gross profit:
Gross profit	29,380	37,118	100,856	87,678
Operating income (loss):
Operating income (loss)	(9,757)	12,874	5,661	24,481
Water and Wastewater [Member]
Revenues:
Revenues	135,649	122,149	371,493	341,680
Gross profit:
Gross profit	26,719	26,473	76,078	71,210
Operating income (loss):
Operating income (loss)	(5,450)	10,071	10,224	21,672
Commercial And Structural [Member]
Revenues:
Revenues	16,979	16,808	50,719	48,070
Gross profit:
Gross profit	7,840	5,820	19,986	17,228
Operating income (loss):
Operating income (loss)	$ 1,273	$ (913)	$ (66)	$ (1,480)

XML

Note 6 - Stockholders' Equity and Equity Compensation (Details) (USD $)	1 Months Ended	3 Months Ended		9 Months Ended			12 Months Ended	9 Months Ended			9 Months Ended			3 Months Ended		9 Months Ended
	Feb. 28, 2014	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2014 Through the Open Market Repurchase Program [Member]	Sep. 30, 2014 In Connection with Equity Compensation Programs [Member]	Dec. 31, 2014 In Connection with Equity Compensation Programs [Member]	Sep. 30, 2014 Employee Stock Option [Member]	Sep. 30, 2014 Stock Awards [Member]	Dec. 31, 2013 Stock Awards [Member]	Sep. 30, 2014 Deferred Stock Units [Member]	Sep. 30, 2013 Deferred Stock Units [Member]	Dec. 31, 2013 Deferred Stock Units [Member]	Sep. 30, 2014 Employee Stock Option [Member]	Sep. 30, 2013 Employee Stock Option [Member]	Sep. 30, 2014 Employee Stock Option [Member]	Sep. 30, 2013 Employee Stock Option [Member]	Sep. 30, 2014 2013 Employee Plan [Member]	Sep. 30, 2014 2013 Employee Plan [Member] Stock Awards [Member]	Sep. 30, 2014 2011 Director Plan [Member]	Sep. 30, 2014 Deferred Compensation, Share-based Payments [Member] 2011 Director Plan [Member]
Note 6 - Stockholders' Equity and Equity Compensation (Details) [Line Items]
Stock Repurchase Program, Authorized Amount	$ 20,000,000						$ 10,000,000
Stock Repurchased During Period, Shares (in Shares)					860,761	53,286		419,643
Stock Repurchased During Period, Value					20,000,000	1,200,000		9,900,000
Stock Repurchased During Period, Net Cash Value								1,400,000
Treasury Stock Acquired, Average Cost Per Share (in Dollars per share)					$ 23.24	$ 22.66
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares)																		2,895,000		250,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number									707,487	555,025	215,565		214,455						1,953,034		135,396
Allocated Share-based Compensation Expense		1,000,000	800,000	2,800,000							788,000	890,000		100,000	400,000	600,000	1,400,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized		$ 11,400,000		$ 11,400,000										$ 200,000		$ 200,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition				2 years 0 months 22 days												0 years 10 months 24 days
Price Per Share For Intrinsic Value Calculation Stock Options (in Dollars per share)		$ 22.25	$ 23.72	$ 22.25

XML

Note 1 - General (Details) - Business Acquisitions - Pro Forma Information (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013
Business Acquisitions - Proforma Information [Abstract]
Revenues		$ 885,842
Net income (loss)		$ 40,889

XML

Note 10 - Discontinued Operations (Details) (USD $)	3 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Note 9 - Discontinued Operations [Line Items]
Goodwill and Intangible Asset Impairment		$ 3,900,000
Goodwill and Intangible Asset Impairment, Net of Tax		2,400,000
Tangible Asset Impairment Charges	11,870,000	1,100,000
Tangible Asset Impairment Charges, Net of Tax		700,000
Business Exit Costs			$ 100,000
Goodwill and Intagible Assets [Member]
Note 9 - Discontinued Operations [Line Items]
Impairment Effect on Earnings Per Share, after Tax (in Dollars per share)		$ 0.06
Tangible Assets [Member]
Note 9 - Discontinued Operations [Line Items]
Impairment Effect on Earnings Per Share, after Tax (in Dollars per share)		$ 0.02

XML

Note 4 - Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

Goodwill

(In thousands)
	Energy and Mining			Water and Wastewater			Commercial and Structural			Total
Beginning balance at January 1, 2014	$	153,110		$	130,078		$	65,492		$	348,680
Additions to goodwill through acquisitions (1)	—			—			1,098			1,098
Foreign currency translation	(609		)	(1,845		)	(88		)	(2,542		)
Balance at September 30, 2014	$	152,501		$	128,233		$	66,502		$	347,236

__________________________

⁽¹⁾  During the second quarter of 2014, the Company recorded goodwill of $1.1 million related to the 2012 acquisition of Fyfe Asia (see Note 1).

Schedule of Finite-Lived Intangible Assets

Identified Intangible Assets

(In thousands)		September 30, 2014							December 31, 2013
	Weighted Average Useful Lives (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
License agreements	6	$	3,912	$	(3,094	)	$	818	$	3,917	$	(2,977	)	$	940
Backlog	0	4,736		(4,736		)	—		4,745		(4,745		)	—
Leases	12	2,067		(588		)	1,479		2,067		(477		)	1,590
Trademarks	16	21,648		(4,941		)	16,707		21,394		(4,167		)	17,227
Non-competes	4	1,140		(817		)	323		1,140		(753		)	387
Customer relationships (1)	14	147,704		(12,517		)	135,187		182,703		(28,287		)	154,416
Patents and acquired technology	16	59,152		(23,692		)	35,460		57,419		(22,696		)	34,723
		$	240,359	$	(50,385	)	$	189,974	$	273,385	$	(64,102	)	$	209,283

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

Estimated amortization expense by year is as follows (in thousands):

2014	$	14,224
2015	13,509
2016	13,516
2017	13,469
2018	13,391

XML

Note 6 - Stockholders' Equity and Equity Compensation (Details) - Additional Stock Option Information (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Additional Stock Option Information [Abstract]
Amount collected from stock option exercises	$ 8,614	$ 738
Total intrinsic value of stock option exercises	3,771	131
Tax benefit of stock option exercises recorded in additional paid-in-capital	6	55
Aggregate intrinsic value of outstanding stock options	2,381	6,983
Aggregate intrinsic value of exercisable stock options	$ 2,138	$ 5,962

XML

Note 4 - Goodwill and Intangible Assets (Details) - Reconciliation Goodwill (USD $)	9 Months Ended
	Sep. 30, 2014
Goodwill [Line Items]
Goodwill, Acquired During Period	$ 1,100,000
Goodwill [Roll Forward]
Goodwill	348,680,000
Foreign currency translation	(2,542,000)
Goodwill	347,236,000
Energy And Mining [Member]
Goodwill [Line Items]
Goodwill, Acquired During Period	0
Goodwill [Roll Forward]
Goodwill	153,110,000
Foreign currency translation	(609,000)
Goodwill	152,501,000
Water and Wastewater [Member]
Goodwill [Line Items]
Goodwill, Acquired During Period	0
Goodwill [Roll Forward]
Goodwill	130,078,000
Foreign currency translation	(1,845,000)
Goodwill	128,233,000
Commercial And Structural [Member]
Goodwill [Line Items]
Goodwill, Acquired During Period	1,100,000
Goodwill [Roll Forward]
Goodwill	65,492,000
Foreign currency translation	(88,000)
Goodwill	$ 66,502,000

XML

Note 2 - Accounting Policies (Details) - Financial Data for Variable Interest Entities - Balance Sheet (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financial Data for Variable Interest Entities - Balance Sheet [Abstract]
Current assets	$ 58,646	$ 55,960
Non-current assets	44,769	47,606
Current liabilities	25,697	27,335
Non-current liabilities	$ 37,215	$ 36,761

XML

Note 7 - Income Taxes (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Taxes [Abstract]
Effective Income Tax Rate Reconciliation, Percent	7.80%	19.70%	88.30%	19.30%

XML

Note 11 - Derivative Financial Instruments (Details) - Summary of the Fair Value Amounts of Derivative Instruments (Fair Value, Inputs, Level 2 [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Inputs, Level 2 [Member]
Derivatives Designated as Hedging Instruments
Forward Currency Contracts	$ 607	$ 24
Cash Flow Hedge Derivative Instrument Assets at Fair Value	607	24
Interest Rate Swaps	740	1,220
Cash Flow Hedge Derivative Instrument Liabilities at Fair Value	740	1,220
Derivatives Not Designated as Hedging Instruments
Forward Currency Contracts	292	878
Derivative Instruments Not Designated as Hedging Instruments, Asset, at Fair Value	292	878
Derivative Assets (Liabilities), at Fair Value, Net	$ 159	$ (318)

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Note 6 - Stockholders' Equity and Equity Compensation (Details) - Summary of Stock Award Activity (USD $)	9 Months Ended
	Sep. 30, 2014 Restricted Stock [Member]	Sep. 30, 2014 Restricted Stock Units (RSUs) [Member]	Sep. 30, 2014 Stock Awards [Member]	Dec. 31, 2013 Stock Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Stock Awards - Outstanding			707,487	555,025
Weighted Average Award Date Fair Value - Outstanding (in Dollars per share)			$ 23.13	$ 22.79
Stock Awards - Awarded	226,483	230,324
Weighted Average Award Date Fair Value - Awarded (in Dollars per share)	$ 23.81	$ 24.20
Stock Awards - Distributed	(117,086)	(15,277)
Weighted Average Award Date Fair Value - Distributed (in Dollars per share)	$ 23.69	$ 21.25
Stock Awards - Forfeited	(75,006)	(96,976)
Weighted Average Award Date Fair Value - Forfeited (in Dollars per share)	$ 23.47	$ 24.66
Stock Awards - Outstanding			707,487	555,025
Weighted Average Award Date Fair Value - Outstanding (in Dollars per share)			$ 23.13	$ 22.79

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Note 1 - General

9 Months Ended

Sep. 30, 2014

Description of Business [Abstract]

General

GENERAL

The accompanying unaudited consolidated financial statements of Aegion Corporation and its subsidiaries (collectively, “Aegion” or the “Company”) reflect all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s financial position as of September 30, 2014 and the results of operations and statements of comprehensive income for the quarters and nine-month periods ended September 30, 2014 and 2013 and the statements of equity and cash flows for the nine-month periods ended September 30, 2014 and 2013. The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), the requirements of Form 10-Q and Article 10 of Regulation S-X and, consequently, do not include all information or footnotes required by GAAP for complete financial statements or all the disclosures normally made in an Annual Report on Form 10-K. Accordingly, the unaudited consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s 2013 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2014.

The results of operations for the quarter and nine-month period ended September 30, 2014 are not necessarily indicative of the results to be expected for the full year.

Acquisitions/Strategic Initiatives/Divestitures

Energy and Mining Segment

On October 6, 2014, the Company’s board of directors approved a realignment and restructuring plan (“2014 Restructuring Plan”) as discussed further in Notes 2 and 12. As part of the 2014 Restructuring Plan, the Company made the decision to shutter two older and redundant fusion bonded epoxy coating plants and terminate certain land leases at The Bayou Companies, LLC’s (“Bayou”) Louisiana facility. The actions taken to restructure Bayou’s Louisiana operations allow Bayou to cost effectively meet market demand, for both onshore and offshore projects, by optimizing pipe coating activities and reducing fixed costs. The repositioning of Bayou’s Louisiana facility will also include additional capital investments in the remaining coating facilities over the next two to three years to augment Bayou’s competitive position.

On March 31, 2014, the Company sold its forty-nine percent (49%) interest in Bayou Coating, L.L.C. (“Bayou Coating”) to Stupp Brothers Inc. (“Stupp”), the holder of the remaining fifty-one percent (51%) interest in Bayou Coating. Stupp purchased the interest by exercising an existing option to acquire the Company’s interest in Bayou Coating at a purchase price equal to $9.1 million, which represented forty-nine percent (49%) of the book value of Bayou Coating as of December 31, 2013. Such book value was determined on the basis of Bayou Coating’s federal information tax return for 2013 and approximated the Company’s book value of its investment in Bayou Coating as of December 31, 2013. The Company had previously received an indication from Stupp of its intent to exercise such option and, in the second quarter of 2013 in connection with such indication, the Company recognized a non-cash charge of $2.7 million ($1.8 million post-tax) related to the goodwill allocated to the joint venture as part of the purchase price accounting associated with the 2009 acquisition of Bayou. The non-cash charge represented the Company’s then current estimate of the difference between the carrying value of the investment on the balance sheet and the amount the Company would receive in connection with the exercise. During the first quarter of 2014, the difference between the Company’s recorded gross equity in earnings of affiliated companies of approximately $1.2 million and the final equity distribution settlement of $0.7 million resulted in a loss of approximately $0.5 million that is recorded in other income (expense) on the consolidated statement of operations.

Prior to March 2014, the Company held a fifty-nine (59%) equity interest in Delta Double Jointing, LLC (“Bayou Delta”) through which the Company offers pipe jointing and other services for the steel-coated pipe industry. The remaining forty-one percent (41%) was held by Bayou Coating. On March 31, 2014, the Company acquired this forty-one percent (41%) interest from Bayou Coating by exercising its existing option at a purchase price equal to $0.6 million. As a result, Bayou Delta is now a wholly owned subsidiary of the Company.

On July 1, 2013, the Company acquired the equity interests of Brinderson, L.P., a California limited partnership, General Energy Services, a California corporation, and Brinderson Constructors, Inc., a California corporation (collectively, “Brinderson”). Brinderson is a leading integrated service provider of maintenance, construction, engineering and turnaround activities for the upstream and downstream oil and gas markets. The transaction purchase price was $150.0 million, which resulted in a cash purchase price at closing of $147.6 million after working capital adjustments and an adjustment to account for cash held in the business at closing. The cash purchase price was funded by borrowings under the Company’s $650.0 million senior secured credit facility as discussed in Note 5.

During the second quarter of 2013, the Company’s board of directors approved a plan of liquidation for its Bayou Welding Works (“BWW”) business in an effort to improve the Company’s overall financial performance and align the operations with its long-term strategic objectives. BWW provided specialty welding and fabrication services from its facility in New Iberia, Louisiana. Financial results for BWW were part of the Company’s Energy and Mining segment for financial reporting purposes. BWW ceased bidding new work and substantially completed all ongoing projects during the second quarter of 2013. As a result of the closure of BWW, Aegion recognized a pre-tax, non-cash charge of approximately $3.9 million ($2.4 million after-tax, or $0.06 per diluted share) to reflect the impairment of goodwill and intangible assets. The Company also recognized additional non-cash impairment charges for equipment and other assets of approximately $1.1 million on a pre-tax basis ($0.7 million on an after-tax basis, or $0.02 per diluted share), which also was recorded in the second quarter of 2013. The Company expects the cash liquidation value to approximate net asset value. Net asset value is determined using recorded amounts for assets and liabilities, which are based on Level 3 inputs as defined in Note 11. The Company also incurred cash charges to exit the business of approximately $0.1 million on a pre-tax and post-tax basis, which included property, equipment and vehicle lease termination and buyout costs, employee termination benefits and retention incentives, among other ancillary shut-down expenses. Final liquidation of BWW’s assets is expected to occur by the end of 2014.

Water and Wastewater Segment

On October 6, 2014, the Company’s board of directors approved the 2014 Restructuring Plan, which included the decision to exit Insituform’s contracting markets in France, Switzerland, India, Hong Kong, Malaysia and Singapore. This decision was made taking into account market size, bid table consistency, supportive governmental bid process, length of cash collection cycles and operating results in each country. Activities with respect to Insituform’s contracting operations in France, Switzerland, India, Hong Kong, Malaysia and Singapore are expected to be concluded by the end of the third quarter of 2015 as Insituform completes existing backlog in the affected countries. See further discussion in Notes 2 and 12.

In June 2013, the Company sold its fifty percent (50%) interest in Insituform Rohrsanierungstechniken GmbH (“Insituform-Germany”) to Per Aarsleff A/S, a Danish company (“Aarsleff”). Insituform-Germany, a company that was jointly owned by Aegion and Aarsleff, is active in the business of no-dig pipe rehabilitation in Germany, Slovakia and Hungary. The sale price was €14.0 million, approximately $18.3 million. The sale resulted in a gain on sale of approximately $11.3 million (net of $0.5 million of transaction expenses). In connection with the sale, Insituform-Germany also entered into a tube supply agreement with the Company whereby Insituform-Germany will purchase on an annual basis at least GBP 2.3 million, approximately $3.6 million, of felt cured-in-place pipe (“CIPP”) liners during the two-year period from June 26, 2013 to June 30, 2015.

Purchase Price Accounting

The Company accounts for its acquisitions in accordance with FASB ASC 805, Business Combinations. The Company records definite-lived intangible assets at their determined fair value related to customer relationships, backlog, trade names and trademarks and patents and other acquired technologies. Acquisitions generally result in goodwill related to, among other things, purchase price, growth opportunities and market potential. The goodwill associated with the Brinderson acquisition is deductible for tax purposes. At September 30, 2014, the Company had substantially completed its accounting for Brinderson with the exception of final working capital adjustments. During the second quarter of 2014, certain pre-acquisition matters were identified by the Company where a loss is both probable and reasonably estimable. Accordingly, the Company increased recorded goodwill by $14.5 million and adjusted its purchase price accounting retroactively to the measurement period, July 1, 2013. The Company has provided claim notices related to these uncertainties; however, no escrow receivable was recorded as of September 30, 2014. To the extent the Company receives notification or cash in future periods, these adjustments would be recorded through purchase accounting consistent with FASB ASC 805, Business Combinations. As the Company completes its final accounting for this acquisition, future adjustments related to working capital, escrow and related contingencies could occur.

The Brinderson acquisition made the following contributions to the Company’s revenues and profits (in thousands):

	Quarter Ended September 30, 2014		Nine Months Ended September 30, 2014
Revenues	$	77,353	$	225,940
Net income	3,503		8,430

The following unaudited pro forma summary presents combined information of the Company as if the Brinderson acquisition had occurred at the beginning of the year preceding its acquisition (in thousands):

	Nine Months Ended September 30, 2013
Revenues	$	885,842
Net income (1)	40,889

_____________________

⁽¹⁾  Includes pro-forma adjustments for purchase price depreciation and amortization as if those intangibles were recorded at the beginning of the year preceding the acquisition date.

The transaction purchase price to acquire Brinderson was $150.0 million, which resulted in a cash purchase price at closing of $147.6 million after preliminary working capital adjustments and an adjustment to account for cash held in the business at closing.

The following table summarizes the fair value of identified assets and liabilities of the Brinderson acquisition at its acquisition date (in thousands):

Cash	$	3,842
Receivables and cost and estimated earnings in excess of billings	28,353
Prepaid expenses and other current assets	655
Property, plant and equipment	6,848
Identified intangible assets	60,210
Other assets	1,071
Accounts payable, accrued expenses and billings in excess of cost and estimated earnings	(30,622		)
Total identifiable net assets	$	70,357
Total consideration recorded	$	147,605
Less: total identifiable net assets	70,357
Goodwill at September 30, 2014	$	77,248

During the second quarter of 2014, and in connection with the 2012 acquisition of Fyfe Group LLC’s Asian operations (“Fyfe Asia”), the Company agreed to a working capital settlement with the previous owners, which increased the purchase price and related goodwill by $1.1 million.

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Note 11 - Derivative Financial Instruments (Details) - Liabilities Measured at Fair Value on a Recurring Basis and the Basis for that Measurement (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Inputs, Level 3 [Member]
Liabilities
Interest Rate Swap	$ 0
Total Derivative Liabilities	0
Fair Value, Measurements, Recurring [Member]
Assets
Forward Currency Contracts	899	902
Total Derivative Assets	899	902
Liabilities
Interest Rate Swap	740	1,220
Total Derivative Liabilities	740	1,220
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Assets
Forward Currency Contracts	0	0
Total Derivative Assets	0	0
Liabilities
Interest Rate Swap	0	0
Total Derivative Liabilities	0	0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Assets
Forward Currency Contracts	899	902
Total Derivative Assets	899	902
Liabilities
Interest Rate Swap	740	1,220
Total Derivative Liabilities	740	1,220
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Assets
Forward Currency Contracts	0	0
Total Derivative Assets	0	0
Liabilities
Interest Rate Swap		0
Total Derivative Liabilities		$ 0

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Note 4 - Goodwill and Intangible Assets (Details) - Intangible Assets (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 240,359		$ 240,359		$ 273,385
Accumulated Amortization	(50,385)		(50,385)		(64,102)
Impairment of Intangible Assets, Finite-lived	10,896	0	10,896	0
Net Carrying Amount	189,974		189,974		209,283
Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Lives			6 years
Gross Carrying Amount	3,912		3,912		3,917
Accumulated Amortization	(3,094)		(3,094)		(2,977)
Net Carrying Amount	818		818		940
Backlog [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Lives			0 years
Gross Carrying Amount	4,736		4,736		4,745
Accumulated Amortization	(4,736)		(4,736)		(4,745)
Net Carrying Amount	0		0		0
Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Lives			12 years
Gross Carrying Amount	2,067		2,067		2,067
Accumulated Amortization	(588)		(588)		(477)
Net Carrying Amount	1,479		1,479		1,590
Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Lives			16 years
Gross Carrying Amount	21,648		21,648		21,394
Accumulated Amortization	(4,941)		(4,941)		(4,167)
Net Carrying Amount	16,707		16,707		17,227
Non-competes [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Lives			4 years
Gross Carrying Amount	1,140		1,140		1,140
Accumulated Amortization	(817)		(817)		(753)
Net Carrying Amount	323		323		387
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Lives			14 years
Gross Carrying Amount	147,704		147,704		182,703
Accumulated Amortization	(12,517)		(12,517)		(28,287)
Net Carrying Amount	135,187		135,187		154,416
Patents and acquired technology [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted Average Useful Lives			16 years
Gross Carrying Amount	59,152		59,152		57,419
Accumulated Amortization	(23,692)		(23,692)		(22,696)
Net Carrying Amount	$ 35,460		$ 35,460		$ 34,723

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Note 11 - Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following table provides a summary of the fair value amounts of our derivative instruments, all of which are Level 2 (as defined below) inputs (in thousands):

Designation of Derivatives	Balance Sheet Location	September 30, 2014		December 31, 2013
Derivatives Designated as Hedging Instruments:
Forward Currency Contracts	Prepaid expenses and other current assets	$	607	$	24
	Total Assets	$	607	$	24
Interest Rate Swaps	Other non-current liabilities	$	740	$	1,220
	Total Liabilities	$	740	$	1,220
Derivatives Not Designated as Hedging Instruments:
Forward Currency Contracts	Prepaid expenses and other current assets	$	292	$	878
	Total Assets	$	292	$	878
	Total Derivative Assets	$	899	$	902
	Total Derivative Liabilities	740		1,220
	Total Net Derivative Asset (Liability)	$	159	$	(318	)

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table represents assets and liabilities measured at fair value on a recurring basis and the basis for that measurement (in thousands):

	Total Fair Value at September 30, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Forward Currency Contracts	$	899	$	—	$	899	$	—
Total	$	899	$	—	$	899	$	—
Liabilities:
Interest Rate Swap	$	740	$	—	$	740	$	—
Total	$	740	$	—	$	740	$	—

	Total Fair Value at December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Forward Currency Contracts	$	902	$	—	$	902	$	—
Total	$	902	$	—	$	902	$	—
Liabilities:
Interest Rate Swap	$	1,220	$	—	$	1,220	$	—
Total	$	1,220	$	—	$	1,220	$	—

Schedule of Notional Amounts of Outstanding Derivative Positions

The following table summarizes the Company’s derivative positions at September 30, 2014:

	Position	Notional Amount		Weighted Average Remaining Maturity In Years	Average Exchange Rate
Canadian Dollar/USD	Sell	$	33,225,371	0.2	1.12
Singapore Dollar/USD	Sell	$	1,973,834	0.2	1.28
Hong Kong Dollar/USD	Sell	$	1,558,146	0.2	7.77
Australian Dollar/USD	Sell	$	3,030,088	0.2	0.87
USD/British Pound	Sell	£	1,900,000	0.2	1.62
EURO/British Pound	Sell	£	8,000,000	0.2	0.78
Interest Rate Swap		$	162,968,750	1.8

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Note 10 - Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2014

Income Statement [Member]

Note 9 - Discontinued Operations (Tables) [Line Items]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures

Operating results for discontinued operations are summarized as follows (in thousands):

	Quarters Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenues	$	—		$	744		$	—		$	8,864
Gross loss	—			(837		)	(67		)	(4,077		)
Operating expenses	215			210			617			1,828
Closure charges of welding business	—			—			—			5,019
Operating loss	(215		)	(1,047		)	(684		)	(10,924		)
Interest expense	—			—			—			(25		)
Other income (expense)	(1		)	—			(74		)	207
Loss before income tax	(216		)	(1,047		)	(758		)	(10,742		)
Tax benefit	86			489			132			4,286
Net loss	(130		)	(558		)	(626		)	(6,456		)

Balance Sheet [Member]

Note 9 - Discontinued Operations (Tables) [Line Items]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures

Balance sheet data for discontinued operations was as follows (in thousands):

	September 30, 2014		December 31, 2013
Restricted cash	$	1,193	$	1,193
Receivables, net	3,471		4,038
Prepaid expenses and other current assets	125		204
Property, plant and equipment, less accumulated depreciation	955		1,118
Deferred tax assets	1,236		1,803
Total assets	$	6,980	$	8,356
Accounts payable	$	1,566	$	2,050
Accrued expenses	155		20
Deferred tax liabilities	224		197
Total liabilities	$	1,945	$	2,267

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Note 9 - Segment Reporting (Details) - Summary of Revenues, Gross Profit and Operating Income (Loss) by Geographic Region (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenues:
Revenues	$ 350,138	$ 307,665	$ 979,240	$ 775,741
Gross Profit:
Gross profit	63,939	69,411	196,920	176,116
Operating income (loss)
Operating income (loss)	(13,934)	22,032	15,819	44,673
United States [Member]
Revenues:
Revenues	242,795	202,353	681,043	496,544
Gross Profit:
Gross profit	40,507	43,838	132,790	111,006
Operating income (loss)
Operating income (loss)	(12,955)	8,941	604	16,067
Canada [Member]
Revenues:
Revenues	55,742	56,026	139,817	131,172
Gross Profit:
Gross profit	13,893	14,351	32,889	31,753
Operating income (loss)
Operating income (loss)	10,359	10,397	21,911	20,622
Europe [Member]
Revenues:
Revenues	20,096	20,605	63,887	65,592
Gross Profit:
Gross profit	3,544	4,769	12,846	15,453
Operating income (loss)
Operating income (loss)	(687)	1,106	692	3,928
Other foreign [Member]
Revenues:
Revenues	31,505	28,681	94,493	82,433
Gross Profit:
Gross profit	5,995	6,453	18,395	17,904
Operating income (loss)
Operating income (loss)	$ (10,651)	$ 1,588	$ (7,388)	$ 4,056

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Note 4 - Goodwill and Intangible Assets (Details) - Estimated Future Amortization Expense by Year (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Estimated Future Amortization Expense by Year [Abstract]
2014	$ 14,224
2016	13,509
2017	13,516
2017	13,469
2018	$ 13,391

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Note 12 - Subsequent Event (Tables)

9 Months Ended

Sep. 30, 2014

Note 12 - Subsequent Event [Abstract]

Restructuring and Related Costs [Table Text Block]

	Fixed Asset Impairment		Definite-lived Intangible Asset Impairment		Non-Cash Restructuring Charges		Total Restructuring Charges
Cost of revenues	$	11,834	$	—	$	3,106	$	14,940
Operating expenses	36		—		14,081		14,117
Definite-lived intangible asset impairment	—		10,896		—		10,896
	$	11,870	$	10,896	$	17,187	$	39,953

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Note 1 - General (Details)	3 Months Ended			9 Months Ended		12 Months Ended	24 Months Ended		3 Months Ended			9 Months Ended		3 Months Ended
	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Sep. 30, 2013 EUR (€)	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Dec. 31, 2013 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2015 GBP (£)	Sep. 30, 2013 Goodwill and Intagible Assets [Member] USD ($)	Sep. 30, 2013 Tangible Assets [Member] USD ($)	Sep. 30, 2013 Brinderson LP [Member] USD ($)	Sep. 30, 2014 Brinderson LP [Member] USD ($)	Jul. 02, 2013 Brinderson LP [Member] USD ($)	Sep. 30, 2014 Bayou Coating [Member] USD ($)	Sep. 30, 2013 Bayou Coating [Member] USD ($)	Mar. 31, 2014 Bayou Coating [Member]	Dec. 31, 2013 Bayou Coating [Member]	Sep. 30, 2014 Delta Double Jointing [Member]	Sep. 30, 2014 Brinderson LP [Member] USD ($)	Jul. 02, 2013 2013 Credit Facility [Member] USD ($)	Sep. 30, 2013 Insituform Germany [Member]
General [Line Items]
Goodwill, Acquired During Period				$ 1,100,000
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net													150,000,000
Debt Instrument, Face Amount																				650,000,000
Goodwill and Intangible Asset Impairment		3,900,000
Goodwill and Intangible Asset Impairment, Net of Tax		2,400,000
Impairment Effect on Earnings Per Share, after Tax (in Dollars per share)									$ 0.06	$ 0.02
Tangible Asset Impairment Charges	11,870,000	1,100,000
Tangible Asset Impairment Charges, Net of Tax		700,000
Business Exit Costs						100,000
Noncontrolling Interest, Ownership Percentage by Parent																		59.00%			50.00%
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners														51.00%				41.00%
Sale of interests in German joint venture				9,065,000	0
Payments to Noncontrolling Interests				617,000	0
PercentOfBookValue																49.00%	49.00%
Gain (Loss) on Sale of Equity Investments				(472,000)	0
Equity Method Investment, Other than Temporary Impairment															2,700,000
Equity Method Investment Other Than Temporary Impairment Net Of Tax															1,800,000
Total consideration recorded		18,300,000	14,000,000	0	(18,300,000)						147,600,000	147,605,000
Gain (Loss) on Disposition of Business		11,300,000		0	11,771,000
Business Acquisition, Transaction Costs		500,000			500,000
Long-term Purchase Commitment, Amount (in Pounds)							3,600,000	2,300,000
Equity in earnings of affiliated companies	0	1,691,000		677,000	3,903,000									1,200,000
Proceeds from Equity Method Investment, Dividends or Distributions				684,000	4,027,000
Loss Contingency Accrual																			$ 14,500,000

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Consolidated Statements of Cash Flows (Unaudited) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Sep. 30, 2014 Brinderson LP [Member] USD ($)	Sep. 30, 2013 Brinderson LP [Member] USD ($)
Proceeds from long-term debt	$ 0	$ 385,500
Cash flows from operating activities:
Net income	609	30,821
Loss from discontinued operations	626	6,456
Income from continuing operations	1,235	37,277
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization	32,984	29,126
Gain on sale of fixed assets	(65)	(815)
Equity-based compensation expense	4,201	5,090
Deferred income taxes	(3,797)	(1,523)
Equity in earnings of affiliated companies	(677)	(3,903)
Non-cash restructuring charges	17,187	0
Fixed asset impairment	11,870	0
Definite-lived intangible asset impairment	10,896	0
Gain on sale of interests in German joint venture	0	(11,771)
Loss on sale of interests in Bayou Coating, L.L.C.	472	0
Loss on foreign currency transactions	149	1,700
Other	881	(159)
Changes in operating assets and liabilities (net of acquisitions):
Restricted cash	(142)	(142)
Return on equity of affiliated companies	684	4,027
Receivables net, retainage and costs and estimated earnings in excess of billings	(83,383)	(11,144)
Inventories	(4,732)	(3,416)
Prepaid expenses and other assets	(5,009)	(5,044)
Accounts payable and accrued expenses	25,511	2,932
Other operating	430	198
Net cash provided by operating activities of continuing operations	8,695	41,553
Net cash used in operating activities of discontinued operations	(90)	(10,179)
Net cash provided by operating activities	8,605	31,374
Cash flows from investing activities:
Capital expenditures	(25,118)	(20,079)
Proceeds from sale of fixed assets	1,140	1,856
Patent expenditures	(1,988)	(469)
Proceeds from sale of interests in Bayou Coating, L.L.C.	9,065	0
Total consideration recorded	0	18,300	(147,605)
Purchase of Brinderson, net of cash acquired			0	143,763
Net cash used in investing activities of continuing operations	(16,901)	(144,155)
Net cash provided by investing activities of discontinued operations	90	774
Net cash used in investing activities	(16,811)	(143,381)
Cash flows from financing activities:
Proceeds from issuance of common stock upon stock option exercises, including tax effects	8,615	903
Repurchase of common stock	(31,051)	(19,017)
Purchase of non-controlling interest	(617)	0
Business Combination, Contingent Consideration, Amounts Paid	0	2,112
Payments of Financing Costs	0	5,013
Proceeds on notes payable	1,284	1,541
Principal payments on long-term debt	(15,477)	(249,125)
Net cash provided by (used in) financing activities	(27,246)	112,677
Effect of exchange rate changes on cash	(6,652)	(7,659)
Net decrease in cash and cash equivalents for the period	(42,104)	(6,989)
Cash and cash equivalents, beginning of period	158,045	133,676
Cash and cash equivalents, end of period	115,941	126,687
Debt Issuance Cost	$ 0	$ 1,964

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Note 1 - General (Details) - Business Acquisitions - Contributions to Revenues and Profits Since Acquisitions (Brinderson LP [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014
Brinderson LP [Member]
Note 1 - General - Business Acquisitions - Contributions to Revenues and Profits Since Acquisitions [Line Items]
Revenues	$ 77,353	$ 225,940
Net income	$ 3,503	$ 8,430

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Note 3 - Share Information (Details) - Earnings Per Share Calculation, Share Information	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Earnings Per Share Calculation, Share Information [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	200,665	159,639	200,665	159,639
Weighted average number of common shares used for basic EPS	37,406,061	38,672,441	37,752,472	38,836,276
Effect of dilutive stock options and restricted and deferred stock unit awards	0	398,932	360,317	392,349
Weighted average number of common shares and dilutive potential common stock used in dilutive EPS	37,406,061	39,071,373	38,112,789	39,228,625

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Note 8 - Commitments and Contingencies Footnote Details (Details) (USD $)	Sep. 30, 2014
Loss Contingencies [Line Items]
Loss Contingency, Range of Possible Loss, Minimum	$ 0
Loss Contingency, Range of Possible Loss, Maximum	24,000,000
Brinderson LP [Member]
Loss Contingencies [Line Items]
Loss Contingency Accrual	$ 14,500,000

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Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenues	$ 350,138	$ 307,665	$ 979,240	$ 775,741
Cost of revenues	286,199	238,254	782,320	599,625
Gross profit	63,939	69,411	196,920	176,116
Operating expenses	66,977	47,956	169,666	130,112
Acquisition-related expenses	0	2,267	539	4,175
Operating income	(13,934)	22,032	15,819	44,673
Other income (expense):
Interest expense	(3,258)	(5,454)	(9,693)	(10,033)
Interest income	102	40	479	158
Other	(367)	(522)	(1,830)	6,561
Total other income (expense)	(3,523)	(5,936)	(11,044)	(3,314)
Income before taxes on income	(17,457)	16,096	4,775	41,359
Taxes on income	(1,356)	3,164	4,217	7,985
Income before equity in earnings of affiliated companies	(16,101)	12,932	558	33,374
Equity in earnings of affiliated companies	0	1,691	677	3,903
Income from continuing operations	(16,101)	14,623	1,235	37,277
Loss from discontinued operations	(130)	(558)	(626)	(6,456)
Net income	(16,231)	14,065	609	30,821
Non-controlling interests	(823)	(127)	(880)	(959)
Net income attributable to Aegion Corporation	(17,054)	13,938		29,862
Basic:
Income from continuing operations (in Dollars per share)	$ (0.45)	$ 0.37	$ 0.01	$ 0.94
Loss from discontinued operations (in Dollars per share)	$ 0.00	$ (0.01)	$ (0.02)	$ (0.17)
Net income (in Dollars per share)	$ (0.45)	$ 0.36	$ (0.01)	$ 0.77
Diluted:
Income from continuing operations (in Dollars per share)	$ (0.45)	$ 0.37	$ 0.01	$ 0.93
Loss from discontinued operations (in Dollars per share)	$ 0.00	$ (0.01)	$ (0.02)	$ (0.17)
Net income (in Dollars per share)	$ (0.45)	$ 0.36	$ (0.01)	$ 0.76
Definite-lived intangible asset impairment	10,896	0	10,896	0
Earnout reversal	$ 0	$ (2,844)	$ 0	$ (2,844)

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Note 5 - Long-Term Debt and Credit Facility (Details)	3 Months Ended		9 Months Ended																	9 Months Ended		3 Months Ended	9 Months Ended
	Sep. 30, 2013 USD ($)	Sep. 30, 2013 EUR (€)	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Dec. 31, 2013 USD ($)	Jul. 02, 2013 USD ($)	Sep. 30, 2014 Additional [Member] USD ($)	Sep. 30, 2014 Initial [Member] USD ($)	Sep. 30, 2014 Wasco Energy [Member] USD ($)	Sep. 30, 2014 Bayou Wasco [Member] USD ($)	Sep. 30, 2014 Initial [Member] USD ($)	Sep. 30, 2014 Additional [Member] USD ($)	Sep. 30, 2014 Insurance Carriers Collateral [Member] USD ($)	Sep. 30, 2014 Work Performance Obligations [Member] USD ($)	Sep. 30, 2014 BPPC [Member] USD ($)	Sep. 30, 2014 2013 Credit Facility [Member] USD ($)	Dec. 31, 2013 2013 Credit Facility [Member] USD ($)	Jul. 31, 2013 2013 Credit Facility [Member] USD ($)	Jul. 02, 2013 2013 Credit Facility [Member] USD ($)	Sep. 30, 2014 2013 Credit Facility [Member] Minimum [Member]	Sep. 30, 2014 2013 Credit Facility [Member] Maximum [Member]	Sep. 30, 2013 Brinderson LP [Member] USD ($)	Sep. 30, 2014 Brinderson LP [Member] USD ($)	Jul. 02, 2013 Brinderson LP [Member] USD ($)	Jul. 31, 2013 2013 Interest Rate Swap [Member] USD ($)
Note 5 - Long-Term Debt and Credit Facility [Line Items]
Debt Instrument, Face Amount																			$ 650,000,000
Line of Credit Facility, Maximum Borrowing Capacity																			300,000,000
Secured Debt																325,900,000	341,300,000		350,000,000
Debt Instrument, Basis Spread on Variable Rate																				1.25%	2.25%
Debt Instrument, Interest Rate at Period End																2.10%
Line of Credit Facility, Amount Outstanding																45,500,000	35,500,000
Proceeds from Lines of Credit			10,000,000	0
Total consideration recorded	18,300,000	14,000,000	0	(18,300,000)																		147,600,000	147,605,000
Significant Acquisitions and Disposals, Acquisition Costs or Sale Proceeds																								150,000,000
Credit Facility, Retired Amount						232,300,000
Business Combination, Consideration Paid						7,000,000
Other Loans Payable			100,000		100,000
Due from Joint Ventures							2,600,000	14,000,000	8,100,000	16,600,000	8,000,000	6,200,000			14,200,000
Other Long-term Debt			4,500,000		11,700,000
Letters of Credit Outstanding, Amount			20,700,000										11,400,000	9,300,000
Long-term Debt, Fair Value			383,900,000		380,100,000
Derivative Asset, Notional Amount																									175,000,000
Derivative, Variable Interest Rate			2.19%
Derivative, Amount of Hedged Item																		175,000,000
Derivative, Fixed Interest Rate Percentage			0.87%
Credit Facility Maximum Consolidated Leverage Ratio			3.75
CreditFacilityMinimumConsolidatedLeverageRatio			3.50
Credit Facility Actual Consolidated Leverage Ratio			2.89
Line of Credit Facility, Remaining Borrowing Capacity			$ 80,400,000
Credit Facility Minimum Consolidated Fixed Charge Ratio			1.25
Credit Facility Actual Consolidated Fixed Charge Ratio			1.28

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Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Allowance for doubtful accounts receivable	$ 2,829	$ 3,441
Preferred stock, undesignated, par (in Dollars per share)	$ 0.10	$ 0.10
Preferred stock, undesignated, shares authorized (in Shares)	2,000,000	2,000,000
Preferred stock, undesignated, shares outstanding (in Shares)	0	0
Common stock, par (in Dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in Shares)	125,000,000	125,000,000
Common stock, shares issued (in Shares)	37,631,630	37,983,114
Common stock, shares outstanding (in Shares)	37,631,630	37,983,114

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Note 10 - Discontinued Operations (Details) - Balance Sheet Data for Discontinued Operations (Bayou Welding Works [Member], Discontinued Operations [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Bayou Welding Works [Member] | Discontinued Operations [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Restricted cash	$ 1,193	$ 1,193
Receivables, net	3,471	4,038
Prepaid expenses and other current assets	125	204
Property, plant and equipment, less accumulated depreciation	955	1,118
Deferred tax assets	1,236	1,803
Total assets	6,980	8,356
Accounts payable	1,566	2,050
Accrued expenses	155	20
Deferred tax liabilities	224	197
Total liabilities	$ 1,945	$ 2,267

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Note 2 - Accounting Policies (Details)	3 Months Ended			9 Months Ended		24 Months Ended			9 Months Ended			9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended	3 Months Ended	9 Months Ended	12 Months Ended		3 Months Ended				3 Months Ended
	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Sep. 30, 2013 EUR (€)	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2015 GBP (£)	Dec. 31, 2013 USD ($)	Sep. 30, 2014 Minimum [Member]	Sep. 30, 2014 Maximum [Member]	Sep. 30, 2013 Insituform Germany [Member]	Sep. 30, 2014 Europe [Member] USD ($)	Dec. 31, 2013 Europe [Member] USD ($)	Sep. 30, 2014 Asia Pacific [Member] USD ($)	Dec. 31, 2013 Asia Pacific [Member] USD ($)	Sep. 30, 2014 Bayou [Member] USD ($)	Sep. 30, 2014 Bayou [Member] USD ($)	Dec. 31, 2013 Bayou [Member] USD ($)	Sep. 30, 2014 Delta Double Jointing [Member]	Sep. 30, 2014 Bayou Coating [Member] USD ($)	Sep. 30, 2013 Bayou Coating [Member] USD ($)	Mar. 31, 2014 Bayou Coating [Member]	Dec. 31, 2013 Bayou Coating [Member]	Sep. 30, 2014 Bayou Delta [Member] USD ($)	Sep. 30, 2014 FRANCE USD ($)	Sep. 30, 2014 MALAYSIA USD ($)	Sep. 30, 2014 INDIA USD ($)
Note 2 - Accounting Policies [Line Items]
Tangible Asset Impairment Charges	$ 11,870,000	$ 1,100,000														$ 11,000,000								$ 0	$ 0	$ 0	$ 0
Fair Value Inputs, Discount Rate												14.00%		14.00%			13.50%
Fair Value Inputs, Long-term Revenue Growth Rate									2.50%	3.00%			3.00%		3.00%			3.00%
Compound Annual Growth Rate Assumption									2.00%	7.00%		5.00%		5.00%			5.00%
Reporting Unit, Percentage of Fair Value in Excess of Carrying Amount												9.30%		12.10%		10.20%	10.20%
PercentOfBookValue																						49.00%	49.00%
Sale of interests in German joint venture				9,065,000	0
Equity Method Investment, Other than Temporary Impairment																					2,700,000
Equity Method Investment Other Than Temporary Impairment Net Of Tax																					1,800,000
Equity Method Investment, Summarized Financial Information, Net Income (Loss)	0	1,691,000		677,000	3,903,000															1,200,000
Proceeds from Equity Method Investment, Dividends or Distributions				684,000	4,027,000
Gain (Loss) on Sale of Equity Investments				(472,000)	0
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax	(13,900,000)	2,100,000		(13,900,000)	2,100,000
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Net of Tax	(100,000)	1,300,000		(100,000)	1,300,000
Accumulated Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net of Tax	(200,000)	200,000		(200,000)	200,000
Noncontrolling Interest, Ownership Percentage by Parent											50.00%								59.00%
Total consideration recorded		18,300,000	14,000,000	0	(18,300,000)
Gain (Loss) on Disposition of Business		11,300,000		0	11,771,000
Business Acquisition, Transaction Costs		500,000			500,000
Long-term Purchase Commitment, Amount (in Pounds)						3,600,000	2,300,000
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners																			41.00%	51.00%
Payments to Noncontrolling Interests				617,000	0
Equity Method Investment, Ownership Percentage									20.00%	50.00%
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	0			0				9,101,000
Goodwill	347,236,000			347,236,000				348,680,000				20,400,000		5,300,000		29,700,000	29,700,000
Impairment of Intangible Assets, Finite-lived	10,896,000	0		10,896,000	0
Reporting Unit, Change in Fair Value, Value													$ (8,200,000)		$ (18,000,000)			$ (48,000,000)
Reporting Unit, Change in Fair Value, Percent													(9.50%)		(36.40%)			(30.90%)

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Note 1 - General (Tables)

9 Months Ended

Sep. 30, 2014

General [Line Items]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the fair value of identified assets and liabilities of the Brinderson acquisition at its acquisition date (in thousands):

Cash	$	3,842
Receivables and cost and estimated earnings in excess of billings	28,353
Prepaid expenses and other current assets	655
Property, plant and equipment	6,848
Identified intangible assets	60,210
Other assets	1,071
Accounts payable, accrued expenses and billings in excess of cost and estimated earnings	(30,622		)
Total identifiable net assets	$	70,357
Total consideration recorded	$	147,605
Less: total identifiable net assets	70,357
Goodwill at September 30, 2014	$	77,248

Pro Forma [Member]

General [Line Items]

Business Acquisition, Pro Forma Information

The following unaudited pro forma summary presents combined information of the Company as if the Brinderson acquisition had occurred at the beginning of the year preceding its acquisition (in thousands):

	Nine Months Ended September 30, 2013
Revenues	$	885,842
Net income (1)	40,889

_____________________

⁽¹⁾  Includes pro-forma adjustments for purchase price depreciation and amortization as if those intangibles were recorded at the beginning of the year preceding the acquisition date.

Since Acquisition [Member]

General [Line Items]

Business Acquisition, Pro Forma Information

The Brinderson acquisition made the following contributions to the Company’s revenues and profits (in thousands):

	Quarter Ended September 30, 2014		Nine Months Ended September 30, 2014
Revenues	$	77,353	$	225,940
Net income	3,503		8,430

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Note 2 - Accounting Policies (Details) - Financial Data for Investments in Affiliated Companies (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Financial Data for Investments in Affiliated Companies [Abstract]
Revenue			$ 9,088	$ 75,986
Gross profit			3,489	21,753
Net income			2,413	13,624
Equity in earnings of affiliated companies	$ 0	$ 1,691	$ 677	$ 3,903

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Note 3 - Share Information (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Schedule of Weighted Average Number of Shares

Earnings per share have been calculated using the following share information:

	Quarters Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Weighted average number of common shares used for basic EPS	37,406,061	38,672,441	37,752,472	38,836,276
Effect of dilutive stock options and restricted and deferred stock unit awards	—	398,932	360,317	392,349
Weighted average number of common shares and dilutive potential common stock used in dilutive EPS	37,406,061	39,071,373	38,112,789	39,228,625

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Consolidated Statements of Equity (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Noncontrolling Interest [Member]	Restricted Stock [Member]	Restricted Stock [Member] Common Stock [Member]	Restricted Stock [Member] Additional Paid-in Capital [Member]	Restricted Stock [Member] Retained Earnings [Member]	Restricted Stock [Member] Accumulated Other Comprehensive Income (Loss) [Member]	Restricted Stock [Member] Noncontrolling Interest [Member]	Restricted Stock Units (RSUs) [Member]	Restricted Stock Units (RSUs) [Member] Common Stock [Member]	Restricted Stock Units (RSUs) [Member] Additional Paid-in Capital [Member]	Restricted Stock Units (RSUs) [Member] Retained Earnings [Member]	Restricted Stock Units (RSUs) [Member] Accumulated Other Comprehensive Income (Loss) [Member]	Restricted Stock Units (RSUs) [Member] Noncontrolling Interest [Member]
Balance at Dec. 31, 2012	$ 716,120	$ 390	$ 257,209	$ 426,457	$ 15,260	$ 16,804
Balance (in Shares) at Dec. 31, 2012		38,952,561
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	30,821	0	0	29,862	0	959
Net Income (Loss) Attributable to Parent	29,862
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		29,511
Stock Issued During Period, Value, Stock Options Exercised	899	0	899	0	0	0
Restricted shares issued							4	4	0	0	0	0	0	0	0	0	0	0
Restricted shares issued (in Shares)								431,877						11,112
Issuance of shares pursuant to deferred stock unit awards (in Shares)		5,313
Forfeitures of restricted shares	0	0	0	0	0	0
Forfeitures of restricted shares (in Shares)		(20,704)
Shares repurchased and retired	19,017	(8)	(19,009)	0	0	0
Shares repurchased and retired (in Shares)		(833,552)
Equity-based compensation expense	5,090	0	5,090	0	0	0
Currency translation adjustment and derivative transactions, net	(11,764)	0	0	0	(11,645)	(119)
Balance at Sep. 30, 2013	722,153	386	244,189	456,319	3,615	17,644
Balance (in Shares) at Sep. 30, 2013		38,576,118
Balance at Dec. 31, 2013	726,921	380	236,128	470,808	2,052	17,553
Balance (in Shares) at Dec. 31, 2013	37,983,114	37,983,114
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	609	0	0		0	880
Net Income (Loss) Attributable to Parent				(271)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	526,359	526,359
Stock Issued During Period, Value, Stock Options Exercised	8,211	5	8,206	0	0	0
Restricted shares issued							2	2	0	0	0	0	0	0	0	0	0	0
Restricted shares issued (in Shares)								226,483						15,277
Issuance of shares pursuant to deferred stock unit awards (in Shares)		31,794
Forfeitures of restricted shares	(1)	(1)	0	0	0	0
Forfeitures of restricted shares (in Shares)		(75,006)
Shares repurchased and retired	31,063	(12)	(31,051)	0	0	0
Shares repurchased and retired (in Shares)		(1,333,690)
Equity-based compensation expense	4,201	0	4,201	0	0
Noncontrolling Interest, Decrease from Redemptions or Purchase of Interests	(617)	0	(909)	0	0	292
Currency translation adjustment and derivative transactions, net	(16,835)	0	0	0	(16,263)	(572)
Balance at Sep. 30, 2014	$ 691,428	$ 374	$ 216,575	$ 470,537	$ (14,211)	$ 18,153
Balance (in Shares) at Sep. 30, 2014	37,631,630	37,374,331

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Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Net income	$ (16,231)	$ 14,065	$ 609	$ 30,821
Other comprehensive income:
Currency translation adjustments	(16,693)	(1,093)	(17,473)	(11,447)
Pension activity, net of tax	(8)	8	(3)	16
Deferred gain on hedging activity, net of tax	453	(484)	641	(333)
Total comprehensive income (loss)	(32,479)	12,496	(16,226)	19,057
Comprehensive income attributable to non-controlling interests	(285)	(290)	(308)	(840)
Comprehensive income (loss) attributable to Aegion Corporation	$ (32,764)	$ 12,206	$ (16,534)	$ 18,217

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Note 9 - Segment Reporting

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Reporting

SEGMENT REPORTING

The Company operates in three distinct markets: energy and mining; water and wastewater; and commercial and structural services. Management organizes the Company around differences in products and services. As such, the Company is organized into three reportable segments: Energy and Mining; Water and Wastewater; and Commercial and Structural. Each reportable segment has a senior operating vice president who reports to the chief operating decision maker (“CODM”). The operating results and financial information reported by each segment are evaluated separately, regularly reviewed and used by the CODM to evaluate segment performance, allocate overall resources and determine management incentive compensation.

During the first quarter of 2014, the Company reorganized its North American Water and Wastewater and International Water and Wastewater reportable segments into a single, reportable segment titled Water and Wastewater. As a result of this reorganization, the entire Water and Wastewater segment reports to the Senior Vice President - Water and Wastewater, who, in turn, reports to the CODM. During 2014, all filings with the Securities and Exchange Commission (“SEC”) have combined these two previously reported segments into a single Waste and Wastewater segment.

The following disaggregated financial results have been prepared using a management approach that is consistent with the basis and manner with which management internally disaggregates financial information for the purpose of making internal operating decisions. Financial results for discontinued operations have been removed for all periods presented. The Company evaluates performance based on stand-alone operating income (loss).

Financial information by segment was as follows (in thousands):

	Quarters Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenues:
Energy and Mining	$	197,510		$	168,708		$	557,028		$	385,991
Water and Wastewater	135,649			122,149			371,493			341,680
Commercial and Structural	16,979			16,808			50,719			48,070
Total revenues	$	350,138		$	307,665		$	979,240		$	775,741
Gross profit:
Energy and Mining	$	29,380		$	37,118		$	100,856		$	87,678
Water and Wastewater	26,719			26,473			76,078			71,210
Commercial and Structural	7,840			5,820			19,986			17,228
Total gross profit	$	63,939		$	69,411		$	196,920		$	176,116
Operating income (loss):
Energy and Mining	$	(9,757	)	$	12,874		$	5,661		$	24,481
Water and Wastewater	(5,450		)	10,071			10,224			21,672
Commercial and Structural	1,273			(913		)	(66		)	(1,480		)
Total operating income (loss)	$	(13,934	)	$	22,032		$	15,819		$	44,673

The following table summarizes revenues, gross profit and operating income by geographic region (in thousands):

	Quarters Ended September 30,					Nine Months Ended September 30,
	2014			2013		2014			2013
Revenues(1):
United States	$	242,795		$	202,353	$	681,043		$	496,544
Canada	55,742			56,026		139,817			131,172
Europe	20,096			20,605		63,887			65,592
Other foreign	31,505			28,681		94,493			82,433
Total revenues	$	350,138		$	307,665	$	979,240		$	775,741
Gross profit:
United States	$	40,507		$	43,838	$	132,790		$	111,006
Canada	13,893			14,351		32,889			31,753
Europe	3,544			4,769		12,846			15,453
Other foreign	5,995			6,453		18,395			17,904
Total gross profit	$	63,939		$	69,411	$	196,920		$	176,116
Operating income (loss):
United States	$	(12,955	)	$	8,941	$	604		$	16,067
Canada	10,359			10,397		21,911			20,622
Europe	(687		)	1,106		692			3,928
Other foreign	(10,651		)	1,588		(7,388		)	4,056
Total operating income (loss)	$	(13,934	)	$	22,032	$	15,819		$	44,673

__________________________

⁽¹⁾  Revenues are attributed to the country of origin for the Company’s legal entities. For a significant majority of its legal entities, the country of origin relates to the country or geographic area that it services.

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Document And Entity Information	9 Months Ended
	Sep. 30, 2014	Oct. 31, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	Aegion Corp
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		37,381,538
Amendment Flag	false
Entity Central Index Key	0000353020
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Well-known Seasoned Issuer	Yes
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

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Note 10 - Discontinued Operations

9 Months Ended

Sep. 30, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

During the second quarter of 2013, the Company’s board of directors approved a plan of liquidation for its BWW business in an effort to improve the Company’s overall financial performance and align the operations with its long-term strategic objectives. BWW provided specialty welding and fabrication services from its facility in Louisiana. Financial results for BWW were part of the Company’s Energy and Mining segment for financial reporting purposes.

BWW ceased bidding new work and substantially completed all ongoing projects during the second quarter of 2013. As a result of the closure of BWW, Aegion recognized a pre-tax, non-cash charge of approximately $3.9 million ($2.4 million after-tax, or $0.06 per diluted share) to reflect the impairment of goodwill and intangible assets. The Company also recognized additional non-cash impairment charges for equipment and other assets of approximately $1.1 million on a pre-tax basis ($0.7 million on an after-tax basis, or $0.02 per diluted share), which also was recorded in the second quarter of 2013. The Company expects the cash liquidation value to approximate net asset value as shown in the table below. Net asset value is determined using recorded amounts for assets and liabilities, which are based on Level 3 inputs as defined in Note 11. The Company also incurred cash charges to exit the business of approximately $0.1 million on a pre-tax and post-tax basis, which included property, equipment and vehicle lease termination and buyout costs, employee termination benefits and retention incentives, among other ancillary shut-down expenses. Final liquidation of BWW’s assets is expected to occur by the end of 2014.

Operating results for discontinued operations are summarized as follows (in thousands):

	Quarters Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenues	$	—		$	744		$	—		$	8,864
Gross loss	—			(837		)	(67		)	(4,077		)
Operating expenses	215			210			617			1,828
Closure charges of welding business	—			—			—			5,019
Operating loss	(215		)	(1,047		)	(684		)	(10,924		)
Interest expense	—			—			—			(25		)
Other income (expense)	(1		)	—			(74		)	207
Loss before income tax	(216		)	(1,047		)	(758		)	(10,742		)
Tax benefit	86			489			132			4,286
Net loss	(130		)	(558		)	(626		)	(6,456		)

Balance sheet data for discontinued operations was as follows (in thousands):

	September 30, 2014		December 31, 2013
Restricted cash	$	1,193	$	1,193
Receivables, net	3,471		4,038
Prepaid expenses and other current assets	125		204
Property, plant and equipment, less accumulated depreciation	955		1,118
Deferred tax assets	1,236		1,803
Total assets	$	6,980	$	8,356
Accounts payable	$	1,566	$	2,050
Accrued expenses	155		20
Deferred tax liabilities	224		197
Total liabilities	$	1,945	$	2,267

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Consolidated Statements of Comprehensive Income (Unaudited) (Parentheticals) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Deferred gain on hedging activity, tax	$ 51	$ 48	$ 124	$ 100

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Note 4 - Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Identified Intangible Assets

GOODWILL AND IDENTIFIED INTANGIBLE ASSETS

Goodwill and identified intangible assets consist of the following:

Goodwill

(In thousands)
	Energy and Mining			Water and Wastewater			Commercial and Structural			Total
Beginning balance at January 1, 2014	$	153,110		$	130,078		$	65,492		$	348,680
Additions to goodwill through acquisitions (1)	—			—			1,098			1,098
Foreign currency translation	(609		)	(1,845		)	(88		)	(2,542		)
Balance at September 30, 2014	$	152,501		$	128,233		$	66,502		$	347,236

__________________________

⁽¹⁾  During the second quarter of 2014, the Company recorded goodwill of $1.1 million related to the 2012 acquisition of Fyfe Asia (see Note 1).

Identified Intangible Assets

(In thousands)		September 30, 2014							December 31, 2013
	Weighted Average Useful Lives (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
License agreements	6	$	3,912	$	(3,094	)	$	818	$	3,917	$	(2,977	)	$	940
Backlog	0	4,736		(4,736		)	—		4,745		(4,745		)	—
Leases	12	2,067		(588		)	1,479		2,067		(477		)	1,590
Trademarks	16	21,648		(4,941		)	16,707		21,394		(4,167		)	17,227
Non-competes	4	1,140		(817		)	323		1,140		(753		)	387
Customer relationships (1)	14	147,704		(12,517		)	135,187		182,703		(28,287		)	154,416
Patents and acquired technology	16	59,152		(23,692		)	35,460		57,419		(22,696		)	34,723
		$	240,359	$	(50,385	)	$	189,974	$	273,385	$	(64,102	)	$	209,283

__________________________

⁽¹⁾  During the third quarter of 2014, the Company recorded an intangible asset impairment of $10.9 million related to realignment efforts at Bayou (see Note 2).

Amortization expense was $3.6 million and $3.7 million for the quarters ended September 30, 2014 and 2013, respectively, and $10.6 million and $8.8 million for the nine-month periods ended September 30, 2014 and 2013, respectively. Estimated amortization expense by year is as follows (in thousands):

2014	$	14,224
2015	13,509
2016	13,516
2017	13,469
2018	13,391

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Note 3 - Share Information

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Share Information

SHARE INFORMATION

Earnings per share have been calculated using the following share information:

	Quarters Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Weighted average number of common shares used for basic EPS	37,406,061	38,672,441	37,752,472	38,836,276
Effect of dilutive stock options and restricted and deferred stock unit awards	—	398,932	360,317	392,349
Weighted average number of common shares and dilutive potential common stock used in dilutive EPS	37,406,061	39,071,373	38,112,789	39,228,625

The Company excluded 312,091 stock options and restricted and deferred stock units for the quarter ended September 30, 2014 from the diluted earnings per share calculation for the Company’s common stock because of the reported net loss for the period. Additionally, the Company excluded 200,665 and 159,639 stock options for the quarters ended September 30, 2014 and 2013, respectively, and 200,665 and 159,639 stock options for the nine-month periods ended September 30, 2014 and 2013, respectively, from the diluted earnings per share calculations for the Company’s common stock because they were anti-dilutive as their exercise prices were greater than the average market price of common shares for each period.

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Note 2 - Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2014

Balance Sheet [Member]

Note 2 - Accounting Policies [Line Items]

Schedule of Variable Interest Entities [Table Text Block]

Financial data for consolidated variable interest entities are summarized in the following table (in thousands):

Balance sheet data	September 30, 2014		December 31, 2013
Current assets	$	58,646	$	55,960
Non-current assets	44,769		47,606
Current liabilities	25,697		27,335
Non-current liabilities	37,215		36,761

Income Statement [Member]

Note 2 - Accounting Policies [Line Items]

Schedule of Investments in and Advances to Affiliates, Schedule of Investments [Table Text Block]

Financial data for these investments in affiliated companies for each of the nine month periods ended September 30, 2014 and 2013 is summarized in the following table (in thousands):

	Nine Months Ended September 30,
Income statement data	2014		2013 (1)
Revenue	$	9,088	$	75,986
Gross profit	3,489		21,753
Net income	2,413		13,624
Equity in earnings of affiliated companies	677		3,903

_____________________

⁽¹⁾    Includes the financial data of Insituform-Germany through its sale in June 2013.

Schedule of Variable Interest Entities [Table Text Block]

	Nine Months Ended September 30,
Income statement data	2014		2013
Revenue	$	58,942	$	62,650
Gross profit	9,370		10,179
Net income	714		2,040

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Note 11 - Derivative Financial Instruments

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

DERIVATIVE FINANCIAL INSTRUMENTS

As a matter of policy, the Company uses derivatives for risk management purposes, and does not use derivatives for speculative purposes. From time to time, the Company may enter into foreign currency forward contracts to hedge foreign currency cash flow transactions. For cash flow hedges, gain or loss is recorded in the consolidated statements of operations upon settlement of the hedge. All of the Company’s hedges that are designated as hedges for accounting purposes were highly effective; therefore, no notable amounts of hedge ineffectiveness were recorded in the Company’s consolidated statements of operations for the outstanding hedged balance. During each of the quarters ended September 30, 2014 and 2013, the Company recorded less than $0.1 million as a gain on the consolidated statements of operations in the other income (expense) line item upon settlement of the cash flow hedges. At September 30, 2014, the Company recorded a net deferred gain of $0.6 million related to the cash flow hedges in other current assets and other comprehensive income on the consolidated balance sheets and on the foreign currency translation adjustment and derivative transactions line of the consolidated statements of equity. The Company presents derivative instruments in the consolidated financial statements on a gross basis. The gross and net difference of derivative instruments are considered to be immaterial to the financial position presented in the financial statements.

The Company engages in regular inter-company trade activities with, and receives royalty payments from its wholly-owned Canadian entities, paid in Canadian Dollars, rather than the Company’s functional currency, U.S. Dollars. In order to reduce the uncertainty of the U.S. Dollar settlement amount of that anticipated future payment from the Canadian entities, the Company uses forward contracts to sell a portion of the anticipated Canadian Dollars to be received at the future date and buys U.S. Dollars.

In July 2013, the Company replaced its interest rate swap agreement with a notional amount of $83.0 million with an interest rate swap agreement with a notional amount of $175.0 million, which is set to expire in July 2016. The notional amount of this swap mirrors the amortization of a $175.0 million portion of the Company’s $350.0 million term loan drawn from the Credit Facility. The swap requires the Company to make a monthly fixed rate payment of 0.87% calculated on the amortizing $175.0 million notional amount, and provides for the Company to receive a payment based upon a variable monthly LIBOR interest rate calculated on the amortizing $175.0 million notional amount. The receipt of the monthly LIBOR-based payment offsets a variable monthly LIBOR-based interest cost on a corresponding $175.0 million portion of the Company’s term loan from the Credit Facility. This interest rate swap is used to partially hedge the interest rate risk associated with the volatility of monthly LIBOR rate movement, and will be accounted for as a cash flow hedge.

The following table provides a summary of the fair value amounts of our derivative instruments, all of which are Level 2 (as defined below) inputs (in thousands):

Designation of Derivatives	Balance Sheet Location	September 30, 2014		December 31, 2013
Derivatives Designated as Hedging Instruments:
Forward Currency Contracts	Prepaid expenses and other current assets	$	607	$	24
	Total Assets	$	607	$	24
Interest Rate Swaps	Other non-current liabilities	$	740	$	1,220
	Total Liabilities	$	740	$	1,220
Derivatives Not Designated as Hedging Instruments:
Forward Currency Contracts	Prepaid expenses and other current assets	$	292	$	878
	Total Assets	$	292	$	878
	Total Derivative Assets	$	899	$	902
	Total Derivative Liabilities	740		1,220
	Total Net Derivative Asset (Liability)	$	159	$	(318	)

FASB ASC 820, Fair Value Measurements (“FASB ASC 820”), defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements for interim and annual reporting periods. The guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1 – defined as quoted prices in active markets for identical instruments; Level 2 – defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3 – defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. In accordance with FASB ASC 820, the Company determined that the instruments summarized below are derived from significant observable inputs, referred to as Level 2 inputs.

The following table represents assets and liabilities measured at fair value on a recurring basis and the basis for that measurement (in thousands):

	Total Fair Value at September 30, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Forward Currency Contracts	$	899	$	—	$	899	$	—
Total	$	899	$	—	$	899	$	—
Liabilities:
Interest Rate Swap	$	740	$	—	$	740	$	—
Total	$	740	$	—	$	740	$	—

	Total Fair Value at December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Forward Currency Contracts	$	902	$	—	$	902	$	—
Total	$	902	$	—	$	902	$	—
Liabilities:
Interest Rate Swap	$	1,220	$	—	$	1,220	$	—
Total	$	1,220	$	—	$	1,220	$	—

The following table summarizes the Company’s derivative positions at September 30, 2014:

	Position	Notional Amount		Weighted Average Remaining Maturity In Years	Average Exchange Rate
Canadian Dollar/USD	Sell	$	33,225,371	0.2	1.12
Singapore Dollar/USD	Sell	$	1,973,834	0.2	1.28
Hong Kong Dollar/USD	Sell	$	1,558,146	0.2	7.77
Australian Dollar/USD	Sell	$	3,030,088	0.2	0.87
USD/British Pound	Sell	£	1,900,000	0.2	1.62
EURO/British Pound	Sell	£	8,000,000	0.2	0.78
Interest Rate Swap		$	162,968,750	1.8

The Company had no transfers between Level 1, 2 or 3 inputs during the nine months ended September 30, 2014. Certain financial instruments are required to be recorded at fair value. Changes in assumptions or estimation methods could affect the fair value estimates; however, we do not believe any such changes would have a material impact on our financial condition, results of operations or cash flows. Other financial instruments including cash and cash equivalents and short-term borrowings, including notes payable, are recorded at cost, which approximates fair value, which are based on Level 2 inputs as previously defined.

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Note 7 - Income Taxes (Notes)

9 Months Ended

Sep. 30, 2014

Note 7 - Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

TAXES ON INCOME

The effective tax rates in the third quarter and first nine-months of 2014 were unfavorably impacted by a relatively small income tax benefit recorded on significant pre-tax charges related to the restructuring initiative and the impact of discrete tax items that were primarily the result of establishing valuation allowances on net operating losses in jurisdictions where the Company will not have the ability to generate future taxable income.

The Company’s effective tax rate for continuing operations was 7.8% and 88.3% in the quarter and nine-month period ended September 30, 2014, respectively, compared to 19.7% and 19.3% in the corresponding periods in 2013. The low effective tax rate on the pre-tax loss and the high effective tax rate on pre-tax income for the quarter and nine-month period ended September 30, 2014, respectively, were negatively influenced by recording no tax benefit on losses in jurisdictions where valuation allowances were recorded against deferred tax assets.

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Note 11 - Derivative Financial Instruments (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Jul. 31, 2013 2011 Interest Rate Swap [Member]	Jul. 31, 2013 2013 Interest Rate Swap [Member]	Sep. 30, 2014 Fair Value, Inputs, Level 2 [Member]	Dec. 31, 2013 Fair Value, Inputs, Level 2 [Member]	Sep. 30, 2014 2013 Credit Facility [Member]	Dec. 31, 2013 2013 Credit Facility [Member]	Jul. 31, 2013 2013 Credit Facility [Member]	Jul. 02, 2013 2013 Credit Facility [Member]
Debt Instrument [Line Items]
Gain (Loss) on Foreign Currency Derivatives Recorded in Earnings, Net	$ 100,000	$ 100,000	$ 100,000	$ 100,000
Cash Flow Hedge Derivative Instrument Assets at Fair Value							607,000	24,000
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax	(13,900,000)	2,100,000	(13,900,000)	2,100,000
Derivative Asset, Notional Amount					83,000,000	175,000,000
Derivative, Amount of Hedged Item											175,000,000
Secured Debt									$ 325,900,000	$ 341,300,000		$ 350,000,000
Derivative, Fixed Interest Rate Percentage	0.87%		0.87%

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Note 5 - Long-Term Debt and Credit Facility

9 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Long-Term Debt and Credit Facility

LONG-TERM DEBT AND CREDIT FACILITY

Financing Arrangements

In July 2013, in connection with the Brinderson acquisition, the Company entered into a $650.0 million senior secured credit facility (the “Credit Facility”) with a syndicate of banks. Bank of America, N.A. served as the administrative agent. Merrill Lynch Pierce Fenner & Smith Incorporated, JPMorgan Securities LLC and U.S. Bank National Association acted as joint lead arrangers and joint book managers in the syndication of the Credit Facility. The Credit Facility consists of a $300.0 million five-year revolving line of credit and a $350.0 million five-year term loan facility, each with a maturity date of July 1, 2018. The Company borrowed the entire term loan and drew $35.5 million against the revolving line of credit from the Credit Facility on July 1, 2013 for the following purposes: (1) to pay the $147.6 million cash purchase price for the Company’s acquisition of Brinderson, L.P. and related entities, which closed on July 1, 2013; (2) to retire $232.3 million in indebtedness outstanding under the Company’s prior credit facility; and (3) to fund expenses associated with the Credit Facility and the Brinderson acquisition. Additionally, the Company used $7.0 million of its cash on hand to fund these transactions.

Generally, interest will be charged on the principal amounts outstanding under the Credit Facility at the British Bankers Association LIBOR rate plus an applicable rate ranging from 1.25% to 2.25% depending on the Company’s consolidated leverage ratio. The Company can also opt for an interest rate equal to a base rate (as defined in the credit documents) plus an applicable rate, which also is based on the Company’s consolidated leverage ratio. The applicable one month LIBOR borrowing rate (LIBOR plus Company’s applicable rate) as of September 30, 2014 was approximately 2.10%.

The Company’s indebtedness at September 30, 2014 consisted of $325.9 million outstanding from the $350.0 million term loan under the Credit Facility and $45.5 million on the line of credit under the Credit Facility. In July 2014, the Company borrowed $10.0 million on the line of credit for working capital needs. Additionally, the Company and Wasco Coatings UK Ltd. (“Wasco Energy”) loaned Bayou Wasco Insulation, LLC (“Bayou Wasco”), a joint venture between the Company and Wasco Energy, an aggregate of $14.0 million for the purchase of capital assets in 2012 and 2013. Additionally, during September 2014, the Company and Wasco Energy agreed to loan Bayou Wasco an additional $2.6 million for working capital needs increasing the total to $16.6 million. Of such amount, $8.1 million (representing funds loaned by Wasco Energy) was designated as third-party debt in the Company’s consolidated financial statements. In February 2014, the Company and Wasco Energy agreed to a five-year term on the funds loaned; therefore, the amounts are classified as long-term debt as of September 30, 2014. In connection with the formation of Bayou Perma-Pipe Canada, Ltd. (“BPPC”), the Company and Perma-Pipe Canada, Inc. loaned BPPC an aggregate of $8.0 million for the purchase of capital assets and for operating purposes. Additionally, during January 2012, the Company and Perma-Pipe Canada, Inc. agreed to loan BPPC an additional $6.2 million for the purchase of capital assets increasing the total to $14.2 million. Of such amount, $4.5 million was designated as third-party debt in the Company’s consolidated financial statements. The Company also held $0.1 million of third party notes and bank debt at September 30, 2014.

As of September 30, 2014, the Company had $20.7 million in letters of credit issued and outstanding under the Credit Facility. Of such amount, $11.4 million was collateral for the benefit of certain of our insurance carriers and $9.3 million was for letters of credit or bank guarantees of performance or payment obligations of foreign subsidiaries.

The Company’s indebtedness at December 31, 2013 consisted of $341.3 million outstanding from the term loan under the Credit Facility and $35.5 million on the line of credit under the Credit Facility. Additionally, the Company designated $11.7 million of debt held by its joint ventures (representing funds loaned by its joint venture partners) as third-party debt in the consolidated financial statements and held $0.1 million of third party notes and bank debt at December 31, 2013.

At September 30, 2014 and December 31, 2013, the estimated fair value of the Company’s long-term debt was approximately $383.9 million and $380.1 million, respectively. Fair value was estimated using market rates for debt of similar risk and maturity and a discounted cash flow model, which are based on Level 3 inputs as defined in Note 11.

In July 2013, the Company entered into an interest rate swap agreement, for a notional amount of $175.0 million that is set to expire in July 2016. The notional amount of this swap mirrors the amortization of a $175.0 million portion of the Company’s $350.0 million term loan drawn from the Credit Facility. The swap requires the Company to make a monthly fixed rate payment of 0.87% calculated on the amortizing $175.0 million notional amount, and provides for the Company to receive a payment based upon a variable monthly LIBOR interest rate calculated on the amortizing $175.0 million notional amount. The annualized borrowing rate of the swap at September 30, 2014 was approximately 2.19%. The receipt of the monthly LIBOR-based payment offsets a variable monthly LIBOR-based interest cost on a corresponding $175.0 million portion of the Company’s term loan from the Credit Facility. This interest rate swap is used to partially hedge the interest rate risk associated with the volatility of monthly LIBOR rate movement, and will be accounted for as a cash flow hedge.

The Credit Facility is subject to certain financial covenants, including a consolidated financial leverage ratio and consolidated fixed charge coverage ratio. On October 6, 2014, the Company amended the Credit Facility’s defined terms for income and fixed charges to allow for the add-back of certain cash and non-cash charges related to the 2014 Restructuring Plan when calculating the Company’s compliance with the consolidated financial leverage ratio and consolidated fixed charge coverage ratio. Subject to the specifically defined terms and methods of calculation as set forth in the Credit Facility’s credit agreement, as amended, the financial covenant requirements, as of each quarterly reporting period end, are defined as follows:

• Consolidated financial leverage ratio compares consolidated funded indebtedness to Credit Facility defined income. The initial maximum amount was not to exceed 3.75 to 1.00, but decreased, as scheduled, to not more that 3.50 to 1.00 beginning with the quarter ended June 30, 2014. At September 30, 2014, the Company’s consolidated financial leverage ratio was 2.89 to 1.00 and, using the Credit Facility defined income, the Company had the capacity to borrow up to approximately $80.4 million of additional debt.

• Consolidated fixed charge coverage ratio compares Credit Facility defined income to Credit Facility defined fixed charges with a minimum permitted ratio of not less than 1.25 to 1.00. At September 30, 2014, the Company’s fixed charge ratio was 1.28 to 1.00.

At September 30, 2014, the Company was in compliance with all of its debt and financial covenants as required under the Credit Facility.

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Note 6 - Stockholders' Equity and Equity Compensation

9 Months Ended

Sep. 30, 2014

Shareholders' Equity and Share-based Payments [Abstract]

Stockholders' Equity and Equity Compensation

STOCKHOLDERS’ EQUITY AND EQUITY COMPENSATION

Share Repurchase Plan

In February 2014, the Company’s board of directors authorized the open market repurchase of up to $20.0 million of the Company’s common stock to be made during 2014. Once a repurchase is complete, the Company promptly retires the shares. The Company also is authorized to utilize up to $10.0 million in cash to purchase shares of the Company’s common stock in each calendar year in connection with the Company’s equity compensation programs for employees and directors. The participants in the Company’s equity plans may surrender shares of previously issued common stock in satisfaction of tax obligations arising from the vesting of restricted stock awards under such plans, in connection with the exercise of stock option awards, and with the lapse of restricted periods of deferred stock unit awards. The deemed price paid is the closing price of the Company’s common stock on the Nasdaq Global Select Market on the date that the restricted stock vests, the shares of the Company’s common stock are surrendered in exchange for stock option exercises or the lapse of the restricted periods of deferred stock unit awards. In addition, in connection with the exercise of employee stock options, the option holder may elect a “net, net” exercise, such that the option holder receives a number of shares equal to (1) the built-in gain in the option shares divided by the market price of the Company’s common stock on the date of exercise, less (2) a number of shares equal to the taxes due upon the exercise of the option divided by the market price of the Company’s common stock on the date of exercise. The shares of Company common stock surrendered to the Company for taxes due on the exercise of the option are deemed repurchased by the Company.

During the nine-month period ended September 30, 2014, the Company acquired 860,761 shares of the Company’s common stock for $20.0 million ($23.24 average price per share) through the open market repurchase program discussed above and 53,286 shares of the Company’s common stock for $1.2 million ($22.66 average price per share) in connection with the satisfaction of tax obligations from the vesting of restricted stock, exercise of stock options and distribution of deferred stock units. In addition, during the nine-month period ended September 30, 2014, the Company acquired 419,643 shares of the Company’s common stock in connection with “net, net” exercises of employee stock options for a gross value of $9.9 million ($1.4 million in cash value). Once repurchased, the Company immediately retired all such shares.

Equity-Based Compensation Plans

At September 30, 2014, the Company had two active equity-based compensation plans under which awards may be made, including stock appreciation rights, restricted shares of common stock, performance awards, stock options and stock units. The Company’s 2013 Employee Equity Incentive Plan (the “2013 Employee Plan”) has 2,895,000 shares of the Company’s common stock reserved for issuance and, at September 30, 2014, 1,953,034 shares of common stock were available for issuance. The Company’s 2011 Non-Employee Director Equity Incentive Plan (“2011 Director Plan”) has 250,000 shares of the Company’s common stock registered for issuance and, at September 30, 2014, 135,396 shares of common stock were available for issuance.

Stock Awards

Stock awards, which include shares of restricted stock, restricted stock units and restricted performance units, are awarded from time to time to executive officers and certain key employees of the Company. Stock award compensation is recorded based on the award date fair value and charged to expense ratably through the requisite service period. The forfeiture of unvested restricted stock, restricted stock units and restricted performance units causes the reversal of all previous expense recorded as a reduction of current period expense.

The following table summarizes all stock award activity during the nine months ended September 30, 2014:

	Stock Awards		Weighted Average Award Date Fair Value
Outstanding at January 1, 2014	555,025		$	22.79
Restricted shares awarded	226,483		23.81
Restricted stock units awarded	230,324		24.20
Restricted shares distributed	(117,086	)	23.69
Restricted stock units distributed	(15,277	)	21.25
Restricted shares forfeited	(75,006	)	23.47
Restricted stock units forfeited	(96,976	)	24.66
Outstanding at September 30, 2014	707,487		$	23.13

Expense associated with stock awards was $2.8 million in each of the nine month periods ended September 30, 2014 and 2013. Unrecognized pre-tax expense of $11.4 million related to stock awards is expected to be recognized over the weighted average remaining service period of 2.06 years for awards outstanding at September 30, 2014.

Expense associated with stock awards was $1.0 million and $0.8 million for the quarters ended September 30, 2014 and 2013, respectively.

Deferred Stock Unit Awards

Deferred stock units generally are awarded to directors of the Company and represent the Company’s obligation to transfer one share of the Company’s common stock to the grantee at a future date and generally are fully vested on the date of grant. The expense related to the issuance of deferred stock units is recorded as of the date of the award.

The following table summarizes all deferred stock unit activity during the nine months ended September 30, 2014:

	Deferred Stock Units		Weighted Average Award Date Fair Value
Outstanding at January 1, 2014	214,455		$	19.56
Awarded	32,904		23.96
Distributed	(31,794	)	19.70
Outstanding at September 30, 2014	215,565		$	20.18

There was no expense associated with awards of deferred stock units for the quarters ended September 30, 2014 and 2013. Expense associated with awards of deferred stock units for the nine months ended September 30, 2014 and 2013 was $0.8 million and $0.9 million, respectively.

Stock Options

Stock options on the Company’s common stock are awarded from time to time to executive officers and certain key employees of the Company. Stock options granted generally have a term of seven to ten years and an exercise price equal to the market value of the underlying common stock on the date of grant.

The following table summarizes all stock option activity during the nine months ended September 30, 2014:

	Shares		Weighted Average Exercise Price
Outstanding at January 1, 2014	1,208,824		$	18.54
Granted	38,820		24.21
Exercised	(526,359	)	16.36
Canceled/Expired	(196,802	)	24.37
Outstanding at September 30, 2014	524,483		$	18.95
Exercisable at September 30, 2014	460,364		$	19.00

Expense associated with stock option grants was $0.1 million and $0.4 million in the quarters ended September 30, 2014 and 2013, respectively. In the nine months ended September 30, 2014 and 2013, the Company recorded expense of $0.6 million and $1.4 million, respectively, related to stock option grants. Unrecognized pre-tax expense of $0.2 million related to stock option grants is expected to be recognized over the weighted average remaining contractual term of 0.90 years for awards outstanding at September 30, 2014.

Financial data for stock option exercises are summarized in the following table (in thousands):

	Nine Months Ended September 30,
	2014		2013
Amount collected from stock option exercises	$	8,614	$	738
Total intrinsic value of stock option exercises	3,771		131
Tax benefit of stock option exercises recorded in additional paid-in-capital	6		55
Aggregate intrinsic value of outstanding stock options	2,381		6,983
Aggregate intrinsic value of exercisable stock options	2,138		5,962

The intrinsic value calculations are based on the Company’s closing stock price of $22.25 and $23.72 on September 30, 2014 and 2013, respectively.

The Company uses a binomial option-pricing model for valuation purposes to reflect the features of stock options granted. The fair value of stock options awarded during the nine-month periods ended September 30, 2014 and 2013 were estimated at the date of grant based on the assumptions presented in the table below. Volatility, expected term and dividend yield assumptions were based on the Company’s historical experience. The risk-free rate was based on a U.S. treasury note with a maturity similar to the option grant’s expected term.

	Nine Months Ended September 30,
	2014	2013
Grant-date fair value	$11.27	$12.92
Volatility	41.6%	49.8%
Expected term (years)	7.0	7.0
Dividend yield	—%	—%
Risk-free rate	2.3%	1.1%

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Note 8 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Litigation

The Company is involved in certain litigation incidental to the conduct of its business and affairs. Management, after consultation with legal counsel, does not believe that the outcome of any such litigation, individually or in the aggregate, will have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.

Contingencies

In connection with the Brinderson acquisition, certain pre-acquisition matters were identified during the quarter ended June 30, 2014 where a loss is both probable and reasonably estimable. The Company identified the range of possible loss from zero to $24 million. The Company establishes liabilities in accordance with FASB ASC Subtopic No. 450-20, Contingencies – Loss Contingencies, and, accordingly, recorded a $14.5 million accrual for such matters as part of its purchase price accounting for Brinderson (see Note 1). The Company believes it has meritorious defenses against certain of these matters.

Purchase Commitments

The Company had no material purchase commitments at September 30, 2014.

Guarantees

The Company has many contracts that require the Company to indemnify the other party against loss from claims, including claims of patent or trademark infringement or other third party claims for injuries, damages or losses. The Company has agreed to indemnify its surety against losses from third-party claims of subcontractors. The Company has not previously experienced material losses under these provisions and, while there can be no assurances, currently does not anticipate any future material adverse impact on its consolidated financial position, results of operations or cash flows.

The Company regularly reviews its exposure under all its engagements, including performance guarantees by contractual joint ventures and indemnification of its surety. As a result of the most recent review, the Company has determined that the risk of material loss is remote under these arrangements and has not recorded a liability for these risks at September 30, 2014 on its consolidated balance sheet.

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Note 12 - Subsequent Event (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Restructuring Cost and Reserve [Line Items]
Tangible Asset Impairment Charges	$ 11,870,000	$ 1,100,000
Impairment of Intangible Assets, Finite-lived	10,896,000	0	10,896,000	0
Restructuring Costs and Asset Impairment Charges	39,953,000		17,187,000	0
Restructuring Reserve, Settled without Cash	17,187,000
Restructuring and Related Cost, Expected Number of Positions Eliminated			170
Entity Number of Employees	6,000		6,000
Energy And Mining [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Costs and Asset Impairment Charges	22,200,000
Water and Wastewater [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Costs and Asset Impairment Charges	17,800,000
Minimum [Member]
Restructuring Cost and Reserve [Line Items]
Payments for Restructuring			15,000,000
Maximum [Member]
Restructuring Cost and Reserve [Line Items]
Payments for Restructuring			18,000,000
Cost of Sales [Member]
Restructuring Cost and Reserve [Line Items]
Tangible Asset Impairment Charges	11,834,000
Impairment of Intangible Assets, Finite-lived	0
Restructuring Costs and Asset Impairment Charges	14,940,000
Restructuring Reserve, Settled without Cash	3,106,000
Operating Expense [Member]
Restructuring Cost and Reserve [Line Items]
Tangible Asset Impairment Charges	36,000
Impairment of Intangible Assets, Finite-lived	0
Restructuring Costs and Asset Impairment Charges	14,117,000
Restructuring Reserve, Settled without Cash	14,081,000
Definite-lived Intangible Asset Impairment [Member]
Restructuring Cost and Reserve [Line Items]
Tangible Asset Impairment Charges	0
Impairment of Intangible Assets, Finite-lived	10,896,000
Restructuring Costs and Asset Impairment Charges	10,896,000
Restructuring Reserve, Settled without Cash	$ 0

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Note 11 - Derivative Financial Instruments (Details) - Summary of the Company’s Derivative Positions	9 Months Ended
	Sep. 30, 2014 Canadian Dollar/USD [Member]	Sep. 30, 2014 Singapore Dollar/USD [Member]	Sep. 30, 2014 Hong Kong Dollar/USD [Member]	Sep. 30, 2014 Australian Dollar/USD [Member]	Sep. 30, 2014 USD/British Pound [Member]	Sep. 30, 2014 EURO/British Pound [Member]	Sep. 30, 2014 Interest Rate Swap [Member]	Sep. 30, 2014 Short [Member] Canadian Dollar/USD [Member] USD ($)	Sep. 30, 2014 Short [Member] Singapore Dollar/USD [Member] USD ($)	Sep. 30, 2014 Short [Member] Hong Kong Dollar/USD [Member] USD ($)	Sep. 30, 2014 Short [Member] Australian Dollar/USD [Member] USD ($)	Sep. 30, 2014 Short [Member] USD/British Pound [Member] GBP (£)	Sep. 30, 2014 Short [Member] EURO/British Pound [Member] GBP (£)	Sep. 30, 2014 Short [Member] Interest Rate Swap [Member] USD ($)
Note 10 - Derivative Financial Instruments (Details) - Summary of the Company’s Derivative Positions [Line Items]
Notional Amount								$ 33,225,371	$ 1,973,834	$ 1,558,146	$ 3,030,088	£ 1,900,000	£ 8,000,000	$ 162,968,750
Weighted Average Remaining Maturity In Years	2 months 12 days	2 months 12 days	2 months 12 days	2 months 12 days	2 months 12 days	2 months 12 days	1 year 9 months 18 days
Average Exchange Rate	1.12	1.28	7.77	0.87	1.6200	0.7800

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Note 1 - General (Details) - Business Acquisitions - Initial Purchase Price Allocation In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended			3 Months Ended	9 Months Ended
	Sep. 30, 2013 USD ($)	Sep. 30, 2013 EUR (€)	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Dec. 31, 2013 USD ($)	Sep. 30, 2013 Brinderson LP [Member] USD ($)	Sep. 30, 2014 Brinderson LP [Member] USD ($)
Note 1 - General - Business Acquisitions - Initial Purchase Price Allocation [Line Items]
Cash							$ 3,842
Receivables and cost and estimated earnings in excess of billings							28,353
Prepaid expenses and other current assets							655
Property, plant and equipment							6,848
Identified intangible assets							60,210
Other assets							1,071
Accounts payable, accrued expenses and billings in excess of cost and estimated earnings							(30,622)
Total consideration recorded	18,300	14,000	0	(18,300)		147,600	147,605
Total identifiable net assets							70,357
Goodwill at September 30, 2014			$ 347,236		$ 348,680		$ 77,248

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Note 6 - Stockholders' Equity and Equity Compensation (Details) - Binomial Option-Pricing Model Assumptions (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Binomial Option-Pricing Model Assumptions [Abstract]
Grant-date fair value (in Dollars per share)	$ 11.27	$ 12.92
Volatility	41.60%	49.80%
Expected term (years)	7 years	7 years
Dividend yield	0.00%	0.00%
Risk-free rate	2.30%	1.10%

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Note 2 - Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Income Tax, Policy [Policy Text Block]

Taxation

The Company provides for estimated income taxes payable or refundable on current year income tax returns as well as the estimated future tax effects attributable to temporary differences and carryforwards, based upon enacted tax laws and tax rates, and in accordance with FASB ASC 740, Income Taxes (“FASB ASC 740”). FASB ASC 740 also requires that a valuation allowance be recorded against any deferred tax assets that are not likely to be realized in the future. Refer to Note 7 for additional information regarding taxes on income.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Long-Lived Assets

Property, plant and equipment and other identified intangibles (primarily customer relationships, patents and acquired technologies, trademarks, licenses, contract backlog and non-compete agreements) are recorded at cost and, except for goodwill and certain trademarks, are depreciated or amortized on a straight-line basis over their estimated useful lives. Changes in circumstances such as technological advances, changes to the Company’s business model or changes in the Company’s capital strategy can result in the actual useful lives differing from the Company’s estimates. If the Company determines that the useful life of its property, plant and equipment or its identified intangible assets should be changed, the Company would depreciate or amortize the net book value in excess of the salvage value over its revised remaining useful life, thereby increasing or decreasing depreciation or amortization expense.

Long-lived assets, including property, plant and equipment and other intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such impairment tests are based on a comparison of undiscounted cash flows to the recorded value of the asset. The estimate of cash flow is based upon, among other things, assumptions about expected future operating performance. The Company’s estimates of undiscounted cash flow may differ from actual cash flow due to, among other things, technological changes, economic conditions, changes to its business model or changes in its operating performance. If the sum of the undiscounted cash flows (excluding interest) is less than the carrying value, the Company recognizes an impairment loss, measured as the amount by which the carrying value exceeds the fair value of the asset.

On October 6, 2014, the Company’s board of directors approved the 2014 Restructuring Plan as discussed further in Note 12. As part of the 2014 Restructuring Plan, the Company evaluated the long-lived assets of its global operations affected by the restructuring initiative. In the early stages of the evaluation process, the Company reviewed the financial performance of all at risk asset groups within each affected reporting unit. Due to the ongoing weak economic conditions and weak economic outlook for certain at risk asset groups, the Company decided to no longer focus on the possible growth opportunities within these businesses; therefore, the Company would no longer provide cash flow or operational support to these businesses. This decision was deemed a significant adverse change in the extent or manner in which the asset is currently being used, and as such, the Company performed an asset impairment review as of September 30, 2014 for all of its at risk asset groups within each of the affected reporting units in accordance with ASC 360 Property, Plant and Equipment (“FASB ASC 360”).

The affected asset groups include: (i) the Bayou and Bayou Delta asset groups within the Bayou reporting unit (“Bayou Reporting Unit”); (ii) the France and Switzerland asset groups within the European Sewer and Water Rehabilitation (“Europe”) reporting unit; and (iii) the Singapore, Hong Kong, Malaysia and India asset groups within the Asia-Pacific Sewer and Water Rehabilitation (“Asia-Pacific”) reporting unit. The results of the Bayou Reporting Unit and its related asset groups are reported within the Energy and Mining reportable segment. The results of Europe and Asia-Pacific and their related asset groups are reported within the Water and Wastewater reportable segment.

The assets of each asset group represent the lowest level for which identifiable cash flows can be determined independent of other groups of assets and liabilities. The Company developed internal forward business plans under the guidance of local and regional leadership to determine the undiscounted expected future cash flows derived from each of the at risk asset groups’ long-lived assets. Such were based on management’s best estimates considering the likelihood of various outcomes. Based on the internal projections, the Company determined that the undiscounted expected future cash flows for all of the at risk asset groups referenced above were less than the carrying value of the assets, and as a result, engaged a third-party valuation firm to assist in determining the fair value of long-lived assets at these at risk asset groups.

In order to determine the impairment amount of long-lived assets, the Company first determined the fair value of each key component of its long-lived assets at each asset group. For property and equipment, the Company primarily utilized the cost and market approaches, which involved the use of significant estimates and assumptions such as salvage and scrap market data and producer price indices. The Company also considered functional and economic obsolescence related to the business and the assets. Based upon the results of the analysis, the at risk asset groups with a fair value less than the carrying value of their respective assets included Bayou, Bayou Delta, France, Malaysia and India. Accordingly, the Company recorded a total impairment charge of $11.9 million in the quarter and nine months ended September 30, 2014, which consisted of $10.9 million related to Bayou, $0.4 million related to Bayou Delta, $0.2 million related to France, $0.3 million related to Malaysia and $0.1 million related to India. The impairment charge was primarily recorded to cost of revenues in the Consolidated Statements of Operations.

Included within the impairment assessment were Bayou-related intangible assets such as tradenames and customer relationships that were also tested on an undiscounted cash flow basis. For customer relationships, the undiscounted expected future cash flows were less than the carrying value; thus, the Company engaged a third-party valuation firm to assist in determining the fair value of customer relationships recorded at Bayou. In order to determine the impairment amount of the customer relationships intangible asset, the Company calculated the fair value of the intangible based on the multi-period excess earnings method, which utilizes discounted cash flows to evaluate the net earnings attributable to the asset being measured. Key assumptions used in assessment include the discount rate (based on weighted-average cost of capital), revenue growth rates, contributory asset charges and working capital needs, which were based on current market conditions and were consistent with internal management projections.

Based on the results of the valuation, the carrying amount of the customer relationship intangible asset at Bayou exceeded the fair value and resulted in a full impairment as of September 30, 2014. Accordingly, the Company recorded a $10.9 million impairment charge for the quarter and nine months ended September 30, 2014. The impairment charge was recorded to definite-lived intangible asset impairment in the Consolidated Statements of Operations.

The fair value estimates described above were determined using observable inputs and significant unobservable inputs, which are based on level 3 inputs as defined in Note 11.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

Goodwill represents the excess of the purchase price of an acquisition over the fair value of the net assets acquired. Under FASB ASC 350, Intangibles–Goodwill and Other (“FASB ASC 350”), the Company assesses recoverability of goodwill on an annual basis or when events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable. The annual assessment was last completed as of October 1, 2013. See Note 4 for additional information regarding goodwill by operating segment. Factors that could potentially trigger an interim impairment review include (but are not limited to):

• significant underperformance of a reporting unit relative to expected, historical or forecasted future operating results;

• significant negative industry or economic trends;

• significant changes in the strategy for a reporting unit including extended slowdowns in a segment’s market;

• a decrease in the Company’s market capitalization below its book value; and

• a significant change in regulations.

As a result of the 2014 Restructuring Plan, the Company evaluated the goodwill of its global operations affected by the restructuring initiative and determined that a triggering event had occurred. As such, the Company performed a goodwill impairment review for each affected reporting unit as of September 30, 2014. The Company’s reporting units adversely affected by the 2014 Restructuring Plan were Bayou, Europe and Asia-Pacific. In accordance with the provisions of FASB ASC 350, the Company determined the fair value of its reporting units and compared such fair value to the carrying value of those reporting units. For all three reporting units, fair value exceeded carrying value.

Fair value of reporting units is determined using a combination of two valuation methods: a market approach and an income approach with each method given equal weight in determining the fair value assigned to each reporting unit. Absent an indication of fair value from a potential buyer or similar specific transaction, the Company believes the use of these two methods provides a reasonable estimate of a reporting unit’s fair value. Assumptions common to both methods are operating plans and economic outlooks, which are used to forecast future revenues, earnings and after-tax cash flows for each reporting unit. These assumptions are applied consistently for both methods.

The market approach estimates fair value by first determining earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples for comparable publicly-traded companies with similar characteristics of the reporting unit. The EBITDA multiples for comparable companies are based upon current enterprise value. The enterprise value is based upon current market capitalization and includes a control premium. Management believes this approach is appropriate because it provides a fair value estimate using multiples from entities with operations and economic characteristics comparable to the Company’s reporting units.

The income approach is based on forecasted future (debt-free) cash flows that are discounted to present value using factors that consider timing and risk of future cash flows. Management believes this approach is appropriate because it provides a fair value estimate based upon the reporting unit’s expected long-term operating cash flow performance. Discounted cash flow projections are based on financial forecasts developed from operating plans and economic outlooks, growth rates, estimates of future expected changes in operating margins, terminal value growth rates, future capital expenditures and changes in working capital requirements. Estimates of discounted cash flows may differ from actual cash flows due to, among other things, changes in economic conditions, changes to business models, changes in the Company’s weighted average cost of capital, or changes in operating performance.

The discount rate applied to the estimated future cash flows is one of the most significant assumptions utilized under the income approach. Management determines the appropriate discount rate for each of the Company’s reporting units based on the weighted average cost of capital (“WACC”) for each individual reporting unit. The WACC takes into account both the pre-tax cost of debt and cost of equity (a major component of the cost of equity is the current risk-free rate on twenty year U.S. Treasury bonds). As each reporting unit has a different risk profile based on the nature of its operations, including market-based factors, the WACC for each reporting unit may differ. Accordingly, the WACCs were adjusted, as appropriate, to account for company-specific risks associated with each reporting unit.

Other significant assumptions used in the Company’s goodwill review included: (i) annual revenue growth rates generally ranging from 2% to 7%; (ii) sustained or slightly increased gross margins; (iii) peer group EBITDA multiples; and (iv) terminal values for each reporting unit using a long-term growth rate of 2.5% to 3.0%. If actual results differ from estimates used in these calculations, we could incur future impairment charges.

For the Bayou Reporting Unit, the excess of fair value in relation to its carrying value was 10.2%. The values derived from both the income approach and market approach decreased from the October 1, 2013 analysis; however, the fair value in relation to its carrying value improved from the prior year due to a decrease in carrying value as of the valuation dates. During the first nine months of 2014, the carrying value at the Bayou Reporting Unit was lowered due to the sale of its interest in Bayou Coating as described in Note 1 and the impairment of tangible and intangibles assets described above. The fair value for the Bayou Reporting Unit decreased $48.0 million, or 30.9%, from the prior year analysis due to the suspension of a material contract, a lack of project activity available in the Gulf of Mexico market and customer-driven project delays. The impairment analysis assumed a weighted average cost of capital of 13.5% and a long-term growth rate of 3%. The analysis also included an annual revenue growth rate of approximately 5%; modestly higher than the prior year actual results, but at a level that is below our five-year average. Projected cash flows anticipate a modest recovery in the Gulf of Mexico market beginning in 2015. The Company noted improved visibility into larger bidding opportunities for deep water drilling activities in the Gulf of Mexico; however, there is a significant lead time from drilling to the point of building the pipeline infrastructure, or gather lines, to bring oil and natural gas onshore for refinement. This extended lead time creates added uncertainty and could have a material negative impact on long-term projected cash flows. Additionally, projected cash flows related to the Bayou Reporting Unit’s new insulation facility located in Louisiana are subject to final operational testing and largely dependent, in 2015 and 2016, on a single, large customer with a long-standing history with the Company. The Bayou Reporting Unit’s Canadian coating operation, while not as reliant on larger projects, is dependent upon overall increased project activity in order to realize the cash flow projections included in the impairment analysis. If any of these assumptions do not materialize in a manner consistent with the Company’s expectations, there is risk of impairment to recorded goodwill.

For Europe, the excess of fair value in relation to its carrying value was 9.3%. The values derived from both the income approach and market approach decreased from the October 1, 2013 analysis, and the fair value in relation to its carrying value declined from the prior year due to exiting certain European operations. The fair value for Europe decreased $8.2 million, or 9.5%, from the prior year analysis. The impairment analysis assumed a weighted average cost of capital of 14.0% and a long-term growth rate of 2.5%. The analysis also included an annual revenue growth rate of approximately 5%; slightly below the prior year results, and certain cost savings expected to be achieved through the 2014 Restructuring Plan. In addition, projected cash flows were also based, in part, on the successful closure of the Insituform contacting operations in France and Switzerland. If any of these assumptions do not materialize in a manner consistent with the Company’s expectations, there is risk of impairment to recorded goodwill.

For Asia-Pacific, the excess of fair value in relation to its carrying value was 12.1%. The values derived from both the income approach and market approach decreased from the October 1, 2013 analysis, and the fair value in relation to its carrying value declined from the prior year due to exiting certain Asia-Pacific operations, many of which, however, were underperforming. The fair value for Asia-Pacific decreased $18.0 million, or 36.4%, from the prior year analysis. The impairment analysis assumed a weighted average cost of capital of 14.0% and a long-term growth rate of 3.0%. The analysis also included an annual revenue growth rate of approximately 5% for the remaining operations and certain cost savings expected to be achieved through the 2014 Restructuring Plan. In addition, projected cash flows were also based, in part, on the successful closure of the Insituform contracting operations in India, Hong Kong, Malaysia and Singapore. If any of these assumptions do not materialize in a manner consistent with the Company’s expectations, there is risk of impairment to recorded goodwill.

The total value of goodwill recorded at September 30, 2014 for the Bayou, Europe and Asia-Pacific reporting units was $29.7 million, $20.4 million and $5.3 million, respectively. The Company will perform its annual goodwill assessment for all of its reporting units as of October 1, 2014.

Revenues

Revenues

Revenues include construction, engineering and installation revenues that are recognized using the percentage-of-completion method of accounting in the ratio of costs incurred to estimated final costs. Revenues from change orders, extra work and variations in the scope of work are recognized when it is probable that they will result in additional contract revenue and when the amount can be reliably estimated. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and equipment costs. The Company expenses all pre-contract costs in the period these costs are incurred. Since the financial reporting of these contracts depends on estimates, which are assessed continually during the term of these contracts, recognized revenues and profit are subject to revisions as the contract progresses to completion. Revisions in profit estimates are reflected in the period in which the facts that give rise to the revision become known. If material, the effects of any changes in estimates are disclosed in the notes to the consolidated financial statements. When estimates indicate that a loss will be incurred on a contract, a provision for the expected loss is recorded in the period in which the loss becomes evident. Any revenue recognized is only to the extent costs have been recognized in the period. Additionally, the Company expenses all costs for unpriced change orders in the period in which they are incurred.

Revenues from Brinderson are derived mainly from multiple maintenance contracts under multi-year, long-term Master Service Agreements and alliance contracts, as well as, engineering and construction-type contracts. Brinderson enters into contracts with its customers that contain three principal types of pricing provisions: time and materials, cost plus fixed fee and fixed price. Although the terms of these contracts vary, most are made pursuant to cost reimbursable contracts on a time and materials basis under which revenues are recorded based on costs incurred at agreed upon contractual rates. Brinderson also performs services on a cost plus fixed fee basis under which revenues are recorded based upon costs incurred at agreed upon rates and a proportionate amount of the fixed fee or percentage stipulated in the contract.

Foreign Currency Transaction

Foreign Currency Translation

For the Company’s international subsidiaries, the local currency is generally the functional currency. Assets and liabilities of these subsidiaries are translated into U.S. dollars using rates in effect at the balance sheet date while revenues and expenses are translated into U.S. dollars using average exchange rates. The cumulative translation adjustment resulting from changes in exchange rates are included in the Consolidated Balance Sheets as a component of accumulated other comprehensive income (loss) in total stockholders’ equity. Net foreign exchange transaction gains (losses) are included in other income (expense) in the Consolidated Statements of Operations. Due to the strengthening of the U.S. Dollar, there was a substantial decrease with respect to certain functional currencies and their relation to the U.S. Dollar during the third quarter of 2014, most notably the Canadian Dollar, British Pound and Euro.

The Company’s accumulated other comprehensive income is comprised of three main components: (i) currency translation; (ii) derivatives; and (iii) gains and losses associated with the Company’s defined benefit plan in the United Kingdom.

As of September 30, 2014 and 2013, the Company had accumulated income (loss) of $(13.9) million and $2.1 million, respectively, related to currency translation adjustments, $(0.1) million and $1.3 million, respectively, related to derivative transactions and $(0.2) million and $0.2 million, respectively, related to pension activity in accumulated other comprehensive income.

Investments in Affiliated Companies

Investments in Affiliated Companies

On March 31, 2014, the Company sold its forty-nine percent (49%) interest in Bayou Coating to Stupp, the holder of the remaining fifty-one percent (51%) interest in Bayou Coating. Stupp purchased the interest by exercising an existing option to acquire the Company’s interest in Bayou Coating at a purchase price equal to $9.1 million. The Company had previously received an indication from Stupp of its intent to exercise such option and, in the second quarter of 2013 in connection with such indication, the Company recognized a non-cash charge of $2.7 million ($1.8 million post-tax) related to the goodwill allocated to the joint venture as part of the purchase price accounting associated with the 2009 acquisition of Bayou. The non-cash charge represented the Company’s then current estimate of the difference between the carrying value of the investment on the balance sheet and the amount the Company would receive in connection with the exercise. During the first quarter of 2014, the difference between the Company’s recorded gross equity in earnings of affiliated companies of approximately $1.2 million and the final equity distribution settlement of $0.7 million resulted in a loss of approximately $0.5 million that is recorded in other income (expense) on the consolidated statement of operations.

Prior to March 2014, the Company held a fifty-nine (59%) equity interest in Bayou Delta through which the Company offers pipe jointing and other services for the steel-coated pipe industry. The remaining forty-one percent (41%) was held by Bayou Coating. On March 31, 2014, the Company acquired this forty-one percent (41%) interest from Bayou Coating by exercising its existing option at a purchase price equal to $0.6 million. As a result, Bayou Delta is now a wholly owned subsidiary of the Company.

In June 2013, the Company sold its fifty percent (50%) interest in Insituform-Germany to Aarsleff. Insituform-Germany, a company that was jointly owned by Aegion and Aarsleff, is active in the business of no-dig pipe rehabilitation in Germany, Slovakia and Hungary. The sale price was €14.0 million, approximately $18.3 million. The sale resulted in a gain on the sale of approximately $11.3 million (net of $0.5 million of transaction expenses). In connection with the sale, Insituform-Germany also entered into a tube supply agreement with the Company whereby Insituform-Germany will purchase on an annual basis at least GBP 2.3 million, approximately $3.6 million, of felt cured-in-place pipe (“CIPP”) liners during the two-year period from June 26, 2013 to June 30, 2015.

Investments in entities in which the Company does not have control or is not the primary beneficiary of a variable interest entity, and for which the Company has 20% to 50% ownership or has the ability to exert significant influence, are accounted for by the equity method. At December 31, 2013, the investment in affiliated companies on the Company’s consolidated balance sheets was $9.1 million. Due to the sale of Bayou Coating, the balance was zero at September 30, 2014.

Net income presented below for the quarters ended September 30, 2014 and 2013 includes Bayou Coating’s previously held forty-one percent (41%) interest in Bayou Delta, which is eliminated for purposes of determining the Company’s equity in earnings of affiliated companies because Bayou Delta is consolidated in the Company’s financial statements as a result of its additional ownership through another Company subsidiary.

The Company’s equity in earnings of affiliated companies for all periods presented below includes acquisition-related depreciation and amortization expense and is net of income taxes associated with these earnings. Financial data for these investments in affiliated companies for each of the nine month periods ended September 30, 2014 and 2013 is summarized in the following table (in thousands):

	Nine Months Ended September 30,
Income statement data	2014		2013 (1)
Revenue	$	9,088	$	75,986
Gross profit	3,489		21,753
Net income	2,413		13,624
Equity in earnings of affiliated companies	677		3,903

_____________________

⁽¹⁾    Includes the financial data of Insituform-Germany through its sale in June 2013.

Investments in Variable Interest Entities

Investments in Variable Interest Entities

The Company evaluates all transactions and relationships with variable interest entities (“VIE”) to determine whether the Company is the primary beneficiary of the entities in accordance with FASB ASC 810, Consolidation.

The Company’s overall methodology for evaluating transactions and relationships under the VIE requirements includes the following two steps:

• determine whether the entity meets the criteria to qualify as a VIE; and

• determine whether the Company is the primary beneficiary of the VIE.

In performing the first step, the significant factors and judgments that the Company considers in making the determination as to whether an entity is a VIE include:

• the design of the entity, including the nature of its risks and the purpose for which the entity was created, to determine the variability that the entity was designed to create and distribute to its interest holders;

• the nature of the Company’s involvement with the entity;

• whether control of the entity may be achieved through arrangements that do not involve voting equity;

• whether there is sufficient equity investment at risk to finance the activities of the entity; and

• whether parties other than the equity holders have the obligation to absorb expected losses or the right to receive residual returns.

If the Company identifies a VIE based on the above considerations, it then performs the second step and evaluates whether it is the primary beneficiary of the VIE by considering the following significant factors and judgments:

• whether the entity has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance; and

• whether the entity has the obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity.

Newly Issued Accounting Pronouncements

Newly Issued Accounting Pronouncements

In April 2014, the FASB issued guidance that changes the criteria for determining which disposals can be presented as discontinued operations and modifies the related disclosure requirements. Under the new guidance, a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results and is disposed of or classified as held for sale. The standard also introduces several new disclosures. The guidance applies prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date and is effective for annual and interim periods beginning after December 15, 2014, with earlier adoption permitted. The Company does not expect that the adoption of this standard will have a material effect on its financial statements.

In May 2014, the FASB issued guidance that supersedes revenue recognition requirements regarding contracts with customers to transfer goods or services or for the transfer of nonfinancial assets. Under the new guidance, entities are required to recognize revenue in order to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step analysis to be performed on transactions to determine when and how revenue is recognized. This new guidance is effective retroactively in fiscal years beginning after December 15, 2016. The Company is currently evaluating the effect the guidance will have on its financial condition and results of operations.

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Note 6 - Stockholders' Equity and Equity Compensation (Tables)

9 Months Ended

Sep. 30, 2014

Shareholders' Equity and Share-based Payments [Abstract]

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity

The following table summarizes all stock award activity during the nine months ended September 30, 2014:

	Stock Awards		Weighted Average Award Date Fair Value
Outstanding at January 1, 2014	555,025		$	22.79
Restricted shares awarded	226,483		23.81
Restricted stock units awarded	230,324		24.20
Restricted shares distributed	(117,086	)	23.69
Restricted stock units distributed	(15,277	)	21.25
Restricted shares forfeited	(75,006	)	23.47
Restricted stock units forfeited	(96,976	)	24.66
Outstanding at September 30, 2014	707,487		$	23.13

Schedule of Other Share-based Compensation, Activity

The following table summarizes all deferred stock unit activity during the nine months ended September 30, 2014:

	Deferred Stock Units		Weighted Average Award Date Fair Value
Outstanding at January 1, 2014	214,455		$	19.56
Awarded	32,904		23.96
Distributed	(31,794	)	19.70
Outstanding at September 30, 2014	215,565		$	20.18

Schedule of Share-based Compensation, Stock Options, Activity

The following table summarizes all stock option activity during the nine months ended September 30, 2014:

	Shares		Weighted Average Exercise Price
Outstanding at January 1, 2014	1,208,824		$	18.54
Granted	38,820		24.21
Exercised	(526,359	)	16.36
Canceled/Expired	(196,802	)	24.37
Outstanding at September 30, 2014	524,483		$	18.95
Exercisable at September 30, 2014	460,364		$	19.00

Schedule of Share-based Compensation, Stock Options and Stock Appreciation Rights Award Activity

Financial data for stock option exercises are summarized in the following table (in thousands):

	Nine Months Ended September 30,
	2014		2013
Amount collected from stock option exercises	$	8,614	$	738
Total intrinsic value of stock option exercises	3,771		131
Tax benefit of stock option exercises recorded in additional paid-in-capital	6		55
Aggregate intrinsic value of outstanding stock options	2,381		6,983
Aggregate intrinsic value of exercisable stock options	2,138		5,962

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

	Nine Months Ended September 30,
	2014	2013
Grant-date fair value	$11.27	$12.92
Volatility	41.6%	49.8%
Expected term (years)	7.0	7.0
Dividend yield	—%	—%
Risk-free rate	2.3%	1.1%

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Note 6 - Stockholders' Equity and Equity Compensation (Details) - Summary of Stock Option Activity (USD $)	9 Months Ended
	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at January 1, 2013	1,208,824
Outstanding at January 1, 2013 (in Dollars per share)	$ 18.54
Granted	38,820
Granted (in Dollars per share)	$ 24.21
Exercised	(526,359)
Exercised (in Dollars per share)	$ 16.36
Canceled/Expired	(196,802)
Canceled/Expired (in Dollars per share)	$ 24.37
Outstanding at September 30, 2013	524,483
Outstanding at September 30, 2013 (in Dollars per share)	$ 18.95
Exercisable at September 30, 2013	460,364
Exercisable at September 30, 2013 (in Dollars per share)	$ 19.00

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Note 4 - Goodwill and Intangible Assets Note 4 - Goodwill and Intangible Assets (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization of Intangible Assets	$ 3.6	$ 3.7	$ 10.6	$ 8.8

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Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Current assets
Cash and cash equivalents	$ 115,941	$ 158,045
Restricted cash	623	483
Receivables, net of allowances of $9,822 and $3,441, respectively	266,883	231,775
Retainage	35,923	30,831
Costs and estimated earnings in excess of billings	105,170	79,999
Inventories	59,225	58,768
Prepaid expenses and other current assets	41,459	38,522
Current assets of discontinued operations	4,789	5,435
Total current assets	630,013	603,858
Property, plant & equipment, less accumulated depreciation	169,873	182,303
Other assets
Goodwill	347,236	348,680
Identified intangible assets, less accumulated amortization	189,974	209,283
Investments	0	9,101
Deferred income tax assets	2,627	6,957
Other assets	13,276	14,315
Total other assets	553,113	588,336
Non-current assets of discontinued operations	2,191	2,921
Total Assets	1,355,190	1,377,418
Current liabilities
Accounts payable	93,548	80,417
Accrued expenses	111,785	105,466
Billings in excess of costs and estimated earnings	30,355	24,978
Current maturities of long-term debt and line of credit	26,399	22,024
Current liabilities of discontinued operations	1,721	2,070
Total current liabilities	263,808	234,955
Long-term debt, less current maturities	357,802	366,616
Deferred income tax liabilities	29,629	38,217
Other non-current liabilities	12,299	10,512
Non-current liabilities of discontinued operations	224	197
Total liabilities	663,762	650,497
Commitments and Contingencies – Note 8
Equity
Preferred stock, undesignated, $.10 par – shares authorized 2,000,000; none outstanding	0	0
Common stock, $.01 par – shares authorized 125,000,000; shares issued and outstanding 37,374,331 and 37,983,114 respectively	374	380
Additional paid-in capital	216,575	236,128
Retained earnings	470,537	470,808
Accumulated other comprehensive income (loss)	(14,211)	2,052
Total stockholders’ equity	673,275	709,368
Non-controlling interests	18,153	17,553
Total equity	691,428	726,921
Total Liabilities and Equity	$ 1,355,190	$ 1,377,418

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Note 2 - Accounting Policies

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Accounting Policies

ACCOUNTING POLICIES

Revenues

Revenues include construction, engineering and installation revenues that are recognized using the percentage-of-completion method of accounting in the ratio of costs incurred to estimated final costs. Revenues from change orders, extra work and variations in the scope of work are recognized when it is probable that they will result in additional contract revenue and when the amount can be reliably estimated. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and equipment costs. The Company expenses all pre-contract costs in the period these costs are incurred. Since the financial reporting of these contracts depends on estimates, which are assessed continually during the term of these contracts, recognized revenues and profit are subject to revisions as the contract progresses to completion. Revisions in profit estimates are reflected in the period in which the facts that give rise to the revision become known. If material, the effects of any changes in estimates are disclosed in the notes to the consolidated financial statements. When estimates indicate that a loss will be incurred on a contract, a provision for the expected loss is recorded in the period in which the loss becomes evident. Any revenue recognized is only to the extent costs have been recognized in the period. Additionally, the Company expenses all costs for unpriced change orders in the period in which they are incurred.

Revenues from Brinderson are derived mainly from multiple maintenance contracts under multi-year, long-term Master Service Agreements and alliance contracts, as well as, engineering and construction-type contracts. Brinderson enters into contracts with its customers that contain three principal types of pricing provisions: time and materials, cost plus fixed fee and fixed price. Although the terms of these contracts vary, most are made pursuant to cost reimbursable contracts on a time and materials basis under which revenues are recorded based on costs incurred at agreed upon contractual rates. Brinderson also performs services on a cost plus fixed fee basis under which revenues are recorded based upon costs incurred at agreed upon rates and a proportionate amount of the fixed fee or percentage stipulated in the contract.

Foreign Currency Translation

For the Company’s international subsidiaries, the local currency is generally the functional currency. Assets and liabilities of these subsidiaries are translated into U.S. dollars using rates in effect at the balance sheet date while revenues and expenses are translated into U.S. dollars using average exchange rates. The cumulative translation adjustment resulting from changes in exchange rates are included in the Consolidated Balance Sheets as a component of accumulated other comprehensive income (loss) in total stockholders’ equity. Net foreign exchange transaction gains (losses) are included in other income (expense) in the Consolidated Statements of Operations. Due to the strengthening of the U.S. Dollar, there was a substantial decrease with respect to certain functional currencies and their relation to the U.S. Dollar during the third quarter of 2014, most notably the Canadian Dollar, British Pound and Euro.

The Company’s accumulated other comprehensive income is comprised of three main components: (i) currency translation; (ii) derivatives; and (iii) gains and losses associated with the Company’s defined benefit plan in the United Kingdom.

As of September 30, 2014 and 2013, the Company had accumulated income (loss) of $(13.9) million and $2.1 million, respectively, related to currency translation adjustments, $(0.1) million and $1.3 million, respectively, related to derivative transactions and $(0.2) million and $0.2 million, respectively, related to pension activity in accumulated other comprehensive income.

Taxation

The Company provides for estimated income taxes payable or refundable on current year income tax returns as well as the estimated future tax effects attributable to temporary differences and carryforwards, based upon enacted tax laws and tax rates, and in accordance with FASB ASC 740, Income Taxes (“FASB ASC 740”). FASB ASC 740 also requires that a valuation allowance be recorded against any deferred tax assets that are not likely to be realized in the future. Refer to Note 7 for additional information regarding taxes on income.

Long-Lived Assets

Property, plant and equipment and other identified intangibles (primarily customer relationships, patents and acquired technologies, trademarks, licenses, contract backlog and non-compete agreements) are recorded at cost and, except for goodwill and certain trademarks, are depreciated or amortized on a straight-line basis over their estimated useful lives. Changes in circumstances such as technological advances, changes to the Company’s business model or changes in the Company’s capital strategy can result in the actual useful lives differing from the Company’s estimates. If the Company determines that the useful life of its property, plant and equipment or its identified intangible assets should be changed, the Company would depreciate or amortize the net book value in excess of the salvage value over its revised remaining useful life, thereby increasing or decreasing depreciation or amortization expense.

Long-lived assets, including property, plant and equipment and other intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such impairment tests are based on a comparison of undiscounted cash flows to the recorded value of the asset. The estimate of cash flow is based upon, among other things, assumptions about expected future operating performance. The Company’s estimates of undiscounted cash flow may differ from actual cash flow due to, among other things, technological changes, economic conditions, changes to its business model or changes in its operating performance. If the sum of the undiscounted cash flows (excluding interest) is less than the carrying value, the Company recognizes an impairment loss, measured as the amount by which the carrying value exceeds the fair value of the asset.

On October 6, 2014, the Company’s board of directors approved the 2014 Restructuring Plan as discussed further in Note 12. As part of the 2014 Restructuring Plan, the Company evaluated the long-lived assets of its global operations affected by the restructuring initiative. In the early stages of the evaluation process, the Company reviewed the financial performance of all at risk asset groups within each affected reporting unit. Due to the ongoing weak economic conditions and weak economic outlook for certain at risk asset groups, the Company decided to no longer focus on the possible growth opportunities within these businesses; therefore, the Company would no longer provide cash flow or operational support to these businesses. This decision was deemed a significant adverse change in the extent or manner in which the asset is currently being used, and as such, the Company performed an asset impairment review as of September 30, 2014 for all of its at risk asset groups within each of the affected reporting units in accordance with ASC 360 Property, Plant and Equipment (“FASB ASC 360”).

The affected asset groups include: (i) the Bayou and Bayou Delta asset groups within the Bayou reporting unit (“Bayou Reporting Unit”); (ii) the France and Switzerland asset groups within the European Sewer and Water Rehabilitation (“Europe”) reporting unit; and (iii) the Singapore, Hong Kong, Malaysia and India asset groups within the Asia-Pacific Sewer and Water Rehabilitation (“Asia-Pacific”) reporting unit. The results of the Bayou Reporting Unit and its related asset groups are reported within the Energy and Mining reportable segment. The results of Europe and Asia-Pacific and their related asset groups are reported within the Water and Wastewater reportable segment.

The assets of each asset group represent the lowest level for which identifiable cash flows can be determined independent of other groups of assets and liabilities. The Company developed internal forward business plans under the guidance of local and regional leadership to determine the undiscounted expected future cash flows derived from each of the at risk asset groups’ long-lived assets. Such were based on management’s best estimates considering the likelihood of various outcomes. Based on the internal projections, the Company determined that the undiscounted expected future cash flows for all of the at risk asset groups referenced above were less than the carrying value of the assets, and as a result, engaged a third-party valuation firm to assist in determining the fair value of long-lived assets at these at risk asset groups.

In order to determine the impairment amount of long-lived assets, the Company first determined the fair value of each key component of its long-lived assets at each asset group. For property and equipment, the Company primarily utilized the cost and market approaches, which involved the use of significant estimates and assumptions such as salvage and scrap market data and producer price indices. The Company also considered functional and economic obsolescence related to the business and the assets. Based upon the results of the analysis, the at risk asset groups with a fair value less than the carrying value of their respective assets included Bayou, Bayou Delta, France, Malaysia and India. Accordingly, the Company recorded a total impairment charge of $11.9 million in the quarter and nine months ended September 30, 2014, which consisted of $10.9 million related to Bayou, $0.4 million related to Bayou Delta, $0.2 million related to France, $0.3 million related to Malaysia and $0.1 million related to India. The impairment charge was primarily recorded to cost of revenues in the Consolidated Statements of Operations.

Included within the impairment assessment were Bayou-related intangible assets such as tradenames and customer relationships that were also tested on an undiscounted cash flow basis. For customer relationships, the undiscounted expected future cash flows were less than the carrying value; thus, the Company engaged a third-party valuation firm to assist in determining the fair value of customer relationships recorded at Bayou. In order to determine the impairment amount of the customer relationships intangible asset, the Company calculated the fair value of the intangible based on the multi-period excess earnings method, which utilizes discounted cash flows to evaluate the net earnings attributable to the asset being measured. Key assumptions used in assessment include the discount rate (based on weighted-average cost of capital), revenue growth rates, contributory asset charges and working capital needs, which were based on current market conditions and were consistent with internal management projections.

Based on the results of the valuation, the carrying amount of the customer relationship intangible asset at Bayou exceeded the fair value and resulted in a full impairment as of September 30, 2014. Accordingly, the Company recorded a $10.9 million impairment charge for the quarter and nine months ended September 30, 2014. The impairment charge was recorded to definite-lived intangible asset impairment in the Consolidated Statements of Operations.

The fair value estimates described above were determined using observable inputs and significant unobservable inputs, which are based on level 3 inputs as defined in Note 11.

Goodwill

Goodwill represents the excess of the purchase price of an acquisition over the fair value of the net assets acquired. Under FASB ASC 350, Intangibles–Goodwill and Other (“FASB ASC 350”), the Company assesses recoverability of goodwill on an annual basis or when events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable. The annual assessment was last completed as of October 1, 2013. See Note 4 for additional information regarding goodwill by operating segment. Factors that could potentially trigger an interim impairment review include (but are not limited to):

• significant underperformance of a reporting unit relative to expected, historical or forecasted future operating results;

• significant negative industry or economic trends;

• significant changes in the strategy for a reporting unit including extended slowdowns in a segment’s market;

• a decrease in the Company’s market capitalization below its book value; and

• a significant change in regulations.

As a result of the 2014 Restructuring Plan, the Company evaluated the goodwill of its global operations affected by the restructuring initiative and determined that a triggering event had occurred. As such, the Company performed a goodwill impairment review for each affected reporting unit as of September 30, 2014. The Company’s reporting units adversely affected by the 2014 Restructuring Plan were Bayou, Europe and Asia-Pacific. In accordance with the provisions of FASB ASC 350, the Company determined the fair value of its reporting units and compared such fair value to the carrying value of those reporting units. For all three reporting units, fair value exceeded carrying value.

Fair value of reporting units is determined using a combination of two valuation methods: a market approach and an income approach with each method given equal weight in determining the fair value assigned to each reporting unit. Absent an indication of fair value from a potential buyer or similar specific transaction, the Company believes the use of these two methods provides a reasonable estimate of a reporting unit’s fair value. Assumptions common to both methods are operating plans and economic outlooks, which are used to forecast future revenues, earnings and after-tax cash flows for each reporting unit. These assumptions are applied consistently for both methods.

The market approach estimates fair value by first determining earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples for comparable publicly-traded companies with similar characteristics of the reporting unit. The EBITDA multiples for comparable companies are based upon current enterprise value. The enterprise value is based upon current market capitalization and includes a control premium. Management believes this approach is appropriate because it provides a fair value estimate using multiples from entities with operations and economic characteristics comparable to the Company’s reporting units.

The income approach is based on forecasted future (debt-free) cash flows that are discounted to present value using factors that consider timing and risk of future cash flows. Management believes this approach is appropriate because it provides a fair value estimate based upon the reporting unit’s expected long-term operating cash flow performance. Discounted cash flow projections are based on financial forecasts developed from operating plans and economic outlooks, growth rates, estimates of future expected changes in operating margins, terminal value growth rates, future capital expenditures and changes in working capital requirements. Estimates of discounted cash flows may differ from actual cash flows due to, among other things, changes in economic conditions, changes to business models, changes in the Company’s weighted average cost of capital, or changes in operating performance.

The discount rate applied to the estimated future cash flows is one of the most significant assumptions utilized under the income approach. Management determines the appropriate discount rate for each of the Company’s reporting units based on the weighted average cost of capital (“WACC”) for each individual reporting unit. The WACC takes into account both the pre-tax cost of debt and cost of equity (a major component of the cost of equity is the current risk-free rate on twenty year U.S. Treasury bonds). As each reporting unit has a different risk profile based on the nature of its operations, including market-based factors, the WACC for each reporting unit may differ. Accordingly, the WACCs were adjusted, as appropriate, to account for company-specific risks associated with each reporting unit.

Other significant assumptions used in the Company’s goodwill review included: (i) annual revenue growth rates generally ranging from 2% to 7%; (ii) sustained or slightly increased gross margins; (iii) peer group EBITDA multiples; and (iv) terminal values for each reporting unit using a long-term growth rate of 2.5% to 3.0%. If actual results differ from estimates used in these calculations, we could incur future impairment charges.

For the Bayou Reporting Unit, the excess of fair value in relation to its carrying value was 10.2%. The values derived from both the income approach and market approach decreased from the October 1, 2013 analysis; however, the fair value in relation to its carrying value improved from the prior year due to a decrease in carrying value as of the valuation dates. During the first nine months of 2014, the carrying value at the Bayou Reporting Unit was lowered due to the sale of its interest in Bayou Coating as described in Note 1 and the impairment of tangible and intangibles assets described above. The fair value for the Bayou Reporting Unit decreased $48.0 million, or 30.9%, from the prior year analysis due to the suspension of a material contract, a lack of project activity available in the Gulf of Mexico market and customer-driven project delays. The impairment analysis assumed a weighted average cost of capital of 13.5% and a long-term growth rate of 3%. The analysis also included an annual revenue growth rate of approximately 5%; modestly higher than the prior year actual results, but at a level that is below our five-year average. Projected cash flows anticipate a modest recovery in the Gulf of Mexico market beginning in 2015. The Company noted improved visibility into larger bidding opportunities for deep water drilling activities in the Gulf of Mexico; however, there is a significant lead time from drilling to the point of building the pipeline infrastructure, or gather lines, to bring oil and natural gas onshore for refinement. This extended lead time creates added uncertainty and could have a material negative impact on long-term projected cash flows. Additionally, projected cash flows related to the Bayou Reporting Unit’s new insulation facility located in Louisiana are subject to final operational testing and largely dependent, in 2015 and 2016, on a single, large customer with a long-standing history with the Company. The Bayou Reporting Unit’s Canadian coating operation, while not as reliant on larger projects, is dependent upon overall increased project activity in order to realize the cash flow projections included in the impairment analysis. If any of these assumptions do not materialize in a manner consistent with the Company’s expectations, there is risk of impairment to recorded goodwill.

For Europe, the excess of fair value in relation to its carrying value was 9.3%. The values derived from both the income approach and market approach decreased from the October 1, 2013 analysis, and the fair value in relation to its carrying value declined from the prior year due to exiting certain European operations. The fair value for Europe decreased $8.2 million, or 9.5%, from the prior year analysis. The impairment analysis assumed a weighted average cost of capital of 14.0% and a long-term growth rate of 2.5%. The analysis also included an annual revenue growth rate of approximately 5%; slightly below the prior year results, and certain cost savings expected to be achieved through the 2014 Restructuring Plan. In addition, projected cash flows were also based, in part, on the successful closure of the Insituform contacting operations in France and Switzerland. If any of these assumptions do not materialize in a manner consistent with the Company’s expectations, there is risk of impairment to recorded goodwill.

For Asia-Pacific, the excess of fair value in relation to its carrying value was 12.1%. The values derived from both the income approach and market approach decreased from the October 1, 2013 analysis, and the fair value in relation to its carrying value declined from the prior year due to exiting certain Asia-Pacific operations, many of which, however, were underperforming. The fair value for Asia-Pacific decreased $18.0 million, or 36.4%, from the prior year analysis. The impairment analysis assumed a weighted average cost of capital of 14.0% and a long-term growth rate of 3.0%. The analysis also included an annual revenue growth rate of approximately 5% for the remaining operations and certain cost savings expected to be achieved through the 2014 Restructuring Plan. In addition, projected cash flows were also based, in part, on the successful closure of the Insituform contracting operations in India, Hong Kong, Malaysia and Singapore. If any of these assumptions do not materialize in a manner consistent with the Company’s expectations, there is risk of impairment to recorded goodwill.

The total value of goodwill recorded at September 30, 2014 for the Bayou, Europe and Asia-Pacific reporting units was $29.7 million, $20.4 million and $5.3 million, respectively. The Company will perform its annual goodwill assessment for all of its reporting units as of October 1, 2014.

Investments in Affiliated Companies

On March 31, 2014, the Company sold its forty-nine percent (49%) interest in Bayou Coating to Stupp, the holder of the remaining fifty-one percent (51%) interest in Bayou Coating. Stupp purchased the interest by exercising an existing option to acquire the Company’s interest in Bayou Coating at a purchase price equal to $9.1 million. The Company had previously received an indication from Stupp of its intent to exercise such option and, in the second quarter of 2013 in connection with such indication, the Company recognized a non-cash charge of $2.7 million ($1.8 million post-tax) related to the goodwill allocated to the joint venture as part of the purchase price accounting associated with the 2009 acquisition of Bayou. The non-cash charge represented the Company’s then current estimate of the difference between the carrying value of the investment on the balance sheet and the amount the Company would receive in connection with the exercise. During the first quarter of 2014, the difference between the Company’s recorded gross equity in earnings of affiliated companies of approximately $1.2 million and the final equity distribution settlement of $0.7 million resulted in a loss of approximately $0.5 million that is recorded in other income (expense) on the consolidated statement of operations.

Prior to March 2014, the Company held a fifty-nine (59%) equity interest in Bayou Delta through which the Company offers pipe jointing and other services for the steel-coated pipe industry. The remaining forty-one percent (41%) was held by Bayou Coating. On March 31, 2014, the Company acquired this forty-one percent (41%) interest from Bayou Coating by exercising its existing option at a purchase price equal to $0.6 million. As a result, Bayou Delta is now a wholly owned subsidiary of the Company.

In June 2013, the Company sold its fifty percent (50%) interest in Insituform-Germany to Aarsleff. Insituform-Germany, a company that was jointly owned by Aegion and Aarsleff, is active in the business of no-dig pipe rehabilitation in Germany, Slovakia and Hungary. The sale price was €14.0 million, approximately $18.3 million. The sale resulted in a gain on the sale of approximately $11.3 million (net of $0.5 million of transaction expenses). In connection with the sale, Insituform-Germany also entered into a tube supply agreement with the Company whereby Insituform-Germany will purchase on an annual basis at least GBP 2.3 million, approximately $3.6 million, of felt cured-in-place pipe (“CIPP”) liners during the two-year period from June 26, 2013 to June 30, 2015.

Investments in entities in which the Company does not have control or is not the primary beneficiary of a variable interest entity, and for which the Company has 20% to 50% ownership or has the ability to exert significant influence, are accounted for by the equity method. At December 31, 2013, the investment in affiliated companies on the Company’s consolidated balance sheets was $9.1 million. Due to the sale of Bayou Coating, the balance was zero at September 30, 2014.

Net income presented below for the quarters ended September 30, 2014 and 2013 includes Bayou Coating’s previously held forty-one percent (41%) interest in Bayou Delta, which is eliminated for purposes of determining the Company’s equity in earnings of affiliated companies because Bayou Delta is consolidated in the Company’s financial statements as a result of its additional ownership through another Company subsidiary.

The Company’s equity in earnings of affiliated companies for all periods presented below includes acquisition-related depreciation and amortization expense and is net of income taxes associated with these earnings. Financial data for these investments in affiliated companies for each of the nine month periods ended September 30, 2014 and 2013 is summarized in the following table (in thousands):

	Nine Months Ended September 30,
Income statement data	2014		2013 (1)
Revenue	$	9,088	$	75,986
Gross profit	3,489		21,753
Net income	2,413		13,624
Equity in earnings of affiliated companies	677		3,903

_____________________

⁽¹⁾    Includes the financial data of Insituform-Germany through its sale in June 2013.

Investments in Variable Interest Entities

The Company evaluates all transactions and relationships with variable interest entities (“VIE”) to determine whether the Company is the primary beneficiary of the entities in accordance with FASB ASC 810, Consolidation.

The Company’s overall methodology for evaluating transactions and relationships under the VIE requirements includes the following two steps:

• determine whether the entity meets the criteria to qualify as a VIE; and

• determine whether the Company is the primary beneficiary of the VIE.

In performing the first step, the significant factors and judgments that the Company considers in making the determination as to whether an entity is a VIE include:

• the design of the entity, including the nature of its risks and the purpose for which the entity was created, to determine the variability that the entity was designed to create and distribute to its interest holders;

• the nature of the Company’s involvement with the entity;

• whether control of the entity may be achieved through arrangements that do not involve voting equity;

• whether there is sufficient equity investment at risk to finance the activities of the entity; and

• whether parties other than the equity holders have the obligation to absorb expected losses or the right to receive residual returns.

If the Company identifies a VIE based on the above considerations, it then performs the second step and evaluates whether it is the primary beneficiary of the VIE by considering the following significant factors and judgments:

• whether the entity has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance; and

• whether the entity has the obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity.

Based on its evaluation of the above factors and judgments, as of September 30, 2014, the Company consolidated any VIEs in which it was the primary beneficiary.

Financial data for consolidated variable interest entities are summarized in the following table (in thousands):

Balance sheet data	September 30, 2014		December 31, 2013
Current assets	$	58,646	$	55,960
Non-current assets	44,769		47,606
Current liabilities	25,697		27,335
Non-current liabilities	37,215		36,761

	Nine Months Ended September 30,
Income statement data	2014		2013
Revenue	$	58,942	$	62,650
Gross profit	9,370		10,179
Net income	714		2,040

Newly Issued Accounting Pronouncements

In April 2014, the FASB issued guidance that changes the criteria for determining which disposals can be presented as discontinued operations and modifies the related disclosure requirements. Under the new guidance, a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results and is disposed of or classified as held for sale. The standard also introduces several new disclosures. The guidance applies prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date and is effective for annual and interim periods beginning after December 15, 2014, with earlier adoption permitted. The Company does not expect that the adoption of this standard will have a material effect on its financial statements.

In May 2014, the FASB issued guidance that supersedes revenue recognition requirements regarding contracts with customers to transfer goods or services or for the transfer of nonfinancial assets. Under the new guidance, entities are required to recognize revenue in order to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step analysis to be performed on transactions to determine when and how revenue is recognized. This new guidance is effective retroactively in fiscal years beginning after December 15, 2016. The Company is currently evaluating the effect the guidance will have on its financial condition and results of operations.

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Note 10 - Discontinued Operations (Details) - Operating Results for Discontinued Operations (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Closure charges of welding business					$ 100
Interest expense	0	0	0	(25)
Other expenses			(74)	207
Bayou Welding Works [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenues	0	744	0	8,864
Gross profit	0	(837)	(67)	(4,077)
Operating expenses	215	210	617	1,828
Closure charges of welding business	0	0	0	5,019
Operating loss	(215)	(1,047)	(684)	(10,924)
Other expenses	(1)	0
Loss before tax benefits	(216)	(1,047)	(758)	(10,742)
Tax benefits	86	489	(132)	(4,286)
Net loss	$ (130)	$ (558)	$ (626)	$ (6,456)

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Note 9 - Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

Financial information by segment was as follows (in thousands):

	Quarters Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenues:
Energy and Mining	$	197,510		$	168,708		$	557,028		$	385,991
Water and Wastewater	135,649			122,149			371,493			341,680
Commercial and Structural	16,979			16,808			50,719			48,070
Total revenues	$	350,138		$	307,665		$	979,240		$	775,741
Gross profit:
Energy and Mining	$	29,380		$	37,118		$	100,856		$	87,678
Water and Wastewater	26,719			26,473			76,078			71,210
Commercial and Structural	7,840			5,820			19,986			17,228
Total gross profit	$	63,939		$	69,411		$	196,920		$	176,116
Operating income (loss):
Energy and Mining	$	(9,757	)	$	12,874		$	5,661		$	24,481
Water and Wastewater	(5,450		)	10,071			10,224			21,672
Commercial and Structural	1,273			(913		)	(66		)	(1,480		)
Total operating income (loss)	$	(13,934	)	$	22,032		$	15,819		$	44,673

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area

The following table summarizes revenues, gross profit and operating income by geographic region (in thousands):

	Quarters Ended September 30,					Nine Months Ended September 30,
	2014			2013		2014			2013
Revenues(1):
United States	$	242,795		$	202,353	$	681,043		$	496,544
Canada	55,742			56,026		139,817			131,172
Europe	20,096			20,605		63,887			65,592
Other foreign	31,505			28,681		94,493			82,433
Total revenues	$	350,138		$	307,665	$	979,240		$	775,741
Gross profit:
United States	$	40,507		$	43,838	$	132,790		$	111,006
Canada	13,893			14,351		32,889			31,753
Europe	3,544			4,769		12,846			15,453
Other foreign	5,995			6,453		18,395			17,904
Total gross profit	$	63,939		$	69,411	$	196,920		$	176,116
Operating income (loss):
United States	$	(12,955	)	$	8,941	$	604		$	16,067
Canada	10,359			10,397		21,911			20,622
Europe	(687		)	1,106		692			3,928
Other foreign	(10,651		)	1,588		(7,388		)	4,056
Total operating income (loss)	$	(13,934	)	$	22,032	$	15,819		$	44,673

__________________________

⁽¹⁾  Revenues are attributed to the country of origin for the Company’s legal entities. For a significant majority of its legal entities, the country of origin relates to the country or geographic area that it services.

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Note 2 - Accounting Policies (Details) - Financial Data for Variable Interest Entities - Income Statement (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Financial Data for Variable Interest Entities - Income Statement [Abstract]
Revenue	$ 58,942	$ 62,650
Gross profit	9,370	10,179
Net income	$ 714	$ 2,040

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Note 12 - Subsequent Event (Notes)

9 Months Ended

Sep. 30, 2014

Note 12 - Subsequent Event [Abstract]

Subsequent Events [Text Block]

12.    SUBSEQUENT EVENT

On October 6, 2014, the Company’s board of directors approved the 2014 Restructuring Plan and delegated authority to the Company’s management to determine final actions with respect to 2014 Restructuring Plan. The 2014 Restructuring Plan is intended to exit low-return businesses and reduce the size and cost of the Company’s overhead structure to improve gross margins and profitability in the long term.

The 2014 Restructuring Plan includes exiting certain unprofitable international locations for the Company’s Water and Wastewater business, consolidating the Company’s worldwide Commercial and Structural business with the Company’s global Water and Wastewater business and eliminating certain idle facilities in the Company’s Bayou Louisiana coatings operations. Effective in the fourth quarter of 2014, the Company will realign its existing three reportable segments into three new reportable segments: Infrastructure Solutions; Corrosion Protection; and Energy Services. The reportable segments will be the same as the Company’s operating segments, which correspond to its management organizational structure. Each new reportable segment will have a operating president who will report to the CODM. The operating results and financial information reported by each of the new segments will be evaluated separately, regularly reviewed and used by the CODM to evaluate segment performance, allocate resources and determine management incentive compensation. All future SEC filings will reflect these new reportable segments.

As part of the 2014 Restructuring Plan, the Company recognized the following non-cash, pre-tax charges totaling $40.0 million for the quarter and nine months ended September 30, 2014 (in thousands):

	Fixed Asset Impairment		Definite-lived Intangible Asset Impairment		Non-Cash Restructuring Charges		Total Restructuring Charges
Cost of revenues	$	11,834	$	—	$	3,106	$	14,940
Operating expenses	36		—		14,081		14,117
Definite-lived intangible asset impairment	—		10,896		—		10,896
	$	11,870	$	10,896	$	17,187	$	39,953

The non-cash, pre-tax charge of $40.0 million includes $22.2 million related to the impairment of certain long-lived assets and definite-lived intangible assets for Bayou’s coating operations in Louisiana, which is reported in the Energy and Mining reportable segment, and $17.8 million related to inventory obsolescence, impairment of certain long-lived assets, bad debt expense, write-off of certain other current assets and a legal accrual related to disputed work performed for the Company’s European and Asia-Pacific operations, which are reported in the Water and Wastewater reportable segment.

Included in the 2014 Restructuring Plan is a reduction of the Company’s overhead expenses and related elimination of approximately 170 full-time positions out of approximately 6,000 employees worldwide. The Company expects pre-tax cash charges of $15 million to $18 million to be incurred from the fourth quarter of 2014 through the third quarter of 2015 for related employee severance, extension of benefits, employment assistance programs and other costs associated with the restructuring. Additional non-cash charges related to the various restructured operations could potentially be recorded between the fourth quarter of 2014 and the third quarter of 2015.