UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report March 6, 2017

CH2M HILL Companies, Ltd.

(Exact name of registrant as specified in its charter)

Commission File Number 000-27261

(303) 771-0900

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.  Results of Operations and Financial Condition.

On March 6, 2017, CH2M HILL Companies, Ltd. (“CH2M”) announced its financial results for its fourth fiscal quarter ended December 30, 2016.  A copy of the Fourth Quarter 2016 Earnings Report is furnished to the United States Securities and Exchange Commission (the “SEC”) with this current report on Form 8-K as Exhibit 99.1.

The information contained in this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.

Item 7.01.  Regulation FD Disclosure.

The disclosure contained in Item 2.02 is incorporated herein by reference.

The information contained in this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Act, or incorporated by reference in any filing under the Securities Act or the Exchange Act.

Item 8.01.  Other Events.

New Price for Common Stock and Trade Date Information.

Effective March 6, 2017, the Board of Directors established the price of the CH2M common stock at $50.69 per share.  This price represents an increase of 8.2% from the price that was set by the CH2M Board of Directors on January 19, 2017.

CH2M is in the process of transitioning its internal market processing system, certain equity plan administration functions, and transfer agent to an external third party vendor, Computershare. One of the primary benefits to stockholders, especially former employees of CH2M, will be the ease of access to their stock portfolio from multiple web browsers. Due to this transition, CH2M has not yet announced a trade date but currently expects to open the market during the second week of April 2017. Communications including more information on the transition to Computershare will be forthcoming, and CH2M expects to announce the trade date and related deadlines in April.

Determination of Common Stock Price.

The price of the CH2M common stock is established by the Board of Directors each quarter based on a company fair valuation methodology described in the CH2M Prospectus, dated March 23, 2010 (the “Prospectus”), as filed with the SEC, as amended by the information contained in the subsequent annual, quarterly and current reports filed by CH2M with the SEC pursuant to the Securities Exchange Act.  The valuation methodology used by the board of directors includes the following valuation formula (“Stock Valuation Formula”):

Share Price = [(7.8 x M x P) + (SE)]/CS

As further discussed below, the Stock Valuation Formula is one of several factors considered by the Board of Directors as part of the total mix of information available to determine the fair value of CH2M common stock. The following table sets forth information concerning the values used in the valuation formula for purposes of the Board’s determination of the new stock price.

The factors and values in the table above are defined as follows:

(1)                                 “M” is the market factor, which is subjectively determined in the sole discretion of the Board of Directors.  In determining the market factor, the Board of Directors takes into account numerous factors in determining the fair value of the common stock, as further described in the Prospectus and other reports filed with the SEC referred to above.

(2)                                 “P” is profit after tax, otherwise referred to as net income, for the four fiscal quarters immediately preceding the trade date, adjusted for any items that the Board of Directors determines should be excluded, as discussed below.

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(3)                                 “SE” is CH2M’s total stockholders’ equity, which includes intangible items, as set forth in CH2M’s quarterly or annual financial statements for the relevant period.  For purposes of setting the price of the common stock, the Board does not include in the “SE” parameter accumulated other comprehensive income (loss) or non-controlling interests.

(4)                                 “CS” is based on the weighted average number of shares of common stock outstanding during the four fiscal quarters immediately preceding the trade date, calculated on a fully diluted basis, adjusted for specific items as determined by the Board of Directors, in its discretion, as discussed below.  By comparison, the year to date diluted weighted average number of shares of common stock as reflected in CH2M’s financial statements is 25,732,114.

As discussed below, the Board of Directors has the discretion to review events and exclude nonrecurring or unusual transactions from certain of the parameters used in the stock price valuation.  Transactions are considered nonrecurring or unusual if the market would not generally take them into account in valuing an equity security.

Operating results related to winding down of CH2M’s Power EPC business.  In connection with the cost reduction initiatives described below, during 2014 CH2M made a decision to wind down its Power EPC business. For the rolling four quarter period ended Q4 2016, the Power EPC business recognized a loss of $101 million (net of tax).  Consistent with the approach of CH2M’s independent third party valuation experts, the Board of Directors believes that, because these financial results are related to a business that CH2M has chosen to exit, inclusion of these results does not accurately reflect the profitability or value of CH2M’s continuing operations and would generally not be taken into account by the market in valuing an equity security.  Therefore, the Board of Directors decided to exclude these results from the “P” (profit after tax) parameter for stock valuation purposes.  These results are part of CH2M’s cumulative earnings history, however, and the Board determined that it should, therefore, still reflect them in the stock valuation calculation as part of the “SE” parameter (total stockholders’ equity).  The Board intends to exclude any future operational results from the Power EPC business until the wind down is complete from the “P” calculation while retaining them in the “SE” parameter.

Restructuring costs. In October 2016, CH2M’s management announced a restructuring plan to more fully align global operations with CH2M’s client-centric go-to-market strategy, including a simplified organization structure and streamlined delivery model to achieve higher levels of profitable growth. The restructuring activities, including workforce reductions and facilities consolidations, began in the third quarter of 2016 and are expected to be completed in the first half of 2017.

For the rolling four quarter period ended Q4 2016, CH2M incurred charges of $28 million (net of tax) for the restructuring activities detailed above.  The Board of Directors believes that these charges do not accurately reflect the profitability or value of CH2M’s continuing operations on an ongoing basis and would generally not be taken into account by the market in valuing an equity security.  Therefore, the Board of Directors decided to exclude these charges from the “P” parameter for stock valuation purposes.  These charges are part of CH2M’s cumulative earnings history, however, and the Board determined that it should, therefore, still reflect them in the stock valuation calculation as part of the “SE” parameter.  The Board intends to treat these costs similarly in the future by excluding them from the “P” calculation while retaining them in the “SE” parameter.

Non-cash depreciation and amortization charges relating to acquisitions.  For the rolling four quarter period ended Q4 2016, CH2M recognized certain non-cash depreciation and amortization charges relating to acquisitions, resulting in a reduction of our earnings of $14 million (net of tax). The Board of Directors believes that these non-cash charges would generally not be taken into account by the market in valuing an equity security.  Therefore, the Board of Directors decided to exclude these acquisition costs from the “P” parameter for stock valuation purposes.  These non-cash depreciation and amortization charges are part of CH2M’s cumulative earnings history, however, and the Board determined that it should, therefore, still reflect them in the stock valuation calculation as part of the “SE” parameter.  The Board intends to treat these non-cash depreciation and amortization costs similarly in the future by excluding them from the “P” calculation while retaining them in the “SE” parameter.

Tax benefit related to pension redesign.  In Q3 2016 and Q4 2016, a non-cash tax benefit was generated totaling $65 million as a result of the pension settlement.  The Board of Directors believes that the market would exclude this tax benefit from CH2M’s profit calculation for valuation purposes.  Therefore, the Board of Directors decided in Q4 2016 to exclude this benefit from the calculation of “P” parameter for stock valuation purposes.  At the same time, given that this tax benefit is also part of CH2M’s cumulative earnings history, the Board determined that this tax benefit should be reflected in the stock valuation calculation as part of the “SE” parameter.

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Further detailed discussion of our Stock Valuation Formula is contained in CH2M’s Annual Report on Form 10-K for the year ended December 30, 2016 (the “2016 Annual Report”) under the heading Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Our 2016 Annual Report may be obtained from the SEC’s Internet website (http://www.sec.gov) through the EDGAR Company Filings search page (http://www.sec.gov/edgar/searchedgar/companysearch.html), or by calling CH2M at (303) 771-0900.

Adjustments to the Calculation of Common Stock Outstanding (“CS”). “CS’’ is based on the weighted-average number of shares of CH2M common stock outstanding during the four fiscal quarters immediately preceding the Trade Date, calculated on a fully-diluted basis. By ‘‘fully-diluted,’’ we mean that the calculations are made as if all outstanding dilutive options to purchase CH2M common stock had been exercised and other ‘‘dilutive’’ securities were converted into shares of our common stock. On June 24, 2015, CH2M sold and issued an aggregate of 3,214,400 shares of Series A Preferred Stock.  On April 11, 2016, CH2M issued an additional 1,607,200 shares of Series A Preferred Stock in a second closing. The holders of Series A Preferred Stock are entitled to a cumulative dividend at an annual rate of 5% payable in kind at a future date and a number of votes equal to the number of shares of Common Stock into which it is convertible.  As of December 30, 2016, the Series A Preferred Stock along with the cumulative dividend was convertible into 6,102,648 shares of Common Stock.  Accordingly, the Board of Directors determined to include into the calculation of the “CS” component 6,102,648 shares of Series A Preferred Stock.  In addition, the CH2M Board of Directors may determine, in its discretion and solely for the purpose of determining the price of CH2M common stock, (1) to adjust the weighted-average number of shares to reflect in an appropriate manner the impact of past or anticipated future issuances, and (2) to treat substantial issuances of shares, such as substantial issuances of shares as consideration in connection with business acquisition transactions or issuances of preferred stock, that occur during the four fiscal quarters immediately preceding the Trade Date as having been issued at the beginning of such four-quarter period.  CH2M also includes in CS as calculated an estimate of the weighted-average number of shares that CH2M reasonably anticipates will be issued during the next four quarters under the CH2M stock-based compensation programs and employee benefit plans.

The Stock Valuation Formula is one of several factors considered by the Board of Directors as part of the total mix of information available to determine the fair value of CH2M common stock.  The CH2M Board of Directors also takes into account company appraisal information prepared by independent third party valuation experts and other available information and data.

In the course of determining the stock price for the current period, the Board of Directors reviewed and analyzed several sources of information in determining a fair valuation of CH2M for the stock trade including, but not limited to, the stock valuation data presented to it, including the valuation data provided by CH2M’s outside advisers, and the results of using the Stock Valuation Formula.  The Board also considered, among other things, recent volatility in CH2M’s reported results of operations, and ongoing steps being taken by management as part of our restructuring activities. In addition, the Board reviewed other relevant information regarding CH2M’s fair value.  Considering all the information reviewed and in consultation with CH2M’s professional advisers, the Board deliberated and determined that the current fair value of CH2M’s common stock is $50.69 per share.

Historical Prices for CH2M Common Stock.

The prices for CH2M common stock for the past three years have been:

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Possible Proration or Allocation of Internal Market Trade.

CH2M determines whether to participate in the internal market on a quarterly basis. Prior to each quarterly trade date, CH2M reviews the outstanding orders and any resulting imbalance between sell orders and buy orders and make a determination whether or not to participate in the internal market by buying shares if there are more sell orders than buy orders. In making that determination, CH2M’s management and Board of Directors consider relevant factors in light of prevailing circumstances, including our financial condition and results of operations, our available cash and capital resources, including the limits that CH2M may spend on share repurchases and the borrowing capacity available pursuant to the terms of our existing unsecured revolving line of credit and other sources of liquidity, expected current and future needs for cash to fund our operations, anticipated contingencies and other factors.

CH2M experienced project losses and other adverse operating results in recent periods, which has constrained our cash flow and liquidity.  In addition, CH2M’s principal revolving credit facility included limitations on the amount CH2M may spend to repurchase its common stock in the internal market in connection with its employee stock ownership program up to $75 million during the three quarter period ending March 31, 2017 and, thereafter, up to $100 million during a rolling four quarter period less the amount of any legally required purchases of common stock held in benefit plans. Additionally, in 2017, the covenants contained within CH2M’s Certificate of Designation of the Series A Preferred Stock prohibit the repurchase by CH2M of shares of our common stock in excess of amounts determined by a negotiated pre-approved formula based upon our “Free Cash Flow,” or cash flow from operations, minus capital expenditures, for fiscal 2016. Our Free Cash Flow was negative for fiscal 2016 and, as a result, other than certain specified exemptions, CH2M is prohibited from repurchasing shares of common stock in the internal market, except as legally required, unless it is able to obtain the consent of the holders of at least a majority of the Series A Preferred Stock. On January 17, 2017, the Company received from the Series A Preferred Stockholder, an acknowledgment and consent permitting CH2M to spend up to $25 million, in the aggregate, to repurchase shares of common stock in connection with legally required distributions and to participate as a buyer in the internal market on the February 10, 2017 trade date. No assurance can be given that in the future CH2M will be able to obtain an acknowledgment and consent from the Series A Preferred Stockholder permitting CH2M to repurchase common stock in the internal market if such an acknowledgment and consent is required.

Regardless of any bank covenant or charter limitation, CH2M’s management and Board of Directors could determine to limit the amount of money expended by CH2M to repurchase shares in the internal market, or not to participate in the internal market, either of which would result in proration of sell orders that stockholders may place for trades on the next trade date. In addition, CH2M’s Board of Directors could determine to suspend trading on the internal market in order to provide time to evaluate the ability to adequately provide for proration and to conserve CH2M’s cash reserves and available liquidity.  Since the September 26, 2014 trade, CH2M has limited the amount expended to repurchase shares in the internal market.  CH2M expects that the amounts it will be able to spend to repurchase shares on the upcoming trade date and on subsequent trade dates that are expected to occur will continue to be restricted, and CH2M’s Board of Directors and management anticipate that some sell orders will be only partially filled on such trade dates.

Risks Related to Our Internal Market.

Before deciding to invest in CH2M’s common stock, you should carefully consider information regarding CH2M’s historical financial performance and the risk factors relating to our business and the internal market set forth in CH2M’s annual, quarterly and current reports filed with the SEC, including the risk factors set forth in our 2016 Annual Report under the heading Item 1A. Risk Factors.  These documents may be obtained from the SEC’s Internet website or by calling CH2M directly.

Cautionary Note Regarding Forward Looking Statements.

This Form 8-K contains “forward-looking statements,” as that term is defined in U.S. Federal and certain foreign securities regulations, including statements regarding our transition to Computershare, the upcoming market open and trade dates and CH2M’s potential participation in the internal market. Although CH2M’s management believes that its expectations are based on reasonable assumptions, these assumptions are subject to a wide range of economic, business, regulatory, technical, legal, and other unforeseen risks which may cause actual results to differ materially from those stated or implied by these forward-looking statements. CH2M undertakes no duty to update any forward-looking statement made herein.  All forward-looking statements speak only as of the date of this Form 8-K. This communication should be read in conjunction with all the other information included in our most current Prospectus and European Prospectus, which are filed with the U.S. Securities and Exchange Commission (SEC) and the U.K. Financial Conduct Authority (FCA), respectively, and, for our stockholders outside of the U.S. and the European Union, similar documents filed with local securities regulators, where required. You should also read our 2016 Annual Report on Form 10-K and any subsequent reports on Form 10-Q and Form 8-K for a list of factors that could cause actual operational and financial results to differ from those expected.

Item 9.01.  Financial Statements and Exhibits.

(d) Exhibits

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, CH2M has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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