Restructuring

3 Months Ended

Mar. 31, 2013

(16) Restructuring

In September 2012, we initiated a restructuring plan (the “Restructuring Plan”) to reduce operating costs and improve profitability within our operations in the U.S. Under the Restructuring Plan, we reduced our facility footprint and implemented a reduction of force across multiple business segments and functions. For the three month period ended March 31, 2013 we recognized $1.8 million in restructuring charges associated with lease and contract terminations, which is included in the condensed consolidated statements of operations and comprehensive income (loss) under cost of revenue. The corresponding liability as of March 31, 2013 and December 31, 2012 was $4.9 million and $7.8 million, respectively, and is included in accrued expenses and other current liabilities and other noncurrent liabilities in the condensed consolidated balance sheets. In February 2013, we announced that we had substantially completed the Restructuring Plan. The remaining unpaid termination benefits are expected to be paid within the next 9 years.

In 2009, we started an initial organizational review of our Magnox sites and identified an opportunity to reduce the existing workforce, primarily at three sites at which decommissioning was relatively close to completion with only a few projects remaining. The termination plan was presented in two phases and was approved by the NDA. As a result of overstaffing at the Magnox sites, approximately 300 employees left us on a voluntary basis. For the three month period ended March 31, 2013 we recognized an additional $55.6 million of expected employee termination benefits related to the termination of approximately 200 employees at the Bradwell site, which is rapidly moving into the early care and maintenance phase. Additionally, we also accrued employee termination benefits for the Chapelcross site, which is decreasing in size following completion of defueling activities and is preparing for further decommissioning, as well as the Dungeness, Oldbury, Trawsfynnyd sites, which are getting ready to re-shape the workforce following cessation of power generation in 2014 . No termination benefits were recognized for the three month period ended March 31, 2012. These benefits are included in cost of revenue in the accompanying condensed consolidated statements of operations and comprehensive income (loss) related to our International operations. In addition, we have recognized revenue and a receivable from the NDA for the reimbursement of the employee termination benefits. The corresponding liability as of March 31, 2013 and December 31, 2012 was $56.7 million and $5.7 million, respectively, and is included in accrued expenses and other current liabilities in the condensed consolidated balance sheets. The remaining liability is expected to be paid over approximately the next 12 months.

The following is a reconciliation of the beginning and ending liability balances related to the Magnox employee termination benefits (in thousands):

	March 31, 2013			December 31, 2012
Beginning liability	$	5,695		$	32,659
Additions	55,555			—
Payments	(3,097		)	(27,888		)
Effect of exchange rate	(1,445		)	924
Ending liability	$	56,708		$	5,695

The termination plan and employee benefits paid for the termination of these employees are in accordance with the existing employee and the trade union agreements and were pre-approved by the NDA. All employee termination benefits are treated as part of the normal Magnox cost base and are reimbursed by the NDA.

Magnox Limited continues to transition as sites move to a new state within their lifecycle. The Magnox Optimized Decommissioning Program (“MODP”) includes approximately ten further changes of organization across the ten Magnox sites in the next 5 years. As a result of these changes and the drive to reduce support and overhead costs, there will be manpower reductions of approximately 600 employees through year 2015 followed by a further reduction of approximately 1,000 employees in the period from 2016 to 2020. The MODP has been approved by the NDA and forms part of the NDA funding settlement which in turn is part of the U.K. government’s current comprehensive spending review.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References+ Details

EnergySolutions, Inc. 10-Q