Commitments and Contingencies

Government Contracts

As a government contractor, we are subject to U.S. government audits and investigations relating to our operations, including claims for fines, penalties and compensatory and treble damages, and possible suspension or debarment from doing business with the government. Based on currently available information, we believe the outcome of ongoing government disputes and investigations will not have a material impact on our financial position, results of operations or liquidity.

Legal Matters

One of our subsidiaries was a subcontractor to a mechanical contractor ("Mechanical Contractor") on a construction project where an explosion occurred. An investigation of the matter could not determine who was responsible for the explosion. As a result of the explosion, lawsuits have been commenced against various parties, but, to date, no lawsuits have been commenced against our subsidiary with respect to personal injury or damage to property as a consequence of the explosion. However, the Mechanical Contractor has asserted claims, in the context of an arbitration proceeding against our subsidiary, alleging that our subsidiary is responsible for a portion of the damages for which the Mechanical Contractor may be liable as a result of: (a) losses asserted by the owner of the project and/or the owner's general contractor because of delays in completion of the project and damages to its property, (b) personal injury suffered by individuals as a result of the explosion and (c) the Mechanical Contractor's legal fees in defending against any and all such claims. We believe, and have been advised by counsel, that we have a number of meritorious defenses to all such matters. We believe that the ultimate outcome of such matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity. Notwithstanding our assessment of the final impact of this matter, we are not able to estimate with any certainty the amount of loss, if any, which would be associated with an adverse resolution.

One of our subsidiaries, USM, Inc. ("USM"), doing business in California provides, among other things, janitorial services to its customers by having those services performed by independent janitorial companies. USM and one of its customers, which owns retail stores (the “Customer”), are co-defendants in a federal class action lawsuit brought by employees of two of USM’s California local janitorial contractors. The action was commenced on September 5, 2013 in a Superior Court of California and was removed by USM on November 22, 2013 to the United States District Court for the Northern District of California. The employees allege in their complaint, among other things, that USM and the Customer violated a California statute that prohibits USM from entering into a contract with a janitorial contractor when it knows or should know that the contract does not include funds sufficient to allow the janitorial contractor to comply with all local, state and federal laws or regulations governing the labor or services to be provided. The employees have asserted that the amounts USM pays to its janitorial contractors are insufficient to allow those janitorial contractors to meet their obligations regarding, among other things, wages due for all hours their employees worked, minimum wages, overtime pay and meal and rest breaks. These employees seek to represent not only themselves, but also all other individuals who provided janitorial services at the Customer’s stores in California during the relevant four year time period. We do not believe USM or the Customer has violated the California statute or that the employees may bring the action as a class action on behalf of other employees of janitorial companies with whom USM contracted for the provision of janitorial services to the Customer. However, if the pending lawsuit is certified as a class action and USM is found to have violated the California statute, USM might have to pay significant damages and might be subject to similar lawsuits regarding the provision of janitorial services to its other customers in California. The plaintiffs seek a declaratory judgment that USM has violated the California statute, monetary damages, including all unpaid wages and thereon, restitution for unpaid wages, and an award of attorney fees and costs.

We are involved in several other proceedings in which damages and claims have been asserted against us. Other potential claims may exist that have not yet been asserted against us. We believe that we have a number of valid defenses to such proceedings and claims and intend to vigorously defend ourselves. We do not believe that any such matters will have a material adverse effect on our financial position, results of operations or liquidity. Litigation is subject to many uncertainties and the outcome of litigation is not predictable with assurance. It is possible that some litigation matters for which reserves have not been established could be decided unfavorably to us, and that any such unfavorable decisions could have a material adverse effect on our financial position, results of operations or liquidity.

Restructuring expenses

Restructuring expenses were $0.9 million and $1.4 million for the three months ended March 31, 2014 and 2013, respectively, which primarily related to employee severance obligations and/or the termination of leased facilities. Restructuring expenses for the three months ended March 31, 2014 included $0.7 million of employee severance obligations and $0.2 million relating to the termination of leased facilities. Restructuring expenses for the three months ended March 31, 2013 of $1.4 million all related to employee severance obligations. The majority of these restructuring expenses were as a result of our decision last year to withdraw from the construction market in the United Kingdom. This decision was based on recurring losses over the last several years in the construction operations of our United Kingdom segment and our negative assessment of construction market conditions in the United Kingdom for the foreseeable future. As of March 31, 2014, the balance of these restructuring obligations yet to be paid was $3.9 million, the majority of which is expected to be paid in 2014. We expect to incur an additional $0.8 million of expenses in connection with restructuring through 2014.

The changes in restructuring activity by reportable segments during the three months ended March 31, 2014 and March 31, 2013 were as follows (in thousands):



	United States electrical construction and facilities services segment			United States mechanical construction and facilities services segment			United States building services segment			United Kingdom construction and building services segment			Corporate administration		Total
Balance at December 31, 2012	$	53		$	—		$	—		$	—		$	—	$	53
Charges	—			—			38			1,325			—		1,363
Payments	—			—			(38		)	—			—		(38		)
Non-cash items	(6		)	—			—			—			—		(6		)
Balance at March 31, 2013	$	47		$	—		$	—		$	1,325		$	—	$	1,372
Balance at December 31, 2013	$	30		$	164		$	—		$	4,685		$	—	$	4,879
Charges	—			(76		)	—			685			300		909
Payments	—			—			—			(1,401		)	—		(1,401		)
Non-cash items	(6		)	(88		)	—			(389		)	—		(483		)
Balance at March 31, 2014	$	24		$	—		$	—		$	3,580		$	300	$	3,904

A summary of restructuring expenses by reportable segments recognized for the three months ended March 31, 2014 was as follows (in thousands):



	United States electrical construction and facilities services segment		United States mechanical construction and facilities services segment			United States building services segment		United Kingdom construction and building services segment		Corporate administration		Total
Severance	$	—	$	—		$	—	$	685	$	—	$	685
Leased facilities	—		(76		)	—		—		300		224
Total charges	$	—	$	(76	)	$	—	$	685	$	300	$	909