0001393744-14-000011.txt : 20140516 0001393744-14-000011.hdr.sgml : 20140516 20140516125227 ACCESSION NUMBER: 0001393744-14-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20140331 FILED AS OF DATE: 20140515 DATE AS OF CHANGE: 20140516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EnergySolutions, Inc. CENTRAL INDEX KEY: 0001393744 STANDARD INDUSTRIAL CLASSIFICATION: HAZARDOUS WASTE MANAGEMENT [4955] IRS NUMBER: 061782005 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-33830 FILM NUMBER: 14850609 BUSINESS ADDRESS: STREET 1: 423 WEST 300 SOUTH STREET 2: SUITE 200 CITY: SALT LAKE CITY STATE: UT ZIP: 84101 BUSINESS PHONE: 801-649-2000 MAIL ADDRESS: STREET 1: 423 WEST 300 SOUTH STREET 2: SUITE 200 CITY: SALT LAKE CITY STATE: UT ZIP: 84101 FORMER COMPANY: FORMER CONFORMED NAME: EnergySolutions Group, Inc. DATE OF NAME CHANGE: 20070320 10-Q 1 es-20140331x10q.htm 10-Q ES-2014.03.31-10Q
 
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 March 31, 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 001-33830 
EnergySolutions, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
 
51-0653027
(I.R.S. Employer
Identification Number)
423 West 300 South, Suite 200
Salt Lake City, Utah
(Address of principal executive offices)
 
84101
 (Zip Code)
 

Registrant’s telephone number, including area code: (801) 649-2000
 
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 o
 
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 o
 
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 definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
 
Accelerated filer o
 
Non-accelerated filer ý
 
Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No x
 
As of May 15, 2014, there were 100 shares of the registrant’s common stock outstanding all of which were owned by Rockwell Holdco, Inc. the registrant’s parent holding company. The registrant’s common stock is not publicly traded.

 



ENERGYSOLUTIONS, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
For the Three Month Period Ended March 31, 2014
 

1


PART I 
Item 1.  Financial Statements
EnergySolutions, Inc. 
Condensed Consolidated Balance Sheets 
March 31, 2014 and December 31, 2013 
(in thousands of dollars, except share information)
 
March 31,
2014
 
December 31,
2013
 
(unaudited)
 
 
Assets
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
65,579

 
$
84,213

Accounts receivable, net of allowance for doubtful accounts
340,538

 
287,438

Costs and estimated earnings in excess of billings on uncompleted contracts
75,269

 
85,965

Prepaid expenses
9,977

 
10,157

Nuclear decommissioning trust fund investments, current portion
110,359

 
112,475

Deferred costs, current portion
101,192

 
91,841

Other current assets
5,628

 
5,711

Total current assets
708,542

 
677,800

Property, plant and equipment, net
131,665

 
114,476

Goodwill
266,247

 
309,508

Other intangible assets, net
180,321

 
214,361

Nuclear decommissioning trust fund investments
312,132

 
330,442

Restricted cash and decontamination and decommissioning deposits
205,830

 
293,896

Deferred costs
241,029

 
270,039

Deferred income taxes
28,023

 
29,707

Other noncurrent assets
177,905

 
180,314

Total assets
$
2,251,694

 
$
2,420,543

Liabilities and Stockholders’ Equity
 

 
 

Current liabilities:
 

 
 

Current portion of long-term debt
$

 
$
65,000

Accounts payable
152,065

 
145,857

Accrued expenses and other current liabilities
270,388

 
208,177

Deferred income taxes
29,085

 
30,363

Facility and equipment decontamination and decommissioning liabilities, current portion
97,681

 
98,175

Unearned revenue, current portion
135,164

 
118,465

Total current liabilities
684,383

 
666,037

Long-term debt, less current portion
646,430

 
666,814

Pension liability
120,820

 
111,644

Facility and equipment decontamination and decommissioning liabilities
352,089

 
378,389

Deferred income taxes

 
12,497

Unearned revenue, less current portion
243,803

 
272,940

Other noncurrent liabilities
32,279

 
44,007

Total liabilities
2,079,804

 
2,152,328

Commitments and contingencies

 

Stockholders’ equity:
 

 
 

Common stock, $0.01 par value, 100 shares authorized as of March 31, 2014 and December 31, 2013, respectively, and 100 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively.

 

Additional paid-in capital
536,361

 
535,288

Accumulated other comprehensive loss
(22,163
)
 
(22,877
)
Accumulated deficit
(342,795
)
 
(244,684
)
Total EnergySolutions stockholders’ equity
171,403

 
267,727

Noncontrolling interests
487

 
488

Total equity
171,890

 
268,215

Total liabilities and stockholders’ equity
$
2,251,694

 
$
2,420,543

See accompanying notes to condensed consolidated financial statements.

2


EnergySolutions, Inc.
 
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
 
Three Month Periods Ended March 31, 2014 and 2013
 
(in thousands of dollars)
 
(unaudited)
 
 
 
Three Month Periods Ended
 
 
March 31,
 
 
2014
 
2013
Revenue
 
$
476,793

 
$
526,208

Cost of revenue
 
(432,770
)
 
(479,788
)
Gross profit
 
44,023

 
46,420

Selling, general and administrative expenses
 
(30,882
)
 
(32,221
)
Impairment of goodwill and other intangible assets
 
(102,324
)
 

Equity in income of unconsolidated joint ventures
 
292

 
676

Income (loss) from operations
 
(88,891
)
 
14,875

Interest expense
 
(21,356
)
 
(18,645
)
Other income, net
 
11,618

 
2,111

Loss before income taxes and noncontrolling interests
 
(98,629
)
 
(1,659
)
Income tax benefit (expense)
 
517

 
(6,539
)
Net loss
 
(98,112
)
 
(8,198
)
Less: Net (income) loss attributable to noncontrolling interests
 
1

 
(2
)
Net loss attributable to EnergySolutions
 
$
(98,111
)
 
$
(8,200
)
 
 
 
 
 
Other comprehensive income (loss):
 
 

 
 

Net loss
 
$
(98,112
)
 
$
(8,198
)
Foreign currency translation adjustments, net of taxes
 
840

 
(8,687
)
Change in unrecognized actuarial loss
 
(126
)
 
(478
)
Other comprehensive loss, net of taxes
 
(97,398
)
 
(17,363
)
Less: net (income) loss attributable to noncontrolling interests
 
1

 
(2
)
Comprehensive loss attributable to EnergySolutions
 
$
(97,397
)
 
$
(17,365
)
 
See accompanying notes to condensed consolidated financial statements.

3


EnergySolutions, Inc.
 Condensed Consolidated Statement of Changes in Stockholders’ Equity
 Three Month Period Ended March 31, 2014
 (in thousands of dollars, except share information)

(unaudited)
 
 
Common Stock
 
Additional
Paid-in
 
Accumulated
Other
Comprehensive
 
Accumulated
 
Noncontrolling
 
Total
Stockholders’
 
Shares
 
Amount
 
Capital
 
Loss
 
Deficit
 
Interests
 
Equity
Balance at December 31, 2013
100

 
$

 
$
535,288

 
$
(22,877
)
 
$
(244,684
)
 
$
488

 
$
268,215

Net loss

 

 

 

 
(98,111
)
 
(1
)
 
(98,112
)
Equity-based compensation

 

 
1,073

 

 

 

 
1,073

Change in unrecognized actuarial loss

 

 

 
(126
)
 

 

 
(126
)
Foreign currency translation, net of taxes

 

 

 
840

 

 

 
840

Balance at March 31, 2014
100

 
$

 
$
536,361

 
$
(22,163
)
 
$
(342,795
)
 
$
487

 
$
171,890

 
See accompanying notes to condensed consolidated financial statements.

4


EnergySolutions, Inc.
Condensed Consolidated Statements of Cash Flows
Three Month Periods Ended March 31, 2014 and 2013
 (in thousands of dollars)
(unaudited)
 
Three Month Periods Ended
 
March 31,
 
2014
 
2013
Cash flows from operating activities
 

 
 

Net loss
$
(98,112
)
 
$
(8,198
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 

 
 

Depreciation, amortization and accretion
16,706

 
17,400

Equity-based compensation expense
1,073

 
(342
)
Deferred income taxes
(10,963
)
 
(1,187
)
Amortization of debt financing fees and debt discount
4,415

 
1,801

Impairment of goodwill and other intangible assets
102,324

 

Gain on disposal of property, plant and equipment
(46
)
 

Realized and unrealized gains on nuclear decommissioning trust fund investments
(13,155
)
 
(5,354
)
Changes in operating assets and liabilities, net of effects from acquisition:
 

 
 

Accounts receivable
(45,820
)
 
(102,815
)
Costs and estimated earnings in excess of billings on uncompleted contracts
14,094

 
3,704

Prepaid expenses and other current assets
(161
)
 
6,543

Accounts payable
1,643

 
761

Accrued expenses and other current liabilities
32,386

 
69,911

Unearned revenue
(14,161
)
 
(29,708
)
Facility and equipment decontamination and decommissioning liabilities
(41,206
)
 
(41,384
)
Restricted cash and decontamination and decommissioning deposits
385

 
791

Nuclear decommissioning trust fund
32,938

 
38,289

Deferred costs
19,686

 
30,237

Other noncurrent assets
3,364

 
(8,033
)
Other noncurrent liabilities
(3,555
)
 
7,258

Net cash provided by (used in) operating activities
1,835

 
(20,326
)
Cash flows from investing activities
 

 
 

Purchase of nuclear decommissioning trust fund investments
(135,712
)
 
(188,286
)
Proceeds from sales of nuclear decommissioning trust fund investments
136,745

 
189,367

Acquisition of business, net of cash acquired
(20,996
)
 

Purchases of property, plant and equipment
(1,158
)
 
(3,082
)
Proceeds from disposition of property, plant and equipment
66

 

Net cash used in investing activities
(21,055
)
 
(2,001
)
Cash flows from financing activities
 

 
 

Repayments of long-term debt
(87,000
)
 
(16,592
)
Restricted cash held as collateral of letter of credit obligations
87,681

 

Minimum tax withholding on restricted stock awards

 
(431
)
Repayments of capital lease obligations
(208
)
 
(211
)
Debt financing fees

 
(3,160
)
Net cash provided by (used in) financing activities
473

 
(20,394
)
Effect of exchange rate on cash
113

 
(1,045
)
Net decrease in cash and cash equivalents
(18,634
)
 
(43,766
)
Cash and cash equivalents, beginning of period
84,213

 
134,191

Cash and cash equivalents, end of period
$
65,579

 
$
90,425

 See accompanying notes to condensed consolidated financial statements.

5


EnergySolutions, Inc.
 
Notes to Condensed Consolidated Financial Statements
 
(1) Description of Business
 
EnergySolutions, Inc. ("we," "our," "EnergySolutions" or the "Company") provides a broad range of services nationally and internationally. Our broad range of nuclear services includes engineering, in-plant support services, spent nuclear fuel management, decontamination and decommissioning ("D&D") services, operation of nuclear reactors, comprehensive long-term stewardship D&D work for shut-down nuclear power plants, logistics, transportation, processing and LLRW disposal. We derive almost 100% of our revenue from the provision of nuclear services. We operate facilities for the processing and disposal of radioactive materials, including one facility in Clive, Utah, our four facilities in Tennessee, or our two facilities in Barnwell, South Carolina and one facility in Brampton, Ontario, Canada. We also provide turn-key services and sub-contract services for the treatment, processing, storage and disposal of radioactive waste from nuclear sites and non-nuclear facilities.
On January 7, 2013, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Rockwell Holdco, Inc., a Delaware corporation (the "Parent" or "Rockwell") and Rockwell Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub") established as an acquisition vehicle for the purpose of acquiring the Company. The Merger Agreement was later amended on April 5, 2013. Pursuant to the terms of the Merger Agreement, as amended, on May 24, 2013, (the "Merger Date"), Merger Sub merged with and into the Company, with the Company surviving as a wholly-owned subsidiary of Parent (the "Merger"). Parent is 100% owned by Energy Capital Partners II, LP and its parallel funds ("Energy Capital" or "ECP") a private equity firm focused on investing in North America’s energy infrastructure.
We have contracts with government and commercial customers. Our government customers are primarily individual offices, departments and administrations within the U.S. Department of Energy ("DOE"), U.S. Department of Defense ("DOD"), the Nuclear Decommissioning Authority ("NDA") in the United Kingdom ("U.K.") and state agencies. Our commercial customers include power and utility companies, pharmaceutical companies, research laboratories, manufacturing and industrial facilities, hospitals, universities and other commercial entities that are involved with nuclear materials.

We report our results through four major operating groups: Projects, Products, Logistics, Processing and Disposal ("LP&D") and International.

(2) Business Combinations

On the Merger Date, each issued and outstanding share of common stock of the Company (other than shares of Company common stock held in the treasury of the Company or owned by Parent, affiliates of Parent, Merger Sub, a subsidiary of the Company or by stockholders who had validly exercised and perfected their appraisal rights under Delaware law), was converted into the right to receive $4.15 in cash, without interest and subject to any required withholding of taxes. The Company's common stock ceased to be traded on the New York Stock Exchange after close of market on May 24, 2013. The Company continues its operations as a privately-held company. The Company filed with the Securities and Exchange Commission (the "SEC"), or has had filed on its behalf, a Form 15 and Form 25 to deregister the Company's common stock under Sections 12(b) and (g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), respectively, which deregistration became effective 90 days after the filing of the applicable form. Further, the Company's reporting obligations under Section 15(d) of the Exchange Act on account of its common stock were suspended effective January 1, 2014, at which time the Company ceased filing periodic reports with the SEC on account of its common stock, but continues to have public reporting obligations with the SEC with respect to its 10.75% Senior Notes due 2018, as required by the indenture governing such Senior Notes.

We refer to the acquisition of EnergySolutions by Rockwell as the "Merger Transaction". The following events describe the transactions that occurred in connection with the Merger Transaction:

Parent and EnergySolutions purchased and retired all of the Company's outstanding common stock as of the Merger Date and paid approximately $383.9 million in cash to the Company's stockholders. Of the total amount paid, EnergySolutions directly purchased 1.8 million shares for $7.3 million from cash on hand. The 1.8 million shares were issued as a result of accelerated vesting of previously issued restricted stock awards due to the change in control.

Parent paid $10.9 million of Merger Transaction related costs on behalf of EnergySolutions. Payments made by Parent on the Company's behalf were accounted for as capital contributions. Of the $10.9 million transaction costs,

6


approximately $3.1 million was capitalized as debt issuance costs and the remainder was expensed on the Merger Date and is included in the condensed consolidated statements of operations and comprehensive income (loss) under selling, general and administrative ("SG&A") expenses.

EnergySolutions incurred $49.2 million of Merger Transaction related expenses which were funded by both, the Company and the Parent. These expenses were comprised primarily of employee incentive compensation and related payroll taxes of $26.9 million, professional fees of $13.4 million, lead arranger banker fees of $6.9 million and D&O run out insurance cost of $2.0 million. These expenses were included in the condensed consolidated statements of operations and comprehensive income (loss) under cost of revenue and SG&A expenses.

The Merger Transaction was accounted for as a recapitalization, and accordingly, the Company will continue to apply its historical basis of accounting in its stand-alone financial statements after the Merger. This is based on our determination under Financial Accounting Standards Board ("FASB") accounting standards codification Topic 805 - Business Combinations, and SEC Staff Accounting Bulletin (SAB) No. 54, codified as Topic 5J, Push Down Basis of Accounting Required In Certain Limited Circumstances, that while the push down of Parent's basis in EnergySolutions is permissible, it was not required due to the existence of significant outstanding public debt securities at EnergySolutions.

On March 4, 2014, we acquired Studsvik, Inc.'s Tennessee radioactive waste processing facilities located in Erwin and Memphis, Tennessee, the exclusive rights to use Studsvik's patented Thermal Organic Reduction ("THOR") technology, in the commercial North America markets and China, and the remaining equity interest in the SempraSafe LLC, joint venture, in which the Company previously owned an equity interest of 49.0%. Studsvik will retain patents and rights for THOR in other markets. The aggregate purchase price for the acquisition was $22.5 million. For the three month period ended March 31, 2014, we incurred $0.4 million in acquisition costs which are included in the condensed consolidated statements of operations and comprehensive income (loss) under cost of revenue and SG&A expenses.

The table below presents the preliminary allocation to the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date (in thousands):

Cash
$
1,461

Accounts receivables
5,123

Costs and estimated earnings in excess of billings on uncompleted contracts
3,152

Other current assets
1,065

Intangible assets
9,011

Property, plant and equipment
20,595

Accounts payable
(3,419
)
Accrued expenses and other current liabilities
(4,047
)
Unearned revenue
(1,718
)
Asset retirement obligations
(8,766
)
Total purchase price allocated
$
22,457


The acquisition was accounted for by using the acquisition method of accounting. The assets acquired and liabilities assumed in connection with the acquisition, including identifiable intangible assets, have been measured at their fair value primarily using Level 3 inputs. Determining the fair value of the assets acquired and liabilities assumed requires judgment and involved the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset useful lives and market multiples, among other items. The use of different estimates and judgments could yield materially different results. The assets acquired and liabilities assumed in connection with the acquisition were allocated to the LP&D group.

We have engaged an independent third party valuation firm to complete a business appraisal on the assets and the THOR technology acquired from Studsvik. Our preliminary purchase price allocation may differ from their results and as such adjustments may be required. A decrease in the preliminary fair market value of these assets may result in recognition of goodwill in future periods.

(3) Basis of Presentation
 

7


The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2013 (the "2013 Annual Report").

In the opinion of management, all material adjustments which are of a normal and recurring nature necessary for a fair presentation of the results for the periods presented have been reflected. Preparing financial statements requires management to make estimates and assumptions that affect the amounts that are reported in the condensed consolidated financial statements and accompanying disclosures. Although these estimates are based on our best knowledge of current events and actions that we may undertake in the future, actual results may be different from these estimates. The results of operations for the three months ended March 31, 2014 are not necessarily indicative of the results to be expected for any future period or the full fiscal year.

 We have majority voting rights for one of our minority-owned joint ventures. Accordingly, we have consolidated its operations in our consolidated financial statements and therefore, we recorded the noncontrolling interests, which reflect the portion of the earnings of operations which are applicable to other noncontrolling partners. Assets from our consolidated joint venture can only be used to settle its own obligations. Additionally, our assets cannot be used to settle the joint ventures’ obligations because this minority owned joint venture does not have recourse to our general credit.

(4) Recent Accounting Pronouncements
 
Accounting Pronouncements Issued
 
New accounting pronouncements implemented by the Company during the three month period ended March 31, 2014 or requiring implementation in future periods are discussed below or elsewhere in the notes, where appropriate.

In April 2014, the Financial Accounting Standard Board (the "FASB") issued guidance related to presentation of financial statements (Topic 205) and property, plant, and equipment (Topic 360): reporting of discontinued operations and disclosures of disposals of components of an entity. This guidance defines a discontinued operation as a disposal of a component or group of components that is disposed of or is classified as held for sale and “represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.” The standard states that a strategic shift could include a disposal of (i) a major geographical area of operations, (ii) a major line of business, (iii) a major equity method investment, or (iv) other major parts of an entity. Although “major” is not defined, the standard provides examples of when a disposal qualifies as a discontinued operation. An entity is required to present in the statement of cash flows or disclose in a note either (i) total operating and investing cash flows for discontinued operations, or (ii) depreciation, amortization, capital expenditures, and significant operating and investing non cash items related to discontinued operations. Additional disclosures are required when an entity retains significant continuing involvement with a discontinued operation after its disposal, including the amount of cash flows to and from a discontinued operation. This guidance is effective in the first quarter of 2015 and early adoption is permitted. The Company is evaluating the impact of this guidance on its financial statements and disclosures.

In July 2013, the FASB issued guidance related to presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance eliminates diversity in practice for presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is available to reduce the taxable income or tax payable that would result from disallowance of a tax position. This guidance is effective for interim and annual reporting periods beginning after December 15, 2013 and should be applied prospectively to all unrecognized tax benefits that exist at the effective date. The adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows.

In March 2013, the FASB issued guidance related to foreign currency matters. The standard update addresses the accounting for the release of cumulative translation adjustment when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a business unit or a group of assets that do not produce a profit within a foreign entity. Under such circumstances, a parent company is required to release any related currency adjustments to earnings. The currency adjustment is released into earnings only if the sale or transfer results in a complete or substantially complete liquidation of the foreign entity in question. The standard update is effective for interim and annual reporting periods beginning after December 15, 2013. We adopted this guidance during the first quarter of fiscal year 2014. (See note 14 for our assessment of the impact of adopting this guidance).

(5) Trust Fund Investments

8


 
The nuclear decommissioning trust ("NDT") fund was established solely to satisfy obligations related to the D&D of the Zion Station. The NDT fund holds investments in marketable debt and equity securities directly and indirectly through commingled funds. Investments in the NDT fund are carried at fair value and are classified as trading securities. We consolidate the NDT fund as a variable interest entity ("VIE"). We have a contractual interest in the NDT fund and this interest is a variable interest due to its exposure to the fluctuations caused by market risk. We are able to control the NDT fund by appointing the trustee and, subject to certain restrictions, we are able to direct the investment policies of the fund. We are the primary beneficiary of the NDT fund as we benefit from positive market returns and bear the risk of market losses.

A portion of our NDT fund is invested in a securities lending program with the trustee of the NDT fund. The program authorizes the trustee of the NDT fund to loan securities that are assets of the NDT fund to approved borrowers. Borrowers have the right to sell or re-pledge the loaned securities. The trustee requires borrowers, pursuant to a security lending agreement, to deliver collateral to secure each loan. The securities are required to be collateralized by cash, U.S. government securities or irrevocable bank letters of credit. Initial collateral levels are no less than 102% and 105% of the market value of the borrowed securities for collateral denominated in U.S. and foreign currency, respectively.

NDT fund investments consisted of the following (in thousands):
 
As of March 31, 2014
 
As of December 31, 2013
 
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated
fair value
 
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Estimated
fair value
Assets
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Receivables for securities sold
$
5,218

 
$

 
$

 
$
5,218

 
$
4,568

 
$

 
$

 
$
4,568

Investments
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Corporate debt securities
167,594

 
9,279

 
(518
)
 
176,355

 
201,377

 
8,050

 
(2,352
)
 
207,075

Equity securities
200

 
14

 

 
214

 
400

 
13

 

 
413

Direct lending securities
138,436

 
10,420

 
(2,479
)
 
146,377

 
134,161

 
11,476

 
(3,387
)
 
142,250

Debt securities issued by states of the U.S.
20,660

 
1,121

 
(120
)
 
21,661

 
23,725

 
761

 
(468
)
 
24,018

Cash and cash equivalents
49,390

 

 

 
49,390

 
29,686

 

 

 
29,686

Debt securities issued by the U.S. Treasury and other U.S. government corporations and agencies
24,377

 
512

 
(317
)
 
24,572

 
35,685

 
77

 
(855
)
 
34,907

Total investments
400,657

 
21,346

 
(3,434
)
 
418,569

 
425,034

 
20,377

 
(7,062
)
 
438,349

Total assets
405,875

 
21,346

 
(3,434
)
 
423,787

 
429,602

 
20,377

 
(7,062
)
 
442,917

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payable for securities purchased
(1,296
)
 

 

 
(1,296
)
 

 

 

 

Total liabilities
(1,296
)
 

 

 
(1,296
)
 

 

 

 

Net assets held by the NDT fund
$
404,579

 
$
21,346

 
$
(3,434
)
 
422,491

 
$
429,602

 
$
20,377

 
$
(7,062
)
 
442,917

Less: current portion
 

 
 

 
 

 
(110,359
)
 
 

 
 

 
 

 
(112,475
)
Long-term investments
 

 
 

 
 

 
$
312,132

 
 

 
 

 
 

 
$
330,442

 
Investments held by the NDT fund, net, totaled $422.5 million and $442.9 million as of March 31, 2014 and December 31, 2013, respectively, and are included in current and other long-term assets in the accompanying condensed consolidated balance sheets, depending on the expected timing of usage of funds. We have withdrawn from the NDT fund approximately $32.9 million and $38.3 million for three month periods ended March 31, 2014 and 2013, respectively, to pay for Zion Station D&D project expenses and estimated trust income taxes. In addition, we paid fees associated with the management of the NDT fund investments of approximately $1.0 million and $1.1 million, respectively. These fees are included in other income, net, in the condensed consolidated statements of operations and comprehensive income (loss).
 
We record changes to the fair value of the NDT fund investments as unrealized gains or losses. For the three month periods ended March 31, 2014 and 2013, we recorded $4.6 million of unrealized gains and $6.0 million of unrealized losses, respectively. Investment income related to sales of investments, dividends and interest payments received from investments held by the NDT fund are recorded as realized gains or losses. For the three month periods ended March 31, 2014 and 2013, we recorded $8.5 million and $11.3 million, of realized gains, respectively. Both, unrealized and realized gains and losses on the NDT fund investments are included in other income, net, in the accompanying condensed consolidated statements of operations and comprehensive income (loss).

(6) Fair Value Measurements

9


 
We have implemented the accounting requirements for financial assets, financial liabilities, non-financial assets and non-financial liabilities reported or disclosed at fair value. The requirements define fair value, establish a three level hierarchy for measuring fair value in GAAP, and expand disclosures about fair value measurements. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that a company has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the assets or liabilities.
 
This hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. Assets are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.
 
The carrying value of accounts receivable, costs, and estimated earnings in excess of billings on uncompleted contracts, prepaid assets, accounts payable, and accrued expenses approximate their fair value principally because of the short-term nature of these assets and liabilities.
 
The fair market value of our term loan is estimated utilizing market quotations for debt that have quoted prices in active markets. Since our term loan does not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities and is categorized as Level 2. The fair value of our term loan is calculated by taking the mid-point of the trading prices and multiplying it by the outstanding principal balance of our term loan. The fair market value of our term loan was approximately $356.1 million as of March 31, 2014 and $444.4 million as of December 31, 2013. The carrying value of our term loan was $353.0 million as of March 31, 2014 and $440.0 million as of December 31, 2013.

In the case of our senior notes, we estimate fair value based on quoted market prices from active markets as they are publicly traded and are categorized as Level 1. As of March 31, 2014 and December 31, 2013, we had outstanding senior notes obligations with a carrying amount of $300.0 million and $300.0 million, respectively, with a fair market value of approximately $317.8 million as of March 31, 2014 and $320.2 million as of December 31, 2013.

The following table presents the NDT fund investments measured at fair value (in thousands): 
 
As of March 31, 2014
 
As of December 31, 2013
 
Total
Investments
at Fair
Value
 
Quoted Prices
in Active
Markets for
Identical
Assets
Level 1
 
Significant
Other
Observable
Inputs
Level 2
 
Significant
Unobservable
Inputs
Level 3
 
Total
Investments
at Fair
Value
 
Quoted Prices
in Active
Markets for
Identical
Assets
Level 1
 
Significant
Other
Observable
Inputs
Level 2
 
Significant
Unobservable
Inputs
Level 3
(revised)
Assets
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Receivables for securities sold
$
5,218

 
$
5,218

 
$

 
$

 
$
4,568

 
$
4,568

 
$

 
$

Investments
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
49,390

 
49,390

 

 

 
29,686

 
29,686

 

 

Fixed income securities(1)
222,588

 
24,572

 
198,016

 

 
266,000

 
34,907

 
231,093

 

Equity securities(2)
214

 
214

 

 

 
413

 
413

 

 

Direct lending securities(3)
146,377

 

 

 
146,377

 
142,250

 

 

 
142,250

Total investments
418,569

 
74,176

 
198,016

 
146,377

 
438,349

 
65,006

 
231,093

 
142,250

Total assets
423,787

 
79,394

 
198,016

 
146,377

 
442,917

 
69,574

 
231,093

 
142,250

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payable for securities purchased
(1,296
)
 
(1,296
)
 

 

 

 

 

 

Total liabilities
(1,296
)
 
(1,296
)
 

 

 

 

 

 

Net assets held by the NDT fund
$
422,491

 
$
78,098

 
$
198,016

 
$
146,377

 
$
442,917

 
$
69,574

 
$
231,093

 
$
142,250

_____________________________
(1)
For fixed income securities, multiple prices from pricing services are obtained from pricing vendors whenever possible, which enables cross- provider validations in addition to checks for unusual daily movements. A primary price source is identified based on asset type, class or issue for each security. The trustee monitors prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the portfolio managers challenge an assigned price and the trustee determines that another price source is considered to be preferable. U.S. Treasury securities are categorized as Level 1 because they trade in a highly liquid and transparent market. Investments with maturities of three months or less when purchased, including certain short-term fixed income securities, are considered cash equivalents and are also categorized as Level 1. The fair values of fixed income securities, excluding U.S. Treasury securities, are based on evaluated prices that reflect observable market information, such as actual trade information or similar securities, adjusted for observable differences and are categorized in Level 2.
 

10


(2)
With respect to individually held equity securities, the trustee obtains prices from pricing services, whose prices are obtained from direct feeds from market exchanges. The fair values of equity securities held directly by the trust fund are based on quoted prices in active markets and are categorized in Level 1. Equity securities held individually are primarily traded on the New York Stock Exchange and NASDAQ Global Select Market, which contain only actively traded securities due to the volume trading requirements imposed by these national securities exchanges.
 
(3)
Direct lending securities are investments in managed funds that invest in private companies for long-term capital appreciation. The fair value of these securities is determined using either an enterprise value model or a bond valuation model. The enterprise value model develops valuation estimates based on valuations of comparable public companies, recent sales of private and public companies, discounting the forecasted cash flows of the portfolio company, estimating the liquidation or collateral value of the portfolio company or its assets, considering offers from third parties to buy the portfolio company, its historical and projected financial results, as well as other factors that may impact value. Significant judgment is required in the applications of discounts or premiums applied to the prices of comparable companies for factors such as size, marketability and relative performance. Under the bond valuation model, expected future cash flows are discounted using a discount rate. The discount rate is composed of a market based rate for similar credits in the public market and an internal credit rate based on the underlying risk of the credit. Investments in direct lending funds are categorized as Level 3 because the fair value of these securities is based largely on inputs that are unobservable and also utilize complex valuation models. Investments in direct lending securities typically cannot be redeemed until maturity of the term loan.

Management determines the value of Level 3 investments by considering third party valuations and have concluded that quantitative information about significant unobservable inputs used in valuing these investments is not reasonably available. This includes information regarding the sensitivity of the fair values to changes in the unobservable inputs. We obtain annual valuations from the fund managers and gain an understanding of the inputs and assumptions used in preparing the valuations. We also conclude on the reasonableness of the fair value of these investments. We obtain quarterly reports from the fund managers and review for consistency and reasonableness with regards to the valuations of these investments that were analyzed at the most recent year-end.

The following table presents the roll forward for Level 3 assets and liabilities measured at fair value on a recurring basis (in thousands):
 
        
Direct Lending Securities
March 31,
2014
 
March 31,
2013
Beginning balance
$
142,250

 
$
102,443

Purchases and issuances
17,074

 
17,351

Sales, dispositions and settlements
(12,802
)
 
(5,094
)
Realized gains and losses
4

 
46

Change in unrealized gains and losses
(149
)
 
3,112

Ending balance
$
146,377

 
$
117,858

 
(7) Joint Ventures
 
We use the equity method of accounting for our unconsolidated joint ventures. Under the equity method, we recognize our proportionate share of the net earnings of these joint ventures as a single line item under "Equity in income of unconsolidated joint ventures" in our condensed consolidated statements of operations and comprehensive income (loss). In accordance with authoritative guidance, we analyzed all of our joint ventures and classified them into two groups: (a) joint ventures that must be consolidated because we hold the majority voting interest, or because they are VIEs of which we are the primary beneficiary; and (b) joint ventures that do not need to be consolidated because we hold only a minority voting or other ownership interest, or because they are VIEs of which we are not the primary beneficiary.

On March 4, 2014, we acquired from Studsvik Inc., the remaining equity interest in the SempraSafe LLC, joint venture, in which the Company previously owned an equity interest of 49.0%. As such, we discontinued the use of the equity method on the acquisition date and have since consolidated SempraSafe LLC's results of operations.

For the three month period ended March 31, 2014, we performed an assessment on all of our other joint ventures and concluded that no other unconsolidated joint ventures should be consolidated and that no other consolidated joint ventures should be deconsolidated.
 
The table below presents unaudited financial information, for our unconsolidated joint ventures (in thousands):
         
 
As of
 
As of
 
March 31,
2014
 
December 31,
2013
Current assets
$
51,023

 
$
55,229

Current liabilities
30,905

 
30,606


11


            
 
For The Three Month
 
Period Ended
 
March 31,
 
2014
 
2013
Revenue
$
32,493

 
$
26,506

Gross profit
1,196

 
2,566

Net income
1,086

 
2,275

Net income attributable to EnergySolutions
292

 
676

 
As of March 31, 2014 and December 31, 2013, we had investments in unconsolidated joint ventures of $6.5 million and $6.1 million, respectively, which are included in other long term assets in the condensed consolidated balance sheets.We received $2.2 million and $0 million in cash dividend distributions from our unconsolidated joint ventures for the three month periods ended March 31, 2014 and 2013, respectively.
 
(8) Goodwill

The following summary sets forth the changes in goodwill for the three months period ended March 31, 2014 (in thousands):

    
 
 
Gross
Carrying
Amount
 
Foreign
Currency
Translation
 
Accumulated Impairment Losses
 
Total Goodwill
Beginning Balance at December 31, 2013
 
$
526,334

 
$
(7,826
)
 
$
(209,000
)
 
$
309,508

Acquisitions
 

 

 

 

Impairment
 

 
7,236

 
(50,668
)
 
(43,432
)
Translation adjustments
 

 
171

 

 
171

Ending balance at March 31, 2014
 
$
526,334

 
$
(419
)
 
$
(259,668
)
 
$
266,247


The Company performs its annual goodwill impairment test in accordance with authoritative guidance for accounting for Goodwill and Other Intangible Assets, during the second quarter of each fiscal year, or more often when events occur or circumstances change that would, more likely than not, reduce the fair value of a reporting unit below its carrying value. For impairment analysis, we allocate goodwill at the reporting unit level. In determining our reporting units, we considered how the business is managed at the segment operating level, the financial information available to management to operate the business, and how the business leaders make decisions on allocation of resources and performance assessment of the Company. Our reporting units are: Projects, Products, LP&D and International.

On March 31, 2014, the NDA announced that our team was not selected as the preferred bidder to manage the D&D of the Magnox sites for the next contract period. This event prompted us to perform an interim evaluation of our goodwill related to our international operations in the U.K. We determined that the fair value of our International reporting unit was below its carrying value and as such recorded a $50.9 million non cash impairment charge, of which $7.4 million relates to AOCIL resulting from foreign currency translation adjustments made since the acquisition date in June 2007. We measured the fair value of the International reporting unit by using management's business plans and projections as the basis for expected cash flows for the next five years, a 2.5% estimated residual growth rate for future years and a 17% weighted average discount rate. This non-cash charge reduced goodwill recorded in connection with previous acquisitions and did not impact our cash position, operating cash flow or debt covenants.

(9) Other Intangible Assets
 

12


Other intangible assets consisted of the following (in thousands):

 
As of March 31, 2014
 
As of December 31, 2013
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Weighted
Average
Remaining
Useful Life
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Weighted
Average
Remaining
Useful Life
Permits
$
243,173

 
$
(88,714
)
 
15.6 years
 
$
243,173

 
$
(86,263
)
 
15.8 years
Customer relationships
124,866

 
(110,848
)
 
3.1 years
 
161,903

 
(107,718
)
 
4.8 years
Technology and other
24,501

 
(12,657
)
 
5.8 years
 
15,490

 
(12,224
)
 
2.1 years
Total amortizable intangibles
$
392,540

 
$
(212,219
)
 
13.6 years
 
$
420,566

 
$
(206,205
)
 
12.8 years
 
All of our other intangible assets are subject to amortization. Amortization expense was $6.6 million and $6.4 million for the three month periods ended March 31, 2014 and 2013, respectively. Amortization expense is included in cost of revenue and SG&A expenses within the condensed consolidated statement of operations and comprehensive income (loss).

In connection with the performance of our goodwill impairment analysis for the International reporting unit, with respect to the Magnox contract loss, we determined that an indicator of impairment also existed with regard to the customer relationship intangible asset and initiated an evaluation in accordance with applicable accounting guidance. As of March 31, 2014, we had recorded a $39.8 million customer relationship intangible asset related this reporting unit. Based upon our analysis, we determined that the fair value of the customer relationship intangible asset was below its carrying value and as such recorded a non cash impairment charge of $36.7 million. We also recorded a loss of approximately $18.0 million of related AOCIL resulting from foreign currency translation adjustments made since the acquisition date in June 2007. Both charges are included in net income from operations within the condensed consolidated statement of operations and comprehensive income (loss).
 
(10) Long-Term Debt
 
Our outstanding long-term debt consists of the following (in thousands):
 
    
 
March 31,
2014
 
December 31,
2013
Term loan facilities due through 2016(1)(2)
$
353,000

 
$
440,000

Term loan unamortized discount
(4,013
)
 
(5,519
)
Senior notes, 10.75% due through 2018
300,000

 
300,000

Senior notes unamortized discount
(2,557
)
 
(2,667
)
Revolving credit facility (3)

 

Total debt
646,430

 
731,814

Less: current portion

 
(65,000
)
Total long-term debt
$
646,430

 
$
666,814

______________________________
(1)
The variable interest rate on borrowings under our senior secured credit facility was 6.75% and 7.25% as of March 31, 2014, and December 31, 2013, respectively. Borrowings under the senior secured credit facility bear interest at a rate equal to Adjusted LIBOR plus 5.00% or ABR plus 4.00% in the case of the senior secured term loan; and Adjusted LIBOR plus 4.50%, or ABR plus 3.50% in the case of the senior secured revolving credit facility.
(2)
$202.2 million and $289.7 million of the term loan balances, for each of the periods ended March 31, 2014 and December 31, 2013, respectively, was held in a restricted cash account as collateral for the Company’s reimbursement obligations with respect to deposit letters of credit.
(3)
Includes a senior secured revolving credit facility due with availability of $105.0 million, of which $65.5 million was used to fund letters of credit issued as of March 31, 2014, with the balance being payable on August 13, 2015.

On August 13, 2010, the Company entered into a senior secured credit facility with JPMorgan Chase Bank, N.A., as the administrative agent and collateral agent, consisting of a senior secured term loan in an aggregate principal amount of $560.0 million at a discount rate of 2.5%, with the balance being payable on August 13, 2016.


13


On February 15, 2013, we entered into Amendment No. 2 to the Credit Agreement and Consent and Waiver (the "Second Loan Amendment"), which became effective on May 24, 2013 upon the consummation of the Merger. Pursuant to the Second Loan Amendment, the lenders and the administrative agent consented to i) a waiver of the change of control provisions and certain other covenants and provisions under the senior secured credit facility; ii) any repayment of our 10.75% Senior Notes due 2018, provided that any payments are funded from equity contributions made to us by ECP or its affiliates; iii) an extension to the maturity date of our senior secured revolving credit facility, subject to certain conditions and acceptance by the extending revolving lenders; and iv) 1% prepayment premium if any senior secured term loan is refinanced prior to the date that is one year following the execution date of the Second Loan Amendment.
    
On October 11, 2013, we entered into Amendment No. 3 to the Credit Agreement (the "Third Loan Amendment"), which extended the mandatory debt prepayment deadline on our collective senior debt to 270 days after the Third Loan Amendment's effective date of October 15, 2013, and increased the applicable margin for our senior secured term loan and revolving credit facility by 0.50% until we reduce the aggregate outstanding amount of senior secured term loan under the amended senior secured credit facility and our 10.75% Senior Notes due 2018 to $675.0 million or less. During the first quarter of 2014, we made principal debt repayments totaling $87.0 million, with funds released from our restricted cash escrow account, bringing the aggregate outstanding principal balance of our debt down to $653.0 million. As a result, as of March 21, 2014, we have met the requirements of the Third Loan Amendment and the interest rates on the senior secured term loan and revolving credit facility decreased by 0.50%.

During 2013, in connection with the execution of amendments to our senior secured credit facility, we paid to our lenders $7.6 million in consent fees, of which $3.2 million was recorded during the three month period ended March 31, 2013. All consent fees were capitalized and are included in other noncurrent assets within the condensed consolidated balance sheet as of March 31, 2014. Parent contributed $3.1 million to fund the payment of these consent fees in 2013. During 2013, we also paid $8.0 million of lead arranger banker fees, of which $2.7 million was recorded during the three month period ended March 31, 2013, and were included in other income, net, within the condensed consolidated statement of operations and comprehensive income (loss). Parent contributed $4.3 million to fund the payment of these lead arranger banker fees in 2013.

Covenants

The senior secured credit facility requires the Company to maintain a leverage ratio (based upon the ratio of indebtedness for money borrowed to consolidated adjusted EBITDA, as defined in the senior secured credit facility) and an interest coverage ratio (based upon the ratio of consolidated adjusted EBITDA to consolidated cash interest expense), both of which are calculated quarterly. Failure to comply with these financial ratio covenants would result in an event of default under the senior secured credit facility and, absent a waiver or an amendment from the lenders, preclude us from making further borrowings under the senior secured credit facility and permit the lenders to accelerate repayment of all outstanding borrowings under the senior secured credit facility. We are required to maintain a maximum total leverage ratio of 4.0 for the quarter ending March 31, 2014, which is reduced by 0.25 on an annual basis through the maturity date. We are required to maintain a minimum cash interest coverage ratio of 2.00 from the quarter ended March 31, 2014 through the quarter ended September 30, 2014 and 2.25 through the maturity date. As of March 31, 2014, our total leverage and cash interest coverage ratios were 2.96 and 2.41, respectively.
 
The senior secured credit facility also contains a number of affirmative and restrictive covenants including limitations on mergers, consolidations and dissolutions, sales of assets, investments and acquisitions, indebtedness, liens, affiliate transactions, and dividends and restricted payments. Under the senior secured credit facility, we are permitted maximum annual capital expenditures of $40.0 million for 2014 and each year thereafter, plus for each year the lesser of (1) a one year carryforward of the unused amount from the previous fiscal year and (2) 50% of the amount permitted for capital expenditures in the previous fiscal year. The senior secured credit facility contains events of default for non-payment of principal and interest when due, a cross-default provision with respect to other indebtedness having an aggregate principal amount of at least $5.0 million and an event of default that would be triggered by a change of control, as defined in the senior secured credit facility. Capital expenditures for the three month period ended March 31, 2014 were $1.2 million. As of March 31, 2014, we were in compliance with all of the covenants under our senior secured credit facility.
 
The obligations under the senior secured credit facility are secured by a lien on substantially all of the assets of the Company and each of the Company’s domestic subsidiary guarantors, including a pledge of equity interests with the exception of the equity interests in our ZionSolutions subsidiary, which includes investments in the NDT fund of approximately $422.5 million as of March 31, 2014, and other special purpose subsidiaries, whose organizational documentation prohibits or limits such pledge.

Senior Notes

14


 
On August 13, 2010, we completed a $300.0 million private offering of 10.75% senior notes at a discount rate of 1.3%. The senior notes are governed by an indenture among EnergySolutions and Wells Fargo Bank, National Association, as trustee. Interest on the senior notes is payable semiannually in arrears on February 15 and August 15 of each year beginning on February 15, 2011. The senior notes rank in equal right of payment to all existing and future senior debt and senior in right of payment to all future subordinated debt.
 
At any time prior to August 15, 2014, we are entitled to redeem all or a portion of the senior notes at a redemption price equal to 100% of the principal amount of the senior notes plus an applicable make-whole premium, as of, and accrued and unpaid interest to, the redemption date. In addition, on or after August 15, 2014, we may redeem all or a portion of the senior notes at the following redemption prices during the 12-month period commencing on August 15 of the years set forth below, plus accrued and unpaid interest to the redemption date.
         
Period
Redemption
Price
2014
105.375
%
2015
102.688
%
2016 and thereafter
100.000
%

The senior notes are guaranteed on a senior unsecured basis by all of our domestic restricted subsidiaries that guarantee the senior secured credit facility. The senior notes and related guarantees are effectively subordinated to our secured obligations, including the senior secured credit facility and related guarantees, to the extent of the value of assets securing such debt. The senior notes are structurally subordinated to all liabilities of each of our subsidiaries that do not guarantee the senior notes. If a change of control of the Company occurs, each holder will have the right to require that we purchase all or a portion of such holder’s senior notes at a purchase price of 101% of the principal amount, plus accrued and unpaid interest to the date of the purchase. The indenture contains, among other things, certain covenants limiting our ability and the ability of one restricted subsidiary to incur or guarantee additional indebtedness, pay dividends or make other restricted payments, make certain investments, create or incur liens, sell assets and subsidiary stock, transfer all or substantially all of our assets, or enter into a merger or consolidation transactions, and enter into transactions with affiliates.
 
Each subsidiary co-issuer and guarantor of our senior notes is exempt from reporting under the Exchange Act, pursuant to Rule 12h-5 under the Exchange Act, as the subsidiary co-issuer and each of the subsidiary guarantors is 100% owned by us, and the obligations of the co-issuer and the guarantees of our subsidiary guarantors are full and unconditional and joint and several. There are no significant restrictions on our ability or any subsidiary guarantor to obtain funds from its subsidiaries.
 
During the three month periods ended March 31, 2014 and 2013, we made cash interest payments totaling $23.6 million and $25.2 million, respectively, related to our outstanding debt obligations as of those dates.

(11) Facility and Equipment Decontamination and Decommissioning
 
Our facility and equipment D&D liabilities consist of the following (in thousands):
 
    
 
March 31,
2014
 
December 31,
2013
Facilities and equipment ARO—Zion Station
$
374,848

 
$
409,190

Facilities and equipment ARO—Clive, UT
27,585

 
28,106

Facilities and equipment ARO—other
44,091

 
35,446

Total facilities and equipment ARO
446,524

 
472,742

Barnwell Closure
3,246

 
3,822

 
449,770

 
476,564

Less: current portion
(97,681
)
 
(98,175
)
 
$
352,089

 
$
378,389

 
We recognize asset retirement obligations ("AROs") when we have a legal obligation to perform D&D and removal activities upon retirement of an asset. The fair value of an ARO liability is recognized in the period in which it is incurred, if a

15


reasonable estimate of fair value can be made, and is added to the carrying amount of the associated asset, which is then depreciated over the remaining useful life of the asset, in the case of all our AROs except the Zion Station ARO. Our ARO is based on a cost estimate for a third party to perform the D&D work. This estimate is inflated, using an inflation rate, to the expected time at which the D&D activity will occur, and then discounted back, using our credit adjusted risk free rate, to the present value.

The ARO established in connection with the Zion Station project differs somewhat from our traditional AROs. The assets acquired in the Zion Station transaction have no fair value, no future useful life and are in a shut-down, non-operating state. As a result, the ARO established in connection with the Zion Station project is not accompanied by a related depreciable asset. Changes to the ARO liability due to accretion expense and changes in cost estimates are recorded in cost of revenue in our condensed consolidated statements of operations and comprehensive income (loss). Also, since we perform most of the work related to the Zion Station ARO with internal resources, we recognized an ARO gain for the difference between our actual costs incurred and the recorded ARO which includes an element of profit. Due to the nature of this contract and the purpose of the license stewardship initiative, we have presented this gain in cost of revenue rather than as a credit to operating expense, as we would with our other AROs.
The following is a roll forward of our facilities and equipment ARO liabilities (in thousands):
 
    
 
March 31,
2014
 
Beginning Balance as of January 1
$
472,742

 
Liabilities incurred(1)
8,766

 
Liabilities settled
(40,552
)
 
Accretion expense
5,568

 
ARO estimate adjustments

 
Ending liability
$
446,524

 
_____________________________
(1) Represents ARO liabilities related to the acquisition of Studsvik, Inc.'s Tennessee processing facilities located in Erwin and Memphis, Tennessee.

Accretion expense represents adjustment to the ARO to reflect the passage of time. Accretion expense for three month periods ended March 31, 2014 and 2013, was $5.6 million and $6.6 million, respectively, and is included within cost of revenue in our condensed consolidated statements of operations and comprehensive income (loss).

Our processing and disposal facilities operate under licenses and permits that require financial assurance for landfill closure, post-closure and remediation obligations. We provide for these requirements through a combination of restricted cash, cash deposits, escrow accounts, letters of credit, surety bonds and/or insurance policies.We also have funds held in trusts for completion of various site clean-up projects. As of March 31, 2014 and December 31, 2013, the closure and post-closure state regulatory requirements for our facilities were $141.9 million and $142.5 million, respectively. These assurance mechanisms do not extinguish our D&D liabilities.

In connection with the execution of the Exelon Agreements, and in fulfillment of NRC regulations, we secured a $200.0 million letter of credit facility to further support the D&D activities at Zion Station. This letter of credit is fully collateralized with cash held in a restricted cash escrow account.
 
(12) Equity-Based Compensation

On May 24, 2013, the board of directors and stockholders of Parent approved the Stock Option Plan of Rockwell Holdco, Inc. (the "Rockwell Plan"), pursuant to which stock options may be granted to the employees, consultants, non-employee directors of Parent or its subsidiaries. Under the Rockwell Plan, 36,087 shares of Parent common stock have been reserved for issuance. Any option granted under the Rockwell Plan will be subject to terms and conditions contained in a written stock option agreement, and any shares of Parent common stock received upon exercise of an option under the Rockwell Plan will be subject to Parent’s Stockholders Agreement. The board of directors of Parent administers the Rockwell Plan and may amend, suspend or terminate the Rockwell Plan at any time.

As of March 31, 2014, 34,867 options had been issued under the Rockwell Plan to employees of the Company. Our estimates of fair value for the stock options were made using the Black‑Scholes model based upon the fair value of the stock

16


price on the date of grant, volatility of 72.2%, risk-free interest rate of 1.39% per year and expected life of 6.5 years. We are currently using the simplified method to calculate expected life, which is based on the average term of the options and the weighted‑average graded vesting period because we do not have sufficient exercise history to calculate an expected holding period. The risk-free rate is based on the U.S. Treasury rate for the expected life at the time of grant.
In connection with our initial public offering, we adopted the EnergySolutions, Inc. 2007 Equity Incentive Plan (the "former Plan"). The former Plan had 10,440,000 shares reserved for issuance of stock options, restricted stock and other equity based awards to directors, officers, employees and consultants. No shares from the former Plan were granted during 2013.
We recognize equity based compensation expense over the instruments' vesting periods based on the instruments' fair values on the measurement date, in SG&A expenses in the condensed consolidated statements of operations and comprehensive income (loss). We recorded $1.1 million and negative $0.3 million of stock based compensation expense for the three month periods ended March 31, 2014, and 2013, respectively. As of March 31, 2014, we had $18.7 million of unrecognized compensation expense related to outstanding stock options, which will be recognized over a weighted-average period of 4.2 years.
We also had a phantom stock plan that provided cash or stock award based on the value of a number of shares to be paid out at the end of a specified period of time at the Company’s closing stock price on the vesting date. For the three month periods ended March 31, 2014 and 2013, we recorded $0 million and $1.6 million, respectively, of compensation expense related to these awards.  
On May 24, 2013, as a result of the completion of the Merger, a change in control occurred that resulted in immediate vesting of all outstanding share-based awards. The acceleration in vesting resulted from a preexisting change in control provision included in the terms of the awards issued under the former Plan. Both, the former Plan and the phantom stock plan were terminated on May 24, 2013. As such, we had no outstanding liabilities related to these plans as of March 31, 2014 or December 31, 2013.
(13) Income Taxes
 
We recognized income tax benefit of $0.5 million and an income tax expense of $6.5 million for the three month periods ended March 31, 2014 and 2013, respectively, for year-to-date effective rates of negative 0.5% and negative 393.6%, respectively, based on an estimated annual effective tax rate method. The income tax benefit arises from income tax expense for certain entities in the U.K. and for the Zion NDT fund offset by a discrete benefit in the quarter related to other entities in the U.K. No benefits from losses in the U.S. are available to offset tax expense due to the full valuation allowance position.

The 2014 effective tax rate differs from the statutory rate of 35% primarily as a result of the small amount of net tax benefit from the U.K. and Zion NDT fund relative to consolidated pretax book losses. The consolidated pretax book losses include large impairment charges in the U.K. for which no benefit is recorded as these amounts are not deductible for income tax purposes. The net income tax benefit for the quarter also includes a discrete benefit of approximately $2.0 million for the release of the valuation allowance against net operating loss deferred tax assets recorded in prior years for certain entities in the U.K. Recently enacted regulations allow the net operating losses of certain U.K. entities, previously subject to a full valuation allowance, to offset the taxable income of other U.K. entities. The realization of the deferred tax asset allowed the valuation allowance to be reversed in the current quarter.

The 2013 negative effective tax rate differs from the statutory rate of 35% primarily as a result of the combination of income tax expense and pretax book losses. Income tax expense arises from income in certain jurisdictions in the U.K. and for the Zion NDT fund. No benefits from losses in the U.S. and other jurisdictions in the U.K. are available to offset tax expense due to their respective full valuation allowance positions. During the three month period ended March 31, 2013, an extension of the research and development credit in the U.S. was signed into law. While the Company fully intends to take advantage of the research and development credit for the 2012 and 2013 tax years, no benefit has been recorded in the financial statements due to the full valuation allowance position in the U.S.

During the first quarter of 2014, the Company received a dividend from the U.K. operations of approximately $29.7 million. As of March 1, 2014, we have approximately $68.0 million of undistributed earnings of non-U.S. operations.  

During the three month periods ended March 31, 2014 and 2013, we made income tax payments, net of income tax refunds, of $2.6 million and $0.9 million, respectively.


17


As of March 31, 2014 and December 31, 2013, we had $0.1 million and $0.1 million, respectively, of gross unrecognized tax benefits. These tax benefits were accounted for under guidance for accounting for uncertainties in income taxes.

(14) Segment Reporting and Business Concentrations
 
During the fourth quarter of 2013, we streamlined our business groups to enable us to evaluate and oversee strategic initiatives more efficiently and to improve future growth and profitability. We report our results through four major operating segments: Projects, Products, LP&D and International. The chief operating decision maker now reviews the operating results of the four new segments.

Certain reclassifications have been made to the segment information reported for prior periods, to conform to current year presentation.

Our International operations derive revenue primarily through a contract with the NDA in the U.K. for the D&D of its ten Magnox nuclear power plant sites. We have exclusively managed the D&D of the Magnox sites for the NDA since June 2007. The operations for this contract are measured in the local currency and then translated into U.S. dollars. The balance sheet accounts, with the exception of retained earnings accounts, are translated using the current exchange rate at the balance sheet date and the operating results are translated using the average rates prevailing throughout the reporting period. The retained earnings equity accounts are translated at historical average rates. Accumulated translation gains or losses are recorded in accumulated other comprehensive income (loss) (“AOCIL”) and are included as a component of comprehensive income.

On March 31, 2014, the NDA announced that our team was not selected as the preferred bidder to manage the D&D of the Magnox sites for the next contract period. As a result, the Company determined that the fair value of the related reporting unit was below its carrying value and as such recorded an impairment of goodwill and intangible assets in the amount of $102.3 million of which $22.2 million relates to AOCIL associated to those assets. The impairment charge is included in net income from operations within the condensed consolidated statement of operations and comprehensive income (loss).

On September 1, 2014, after a five month transition period, the Company will no longer hold the shares of the parent body organization owning the Magnox contract. On this date and in accordance with topic 830-40-10 Derecognition of Cumulative Translation Adjustments upon Loss of Ownership Interest in a Foreign Entity, the Company will derecognize the AOCIL as a component of comprehensive income against the accrued impairment. On this date and in accordance with topic 810-10-40 Derecognition of a Group of Assets, the Company will also deconsolidate the Magnox entity. As of March 31, 2014, the Company held $380.7 million and $388.0 million in total assets and liabilities, respectively, related to that entity. For the three month periods ended March 31, 2014 and 2013, we recognized $318.0 million and $376.3 million, respectively, of revenues related to that entity.

The following table presents the segment information by operating group (in thousands):

 
As of and for the Three Month Period Ended March 31, 2014
 
Projects
 
Products
 
LP&D
 
International
 
Corporate
Unallocated Items
 
Consolidated
Revenue from external customers(1)(2)
$
62,104

 
$
42,175

 
$
51,357

 
$
321,157

 
$

 
$
476,793

Income (loss) from operations(2)(3)(7)
2,856

 
9,547

 
7,407

 
(93,580
)
 
(15,121
)
 
(88,891
)
Depreciation, amortization and accretion expense(4)
5,555

 
520

 
7,805

 
1,978

 
848

 
16,706

Goodwill
40,236

 
17,951

 
208,060

 

 

 
266,247

Other long-lived assets(5)
15,453

 
15,635

 
262,796

 
3,727

 
14,375

 
311,986

Purchases of property, plant and equipment

 

 
757

 

 
401

 
1,158

Total assets(6)
1,080,881

 
65,265

 
543,107

 
458,918

 
103,523

 
2,251,694


18


 
 
As of and for the Three Month Period ended March 31, 2013
 
Projects
 
Products
 
LP&D
 
International
 
Corporate
Unallocated Items
 
Consolidated
Revenue from external customers(1)(2)
$
76,916

 
$
21,297

 
$
46,808

 
$
381,187

 
$

 
$
526,208

Income (loss) from operations(2)(3)
4,584

 
3,791

 
6,683

 
16,919

 
(17,102
)
 
14,875

Depreciation, amortization and accretion expense(4)
6,659

 
513

 
7,385

 
1,898

 
945

 
17,400

Goodwill
40,236

 
17,951

 
208,096

 
39,149

 

 
305,432

Other long-lived assets(5)
17,023

 
17,178

 
254,754

 
44,499

 
13,230

 
346,684

Purchases of property, plant and equipment

 
50

 
2,766

 
5

 
261

 
3,082

Total assets(6)
1,367,047

 
59,739

 
633,854

 
472,173

 
84,703

 
2,617,516

______________________ 
(1)
We eliminate intersegment revenue in consolidation. Intersegment revenue for the three month periods ended March 31, 2014, and 2013 was $0.7 million and $5.5 million, respectively. Revenue by segment represent revenue earned based on third-party billings to customers.
 
(2)
Results of our operations for services provided to our customers in Asia and Europe are included in our Products Group, and for services provided in Canada are included in our LP&D and Projects Groups.

(3)
For the three month periods ended March 31, 2014, and 2013, we recorded $0.3 million and $0.7 million, respectively of income from our unconsolidated joint ventures of which $0.1million and $0.2 million, respectively, of losses are attributable to LP&D operations; and $0.4 million and $0.9 million, respectively, of income is attributable to the Projects Group.

(4)
Depreciation, amortization and accretion expenses ("DA&A") are included in cost of revenue and SG&A expenses in the accompanying condensed consolidated statements of operations and comprehensive income (loss). DA&A expenses included in cost of revenue for the three month periods ended March 31, 2014, and 2013 were $11.5 million and $12.1 million, respectively. DA&A expenses included in SG&A for the three month periods ended March 31, 2014, and 2013, were $5.2 million and $5.3 million, respectively.

(5)
Other long-lived assets include property, plant and equipment and other intangible assets.

(6)
Corporate unallocated assets relate primarily to income tax receivables, deferred tax assets, deferred financing costs, prepaid expenses, and property, plant and equipment that benefit the entire Company and cash.

(7)
Losses from our International operations for the three month period ended March 31, 2014, included a $102.3 million non cash impairment charge related to Goodwill and the customer relationship intangible assets associated to the Magnox contract.
 
(15) Pension Plans
 
Net periodic benefit costs related to the Magnox pension plan consisted of the following (in thousands): 
    
 
For The Three Month
 
 
Period Ended
 
 
March 31,
 
 
2014
 
2013
 
Service cost
$
16,552

 
$
14,216

 
Interest cost
45,559

 
38,726

 
Expected return on plan assets
(54,084
)
 
(45,290
)
 
Net actuarial loss
83

 
78

 
 Total net periodic benefit costs
$
8,110

 
$
7,730

 
 
(16) Restructuring
 

19


In 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.

During 2012, in connection with the plan, we recorded restructuring charges related to severance and employee termination benefits. In February 2013, we announced that we had substantially completed the Restructuring Plan. The corresponding liabilities as of March 31, 2014 and December 31, 2013 were $0.6 million and $1.1 million, respectively, and are included in accrued expenses and other current liabilities and other noncurrent liabilities in the condensed consolidated balance sheets. The remaining unpaid termination benefits are expected to be paid within the next six months.

We also recorded restructuring charges associated with lease and contract terminations. The corresponding accrued liabilities as of March 31, 2014 and December 31, 2013 were $9.1 million and $9.5 million, respectively, of which $7.0 million and $7.3 million, respectively, were included in other long term liabilities in the condensed consolidated balance sheets. For the three month periods ended March 31, 2014 and 2013, we recognized $0 million and $1.8 million, respectively, in restructuring charges associated with lease contract terminations. These charges are included in the condensed consolidated statements of operations and comprehensive income (loss) under cost of revenue related to our LP&D operations. In determining facilities lease loss liability, various assumptions were made, including the time period over which the buildings will be vacant, expected sublease terms and expected sublease rates. Adjustments to this accrual may be required in future periods if events and circumstances change.
 
                                                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, Trawsfynydd 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, 2014. 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. The corresponding liability as of March 31, 2014 and December 31, 2013 was $41.7 million and $46.7 million, respectively, and is included in accrued expenses and other current liabilities and other long term liabilities in the condensed consolidated balance sheets. The remaining liability is expected to be paid over approximately the next 20 months.

The following is a reconciliation of the beginning and ending liability balances related to the Magnox employee termination benefits (in thousands):
  
        
 
March 31,
2014
 
Beginning liability
$
46,728

 
Additions

 
Payments
(5,453
)
 
Effect of exchange rate
398

 
Ending liability
41,673

 
Less current portion
(10,676
)
 
 
$
30,997

 
 
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.
 
(17) Commitments and Contingencies
 
We may become subject to various claims and legal proceedings covering matters that may arise in the ordinary course of our business activities.

20



On March 31, 2014 the NDA announced that our team was not selected as the preferred bidder to manage the D&D of the Magnox sites for the next contract period. We have managed the Magnox sites for the NDA since June 2007 through our subsidiary EnergySolutions EU Limited. As permitted under English law, on April 28, 2014, EnergySolutions EU Limited issued a claim form in the High Court of Justice, Queen’s Bench Division, Technology and Construction Court, in respect of the NDA’s decision to award the rebid of the Magnox Contracts to another bidder. The claim form alleges, among other things, that the NDA failed to properly evaluate certain material submitted by our bid team, applied the evaluation criteria inconsistently, and erred in the assessment in its scoring of the competing bids. EnergySolutions EU Limited is seeking an award of damages and costs. Our teaming partner is not participating in this legal proceeding against the NDA.
(18) Guarantor and Non-Guarantor Financial Information
 
The 2018 senior notes were issued by EnergySolutions, Inc., the parent company, and EnergySolutions, LLC (together with EnergySolutions, Inc., the "Issuers"). The senior notes are jointly and severally guaranteed on a full and unconditional basis by each of the EnergySolutions, Inc.’s current and future domestic 100% owned subsidiaries that are guarantors under the senior secured credit facility, other than ZionSolutions LLC, which was established for the purpose of the Company’s license stewardship initiative, as well as up to five other special purpose subsidiaries that may be established for similar license stewardship projects, and certain other non-operating or immaterial subsidiaries.
 
Presented below is the condensed consolidating financial information of the issuers, our subsidiaries that are guarantors (the "Guarantor Subsidiaries"), and our subsidiaries that are not guarantors (the "Non-Guarantor Subsidiaries"). The condensed consolidating financial information reflects the investments of EnergySolutions, Inc. in the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries using the equity method of accounting.


21


CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For The Three Month Period ended March 31, 2014
(in thousands) 

 
Energy
Solutions,
Inc.
 
Energy
Solutions,
LLC
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$

 
$
18,510

 
$
120,240

 
$
352,456

 
$
(14,413
)
 
$
476,793

Cost of revenue

 
(13,923
)
 
(98,030
)
 
(335,230
)
 
14,413

 
(432,770
)
Gross profit

 
4,587

 
22,210

 
17,226

 

 
44,023

Selling, general and administrative expenses

 
(15,835
)
 
(9,430
)
 
(5,617
)
 

 
(30,882
)
Impairment of goodwill and other intangible assets

 

 

 
(102,324
)
 

 
(102,324
)
Equity in income of unconsolidated joint ventures

 

 
292

 

 

 
292

Operating income (loss)

 
(11,248
)
 
13,072

 
(90,715
)
 

 
(88,891
)
Interest expense

 
(17,187
)
 

 
(4,169
)
 

 
(21,356
)
Income (loss) from subsidiaries
(100,913
)
 
(72,512
)
 

 

 
173,425

 

Other, net

 
34

 
29,790

 
(18,206
)
 

 
11,618

Income (loss) before income taxes
(100,913
)
 
(100,913
)
 
42,862

 
(113,090
)
 
173,425

 
(98,629
)
Provision for income taxes
2,802

 

 

 
(2,285
)
 

 
517

Net income (loss)
(98,111
)
 
(100,913
)
 
42,862

 
(115,375
)
 
173,425

 
(98,112
)
Less: net loss attributable to noncontrolling interests

 

 
1

 

 

 
1

Net income (loss) attributable to EnergySolutions
$
(98,111
)
 
$
(100,913
)
 
$
42,863

 
$
(115,375
)
 
$
173,425

 
$
(98,111
)
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income (loss):
 

 
 

 
 

 
 

 
 

 
 

Net income (loss)
(98,111
)
 
(100,913
)
 
42,862

 
(115,375
)
 
173,425

 
(98,112
)
Foreign currency translation adjustments, net of taxes

 

 

 
840

 

 
840

Change in unrecognized actuarial loss

 

 

 
(126
)
 

 
(126
)
Other comprehensive income (loss)
(98,111
)
 
(100,913
)
 
42,862

 
(114,661
)
 
173,425

 
(97,398
)
Less: net loss attributable to noncontrolling interests

 

 
1

 

 

 
1

Comprehensive income (loss) attributable to EnergySolutions
$
(98,111
)
 
$
(100,913
)
 
$
42,863

 
$
(114,661
)
 
$
173,425

 
$
(97,397
)


22




 
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For The Three Month Period ended March 31, 2013
(in thousands)
 
 
Energy
Solutions,
Inc.
 
Energy
Solutions,
LLC
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$

 
$
11,275

 
$
96,895

 
$
431,052

 
$
(13,014
)
 
$
526,208

Cost of revenue

 
(7,195
)
 
(80,077
)
 
(405,530
)
 
13,014

 
(479,788
)
Gross profit

 
4,080

 
16,818

 
25,522

 

 
46,420

Selling, general and administrative expenses

 
(17,492
)
 
(9,975
)
 
(4,754
)
 

 
(32,221
)
Equity in income of unconsolidated joint ventures

 

 
676

 

 

 
676

Operating income (loss)

 
(13,412
)
 
7,519

 
20,768

 

 
14,875

Interest expense

 
(15,190
)
 

 
(3,455
)
 

 
(18,645
)
Income (loss) from subsidiaries
(6,236
)
 
24,772

 

 

 
(18,536
)
 

Other, net

 
(2,406
)
 
163

 
4,354

 

 
2,111

Income (loss) before income taxes
(6,236
)
 
(6,236
)
 
7,682

 
21,667

 
(18,536
)
 
(1,659
)
Benefit from (provision for) income taxes
(1,964
)
 

 

 
(4,575
)
 

 
(6,539
)
Net income (loss)
(8,200
)
 
(6,236
)
 
7,682

 
17,092

 
(18,536
)
 
(8,198
)
Less: net income attributable to noncontrolling interests

 

 

 
(2
)
 

 
(2
)
Net income (loss) attributable to EnergySolutions
$
(8,200
)
 
$
(6,236
)
 
$
7,682

 
$
17,090

 
$
(18,536
)
 
$
(8,200
)
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income (loss):
 

 
 

 
 

 
 

 
 

 
 

Net income (loss)
(8,200
)
 
(6,236
)
 
7,682

 
17,092

 
(18,536
)
 
(8,198
)
Foreign currency translation adjustments, net of taxes

 

 

 
(8,687
)
 

 
(8,687
)
Change in unrecognized actuarial gain

 

 

 
(478
)
 

 
(478
)
Other comprehensive income (loss)
(8,200
)
 
(6,236
)
 
7,682

 
7,927

 
(18,536
)
 
(17,363
)
Less: net income attributable to noncontrolling interests

 

 

 
(2
)
 

 
(2
)
Comprehensive income (loss) attributable to EnergySolutions
$
(8,200
)
 
$
(6,236
)
 
$
7,682

 
$
7,925

 
$
(18,536
)
 
$
(17,365
)


23


CONDENSED CONSOLIDATING BALANCE SHEET
As of March 31, 2014
(in thousands)
 
Energy
Solutions,
Inc.
 
Energy
Solutions,
LLC
 
Guarantor
Subsidiaries
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 

 
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
$

 
$
39,487

 
$
4,643

 
$
21,449

 
$

 
$
65,579

Accounts receivable, net of allowance for doubtful accounts

 
10,769

 
53,570

 
277,343

 
(1,144
)
 
340,538

Costs and estimated earnings in excess of billings on uncompleted contracts

 
9,080

 
40,701

 
28,234

 
(2,746
)
 
75,269

Nuclear decommissioning trust fund investments, current portion

 

 

 
110,359

 

 
110,359

Deferred costs, current portion

 

 
7,873

 
93,319

 

 
101,192

Other current assets

 
9,405

 
5,393

 
807

 

 
15,605

Total current assets

 
68,741

 
112,180

 
531,511

 
(3,890
)
 
708,542

Property, plant and equipment, net

 
74,975

 
54,860

 
1,830

 

 
131,665

Goodwill

 
35,769

 
228,116

 
2,362