RESTRUCTURING

On October 6, 2014, the Company’s board of directors approved the 2014 Restructuring to improve gross margins and profitability in the long term by exiting low-return businesses and reducing the size and cost of the Company’s overhead structure.

The 2014 Restructuring included exiting certain unprofitable international locations for the Company’s Insituform business, consolidating the Company’s worldwide Fyfe business with the Company’s global Insituform business and shutting down certain idle facilities in the Company’s Bayou Louisiana coatings operations.

As of March 31, 2015, significant progress had been made against all of the aforementioned objectives. Headcount reductions totaled 13 in the first quarter of 2015, and 31 for the year ended December 31, 2014. The Company expects approximately 65 additional headcount reductions to occur throughout the remainder of 2015 as the Company substantially completes its 2014 Restructuring.

In December 2014, and as part of the restructuring, the Company sold its wholly-owned subsidiary, Ka-te, the Company’s Swiss contracting operation, to Marco Daetwyler Gruppe AG, a Swiss company. In connection with the sale, the Company entered into a five-year tube supply agreement whereby Ka-te will source liners from Insituform Linings Ltd. Ka-te will also be entitled to continue to use its trade name based on a trade mark license granted for the same five-year time period.

In February 2015, and in connection with the 2014 Restructuring, the Company sold its wholly-owned subsidiary, VII, the Company’s French CIPP contracting operation, to certain employees of VII. In connection with the sale, the Company entered into a five-year exclusive tube supply agreement whereby VII will source liners from Insituform Linings Ltd. VII will also be entitled to continue to use its trade name based on a trade mark license granted for the same five-year time period.

During the first quarter of 2015, the Company recorded pre-tax expense of $3.5 million ($3.3 million post-tax) for charges related to the 2014 Restructuring as follows (in thousands):



	Quarter Ended March 31, 2015
Severance and benefit related costs	$	516
Lease termination costs	141
Bad debt expense	(999		)
Currency translation	409
Other restructuring costs ⁽¹⁾	3,471
Total pre-tax restructuring charges ⁽²⁾	$	3,538

__________________________


⁽¹⁾	Includes charges related to the write-off of certain other assets, including the loss on the CIPP contracting operation in France, professional fees and certain other restructuring charges.


⁽²⁾	All current period restructuring charges relate to the Infrastructure Solutions reportable segment.

Restructuring costs of $0.7 million for the quarter ended March 31, 2015 are reported on a separate line in the Consolidated Statements of Operations in accordance with FASB ASC 420, Exit or Disposal Cost Obligations, and relate to severance, other termination benefit costs and early lease termination costs. The following tables summarize all restructuring charges recognized in the first quarter of 2015 as presented in their affected line in the Consolidated Statements of Operations:



	Other Non-Cash Restructuring Charges (Reversals)			Cash Restructuring Charges		Total
Cost of revenues	$	(166	)	$	180	$	14
Operating expenses	(1,021		)	1,153		132
Restructuring charges	—			658		658
Other expense	2,692			42		2,734
Total pre-tax restructuring charges ⁽¹⁾	$	1,505		$	2,033	$	3,538

__________________________


⁽¹⁾	All current period restructuring charges relate to the Infrastructure Solutions reportable segment.

Total pre-tax restructuring charges to date were $53.1 million ($39.4 million post-tax) and consisted of non-cash charges totaling $45.4 million and cash charges totaling $7.7 million. The non-cash charges of $45.4 million included $22.2 million related to the impairment of certain long-lived assets and definite-lived intangible assets for Bayou’s coating operations in Louisiana, which is reported in the Corrosion Protection reportable segment, and $23.2 million related to inventory obsolescence, impairment definite-lived intangible assets, allowances for accounts receivable, currency translation adjustments, write-off of certain other current assets and long-lived assets as well as a legal accrual related to disputed work performed by our European and Asia-Pacific operations, which are reported in the Infrastructure Solutions reportable segment. The cash charges of $7.7 million included employee severance, retention, extension of benefits, employment assistance programs, early lease termination costs and other costs associated with the restructuring of Insituform’s European and Asia-Pacific operations and Fyfe’s worldwide business.

Estimated remaining costs to be incurred in 2015, including totals and category ranges, for the 2014 Restructuring are as follows:


•	Approximately $1 million to $2 million related to severance and benefit costs; and


•	Approximately $3 million to $4 million related to other restructuring costs.

The following table summarizes the 2014 Restructuring activity during the first quarter of 2015 (in thousands):



									Utilized
	Reserves at December 31, 2014		Charge (Reversal) to Income			Foreign Currency Translation			Cash		Non-Cash			Reserves at March 31, 2015
Severance and benefit related costs	$	466	$	516		$	(2	)	$	82	$	—		$	898
Lease termination expenses	—		141			—			141		—			—
Bad debt expense	11,464		(999		)	(1		)	—		(124		)	10,588
Currency translation	—		409			—			—		409			—
Other restructuring costs	2,496		3,471			(102		)	1,297		2,163			2,405
Total pre-tax restructuring charges	$	14,426	$	3,538		$	(105	)	$	1,520	$	2,448		$	13,891