RESTRUCTURING

2017 Restructuring

On July 28, 2017, the Company’s board of directors approved the 2017 Restructuring to: (i) divest the Company’s pipe coating and insulation businesses in Louisiana, The Bayou Companies, LLC and Bayou Wasco Insulation, LLC (collectively “Bayou”); (ii) exit all non-pipe related contract applications for the Tyfo^® system in North America; (iii) right-size the cathodic protection services operation in Canada; and (iv) reduce corporate and other operating costs. These decisions reflected the Company’s: (a) desire to reduce further its exposure in the North American upstream oil and gas markets; (b) assessment of its ability to drive sustainable, profitable growth in the non-pipe FRP contracting market in North America; and (c) assessment of continuing weak conditions in the Canadian oil and gas markets. During the third quarter of 2017, the Company also completed a detailed assessment of Infrastructure Solutions’ CIPP businesses in Australia and Denmark, which resulted in additional restructuring actions in both countries.

During 2017, total pre-tax 2017 Restructuring charges recorded were $23.7 million ($20.6 million post-tax), which consisted of cash charges of $13.6 million and non-cash charges of $10.1 million, related to employee severance, retention, extension of benefits, employment assistance programs, early lease termination and other restructuring costs associated with the restructuring efforts described above. The Company expects to incur additional charges of $5 million to $7 million, most of which are expected to be cash charges incurred in 2018. These charges are mainly in Infrastructure Solutions and, to a lesser extent, Corrosion Protection. The Company reduced headcount by approximately 300 employees as a result of these actions.

During 2017, the Company recorded pre-tax expenses related to the 2017 Restructuring as follows (in thousands):



	Infrastructure Solutions		Corrosion Protection		Total
Severance and benefit related costs	$	4,587	$	2,758	$	7,345
Lease and contract termination costs	4,545		775		5,320
Relocation and other moving costs	26		121		147
Other restructuring costs ⁽¹⁾	8,668		2,263		10,931
Total pre-tax restructuring charges ⁽²⁾	$	17,826	$	5,917	$	23,743

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⁽¹⁾	Includes charges primarily related to exiting non-pipe-related applications for the Tyfo^® system in North America and right-sizing the cathodic protection services operation in Canada, inclusive of wind-down costs, professional fees, patent write offs, fixed asset disposals and certain other restructuring and related charges.


⁽²⁾	Includes $1.3 million of corporate-related restructuring charges that have been allocated to the Infrastructure Solutions and Corrosion Protection reportable segments.

2017 Restructuring costs related to severance, other termination benefit costs and early lease and contract termination costs were $12.8 million in 2017 and are reported on a separate line in the Consolidated Statements of Operations.

The following table summarizes all charges related to the 2017 Restructuring recognized in 2017 as presented in their affected line in the Consolidated Statements of Operations (in thousands):



	Infrastructure Solutions		Corrosion Protection		Total ⁽¹⁾
Cost of revenues	$	30	$	15	$	45
Operating expenses	8,636		2,248		10,884
Restructuring and related charges	9,160		3,654		12,814
Total pre-tax restructuring charges	$	17,826	$	5,917	$	23,743

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⁽¹⁾	Total pre-tax restructuring charges include cash charges of $13.6 million and non-cash charges of $10.1 million. Cash charges consist of charges incurred during the year that will be settled in cash, either during the current period or future periods.

The following table summarizes the 2017 Restructuring activity during 2017 (in thousands):



	2017 Charge to Income		Utilized in 2017				Reserves at December 31, 2017
	2017 Charge to Income		Cash⁽¹⁾		Non-Cash		Reserves at December 31, 2017
Severance and benefit related costs	$	7,345	$	3,481	$	—	$	3,864
Lease and contract termination costs	5,320		2,706		1,964		650
Relocation and other moving costs	147		147		—		—
Other restructuring costs	10,931		2,140		8,116		675
Total pre-tax restructuring charges	$	23,743	$	8,474	$	10,080	$	5,189

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⁽¹⁾	Refers to cash utilized to settle charges during 2017.

2016 Restructuring

On January 4, 2016, the Company’s board of directors approved the 2016 Restructuring to reduce its exposure to the upstream oil markets and to reduce consolidated expenses. During 2016, the Company completed its restructuring, which included repositioning Energy Services’ upstream operations in California, reducing Corrosion Protection’s upstream exposure by divesting its interest in a Canadian pipe coating joint venture, right-sizing Corrosion Protection to compete more effectively and reducing corporate and other operating costs. The 2016 Restructuring reduced consolidated annual expenses by approximately $17.4 million, of which approximately $1.2 million, $6.6 million and $5.6 million related to recognized savings within Infrastructure Solutions, Corrosion Protection and Energy Services, respectively, and $4.0 million related to reduced corporate costs. Cost savings were achieved primarily through office closures and reducing headcount by 964 employees, or 15.5% of the Company’s total workforce as of December 31, 2015.

The Company recorded total pre-tax charges, most of which were cash charges, of $16.1 million ($10.3 million post-tax) in connection with the 2016 Restructuring. These charges included employee severance, retention, extension of benefits, early lease termination and other restructuring costs associated with the restructuring efforts described above.

During 2016, the Company recorded pre-tax expense related to the 2016 Restructuring as follows (in thousands):



	Year Ended December 31, 2016
	Infrastructure Solutions		Corrosion Protection		Energy Services		Total
Severance and benefit related costs	$	2,249	$	3,588	$	1,559	$	7,396
Lease termination costs	—		154		983		1,137
Relocation and other moving costs	307		62		193		562
Other restructuring costs ⁽¹⁾	808		761		5,436		7,005
Total pre-tax restructuring charges ⁽²⁾	$	3,364	$	4,565	$	8,171	$	16,100

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⁽¹⁾	For Energy Services, includes charges primarily related to downsizing the Company’s upstream operations in California, inclusive of wind-down costs, professional fees, fixed asset disposals and certain other restructuring charges.


⁽²⁾	Includes $1.4 million of corporate-related restructuring charges that have been allocated to the Infrastructure Solutions, Corrosion Protection and Energy Services reportable segments.

2016 Restructuring costs related to severance, other termination benefit costs and early lease termination costs were $9.1 million in 2016 and reported on a separate line in the Consolidated Statements of Operations.

The following tables summarize all charges related to the 2016 Restructuring recognized in 2016 as presented in their affected line in the Consolidated Statements of Operations (in thousands):



	Year Ended December 31, 2016
	Infrastructure Solutions		Corrosion Protection		Energy Services		Total ⁽¹⁾
Cost of revenues	$	—	$	278	$	—	$	278
Operating expenses	559		483		5,436		6,478
Restructuring and related charges	2,557		3,803		2,735		9,095
Other expense	249		—		—		249
Total pre-tax charges	$	3,365	$	4,564	$	8,171	$	16,100

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⁽¹⁾	Total pre-tax restructuring charges include cash charges of $15.3 million and non-cash charges of $0.8 million for in 2016. Cash charges consist of charges incurred during the period that will be settled in cash, either during the current period or future periods.

The following tables summarize the 2016 Restructuring activity during 2017 and 2016 (in thousands):



	Reserves at December 31, 2016		2017 Charge to Income		Utilized in 2017				Reserves at December 31, 2017
	Reserves at December 31, 2016		2017 Charge to Income		Cash ⁽¹⁾		Non-Cash		Reserves at December 31, 2017
Severance and benefit related costs	$	645	$	—	$	645	$	—	$	—
Lease termination costs	125		—		125		—		—
Relocation and other moving costs	10		—		10		—		—
Other restructuring costs	120		—		120		—		—
Total pre-tax restructuring charges	$	900	$	—	$	900	$	—	$	—

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⁽¹⁾	Refers to cash utilized to settle charges during 2017.



	2016 Charge to Income		Utilized in 2016				Reserves at December 31, 2016
	2016 Charge to Income		Cash ⁽¹⁾		Non-Cash		Reserves at December 31, 2016
Severance and benefit related costs	$	7,396	$	6,751	$	—	$	645
Lease termination costs	1,137		1,012		—		125
Relocation and other moving costs	562		552		—		10
Other restructuring costs	7,005		6,120		765		120
Total pre-tax restructuring charges	$	16,100	$	14,435	$	765	$	900

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⁽¹⁾	Refers to cash utilized to settle charges during 2016.

2014 Restructuring

On October 6, 2014, the Company’s board of directors approved the 2014 Restructuring to improve gross margins and profitability over the long term by exiting certain unprofitable international locations for the Company’s CIPP business and eliminating certain idle facilities in the Company’s pipe coating and insulation operation in Louisiana.

The Company completed all of the aforementioned objectives related to the 2014 Restructuring and reduced consolidated annual operating costs by approximately $10.8 million, consisting of approximately $8.4 million and $2.4 million of recognized savings within Infrastructure Solutions and Corrosion Protection, respectively.

Total pre-tax 2014 Restructuring charges since inception were $60.6 million ($45.0 million post-tax) and consisted of non-cash charges totaling $48.3 million and cash charges totaling $12.3 million. The non-cash charges of $48.3 million included: (i) $22.2 million related to the impairment of certain long-lived assets and definite-lived intangible assets for Bayou’s pipe coating operation in Louisiana; and (ii) $26.1 million related to impairment of definite-lived intangible assets, allowances for accounts receivable, write-off of certain other current assets and long-lived assets, inventory obsolescence, as well as losses related to the sales of the Company’s CIPP contracting operations in France and Switzerland, which were reported in Infrastructure Solutions. Cash charges totaling $12.3 million included employee severance, retention, extension of benefits, employment assistance programs and other costs associated with the restructuring of Insituform’s European and Asia-Pacific operations and Fyfe’s worldwide business.

The Company recorded pre-tax expenses (reversals) of $0.2 million, $(0.2) million and $11.0 million in 2017, 2016 and 2015, respectively, related to the 2014 Restructuring.