Restructuring

During the fourth quarter of 2011, we announced the approval of projects to restructure our manufacturing operations to increase efficiency and lower our cost of manufacturing. We began implementing these projects in the fourth quarter of 2011, and we expect to substantially complete these projects by the end of 2013.

Certain projects are subject to a variety of labor and employment laws, rules, and regulations, which could result in a delay in implementing projects at some locations. Future real estate market conditions may impact the timing of our ability to sell some of the manufacturing facilities we have designated for closure and disposal. This may delay the completion of the restructuring projects beyond 2013.

The total expected costs of $85.5 million for the restructuring projects did not change from the total expected costs at December 31, 2011. The total expected restructuring costs, the costs recognized in prior periods, the restructuring costs recognized during the three months ended March 31, 2012, and the remaining restructuring costs as of March 31, 2012 are as follows:



	Total Expected Costs at March 31, 2012		Costs Recognized in Prior Periods		Costs Recognized During the Three Months Ended March 31, 2012		Remaining Costs to be Recognized at March 31, 2012
	(in thousands)
Employee severance costs	$	52,031	$	42,530	$	539	$	8,962
Asset impairments	25,547		25,144		—		403
Other restructuring costs	7,913		408		250		7,255
Total	$	85,491	$	68,082	$	789	$	16,620

Segments:
Energy	$	62,603	$	51,873	$	603	$	10,127
Water	17,491		15,321		18		2,152
Corporate unallocated	5,397		888		168		4,341
Total	$	85,491	$	68,082	$	789	$	16,620

Other restructuring costs includes expenses to exit the facilities once the operations in those facilities have ceased. Costs associated with restructuring activities are generally presented as restructuring expense in the Consolidated Statements of Operations, except for certain costs associated with inventory write-downs, which are classified within cost of revenues, and accelerated depreciation expense, which is recognized according to the use of the asset.

The following table summarizes the activity within the restructuring related balance sheet accounts during the three months ended March 31, 2012:



	Accrued Employee Severance			Asset Impairments & Net Loss (Gain) on Sale or Disposal		Other Accrued Costs			Total
	(in thousands)
Beginning balance, January 1, 2012	$	28,168		$	—	$	399		$	28,567
Costs incurred and charged to expense	539			—		250			789
Cash payments	(3,337		)	—		(498		)	(3,835		)
Non-cash items	—			—		—			—
Effect of change in exchange rates	786			—		—			786
Ending balance, March 31, 2012	$	26,156		$	—	$	151		$	26,307

Asset impairments are determined at the asset group level. There were no asset impairments recognized during the three months ended March 31, 2012.

The current and long-term portions of the restructuring related liability balance as of March 31, 2012 were $25.9 million and $400,000, which are classified within other current liabilities and other long-term liabilities, respectively, on the Consolidated Balance Sheets.

There were no significant long-lived assets that were recognized at fair value during the three months ended March 31, 2012.

As a result of our restructuring activities, we expect to achieve annualized cost savings of approximately $30 million by the end of 2013. In the second half of 2012, we anticipate savings of approximately $15 million. Revenues and net operating income from the activities we will exit are not material to our operating segments or consolidated results.