U.K. OPERATIONS OPTIMIZATION:

In 2018, the Company reorganized its U.K. business into three service platforms: Rail (Intermodal and Heavy Haul), Road (former Freightliner and Pentalver road operations) and Terminals (former Freightliner and Pentalver terminals), with a single combined commercial organization responsible for selling all three services. The Company also announced a program to restructure and further optimize its operations in the U.K. that began in May 2018 and is intended to be completed by early 2019. The program includes the rationalization of the locomotive and railcar fleet, management restructuring (following the U.K. consultative process), and technology investments to upgrade systems to enhance productivity and service quality. Restructuring and related expenses associated with the optimization are expected to be approximately $55 million (assuming the adjustment described in footnote (a) below does not occur and an exchange rate of $1.40 for one British pound) and are comprised of the following, including the current estimate of the timing of the related charges, which is subject to change (dollars in thousands):



	Three and Six Months Ended June 30, 2018		Estimated Total Restructuring and Related Costs
Rationalization of locomotive and railcar fleet^(a)	$	5,938	$	29,000
Management restructuring^(b)	2,129		9,000
Productivity and automation investments	1,288		17,000
Total	$	9,355	$	55,000


(a)	Strengthening commercial demand for bulk commodity shipments may result in less restructuring and related expense if new business is contracted for a higher profit using the excess equipment.


(b)	Subject to requisite U.K. consultative process.

Restructuring and related activity for the U.K. Operations Optimization program for the six months ended June 30, 2018 was as follows (dollars in thousands):



	Rationalization of Locomotive and Railcar Fleet			Management Restructuring			Productivity and Automation Investments			Total
Restructuring and related liability as of December 31, 2017	$	—		$	—		$	—		$	—
Restructuring and related costs incurred	5,938			2,129			1,288			9,355
Cash payments	(307		)	(620		)	(1,065		)	(1,992		)
Non-cash settlements	(897		)	—			(223		)	(1,120		)
Restructuring and related liability as of June 30, 2018	$	4,734		$	1,509		$	—		$	6,243