COMMITMENTS AND CONTINGENCIES

Commitments

We lease land, buildings and equipment under various leases. The leases frequently include renewal options and escalation clauses and require us to pay for utilities, taxes, insurance and maintenance expenses.

Future minimum payments, by year and in the aggregate, under capital leases, non-cancelable operating leases and related subleases with initial or remaining terms of one or more years at December 31, 2017, were as follows (in thousands):



	Capital Leases			Operating Leases		Sublease Income
2018	$	1,478		$	73,425	$	607
2019	1,778			64,177		309
2020	1,013			51,615		216
2021	422			39,668		125
2022	38			25,760		34
Thereafter	14			48,472		—
Total minimum lease payments	4,743			$	303,117	$	1,291
Amounts representing interest	(172		)
Present value of net minimum lease payments	$	4,571

Rent expense for operating leases and other rental items, including short-term equipment rentals charged to cost of sales, for the years ended December 31, 2017, 2016 and 2015 was $158.8 million, $143.1 million and $122.0 million, respectively. Rent expense for the years ended December 31, 2017, 2016 and 2015 was reported net of sublease rental income of $0.6 million, $0.6 million and $1.2 million, respectively.

Contractual Guarantees

We have agreements with our executive officers and certain other key management personnel providing for severance benefits for such employees upon termination of their employment under certain circumstances.

In the ordinary course of business, we, at times, guarantee obligations of our subsidiaries under certain contracts. Generally, we are liable under such an arrangement only if our subsidiary fails to perform its obligations under the contract. Historically, we have not incurred any substantial liabilities as a consequence of these guarantees.

The terms of our construction contracts frequently require that we obtain from surety companies (“Surety Companies”) and provide to our customers payment and performance bonds (“Surety Bonds”) as a condition to the award of such contracts. The Surety Bonds secure our payment and performance obligations under such contracts, and we have agreed to indemnify the Surety Companies for amounts, if any, paid by them in respect of Surety Bonds issued on our behalf. In addition, at the request of labor unions representing certain of our employees, Surety Bonds are sometimes provided to secure obligations for wages and benefits payable to or for such employees. Public sector contracts require Surety Bonds more frequently than private sector contracts and, accordingly, our bonding requirements typically increase as the amount of public sector work increases. As of December 31, 2017, based on our percentage-of-completion of our projects covered by Surety Bonds, our aggregate estimated exposure, assuming defaults on all our then existing contractual obligations, was approximately $927.3 million. Surety Bonds are issued by Surety Companies in return for premiums, which vary depending on the size and type of bond.

We are subject to regulation with respect to the handling of certain materials used in construction, which are classified as hazardous or toxic by federal, state and local agencies. Our practice is to avoid participation in projects principally involving the remediation or removal of such materials. However, when remediation is required as part of our contract performance, we believe we comply with all applicable regulations governing the discharge of material into the environment or otherwise relating to the protection of the environment.

At December 31, 2017, we employed approximately 32,000 people, approximately 57% of whom are represented by various unions pursuant to approximately 400 collective bargaining agreements between our individual subsidiaries and local unions. We believe that our employee relations are generally good. Only two of these collective bargaining agreements are national or regional in scope.

Restructuring expenses, primarily related to employee severance obligations, were $1.6 million, $1.4 million and $0.8 million for 2017, 2016 and 2015, respectively. As of December 31, 2017, 2016 and 2015, the balance of our restructuring related obligations yet to be paid was $0.5 million, $0.2 million and $0.1 million, respectively. The majority of obligations outstanding as of December 31, 2016 and 2015 were paid during 2017 and 2016, respectively. The obligations outstanding as of December 31, 2017 will be paid throughout 2018. No material expenses in connection with restructuring from continuing operations are expected to be incurred during 2018.

The changes in restructuring activity by reportable segments during the years ended December 31, 2017 and December 31, 2016 were as follows (in thousands):



	United States electrical construction and facilities services segment		United States mechanical construction and facilities services segment			United States building services segment			Total
Balance at December 31, 2015	$	—	$	—		$	81		$	81
Charges	—		519			919			1,438
Payments	—		(331		)	(987		)	(1,318		)
Balance at December 31, 2016	—		188			13			201
Charges	452		180			945			1,577
Payments	—		(368		)	(918		)	(1,286		)
Balance at December 31, 2017	$	452	$	—		$	40		$	492

A summary of restructuring expenses by reportable segments recognized for the year ended December 31, 2017 was as follows (in thousands):



	United States electrical construction and facilities services segment		United States mechanical construction and facilities services segment		United States building services segment		Total
Severance	$	391	$	180	$	945	$	1,516
Leased facilities	61		—		—		61
Total charges	$	452	$	180	$	945	$	1,577

Government Contracts

As a government contractor, we are subject to U.S. government audits and investigations relating to our operations, fines, penalties and compensatory and treble damages, and possible suspension or debarment from doing business with the government. Based on currently available information, we believe the outcome of ongoing government disputes and investigations will not have a material impact on our financial position, results of operations or liquidity.

Legal Matters

One of our subsidiaries was a subcontractor to a mechanical contractor (“Mechanical Contractor”) on a construction project where an explosion occurred in 2010. The Mechanical Contractor has asserted claims, in the context of an arbitration proceeding against our subsidiary, alleging that our subsidiary is responsible for a portion of the damages for which the Mechanical Contractor may be liable as a result of: (a) personal injury suffered by individuals as a result of the explosion and (b) the Mechanical Contractor’s legal fees and associated management costs in defending against any and all such claims. The Mechanical Contractor previously asserted claims under the Connecticut and Massachusetts Unfair and Deceptive Practices Acts, but such claims have been withdrawn. The general contractor (as assignee of the Mechanical Contractor) on the construction project, and for whom the Mechanical Contractor worked, has alleged that our subsidiary is responsible for losses asserted by the owner of the project and/or the general contractor because of delays in completion of the project and for damages to the owner’s property. We believe, and have been advised by counsel, that we have a number of meritorious defenses to all such matters. We believe that the ultimate outcome of such matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity. Notwithstanding our assessment of the final impact of this matter, we are not able to estimate with any certainty the amount of loss, if any, which would be associated with an adverse resolution.

We are involved in several other proceedings in which damages and claims have been asserted against us. We believe that we have a number of valid defenses to such proceedings and claims and intend to vigorously defend ourselves. Other potential claims may exist that have not yet been asserted against us. We do not believe that any such matters will have a material adverse effect on our financial position, results of operations or liquidity. Litigation is subject to many uncertainties and the outcome of litigation is not predictable with assurance. It is possible that some litigation matters for which liabilities have not been recorded could be decided unfavorably to us, and that any such unfavorable decisions could have a material adverse effect on our financial position, results of operations or liquidity.