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. 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 restructuring costs as of December 31, 2012 were $77.8 million, which is a decrease of approximately $7.7 million from the total expected costs at December 31, 2011. This decrease was primarily the result of gains on the dispositions of fixed assets and a correction to the amount of goodwill allocated to one of our non-core businesses sold as part of the restructuring process. In addition, expected severance costs were reduced as the result of certain employees, in positions that were eliminated under the restructuring plan, filling vacant positions within the Company.

The total expected restructuring costs, the costs recognized in prior periods, the restructuring costs recognized during the year ended December 31, 2012, and the remaining expected restructuring costs as of December 31, 2012 are as follows:



	Total Expected Costs at December 31, 2012		Costs Recognized in Prior Periods		Costs Recognized During the Year Ended December 31, 2012			Remaining Costs to be Recognized at December 31, 2012
	(in thousands)
Employee severance costs	$	47,891	$	42,530	$	1,666		$	3,695
Asset impairments	21,351		25,144		(4,839		)	1,046
Other restructuring costs	8,592		408		4,838			3,346
Total	$	77,834	$	68,082	$	1,665		$	8,087

Segments:
Energy	$	55,987	$	51,873	$	1,317		$	2,797
Water	16,127		15,321		(765		)	1,571
Corporate unallocated	5,720		888		1,113			3,719
Total	$	77,834	$	68,082	$	1,665		$	8,087

Other restructuring costs include expenses to exit the facilities once the operations in those facilities have ceased. Costs associated with restructuring activities are generally presented in the Consolidated Statements of Operations as restructuring, 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 year ended December 31, 2012:



	Accrued Employee Severance			Asset Impairments & Net (Gain) Loss 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	1,666			(4,839		)	4,838			1,665
Cash payments	(15,717		)	—			(1,919		)	(17,636		)
Non-cash items	—			4,839			—			4,839
Effect of change in exchange rates	381			—			(102		)	279
Ending balance, December 31, 2012	$	14,498		$	—		$	3,216		$	17,714

Asset impairments are determined at the asset group level. Assets held for sale are classified within other current assets and are reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated or amortized. During the year-ended December 31, 2012, we adjusted the estimated impairment of certain assets and recognized gains on the sale of various asset groups. As part of the sale of a non-core business in Europe, $675,000 of goodwill was allocated to the business and charged to asset impairment restructuring expense. In addition, during the third quarter of 2012, we corrected an overstatement of $5.4 million in restructuring expense, originally recognized during the year ended December 31, 2011, for the goodwill allocated to a non-core business in North America that was sold in May 2012. See Note 5 for additional information related to the goodwill impairment correction.

The current portions of the restructuring related liability balances were $13.2 million and $25.6 million as of December 31, 2012 and 2011, respectively. The current portion of the liability is classified within "Other current liabilities" on the Consolidated Balance Sheets. The long-term portions of the restructuring related liability related balances were $4.5 million and $3.0 million as of December 31, 2012 and 2011, respectively. The long term portion of the restructuring liability is classified within "Other long-term liabilities" on the Consolidated Balance Sheets.

The following table includes long-lived assets held for sale and long-lived assets held and used that were measured at fair value on a nonrecurring basis as of December 31, 2012 and 2011, and the related recognized losses for the years ended December 31, 2012 and 2011:



	Net Carrying Value		Fair Value Measurement (Level 3)		Total Loss Recognized
	(in thousands)
2012
Long-lived assets held for sale	$	3,184	$	3,184	$	2

2011
Long-lived assets held for sale	$	898	$	898	$	13,151
Long-lived assets held and used	8,558		8,558		7,754
					$	20,905

The fair values of the disposal groups included in long-lived assets held for sale were determined based on the estimated proceeds from their expected sales, net of estimated selling costs. The fair values of the assets held and used were based on the market approach using similar properties in the respective geography to determine an estimated sales price. Long-lived assets held for sale in 2012 consist of one asset group that includes land, a building, and building improvements. This asset group was included in long-lived assets held and used at December 31, 2011, at which time the carrying value was reduced to fair value, and an impairment charge was recognized and included in the total loss in the table above. In 2011, long-lived assets held for sale encompassed two disposal groups, each representing a business, and consisting of land, building, machinery and equipment, intangible assets, and goodwill.

Revenues and net operating income from the activities we have exited or will exit under the restructuring plan are not material to our operating segments or consolidated results.