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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q

Commission file number 001-33830

EnergySolutions, Inc.
(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (801) 649-2000

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

        As of August 5, 2010, 88,526,882 shares of registrant's common stock were outstanding.

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ENERGYSOLUTIONS, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
For the Three and Six Months Ended June 30, 2010

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PART I

Item 1.    Financial Statements

        

EnergySolutions, Inc.

Condensed Consolidated Balance Sheets

June 30, 2010 and December 31, 2009

(in thousands of dollars, except per share information)

See accompanying notes to condensed consolidated financial statements.

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EnergySolutions, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

Three and Six Months Ended June 30, 2010 and 2009

(in thousands of dollars, except per share information)

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

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EnergySolutions, Inc.

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30, 2010 and 2009

(in thousands of dollars)

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

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EnergySolutions, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(1) Description of Business

        EnergySolutions, Inc. ("we," "our," "EnergySolutions" or the "Company") is a leading provider of specialized, technology-based nuclear services to government and commercial customers. Our customers rely on our expertise to address their needs throughout the lifecycle of their nuclear operations. Our broad range of nuclear services includes engineering, operation of nuclear reactors, in-plant support services, spent nuclear fuel management, decontamination and decommissioning ("D&D"), logistics, transportation, processing and disposal. We derive almost 100% of our revenues from the provision of nuclear services.

        We provide our services through four segments: Federal Services; Commercial Services; Logistics, Processing and Disposal ("LP&D"); and International. Our Federal Services segment derives revenues from U.S. government customers for the management and operation or clean-up of facilities with radioactive materials. Our U.S. government customers are primarily individual offices, departments and administrations within the U.S. Department of Energy ("DOE") and U.S. Department of Defense ("DOD"). Our Commercial Services segment provides a broad range of on-site services, including D&D, to commercial customers. Our commercial customers include power and utility companies, pharmaceutical companies, research laboratories, universities, industrial facilities and other commercial entities with nuclear materials, as well as state agencies in the United States. Our LP&D segment provides a broad range of logistics, transportation, processing and disposal services to government and commercial customers. This segment also operates our facilities for the safe processing and disposal of radioactive materials, including a facility in Clive, Utah, four facilities in Tennessee and two facilities in Barnwell, South Carolina. Our International segment derives revenues primarily through contracts with the Nuclear Decommissioning Authority ("NDA") in the United Kingdom ("U.K.") to operate, manage and decommission 10 Magnox sites with 22 nuclear reactors. In addition, our International segment provides turn-key services for the disposal of radioactive sources from non-nuclear power generating facilities such as hospitals, research facilities and other manufacturing and industrial facilities.

(2) Basis of Presentation

        The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring activities, considered necessary for a fair presentation have been included. We evaluated all subsequent events through the date we filed these financial statements in our Form 10-Q Report with the Securities and Exchange Commission. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission on March 1, 2010.

        The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The results of operations for the three and six months ended June 30, 2010 are not necessarily indicative of results that can be expected for the full year.

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EnergySolutions, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(2) Basis of Presentation (Continued)

        We have majority voting rights for two of our minority-owned joint ventures. Accordingly, we have consolidated their operations in our consolidated financial statements. We recorded the noncontrolling interests, which reflect the portion of the earnings of operations which are applicable to other noncontrolling partners.

        Certain amounts for prior periods have been reclassified to conform to the current year presentation. Prior to the fourth quarter of 2009, we included equity in income of unconsolidated joint ventures in other income (expense), net. During the fourth quarter of 2009, we reclassified these amounts from other income (expense), net, to operating income in the accompanying consolidated statements of operations. Accordingly, for the three and six months ended June 30, 2009 income from operations was increased by $2.2 million and $3.1 million, respectively, as a result of the reclassification. There was no impact on net income or net income attributable to EnergySolutions for the three or six months ended June 30, 2009. Income from unconsolidated joint ventures is included in our Federal Services segment operations. In addition, we reclassified $36.8 million from accounts receivable, net of allowance for doubtful accounts, to costs and estimated earnings in excess of billings on uncompleted contracts as of December 31, 2009 to conform to the current year presentation which reflects a difference in the way our new accounting system, implemented effective January 1, 2010, records invoicing activities related to the current period, but generated in the subsequent period. This reclassification had no impact on total current assets, total assets, revenue or net income.

(3) Recent Accounting Pronouncements

Accounting Pronouncements Issued But Not Yet Effective

        In October 2009, the Financial Accounting Standards Board ("FASB") issued an update to the authoritative guidance for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. This update is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010 and may be applied retrospectively for all periods presented or prospectively to arrangements entered into or materially modified after the adoption date. This guidance is effective for us on January 1, 2011. We are currently evaluating the potential impact of the adoption of this guidance but we do not expect it to have a material impact on the Company's results of operations, financial position or cash flows.

        In January 2010, the FASB issued accounting guidance improving disclosures about fair value measurements, which requires reporting entities to make new disclosures about recurring or nonrecurring fair value measurements including significant transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. This guidance is effective for annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which are effective for annual periods beginning after December 15, 2010. The adoption of the Level 1 and Level 2 provisions as of January 1, 2010 did not have any impact on our consolidated financial statements and we do not expect the adoption of the Level 3 provisions to have any impact on our consolidated financial statements.

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EnergySolutions, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(4) Goodwill

        As of June 30, 2010 and December 31, 2009 we had recorded $481.0 million and $518.8 million of goodwill related to acquisitions. Goodwill related to the acquisitions of foreign entities is translated into U.S. dollars at the exchange rate in effect at the balance sheet date. The related translation gains and losses are included as a separate component of stockholders' equity in accumulated other comprehensive loss in the consolidated balance sheets. For the six months ended June 30, 2010 we recorded $2.8 million in translation losses related to goodwill denominated in foreign currencies.

        In accordance with authoritative guidance, the Company assesses annually the carrying value of its reporting units' goodwill for impairment as of the first day of the second quarter of each fiscal year, or more frequently if events occur or circumstances change that would more likely than not reduce our reporting unit fair value below its book value. Based on the goodwill impairment analysis performed as of the beginning of the second quarter of 2010, Step 1 of our impairment test, which included the use of a discounted cash flow model, indicated potential impairment of our Federal Services reporting unit. Therefore, we completed Step 2, which included an assessment of fair value of the assets and liabilities of the reporting unit. Based on this analysis, we concluded that the goodwill within our Federal Services reporting unit was impaired and recorded a non-cash goodwill impairment charge of $35.0 million in the second quarter. As discussed further in Note 5, an evaluation of potential impairment of certain intangible assets recorded in the Federal Services reporting unit is ongoing; therefore, due to the nature of Step 2 analysis, the goodwill impairment calculation is preliminary. There was no tax benefit associated with this impairment charge as the goodwill was not deductible for tax purposes. Factors culminating in the impairment included continued weakness in the macroeconomic environment and lower forecasted growth rates than those projected in the prior year. The impairment charge did not impact our cash position, operating cash flow or debt covenants.

(5) Other Intangible Assets

        Other intangible assets subject to amortization consist principally of amounts assigned to permits, customer relationships, non-compete agreements and technology. We do not have intangible assets that are not subject to amortization.

        Other intangible assets as of June 30, 2010 and December 31, 2009 consist of the following (in thousands):

        Amortization expense was $6.3 million and $12.7 million for the three and six months ended June 30, 2010, respectively, as compared to $7.0 million and $13.9 million for the three and six months

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EnergySolutions, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(5) Other Intangible Assets (Continued)

ended June 30, 2009, respectively. In addition, for the six months ended June 30, 2010 we recorded $4.7 million in translation losses related to intangible assets denominated in foreign currencies.

        In conjunction with the performance of our goodwill impairment analysis and completion of Step 2 for the Federal Services reporting unit, we determined that an indicator of impairment existed with regard to the intangible assets of this reporting unit. As such, we initiated an evaluation of these intangible assets in accordance with applicable accounting guidance. Total intangible assets for this reporting unit were $24.3 million as of June 30, 2010, consisting of $10.9 million of customer relationships, $5.9 million of permits and $7.5 million of technology. Based upon our analysis, we determined that the customer relationships and permits were not impaired. As it relates to the technology intangible asset, our evaluation is ongoing. Upon completion of this evaluation, we could be required to record an impairment charge related to this technology and any resulting non-cash impairment charge is expected to be recorded in the quarter ending September 30, 2010. Because we are in the early stages of this analysis, we do not believe that it is currently possible to reasonably estimate the range of the potential impairment, if any.

(6) Senior Credit Facilities

        On September 23, 2009, we entered into a Third Amended and Restated Credit Agreement, as subsequently amended on January 14, 2010 (the "Amended ES Credit Agreement"), with Citicorp North America, Inc. ("Citicorp") as administrative agent and collateral agent. Concurrent with the entry into the Amended ES Credit Agreement, Duratek, Inc., a wholly-owned subsidiary of the Company, entered into an Amended and Restated Credit Agreement, as subsequently amended on January 14, 2010 (the "Amended Duratek Credit Agreement" and together with the Amended ES Credit Agreement, the "Amended Credit Agreements"), with Citicorp. The Amended Credit Agreements amend, restate and supersede the credit agreements dated June 7, 2006 with Citicorp and the lenders identified therein as previously amended. The January 14, 2010 amendment increased the maximum credit support facility for the Zion Station transaction from $50 million to $200 million.

        The January 14, 2010 amendment permits us to obtain credit support in an aggregate amount of up to $200.0 million in connection with our agreement with Exelon Generation Company LLC (the "Exelon Agreement") to dismantle Exelon's Zion nuclear facility located in Zion, Illinois ("Zion Station"), which ceased operation in 1998. Such credit support may take the form of (i) incremental commitments under the Amended ES Credit Agreement with respect to a letter of credit facility (the "Zion Letter of Credit Facility") and/or (ii) a letter of credit, performance or fidelity bond or related obligation by a third party support provider (the "Zion Credit Support Obligation"). Each of the Zion Letter of Credit Facility and Zion Credit Support Obligation would be secured pari passu on the same collateral securing the obligations under the Credit Agreements and would mature up to one year after its establishment (with two one-year auto-renewal extension provisions) or, if earlier, the term loan maturity date. The Credit Agreements also include additional loan covenants and exceptions related to the Zion Station decommissioning and decontamination project.

        Our credit facilities consist of a $75.0 million revolving credit facility, of which $37.0 million was outstanding as of June 30, 2010, and which matures on June 7, 2011, term-loan facilities totaling $770.0 million, of which $494.8 million was outstanding as of June 30, 2010 and which mature on June 7, 2013, and synthetic letter of credit facilities totaling $100.0 million, which expire on June 7,

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EnergySolutions, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(6) Senior Credit Facilities (Continued)

2013. The revolving credit facility includes a sublimit of $60.0 million for letters of credit of which $14.0 million in letters of credit were issued as of June 30, 2010. The synthetic letter of credit facilities had $100.0 million issued as of June 30, 2010.

        As amended, borrowings under the credit facilities bear interest as follows:

(1)

in the case of the first-lien term loans, (i) the greater of the rate of interest announced by Citicorp, from time to time, as its prime rate in effect at its principal office in the city of New York, and the federal funds rate plus 0.50% per annum (the "base rate"), plus 2.25% (or 1.75% when the leverage ratio (as defined in the Amended Credit Agreements) as of the most recently completed fiscal quarter is less than 2.0 to 1.0) or (ii) for any portion of the term loans as to which we have elected to pay interest on a Eurodollar basis, LIBOR plus 3.75% (or 3.25% when the leverage ratio (as defined in the Amended Credit Agreements) as of the most recently completed fiscal quarter is less than 2.0 to 1.0);



(2)

in the case of the revolving loans, (i) the base rate plus 2.25% or (ii) for any portion of the revolving loans as to which we have elected to pay interest on a Eurodollar basis, LIBOR plus 3.75%; and



(3)

in the case of synthetic letters of credit, LIBOR for the period of the loan less the synthetic deposit return paid to the synthetic lenders plus 3.75% (or 3.25% when the leverage ratio (as defined in the Amended ES Credit Agreement) as of the most recently completed fiscal quarter is less than 2.0 to 1.0).

        Borrowings under our credit facilities bear interest at variable rates. As of June 30, 2010 and December 31, 2009, the interest rate of borrowings under our term-loan facilities was 4.10% and 4.01%, respectively.

        The obligations under the credit facilities are unconditional and irrevocably guaranteed, subject to certain exceptions, by each of our existing and subsequently acquired or organized domestic subsidiaries. In addition, the credit facilities and such guarantees are secured on a first priority basis by security interests (subject to permitted liens as defined in the credit agreements governing the credit facilities) in substantially all tangible and intangible assets owned by us and each of our domestic subsidiaries, subject to certain exceptions, including limiting pledges of 65% of the equity interests of first-tier foreign subsidiaries. In the event of default, the lenders have standard creditor remedies, including the right to foreclosure on pledged assets.

        According to the terms of the credit agreements, at the end of each calendar quarter, we are required to make scheduled repayments of the term loans of approximately $1.4 million, adjusted for optional prepayments made, provided that the final installment shall be equal to the amount outstanding of the term loan facilities.

        We are generally also required to prepay borrowings under the credit facilities with (1) 100% of the net proceeds we receive from non-ordinary course asset sales or as a result of a casualty or condemnation, subject to reinvestment provisions, (2) 100% of the net proceeds we receive from the issuance of unsecured debt obligations other than specified debt obligations (or if our total leverage ratio is less than 2.0 to 1.0, then 50% of net proceeds is applied) and (3) the excess, if any, of 50% (or, if our leverage ratio is less than 3.0 and greater than 1.0, 25%) of excess cash flow (as defined in the

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EnergySolutions, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(6) Senior Credit Facilities (Continued)

credit agreements) reduced by the aggregate amount of term loans optionally prepaid during the applicable fiscal quarter. Under the credit facilities, we are not required to prepay borrowings with excess cash flow if our leverage ratio is less than or equal to 1.0. As of June 30, 2010, we have mandatory principal repayments based on our excess cash flow and scheduled repayments of $14.6 million due within the next 12 months.

        As amended, the credit facilities also require us to maintain certain financial ratios, including a maximum total leverage ratio (based upon the ratio of total consolidated indebtedness to consolidated operating cash flow), a maximum first-lien leverage ratio (based upon the ratio of first-lien indebtedness to consolidated operating cash flow) and a minimum cash interest coverage ratio (based upon the ratio of consolidated operating cash flow to consolidated cash interest expense), which are tested quarterly. Based on the revised formulas set forth in the Amended Credit Agreements, we are required to maintain a maximum total leverage ratio of 4.0 from the quarter ending March 31, 2010 through the quarter ending December 31, 2010 and 3.5 from the quarter ending March 31, 2011 until maturity. We are required to maintain a maximum first-lien leverage ratio of 3.5 for the quarters ending March 31, 2010 through December 31, 2010, 3.25 for the quarter ending March 31, 2011 and 3.0 for quarters ending June 30, 2011 through the maturity date. We are required to maintain a minimum cash interest coverage ratio of 3.0 from the quarter ending March 31, 2010 through the maturity date. Failure to comply with these financial ratio covenants would result in a default under our credit facilities and, absent a waiver or an amendment from the lenders, preclude us from making further borrowings under our credit facilities and permit the lenders to accelerate all outstanding borrowings under the credit facilities. As of June 30, 2010, our total leverage, first-lien leverage and cash interest coverage ratios were 3.43, 3.43 and 5.80, respectively.

        The credit facilities also contain a number of affirmative and restrictive covenants including limitations on mergers, consolidations and dissolutions; sales of assets; investments and acquisitions; indebtedness; liens; affiliate transactions; and dividends and restricted payments. Under the credit facilities, we are permitted maximum annual capital expenditures of $40.0 million for 2010 and each year thereafter, plus for each year the lesser of (1) a one year carry-forward of the unused amount from the previous fiscal year and (2) 50% of the amount permitted for capital expenditures in the previous fiscal year. The credit facilities contain events of default for non-payment of principal and interest when due, a cross-default provision with respect to other indebtedness having an aggregate principal amount of at least $5.0 million and an event of default that would be triggered by a change of control, as defined in the credit facilities. Capital expenditures for the six months ended June 30, 2010 were $6.0 million. As of June 30, 2010, we were in compliance with all of the covenants under our credit agreements.

        On July 12, 2010, we amended our existing credit facilities in advance of the completion of our financial statement close process to ensure that we remain in compliance with the financial covenants, as defined in the credit facilities. Pursuant to the amendment, the lenders agreed that the requirement not to exceed a maximum first lien leverage ratio, as defined in the credit facilities, would not apply for the quarter ended June 30, 2010. Our interest rate on the credit facilities is comprised of a base rate plus a margin. As a result of the amendment, the interest rates of the credit facilities have been amended to establish a minimum base rate of 3.25% and a minimum LIBOR of 1.75%. In addition, the margins applicable to loans under each credit facility will be higher by 0.5% to 1.25% and will be

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EnergySolutions, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(6) Senior Credit Facilities (Continued)

based on a leverage ratio (as defined in the credit facilities) and the applicable long-term credit or corporate family rating assigned to us by rating agencies. As of June 30, 2010, we were in compliance with all of the covenants under our credit agreements, though there is a risk that we will not be in compliance with our covenants in future periods.

        During the six months ended June 30, 2010 and 2009, we made principal repayments totaling $24.3 million and $11.7 million, respectively. During the six months ended June 30, 2010 and 2009, we made cash interest payments of $14.7 million and $13.7 million, respectively. In addition, during the six months ended June 30, 2010 we paid fees of approximately $2.5 million to the lenders to obtain the Amended Credit Agreements, which are being amortized over the remaining term of the credit facilities. We also paid fees of approximately $2.2 million to the lenders in conjunction with the July 2010 amendment, which will be amortized over the remaining term of the credit facilities beginning in the quarter ending September 30, 2010.

(7) Fair Value Measurements

        The Company has implemented the accounting requirements for financial assets, financial liabilities, non-financial assets and non-financial liabilities reported or disclosed at fair value. The requirements define fair value, establish a three level hierarchy for measuring fair value in generally accepted accounting principles, and expand disclosures about fair value measurements. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that a company has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. As of June 30, 2010 and December 31, 2009, we had no assets or liabilities considered to be Level 1 or Level 3.

        The carrying value of accounts receivable, costs and estimated earnings in excess of billings on uncompleted contracts, inventories, prepaid assets, accounts payable, accrued expenses and unearned revenues approximate their fair value principally because of the short-term nature of these assets and liabilities.

        The fair market value of our debt is based on quoted market prices from the over-the-counter restricted market. As of June 30, 2010 and December 31, 2009, we had outstanding term loans with carrying amounts of $494.8 million and $519.1 million, respectively, with fair values of approximately $478.7 million and $516.5 million, respectively.

        The fair value of our derivative instruments is determined using models that maximize the use of the observable market inputs including interest rate curves and both forward and spot prices for currencies. The carrying amount of our interest rate collar derivative approximates fair value. This instrument is included in other noncurrent liabilities in the accompanying balance sheets and is classified as Level 2 under the fair value hierarchy.

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EnergySolutions, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(7) Fair Value Measurements (Continued)

        As of June 30, 2010 and December 31, 2009 the fair values of our interest rate collar contract outstanding was (in thousands):

(8) Derivative Financial Instruments

        We have entered into derivative contracts to help offset our exposure to movements in interest rates in relation to our variable rate debt. These contracts are not designated as accounting hedges. On December 18, 2008, we entered into an interest rate collar agreement with a notional amount of $200.0 million. As of June 30, 2010 and December 31, 2009, the fair value liability of the interest rate collar contract was $0.8 million and $1.7 million, respectively. Unrealized gains and losses resulting from adjustments to the fair value of the contracts are included in other income (expense), net, and resulted in net gains of $0.7 million and $0.9 million for the three and six months ended June 30, 2010, respectively, and net losses of $0.6 million $1.2 million for the three and six months ended June 30, 2009, respectively. We do not use interest rate derivatives for trading or speculative purposes.

        We have foreign currency exposure related to our operations in the U.K. as well as other foreign locations. Foreign currency gains and losses are included in other income (expenses), net, in the accompanying consolidated statements of operations. During the three and six months ended June 30, 2010 we recognized gains of $0.4 million and $0.1 million, respectively. During the three and six months ended June 30, 2009, we recognized gains of $6.7 million and $5.7 million, respectively.

        In the past, we have entered into derivative contracts to help offset our exposure to movements in foreign currency rates in relation to our U.S. dollar denominated intercompany loan with our U.K. subsidiary. This foreign currency derivative contract was not designated as an accounting hedge. The contract was terminated on December 23, 2009. Unrealized gains and losses resulting from adjustments to the fair value of the contracts were included in other expenses, net and resulted in losses of $6.3 million and $5.6 million for the three and six months ended June 30, 2009. We had no foreign currency derivative contracts for the six months ended June 30, 2010.

(9) Net Income (Loss) Per Share

        Basic net income (loss) per share is computed by dividing net income (loss) attributable to EnergySolutions by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) attributable to EnergySolutions by the weighted-average number of common shares outstanding during the period and potentially dilutive common stock equivalents. Potential common stock equivalents that have been issued by us relate to outstanding stock options and non-vested restricted stock awards and are determined using the treasury stock method.

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EnergySolutions, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(9) Net Income (Loss) Per Share (Continued)

        The following table sets forth the computation of the common shares outstanding in determining basic and diluted net income (loss) per share:

(10) Equity-Based Compensation

Stock Options and Restricted Stock

        In November 2007, we adopted the EnergySolutions, Inc. 2007 Equity Incentive Plan (the "Plan"). The Plan authorizes our Board of Directors to grant equity awards to directors, officers, employees and consultants. The aggregate number of shares of common stock that may be issued pursuant to awards granted under the Plan is 10,440,000. We recorded non-cash compensation expense related to our stock option and restricted stock grants of $2.6 million and $5.0 million for the three and six months ended June 30, 2010, respectively, as compared to $2.8 million and $5.2 million for the three and six months ended June 30, 2009, respectively. For the six months ended June 30, 2009, we also had $0.3 million of compensation expense related to other equity awards. As of June 30, 2010, we had $13.9 million of unrecognized compensation expense related to outstanding stock options, which will be recognized over a weighted-average period of 1.9 years. As of June 30, 2010, there was $2.9 million of unrecognized compensation expense related to non-vested restricted stock which is expected to be recognized over a weighted-average period of 2.5 years.

(11) Pension Plans

        Net periodic benefit costs for the three and six months ended June 30, 2010 and 2009 consisted of the following (in thousands):

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EnergySolutions, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

(11) Pension Plans (Continued)

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(1)

Intersegment revenues have been eliminated for the three and six months ended June 30, 2010 and 2009. Intersegment revenues were $0.1 million and $1.8 million for the three and six months ended June 30, 2010 and were $5.6 million and $8.8 million for the three and six months ended June 30, 2009. Revenues by segment represent revenues earned based on third-party billing to customers.

(2)

Included in income from operations from our Federal Services segment is a $35.0 million impairment of goodwill recorded during the three and six months ended June 30, 2010.

(3)

Prior to the fourth quarter of 2009, we included equity in income of unconsolidated joint ventures in other expense, net. For the three and six months ended June 30, 2009 we reclassified these amounts from other expense, net to operating income in the accompanying condensed consolidated statements of operations. Accordingly, income from operations was increased by $2.2 million and $3.1 million for the three and six months ended June 30, 2009, respectively. Income from unconsolidated joint ventures is included in our Federal Services segment operations.

(4)

Other long-lived assets include property, plant and equipment and other intangible assets.

(5)

Corporate unallocated assets relate primarily to income tax receivables, deferred tax assets, deferred financing costs, prepaid expenses, property, plant and equipment that benefit the entire company and cash.