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Restructuring Charges

12 Months Ended

Dec. 31, 2011

14. Restructuring Charges

In November 2011, we announced a workforce cost reduction program across all of our business segments as a first step in a broader overall profit improvement initiative. These actions were the result of a review of our cost structure aimed at identifying ways to reduce our on-going operating costs and to adjust the size of our workforce to be consistent with current and expected activity levels. A significant portion of the workforce cost reduction program was completed in 2011, with the remainder expected to be completed in 2012.

During the year ended December 31, 2011, we incurred $11.6 million of restructuring charges that were related to consulting services and termination benefits. These charges are reflected as Restructuring charges in our consolidated statements of operations. We currently estimate that we will incur additional charges with respect to the profit improvement initiative of approximately $3.1 million. We expect all of the estimated additional charges will result in cash expenditures.

The following table summarizes the changes to our accrued liability balance related to restructuring charges for year ended December 31, 2011 (in thousands):


	Restructuring Charges Accrual
Beginning balance at December 31, 2010	$	—
Additions for costs expensed		11,627
Less non-cash expenses		(1,575	)
Reductions for payments		(8,276	)

Ending balance at December 31, 2011	$	1,776

Restructuring charges by segment are as follows (in thousands):


	North America Contract Operations		International Contract Operations		Aftermarket Services		Fabrication		Other(1)		Total
Costs incurred in 2011	$	53	$	502	$	422	$	1,574	$	9,076	$	11,627
Total expected costs		53		867		482		2,424		10,945		14,771

(1)	Includes corporate related items

As a result of the reduced level of demand for our products and services, our management approved a plan in March 2009 to close certain facilities to consolidate our compression fabrication activities. These actions were the result of significant fabrication capacity stemming from the 2007 merger that created Exterran and the lack of consolidation of this capacity since that time, as well as the anticipated continuation of weaker global economic and energy industry conditions. The consolidation of those compression fabrication activities was completed in September 2009. The restructuring activities in 2009 included a $6.0 million facility impairment charge that was reflected in our consolidated statement of operations as a long-lived asset impairment (see Note 13). Additionally, we reduced the size of our workforce at our two manufacturing locations in Houston, Texas to support the forecasted level of new fabrication work.

We incurred charges in 2009 with respect to these restructuring charges discussed above of $14.3 million. These charges are reflected as Restructuring charges in our consolidated statements of operations. Approximately $13.4 million of the charges are severance and employee benefit costs and the remaining amount is for other facility closure and moving costs. All of the $14.3 million of charges resulted in cash expenditures.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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