12. Restructuring and Other Charges

As discussed in Note 2, in November 2014, we announced that our board of directors had authorized management to pursue a plan to separate our international contract operations, international aftermarket services and global fabrication businesses into an independent, publicly traded company. On November 3, 2015, we completed the Spin-off of Exterran Corporation. During the three and nine months ended September 30, 2015, we incurred $6.4 million and $24.8 million, respectively, of costs associated with the Spin-off which were primarily related to legal, consulting, audit and professional fees, a one-time cash signing bonus paid to an employee and non-cash inventory write-downs. Non-cash inventory write-downs, which primarily related to the decentralization of shared inventory components between the North America contract operations business and the international contract operations business, totaled $5.7 million during the nine months ended September 30, 2015, of which approximately $4.2 million related to our international contract operations segment, $1.0 million related to our North America contract operations segment and $0.5 million related to our fabrication segment. The separation costs relating to expenditures settled in cash have not been allocated to the segments because they consist mostly of professional service fees within the corporate, finance and legal functions. The costs incurred in conjunction with the Spin-off are included in restructuring and other charges in our condensed consolidated statements of operations. We expect to incur additional restructuring costs as a result of the Spin-off ranging from approximately $20 million to $30 million that is primarily related to legal, consulting, audit and professional fees and retention payments to certain employees. The range of additional restructuring costs excludes costs that may be incurred by Exterran Corporation after the completion of the Spin-off. As of September 30, 2015, we had an accrued liability balance of $1.1 million for planned separation charges incurred.

As a result of the current market conditions in North America, combined with the impact of lower international activity due to customer budget cuts driven by lower oil prices, in the second quarter of 2015 we announced a cost reduction plan primarily focused on workforce reductions and the reorganization of certain fabrication facilities. During the three and nine months ended September 30, 2015, we incurred $5.6 million and $11.6 million, respectively, of restructuring and other charges as a result of this plan. Included in these amounts are $5.6 million and $7.6 million recorded during the three and nine months ended September 30, 2015, respectively, related to termination benefits and consulting fees and $4.0 million recorded during the nine months ended September 30, 2015 related to non-cash write-downs of inventory. The non-cash inventory write-downs were the result of our decision to exit the manufacturing of cold weather packages, which had historically been performed at a fabrication facility in North America we recently decided to close. These charges are reflected as restructuring and other charges in our condensed consolidated statements of operations. We currently estimate that we will incur additional charges with respect to this cost reduction plan of approximately $2.5 million. We expect the majority of the estimated additional charges will result in cash expenditures. As of September 30, 2015, we had an accrued liability balance of $0.5 million for charges incurred relating to the cost reduction plan.

The following table summarizes the changes to our accrued liability balance related to restructuring and other charges for the nine months ended September 30, 2015 (in thousands):



	Spin-off			Cost Reduction Plan			Total
Beginning balance at January 1, 2015	$	1,089		$	—		$	1,089
Additions for costs expensed	24,810			11,582			36,392
Less non-cash expense	(5,700		)	(4,007		)	(9,707		)
Reductions for payments	(19,055		)	(7,055		)	(26,110		)
Ending balance at September 30, 2015	$	1,144		$	520		$	1,664

The following table summarizes the components of charges included in restructuring and other charges in our condensed consolidated statements of operations for the three and nine months ended September 30, 2015 (in thousands):



	Three Months Ended September 30, 2015		Nine Months Ended September 30, 2015
Legal fees	$	1,080	$	3,960
Consulting, audit and professional fees	3,520		12,046
Employee Signing bonus	2,000		2,000
Non-cash inventory write-downs	—		9,707
Employee termination benefits	4,213		6,246
Other	1,185		2,433
Total restructuring and other charges	$	11,998	$	36,392

In January 2014, we announced a plan to centralize our make-ready operations to improve the cost and efficiency of our shops and further enhance the competitiveness of our fleet of compressors. As part of this plan, we examined both recent and anticipated changes in the North America market, including the throughput demand of our shops and the addition of new equipment to our fleet. To better align our costs and capabilities with the current market, we closed several of our make-ready shops. The centralization of our make-ready operations was completed in the second quarter of 2014. During the nine months ended September 30, 2014, we incurred $5.4 million of restructuring and other charges primarily related to termination benefits and a non-cash write-down of inventory associated with the centralization of our make-ready operations. These charges are reflected as restructuring and other charges in our condensed consolidated statements of operations and are related to our North America contract operations and aftermarket services segments.