Restructuring Charges

12 Months Ended

Dec. 31, 2015

Restructuring and Related Activities [Abstract]

13. Restructuring Charges

As discussed in Note 2 (“Discontinued Operations”), we completed the Spin-off of Exterran Corporation on November 3, 2015. During the year ended December 31, 2015, we incurred $4.1 million of costs associated with the Spin-off which were directly attributable to Archrock and are summarized below. The restructuring charges associated with the Spin-off have not been allocated to the segments because they primarily represent costs incurred within the corporate function. Restructuring charges incurred in 2015 and 2014 in conjunction with completion of the Spin-off or directly associated with the Exterran Corporation business are included in discontinued operations in our consolidated statements of operations. As of December 31, 2015, we had an accrued liability balance of $0.9 million for retention and severance benefits incurred. We expect to incur an additional $2.0 million in both 2016 and 2017 related to retention payments.

In the second quarter of 2015 we announced a cost reduction plan primarily focused on workforce reductions. During the year ended December 31, 2015, we incurred $0.6 million of restructuring and other charges as a result of this plan primarily related to termination benefits. These charges are reflected as restructuring and other charges in our consolidated statement of operations.

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 U.S. 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 determined to close several of our make-ready shops. The centralization of our make-ready operations was completed in the second quarter of 2014.

The following table summarizes the changes to our accrued liability balance related to restructuring charges for the year ended December 31, 2015 and December 31, 2014 (in thousands):



	Spin-off			Cost Reduction Plan			Total
Balance at January 1, 2014	$	—		$	—		$	—
Additions for costs expensed	—			5,394			5,394
Less: non-cash expense	—			(4,103		)	(4,103		)
Reductions for payments	—			(1,291		)	(1,291		)
Balance at January 1, 2015	$	—		$	—		$	—
Additions for costs expensed	4,135			610			4,745
Less: non-cash expense	(2,515		)	$	—		(2,515		)
Reductions for payments	(765		)	(610		)	(1,375		)
Balance at December 31, 2015	$	855		$	—		$	855

The following table summarizes the components of charges included in restructuring and other charges in our consolidated statements of operations for the year ended December 31, 2015 and December 31, 2014 (in thousands):



	Year ended December 31, 2015		Year ended December 31, 2014
Retention and severance benefits	$	3,135	$	—
Non-cash inventory write-downs	1,000		4,103
Employee termination benefits	610		1,291
Total restructuring and other charges	$	4,745	$	5,394