Restructuring and Other Charges

3 Months Ended

Mar. 31, 2017

Restructuring and Related Activities [Abstract]

11. Restructuring and Other Charges

As discussed in Note 3 (“Discontinued Operations”), we completed the Spin-off of Exterran Corporation on November 3, 2015. During the three months ended March 31, 2017, and 2016, we incurred $0.5 million and $1.1 million, respectively, of costs associated with the Spin-off that were directly attributable to Archrock and are summarized below. The restructuring charges associated with the Spin-off are not directly attributable to our reportable segments because they primarily represent costs incurred within the corporate function. As of March 31, 2017, we had an accrued liability of $0.2 million related to retention benefits incurred. We expect to incur an additional $1.1 million for the remainder of 2017.

In the first quarter of 2016, we determined to undertake a cost reduction program to reduce our on-going operating expenses, including workforce reductions and closure of certain make-ready shops. These actions were a result of our review of our businesses and efforts to efficiently manage cost and maintain our businesses in line with then current and expected activity levels and anticipated make-ready demand in the U.S. market. During the three months ended March 31, 2016, we incurred $7.0 million of restructuring and other charges as a result of this plan primarily related to severance benefits and consulting fees. These charges are reflected as restructuring and other charges in our condensed consolidated statement of operations. The cost reduction program under this plan was completed during the fourth quarter of 2016.

The following table presents the expense incurred under this plan by reportable segment (in thousands):



	Contract Operations		Aftermarket Services		Other ⁽¹⁾		Total
Three months ended March 31, 2016	$	2,241	$	369	$	4,391	$	7,001


⁽¹⁾	Represents expenses incurred under this plan that are not directly attributable to our reportable segments because they represent severance benefits and consulting fees incurred within the corporate function.

The following table summarizes the changes to our accrued liability balance related to restructuring and other charges for the three months ended March 31, 2016 and 2017 (in thousands):



	Spin-off			Cost Reduction Plan			Total
Balance at January 1, 2016	$	855		$	—		$	855
Additions for costs expensed	1,064			7,001			8,065
Less: non-cash expense⁽¹⁾	(330		)	—			(330		)
Reductions for payments	(1,005		)	(4,496		)	(5,501		)
Ending balance at March 31, 2016	$	584		$	2,505		$	3,089

Balance at January 1, 2017	$	712		$	—		$	712
Additions for costs expensed	457			—			457
Less: non-cash expense⁽¹⁾	(340		)	—			(340		)
Reductions for payments	(606		)	—			(606		)
Balance at March 31, 2017	$	223		$	—		$	223


⁽¹⁾	Represents non-cash retention benefits associated with the Spin-off to be settled in Archrock stock.

The following table summarizes the components of charges included in restructuring and other charges in our condensed consolidated statements of operations for the three months ended March 31, 2017 and 2016 (in thousands):



	Three Months Ended March 31,
	2017		2016
Retention and severance benefits	$	457	$	5,324
Consulting services	—		2,741
Total restructuring and other charges	$	457	$	8,065