RESTRUCTURING

2016 Restructuring Program

During the year ended December 31, 2016, the Company initiated a restructuring program that included a thorough review of the Company-operated Aaron's store portfolio and the subsequent closure or planned closure of underperforming stores. As a result of this restructuring program, the Company closed 56 underperforming Company-operated stores during 2016 and 63 stores during the first six months of 2017, and anticipates closing an additional six stores during the remainder of 2017. The Company also optimized its home office and field support staff during 2016 and 2017, which resulted in a reduction in employee headcount in those areas to more closely align with current business conditions.

Total restructuring charges of $13.4 million and $13.8 million were recorded during the three and six months ended June 30, 2017, respectively. Charges for the three months ended June 30, 2017 were comprised of $11.8 million related to Aaron's store contractual lease obligations for closed stores, $1.1 million related to workforce reductions, and $0.5 million primarily related to the write-down to fair value, less estimated selling costs, of land and buildings from stores closed under the restructuring program. These costs were included in the line item "Restructuring expenses" in the condensed consolidated statements of earnings. The Company expects to incur approximately $1.5 million of additional charges related to the previously announced store closures, but will continue to evaluate its store base for strategic growth and consolidation activities in future periods. To date, the Company has incurred charges of $34.0 million under the restructuring program that was initiated in 2016 and has continued to be implemented in 2017.

The following table summarizes the balance of the accruals, which are recorded in accounts payable and accrued expenses in the condensed consolidated balance sheets, and the activity for the six months ended June 30, 2017:



(In Thousands)	Contractual Lease Obligations			Severance
Balance at January 1, 2017	$	10,583		$	2,079
Charges	12,259			1,591
Adjustments¹	(941		)	—
Restructuring Charges	11,318			1,591
Payments	(4,700		)	(1,330		)
Balance at June 30, 2017	$	17,201		$	2,340

¹Adjustments relate to early buyouts of leases, changes in sublease assumptions and interest accretion.

The following table summarizes restructuring charges by segment for the three and six months ended June 30, 2017:



	Three Months Ended June 30, 2017						Six Months Ended June 30, 2017
(In Thousands)	Aaron's Business		DAMI¹		Total		Aaron's Business		DAMI¹		Total
Contractual Lease Obligations	$	11,841	$	—	$	11,841	$	11,318	$	—	$	11,318
Fixed Asset Impairment/Other	460		—		460		864		—		864
Severance	996		148		1,144		1,352		238		1,590
Total Restructuring Expense	$	13,297	$	148	$	13,445	$	13,534	$	238	$	13,772

¹Restructuring charges for DAMI relate primarily to the segment's relocation efforts. Future DAMI restructuring charges are expected to be immaterial.