Restructuring and Other Charges
 12 Months Ended
Dec. 31, 2016
Restructuring and Related Activities [Abstract]  
Restructuring and Other Charges
14. Restructuring and Other Charges

We incurred restructuring and other charges associated with the Spin-off of $3.9 million and $15.7 million during the years ended December 31, 2016 and 2015, respectively. Costs incurred during the year ended December 31, 2016 were primarily related to retention awards to certain employees of $3.1 million, which are being amortized over the required service period of each applicable employee. Costs incurred during the year ended December 31, 2015 were related to non-cash inventory write-downs, financial advisor fees of $4.6 million paid at the completion of the Spin-off, expenses of $3.1 million for retention awards to certain employees, a one-time cash signing bonus paid to our new Chief Executive Officer of $2.0 million and costs to start-up certain stand-alone functions of $1.3 million. Non-cash inventory write-downs primarily related to the decentralization of shared inventory components between Archrock’s North America contract operations business and our international contract operations business totaled $4.7 million during the year ended December 31, 2015, of which approximately $4.2 million related to our international contract operations segment and $0.5 million related to our oil and gas product sales segment. The charges incurred in conjunction with the Spin-off are included in restructuring and other charges in our statements of operations. We currently estimate that we will incur additional one-time expenditures of approximately $1.9 million related to retention awards to certain employees in the form of cash and stock-based compensation through November 2017.

As a result of unfavorable 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 facilities. We incurred restructuring and other charges associated with the cost reduction plan of $23.5 million and $15.6 million during the years ended December 31, 2016 and 2015, respectively. Restructuring and other charges incurred during the year ended December 31, 2016 were primarily related to employee termination benefits and the exit from a leased corporate building. Costs incurred for employee termination benefits during the year ended December 31, 2016 were $19.9 million, of which $9.0 million related to our oil and gas product sales segment and $5.4 million related to our Belleli EPC product sales segment. We ceased the use of a corporate building under an operating lease in the second quarter of 2016, and as a result, recorded net charges of $2.9 million during the year ended December 31, 2016. Restructuring and other charges incurred during the year ended December 31, 2015 were primarily related to employee termination benefits, non-cash inventory write-downs and consulting fees. Costs incurred for employee termination benefits during the year ended December 31, 2015 were $9.6 million, of which $6.4 million related to our oil and gas product sales business. The non-cash inventory write-downs of $4.0 million were the result of our decision to exit the manufacturing of cold weather packages, which had historically been performed at an oil and gas product sales facility in North America we decided to close in 2015. The charges incurred in conjunction with the cost reduction plan are included in restructuring and other charges in our statements of operations. Accrued liabilities related to the cost reduction plan, which are expected to be settled within the next twelve months with cash payments, are based on estimates that may vary significantly from actual costs depending, in part, upon factors that may be beyond our control. We will continue to review the status of our restructuring obligations on a quarterly basis and, if appropriate, record changes to these obligations in current operations based on management’s most current estimates.

The following table summarizes the changes to our accrued liability balance related to restructuring and other charges for the years ended December 31, 2015 and 2016 (in thousands):
 
Spin-off
 
Cost Reduction Plan
 
Total
Beginning balance at January 1, 2015
$
—

 
$
—

 
$
—

Additions for costs expensed
15,749

 
15,566

 
31,315

Less non-cash expense
(4,843
)
 
(4,007
)
 
(8,850
)
Reductions for payments
(9,823
)
 
(11,334
)
 
(21,157
)
Ending balance at December 31, 2015
1,083

 
225

 
1,308

Additions for costs expensed
3,943

 
24,386

 
28,329

Deductions for gains realized
—

 
(872
)
 
(872
)
Less non-cash expense
(896
)
 
(437
)
 
(1,333
)
Less non-cash income
—

 
872

 
872

Reductions for payments
(3,196
)
 
(16,289
)
 
(19,485
)
Ending balance at December 31, 2016
$
934

 
$
7,885

 
$
8,819



The following table summarizes the components of charges included in restructuring and other charges in our statements of operations for the years ended December 31, 2016 and 2015 (in thousands):
 
Years Ended December 31,
 
2016
 
2015
Financial advisor fees related to the Spin-off
$
—

 
$
4,598

Consulting fees
22

 
1,932

Start-up of stand-alone functions
887

 
1,332

Retention awards to certain employees
3,056

 
3,121

Chief Executive Officer signing bonus
—

 
2,000

Non-cash inventory write-downs
—

 
8,707

Employee termination benefits
19,892

 
9,625

Net charges to exit the use of a corporate operating lease
2,904

 
—

Other
696

 
—

Total restructuring and other charges
$
27,457

 
$
31,315



Additionally, in the first quarter of 2016, we began executing a plan to exit our Belleli EPC business to focus on our core oil and gas businesses. Our plan to exit our Belleli EPC business resulted in a reduction in the remaining useful lives of the assets that are currently used in the Belleli EPC business and a long-lived asset impairment charge of $0.7 million impacting results from continuing operations during the year ended December 31, 2016. See Note 12 for further discussion relating to this impairment charge and Note 3 for further discussion related to our plan to exit our Belleli businesses.