RESTRUCTURING

2017 Restructuring Program

During the year ended December 31, 2017, the Company initiated a restructuring program that included a further review of the Company-operated Aaron’s store portfolio in order to continue rationalizing its store base to better align with marketplace demand. As a result of this restructuring program, the Company closed 15 underperforming Company-operated stores during 2017 and anticipates closing an additional eight stores in the first six months of 2018. Total restructuring charges of $3.0 million were recorded during the year ended December 31, 2017 under the 2017 program, which were comprised of $1.7 million related to a realignment of the Company’s home office organizational structure to more closely align with current business conditions, $0.8 million related to Aaron’s contractual lease obligations for closed stores, and $0.5 million related to the write-off and impairment of Aaron’s store property, plant and equipment. These costs were included in restructuring expenses in the consolidated statements of earnings. The Company expects to incur approximately $1.5 million of additional charges related to the 2017 restructuring program, which are expected to be incurred in the first six months of 2018. This estimate is subject to change based on future changes in assumptions for the remaining minimum lease obligation for stores closed under the restructuring program, including changes related to sublease assumptions and potential earlier buyouts of leases with landlords.

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 123 underperforming Company-operated stores throughout 2016 and 2017. The Company also optimized its home office staff during 2016 and field support 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 $15.0 million and $20.2 million were recorded during the years ended December 31, 2017 and December 31, 2016, respectively, under the 2016 program. Charges incurred during 2017 were comprised of $12.6 million related to Aaron’s store contractual lease obligations for closed stores, $1.5 million related to reduction of headcount to more closely align with current business conditions, and $0.9 million 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 restructuring expenses in the consolidated statements of earnings. The Company does not expect to incur any further material charges related to the 2016 restructuring program.

The following table summarizes the balances of the accruals for both programs, which are recorded in accounts payable and accrued expenses in the consolidated balance sheets, and the activity for the years ended December 31, 2017 and December 31, 2016:



(In Thousands)	Contractual Lease Obligations			Severance			Total
Balance at January 1, 2016	$	—		$	—		$	—
Charges	11,830			3,883			15,713
Adjustments¹	(241		)	—			(241		)
Restructuring Charges	11,589			3,883			15,472
Payments	(1,006		)	(1,804		)	(2,810		)
Balance at December 31, 2016	10,583			2,079			12,662
Charges	13,501			3,176			16,677
Adjustments¹	(69		)	—			(69		)
Restructuring Charges	13,432			3,176			16,608
Payments	(11,578		)	(2,952		)	(14,530		)
Balance at December 31, 2017	$	12,437		$	2,303		$	14,740

¹Adjustments relate to changes in sublease assumptions and interest accretion.

The following table summarizes restructuring charges by segment for the years ended December 31, 2017 and December 31, 2016:



	Year Ended December 31, 2017						Year Ended December 31, 2016
(In Thousands)	Aaron’s Business		DAMI¹		Total		Aaron’s Business		Total
Contractual Lease Obligations	$	13,432	$	—	$	13,432	$	11,589	$	11,589
Severance	2,705		471		3,176		3,883		3,883
Fixed Asset Impairment and Other	1,386		—		1,386		4,746		4,746
Total Restructuring Expense	$	17,523	$	471	$	17,994	$	20,218	$	20,218

¹Restructuring charges for DAMI relate primarily to severance and other costs related to the segment’s relocation of its headquarters. Future DAMI restructuring charges are expected to be immaterial.

To date, the Company has incurred charges of $38.2 million under the 2016 and 2017 restructuring programs.