NOTE 6—RESTRUCTURING

In 2014 we completed a major review of our cost structure, and implemented a plan, which we referred to as the McDermott Profitability Initiative (the “MPI”), to increase our profitability and flexibility through reduced fixed and variable costs. The plan included headcount reductions, centralization of operational activities, other cost reduction initiatives and certain asset impairments.

During 2013 and 2014, we implemented a restructuring of our Americas operations, which involved our Morgan City, Louisiana, Houston, Texas, New Orleans, Louisiana and some Brazil locations. The restructuring involved, among other things, reductions of management, administrative, fabrication and engineering personnel, and the discontinued utilization of the Morgan City facility.

We completed a Corporate restructuring during 2014. Costs associated with our Corporate restructuring activities primarily included severance, relocation and other personnel-related costs and costs for advisors, as well as costs for certain executive management changes that became effective during the fourth quarter of 2013.

The following tables present amounts incurred during the three and nine months ended September 30, 2015 and 2014, as well as amounts incurred from the inception of our restructuring efforts up to September 30, 2015 and amounts expected to be incurred in the future by major type of cost and by segment.

	Incurred in the three months ended September 30, 2015			Incurred in the three months ended September 30, 2014			Incurred in the nine months ended September 30, 2015		Incurred in the nine months ended September 30, 2014			Incurred from inception to September 30, 2015		Estimate of remaining amounts to be incurred		Total
	(In thousands)
Americas Restructuring
Impairments and write offs	$	-		$	100		$	-	$	(1,240	)	$	12,923	$	-	$	12,923
Severance and other personnel-related costs		-			(155	)		601		3,099			13,981		-		13,981
Morgan City environmental reserve		-			-			-		-			5,925		-		5,925
Morgan City yard-related expenses		(27	)		2,879			1,707		5,528			12,557				12,557
Other		-			-			-		-			158		-		158
		(27	)		2,824			2,308		7,387			45,544		-		45,544

Corporate Restructuring
Severance and other personnel-related costs		-			53			-		961			2,599		-		2,599
Legal and other advisor fees		-			1,117			-		3,034			3,204		-		3,204
Other		-			730			-		730			798		-		798
		-			1,900			-		4,725			6,601		-		6,601

MPI
Severance and other personnel-related costs
AEA		2,360			-			6,411		-			6,411		1,694		8,105
MEA		71			-			982		-			982		-		982
ASA		387			-			3,973		-			3,973		5,200		9,173
Corporate and other		-			-			1,119		-			1,119		-		1,119
Asset impairment and disposal
ASA		-			-			7,471		-			7,471		-		7,471
Legal and other advisor fees																	-
Corporate		3,555			-			6,335		-			10,338		-		10,338
ASA															1,304		1,304
Other																	-
ASA		-			-			3,527		-			3,527		5,806		9,333
Corporate and other		-			-			-		-			-		700		700
		6,373			-			29,818		-			33,821		14,704		48,525

Total	$	6,346		$	4,724		$	32,126	$	12,112		$	85,966	$	14,704	$	100,670

By segment
AEA	$	2,333		$	2,824		$	8,719	$	7,387		$	51,955	$	1,694	$	53,649
MEA		71			-			982		-			982		-		982
ASA		387			-			14,971		-			14,971		12,310		27,281
Corporate		3,555			1,900			7,454		4,725			18,058		700		18,758
Total	$	6,346		$	4,724		$	32,126	$	12,112		$	85,966	$	14,704	$	100,670

In the first quarter of 2015, we reclassified certain MPI-related legal and other advisory fees of $4 million incurred in 2014 from Corporate restructuring costs to MPI costs.

The following table presents a roll forward of accrued liabilities associated with our restructuring activities:

	December 31, 2014		Accruals		Payments/ Reversals			September 30, 2015
	(In thousands)
Morgan City environmental reserve	$	3,675	$	-	$	(2,101	)	$	1,574
Morgan City yard-related expenses and other		373		343		(453	)		263
MPI related accruals		-		6,293		(1,812	)		4,481

Total	$	4,048	$	6,636	$	(4,366	)	$	6,318