NOTE 4—RESTRUCTURING

In 2014 we completed a major review of our cost structure, and subsequently 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 personnel reductions, centralization of operational activities, other cost reduction initiatives and certain asset impairments. The remaining activities for MPI are still progressing, and we expect to substantially complete the move from Singapore to Kuala Lumpur, along with additional sourcing initiatives, in the second quarter 2016.

We continued our efforts to improve our cost structure by initiating the Additional Overhead Reduction program (“AOR”) during fourth quarter 2015. AOR actions have included personnel reductions affecting direct operating expense and SG&A, and with additional opportunities for cost reductions identified in the first quarter of 2016, is now expected to be complete in the third quarter of 2016.

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 table presents amounts incurred during the three months ended March 31, 2016 and 2015, as well as amounts incurred from the inception of our restructuring efforts up to March 31, 2016 and amounts expected to be incurred in the future, by major type of cost and by segment.

	Incurred in the three months ended March 31,				Incurred from inception to		Estimate of remaining amounts to be
	2016		2015		March 31, 2016		incurred		Total
	(in thousands)
Americas Restructuring
Impairments and write offs	$	-	$	-	$	12,923	$	-	$	12,923
Severance and other personnel-related costs		-		881		13,981		-		13,981
Morgan City environmental reserve		-		-		5,925		-		5,925
Morgan City yard-related expenses		-		914		12,557		-		12,557
Other		-		-		158		-		158
		-		1,795		45,544		-		45,544

Corporate Restructuring		-		-		6,601		-		6,601

MPI
Severance and other personnel-related costs
AEA		-		1,252		6,646		-		6,646
MEA		-		607		856		-		856
ASA		433		1,800		6,537		1,898		8,435
Corporate and other		-		719		1,611		-		1,611
Asset impairment and disposal										-
ASA		-		4,168		7,471		-		7,471
Legal and other advisor fees										-
ASA		-						390		390
Corporate		173		48		11,590		-		11,590
Other										-
AEA		-		-		692		-		692
ASA		895		-		6,829		2,327		9,156
Corporate and other		-		-		983		-		983
		1,501		8,594		43,215		4,615		47,830
AOR
Severance and other personnel-related costs
AEA		2,186		-		2,186		795		2,981
ASA		-		-		-		400		400
Corporate		785		-		785		472		1,257
Legal and other advisor fees						-		-
Corporate		1,728		-		2,528		-		2,528
Other								-
AEA		150		-		150		-		150
MEA		17		-		17		-		17
Corporate		-		-		-		2,469		2,469
		4,866		-		5,666		4,136		9,802

Total	$	6,367	$	10,389	$	101,026	$	8,751	$	109,777

By segment
AEA	$	2,336	$	3,047	$	55,218	$	795	$	56,013
MEA		17		607		873		-		873
ASA		1,328		5,968		20,837		5,015		25,852
Corporate		2,686		767		24,098		2,941		27,039
Total	$	6,367	$	10,389	$	101,026	$	8,751	$	109,777