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 previously announced move of our ASA regional headquarters from Singapore to Kuala Lumpur, along with additional sourcing initiatives, is substantially complete.

We continued our efforts to improve our cost structure by initiating the Additional Overhead Reduction program (“AOR”) during fourth quarter of 2015. AOR actions, which have included personnel reductions affecting direct operating and selling, general and administrative expenses are now expected to be substantially 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 and six months ended June 30, 2016 and 2015, as well as amounts incurred from the inception of our restructuring efforts up to June 30, 2016 and amounts expected to be incurred in the future by major type of cost and by segment.

	Incurred in the three months ended June 30,					Incurred in the six months ended June 30,					Incurred from inception to		Estimate of remaining amounts
	2016			2015		2016			2015		June 30, 2016		to be incurred		Total
	(in thousands)
Americas Restructuring
Impairments and write offs	$	-		$	-	$	-		$	-	$	12,923	$	-	$	12,923
Severance and other personnel-related costs		-			1,621		-			2,502		13,981		-		13,981
Morgan City environmental reserve		(1,500	)		-		(1,500	)		-		4,425		-		4,425
Morgan City yard-related expenses		-			820		-			1,734		12,557		-		12,557
Other		-			-		-			-		158		-		158
		(1,500	)		2,441		(1,500	)		4,236		44,044		-		44,044

Corporate Restructuring		-			-		-			-		6,601		-		6,601

MPI
Severance and other personnel-related costs
AEA					898		-			2,150		6,646		250		6,896
MEA		-			304		-			911		856		-		856
ASA		992			1,786		1,425			3,586		7,529		1,000		8,529
Corporate and other					400		-			1,119		1,611		-		1,611
Asset impairment and disposal																-
ASA		-			3,303		-			7,471		7,471		-		7,471
Legal and other advisor fees																-
ASA		-			-		-			-		-		-		-
Corporate		49			2,732		222			2,780		11,639		-		11,639
Other																-
AEA		-			-		-			-		692		-		692
ASA		1,541			3,527		2,436			3,527		8,370		-		8,370
Corporate and other		-			-		-			-		983		-		983
		2,582			12,950		4,083			21,544		45,797		1,250		47,047
AOR
Severance and other personnel-related costs
AEA		1,022			-		3,208			-		3,208		-		3,208
ASA		-			-		-			-		-		400		400
Corporate		51			-		836			-		836		100		936
Legal and other advisor fees												-
Corporate		240			-		1,968			-		2,768		-		2,768
Other
AEA		16			-		166			-		166		-		166
MEA		-			-		17			-		17		-		17
Corporate		73			-		73			-		73		1,000		1,073
		1,402			-		6,268			-		7,068		1,500		8,568

Total	$	2,484		$	15,391	$	8,851		$	25,780	$	103,510	$	2,750	$	106,260

By segment
AEA	$	(462	)	$	3,339	$	1,874		$	6,386	$	54,756	$	250	$	55,006
MEA		-			304		17			911		873		-		873
ASA		2,533			8,616		3,861			14,584		23,370		1,400		24,770
Corporate		413			3,132		3,099			3,899		24,511		1,100		25,611
Total	$	2,484		$	15,391	$	8,851		$	25,780	$	103,510	$	2,750	$	106,260