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 completed the MPI restructuring during third quarter of 2016.

We continued our efforts to improve our cost structure by initiating the Additional Overhead Reduction program (“AOR”) during the fourth quarter of 2015. AOR actions, which have included personnel reductions affecting direct operating and selling, general and administrative expenses, were substantially complete as of September 30, 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 nine months ended September 30, 2016 and 2015, as well as amounts incurred from the inception of our restructuring efforts up to September 30, 2016. Amounts expected to be incurred in the fourth quarter of 2016 are not material.

	Incurred in the three months ended September 30,					Incurred in the nine months ended September 30,					Incurred from inception to
	2016		2015			2016			2015		September 30, 2016
	(in thousands)
Americas Restructuring	$	-	$	(27	)	$	(1,500	)	$	2,308	$	44,044

Corporate Restructuring		-		-			-			-		6,601

MPI
Severance and other personnel-related costs
AEA		-		2,360			-			6,411		6,646
MEA		-		71			-			982		856
ASA		1,165		387			2,590			3,973		8,694
Corporate and other		-		-			-			1,119		1,611
Asset impairment and disposal
ASA		-		-			-			7,471		7,471
Legal and other advisor fees
ASA		-		-			-			-		-
Corporate and other		-		3,555			222			6,335		11,639
Other
AEA		-		-			-			-		692
ASA		-		-			2,436			3,527		8,370
Corporate and other		-		-			-			-		983
		1,165		6,373			5,248			29,818		46,962
AOR
Severance and other personnel-related costs
AEA		321		-			3,529			-		3,529
ASA		235		-			235			-		235
Corporate and other		-		-			836			-		836
Legal and other advisor fees												-
Corporate		-		-			1,968			-		2,768
Other
AEA		-		-			166			-		166
MEA		-		-			17			-		17
Corporate and other		115		-			188			-		188
		671		-			6,939			-		7,739

Total	$	1,836	$	6,346		$	10,687		$	32,126	$	105,346

By segment
AEA	$	321	$	2,333		$	2,195		$	8,719	$	55,077
MEA		-		71			17			982		873
ASA		1,400		387			5,261			14,971		24,770
Corporate and other		115		3,555			3,214			7,454		24,626
Total	$	1,836	$	6,346		$	10,687		$	32,126	$	105,346