RESTRUCTURING

2016 Restructuring Program

During the year ended December 31, 2016, the Company initiated a restructuring program related to its Sales and Lease Ownership segment and supporting corporate functions. The program resulted in 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 56 underperforming Aaron's Company-operated stores, primarily in the fourth quarter of 2016, and committed to plans to close approximately 70 additional stores during 2017. The Company estimates it will incur additional restructuring charges of $13.0 million in 2017 related to the loss on contractual lease obligations for the stores that the Company expects to close in 2017. The Company also optimized its home office and field support staff during 2016, which resulted in a reduction in employee headcount in those areas, to more closely align with current business conditions.

Total restructuring charges of $20.2 million were recorded during the year ended December 31, 2016, comprised principally of $11.6 million related to Aaron's store contractual lease obligations for closed stores, $4.5 million related to the write-off and impairment of Aaron's store property, plant and equipment and $3.9 million related to workforce reductions. Contractual lease obligations are recorded at the cease use date of the related property. These costs were included in the line item "Restructuring expenses" in the consolidated statements of earnings.

The following table summarizes the balances of the restructuring accruals, which are recorded in accounts payable and accrued expenses in the consolidated balance sheets, and the activity for the year ended December 31, 2016 related to the 2016 restructuring program:



(In Thousands)	Contractual Lease Obligations			Severance
Balance at January 1, 2016	$	—		$	—
Charges	11,830			3,883
Adjustments¹	(241		)	—
Restructuring Charges	11,589			3,883
Payments	(1,006		)	(1,804		)
Balance at December 31, 2016	$	10,583		$	2,079

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

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



(In Thousands)	Sales and Lease Ownership		Franchise		Other		Total
Contractual Lease Obligations	$	11,589	$	—	$	—	$	11,589
Severance	287		88		3,508		3,883
Fixed Asset Impairment	4,538		—		—		4,538
Lease Merchandise Write-Offs	208		—		—		208
Total Restructuring Expense	$	16,622	$	88	$	3,508	$	20,218

2014 Restructuring Program

During the year ended December 31, 2014, the Company closed 44 underperforming Company-operated stores and restructured its home office and field support to more closely align with current business conditions. The restructuring was completed during the third quarter of 2014 and total restructuring charges of $9.1 million were recorded during the year ended December 31, 2014, principally comprised of $4.8 million related to contractual lease obligations, $3.3 million related to the write-off and impairment of property, plant and equipment and $0.6 million related to workforce reductions. These costs were included in the line item "Restructuring Expenses" in the consolidated statements of earnings. The Company does not currently anticipate any remaining costs related to this restructuring plan to be material.

The following table summarizes the balances of the remaining restructuring accrual and the activity in that accrual related to the 2014 restructuring program:



(In Thousands)	Contractual Lease Obligations
Balance at January 1, 2014	$	—
Charges	4,797
Payments	(1,570		)
Balance at December 31, 2014	3,227
Payments	(1,559		)
Balance at December 31, 2015	1,668
Payments	(766		)
Adjustments¹	110
Balance at December 31, 2016	$	1,012

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

The following table summarizes the activity related to the restructuring charges by segment for the year ended December 31, 2014:



(In Thousands)	Sales and Lease Ownership		HomeSmart		Other		Total
Contractual Lease Obligations	$	694	$	6	$	4,097	$	4,797
Severance	419		—		201		620
Fixed Asset Impairment	3,328		—		—		3,328
Lease Merchandise Write-Offs	395		—		—		395
Total Restructuring Expense	$	4,836	$	6	$	4,298	$	9,140