Rosetta Stone 2015 Annual Report Download - page 92

Table of Contents



The following table summarizes activity with respect to the restructuring charges for the 2015 Restructuring Plan during the year ended December 31,
2015 (in thousands):








Severance costs
$ —
$ 7,240
$ (5,940)
$ (1,048)
$ 252
Contract termination costs
—
1,134
(1,134)
—
—
Other costs
—
417
(417)
—
—
Total
$ —
$ 8,791
$ (7,491)
$ (1,048)
$ 252


As of December 31, 2015, the entire restructuring liability of $0.3 million was classified as a current liability within accrued compensation and other
current liabilities on the consolidated balance sheets.
The following table presents restructuring costs included in the related line items of our Statement of Operations (in thousands):



Cost of revenue
$ 113
$ —
Sales and marketing
4,492
—
Research and development
602
—
General and administrative
3,584
—
Total
$ 8,791
$ —
These restructuring expenses are not allocated to any reportable segment under our definition of segment contribution as defined in Note 17 "Segment
Information."
The Company does not expect to incur any additional restructuring costs in connection with the 2015 Restructuring Plan.
At each reporting date, the Company will evaluate its accrued restructuring costs to ensure the liabilities reported are still appropriate. Any changes to
the estimated costs of executing approved restructuring plans will be reflected in the Company’s consolidated statements of operations.
2014 Employee Severance Actions
On January 9, 2014, the Company completed its acquisition of Tell Me More, a company organized under the laws of France. At acquisition, the plan
was to fully integrate Tell Me More into the operations of the Company. Following the acquisition, the Company undertook financial performance review of
the French entity and of the Company as a whole. As a result, the Company identified the need to reduce expenses. In the second quarter of 2014, the
Company began to create a plan to address the economic issues of the business through the reduction of expense. The result of this economic planning was to
reduce headcount within certain business units of the French entity.
Under the requirements of French Labour Law, there is an expectation on the part of both the employer and employee that if an employee is terminated,
the employer is required to pay a minimum amount of severance. Accordingly, the Company concluded that the termination benefits for certain employees as
the result of the reduction in force in France were payable based upon an ongoing benefit arrangement. A severance liability became probable and estimable
when the Company received approval from the French Labour Administration and when the specific employees impacted were determined. These criteria
were met in the third quarter of 2014 and the Company recorded an accrual and related expense of $1.0 million. Severance payments totaling $0.5
million related to this reduction in force were paid during the fourth quarter of 2014, $0.4 million was paid in 2015, and the remaining amount is expected to
be paid in 2016.
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