Shutterfly 2009 Annual Report Download - page 89

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SHUTTERFLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Accrued Liabilities
Note 5 — Restructuring
In July 2008, the Company announced that effective in early 2009, it would close its Hayward, California production facility and begin
operations at a new manufacturing facility to be located in Phoenix, Arizona. As a result of this decision, the Company incurred approximately
$80,000 in contractual lease termination costs which was recorded in the second quarter of the fiscal year. The Company will also incur
$846,000 in severance costs, which is recognized ratably over the period from the severance communication date in July 2008, through the
facility closure date in early 2009. Through December 31, 2008, the Company has recognized $633,000 in severance costs which is recorded in
cost of revenue for the year ended 2008. The Company expects to incur up to $60,000 in additional costs associated with the relocation of
certain employees, which will be expensed as incurred in 2009.
Accrued liabilities related to restructuring actions consist of (in thousands):
December 31,
2008
2007
In thousands
Accrued marketing expenses
$
6,697
$
4,101
Accrued income and sales taxes
5,923
3,682
Accrued compensation
4,110
3,053
Accrued production facility expenses
2,677
3,283
Accrued consultant expenses
1,439
1,516
Accrued purchases
526
1,414
Accrued other
3,340
1,675
$
24,712
$
18,724
Facility
Closure Costs
Workforce
Reduction Costs
Total
Balance, December 31, 2007
$
—
$
—
$
—
Restructuring charges
80
633
713
Payments
—
—
—
Balance, December 31, 2008
$
80
$
633
$
713
87