Overstock.com 2007 Annual Report Download - page 108

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Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period's presentation. The effect of these reclassifications had no impact on
net income, total assets, total liabilities, or stockholders' equity.
3. RESTRUCTURING EXPENSE
During the fourth quarter of 2006, the Company began a facilities consolidation and restructuring program designed to reduce the overall expense
structure in an effort to improve future operating performance. The facilities consolidation and restructuring program was substantially completed by the end
of the second quarter of 2007. The Company incurred no restructuring charges during the third or fourth quarters of 2007.
During fiscal year 2006, the Company recorded $5.7 million of restructuring charges, of which $4.6 million related to costs to terminate a co-location
data center lease. Other costs included in the restructuring charge related to $638,000 of accelerated depreciation of leasehold improvements in the Company's
current office facilities that the Company is attempting to sublease, and $450,000 of costs to return these office facilities to their original condition as required
by the lease agreement.
During fiscal year 2007, the Company recorded $12.3 million of restructuring charges, of which $9.9 million related to the termination of a logistics
services agreement, termination and settlement of a lease related to vacated warehouse facilities in Indiana, and abandonment and marketing for sub-lease
office and data center space in the Company's current corporate office facilities. The Company also recorded an additional $2.2 million of restructuring
charges related to accelerated depreciation of leasehold improvements located in the abandoned office and co-location data center space and $200,000 of other
miscellaneous restructuring charges.
Restructuring liabilities along with charges to expense, cash payments or accelerated depreciation of leasehold improvements associated with the
facilities consolidation and restructuring program were as follows (in thousands):
Balance
12/31/2006
Charges to
Expense
Cash
payment or
accelerated depreciation
Balance
12/31/2007
Lease and contract termination costs $ 5,499 $ 9,914 $ (11,378) $ 4,035
Asset retirement obligation 450 — (450) —
Accelerated depreciation of leasehold improvements — 2,169 (2,169) —
Other restructuring expenses — 200 (200) —
Total $ 5,949 $ 12,283 $ (14,197) $ 4,035
Under the restructuring program, the Company has recorded $18.0 million in restructuring charges through the end of fiscal year 2007, including
$5.7 million in fiscal year 2006 and $12.3 million in fiscal year 2007, respectively. The costs incurred to date within each restructuring category approximate
the costs that the Company had anticipated at the beginning of the program. The Company believes that the restructuring program is substantially complete.
However, as part of the program, the Company is still considering a complete relocation of its corporate office facilities, which would result in additional
restructuring charges, primarily for lease and contract termination costs.
F-19