6. Corporate Restructuring Costs

On May 23, 2018, we announced that we will open a headquarters office in Newport Beach, California, consolidate certain corporate administrative functions into our existing office in Columbus, Ohio, and close our existing headquarters offices in Denver, Colorado, as well as additional corporate offices in New York, New York. All affected employees were either offered an opportunity to continue in the new organization or were offered a severance package, which was communicated throughout the week ended June 22, 2018. As a result, we expect to incur corporate restructuring costs aggregating approximately $70,000 to $80,000.

We record severance as a one-time termination benefit and recognize the expense ratably over the employees’ required future service period. We record a liability for lease termination costs consisting of the net present value of remaining lease obligations, net of estimated sublease rentals that could be reasonably obtained, at the date we cease using a property, and measure fair value using Level 3 inputs (unobservable inputs). All other costs, including other employee transition costs, recruitment and relocation costs, other office closure costs, and third-party costs, are recognized in the period incurred.

During the three and six months ended June 30, 2018, we recorded restructuring charges of $3,900 and a cumulative adjustment to reduce stock-based compensation expense of $6,426 in general and administrative expenses on the condensed consolidated statement of income. Further, during the three and six months ended June 30, 2018, we recorded $16,299 in impairment, closure costs, and asset disposals on the condensed consolidated statement of income, of which $15,196 was lease termination and other office closure costs and $1,103 was non-cash impairment for office-related assets.

We expect to recognize additional costs associated with the restructuring into 2019 of approximately $57,000 to $66,000, including cash expenditures related to (i) employee severance and other employee transition costs of approximately $23,000 to $26,000, (ii) recruitment and relocation costs of approximately $15,000 to $16,000, (iii) lease termination and other office closure costs of approximately $9,000 to $13,000, and (iv) third-party and other costs of approximately $1,000. We also expect additional incremental stock-based compensation costs associated with the restructuring of approximately $9,000 to $10,000. See Note 9. “Stock-based Compensation” below for discussion of stock-based compensation expense related to the restructuring.

Restructuring costs recorded in the three and six months ended June 30, 2018 consisted of the following:



	Three and Six months ended June 30,
	2018
Employee severance and other employee transition costs	$	493
Recruitment and relocation costs		207
Lease termination and other office closure costs		15,196
Third-party and other costs		3,200
		19,096
Impairment for office-related assets		1,103
Stock-based compensation (1)		(6,426)
Total restructuring costs	$	13,773

(1)

Cumulative adjustment to reduce stock-based compensation expense as we reduced our estimate of the number of certain awards that we expect will vest. See Note 9. “Stock-based Compensation” below for discussion of stock-based compensation expense related to the restructuring.

As of June 30, 2018, the accruals for our corporate restructuring costs are included in accrued liabilities on the condensed consolidated balance sheet and totaled $16,785. The following table summarizes the activity included in our restructuring liability for the six months ended June 30, 2018:



	Balance December 31, 2017		Charges		Payments		Balance June 30, 2018
Employee severance and other employee transition costs	$	-	$	493	$	-	$	493
Recruitment and relocation costs		-		207		(207)		-
Lease termination and other office closure costs		-		15,196		(499)		14,697
Third-party and other costs		-		3,200		(1,605)		1,595
Total restructuring liability	$	-	$	19,096	$	(2,311)	$	16,785