Restructuring Charges

12 Months Ended

Jan. 04, 2014

3. Restructuring Charges

We account for exit and disposal costs by recognizing a liability for costs associated with an exit or disposal activity at fair value in the period in which it is incurred or when the entity ceases using the right conveyed by a contract (i.e., the right to use a leased property). We account for severance and outplacement costs by recognizing a liability for employees’ rights to post-employment benefits when management has committed to a plan, due to the existence of a post employment benefit agreement. These costs are included in “Selling, general, and administrative” expenses in the Consolidated Statements of Operations and Comprehensive Loss for the fiscal years ended January 4, 2014, December 29, 2012, and December 31, 2011, and in “Accrued compensation” on the Consolidated Balance Sheets at January 4, 2014 and December 29, 2012.

2013 Facility Lease Obligation and Severance Costs

During the second quarter of fiscal 2013, we announced the 2013 restructuring which included the realignment of headquarters resources and the strategic review of our distribution centers. This review resulted in the Company designating five distribution centers to be sold or closed. These distribution centers were closed or ceased operations during the third quarter of fiscal 2013. During the second quarter of fiscal 2013, we also announced that George R. Judd no longer would serve as President and Chief Executive Officer of the Company (the “change in executive leadership”). In connection with the 2013 restructuring and the change in executive leadership the Company has recognized severance related charges of $5.6 million and $2.9 million of related share-based compensation charges in “Selling, general, and administrative” expenses in the Consolidated Statements of Operations and Comprehensive Loss during fiscal 2013. In addition, the Company has recognized facility lease obligation charges of $1.3 million for two closed facilities in “Selling, general, and administrative” expenses in the Consolidated Statements of Operations and Comprehensive Loss during fiscal 2013.

The table below summarizes the balance of reduction in force activities and the related accrued facility lease obligation reserve and the changes in the accrual for fiscal 2013 (in thousands):


	Reduction in Force Activities			Facility Lease Obligation			Total
Balance at December 29, 2012	$	—		$	—		$	—
Charges		5,709			1,398			7,107
Assumption changes		(102	)		(77	)		(179	)
Payments		(3,057	)		(402	)		(3,459	)
Accretion of Liability		—			9			9
Balance at January 4, 2014	$	2,550		$	928		$	3,478

In addition to the charges described above, as a result of the 2013 restructuring we recorded approximately $1.4 million of other restructuring related charges, which were recorded in “Selling, general and administrative” expenses in the Consolidated Statement of Operations and Comprehensive Loss during fiscal 2013.

During the first quarter of fiscal 2013, we completed the transition of our Fremont, California operation to our new facility in Stockton, California. We incurred approximately $0.8 million of transition costs related to this move which are recorded in “Selling, general, and administrative” expenses in the Consolidated Statements of Operations and Comprehensive Loss in the first nine months of fiscal 2013.

During the third quarter of fiscal 2011, we entered into an amendment to our corporate headquarters lease in Atlanta, Georgia related to the unoccupied 4100 building, which was exited during fiscal 2007. This amendment released us from our obligations with respect to this unoccupied space as of January 31, 2012, in exchange for a $5.0 million space remittance fee, which was paid in the first quarter of fiscal 2012. We also paid $0.9 million in the third quarter of fiscal 2012 and paid an additional $0.3 million in the first quarter of fiscal 2014 related to contractually obligated tenant improvement reimbursement expense. As of January 4, 2014 and December 29, 2012, there was a remaining balance of this accrued facility consolidation reserve of $0.3 million. The provisions relating to the occupied 4300 building remain unchanged. Under the existing provisions, the current term of the lease ends on January 31, 2019.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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