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Restructuring, Impairment and Other Related Charges | 9 Months Ended
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Sep. 30, 2024
Restructuring, Impairment and Other Related Charges [Abstract] |
Restructuring, Impairment and Other Related Charges | 4. Restructuring, Impairment and Other Related Charges In August 2024, the Company initiated a restructuring plan to strategically realign the Company’s operational focus to achieve operational efficiencies that are expected to improve profitability and provide for reinvesting in technology and marketing initiatives (the “Restructuring Plan”). The Company’s Restructuring Plan is comprised of the permanent closure of its Grantsville and Salt Lake City, Utah manufacturing facilities to consolidate mattress production in its Georgia plant, and a headcount reduction at the Company’s Utah headquarters to drive additional operating efficiencies. Closure of the two Utah manufacturing facilities is projected to be completed during the first quarter of 2025 while consolidation into the Georgia facility is expected to be finalized by December 31, 2024. The reduction in workforce at the Utah headquarters was completed in August 2024. The following table summarizes the restructuring, impairment and other related charges the Company recognized during the third quarter of 2024 in the condensed consolidated statement of operations (in thousands):
|  | Cost of Revenues |  |  | Operating Expenses |  |  | Restructuring, Impairment and Other Related Charges |  |  | Total |
Cash charges: |  |  |  |  |  |  |  |  |  |  |  |
Employee-related costs |  | $ | 241 |  |  | $ | 942 |  |  | $ | 2,355 |  |  | $ | 3,538 |
Other costs |  |  | — |  |  |  | — |  |  |  | 16 |  |  |  | 16 |
Total cash charges |  |  | 241 |  |  |  | 942 |  |  |  | 2,371 |  |  |  | 3,554 |
Non-cash charges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accelerated depreciation |  |  | 8,592 |  |  |  | — |  |  |  | 421 |  |  |  | 9,013 |
Inventory write-downs |  |  | 4,026 |  |  |  | — |  |  |  | — |  |  |  | 4,026 |
Write-down of long-lived assets |  |  | — |  |  |  | — |  |  |  | 5,122 |  |  |  | 5,122 |
Impairment of assets |  |  | — |  |  |  | — |  |  |  | 10,967 |  |  |  | 10,967 |
Total non-cash charges |  |  | 12,618 |  |  |  | — |  |  |  | 16,510 |  |  |  | 29,128 |
Total restructuring, impairment and other related charges |  | $ | 12,859 |  |  | $ | 942 |  |  | $ | 18,881 |  |  | $ | 32,682 |
The following table summarizes the estimated restructuring and other related charges related to the Restructuring Plan to be recognized in the future (in thousands):
|  | Cost of Revenues |  |  | Operating Expenses |  |  | Restructuring, Impairment and Other Related Charges |  |  | Total |
Cash charges |  | $ | — |  |  | $ | — |  |  | $ | 4,682 |  |  | $ | 4,682 |
Non-cash charges |  |  | 5,205 |  |  |  | — |  |  |  | — |  |  |  | 5,205 |
Total estimated charges to be recognized in future (1) |  | $ | 5,205 |  |  | $ | — |  |  | $ | 4,682 |  |  | $ | 9,887 |
(1) | These charges include certain estimates that are provisional and include management judgments and assumptions that could change materially as we complete the execution of our plans. Actual results may differ from these estimates, and the completion of our plan could result in additional restructuring, impairment or other related charges not reflected above.
Restructuring actions result in various costs, including employee-related costs, accelerated depreciation expense, write-downs of long-lived assets and inventory, impairment of long-lived and indefinite-lived assets, contract termination costs and other associated costs. Employee-related costs represent one-time termination benefits for severance and other post-employment costs that are recognized as incurred upon communication of the plan to the identified employees. Accelerated depreciation expense represents additional expense resulting from shortening the useful lives of production and other assets to coincide with the end of production and other activities under an approved restructuring plan. Costs to terminate contracts are recognized upon entering a termination agreement with the provider. Other associated restructuring costs are expensed as incurred. Any impairment or write-down of assets resulting from restructuring activities are recognized immediately in the period the plan is approved. Impairment of assets included impairment charges associated with entering into a sublease for the Salt Lake City, Utah manufacturing facility to be closed and related impairment charges associated with certain leasehold improvements of the property. The fair values of the impaired assets were determined by the Company to be Level 3 under the fair value hierarchy (see Note 5— Fair Value Measurements for the definition of Level 3 inputs) and were estimated based on internal expertise related to current marketplace conditions and estimated future discounted cash flows. These assets were adjusted to their estimated fair values at the time of impairment. If estimated fair values subsequently decline, the carrying values of the assets will be adjusted accordingly. Impairment of assets also included the write-off of an $8.5 million indefinite-lived intangible asset. The Restructuring Plan was determined to be a triggering event for potential impairment of this indefinite-lived intangible asset. As a result of the impairment assessment performed, the Company determined the asset was impaired and recorded an impairment charge to write off the entire $8.5 million balance. The lease for the Company’s Grantsville, Utah manufacturing facility included a five-year renewal option that was reasonably certain of being exercised and included in the lease term when the right-of-use (“ROU”) asset and lease liability were originally measured. Because of the expected closure of this facility as part of the Restructuring Plan, the renewal option was no longer deemed reasonably certain of being exercised and a reassessment of the lease terms was completed. As a result, the original lease term was shortened and the Company recorded a $10.5 million reduction to the ROU asset and corresponding lease liability in the condensed consolidated balance sheets, using the applicable discount rate at the effective date of the reassessment. The following table summarizes 2024 activity associated with employee-related and other costs recorded pursuant to the Restructuring Plan, as presented in the indicated line item of the condensed consolidated statement of operations, that will be settled in cash and are included in accounts payable or accrued compensation on the condensed consolidated balance sheet (in thousands):
Balance at December 31, 2023 |  | $ | — |
Employee-related costs – cost of revenues |  |  | 241 |
Employee-related costs – operating expenses |  |  | 942 |
Employee-related costs – restructuring charges |  |  | 2,355 |
Other costs – restructuring charges |  |  | 16 |
Cash paid |  |  | (906 | )
Balance at September 30, 2024 |  | $ | 2,648 |

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 5.P.4.e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479823/420-10-S99-2 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482017/420-10-50-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482017/420-10-50-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/420/tableOfContent Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482017/420-10-50-1 + Details
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