LiveWire Group Inc

13. Restructuring

On April 24, 2024, the Company announced a plan to both relocate the operations of LiveWire Labs, the Company’s west coast product development facility, from Mountain View, California, to Milwaukee, Wisconsin, and streamline headcount at the Company. The Company believes this plan will enable synergies and optimize efficiencies in product development and simplify the Company’s overall path to future profitability.

In conjunction with this plan, the Company recorded $673 thousand and $3,025 thousand of employee termination benefits, primarily severance, during the three and nine months ended September 30, 2024, respectively, within Selling, administrative and engineering expense on the consolidated statements of operations and comprehensive loss in the Electric Motorcycle segment. Of these amounts, $673 thousand and $1,797 thousand related to one-time employee termination benefits recorded pursuant to ASC 420, Exit or Disposal Cost Obligations (“ASC 420”) for the three and nine months ended September 30, 2024, respectively, and the remainder was related to existing contractual arrangements with employees recorded pursuant to ASC 712, Compensation – Nonretirement Postemployment Benefits (“ASC 712”). During the three and nine months ended September 30, 2024, cash payments of $1,563 thousand and $2,020 thousand were made related to this plan. Additionally, the Company incurred $552 thousand and $744 thousand of expenses for the three and nine months ended September 30, 2024 related to employee relocation and equipment move costs in conjunction with these actions, which was recorded within Selling, administrative and engineering expense on the consolidated statements of operations and comprehensive loss in the Electric Motorcycles segment. Of this amount, $54 thousand and $151 thousand was paid within the three and nine months ended September 30, 2024, respectively.

In September 2024, continuing its focus on the Company’s path to profitability and furthering its strategy, the Company executed a reorganization of its Sales and Marketing function and Product Development and Design function, including consolidating each of these functions under singular leadership and other headcount reductions. In conjunction with this reorganization, the Company recorded $900 thousand of employee termination benefits, primarily severance, during the three and nine months ended September 30, 2024, of which none was paid as of September 30, 2024. This amount was recorded within the Electric Motorcycles segment and presented within Selling, administrative and engineering on the consolidated statements of operations and comprehensive loss. Of this amount, $405 thousand related to one-time employee termination benefits recorded pursuant to ASC 420, and the remainder was related to existing contractual arrangements with employees recorded pursuant to ASC 712.

The Company recognized a reduction in stock compensation expense of $730 thousand and $3,024 thousand in the three and nine months ended September 30, 2024, respectively, resulting from forfeitures of awards related to employees who terminated during the second and third quarters of 2024 resulting from the above actions. The Company also recorded $401 thousand and $863 thousand of accelerated depreciation related to LiveWire Labs leasehold improvements resulting from the move from Mountain View, California to Milwaukee, Wisconsin in the three and nine months ended September 30, 2024, respectively. These amounts were recorded within Selling, administrative and engineering expense on the consolidated statements of operations and comprehensive loss in the Electric Motorcycles segment.

The following table displays a roll-forward of the restructuring liability recorded within the Company’s consolidated balance sheets and the related cash flow activity (in thousands):