Facility Lease Exit

12 Months Ended

Dec. 31, 2015

Facility Lease Exit [Abstract]

Facility Lease Exit

14. Facility Lease Exit

In September 2014, the Company entered into the Lease Termination Agreement pursuant to which the Company immediately surrendered leased space at 650 East Kendall Street in Cambridge, Massachusetts that it had previously ceased using earlier in 2014. In connection with the Lease Termination Agreement, the Company agreed to pay the landlord a termination fee totaling $15.6 million. The Company also agreed to surrender its remaining leased space upon 90 days written notice prior to September 24, 2015.

The Company previously recorded liabilities totaling $15.2 million for lease exit costs when it ceased using the leased spaces during the first and second quarters of 2014. The fair value of these liabilities was determined using the credit-adjusted risk-free rate to discount the estimated future net cash outflows associated with the space that met the cease use criteria. The estimate of future net cash outflows included the Company’s expected minimum rental payments and incremental operating, utility and tax payments to the landlord less the amount of sublease income that the Company estimates it could reasonably expect to obtain during the remainder of the lease period. Upon signing the Lease Termination Agreement during the quarter ended September 30, 2014, the Company recorded an additional $1.9 million of Lease Exit charges based on the fair value of the revised net cash outflows, resulting in total Lease Exit charges of $17.1 million for the year ended December 31, 2014.

In February 2015, the Company provided notice that it would surrender the remaining space on May 29, 2015. Accordingly, the Company revised the estimated useful life of its leasehold improvements related to this office space and amortized such assets through May 2015, resulting in an additional $2.9 million of depreciation expense during the year ended December 31, 2015. Similarly, the Company accelerated the amortization of its deferred rent and leasehold improvement allowance associated with this office space through May 2015, resulting in an additional $3.5 million of amortization during the year ended December 31, 2015. Upon the surrender of the remaining space, the Company had no further rights or obligations with respect to the lease. The Company has secured office space appropriate for its current needs under a cancellable arrangement that began in May 2015.

The following tables summarize the components of the Company’s lease exit activity recorded in current liabilities:

	Lease Exit Expense incurred during the year ended December 31, 2014		Accretion Expense incurred during the year ended December 31, 2014		Amounts paid during the year ended December 31, 2014			Amounts offset against tenant receivable during the year ended December 31, 2014			Amounts accrued at December 31, 2014
	(in thousands)
Lease exit costs	$	17,142	$	974	$	(5,313	)	$	(7,822	)	$	4,981

In addition to the $17.1 million of expense included in the table above, lease exit expenses also include the write-off $14.0 million of deferred rent associated with the portions of the facility that met the cease use criteria under ASC 420-10 and leasehold improvements totaling $7.6 million during the year ended December 31, 2014 as the Company’s estimates of sublease income would not recover the value of the leasehold improvements.

	Amounts accrued at December 31, 2014		Accretion Expense incurred during the year ended December 31, 2015		Amounts paid during the year ended December 31, 2015			Additional expense incurred during the year ended December 31, 2015		Amounts accrued at December 31, 2015
	(in thousands)
Lease exit costs	$	4,981	$	224	$	(5,477	)	$	272	$	─

In addition to the $0.5 million of expense for the year ended December 31, 2015 included in the table above, lease exit expenses also include the write-off of $0.2 million of leasehold improvements.