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Impairment, Restructuring and Other Charges

9 Months Ended

Mar. 31, 2021

Impairment, Restructuring and Other Charges

Impairment, Restructuring and Other Charges

7. Impairment, Restructuring and Other Charges

We endeavor to align our global capacity and infrastructure with demand by our customers as well as fully integrate acquisitions and thereby improve operational efficiency.

During the three months ended March 31, 2021, we recognized a total net benefit of ($0.3) million which included a net benefit of ($0.7) million for reimbursements from our insurance carriers for covered legal charges. We also incurred charges of $0.2 million for employee terminations and $0.2 million for facility closure and operational efficiency activities.

During the nine months ended March 31, 2021, we incurred a total net expense of $7.9 million which included $7.2 million for exit activities associated with an expired turnkey contract in Mexico. Such exit costs include $2.8 million for employee terminations, $1.1 million for facility closure and other exit costs, direct transaction costs of $2.7 million, and $0.6 million for right-of-use asset impairment for a leased facility. We also incurred costs of $1.6 million for other employee terminations and facility closure costs for operational efficiency activities and $0.3 million for acquisition-related activities. We also recognized a net benefit of ($1.2) million for reimbursements from our insurance carriers for covered legal charges.

During the three and nine months ended March 31, 2020, we abandoned a non-core product line in our Healthcare division which resulted in the write-off of assets, including intangible and fixed assets, totaling $3.3 million as we determined that these assets had no value and were permanently impaired. In addition, we continued to recover certain legal costs related to class action litigation and government investigations through insurance reimbursement. We also incurred additional legal fees related to these matters as well as restructuring charges by the divisions as noted in the tables below. This resulted in a net expense of $4.5 million and $1.5 million during the three and nine months ended March 31, 2020, respectively.

The following tables summarize impairment, restructuring and other charges (benefit), net for the periods set forth below (in thousands):


	Three Months Ended March 31, 2020
					Optoelectronics and
			Healthcare		Manufacturing
	Security Division		Division		Division		Corporate		Total
Impairment charges	$	—	$	3,258	$	—	$	—	$	3,258
Acquisition-related costs		107		—		41		155		303
Employee termination costs		328		466		259		50		1,103
Facility closures/consolidation		30		—		—		—		30
Legal costs (recoveries), net		—		—		—		(146)		(146)
Total expensed	$	465	$	3,724	$	300	$	59	$	4,548


	Three Months Ended March 31, 2021
					Optoelectronics and
			Healthcare		Manufacturing
	Security Division		Division		Division		Corporate		Total
Acquisition-related costs	$	22	$	—	$	—	$	—	$	22
Employee termination costs		213		—		—		—		213
Facility closures/consolidation costs (benefit)		166		—		—		—		166
Legal costs (recoveries), net		—		—		—		(686)		(686)
Total expensed (benefit), net	$	401	$	—	$	—	$	(686)	$	(285)


	Nine Months Ended March 31, 2020
					Optoelectronics and
			Healthcare		Manufacturing
	Security Division		Division		Division		Corporate		Total
Impairment charges	$	—	$	3,258	$	—	$	—	$	3,258
Acquisition-related costs		107		—		41		155		303
Employee termination costs		734		466		277		119		1,596
Facility closures/consolidation		30		—		—		—		30
Legal costs (recoveries), net		—		—		—		(3,667)		(3,667)
Total expensed	$	871	$	3,724	$	318	$	(3,393)	$	1,520


	Nine Months Ended March 31, 2021
					Optoelectronics and
			Healthcare		Manufacturing
	Security Division		Division		Division		Corporate		Total
Impairment charges	$	552	$	—	$	—	$	—	$	552
Acquisition-related costs		250		27		—		—		277
Employee termination costs		4,010		—		146		—		4,156
Mexico transaction costs		2,691		—		—		—		2,691
Facility closures/consolidation costs		1,420		—		—		—		1,420
Legal costs (recoveries), net		—		—		—		(1,184)		(1,184)
Total expensed (benefit), net	$	8,923	$	27	$	146	$	(1,184)	$	7,912

The accrued liability for restructuring and other charges is included in other accrued expenses and current liabilities in the condensed consolidated balance sheet. The changes in the accrued liability for restructuring and other charges for the nine-month period ended March 31, 2021 were as follows (in thousands):



			Facility
	Employee		Closure/
	Termination		Consolidation		Acquisition-		Legal Costs and
	Costs		Cost		Related Costs		Settlements		Total
Balance as of June 30, 2020	$	545	$	201	$	—	$	1,882	$	2,628
Restructuring and other charges (benefit), net		4,156		1,420		277		(1,184)		4,669
Payments, adjustments and reimbursements, net		(4,570)		(1,501)		(277)		748		(5,600)
Balance as of March 31, 2021	$	131	$	120	$	—	$	1,446	$	1,697