XML 35 R16.htm IDEA: XBRL DOCUMENT
v3.19.2

Note 10 - Restructuring and Impairment Activities | 12 Months Ended
--- | ---
Jun. 30, 2019
Notes to Financial Statements |
Restructuring, Impairment, and Other Activities Disclosure [Text Block] |
( 10 ) | Restructuring and Impairment Activities
Optimization of Manufacturing and Logistics During fiscal 2019, we began to execute plans to consolidate our manufacturing and logistics operations as part of an overall strategy to maximize production efficiencies and maintain our competitive advantage. In April 2019, the following changes to our operations were announced as we continue to improve the vertical integration of our business operations.
| ● | Our 550,000 square foot Old Fort, North Carolina case goods manufacturing plant, while maintaining a lumber processing facility, will be converted into a state-of-the-art distribution center to support our national distribution structure and growing GSA contract business.
| ● | Consolidating approximately half of the case goods manufacturing from our Old Fort plant into our case goods plants in Orleans and Beecher Falls, Vermont, with the balance to be consolidated into our other manufacturing facilities.
| ● | Expansion of our Maiden, North Carolina campus with the addition of 80,000 square feet of operating space.
| ● | Distribution operations and art framing production at our Passaic, New Jersey facility will be discontinued with the distribution operations moved to our operations in North Carolina and the art framing operations outsourced.
As of June 30, 2019, we have permanently ceased operations at our Passaic, New Jersey facility and, for the most part, transferred our Old Fort case goods manufacturing operations to other existing operations. As a result, approximately 325 of our associates in Old Fort and 55 associates in Passaic were terminated. We plan to continue with the optimization project during fiscal 2020 as we convert Old Fort into a distribution center and expand our existing Maiden, North Carolina campus. For these fourth quarter of fiscal 2019 actions, we recorded pre-tax restructuring, impairment, and other related charges totaling $8.3 million, consisting of $3.1 million in impairments of long-lived assets, $2.8 million in employee severance and other payroll and benefit costs, $2.0 million in inventory write-downs and manufacturing variances and $0.4 million of other associated costs, including freight and relocation expenses. The inventory write-downs and abnormal manufacturing overhead variances of $2.0 million were recorded within Cost of Sales with the remaining $6.3 million recorded within the line item Restructuring and Impairment Charges in the consolidated statement of comprehensive income. Retail Design Center Long-Lived Assets Impairment During the fourth quarter of fiscal 2019, we recorded a non-cash impairment charge of $9.9 million related to the impairment of long-lived assets held at certain retail design center locations. Due to retail segment operating losses and a recent organizational realignment, we identified this as a fiscal 2019 triggering event requiring assessment of recoverability. The asset group used in the impairment analysis, which represented the lowest level for which identifiable cash flows were available and largely independent of the cash flows of other groups of assets, was the individual retail design center. We estimated future cash flows based on design center-level historical results, current trends, and operating and cash flow projections. The impairment charge of $9.9 million was recorded in the consolidated statement of comprehensive income within the line item Restructuring and Impairment Charges. Lease Exit Costs and Other Charges During the fourth quarter of fiscal 2019 we recorded $2.1 million of charges primarily related to remaining contractual obligations under leased retail design center space for which we ceased using as of June 30, 2019. The amount of the charge was equal to all costs that will continue to be incurred under our lease for its remaining term without economic benefit and measured at fair value when we ceased using the right conveyed by the contract. The pre-tax charge was recorded in the consolidated statement of comprehensive income within the line item Restructuring and Impairment Charges. Summary of Restructuring, Impairments and Other related charges Restructuring, impairment and other related fiscal 2019 charges are summarized in the table below (in thousands):
|  | Fiscal 2019 |
|  | Charges |
Optimization of manufacturing and logistics |  | $ | 6,330 |
Impairment of long-lived assets at retail design centers |  |  | 9,913 |
Lease exit costs (remaining lease rentals) |  |  | 2,662 |
Other charges (income) |  |  | (525 | )
Total Restructuring, Impairments and other charges |  | $ | 18,380 |
Inventory write-downs and manufacturing overhead costs |  |  | 1,994 | (1)
Total |  | $ | 20,374 |
( 1 ) | Inventory write-downs and manufacturing overhead costs are reported within Cost of Sales in the consolidated statements of comprehensive income.
Restructuring, Impairments and Other Related Charges Rollforward Activity in the Company’s restructuring reserves is summarized in the table below (in thousands):
|  | Balance |  |  | Fiscal 2019 Activity |  |  | Balance |
Optimization of Manufacturing and Logistics |  | June 30, 2018 |  |  | New Charges |  |  | Non-Cash |  |  | Payments |  |  | June 30, 2019 |
Employee severance, other payroll and benefit costs |  | $ | - |  |  | $ | 2,837 |  |  | $ | - |  |  | $ | (1,123 | ) |  | $ | 1,714 | (1)
Accelerated depreciation of long-lived assets |  |  | - |  |  |  | 3,112 |  |  |  | 3,112 |  |  |  | - |  |  |  | - |
Inventory write-downs and manufacturing overhead costs |  |  | - |  |  |  | 1,994 |  |  |  | 1,128 |  |  |  | (866 | ) |  |  | - |
Other exit and relocation costs |  |  | - |  |  |  | 381 |  |  |  | 283 |  |  |  | (98 | ) |  |  | - |
Sub-total |  |  | - |  |  |  | 8,324 |  |  |  | 4,523 |  |  |  | (2,087 | ) |  |  | 1,714 |
Retail Design Center Impairment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impairment of long-lived assets |  |  | - |  |  |  | 9,913 |  |  |  | 9,913 |  |  |  | - |  |  |  | - |
Other Restructuring and Impairment Charges |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Lease exit costs (remaining lease rentals) |  |  | - |  |  |  | 2,662 |  |  |  | (483 | ) |  |  | - |  |  |  | 3,145 | (2)
Other charges (income) |  |  | 958 |  |  |  | (525 | ) |  |  | - |  |  |  | (209 | ) |  |  | 224 | (3)
Sub-total |  |  | 958 |  |  |  | 2,137 |  |  |  | (483 | ) |  |  | (209 | ) |  |  | 3,369 |
Total Restructuring, Impairments and other exit costs |  | $ | 958 |  |  | $ | 20,374 |  |  | $ | 13,953 |  |  | $ | (2,296 | ) |  | $ | 5,083 |
( 1 ) | Remaining severance expected to be paid during the first quarter of fiscal 2020. The balance of $1.7 million is reported within Acc rued compensation and benefit s in our consolidated balance sheet as of June 30, 2019.
( 2 ) | The current portion of the remaining lease rentals as of June 30, 2019 is recorded within A ccounts payable and accrued expenses and totaled $1.1 million while the non-current portion of $2.1 million is reflected in O ther long-term liabilities.
( 3 ) | The remaining balance from the other charges (income) as of June 30, 2019 is recorded within A ccounts payable and accrued expenses .

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure of costs incurred for restructuring including, but not limited to, exit and disposal activities, remediation, implementation, integration, asset impairment, and charges against earnings from the write-down of assets. + References No definition available. + Details
Name: | us-gaap_RestructuringImpairmentAndOtherActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration