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Note 9 - Restructuring and Impairment Activities | 3 Months Ended
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Sep. 30, 2019
Notes to Financial Statements |
Restructuring, Impairment, and Other Activities Disclosure [Text Block] |
( 9 ) | Restructuring and Impairment Activities
Optimization of Manufacturing and Logistics During the fourth quarter of fiscal 2019, we initiated restructuring plans to consolidate our manufacturing and logistics operations as part of an overall strategy to maximize production efficiencies and maintain our competitive advantage. As of June 30, 2019, we permanently ceased operations at our Passaic, New Jersey property and, for the most part, transferred our Old Fort, North Carolina case goods manufacturing operations to our other existing operations. As a result, approximately 325 of our associates in Old Fort and 55 associates in Passaic were terminated. During the first quarter of fiscal 2020, we continued with this optimization project as we converted the Old Fort facility into a distribution center and expanded our existing Maiden, North Carolina manufacturing campus while finalizing severance and other exit costs associated with our case goods operations. In connection with the foregoing first quarter fiscal 2020 initiatives, we recorded pre-tax restructuring and other exit charges totaling $1.7 million, consisting of $1.1 million in manufacturing variances associated with the closing of the Passaic property and the repurposing of the Old Fort case goods manufacturing operations, $0.4 million in employee severance and other payroll and benefit costs, and $0.2 million of other exit costs. The manufacturing overhead variances of $1.1 million were recorded within Cost of Sales with the remaining $0.6 million recorded within the line item Restructuring and Impairment Charges (Gains) in the consolidated statements of comprehensive income. As part of our optimization plans, we completed the sale of our Passaic property in September 2019 to an independent third party and received $12.4 million in cash less certain adjustments set forth in the purchase and sale agreement, including $0.9 million in selling and other closing costs. As a result of the sale, the Company recognized a pre-tax gain of $11.5 million in the first quarter of fiscal 2020, which was recorded within the line item Restructuring and Impairment Charges (Gains) in the consolidated statements of comprehensive income. Inventory Write-downs During the first quarter of fiscal 2020 we recorded a non-cash charge of $3.1 million related to the write-down and disposal of certain slow moving and discontinued inventory items, which was due to actual demand and forecasted market conditions for these inventory items being less favorable than originally estimated. Of the total inventory write-down, $2.7 million related to slow moving finished goods with the remaining $0.4 million consisting of raw materials that were disposed. The non-cash inventory write-down was recorded in the consolidated statement of comprehensive income within the line item Cost of Sale s. Summary of Restructuring , Impairments and Other r elated charges (gains) Restructuring, impairment and other related costs incurred during the first quarter of fiscal 2020 were as follows (in thousands):
|  | Three months ended |
|  | September 30, 2019 |
Optimization of manufacturing and logistics |  | $ | 640 |
Gain on sale of Passaic property |  |  | (11,497 | )
Total Restructuring and other exit costs (income) |  | $ | (10,857 | )
Manufacturing overhead costs |  |  | 1,052 | (1)
Inventory write-downs |  |  | 3,088 | (1)
Total |  | $ | (6,717 | )
( 1 ) | Manufacturing overhead costs and inventory write-downs are reported within Cost of Sales in the consolidated statements of comprehensive income.
Restructuring and Other Related Charges Rollforward The Company’s restructuring activity is summarized in the table below (in thousands):
|  |  |  |  | Fiscal 2020 Activity |  |  |  |
Optimization of Manufacturing and Logistics |  | Balance June 30, 2019 |  |  | New Charges (Income) |  |  | Non-Cash |  |  | (Payments) Receipts |  |  | Balance Sept 30, 2019 |
Employee severance, other payroll and benefit costs |  | $ | 1,714 |  |  | $ | 449 |  |  | $ | - |  |  | $ | (2,002 | ) |  | $ | 161 | (1)
Manufacturing overhead costs |  |  | - |  |  |  | 1,052 |  |  |  | - |  |  |  | (1,052 | ) |  |  | - |
Gain on sale of Passaic property |  |  | - |  |  |  | (11,497 | ) |  |  | 245 |  |  |  | 11,612 |  |  |  | (130 | ) (2)
Other exit and relocation costs |  |  | - |  |  |  | 191 |  |  |  | (465 | ) |  |  | (697 | ) |  |  | (41 | ) (3)
Sub-total |  | $ | 1,714 |  |  | $ | (9,805 | ) |  | $ | (220 | ) |  | $ | 7,861 |  |  | $ | (10 | )
Inventory write-downs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Inventory write-downs |  | $ | - |  |  | $ | 3,088 |  |  | $ | 3,088 |  |  | $ | - |  |  | $ | - |
Other Restructuring and Impairment Charges |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Lease exit costs (remaining lease rentals) |  | $ | 3,145 |  |  | $ | - |  |  | $ | 2,878 |  |  | $ | (267 | ) |  | $ | - | (4)
Other charges (income) |  |  | 224 |  |  |  | - |  |  |  | - |  |  |  | (53 | ) |  |  | 171 | (5)
Sub-total |  |  | 3,369 |  |  |  | - |  |  |  | 2,878 |  |  |  | (320 | ) |  |  | 171 |
Total Restructuring, Impairments and other exit costs |  | $ | 5,083 |  |  | $ | (6,717 | ) |  | $ | 5,746 |  |  | $ | 7,541 |  |  | $ | 161 |
( 1 ) | Remaining severance expected to be paid during the second quarter of fiscal 2020. The balance of $0.2 million is reported within Acc rued compensation and benefit s in our consolidated balance sheet as of September 30, 2019.
( 2 ) | The remaining balance of $0.1 million as of September 30, 2019 represents prepaid income taxes from the sale of the Passaic property, which are recorded as a reduction to our income taxes payable balance reported in Other current liabilities.
( 3 ) | Balance represents proceeds to be received from inventory sold at auction in the closing of the Passaic property. We expect to receive the proceeds from these sales during the second quarter of fiscal 2020. The balance is reported within Prepaid expenses and other current assets as of September 30, 2019.
( 4 ) | The previously recorded vacant space liability was reclassified from Accounts payable and accrued expenses and Other long-term liabilities to Operating lease right-of-use assets upon the adoption of ASU 2016 - 02, which requires all right-of-use assets to be measured net of any Topic 420 lease liabilities.
( 5 ) | The remaining balance from the other charges (income) as of September 30, 2019 is recorded within Accounts payable and accrued expenses .

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- 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
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