. RESTRUCTURING OF OPERATIONS

AND OTHER OPERATING INCOME

Restructuring expenses

The Company has implemented various restructuring programs in response to unfavorable macroeconomic trends in certain of the Company’s markets since the

fourth

quarter of fiscal

2015.

These programs primarily involved the reduction of workforce in several of the Company’s manufacturing locations, under a combination of voluntary and involuntary programs.

During the current year, the Company implemented additional actions to reduce personnel costs in its Belgian operations and reorganize for productivity in its European operations. These actions, together with the costs associated with the India manufacturing operations exit, resulted in pre-tax restructuring charges of

$1,179

and

$3,398

in fiscal

2019

and

2018,

respectively.

Restructuring activities since

June 2015

have resulted in the elimination of

176

full-time employees in the manufacturing segment. Accumulated costs to date under these programs within the manufacturing segment through

June 30, 2019

were

$10,452.

The following is a roll-forward of restructuring activity:

Accrued restructuring liability, June 30, 2017	$	92
Additions		3,398
Payments and adjustments		(3,400	)
Accrued restructuring liability, June 30, 2018		90
Additions		1,179
Payments and adjustments		(1,269	)
Accrued restructuring liability, June 30, 2019	$	-

Other Operating Income – Sale of Mill Log Business

February 7, 2019,

as part of its ongoing initiative to focus resources on core manufacturing and product development activities, the Company entered into an asset purchase agreement with

one

of its major distributor customers. Under this agreement, the Company sold substantially all of the assets and intangible rights of Mill-Log Equipment Co., Inc. and Mill-Log Wilson Equipment Ltd. (the “Mill Log Business”), its wholly-owned subsidiaries which distributed Twin Disc products in the northwestern U.S. and western Canada territories. The Mill Log Business reported pre-tax loss of

$1,374

and pre-tax income of

$1,139

in fiscal

2019

and

2018,

respectively. The results of operations from the Mill Log Business are reported as part of the Company’s distribution segment. Assets sold consisted primarily of inventories, with a carrying value of

$6,298,

and property and equipment including right-of-use leases, with a carrying value of

$592.

The sale closed on

March 4, 2019

and the Company received a total consideration of

$7,658,

consisting of cash proceeds of

$5,158

and a note receivable for

$2,500

due on

March 4, 2020.

The Company recognized a pre-tax gain on sale of the Mill Log Business of

$768,

and recorded it as part of other operating income in the statement of operations in the current year.

Other Operating Income – Fair Value Adjustment of Contingent Consideration

As discussed in Note B, Acquisition of Veth Propulsion Holding B.V., the Company issued a contingent consideration as part of the Veth Propulsion acquisition; the fair value at acquisition date was

$2,921.

The contingency was settled after Veth Propulsion demonstrated that it achieved the earnings before interest, tax, depreciation and amortization (“EBITDA”) amount as provided for under the Purchase Agreement.

May 13, 2019,

the Company issued

139,347

shares of the Company’s common stock, with a fair value of

$1,991

in settlement of the contingent consideration. Under ASC

805,

Business Combinations, any change in fair value of the contingent consideration is recognized in the current period income statement and is

not

an adjustment to the opening balance sheet or the determination of goodwill. Accordingly, the Company recognized a gain of

$809,

after foreign exchange impact; this amount is reported as other operating income in the current fiscal year.