. 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. In its European operations, the Company also implemented actions to reorganize for productivity.

These actions resulted in restructuring charges of

$1,953

and

$1,179

in fiscal

2020

and

2019,

respectively.

Restructuring activities since

June 2015

have resulted in the elimination of

207

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

June 30, 2020

were

$12,405.

During the

second

quarter of fiscal

2020,

a marine propulsion development program, for which the Company had provided development and production services, was terminated. The cost of exiting the contract consisted of a noncash write-off of assets and liabilities relating to the program amounting to

$2,185,

and a cash settlement to satisfy supplier commitments associated with the program amounting to

$1,000.

The Company has classified the total contract exit cost of

$3,185

as a restructuring charge within the manufacturing segment, in the year ended

June 30, 2020.

The following is a roll-forward of restructuring activity:

Accrued restructuring liability, June 30, 2018	$	90
Additions		1,179
Payments and adjustments		(1,269	)
Accrued restructuring liability, June 30, 2019		-
Additions		5,138
Payments and adjustments		(5,054	)
Accrued restructuring liability, June 30, 2020	$	84

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

in fiscal

2019.

The results of operations from the Mill Log Business were 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.

As of

June 30, 2020,

the Company has agreed to a revised payment schedule after collecting

$500,

and is carrying the balance of

$1,200

and

$800

in other current assets and other assets, respectively. 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 fiscal

2019.

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 statement of operations and comprehensive (loss) income 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 fiscal

2019.