11. Impairment and Restructuring Charges

Long-lived Asset Impairment.

During the year ended March 31, 2019, the Company reviewed assets designated for its TeamConnect business. As a result of the Company’s shift to better align and focus its business priorities on its spectrum initiatives, it determined that the carrying value of radios and related accessories were not fully recoverable. As a result, the Company recorded a non-cash asset impairment charge of $0.8 million in the year ending March 31, 2019, to reduce the carrying value of these assets to zero.

Restructuring Charges.

April 2018 and June 2018 restructuring activities

In April 2018, the Company announced a shift in its focus and resources in order to pursue the regulatory initiatives at the FCC and prepare for the future deployment of broadband and other advanced technologies and services. In light of this shift in focus, the board of directors also approved a chief executive officer transition plan, under which, John Pescatore, the Company’s chief executive officer and president, transitioned to the position of vice chairman and Morgan O’Brien, the Company’s then-current vice chairman, assumed the position as the new chief executive officer. In connection with the transition, the Company and Mr. Pescatore entered into a Continued Service, Consulting and Transition Agreement and a separate Consulting Agreement (the “CEO Transition Agreements”) and the Company also entered into additional consulting and transition agreements with several other key employees. As of March 31, 2019, the Company recorded a liability of $2.7 million, of which $2.1 million is reflected in restructuring reserve and $0.6 million in other non-current liabilities, for the cash payments under both the CEO Transition Agreements with Mr. Pescatore and the consulting and transition agreements with other key employees payable within the next twelve to eighteen months. In addition, for the year ended March 31, 2019, the Company recorded a non-cash $1.7 million charge for stock compensation expense due to modifications to the key employee stock grants recorded in restructuring costs. For the year ended March 31, 2019, the Company recorded a non-cash $4.6 million charge for stock compensation expense due to modifications to Mr. Pescatore’s stock grants and the key employee stock grants.

On June 1, 2018, the Company’s board of directors approved an initial plan to restructure its business aimed at reducing the operating costs of its TeamConnect and pdvConnect businesses and better aligning and focusing its business priorities on its spectrum initiatives. As part of the restructuring plan, the Company eliminated approximately 20 positions, or 20% of its workforce, primarily from its TeamConnect and pdvConnect businesses. In August 2018, the Company continued with its restructuring efforts and eliminated approximately seven additional positions.

For the year ended March 31, 2019, total restructuring costs related to the April 2019 and June 2018 restructuring activities were $8.7 million consisting of $4.6 million of stock compensation expense, $3.7 million for the CEO Transition Agreements and the additional consulting and transition agreements with other key employees, as well as $0.4 million related to employee severance and benefit costs. Restructuring efforts has been completed by March 31, 2019.

For the year ended March 31, 2019, total accrued restructuring charges for the April 2018 and June 2018 restructuring activities were as follows (in thousands):


	Restructure Activity
Balance at March 31, 2018	$	—
Severance costs		408
Consulting costs		3,721
Facility exit		3
Cash payments		(1,477)
Balance at March 31, 2019		2,655
Less amount classified as current liabilities - restructuring reserve		2,093
Noncurrent liabilities - included in other liabilities	$	562

December 2018 cost reductions

On December 31, 2018, the Company’s board of directors approved the following cost reduction actions: (i) the elimination of approximately 20 positions, or 30% of the Company’s workforce and (ii) the closure of its office in San Diego, California (collectively, the “December 2018 Cost-Reduction Actions”). For the year ended March 31, 2019, the company recorded an additional restructuring charge relating to the December 2018 Cost-Reduction Actions amounting to $0.9 million consisting of $0.8 million related to employee severance and benefit costs and $0.1 million in facility exit costs for our San Diego, California office. An additional $0.3 million of restructuring charges will be incurred during fiscal 2020 and 2021 related to employee retention costs. The Company anticipates that the cost reduction and restructuring actions will be completed by July 31, 2019 and that the related cash payments for severance costs will occur by the end of August 31, 2019.

For the year ended March 31, 2019, total December 2018 cost reduction charges were as follows (in thousands):


	Restructure Activity
Balance at March 31, 2018	$	—
Severance costs		794
Facility exit		110
Cash payments		(225)
Balance at March 31, 2019		679
Less amount classified as current liabilities - restructuring reserve		665
Noncurrent liabilities - included in other liabilities	$	14