Severance, Impairment And Other Charges

12 Months Ended

Jun. 30, 2017

Severance, Impairment And Other Charges [Abstract]

10.Severance, Impairment and Other Charges

During the third quarter of fiscal 2016, we announced a financial improvement plan that resulted in a reduction in global headcount of approximately 11%. This plan was implemented to re-align our fixed costs with our near-to mid-term expectations for our business. In addition, during the first quarter of fiscal 2017, we decided to terminate production and marketing of a specific product line due to limitations in its design. As a result of this decision, we have written off $307,000, net related to inventory and impaired certain customer receivable balances in the amount of $169,000. Total pre-tax cash and non-cash charges related to the original restructuring plan as well as the additional charges from the terminated product line are expected to be up to $4.0 million; as of June 30, 2017, we have incurred $3,603,000.

In July 2017, we announced that we had entered into an agreement to settle the civil suit that was filed by 3CEMS, a Cayman Island and People’s Republic of China corporation, in January 2015 (see Note 12 ‘Commitments and Contingencies – Legal Proceedings’ for further discussion). The settlement of $1,000,000 has been recorded as a liability at June 30, 2017.

The charges recorded as Severance, Impairment and Other Charges are as follows (in thousands):


	Fiscal Year ended June 30, 2017		Fiscal Year ended June 30, 2016
Severance and Related Costs	$	301	$	1,968
Legal Settlement		1,000		-
Impairment		169		694
Inventory Write-Off		307		164
Total	$	1,777	$	2,826

Severance expense for the fiscal year ended June 30, 2017 was associated with adjustments at our U.S. location (increase of $312,000), our China location (increase of $82,000) and our German location (decrease of $93,000), primarily as we reached final settlements related to several individuals impacted by the reduction in force.

Severance expense for the fiscal year ended June 30, 2016 was associated with a reduction in force at our U.S. location ($1,395,000), our German location ($472,000) and our China location ($101,000), We also recorded an impairment charge of previously capitalized software and wrote-off inventory in the amount of $858,000 related to a product line that was discontinued in the third quarter of fiscal 2016.

The following table reconciles the activity for the Reserve for Restructuring and Other Charges (in thousands):


	2017		2016
Balance at June 30	$	814	$	-
Accruals - Severance Related		301		1,968
Accruals - Legal Settlement		1,000		-
Payments		(1,002)		(1,154)
Balance at June 30	$	1,113	$	814

The remaining accrued balance at June 30, 2017 mainly includes payments to be made related to our legal settlement with 3CEMS, which is expected to be paid out over the next ten months and the U.S. and China reduction in force, which is expected to be paid within the next fiscal year.