Severance, Impairment And Other Charges

3 Months Ended

Sep. 30, 2017

Severance, Impairment And Other Charges [Abstract]

11.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. Since this decision was made, we have written off $293,000, net related to inventory and impaired certain customer receivable balances in the amount of $127,000. 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 September 30, 2017, we have incurred $3,551,000.

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 16, “Commitments and Contingencies – Legal Proceedings” for further discussion). The settlement of $1,000,000 was recorded as a liability in fiscal 2017.

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



	Three Months Ended September 30,
	2017		2016
Severance and Related Costs	$	4	$	114
Impairment		(42)		145
Inventory Write-Off		(14)		397
Total	$	(52)	$	656

Severance expense for the three months ended September 30, 2017 was associated with an adjustment at our U.S. location. The decrease in the Impairment is due to a collection of an accounts receivable balance that was previously written off. The decrease of the inventory write-off was due to finding other uses for some of the inventory originally designated as impaired.

Severance expense (income) for the three months ended September 30, 2016 was associated with adjustments at our U.S. (expense of $110,000), Chinese (increase of $82,000) and German (reduction of $78,000) locations as we reached final settlements related to several individuals impacted by the reduction in force.

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



	2017		2016
Beginning Balance at July 1,	$	1,113	$	814
Accruals - Severance Related		4		114
Payments		(283)		(329)
Ending Balance at September 30,	$	834	$	599

The remaining accrued balance at September 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 8 months and the China reduction in force, which is expected to be paid within the next fiscal year.