Note P - Restructuring of Operations and Income From Extinguishment of Loan

12 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Restructuring, Impairment, and Other Activities Disclosure [Text Block]

P. RESTRUCTURING OF OPERATIONS AND INCOME FROM EXTINGUISHMENT OF LOAN

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 fourth quarter of fiscal 2021, the Company undertook a series of steps to accelerate its focus on its core competencies, improve its fixed cost structure, and monetize some of its under-utilized assets.

With regard to its Belgian operations, on June 30, 2021, the Company announced a new phase in its restructuring plans. Under this plan, the Belgian operation’s workforce will be reduced by 23 employees. This reduction in force resulted in an accrual of $2,200, pertaining to the Company’s current estimate for the payment of severance benefits, which is expected to be completed by December 2022. The accrual will be adjusted as negotiations with the union representing certain of the affected employees commence and progress. The action was taken to allow the Belgian operation to focus resources on core manufacturing processes, while allowing for savings on the outsourcing of non-core processes. The Company anticipates annual pre-tax savings upon completion of the restructuring of approximately $1,600.

Total restructuring charges relating to streamlining operations amounted to $3,110 and $1,953 in fiscal 2021 and 2020, respectively. Restructuring activities since June 2015 have resulted in the elimination of 252 full-time employees in the manufacturing segment. Accumulated costs to date under these programs within the manufacturing segment through June 30, 2021 were $15,515.

Assets held for sale

To improve its fixed cost structure and monetize some of its under-utilized assets, the Company commenced the active marketing of three of its real estate properties, namely, its corporate headquarters in Racine, its propeller machining plant and office in Switzerland, and a spare warehouse in Italy during the fourth quarter of fiscal 2021. Such actions required the Company to reclassify these assets from Property, Plant and Equipment to Assets Held for Sale, at fair value less costs to sell, or net book value, whichever is lower. Fair value was determined using real estate broker estimates, and would be classified as Level 3 in the fair value hierarchy. This assessment of fair value resulted in the Company recognizing a write-down of the carrying value of its corporate headquarters by $4,267.

On August 17, 2021, the Company signed an agreement to sell the propeller machining plant and office in Switzerland and received 600 Swiss francs as partial proceeds.

The following is a roll-forward of restructuring activity:

Accrued restructuring liability, June 30, 2019	$	-
Additions		5,138
Payments and adjustments		(5,054	)
Accrued restructuring liability, June 30, 2020		84
Additions		7,377
Payments and adjustments		(5,109	)
Accrued restructuring liability, June 30, 2021	$	2,352

Income from extinguishment of loan

As discussed in Note G, Debt, on June 16, 2021, the Company received formal forgiveness of its PPP Loan in the amount of $8,200. In accordance with ASC 470 Debt and ASC 450-30 Gain contingency, the Company recorded $8,200 in income from extinguishment of loan in its condensed consolidated statement of operations in fiscal 2021.