Restructuring and Severance

9 Months Ended

Mar. 31, 2017

Restructuring and Severance

Restructuring and Severance

10.   Restructuring and Severance

In the third quarter of fiscal year 2017, the Company exited three facilities that are currently under an operating lease and reduced its workforce through involuntary terminations. The Company consolidated its corporate workforce by exiting its space in a building as well as another facility that was no longer being utilized. The workforce reduction was executed after an internal management review of resources required to meet the future business plans of the Company.

The present value of the remaining lease payments was calculated using a credit adjusted risk-free rate and estimated sublease rentals for each lease. In aggregate, the Company recorded an impairment of $5.4 million for the leases. The current portion of the liability of $1.7 million, is included in accrued liabilities and the long-term portion of $3.7 million, is included in other long-term liabilities on the condensed consolidated balance sheet. In addition to the lease impairment, the Company accelerated the useful life of each lease’s property and equipment to the cease-use date and recorded accelerated depreciation of $1.4 million. The Company also wrote off the deferred rent and the liability for tenant improvements associated with each lease which resulted in income of $1.9 million. The $4.9 million net impact of these actions are recorded in selling, administrative, and other operating expenses in the condensed consolidated statements of operations. There were no similar charges recorded during the three or nine months ended March 31, 2016.

The Company reduced its workforce during the three months ended March 31, 2017 and recorded severance of $2.3 million. For the nine months ended March 31, 2017, the Company recorded severance of $3.3 million. During the three and nine months ended March 31, 2016, the Company recorded severance of $0.2 million and $1.0 million, respectively.