Charges Related To Restructuring Activities

3 Months Ended

Mar. 31, 2018

Restructuring and Related Activities [Abstract]

Charges Related to Restructuring Activities

The company's restructuring charges were originally necessitated primarily by continued declines in Medicare and Medicaid reimbursement by the U.S. government, as well as similar healthcare reimbursement pressures abroad, which negatively affect the company's customers (e.g. home health care providers) and continued pricing pressures faced by the company due to the outsourcing by competitors to lower cost locations. Restructuring decisions were also the result of reduced profitability in the NA/HME and Asia/Pacific segments. In addition, as a result of the company's transformation strategy, additional restructuring actions were incurred in 2017 and continued in 2018. The company expects any near-term cost savings from restructuring will be offset by other costs because of pressures on the business.

For the three months ended March 31, 2018, charges totaled $401,000 which were related to severance in NA/HME ($97,000), Europe ($293,000) and Asia/Pacific ($11,000). Payments for the three months ended March 31, 2018 were $2,460,000 and the cash payments were funded with company's cash on hand. Most of the 2018 charges are expected to be paid out within twelve months.

For the three months ended March 31, 2017, charges totaled $3,283,000 which were related to NA/HME ($2,242,000),

Europe segment ($690,000) and Asia/Pacific ($351,000). In NA/HME, costs were incurred related to severance ($2,095,000) and contract termination costs ($147,000). The European and Asia/Pacific charges were for severance costs. Payments for the three months ended March 31, 2017 were $2,251,000 and the cash payments were funded with company's cash on hand. Most of the 2017 charges have been paid out.

There have been no material changes in accrued balances related to the charges, either as a result of revisions to the plans or changes in estimates. In addition, the savings anticipated as a result of the company's restructuring plans have been or are expected to be achieved, primarily resulting in reduced salary and benefit costs principally impacting Selling, General and Administrative expenses, and to a lesser extent, Costs of Products Sold. However, in general, these savings have been more than offset by the general business decline, higher regulatory and compliance costs related to quality system improvements, and more recently, higher interest expense. To date, the company's liquidity has not been materially impacted. Please refer to Charges Related to Restructuring Activities of company's Annual Report on Form 10-K for the period ending December 31, 2017 for disclosure of restructuring activity prior to 2018.

A progression by reporting segment of the accruals recorded as a result of the restructuring for the period ended March 31, 2018 is as follows (in thousands):



	Severance			Contract Terminations			Total
December 31, 2017 Balances
NA/HME	$	2,439		$	167		$	2,606
Europe	249			134			383
Other	1,016			—			1,016
Total	3,704			301			4,005
Charges
NA/HME	97			—			97
Europe	293			—			293
Asia/Pacific	11			—			11
Total	401			—			401
Payments
NA/HME	(1,697		)	(57		)	(1,754		)
Europe	(338		)	(97		)	(435		)
Asia/Pacific	(11		)	—			(11		)
Other	(260		)	—			(260		)
Total	(2,306		)	(154		)	(2,460		)
March 31, 2018 Balances
NA/HME	839			110			949
Europe	204			37			241
Other	756			—			756
Total	$	1,799		$	147		$	1,946