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Note 4 - Impairment of Long-Lived Assets
12 Months Ended
Jun. 30, 2013
Disclosure Text Block Supplement [Abstract]  
Asset Impairment Charges [Text Block]

NOTE 4: IMPAIRMENT OF LONG-LIVED ASSETS


King, North Carolina facility


As a result of a decision to pursue the sale of Merfin Systems, our nonwoven materials converting business, in King, North Carolina during the quarter ended December 31, 2011, we evaluated the recoverability of the long-lived assets. Our decision was due to Merfin Systems being a non-core business and our desire to redeploy the proceeds into strategic operations. The results of the recoverability test indicated that the facility’s assets were impaired as the estimated future undiscounted cash flows were less than the carrying value. Based on this evaluation, and after reducing the value of certain other assets by $391, we determined that the long-lived assets associated with this operation, which had a carrying value of $1,434, were impaired and wrote them down to their fair value of $152, resulting in an impairment charge of $1,282. The fair value was estimated based on the value in exchange for the facility. The total loss of $1,673 was recorded in asset impairment loss on the consolidated statements of operations. On January 31, 2012, we completed the sale of Merfin Systems and received proceeds of $5,459 from the sale. As a result of the sale, we recorded additional impairment of $421 based on the negotiated purchase price. During 2013, we recorded miscellaneous income of $250 from an earn-out provision in the sale agreement that was settled during the year.


Delta, Canada facility


On June 17, 2011, we announced our decision to cease production at our Delta, B.C., Canada airlaid nonwovens facility by the end of calendar 2012. Our decision was due to several factors including unfavorable site location relative to customers and raw material suppliers, a strong Canadian dollar and low capacity utilization. We consolidated a portion of the Delta Facility’s production at our two other airlaid nonwovens facilities. We believe that this closure and consolidation of business will improve capacity utilization, profitability and return on invested capital for our Nonwovens business.


As a result of this decision, we evaluated the recoverability of the long-lived assets at the Delta facility in accordance with ASC 360, “Impairment or Disposal of Long-Lived Assets”. The results of this test indicated that the Delta assets were impaired as the sum of the undiscounted cash flow analysis was less than the carrying amount of the long-lived assets. As such, the impairment test was performed to determine the estimated fair value of the long-lived assets compared to their carrying value. We engaged an independent valuation firm to assist with this impairment testing and fair value determination. The impairment recognized was the amount that the carrying value exceeded the fair value of the assets estimated as the value in exchange of the underlying asset group using market and cost valuation approaches which exceeded the operating value of the asset group. Based on this evaluation, we determined that these long-lived assets, with a carrying amount of $38,447, were impaired and wrote them down to their estimated fair value of $25,440, resulting in an impairment charge of $13,007 in 2011.


In June 2012, we entered into an agreement of purchase and sale for our Delta facility’s land and buildings. As a result of this agreement, the land and building assets of $12,374 were reclassified on the balance sheet as of June 30, 2012, to other current assets as the sale of these assets was expected to occur within the next twelve months.


The plant ceased production in November 2012, and, as a result, we reevaluated the recoverability of the long-lived assets at the Delta facility as of November 30, 2012. Based on this evaluation, which included consideration of the current market conditions and management’s plans for disposition of the assets, we determined that certain long-lived assets associated with this operation having a carrying value of $4,681 were impaired and wrote them down to their estimated value of $1,090, resulting in an impairment charge of $3,591 ($0.09 per diluted share) in 2013.