Ethan Allen Interiors Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Note 11 - Restructuring and Other Impairment Activities

Note 11 - Restructuring and Other Impairment Activities

9 Months Ended

Mar. 31, 2021

Notes to Financial Statements

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

(11)

Restructuring and Other Impairment Activities

Restructuring and other impairment charges, net of gains, were as follows (in thousands):

	Three months ended March 31,						Nine months ended March 31,
	2021			2020			2021			2020
Loss (gain) on sale of property, plant and equipment⁽¹⁾	$	(1,443	)	$	-		$	(1,170	)	$	(11,497	)
Employee severance costs		455			-			605			-
Lease exit costs⁽²⁾		1,406						1,406
Impairment of long-lived assets					389			623			389
Optimization of manufacturing and logistics					368						829
Other charges		175			105			175			106
Total Restructuring and other impairment charges, net of gains	$	593		$	862		$	1,639		$	(10,173	)
Manufacturing overhead costs⁽³⁾		-			(5	)		-			1,318
Inventory reserves and write-downs⁽³⁾⁽⁴⁾		-			-			389			3,208
Total	$	593		$	857		$	2,028		$	(5,647	)

(1)

We completed the sale of two previously closed retail properties to independent third parties in December 2020 and March 2021. As a result of these sales, the Company recognized a pre-tax gain of $1.2 million in the first nine months of fiscal 2021, which was recorded within the line item Restructuring and other impairment charges, net of gains in the consolidated statements of comprehensive income.

(2)	We recorded non-cash charges related to lease exit costs in the retail segment as a result of the early termination of a lease. These charges were recorded in the consolidated statement of comprehensive income within the line item Restructuring and other impairment charges, net of gains.

(3)	Manufacturing overhead costs and inventory reserves and write-downs are reported within Cost of Sales in the consolidated statements of comprehensive income.

(4)

Based on actual demand and the most current forecasted market conditions, we recorded a non-cash charge of $0.4 million during the second quarter of fiscal 2021 to increase our finished goods inventory obsolescence reserve for certain slow moving and discontinued inventory items. The non-cash inventory write-down was recorded in the consolidated statement of comprehensive income within the line item Cost of Sales.