ITEM 2.05 COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES
On June 1, 2020, the Company's Board of Directors approved the closure and
eventual disposal of its manufacturing plant located in Humboldt, Tennessee. The
closure is related to committed synergy capture from the acquisition of RSI Home
Products Inc. and the subsequent realignment of its flatstock operations. A
portion of the Humboldt facility's capacity had been previously moved to
Anaheim, California and the remaining capacity will be shifting to its Anaheim
and Toccoa, Georgia facilities.
The manufacturing plant is expected to cease operations in September 2020. The
Company expects to incur total pre-tax restructuring costs of $3.0 million to
$5.0 million related to the closing of the plant, net of building proceeds. The
restructuring costs consist of employee severance and separation costs of
approximately $0.5 million to $1.0 million, and charges for asset impairment of
property, equipment and inventory of approximately $2.5 million to $4.0 million.
The Company expects to recognize substantially all of these charges during
fiscal 2021. Once completed, the Company expects to realize ongoing savings of
approximately $6.0 million to $7.0 million per year as a result of these
Certain statements made in this report are not based on historical facts, but
are forward-looking statements. These statements reflect the Company's
reasonable judgment with respect to future events and typically can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "projects," "intends," "plans," "may," "will," "should," "would,"
"could" or "anticipates," or the negative thereof, or other variations thereon,
or comparable terminology, or by discussions of strategy. Forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking statements,
including but are not limited to: when or whether the Company is able to
implement and complete the closure and sale of the Humboldt, Tennessee
manufacturing plant; whether the Company incurs higher than expected charges or
cash expenditures related to this closure and sale; whether the Company will
achieve anticipated operating cost savings and efficiencies when and if the
plant closure and sale is completed; whether the Company experiences disruptions
to its manufacturing operations resulting from the plant closure and sale; and
when and whether the Company will be able to dispose of the closed and idled
plant and surplus or obsolete machinery and equipment at anticipated values; as
well as other risks and uncertainties discussed under the headings
"Forward-Looking Statements" and "Risk Factors" in the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended January 31, 2020 and the
Company's Annual report on Form 10-K for the fiscal year ended April 30,
2019. Any forward-looking statement that the Company makes, speaks only as of
the date of this report. The Company undertakes no obligation to publicly update
or revise any forward-looking statements or cautionary factors, as a result of
new information, future events or otherwise, except as required by law.
ITEM 2.06 MATERIAL IMPAIRMENTS
The information set forth under Item 2.05 of this report on Form 8-K is hereby
incorporated in this Item 2.06 by reference.
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