Annual report pursuant to Section 13 and 15(d)

Impairments, Restructuring and Other Charges

v3.20.4
Impairments, Restructuring and Other Charges
 12 Months Ended
Dec. 31, 2020
Restructuring and Related Activities [Abstract]  
Impairments, Restructuring and Other Charges IMPAIRMENTS, RESTRUCTURING AND OTHER CHARGES
Goodwill Impairment
See Note 7 for discussion of the $86.3 million and $1.6 million of goodwill impairments charges in 2020 and 2019, respectively, within the Aerospace segment. Such amounts are reported within the Impairment Loss line of the Consolidated Statements of Operations in the respective year.
Restructuring Activities
In the fourth quarter of 2019, in an effort to reduce the significant operating losses at our AeroSat business, we initiated a restructuring plan to reduce costs and minimize losses of our AeroSat antenna business. The plan narrows the initiatives for the AeroSat business to focus primarily on near-term opportunities pertaining to business jet connectivity. The plan has a downsized manufacturing operation remaining in New Hampshire, with significantly reduced personnel and operating expenses.
As a result of the restructuring plan, the Company's total impairments and restructuring charges recorded in the fourth quarter of 2019 (including the goodwill impairment described above) amounted to $28.8 million, all of which is included in the Aerospace segment. The Company incurred an impairment charge to ROU assets of approximately $0.7 million and $0.4 million in additional restructuring charges associated with severance at AeroSat during 2020.
The COVID-19 pandemic has significantly impacted the global economy, and particularly the aerospace industry, resulting in reduced expectations of the Company’s future operating results. As a result, the Company executed restructuring activities in the form of workforce reduction, primarily in the second quarter of 2020, to align capacity with expected demand. Accordingly, restructuring charges of $4.9 million in severance expense associated primarily with the Aerospace segment were recorded in 2020. Any future restructuring actions will depend upon market conditions, customer actions and other factors.
The following table is a summary of the restructuring and impairment charges as of December 31, 2020 and 2019:
2020 2019
(In thousands) Non-cash Asset Write-downs and Impairment Charges Restructuring Charges Total Restructuring and Impairment Charges Non-cash Asset Write-downs and Impairment Charges Restructuring Charges Total Restructuring and Impairment Charges
Accounts Receivable, Net $ —  $ —  $ —  $ 1,785  $ —  $ 1,785 
Inventories —  —  —  9,429  —  9,429 
Prepaid Expenses and Other Current Assets —  —  —  1,227  —  1,227 
Property, Plant and Equipment, Net —  —  —  2,268  —  2,268 
Other Assets 691  —  691  1,141  —  1,141 
Intangible Assets, Net —  —  —  6,186  —  6,186 
Goodwill 86,325  —  86,325  1,610  —  1,610 
Accrued Payroll and Employee Benefits —  5,327  5,327  —  449  449 
Other Accrued Expenses —  —  —  —  164  164 
Other Liabilities —  —  —  —  4,577  4,577 
$ 87,016  $ 5,327  $ 92,343  $ 23,646  $ 5,190  $ 28,836 
The charge to Prepaid Expenses and Other Current Assets is comprised of prepaid installation fees associated with programs that were either cancelled or are no longer being pursued as a result of the restructuring. The charges to Other Assets is comprised of the ROU asset values for the AeroSat facility lease. The charges to Accrued Payroll and Employee Benefits is comprised of employee termination benefits at AeroSat in 2019 and additional reporting units, primarily in the Aerospace segment, in 2020. The charges to Other Accrued Expenses and Other Liabilities represents the estimated current and non-current portions of payments to be made under non-cancelable inventory purchase commitments in the future for inventory which is not expected to be purchased prior to the expiration date of such agreements as a result of the restructuring plan.
The above restructuring and impairment charges are presented in the Consolidated Statements of Operations for the years ended December 31 as follows:
(In thousands) 2020 2019
Cost of Products Sold $ 280  $ 15,397 
Selling, General and Administrative Expenses 5,047  2,356 
Impairment Loss 87,016  11,083 
Total Restructuring and Impairment Charges $ 92,343  $ 28,836 
The following table reconciles the beginning and ending liability for restructuring charges:
(In thousands) 2020 2019
Balance as of January 1 $ 5,190  $ — 
Restructuring Charges Recognized 5,327  5,190 
Cash Paid (4,886) — 
Balance as of December 31 $ 5,631  $ 5,190 
Financial Instrument Impairment
From time to time, the Company makes long-term, strategic equity investments in companies to promote business and strategic objectives. These investments are included in Other Assets on the Consolidated Balance Sheets. One of the investments became impaired in 2020 which resulted in an impairment charge of $3.5 million recorded within the Other Expense, Net of Other Income line in the accompanying Consolidated Statements of Operations for the year ended December 31, 2020. A full impairment charge of $5.0 million for an additional investment was recorded in 2019.