Item 2.05 Costs Associated with Exit or Disposal Activities
On April 6, 2011, Gerber Scientific, Inc. (the “Company”) approved and committed to a plan to discontinue the manufacturing of its product line of UV flatbed inkjet printers, including the Gerber CAT UV and Solara ion. These products are manufactured by Gerber Scientific Products, a business unit of the Sign Making and Specialty Graphics segment. The Company will continue to support previously sold units through aftermarket sales and servicing.
In connection with this action, the Company will eliminate approximately 17 to 20 positions and expects to record severance expense of approximately $0.6 million and other compensation expense of approximately $0.6 million. The Company will also record approximately $0.3 million in other charges primarily related to third-party contract termination fees. The Company expects to incur the majority of these expenses during its fourth fiscal quarter ending on April 30, 2011 and complete related cash expenditures by April 30, 2012.
Item 2.06 Material Impairments
The information set forth under Item 2.05 of this report is incorporated by reference in this Item 2.06. As a result of the discontinuance of the product line reported under Item 2.05, the Company estimated inventory impairment and other charges of up to $2.4 million and fixed asset impairment charges of up to $1.3 million. The goodwill of the Gerber Scientific Products reporting unit is being evaluated and could result in an impairment of up to $5.9 million. These charges are expected to be incurred during the Company’s fourth fiscal quarter ending on April 30, 2011.
Item 7.01 Regulation FD Disclosure
The Company is furnishing in Exhibit 99.1 to this report a press release with respect to the matters described in Items 2.05 and 2.06 of this report.
The Company has signed an agreement to sell its South Windsor, Connecticut facility for net proceeds of approximately $6.8 million. The net proceeds will be used to reduce outstanding debt. The transaction is expected to close by July 1, 2011. The Company plans to enter into a one-year lease with the new owners of the facility for a portion of the facility in which Gerber Scientific Products operations are currently located.
Item 9.01 Financial Statements and Exhibits
The following document is furnished herewith as an exhibit to this report:
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.