Annual report pursuant to Section 13 and 15(d)

Impairment Charges

v3.20.1
Impairment Charges
12 Months Ended
Mar. 31, 2019
Property, Plant and Equipment [Abstract]  
Impairment Charges (Gain) Loss on Write Down and Disposal of Long-Lived Assets
As described in Note 1, “Organization and Significant Accounting Policies,” the Company considers whether events or changes in circumstances have occurred that indicate that the carrying amount of long-lived assets may not be recoverable.
During fiscal year 2020, KEMET recorded a net loss on the write down and disposal of long-lived assets of $19.7 million, which was comprised of $18.9 million in impairment charges and $0.8 million in net losses on the sale and disposal of long-lived assets, which are recorded on the Consolidated Statements of Operations line item, “(Gain) loss on write down and disposal of long-lived assets.” The impairment charges of $18.9 million primarily consisted of (i) an $8.9 million impairment of previously capitalized IT application development costs related to a hosted arrangement that was abandoned; (ii) a $6.1 million impairment of buildings and equipment related to the Film and Electrolytic plant in Italy, which is operating significantly under capacity; (iii) a $1.4 million impairment related to under-utilized Solid Capacitors' equipment at the Thailand plant; (iv) a $0.9 million impairment of the Film and Electrolytic building in Sweden due to the relocation of operations to Portugal; and (v) a $0.8 million impairment related to an idle facility in Japan. In determining impairment write downs, the fair value of buildings are generally determined with the use of third-party appraisers. The fair value of equipment is generally determined using a combination of discounted cash flows expected to be generated from the equipment and judgment on the in-place value of specialty equipment that may not be economically feasible to relocate.
During fiscal year 2019, KEMET recorded a net loss on the write down and disposal of long-lived assets of $1.7 million, which was comprised of $0.7 million in impairment charges and $1.0 million in net losses on the sale and disposal of long-lived assets. The impairment charges were primarily related to the write down of idle land and machinery of $0.5 million
and $0.2 million, respectively, at TOKIN. The $1.0 million net loss on the sale and disposal of long-lived assets primarily consisted of the disposal of furniture and fixtures resulting from the Company relocation of its corporate headquarters to Fort Lauderdale, Florida and the disposal of old machinery that was no longer being used.
During fiscal year 2018, the Company recorded a net gain on the write down and disposal of long-lived assets of $1.0 million, which was comprised of $1.2 million in net gains on the sale and disposal of long-lived assets offset by $0.2 million in impairment charges. The net gains on the sale and disposal of long-lived assets were primarily related to the sale of equipment, land, and buildings from KFM, which was shut down in fiscal year 2017. On March 13, 2018, the Company sold KFM's land and buildings to a third party for a gross sales price of $3.6 million. The net proceeds realized by the Company were approximately $3.4 million after payment of $0.2 million in closing costs. The Company realized a gain on the sale of the land and buildings of approximately $1.9 million during the year ended March 31, 2018 as a result of the sale. In addition, the Company sold KFM's equipment for a $1.4 million gain. These gains were partially offset by MSA's loss on disposals of assets of $1.3 million primarily related to equipment and buildings used for discontinued products and Solid Capacitors' loss of approximately $0.6 million related to the relocation of its K-Salt operations from a leased facility to its existing Matamoros, Mexico facility.