(10) Cost Reduction Actions

Wind-Down of Microsatellite Product Line

During the three months ended October 31, 2012, we completed our fiscal 2012 plan to wind-down our mobile data communications segment's microsatellite product line. In connection with this plan, we recorded pre-tax net restructuring charges (almost all of which are reflected in selling, general and administrative expenses in our Condensed Consolidated Statements of Operations for the three months ended October 31, 2012) as follows:



Facility exit costs	$	803,000
Severance and related costs	76,000
Other	(57,000		)
Total	$	822,000

The activity pertaining to the accruals with respect to this plan, since July 31, 2012, are summarized as follows:



	Facility exit costs			Severance and related costs		Other		Total
Balance as of July 31, 2012	$	496,000		310,000		330,000		$	1,136,000
Additions/(reversals)	803,000			76,000		(57,000	)	822,000
Payments made	(184,000		)	(349,000	)	(4,000	)	(537,000		)
Balance as of October 31, 2012	$	1,115,000		37,000		269,000		$	1,421,000

Of the total remaining restructuring-related liabilities of $1,421,000, $1,118,000 is included in accrued expenses and other current liabilities and $303,000 is included in other long-term liabilities in our Condensed Consolidated Balance Sheet as of October 31, 2012.

In connection with the wind-down of our mobile data communications segment's microsatellite product line, during the three months ended October 31, 2012, we transferred certain miscellaneous assets and liabilities to third parties for no cash consideration. As the estimated fair values of the assets transferred and liabilities relinquished were approximately equal, these transactions did not result in any gain or loss.

Fiscal 2013 and Fiscal 2012 Cost Reduction Actions

During the three months ended October 31, 2012, we continued to implement certain additional cost reduction actions.

Other than the aforementioned pre-tax net restructuring charges related to the wind-down of our microsatellite product line, costs associated with our fiscal 2013 and 2012 cost reduction actions related principally to severance, and were not material for the three months ended October 31, 2012 and 2011, respectively.

Radyne Acquisition-Related Restructuring Plan

In connection with our August 1, 2008 acquisition of Radyne, we adopted a restructuring plan for which we recorded $2,713,000 of estimated restructuring costs. Of this amount, $613,000 relates to severance for Radyne employees which was paid in fiscal 2009. The remaining estimated amounts relate to facility exit costs and were determined as follows:



	At August 1, 2008
Total non-cancelable lease obligations	$	12,741,000
Less: Estimated sublease income	8,600,000
Total net estimated facility exit costs	4,141,000
Less: Interest expense to be accreted	2,041,000
Present value of estimated facility exit costs	$	2,100,000

Our total non-cancelable lease obligations were based on the actual lease term which runs from November 1, 2008 through October 31, 2018. We estimated sublease income based on (i) the terms of a fully executed sublease agreement, whose lease term runs from November 1, 2008 through October 31, 2015 and (ii) our assessment of future uncertainties relating to the commercial real estate market. Based on our assessment of commercial real estate market conditions, we currently believe that it is not probable that we will be able to sublease the facility beyond the current sublease terms. As such, in accordance with grandfathered accounting standards that were not incorporated into the FASB’s ASC, we recorded these costs, at fair value, as assumed liabilities as of August 1, 2008, with a corresponding increase to goodwill.

As of October 31, 2012, the amount of the acquisition-related restructuring reserve is as follows:



	Cumulative Activity Through October 31, 2012
Present value of estimated facility exit costs at August 1, 2008	$	2,100,000
Cash payments made	(4,553,000		)
Cash payments received	4,801,000
Accreted interest recorded	671,000
Net liability as of October 31, 2012	3,019,000
Amount recorded as prepaid expenses in the Condensed Consolidated Balance Sheet	419,000
Amount recorded as other liabilities in the Condensed Consolidated Balance Sheet	$	3,438,000

As of July 31, 2012, the present value of the estimated facility exit costs was $2,916,000. During the three months ended October 31, 2012, we made cash payments of $252,000 and we received cash payments of $303,000. Interest accreted for the three months ended October 31, 2012 and 2011 was $52,000 and $45,000, respectively, and is included in interest expense for each respective fiscal period.

As of October 31, 2012, future cash payments associated with our restructuring plan are summarized below:



	As of October 31, 2012
Future lease payments to be made in excess of anticipated sublease payments	$	3,438,000
Less net cash to be received in next twelve months	(419,000		)
Interest expense to be accreted in future periods	1,369,000
Total remaining net cash payments	$	4,388,000