(10) Cost Reduction Actions

Wind-Down of Microsatellite Product Line

During the six months ended January 31, 2013, 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 a pre-tax benefit of $253,000 for the three months ended January 31, 2013, resulting from the reversal of previously accrued costs that were lower than expected. For the six months ended January 31, 2013, we recorded a net pre-tax restructuring charge of $569,000 related to this plan. Almost all of these amounts are reflected in selling, general and administrative expenses in our Condensed Consolidated Statements of Operations for the three and six months ended January 31, 2013.

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)	654,000			76,000		(161,000	)	569,000
Payments made	(373,000		)	(386,000	)	(17,000	)	(776,000		)
Balance as of January 31, 2013	$	777,000		—		152,000		$	929,000

Of the total remaining restructuring-related liabilities of $929,000, $666,000 is included in accrued expenses and other current liabilities and $263,000 is included in other long-term liabilities in our Condensed Consolidated Balance Sheet as of January 31, 2013. In connection with the wind-down of our mobile data communications segment's microsatellite product line, during the six months ended January 31, 2013, 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.

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 January 31, 2013, the amount of the acquisition-related restructuring reserve is as follows:



	Cumulative Activity Through January 31, 2013
Present value of estimated facility exit costs at August 1, 2008	$	2,100,000
Cash payments made	(4,811,000		)
Cash payments received	5,108,000
Accreted interest recorded	724,000
Net liability as of January 31, 2013	3,121,000
Amount recorded as prepaid expenses in the Condensed Consolidated Balance Sheet	427,000
Amount recorded as other liabilities in the Condensed Consolidated Balance Sheet	$	3,548,000

As of July 31, 2012, the present value of the estimated facility exit costs was $2,916,000. During the six months ended January 31, 2013, we made cash payments of $510,000 and we received cash payments of $610,000. Interest accreted for the three and six months ended January 31, 2013 and 2012 was $53,000 and $105,000, respectively, and $46,000 and $91,000, respectively, and is included in interest expense for each respective fiscal period.

As of January 31, 2013, future cash payments associated with our restructuring plan are summarized below:



	As of January 31, 2013
Future lease payments to be made in excess of anticipated sublease payments	$	3,548,000
Less net cash to be received in next twelve months	(427,000		)
Interest expense to be accreted in future periods	1,317,000
Total remaining net cash payments	$	4,438,000

Fiscal 2013 and Fiscal 2012 Cost Reduction Actions

In addition to the items above, during the six months ended January 31, 2013, we continued to implement other cost reduction actions; principally headcount reductions. The costs for these actions were not material for the three and six months ended January 31, 2013 and 2012, respectively.