Restructuring Charges

9 Months Ended

Sep. 30, 2014

N. Restructuring Charges

On October 17, 2013, the Company's management initiated a restructuring plan to restore sustainable profitability and to improve its competitive position as a niche design and manufacturing company of highly-engineered electronics components and subsystems within a dynamic market environment. The first phase of the restructuring plan was designed to realign its customer support operations across all of the Company's locations and to reduce structural costs in an effort to gain efficiencies. Implementation of the first phase was substantially completed during the fourth quarter of 2013.

During the second quarter of 2014, the Company initiated the second phase of the restructuring plan which was designed to realign its sales, general and administrative activities. Implementation of these realignments was substantially completed during the third quarter of 2014. Management continues to evaluate opportunities to improve the Company's operating leverage and to position for improved results.

As a result of these realignment activities, the Company incurred restructuring charges during the nine months September 30, 2014, of $444,000. These restructuring charges consisted of approximately $379,000 of employee separation costs and $65,000 of other office closure-related costs. The charges for employee separation costs consisted of severance pay and other benefits. The costs related to these restructuring activities were recorded in the consolidated statements of operations as restructuring charges.

A reconciliation of the Company's restructuring liability, included as a component of other accrued expenses, is as follows:

	Employee Related			Other			Total
Ending balance, December 31, 2013	$	19,000		$	51,000		$	70,000
Plus: Additional expenses		379,000			65,000			444,000
Less: Cash payments		(335,000	)		(91,000	)		(426,000	)
Ending balance, September 30, 2014	$	63,000		$	25,000		$	88,000

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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