Accrued Expenses and Other Current Liabilities

The components of accrued expenses and other current liabilities consisted of the following:



	As of		As of
(in thousands)	December 31, 2014		September 30, 2014
Compensation	$	5,457	$	1,797
Warranty	1,904		2,285
Termination fee	2,775		2,775
Professional fees	509		2,181
Royalty	13		—
Customer deposits	551		593
Deferred revenue	49		97
Self insurance	1,249		1,470
Income and other taxes	5,618		1,433
Loss on sale contracts	204		119
Severance accruals	2,061		1,317
Loss on inventory purchase commitments	—		306
Amounts owed to SolAero	3,767		—
Other	1,069		836
Accrued expenses and other current liabilities	$	25,226	$	15,209

Compensation: For the three months ended December 31, 2014, the Company accrued additional compensation expense associated with the sale of the Photovoltaics Business.

Professional Fees: As of September 30, 2014, professional fees included transaction costs of $1.8 million associated with the sale of the Photovoltaics Business.

Income and other taxes: For the three months ended December 31, 2014, the Company reported $1.9 million of income tax benefit from continuing operations losses and $30.2 million of income tax expense within income from discontinued operations. The income tax expense within discontinued operations includes estimated alternative minimum tax and other adjustments prescribed by ASC 740 in allocating expected annual income tax expense (benefit) between continuing operations and discontinued operations. During the three months ended December 31, 2014, the Company utilized $24.1 million of deferred tax assets. The Company expects to make a payment for alternative minimum taxes and while the remaining income tax expense will be offset mainly through utilization of $24.1 million of deferred tax assets and net operating loss carry forwards. Also see Note 11 - Income and other Taxes.

Amounts owed to SolAero: This represents SolAero customer payments received by EMCORE after the December 10, 2014 closing of the Photovoltaics Asset Sale. These amounts were reimbursed to SolAero in January 2015.

Severance accruals: On November 15, 2013, Mr. Chris Larocca proposed to resign as the Company's Chief Operating Officer, effective as of November 30, 2013. The Company recorded a charge of $0.5 million in the three months ended December 31, 2013 related to the separation agreement entered into as part of Mr. Larocca's resignation.

On September 17, 2014, Dr. Hong Q. Hou announced he will resign as the Company's Chief Executive Officer, effective as of January 2, 2015 or, if later, fifteen days following the date on which the Company hires a successor Chief Executive Officer (the “Separation Date”). The Company and Dr. Hou entered into a separation agreement and general release, dated September 17, 2014 (Dr. Hou 's Separation Agreement), which includes mutual releases by Dr. Hou and the Company of all claims related to Dr. Hou's employment and service relationship with, and termination of employment and service from, the Company. The separation agreement provides for among other things, the continuation of his base salary for 86 weeks, benefits for 18 months, outplacement services for a period of not more than one year and with a value not in excess of $15,000 and immediate vesting of all his outstanding non-vested equity awards. These payments are not contingent upon any future service by Dr. Hou. The Company recorded a charge of approximately $0.8 million in the fourth quarter of fiscal year 2014 related to Dr. Hou's separation agreement.

On December 10, 2014, Monica Van Berkel announced she will resign as the Company's Chief Administrative Officer, effective as of January 2, 2015 (the “Separation Date”). The Company and Ms. Van Berkel entered into a separation agreement and general release, dated December 10, 2014 (Ms. Van Berkel 's Separation Agreement), which includes mutual releases by Ms. Van Berkel and the Company of all claims related to Ms. Van Berkel's employment and service relationship with, and termination of employment and service from, the Company. The separation agreement provides for among other things, the continuation of her base salary for 74 weeks, benefits for 18 months, outplacement services for a period of not more than one year and with a value not in excess of $15,000 and immediate vesting of all her outstanding non-vested equity awards. These payments are not contingent upon any future service by Ms. Van Berkel. The Company recorded a charge of approximately $0.6 million in the first quarter of fiscal year 2015 related to Ms. Van Berkel's separation agreement.

On December 10, 2014, Alfredo Gomez announced he will resign as the Company's General Counsel and Secretary, effective as of February 13, 2015 or, if later, following the date on which the Company hires a successor in-house counsel (the “Separation Date”). The Company and Mr. Gomez entered into a separation agreement and general release, dated December 10, 2014 (Mr. Gomez's Separation Agreement), which includes mutual releases by Mr. Gomez and the Company of all claims related to Mr. Gomez's employment and service relationship with, and termination of employment and service from, the Company. The separation agreement provides for among other things, the continuation of his base salary for 68 weeks, benefits for 18 months outplacement services for a period of not more than one year and with a value not in excess of $15,000 and immediate vesting of all his outstanding non-vested equity awards. These payments are not contingent upon any future service by Mr. Gomez. The Company recorded a charge of approximately $0.5 million in the first quarter of fiscal year 2015 related to Mr. Gomez's separation agreement.

Expense related to severance accruals is included in selling, general, and administrative expense on our statement of operations and comprehensive income (loss). The following table summarizes the changes in the severance-related accrual accounts:



(in thousands)	Severance-related accruals
Balance as of September 30, 2014	$	1,317
Expense - charged to accrual	965
Payments and accrual adjustments	(221		)
Balance as of December 31, 2014	$	2,061

Warranty: We generally provide product and other warranties on our components, power systems, and fiber optic products, in addition to certain already divested product lines where we retained the warranty obligations. Certain parts and labor warranties from our vendors can be assigned to our customers. Our reported financial position or results of operations may be materially different under changed conditions or when using different estimates and assumptions. In the event that estimates or assumptions prove to differ from actual results, adjustments are made in subsequent periods to reflect more current information.

The following table summarizes the changes in our product warranty accrual accounts:



Product Warranty Accruals	For the three months ended December 31,
(in thousands)	2014			2013
Balance at beginning of period	$	2,816		$	3,881
Provision for product warranty - expense	402			—
Adjustments and utilization of warranty accrual	(783		)	(218		)
Balance at end of period	$	2,435		$	3,663
Current portion	$	1,904		$	3,132
Non-current portion	531			531
Product warranty liability at end of period	$	2,435		$	3,663