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)	March 31, 2017		September 30, 2016
Compensation	$	3,829	$	3,628
Warranty	899		871
Professional fees	405		761
Customer deposits	40		38
Income and other taxes	1,024		944
Severance and restructuring accruals	931		642
Other	1,547		800
Accrued expenses and other current liabilities	$	8,675	$	7,684

Compensation: Compensation is primarily comprised of accrued employee salaries, taxes and benefits.

Income and other taxes: For the three months ended March 31, 2017, the Company recorded income tax benefit of $8,000 and $0 within income from continuing operations and discontinued operations, respectively. For the three months ended March 31, 2016, the Company recorded $0.2 million of income tax benefit from continuing operations losses and $0.2 million of income tax expense within income from discontinued operations. For the six months ended March 31, 2017, the Company recorded approximately $0.1 million of income tax expense from continuing operations and $0 of income tax benefit within income from discontinued operations. For the six months ended March 31, 2016, the Company recorded $0.2 million of income tax benefit from continuing operations losses and $0.2 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.

Severance and restructuring accruals: In connection with the abandonment of our Newark, California facility following the closing of the sale of the Digital Products Business, we accrued for the remaining lease costs through the lease termination in May 2016. In December 2015, we entered into an agreement to terminate this lease and related obligations, including AROs (defined below), as of February 2016 for a payment of $0.2 million. As a result of the agreement, we recorded a gain of $0.3 million on the lease termination. The resulting gain was recorded in the discontinued operations of the Digital Products Business for the six months ended March 31, 2016. See Note 4 - Discontinued Operations.

On June 7, 2016, the Company's former Chief Financial Officer (“CFO”) notified the Company that he would resign as the Company's CFO, effective as of June 20, 2016 (the “Separation Date”). The Company and the former CFO entered into a separation agreement and general release, dated June 7, 2016 (the “Separation Agreement”), which includes mutual releases by the former CFO and the Company of all claims related to his 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 64 weeks, benefits for 16 months, outplacement services for a period of not more than 1 year and with a value not in excess of $15,000 and immediate vesting of all his outstanding non-vested equity awards, other than his most recent equity award. These payments are not contingent upon any future service by the former CFO. The Company recorded a charge of approximately $0.4 million in the fiscal year ended September 30, 2016 related to this Separation Agreement.

In an effort to better align our current and future business operations, in May 2016 the Company announced a reduction in its workforce by approximately 30 individuals and recorded a charge for severance for the affected employees in the amount of $0.3 million in the fiscal year ended September 30, 2016. In November 2016, the Company announced an additional reduction in the workforce of approximately 5 individuals and recorded a charge of $0.2 million in the six months ended March 31, 2017 related to the outsourcing of our satellite communications assembly operations.

In March 2017, the Company announced an additional workforce reduction of approximately 14 individuals and recorded a charge of $0.1 million in the three and six months ended March 31, 2017 related to the outsourcing of our wafer fabrication lab. Also, in March 2017, in connection with our planned opening of a new manufacturing facility in China to reduce costs and improve efficiency later in fiscal year 2017, we accrued for a reduction of approximately 265 individuals and recorded a charge of $0.5 million in the three and six months ended March 31, 2017.

Our severance and restructuring-related accruals specifically relate to the separation agreements and reduction in force discussed above and non-cancelable obligations associated with an abandoned leased facility. Expense related to severance and restructuring accruals is included in selling, general, and administrative expense on our statements of operations and comprehensive income. The following table summarizes the changes in the severance accrual account:



(in thousands)	Severance-related accruals
Balance as of September 30, 2016	$	642
Expense - charged to accrual	846
Payments and accrual adjustments	(557		)
Balance as of March 31, 2017	$	931

Warranty: We generally provide product and other warranties on our components, power systems, and fiber optic products. 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 March 31,						For the six months ended March 31,
(in thousands)	2017			2016			2017			2016
Balance at beginning of period	$	791		$	1,564		$	871		$	1,664
Provision for product warranty - expense	215			88			303			234
Adjustments and utilization of warranty accrual	(107		)	(550		)	(275		)	(796		)
Balance at end of period	$	899		$	1,102		$	899		$	1,102