Research and development

9 Months Ended

Jun. 28, 2014

(8)	Research and development

The cost of research and development programs is charged against income as incurred and was as follows:

	(in thousands of dollars)
	Three Months ended						Nine Months ended
	June 28, 2014			June 29, 2013			June 28, 2014			June 29, 2013
Research and development expense, net of grants receivable	$	1,045		$	970		$	3,058		$	3,057
Percentage of sales		10.8	%		11.2	%		11.0	%		13.1	%

In recent years the Company has received several awards of research and development grants by the Technology Strategy Board, a public body established by the U.K. government to stimulate technology-enabled innovation.

In 2011, the Company was awarded a research and development grant by the Technology Strategy Board to lead a collaborative project with Cummins Generator Technologies and Newcastle University in the U.K. to develop an innovative electric drive system for electric vehicles using advanced switched reluctance motor technology. The Company recorded grant income from this Technology Strategy Board project of $28,000 and $61,000 in the three and nine month periods ended June 28, 2014, respectively, associated with research and development expense of $83,000 and $180,000, respectively, in the same periods. The Company recorded grant income of $39,000 and $76,000 in the three and nine month periods ended June 29, 2013, respectively, associated with research and development expense of $114,000 and $225,000, respectively, in the same periods.

In 2013, the Company was awarded a research and development grant by the Technology Strategy Board as one of a consortium of organizations in the U.K to research and design ultra-efficient systems for electric and hybrid vehicles. The Company recorded grant income from this Technology Strategy Board project of $1,000 and $4,000 in the three and nine month periods ended June 28, 2014, respectively, associated with research and development expense of $8,000 and $18,000, respectively, in the same periods. The Company recorded grant income of $1,000 associated with research and development expense of $3,000 in respect of this grant in the three and nine months ended June 29, 2013.

In July 2013, the Company was awarded a grant of approximately $480,000 by the Low Emission Transport Collaborative Projects Fund, a U.K. government body. The grant is to develop next-generation controls for high-voltage, low-power applications. This grant will defray part of the research and development expense associated with this project over the period from July 2013 to March 2015. The Company recorded grant income from this project of $103,000 and $339,000 in the three and nine month periods ended June 28, 2014, respectively, associated with research and development expense of $423,000 and $1,392,000, respectively, in the same periods. The Company did not record any grant income or incur any research and development expense in respect of this grant in the first nine months of 2013.

The grant income in the first nine months of 2014 and 2013 was recorded as a reduction of research and development expense.

- Definition

The entire disclosure for research, development, and computer software activities, including contracts and arrangements to be performed for others and with federal government. Includes costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility and in-process research and development acquired in a business combination consummated during the period.

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