Restructuring and Impairment Charges

In the first half of 2012, we began several initiatives to streamline our organization and rationalize our cost structure in order to better position the Company for profitable growth in the future. The goal of these initiatives is to become a more streamlined organization both from an organizational and cost perspective, with efficient manufacturing capabilities that are focused on meeting our customers' needs.

First Quarter 2012:

In the first quarter of 2012, we announced several initiatives as part of the streamlining plan. These initiatives were the following:


•	Implemented an early retirement program for certain eligible employees;


•	Realigned our organizational structure by consolidating a number of senior executive positions, reorganizing certain business functions and redeploying resources across the Company;


•	Exited the Thermal Management Solutions business (previously announced in the fourth quarter of 2011);


•	Initiated a plan to shut down the Power Distribution Systems startup operation in North America, which was completed in the third quarter of 2012; and


•	Liquidated our remaining auction rate securities.

Second Quarter 2012:

In the second quarter of 2012, we announced several additional streamlining actions as follows:

•

We announced the shutdown of the High Performance Foams manufacturing facility in Bremen, Germany, which is scheduled to be completed by the end of 2012. The manufacture of certain silicone foam materials produced in the Bremen facility will be consolidated into our existing facility in Carol Stream, Illinois. The expenses and charges related to the termination of the operations at the Bremen facility are estimated to be approximately $3.1 million and are comprised primarily of (i) $0.9 million for the early termination of the lease on the building; (ii) $0.8 million for severance charges for employees in Bremen; (iii) $0.4 million related to the impairment of certain assets; and (iv) $0.3 million of costs to remove and transport certain equipment to Carol Stream and prepare the building for return to the landlord. We recognized approximately $1.5 million of these charges in the second quarter of 2012, and expect to recognize the remaining charges in the second half of 2012.

•

We decided to cease production of our non-woven composite materials products in an effort to redeploy resources to focus on our Core Strategic segments. Sales of these products have been steadily declining for several years and totaled approximately $1.4 million in the second quarter of 2012 and $4.8 million in fiscal 2011. The shutdown of production is expected to occur by the end of 2012 and is not expected to have a material impact on our overall operations. No material charges are expected from this initiative.

Third Quarter 2012:

In the third quarter of 2012, we continued to make progress on the initiatives announced in the first half of the year. In particular, the shutdown of our High Performance Foams manufacturing facility in Bremen, Germany continued on schedule. We recognized approximately $1.4 million of additional charges related to this event in the third quarter of 2012, bringing the year to date charges recognized in relation to the shutdown to $2.9 million.

Further, in the third quarter of 2012, we announced a plan to move the final inspection stage of the manufacturing operations of the Curamik Electronics Solutions segment from its manufacturing site in Eschenbach, Germany to Hungary. The move is expected to enable more cost effective performance of the inspection operations. We expect the move to be complete in 2013 and related expenses and charges will be incurred in the second half of 2012 into 2013. These charges are related to a reduction in force at the German facility, as well as startup costs for the new facility in Hungary, but we are not able to reasonably estimate those charges at this time.

The following table summarizes the restructuring and impairment charges related to these activities recorded in our operating results in the third quarter and first nine months of 2012.



(Dollars in thousands)	Three Months Ended		Nine Months Ended
	September 30, 2012		September 30, 2012
Cost of Sales
High Performance Foams
Accelerated depreciation expense related to Bremen shut-down	$	179	$	764
Inventory impairment related to Bremen shut-down	—		191
Power Distribution Systems
Accelerated depreciation expense related to U.S. shut-down	139		499
Composite Material Division
Write off of obsolete inventory	91		91
Total charges for Cost of Sales	$	409	$	1,545

Restructuring and Impairment

High Performance Foams
Fixed asset impairment for Bisco and Poron asset disposal	$	—	$	79
Severance and related costs (1)	—		3,088
Bremen shut down costs	1,233		1,233

Power Distribution Systems
Impairment of investment related receivable	—		264
Severance and related costs (1)	27		504

Printed Circuit Materials
Severance and related costs (1)	—		3,046

Curamik Electronics Solutions
Severance and related costs (1)	506		1,463

Other
Severance and related costs (1)	—		303
Total charges for Restructuring and Impairment	$	1,766	$	9,980

(1) For the nine month period ended September 30, 2012, this includes an estimated charge of $2.3 million recorded in the first quarter of 2012, offset by a favorable adjustment of $0.7 million recorded in the second quarter of 2012. This net charge of $1.6 million, for 2012, was related to the early retirement program implemented in the first quarter of 2012.

The following table summarizes charges in the severance accrual from March 31, 2012 through September 30, 2012:



(Dollars in thousands)
	September 30, 2012
Balance at March 31, 2012	$	4,545
Provisions	1,273
Payments	(1,911		)
Balance at June 30, 2012	3,907
Provisions	200
Payments	(1,372		)
Balance at September 30, 2012	$	2,735