RESTRUCTURING AND IMPAIRMENT CHARGES

In 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.

During 2012, we recorded approximately $15.9 million in restructuring and impairment charges (of which $1.8 million was recorded in “Cost of Sales” and $14.1 million was recorded in “Restructuring and impairment expense” on our consolidated statement of income (loss)). These charges were comprised of the following:

•

$7.1 million severance and related costs associated with streamlining initiatives, including an early retirement program for certain eligible individuals. As a result of the early retirement program, we incurred $1.6 million in charges in 2012 related to a special termination benefit associated with the retirement health and life insurance benefits program, as we extended eligibility benefits to certain individuals who chose to participate in the program. We incurred $5.5 million of severance charges related primarily to the early retirement program.


•	$3.8 million severance and related costs associated with moving the Curamik inspection process from Germany to Hungary;


•	$3.3 million related to the shut-down of the High Performance Foams manufacturing facility in Bremen, Germany. This charge includes approximately $1.4 million of shut-down related costs, $0.9 million of severance charges, $0.8 million of accelerated depreciation on certain assets, and $0.2 million of inventory related charges;


•	$0.5 million of charges related to the shut-down of Power Distribution Systems startup operations in North America for accelerated depreciation on certain assets, along with $0.1 million of other costs associated with the shut-down;


•	Other charges included, $0.4 million of accelerated depreciation of certain assets of Curamik, $0.3 million impairment charge relate to an investment related receivable, and a $0.4 million impairment charge on a license agreement.

High Performance Foams

In the second quarter of 2012, we announced the shut-down of the High Performance Foams manufacturing facility in Bremen, Germany (to be completed in the first quarter of 2013). The manufacture of certain silicone foam materials produced in the Bremen facility was consolidated into our existing silicone foam manufacturing facility in Carol Stream, Illinois, while certain product lines were discontinued. Charges related to the shut-down of the facility include the following: $0.9 million of severance charges related to the termination of certain employees, $0.8 million of accelerated depreciation expense on certain assets that were no longer to be used in production, $0.2 million of inventory related charges and $0.1 million related to a fixed asset disposal. We also incurred an additional $1.4 million in costs related to the shut-down of the facility and other costs to remove and transport certain equipment to Carol Stream.

The HPF operating segment also recognized $2.2 million in allocated severance and related costs associated with the streamlining initiatives and early retirement program.

Printed Circuit Materials

The PCM operating segment recognized $2.9 million in allocated severance and related costs associated with the streamlining initiatives and early retirement program.

Curamik Electronics Solutions

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 operating segment from its manufacturing site in Eschenbach, Germany to Hungary. The move is expected to enable more cost effective performance of the inspection operation and is expected to be complete in 2013. We recognized approximately $3.8 million in severance charges related to the separation from employment of certain employees at Curamik's facility in Germany. We also recorded $0.4 million of accelerated depreciation related to certain assets.

The CES operating segment also recognized $1.4 million in allocated severance and related costs associated with the streamlining initiatives and early retirement program.

Power Distribution Systems

We incurred $0.5 million in accelerated depreciation associated with the shut-down of the Power Distribution Systems startup operation in North America, along with $0.1 million of other costs associated with the shut-down. We also incurred $0.3 million in expense related to the impairment of an investment receivable.

The PDS operating segment recognized $0.0 million in allocated severance and related costs associated with the streamlining activities and early retirement program.

Other

We incurred a charge of $0.4 million related to the write off of a license agreement formerly associated with the discontinued Thermal Management Solutions operating segment.

We also recognized $0.3 million in allocated severance and related costs associated with the streamlining activities and early retirement program.

The following table summarizes the restructuring and impairment charges related to these activities recorded in our operating results in 2012.



(Dollars in thousands)
	December 31, 2012		December 31, 2011		December 31, 2010
Cost of Sales

High Performance Foams
Accelerated depreciation expense related to Bremen shut-down	$	764	$	—	$	—
Inventory impairment related to Bremen shut-down	191		—		—
Curamik Electronics Solutions
Accelerated depreciation related to certain assets	393		—		—
Power Distribution Systems
Accelerated depreciation expense related to U.S. shut-down	499		—		—
Total charges for Cost of Sales	$	1,847	$	—	$	—

Restructuring and Impairment

High Performance Foams
Fixed asset disposal (1)	$	79	$	441	$	—
Severance related to Bremen shut-down	861		—		—
Bremen shut down-costs	1,442		—		—
Allocated severance and related costs	2,188		—		—

Printed Circuit Materials
Allocated severance and related costs	2,915		—		—

Curamik Electronics Solutions
Severance related to Hungary relocation	3,774		—		—
Allocated severance and related costs	1,376		—		—

Power Distribution Systems
Impairment of investment related receivable	264		—		—
PDS North America shut-down costs	149		—		—
Allocated severance and related costs	423		—		—

Other
License agreement expense	356		—		—
Allocated severance and related costs	255		—		—
Total charges for Restructuring and Impairment	$	14,082	$	441	$	—

(1) In the first quarter of 2012, we signed an agreement to sell our facility in Richmond, Virginia for $1.5 million. This facility had a book value of approximately $1.8 million prior to the signing of the agreement, and we recorded an impairment charge of approximately $0.4 million as of December 31, 2011, which represents the write down to the selling price less approximately $0.1 million of estimated selling costs. The transaction closed in the second quarter of 2012.

The following table summarizes charges in the severance accrual from January 1, 2012 through December 31, 2012:



(Dollars in thousands)	Streamlining and restructuring related activities			Bremen facility shut down			Curamik finishing operations relocation to Hungary		Total
Balance at January 1, 2012	$	—		$	—		$	—	$	—
Provisions	5,445			861			3,774		10,080
Payments	(3,998		)	(861		)	—		(4,859		)
Balance at December 31, 2012	$	1,447		$	—		$	3,774	$	5,221