Note 16 – Restructuring/ 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 is focused on meeting our customer’s needs.

First Quarter 2012:

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

●	Implementing an early retirement program for certain eligible employees;

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

●	Exiting the Thermal Management Solutions business (previously announced in the fourth quarter of 2011);

●	Initiating a plan to shut down the Power Distribution Systems startup operation in North America, which is anticipated to be completed in the third quarter of 2012; and

●	Liquidating 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) $1.1 million 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 made the decision 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.

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

(Dollars in thousands)
	Three Months Ended			Six Months Ended
Cost of Sales	June 30, 2012			June 30, 2012

High Performance Foams
Accelerated depreciation expense related to Bremen shut-down	$	585		$	585
Inventory impairment related to Bremen shut-down		191		$	191
Power Distribution Systems
Accelerated depreciation expense related to U.S. shut-down		360			360
Total charges for cost of sales	$	1,136		$	1,136

Restructuring and Impairment

High Performance Foams
Fixed asset impairment for Bisco and Poron asset disposal	$	-		$	79
Severance and related costs (1)		670		$	3,088

Power Distribution Systems
Impairment of investment related receivable		264			264
Severance and related costs (1)		(13	)		477

Printed Circuit Materials
Severance and related costs (1)		(276	)	$	3,046

Curamik Electronics Solutions
Severance and related costs (1)		213			957

Other
Severance and related costs (1)		(28	)		303
Total charges for restructuring and impairment	$	830		$	8,214

(1) For the three and six month periods ended June 30, 2012, this line item includes an estimated change of 2.3 million recorded in the first quarter of 2012, offest by a favorable adjustment of $0.7 million recorded in the second quarter of 2012. Total net charge of $1.6 million, for the first six months of 2012, was related to the early retirement program implemented in the first quarter of 2012.

A summary of the activity in the severance accrual as of June 30, 2012 and changes during the three month period then ended is as follows:

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