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Restructuring

6 Months Ended

Jun. 30, 2012

10. Restructuring

As a result of the economic crisis, in January 2009 the Company restructured to rationalize its cost structure in an uncertain economic environment. The restructuring planned for the relocation and consolidation of its Ellicottville, New York operations into its Texas facility. This resulted in severance and payroll charges during the year ended December 31, 2009 of $264,000. The remaining December 31, 2011 balance of $123,000 of these payments is expected to be made over the next six months.

During the second quarter of 2012, the Company commenced the Ellicottville relocation, resulting in the realization of expense for discontinued inventory, severance and professional fees to complete the move and recognize the anticipated cost savings. As a result, the Company recorded a restructuring charge of approximately $174,000. Additionally, in the six months ended June 30, 2012, the Company expensed approximately $43,700 of related moving expenses, bringing the total moving expense recorded to $217,700.

In the six month period ending June 30, 2012 the Company expensed $43,739 of related moving expense. The Company expects to incur an additional $50,000 in relocation expenses during the third quarter of 2012. This amount is not accrued at June 30, 2012.

When completed, the restructuring and relocation is expected to result in approximately $240,000 in annual savings. Accrued restructuring expenses of $236,400 are included in “Other accrued expenses” in the Company’s consolidated balance sheet, while the $89,000 increase to inventory obsolescence is included in “Inventory Reserve.”

The following table analyzes the changes in the Company’s reserve with respect to the restructuring plan for the six months ended June 30, 2012:


	December 31, 2011		2012 Expense		Payment			June 30, 2012
Severance	$	111,000	$	43,000	$	(15,300	)	$	138,700
Professional fees		—		42,000		—			42,000
Inventory		—		89,000					89,000
Other		12,000		43,700		—			55,700

Total	$	123,000	$	217,700	$	(15,300	)	$	325,400

The following table analyzes the changes in the Company’s reserve with respect to the restructuring plan for the three months ended June 30, 2012:


	March 31, 2012		2012 Expense		Payment			June 30, 2012
Severance	$	99,700	$	43,000	$	(4,000	)	$	138,700
Professional fees		—		42,000		—			42,000
Inventory		—		89,000					89,000
Other		12,000		43,700		—			55,700

Total	$	111,700	$	217,700	$	(4,000	)	$	325,400

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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