NOTE 4 - BUSINESS RESTRUCTURING

6 Months Ended

Jun. 30, 2013

Restructuring and Related Activities [Abstract]

NOTE - 4. BUSINESS RESTRUCTURING

As a result of the business downturn we experienced in the second half of 2011 and in 2012, as well as the uncertain business outlook at the time, we took restructuring actions in September 2012 to reduce quarterly operating expenses and production costs.  These actions included reductions in personnel and the use of contractors, professionals, and consultants, as well as focusing our development efforts on a smaller number of projects. The net restructuring charge associated with these 2012 actions was $207,000 and was primarily related to severance.  The remaining 2012 restructuring actions were completely paid out during the first quarter of 2013. 

We took additional restructuring actions in the second quarter of 2013 to reduce our excess office space and eliminate certain job positions.  In addition to these previously announced actions in April which resulted in restructuring costs of $525,000, additional personnel related actions were taken in June that increased the restructuring charge by $117,000 to a total $642,000 for the quarter.  The positions eliminated will allow us to have the flexibility to add other critical positions or change fixed to variable costs through outsourcing. 

The restructuring charges associated with the second quarter of 2013 actions are approximately $313,000 for personnel severance related costs and approximately $329,000 for lease abandonment space.  These restructuring charges were recorded in the second quarter of 2013; however the $329,000 related to lease abandonments will continue to be paid over the term of the leases unless the applicable leases are renegotiated with the landlords or costs are partially offset by unanticipated subleases.

An analysis of the business restructuring is as follows:

	Reserve Balance Dec 31, 2011	2012 Expense	2012 Payments/ Write-Offs	Reserve Balance Dec 31, 2012	2013 Expense	2013 Payments/ Write-Offs	Reserve Balance Jun 30, 2013
(in thousands)
Downsizing US operations:
Employee severance	$0	$103	$103	$0	$302	$75	$227
Other costs	-	4	4	-	273	8	265
Downsizing foreign operations:
Employee severance	-	57	32	25	20	45	-
Other costs	-	43	43	-	47	11	36
Total	$0	$207	$182	$25	$642	$139	$528

The portion of the reserve expected to be paid over the next twelve months is $332,000 while the long term liability is $196,000.  The long term portion relates to the lease abandonment payments that are due in over one year.