(6)	Restructuring Expenses

During 2013, the Company implemented workforce restructurings to reduce operating costs, better focus its organizational structure, increase efficiency and concentrate financial resources on its clinical development program and European commercialization activity. This resulted in a total reduction in the Company’s workforce by 50 employees. During the second and third quarters of 2014, the Company implemented additional workforce restructurings that resulted in a total reduction in the Company’s workforce by eight employees. As a result of termination benefits provided to these 58 employees the Company has incurred a total restructuring charge of approximately $5.3 million for employee related expenses. At September 30, 2014, the remaining restructuring reserve of approximately $1.4 million is included in Accrued expenses on the Condensed Consolidated Balance Sheets.

In order to help reduce operating costs and more appropriately align its office space with the reduced size of its workforce, during the quarter ended June 30, 2014, the Company implemented a plan to vacate and sub-lease office space at its 810 Seventh Avenue office. On May 22, 2014, the Company entered into a sub-lease agreement (“Sub-lease #1”) for approximately one-half of the office space at this location (“Suite 3500”), and had vacated and relinquished the premises to the sub-tenant as of June 30, 2014. Pursuant to Sub-lease #1, the sub-lease term commenced on July 1, 2014 and will expire on March 30, 2021, concurrent with the expiration of the Lease Agreement between Delcath and the landlord dated February 5, 2010 and subsequently modified by a Lease Modification, Extension and Additional Space Agreement between Delcath and the landlord dated September 27, 2010 (together the “Prime Lease”). At June 30, 2014, the Company’s future rent obligations for Suite 3500 under the Prime Lease over the remaining lease term of 81 months totaled approximately $3.6 million. Under Sub-lease #1 the Company will receive future sub-lease rental receipts totaling approximately $2.6 million, resulting in net future cash outflows of approximately $1.0 million. In accordance with ASC 420, Exit or Disposal Cost Obligations, the Company calculated the fair value of the remaining net cash flow liability for Suite 3500 and recorded a lease restructuring reserve of approximately $0.9 million as of June 30, 2014. Additionally, during the quarter ended June 30, 2014, the Company recorded contract termination costs related to Sub-lease #1 of approximately $150,000 and wrote off approximately $50,000 of unamortized leasehold improvements related to Suite 3500. The expenses related to this lease restructuring were recorded in Selling, general and administrative on the Condensed Consolidated Statements of Operations.

On August 18, 2014, the Company entered into a sub-lease agreement (“Sub-lease #2”) with a third party for the remaining one-half of office space at its 810 Seventh Avenue office (“Suite 3505”). On September 24, 2014, the Company received written consent from the landlord of the building with respect to Sub-lease #2, and had vacated and relinquished the premises to the sub-tenant as of September 30, 2014. Pursuant to Sub-lease #2, the sub-lease term commenced on October 1, 2014 and will expire concurrently with the expiration of the Prime Lease on March 30, 2021. At September 30, 2014, the Company’s future rent obligations for Suite 3505 under the Prime Lease over the remaining lease term of 78 months totaled approximately $3.4 million. Under Sub-lease #2 the Company will receive future sub-lease rental receipts totaling approximately $2.6 million, resulting in net future cash outflows of approximately $0.8 million. In accordance with ASC 420, Exit or Disposal Cost Obligations, the Company calculated the fair value of the remaining net cash flow liability for Suite 3505 and recorded a lease restructuring reserve of approximately $0.7 million as of September 30, 2014. Additionally, during the quarter ended September 30, 2014, the Company recorded contract termination costs related to Sub-lease #2 of approximately $150,000. The expenses related to this lease restructuring were recorded in Selling, General and Administrative expenses on the Condensed Consolidated Statements of Operations. As of September 30, 2014, the total remaining lease restructuring liability for its leased office space at 810 Seventh Ave was approximately $1.4 million, of which approximately $0.3 million and $1.1 million were included in Accrued expenses and Other non-current liabilities on the Condensed Consolidated Balance Sheets, respectively.

The following table provides the year-to-date activity of the Company’s restructuring reserves as of September 30, 2014:

(in thousands)	Employee Costs			Operating Lease
Reserve balance as of December 31, 2013	$	2,019		$	–
Charges		1,327			1,547
Payments / utilizations		(1,990	)		(125	)
Reserve balance as of September 30, 2014	$	1,356		$	1,422