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Wind-down and exit costs

12 Months Ended

Dec. 31, 2011

Note 11. Wind-down and exit costs

Rhode Island

In October 1999, we relocated to California from Rhode Island and established a wind-down reserve for the estimated lease payments and operating costs of the Rhode Island facilities. Even though we intend to dispose of the facility at the earliest possible time, we cannot determine with certainty a fixed date by which such disposal will occur. In light of this uncertainty, we periodically re-evaluate and adjust the reserve. We consider various factors such as our lease payments through to the end of the lease, operating expenses, the current real estate market in Rhode Island, and estimated subtenant income based on actual and projected occupancy.

The components of our wind-down reserve at December 31 are as follows:


	2011			2010
Accrued wind-down reserve at beginning of period	$	2,644,000		$	3,572,000
Less actual expenses recorded against estimated reserve during the period		(1,248,000	)		(1,219,000	)
Additional expense recorded to revise estimated reserve at period-end		287,000			291,000

Revised reserve at period-end		1,683,000			2,644,000
Add deferred rent at period end		452,000			656,000

Total accrued wind-down expenses at period-end (current and non current)	$	2,135,000		$	3,300,000

Accrued wind-down expenses, current portion	$	1,361,000		$	1,311,000
Non current portion		774,000			1,989,000

Total accrued wind-down expenses	$	2,135,000		$	3,300,000

Australia

On April 1, 2009, as part of our acquisition of the SCS operations, we acquired certain operations near Melbourne, Australia. In order to reduce operating complexity and expenses, we made the decision to close our site in Australia and consolidate personnel and programs to our Cambridge, U.K. and Palo Alto, California sites. At June 30, 2009, we established a reserve of approximately $310,000 for the estimated costs to close down and exit our Australia operations. The reserve reflects the estimated cost to terminate our facility lease in Australia (which provided for an original termination date of December 31, 2010), employee termination benefits and other liabilities associated with the wind-down and relocation of our operations in Australia. As of December 31, 2010, the facility lease agreement has been terminated and our operations in Australia have been relocated to Cambridge, U.K. and Palo Alto, California. We recorded actual expenses, net of foreign currency translation changes of approximately $241,000 against this reserve. At December 31, 2010, we concluded that all costs related to the close down and exit of our Australia operations have been recorded against the reserve and we closed the reserve by crediting the remaining reserve balance of $69,000 to wind-down expense.