On July 3, 2013, the company received notice from the New York Stock Exchange that it had regained compliance with the NYSE’s continued listing standard for share price after its average closing share price for the previous 30 trading days exceeded $1.00. In addition to regaining compliance with the price listing standard, the company continues to follow all NYSE requirements to regain market capitalization compliance including providing quarterly updates to the business plan previously submitted to the exchange.
Expense Reduction Initiative
The company announced an expense reduction program that is expected to reduce operating expenses by approximately $6 million on an annualized basis by the end of the first quarter of 2014. Completion of the reductions will enable the company to make continued progress toward its target 15% operating expense model. Many of the contemplated actions are efficiency improvements related to the implementation of the company’s new ERP system and are expected to affect all segments. The company expects that it will incur cash severance and restructuring costs associated with the action in an amount still to be determined, but expected to be less than one third the annual savings rate. In the second quarter the company recognized $93,000 of severance and associated costs for prior actions not related to this program.
Convertible Bond ExchangeThe company’s investment agreement with Oaktree contemplated that the company might offer each holder of our senior convertible notes the option to receive new secured term loans in exchange for the outstanding senior convertible notes at up to 80% of the par amount, as well as shares of our common stock, subject to Oaktree’s agreement of the terms of the offer. The company remains in discussion with Oaktree, but as of June 28, 2013, we have not reached agreement on the terms of an exchange offer. The company believes it has a number of other options regarding the eventual retirement of the convertible bonds, either before or at maturity.