In addition, the new leadership team will aggressively seek to reduce operating costs, particularly corporate, general and administrative expenses, through a variety of cost-cutting initiatives, some of which have already been implemented in full or in part, including executive attrition and salary reductions, consolidation of facilities, and reductions in board of directors' fees.The Company anticipates that operating costs can improve by approximately $4.1 million on an annual basis after the actions described below, along with other cost reduction initiatives, are fully implemented, which is expected to occur over the next six to twelve months. In connection with its cost reduction initiatives, the Company believes it can:
- Save approximately $2.1 million annually through executive attrition and salary reductions, eliminating unnecessary and/or duplicative administrative expenses and streamlining its organizational structure.
- Reduce its leased facility expenses by relocating its executive management team and corporate support personnel currently located in the Company's Irvine, California, facility to the Company's Advanced Technologies Facility located in Lake Forest, California, and executing on pathways to exit or sublet the existing long–term lease on the Irvine facility. The elimination of underutilized facilities could save approximately $1.4 million annually.
- Realize substantial savings from fees charged by its professional service providers and advisors, including approximately $0.4 million in decreased annual audit fees due to the Company's change in independent auditors that was implemented in calendar 2011 with the full effect expected to be realized in the remainder of 2012.
- Realize cash savings of approximately $0.1 million annually related to fees paid to its board of directors resulting from reducing the size of the board of directors from 7 members to 5 members and the board's unanimous agreement to reduce the cash portion of their annual retainer and meeting fees by 30%, both of which were implemented on May 10, 2012, in connection with the resignation of two directors.