AXT (AXTI)

Restructuring Charges

During the three months ended March 31, 2007, we incurred no restructuring charges. During the three months ended March 31, 2006, we recognized a $2,000 benefit related to an adjustment to a prior accrual.

Restructuring Charges

In 2006, we recognized a $2,000 benefit related to an adjustment to a prior accrual.

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In March 2005, we announced that we would be reducing the workforce at our Beijing, China manufacturing facility by approximately 100 positions or approximately 15%. This measure was taken as part of our ongoing effort to reduce our cost structure and bring capacity in line with current market demand. Accordingly, we recorded a restructuring charge of $56,000 in March 2005 relating to the reduction in work force, which we completed in June 2005. We saved approximately $0.3 million in payroll and related expense relating to this reduction in force.

In April 2005, we closed our Japan office as part of our ongoing effort to reduce our cost structure. Accordingly, we recorded restructuring charges of $98,000 and $9,000, in the second and third quarters of 2005, respectively, relating to the closure of our Japan office. We saved approximately $0.3 million in payroll and related expense.

In December 2005, we further reduced the workforce at our Fremont, California facility by approximately 15 positions that were longer required to support production and operations, or approximately 29 percent. This measure was being taken as part of our ongoing effort to downsize our Fremont, California facility headcount. Accordingly, we recorded a restructuring charge of approximately $0.3 million in December 2005 related to the reduction in force for severance-related expenses from the reduction in force, all of which will be cash expenditures. The cash outflow from this charge was incurred over the first two quarters of 2006. We saved approximately $0.9 million annually in payroll and related expenses. Also in December 2005, we recorded an additional restructuring charge of approximately $0.2 million, primarily related to the final liquidation procedures of AXT’s Japan office so as to eliminate the remaining assets. There was no further cash outflow from this charge.

Overall for the year ended December 31, 2005, we recorded restructuring charges of $0.2 million relating to lease costs associated with facilities located in California that are no longer required to support production. The remaining restructuring accrual for future lease payments related to abandoned U.S. facilities of $0.3 million was paid out through 2006, and was included on the accompanying consolidated balance sheet as accrued restructuring. Refer to Note 8 to our consolidated financial statements.

In 2004 in the second quarter, we announced plans to cease all production activities in the United States and to manufacture our products only in China. In June 2004, we incurred a restructuring charge of $1.1 million as a result of our decision to close down our remaining manufacturing facilities in the United States. In the third and fourth quarter of 2004, we incurred additional restructuring charges of $0.2 million for a total of $1.3 million in 2004. These charges comprised costs related to the reduction in work force effected in June 2004, and lease costs associated with the facilities located in California that are no longer required to support production. In aggregate, we eliminated 50 positions, 47 of which were production workers. As of December 31, 2004, we saved approximately $0.6 million in annual payroll and related expenses.

Restructuring Charges

In December 2005, as part of our ongoing effort to reduce our Fremont, California facility headcount, we further reduced the facility’s work force by 15 full-time equivalent positions that we no longer required to support production and operations, or approximately 29% of the workforce based at this facility.  We expect to save $0.9 million annually in payroll and related expenses. Accordingly, we recorded a restructuring charge of approximately $273,000 related to the reduction in force for severance-related expenses, of which $215,000 was the balance as of December 31, 2005. We completed the reduction in force in the first quarter of 2006.

As of September 30, 2006, the remaining restructuring accrual for workforce reduction and for future lease payments related to abandoned U.S. facilities located in California that are no longer required to support production was zero, as these have all been paid.

Restructuring Charges

In December 2005, we further reduced the work force at our Fremont, California facility by approximately 15 positions that we no longer required to support production and operations, or approximately 29%. This measure was taken as part of our ongoing effort to reduce our Fremont, California facility headcount, and we expect to save $0.9 million annually in payroll and related expenses. Accordingly, we recorded a restructuring charge of approximately $273,000 related to the reduction in force for severance-related expenses, of which $215,000 was the balance as of December 31, 2005. We completed the reduction in force in the first quarter of 2006.

As of June 30, 2006, the remaining restructuring accrual for future lease payments related to abandoned U.S. facilities located in California that are no longer required to support production was zero, as these have all been paid out. This was included on the accompanying condensed consolidated balance sheet as accrued restructuring.

Restructuring Charges

During the three month period ended March 31, 2006, the $2,000 was an adjustment to a prior accrual. During the three month period ended March 31, 2005, we recorded restructuring charges related to the reduction in work force effected in March 2005, and to lease costs associated with facilities located in California that are no longer required to

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Restructuring Charges

In March 2005, we announced that we would be reducing the workforce at our Beijing, China manufacturing facility by approximately 100 positions or approximately 15%. This measure was taken as part of our ongoing effort to reduce our cost structure and bring capacity in line with current market demand. Accordingly, we recorded a restructuring charge of $56,000 in March 2005 relating to the reduction in work force, which we completed in June 2005. We anticipate annual savings of $0.3 million relating to this reduction in force.

In April 2005, we closed our Japan office as part of our ongoing effort to reduce our cost structure. Accordingly, we recorded restructuring charges of $98,000 and $9,000, in the second and third quarters of 2005, respectively, relating to the closure of our Japan office. We also anticipate payroll and related expense annual savings of approximately $0.3 million.

In December 2005, we further reduced the workforce at our Fremont, California facility by approximately 15 positions that are no longer required to support production and operations, or approximately 29 percent, over the next 120 days. This measure was being taken as part of our ongoing effort to downsize our Fremont, California facility headcount. Accordingly, we recorded a restructuring charge of approximately $273,000 in December 2005 related to the reduction in force for severance-related expenses from the reduction in force, all of which will be cash expenditures. We anticipate that the cash outflow from this charge to be incurred over the two quarters commencing in the first quarter of 2006 and we expect to save $0.9 million annually in payroll and related expenses. Also in December 2005, we recorded an additional restructuring charge of approximately $164,000, primarily related to the final liquidation procedures of AXT’s Japan office so as to eliminate the remaining assets. There is no expected cash outflow of this charge.

Overall for the year ended December 31, 2005, we recorded restructuring charges of $236,000 relating to lease costs associated with facilities located in California that are no longer required to support production. The remaining restructuring accrual for future lease payments related to abandoned U.S. facilities of $250,000 is expected to be paid out through 2006, and is included on the accompanying consolidated balance sheet as accrued restructuring. Refer to Note 8 to our consolidated financial statements.

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In 2004 in the second quarter, we announced plans to cease all production activities in the United States and to manufacture our products only in China. In June 2004, we incurred a restructuring charge of $1.1 million as a result of our decision to close down our remaining manufacturing facilities in the United States. In the third and fourth quarter of 2004, we incurred additional restructuring charges of $231,000 for a total of $1.3 million in 2004. These charges comprised costs related to the reduction in work force effected in June 2004, and lease costs associated with the facilities located in California that are no longer required to support production. In aggregate, we eliminated 50 positions, 47 of which were production workers. As of December 31, 2004, we saved approximately $560,000 in annual payroll and related expenses.

Restructuring Charges

During the second quarter of 2004, we announced plans to cease all production activities in the United States and to manufacture our products only in China. In June 2004, we incurred a restructuring charge of $1.1 million as a result of our decision to close down our remaining manufacturing facilities in the United States. In the third and fourth quarter of 2004, we incurred additional restructuring charges of $231,000 for a total of $1.3 million in 2004. These charges comprised costs related to the reduction in work force effected in June 2004, and lease costs associated with the facilities located in California that are no longer required to support production. In aggregate, we eliminated 50 positions, 47 of which were production workers. On an annual basis, we anticipate payroll and related expense savings of $1.5 million. On March 14, 2005, we announced a reduction of our workforce at our Beijing, China manufacturing facility of approximately 100 positions or approximately 15%. This measure was taken as part of our ongoing effort to reduce our cost structure and bring capacity in line with current market demand. We recorded a restructuring charge of $56,000 in the nine month period ended September 30, 2005 relating to the reduction in force, which we completed in March 2005. On an annual basis, we anticipate payroll and related expense savings of approximately $0.3 million relating to this reduction in force.

On April 28, 2005, we closed our Japan office as part of our ongoing effort to reduce our cost structure. Through September, 2005 we recorded a restructuring charge of $107,000 relating to the closure of our Japan office. On an annual basis, we anticipate payroll and related expense savings of approximately $0.3 million relating to the closure of our Japan office.

For the three and nine month periods ended September 30, 2005 we recorded restructuring charges of $5,000 and $213,000, respectively, related to lease costs associated with facilities located in California that are no longer required to support production. The remaining restructuring accrual for future lease payments related to abandoned U.S. facilities of $375,000 is expected to be paid out through 2006, and is included on the accompanying condensed consolidated balance sheet as accrued restructuring.

For the remainder of 2005, we will continue to reduce costs by qualifying new lower cost suppliers, moving more of our administrative functions to China where our costs are lower, and streamlining our organization structure and costs in the United States and China to bring them in line with our current business.

Restructuring Charges

During the second quarter of 2004, we announced plans to cease all production activities in the United States and to manufacture our products only in China. In June 2004, we incurred a restructuring charge of $1.1 million as a result of our decision to close down our remaining manufacturing facilities in the United States. In the third and fourth quarter of 2004, we incurred additional restructuring charges of $231,000 for a total of $1.3 million in 2004. These charges comprised costs related to the reduction in work force effected in June 2004, and lease costs associated with the facilities located in California that are no longer required to support production. In aggregate, we eliminated 50 positions, 47 of which were production workers. On an annual basis, we anticipate payroll and related expense savings of $1.5 million. On March 14, 2005, we announced a reduction of our workforce at our Beijing, China manufacturing facility of approximately 100 positions or approximately 15%. This measure was taken as part of our ongoing effort to reduce our cost structure and bring capacity in line with current market demand. We recorded a restructuring charge of $56,000 in the six month period ended June 30, 2005 relating to the reduction in force, which we completed in March 2005. On an annual basis, we anticipate payroll and related expense savings of approximately $0.3 million relating to this reduction in force.

For the three and six month periods ended June 30, 2005, we recorded restructuring charges of $169,000 and $208,000, respectively, related to lease costs associated with facilities located in California that are no longer required to support production. The remaining restructuring accrual for future lease payments related to abandoned U.S. facilities of $487,000, is expected to be paid out through 2006, and is included on the accompanying condensed consolidated balance sheet as accrued restructuring.

In April, 2005, we closed our Japan office as part of our ongoing effort to reduce our cost structure. In the three month period ended June, 2005 we recorded a restructuring charge of $98,000 relating to the closure of our Japan office of which $17,000 is in the restructuring accrual balance at June 30, 2005. On an annual basis, we anticipate payroll and related expense savings of approximately $0.3 million relating to the closure of our Japan office. The remaining restructuring accrual for our Japan office closure of $17,000 is expected to be paid out through 2005 and is included on the accompanying condensed consolidated balance sheet as accrued restructuring.

For the remainder of 2005, we will continue to reduce costs by qualifying new lower cost suppliers, moving more of our administrative functions to China where our costs are lower, and streamlining our organization structure and costs in the United States and China to bring them in line with our current business.

Restructuring Charges

NM: percentage not meaningful

During the three month period ended March 31, 2005, we recorded restructuring charges of $86,000 and $39,000, respectively, related to the reduction in work force effected in March 2005, and to lease costs associated with facilities located in California that are no longer required to support production.

Restructuring Charges

During the second quarter of 2004, we announced plans to cease all production activities in the United States and to manufacture our products only in China. In June 2004, we incurred a restructuring charge of $1.1 million as a result of our decision to close down our remaining manufacturing facilities in the United States. In the third and fourth quarter of 2004, we incurred additional restructuring charges of $231,000 for a total of $1.3 million in 2004. These charges comprised costs related to the reduction in work force effected in June 2004, and lease costs associated with the facilities located in California that are no longer required to support production. In aggregate, we eliminated 50 positions, 47 of which were production workers. As of December 31, 2004, we saved approximately $560,000 in payroll and related expenses. On an annual basis, we anticipate payroll and related expense savings of $1.5 million. In 2005, we will continue to reduce costs by qualifying new lower cost suppliers, moving more of our administrative functions to China where our costs are lower, and streamlining our organization structure and costs in the United States and China to bring them in line with with our current business. Refer to Note 8 to our consolidated financial statements.