Item 2.05. Costs Associated with Exit or Disposal Activities.
On December 31, 2008, Optelecom-NKF, Inc. (the "Company") completed a reduction
in force in select business units. This reduction in force was initiated to
reduce costs in mature areas of our technology offerings and allow the Company
to continue critical investments in growing Video over IP products. This
reduction in force resulted in the termination of seven employees. The Company
expects to record charges of approximately $500,000 in connection with the
reduction in force. These one-time pre-tax charges are comprised of accruals
for severance expense which will be fully expensed in the fourth quarter 2008.
The severance will consist of approximately $200,000 in cash payments during the
first quarter of 2009 with the remaining $300,000 paid during the last three
quarters of the year.
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