Assets Held for Sale

3 Months Ended

Mar. 31, 2014

In the fourth quarter of 2013, the Company announced that it would begin winding down its CodeXyme^® cellulase enzyme program. As a result of the termination of this research program and corresponding reductions in headcount, the Company had concluded that certain excess research and development equipment, including assets at the Company's Hungarian subsidiary, were no longer held for use, and these assets were determined to meet the criteria to be classified as held for sale at December 31, 2013. In March 2014, the Company sold its Hungarian subsidiary including all of the equipment at this facility classified as assets held for sale. The sale of the assets was recorded at their adjusted carrying value of $779,000 and intends to sell the remaining held for sale assets in an orderly manner, is conducting a program to actively market these assets and believes it will complete the sale within one year.

In conjunction with classifying certain assets as held for sale, in 2013, the Company performed a detailed review of its excess research and development equipment with the assistance of a third party and determined that the estimated net sales price, less selling costs, was below the carrying value. A charge of $1,571,000 was recorded in the fourth quarter of 2013 to research and development expenses to reduce the value of held for sale assets to their estimated fair market value net of selling expenses. The Company reclassified the adjusted carrying value to Assets Held for Sale as of December 31, 2013.

Total assets reclassified as Assets Held for Sale at March 31, 2014 were (in thousands):



Assets Held for Sale	Adjusted Carrying Value
Research & development equipment classified as held for sale at December 31, 2013	$	2,179
Hungarian assets sold during the three months ended March 31, 2014	(779		)
U.S. assets sold during the three months ended March 31, 2014	(6		)
Research & development equipment classified as held for sale at March 31, 2014	$	1,394

Assets held for sale located in the United States were sold for $10,000 in proceeds during the three months ended March 31, 2014, resulting in a gain on the sale of approximately $4,000.

Sale of Hungarian Subsidiary

On March 13, 2014, the Company entered into an agreement with Intrexon Corporation to sell 100% of its equity interests in its Hungarian subsidiary, Codexis Laboratories Hungary Kft. On March 15, 2014, the sale transaction closed and the Company received cash proceeds of $1,500,000 from the sale and recorded a net gain of $760,000 which was included in research and development expenses in connection with the sale. As part of the purchase, the buyer obtained all the Hungarian assets held for sale and assumed all employment and facility lease related contract obligations. There were no transaction related costs incurred other than legal fees, which were recorded in selling, general and administrative expenses.