Assets Held for Sale

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 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 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.

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.

During the second quarter of 2014, the Company made changes to its plan to sell the U.S. excess research and development equipment and certain equipment was retained by the Company and reclassified approximately $333,000 of equipment as Held for Use. Some of the unutilized equipment reclassified as Held for Use was exchanged for more suitable research equipment. In addition to the exchange of equipment, the Company recognized a loss of approximately $188,000. As a result of the above changes to its plan to use the excess research and development equipment, the Company determined that further impairment charges should be recorded in the second quarter of 2014. Total impairment charges related to excess research and development equipment totaled $568,000 for the three months ended June 30, 2014. The Company revised the estimated fair value for the sale of the remaining equipment as Held for Sale to be approximately $292,000.

Total assets reclassified as Assets Held for Sale at June 30, 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 for the three months ended March 31, 2014	(779		)
U.S. assets sold for the three months ended March 31, 2014	(6		)
Research & development equipment classified as held for sale at March 31, 2014	$	1,394
Research & development equipment reclassified as held for use	(333		)
U.S. assets sold for the three months ended June 30, 2014	(13		)
Loss on exchange of assets	(188		)
Change in estimated fair value of research equipment during three months ended June 30, 2014	(568		)
Research & development equipment classified as held for sale at June 30, 2014	$	292

Assets held for sale located in the United States were sold for proceeds of $4,000 for the six months ended June 30, 2014, resulting in a loss on the sale of approximately $2,000.