Assets Held for Sale

In the fourth quarter of 2013, we announced that we would begin winding down Codexis' CodeXyme^® cellulase enzyme program. As a result of the termination of this research program and corresponding reductions in headcount, we concluded that certain excess research and development equipment, including assets at Codexis' 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, we performed a detailed review of Codexis' 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. We reclassified the adjusted carrying value to Assets Held for Sale as of December 31, 2013.

In March 2014, we sold our Hungarian subsidiary including all of the equipment at this facility classified as assets held for sale for proceeds of $1.5 million and recognized a gain of $760,000.

During the second quarter of 2014, we changed our plan to sell certain U.S. research and development equipment. Such equipment, which had a carrying value of approximately $333,000, was put back in operational use and classified 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, we recognized a loss of approximately $188,000. We also decided to expedite the disposition of held for sale assets by selling such assets through auction. As a result of the above changes to our plan to use the excess research and development equipment, we 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. We disposed of the remaining held for sale equipment in the third quarter of 2014, which resulted in an additional impairment charge of $130,000.

Total assets reclassified as assets held for sale at September 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
U.S. assets sold for the three months ended September 30, 2014	(162		)
Change in estimated fair value of research equipment during three months ended September 30, 2014	$	(130	)
Research & development equipment classified as held for sale at September 30, 2014	—