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. The net carrying value of the excess research and development equipment totaled $3,750,000 and was reduced to an adjusted carrying value of $2,179,000 as of December 31, 2013 to reflect the estimated current fair value for these assets. 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 $0.8 million, which is included in research and development expenses.

In 2014, we decided to expedite the disposition of assets held for sale in the United States by selling such assets through auction. As a result, we recognized a change is estimated fair value of $0.7 million in 2014, which is reflected in research and development expense. Also in 2014, we changed our plan to sell certain U.S. research and development equipment, and such equipment was put back in operational use and classified as property and equipment. In addition, certain of the U.S. research and development equipment were exchanged for more suitable research equipment that was classified as property and equipment. The combined transfer of U.S. research and development equipment from assets held for sale to property and equipment was $0.3 million. We recognized a net loss on the disposition and exchange of assets held for sale of less than $0.1 million in 2014.

Total assets reclassified as assets held for sale along with the related expense to reduce carrying value to fair value were as follows (in thousands):



Assets Held for Sale	Carrying Value
Excess research and development equipment	$	3,750
Change in estimated fair value of research equipment during three months ended December 31, 2013		(1,571	)
Research & development equipment classified as held for sale at December 31, 2013		2,179
Hungarian subsidiary assets sold in 2014 (see Note 10)		(779	)
Assets held for sale in the United States sold in 2014		(181	)
Loss on exchange of assets held for sale in the United States sold in 2014		(188	)
Change in estimated fair value of research equipment in 2014		(698	)
Assets held for sale transferred to property and equipment in 2014		(333	)
Research & development equipment classified as held for sale at December 31, 2014	$	—