RESTRUCTURING, IMPAIRMENT OF LONG-LIVED ASSETS AND OTHER CHARGES

In March 2013, the Company announced a restructuring of its DigitalOptics segment and a reduction of corporate overhead expenses to refocus its DigitalOptics Corporation ("DOC") business strategy to achieve the full potential of its differentiated imaging technology while reducing costs. Through the first six months of 2013, the Company incurred total restructuring, impairments of long-lived assets and other charges of $17.6 million, which primarily included an $8.7 million charge due to the abandonment of patents and technology which caused a revision of the useful life estimate of these patent and technology assets thus fully impairing them, $2.4 million impairment of manufacturing equipment assets held for sale, $1.9 million from employee severance, $1.9 million impairment of an investment, and an $1.5 million charge due to the disposal of an entity. Refer to the table below for more details of the restructuring, impairment of long-lived assets and other charges which are presented on a combined continued and discontinued operation basis.

In November 2012, the Company announced a restructuring of its DigitalOptics segment to focus its efforts on its core MEMS camera module business. In connection with this effort, DigitalOptics reduced its workforce and ceased operations at its facility in Tel Aviv, Israel. In connection with these actions, the Company incurred total charges of $2.5 million in the fourth quarter of 2012. The charges in 2013 are not material.

In January 2011, the Company announced a reorganization of its DigitalOptics segment to focus on key growth opportunities including extended depth of field (“EDoF”), Zoom and MEMS-based auto-focus and a reduction of DigitalOptics employees by up to 15% of the Company’s worldwide employee base along with certain headquarters support functions. In August 2011, the Company announced a commitment to undertake a workforce reduction at its Yokohama, Japan development facility and to close that facility in order to optimize the Company’s operations. Expenses incurred as a result of these activities consisted of severance, costs related to the continuation of certain employee benefits and expenses related to the closure of the facility and termination of the operating lease, and are recorded in restructuring and other charges on the statement of operations. Total restructuring and other charges related to these activities was $5.2 million, all of which were expensed in the year ended December 31, 2011 and these activities were completed during the first quarter of 2012.

The Company did not incur restructuring charges in the six months ended June 30, 2012. Information with respect to restructuring, impairment of long-lived assets and other charges as of June 30, 2013 is as follows (in thousands):



	Employee Severance			Impairment of long-lived assets and other			Total
Balance at December 31, 2012	$	1,913		$	28		$	1,941
Charges in fiscal 2013 (1)	2,064			13,691			15,755
Cash payments	(1,967		)	(25		)	(1,992		)
Non-cash items	—			(13,694		)	(13,694		)
Balance at March 31, 2013	2,010			—			2,010
Charges in fiscal 2013 (2)	1,109			5,381			6,490
Cash payments	(1,781		)	(1,464		)	(3,245		)
Non-cash items	(367		)	(3,398		)	(3,765		)
Balance at June 30, 2013	$	971		$	519		$	1,490

(1) Impairment of long-lived assets and other of $13.7 million in the three months ended March 31, 2013 included an impairment charge of $3.2 million in manufacturing equipment assets held for sale resulting from the closure of the Zhuhai Facility, impairment of $675,000 relating to customer relationships and $852,000 relating to patents acquired from the Zhuhai Transaction, and $0.3 million impairment of research and development equipment relating to the closure of the facility in Tel Aviv, Israel, and an $8.7 million charge due to the abandonment of patents and technology which caused a revision of the useful life estimate of these patents and technology assets thus fully impairing them (see Note 8 – "Goodwill and Identified Intangibles Assets" for more information about the accelerated amortization of existing technology).

(2) Restructuring and other charges totaled $6.5 million in the three months ended June 30, 2013 of which $0.5 million was classified in discontinued operations, which included $0.2 million of severance payments relating to the Zhuhai operation and $0.3 million of severance payments relating to the Charlotte operation. Impairment of long-lived assets and other of $5.4 million in the three months ended June 30, 2013 included $1.9 million impairment of the investment in NemoTek Technologie S.A. ("Nemotek"), $1.5 million charge related to disposal of an entity that furthered advanced packaging solutions, and an impairment charge of $1.1 million in manufacturing equipment assets held for sale relating to the Taiwan operation.