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Asset Impairment Charges
12 Months Ended
Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]  
Asset Impairment Charges

5. ASSET IMPAIRMENT CHARGES

When circumstances, such as adverse market conditions, indicate that the carrying value of a long-lived asset may be impaired, the Company performs an analysis to review the recoverability of the asset’s carrying value. The Company makes estimates of the undiscounted cash flows (excluding interest charges) from the expected future operations of the asset. These estimates consider factors such as expected future operating income, operating trends and prospects, as well as the effects of demand, competition and other factors. If the analysis indicates that the carrying value is not recoverable from future cash flows, an impairment loss is recognized to the extent that the carrying value exceeds the estimated fair value. Any impairment losses are recorded as operating expenses, which reduce net income. In response to the Company’s current period operating losses combined with its history of continuing operating losses, the Company evaluated the recoverability of certain property and equipment. In the third quarter of 2015, the overall outlook for the sapphire market continued to be depressed as industry analysts reported significant worldwide over capacity and pricing of sapphire products reached historical lows. Based upon the Company’s quarterly assessment using its most recent projections, impairment to these assets was indicated as of September 30, 2015, as the recoverable amount of undiscounted cash flows did not exceed the carrying amount of these assets. The Company recorded an asset impairment charge on machinery, equipment and facilities of $39.6 million. The Company evaluated its long-lived assets and has written down the assets using a cost and market approach to determine the current fair market value. In using the fair market value approach, valuation inputs used to measure the fair value follow a hierarchy based on three levels of inputs. Level 1, being the most observable, relies upon quoted prices in active markets for identical assets, Level 2 which includes other inputs that are observable or can be corroborated by observable market data and Level 3, the least observable, that is supported by little or no market activity and are significant to the fair value of the assets. Based on the fair market value approach used by the Company to measure its long-lived assets, the Company determined the assets to be measured at fair value using Level 3 inputs. At December 31, 2015, the Company reviewed the current fair market value and concluded no additional adjustments were needed. The Company will continue to reassess its long-lived assets to ensure the carrying amount of these assets is still appropriate given any changes in the marketplace and other factors used in determining the current fair market value.