COST - REDUCTION ACTIONS

9 Months Ended

Sep. 30, 2015

NOTE 12—COST-REDUCTION ACTIONS

In light of the continued shift in module manufacturing to mainland China, and the requirement within this growing market for just-in-time delivery, the Company announced plans in 2013 to cease production at its Johor, Malaysia facility in 2014. In conjunction with the anticipated closure, the Company recognized severance and other benefits of $386 in cost of sales and $377 in selling, general and administrative expenses in 2013. During 2014, the Company reassessed the strategic benefit of its Malaysia facility and decided to continue production as its Johor, Malaysia. As such, the Company reversed restructuring accruals recorded in 2013 during the second quarter of 2014 resulting in a positive benefit to cost of sales of $407 and selling, general and administrative expense of $388.

On July 27, 2015, the Company again reassessed the continued operations of its Malaysia facility and determined to close its Malaysia facility, effective August 2, 2015 following a recent decision by the Company’s largest customer to exit its OEM module production in Malaysia. The Company expects to continue to fulfill orders to this customer from its Spain and China facilities. The Company has reviewed the current inventory on hand and has begun to transfer inventory to its other manufacturing locations. As such, an analysis was performed and inventory was written down to net realizable value. During the third quarter of 2015 the Company recognized $352 of severance and benefits as well as a $467 inventory write down in cost of sales and $467 of severance and benefits in selling, general and administrative expenses related to the Malaysia facility closure.

The restructuring accrual consists of $575 for severance and benefits as of September 30, 2015. A rollforward of the severance and other exit cost accrual activity was as follows:

	September 30, 2015			September 30, 2014
Balance as of beginning of year	$	32		$	1,934
Additions	1,663			65
Reversals	—			(795		)
Reductions	(1,120		)	(798		)

Balance as of end of period	$	575		$	406