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      &lt;font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"&gt;(11)&amp;#160;&amp;#160;ASSET

      IMPAIRMENT&lt;/font&gt;

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      &lt;font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"&gt;When

      indicators of impairment exist and assets are held for use,

      we estimate future undiscounted cash flows attributable to

      the assets. In the event such cash flows are not expected to

      be sufficient to recover the recorded value of the assets,

      the assets are written down to their estimated fair values

      based on the expected discounted future cash flows

      attributable to the assets or based on appraisals. Factors

      affecting impairment of assets held for use include the

      ability of the specific assets to generate positive cash

      flows. Changes in any of these factors or changes in our

      forecast model estimates could necessitate impairment

      recognition in future periods for other assets held for

      use.&lt;/font&gt;

    &lt;/div&gt;&lt;br/&gt;&lt;div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"&gt;

      &lt;font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"&gt;During

      the first quarter of 2012, flooding in Thailand required us

      to suspend our Thailand assembly operations and constrained

      the disk drive manufacturing supply chain, which affected

      demand for our products. We believe that the flooding,

      together with our continued operating losses, was a

      triggering event that required an impairment analysis. Based

      on our forecast model and impairment analysis for our first

      quarter of 2012, the expected undiscounted cash flows

      exceeded the carrying value of our assets. However,

      impairments were recognized on specific identification of

      assets that were destroyed by the floodwaters (see Note 12

      regarding the Thailand flood).&lt;/font&gt;

    &lt;/div&gt;&lt;br/&gt;&lt;div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"&gt;

      &lt;font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"&gt;Late

      in December 2012, we decided to further consolidate and

      streamline our U.S. operations. In connection with this

      consolidation of our operations, we have initiated the

      marketing of two of our facilities for sale or lease,

      including the portion of our Eau Claire, Wisconsin facility

      used for assembly operations and the Development Center

      building on our Hutchinson, Minnesota campus. We plan to

      vacate our assembly operations building in Eau Claire,

      Wisconsin by moving the equipment to other available space

      and as we shift more assembly production to our Thailand

      operation. In Hutchinson, we are consolidating our

      Development Center into our headquarters building, taking

      advantage of the space made available by moving component

      manufacturing from Hutchinson to Eau Claire in 2011. We

      believe that the decision to consolidate operations was a

      triggering event that required us to perform an impairment

      analysis to evaluate the recoverability of the carrying value

      of our long-lived assets. Our impairment analysis for the

      first quarter of 2013 indicated that no charge for impairment

      was required. Based on our forecast model, the expected

      undiscounted cash flows exceeded the carrying value of our

      assets. We determined the long-lived assets did not meet the

      criteria to be classified as assets held for sale.&lt;/font&gt;

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