NOTE 18 – RESTRUCTURING COSTS

In February 2017, the Company announced its plan to transfer its wafer fabrication operation at KFAB to other Company-owned wafer fabrication plants and external foundries. The Company ceased production operations at KFAB late in third quarter 2017 and vacated and returned the premises in November 2017. Employees were provided retention and standard severance packages. During 2017 the Company received $6.5 million of insurance proceeds as a result of the fires sustained at the KFAB facility during 2016 of which $4.5 million is recorded in Cost of Goods Sold and $2.0 million is recorded in Other Income. There are outstanding insurance claims. Also during 2017, the Company recorded $1.9 million of asset impairment related to the shut-down of KFAB.

The table below sets forth the restructuring costs, recorded in restructuring expense in the Condensed Consolidated Statements of Operations, incurred during the twelve months ended December 31, 2017:


Early termination of supply contract	$	1,985
Asset retirement obligation		1,403
Retention cost		3,158
Cost of equipment relocation, shutdown cost and other		3,591
Total	$	10,137

The table below sets forth the costs accrued related to the KFAB restructuring:

	Early Contract Termination			Retention Costs			Equipment Relocation, Shutdown Cost and Other			Total
Beginning balance, January 1, 2017	$	-		$	-		$	-		$	-
Costs accrued		1,985			3,158			3,591			8,734
Restructuring costs paid		(1,985	)		(2,499	)		(2,946	)		(7,430	)
Balance at December 31, 2017	$	-		$	659		$	645		$	1,304

The Company will pay out the remaining accrued costs during the first quarter of 2018.

Based on continued negotiations with the landlord, we recorded an additional $1.4 million of asset retirement obligations related the KFAB restructuring. This asset retirement obligation is for the estimated amounts to be paid to contractors to remediate the KFAB facility upon vacating the property. The table below sets forth the asset retirement obligation related to the KFAB restructuring:

Asset retirement obligation, January 1, 2017	$	486
Accrual of additional asset retirement obligation		1,403
Amount paid		(1,500	)
Asset retirement obligation, December 31, 2017	$	389

In connection with the asset retirement obligation, the Company recorded amortization expense of the offsetting asset of $1.4 million for the twelve months ended December 31, 2017.