11. Asset Impairment, Restructuring and Other Charges

Asset impairment, restructuring and other charges reflect the impact of certain cost reduction programs and initiatives implemented by the Company. These programs and initiatives include the closing of facilities, the termination of employees and other related activities. Asset impairment, restructuring and other charges include program-specific exit costs, severance benefits pursuant to an ongoing benefit arrangement, and special termination benefits. Severance costs unrelated to the Company's restructuring initiatives are recorded as an element of cost of sales, research and development ("R&D") or selling, general and administrative expense ("SG&A"), depending upon the classification and function of the employee terminated. Restructuring costs were expensed during the period in which all requirements of recognition were met.

Asset write-downs are principally related to facilities and equipment that will not be used subsequent to the completion of exit or downsizing activities being implemented, and cannot be sold for amounts in excess of carrying value. In determining the asset groups for the purpose of calculating write-downs, the Company groups assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. In determining whether an asset is impaired, the Company evaluates estimated undiscounted future cash flows and other factors such as changes in strategy and technology. An impairment loss exists if the estimated undiscounted future cash flows are less than the carrying amount of the asset group. The Company then determines the fair value of the asset group by discounting the estimated future cash flows, consistent with the cash flows of a market participant, at a discount rate that is used when analyzing potential acquisitions. The Company then compares the fair value of the asset group with the carrying amount of the asset group and writes down the carrying amount of the asset group to its fair value.

During the first quarter of fiscal year 2013, the Company announced a restructuring plan to modify its manufacturing strategy and lower its operating expenses in order to align its cost structure with business conditions. As part of the plan, the Company expects to incur costs recorded in asset impairment, restructuring and other charges related primarily to the following:

·	Fiscal Year 2013 El Segundo Fabrication Facility Closure Initiative

·	Fiscal Year 2013 Newport Fabrication Facility Resizing Initiative

·	Fiscal Year 2013 Other Cost Reduction Activities Initiative

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Asset Impairment, Restructuring and Other Charges (Continued)

The following tables summarize the total asset impairment, restructuring and other charges by initiative for the three months ended September 23, 2012 (in thousands):

	Three Months Ended
	September 23, 2012
	Fiscal Year 2013 El Segundo Fabrication Facility Closure Initiative		Fiscal Year 2013 Newport Fabrication Facility Resizing Initiative		Fiscal Year 2013 Other Cost Reduction Activities Initiative		Total
Reported in asset impairment, restructuring and other charges:
Asset impairment	$	—	$	—	$	—	$	—
Severance and workforce reduction costs		5,687		—		3,279		8,966
Decommissioning costs		—		—		—		—
Total asset impairment, restructuring and other charges	$	5,687	$	—	$	3,279	$	8,966

In addition to the amounts in the table above, $0.9 million of other charges related to the restructuring initiatives were recorded in cost of sales during the three months ended September 23, 2012. These charges, which were for accelerated depreciation and inventory write-downs, are not classifiable as restructuring costs, and were therefore recorded in cost of sales.

The following table summarizes changes in the Company's restructuring related accruals related to its fiscal year 2013 initiatives for the three months ended September 23, 2012, which are included in accrued salaries, wages, and benefits on the balance sheet (in thousands):

	Fiscal Year 2013 El Segundo Fabrication Facility Closure Initiative			Fiscal Year 2013 Newport Fabrication Facility Resizing Initiative		Fiscal Year 2013 Other Cost Reduction Activities Initiative			Total
Accrued severance and workforce reduction costs at June 24, 2012	$	—		$	—	$	—		$	—
Accrued during the period and charged to asset impairment, restructuring and other charges		5,687			—		3,279			8,966
Costs paid during the period		(829	)		—		(1,869	)		(2,698	)
Accrued severance and workforce reduction costs at September 23, 2012	$	4,858		$	—	$	1,410		$	6,268

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Asset Impairment, Restructuring and Other Charges (Continued)

Fiscal Year 2013 Initiatives

Fiscal Year 2013 El Segundo Fabrication Facility Closure Initiative

During the first quarter of fiscal year 2013, the Company adopted a restructuring plan to close its El Segundo wafer fabrication facility by the third quarter of fiscal year 2013 with estimated total pre-tax costs of $9.0 million. These consist of $5.7 million of severance and workforce reduction costs, $2.1 million of decommissioning costs, and $1.2 million of relocation and re-qualification costs. The restructuring charge recorded during the three months ended September 23, 2012 included $5.7 million of severance costs and workforce reduction costs. In addition, during the three months ended September 23, 2012, the Company recorded $0.9 million of other charges related to the restructuring initiative in cost of sales that affected the ESP reporting segment. These other charges, which were for accelerated depreciation and inventory write-downs, are not classifiable as restructuring costs, and were therefore recorded in cost of sales.

During the first quarter of fiscal year 2013, cash payments for this initiative were $0.8 million and are estimated to be approximately $6.2 million and $2.0 million for the remainder of fiscal year 2013 and thereafter, respectively.

Fiscal Year 2013 Newport, Wales Fabrication Facility Resizing Initiative

During the first quarter of fiscal year 2013, the Company adopted a restructuring plan to resize its wafer fabrication facility in Newport, Wales in several phases by the middle of calendar year 2015 with estimated total pre-tax costs of approximately $13 million. These consist of approximately $2 million of severance and workforce reduction costs, $5 million of decommissioning costs, and $6 million of relocation and re-qualification costs. These charges will not impact any specific reporting segment.

Cash payments for this initiative are estimated to be approximately $4 million during fiscal year 2013, and $9 million thereafter.

Fiscal Year 2013 Other Cost Reduction Activities Initiative

During the first quarter of fiscal year 2013, the Company undertook certain actions to reduce (i) capacity at manufacturing facilities in Mexico, California, and Arizona, as well as (ii) administrative and research and development costs around the world. As part of the plan, the Company estimates that it will incur approximately $4.2 million of severance and other workforce reduction costs by the end of fiscal year 2013. In connection with that effort, during the three months ended September 23, 2012, the Company incurred approximately $3.3 million of severance and workforce reduction costs. The severance and workforce reduction costs recorded during the three months ended September 23, 2012 included $2.1 million related to other manufacturing facilities in Mexico, California, and Arizona, and $1.2 million for administrative and research and development functions around the world.

The Company continues to review its manufacturing footprint and identify additional cost reduction opportunities, and the nature, timing and extent of the Company's restructuring activities are not yet complete. Accordingly, and as part of those ongoing efforts, the Company may also incur asset write-downs related to the ultimate disposition of certain manufacturing equipment; any such potential future asset write-downs do not meet the criteria under GAAP to be accrued at this time.

During the first quarter of fiscal year 2013, cash payments for this initiative were $1.9 million and are estimated to be approximately $2.3 million for the remainder of fiscal year 2013.

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)