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 are expensed during the period in which all requirements of recognition are 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

The following tables summarize the total asset impairment, restructuring and other charges by initiative for the three and nine months ended March 24, 2013 (in thousands):

Fiscal Year 2013 Initiatives	Three Months Ended
	March 24, 2013
	El Segundo Fabrication Facility Closure Initiative			Newport Fabrication Facility Resizing Initiative		Other Cost Reduction Activities Initiative		Total
Reported in asset impairment, restructuring and other charges:
Asset impairment	$	—		$	9	$	—	$	9
Severance and workforce reduction costs (recoveries)		(5	)		—		205		200
Relocation and re-qualification costs		142			529		—		671
Total asset impairment, restructuring and other charges	$	137		$	538	$	205	$	880

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

Fiscal Year 2013 Initiatives	Nine Months Ended
	March 24, 2013
	El Segundo Fabrication Facility Closure Initiative		Newport Fabrication Facility Resizing Initiative		Other Cost Reduction Activities Initiative		Total
Reported in asset impairment, restructuring and other charges:
Asset impairment	$	178	$	675	$	1,062	$	1,915
Severance and workforce reduction costs		5,852		597		4,993		11,442
Decommissioning costs		—		55		—		55
Relocation and re-qualification costs		352		1,023		—		1,375
Total asset impairment, restructuring and other charges	$	6,382	$	2,350	$	6,055	$	14,787

In addition to the amounts in the table above, $0.2 million and $1.4 million of other charges related to the restructuring initiatives were recorded in cost of sales during the three and nine months ended March 24, 2013, respectively. 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 nine months ended March 24, 2013, which are included in accrued salaries, wages, and benefits on the balance sheet (in thousands):

Fiscal Year 2013 Initiatives	El Segundo Fabrication Facility Closure Initiative			Newport Fabrication Facility Resizing Initiative			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		5,852			597			4,993			11,442
Costs paid during the period		(5,282	)		(597	)		(4,893	)		(10,772	)
Accrued severance and workforce reduction costs March 24, 2013	$	570		$	—		$	100		$	670

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. In connection with the plan, the Company estimates it will incur total pre-tax costs of $7.3 million. These costs consist of $5.9 million of severance and workforce reduction costs, $1.2 million of relocation and re-qualification costs, and $0.2 million of asset impairment costs. In addition to the restructuring charges above, during the three and nine months ended March 24, 2013, the Company recorded $0.2 million and $1.4 million of other charges related to the restructuring initiative in cost of sales. These other charges, which were for accelerated depreciation and inventory write-downs, are not classifiable as restructuring costs, and affected the ESP reporting segment.

During the three and nine months ended March 24, 2013, cash payments for this initiative were $2.9 million and $5.3 million, respectively, and are estimated to be approximately $0.9 million and $1.0 million for the remainder of fiscal year 2013 and thereafter, respectively.

In addition, the Company estimates it will make cash expenditures of $2.5 million for the decontamination and restoration of this fabrication facility. These costs were previously considered as part of the asset impairment of the El Segundo Fabrication Facility recorded in the fourth quarter of fiscal year 2012, and are not anticipated to result in additional restructuring charges.

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. In connection with the plan, the Company estimates it will incur total pre-tax costs of approximately $13.6 million. These costs consist of approximately $0.7 million of asset impairment costs, $2.4 million of severance and workforce reduction costs, $4.4 million of decommissioning costs, and $6.1 million of relocation and re-qualification costs.

During the three and nine months ended March 24, 2013, cash payments for this initiative were $0.5 million and $1.7 million, respectively, and are estimated to be approximately $1.5 million and $9.7 million for the remainder of fiscal year 2013 and thereafter, respectively.

Fiscal Year 2013 Other Cost Reduction Activities Initiative

During the first nine months 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 has incurred approximately $5.0 million of severance and workforce reduction costs so far in fiscal year 2013. The severance and workforce reduction costs recorded during the three months ended March 24, 2013 included $0.2 million for research and development functions. During the nine months ended March 24, 2013, severance and workforce reduction costs included $2.6 million related to manufacturing functions, and $1.1 million for general and administrative functions, and $1.3 million for research and development functions.

As part of those ongoing efforts, during the nine months ended March 24, 2013, the Company incurred $1.1 million of asset impairment costs for the planned disposition of certain manufacturing equipment related to its manufacturing facility in Mexico, and may incur additional amounts in the future.

The Company has identified a few additional cost reduction actions to be implemented during the three months ending June 30, 2013, at which point this initiative is expected to be completed.

During the three and nine months ended March 24, 2013, cash payments for this initiative were $1.1 million and $4.9 million, respectively, and are estimated to be approximately $0.2 million for the remainder of fiscal year 2013.