Asset impairment, restructuring and related 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 related 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 employment position 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 operating expenses in order to align its cost structure with business conditions. As part of the plan, the Company has incurred and expects to further incur costs recorded in asset impairment, restructuring and related 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 (completed in fiscal year 2013)

The following tables summarize the total asset impairment, restructuring and related charges by initiative for fiscal years 2014 and 2013 (in thousands):



	Fiscal Year Ended
	June 29, 2014
	El Segundo Fabrication Facility Closure Initiative			Newport Fabrication Facility Resizing Initiative		Other Cost Reduction Activities Initiative		Total
Reported in asset impairment, restructuring and related charges:
Asset impairment	$	—		$	—	$	—	$	—
Severance and workforce reduction costs (recoveries)	(20		)	141		—		121
Decommissioning costs	—			383		—		383
Relocation and re-qualification costs	4			5,130		—		5,134
Total asset impairment, restructuring and related charges	$	(16	)	$	5,654	$	—	$	5,638



	Fiscal Year Ended
	June 30, 2013
	El Segundo Fabrication Facility Closure Initiative		Newport Fabrication Facility Resizing Initiative		Other Cost Reduction Activities Initiative		Total
Reported in asset impairment, restructuring and related charges:
Asset impairment	$	178	$	675	$	1,062	$	1,915
Severance and workforce reduction costs	5,875		597		5,417		11,889
Decommissioning costs	—		79		—		79
Relocation and re-qualification costs	398		2,715		—		3,113
Total asset impairment, restructuring and related charges	$	6,451	$	4,066	$	6,479	$	16,996

In addition to the amounts in the tables above, $2.1 million and $2.0 million of other charges related to the restructuring initiatives were recorded in cost of sales during the fiscal years ended June 29, 2014 and June 30, 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 fiscal years ended June 29, 2014 and June 30, 2013, which are included in accrued salaries, wages, and benefits on the balance sheet (in thousands):



	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 related charges	5,875			597			5,417			11,889
Costs paid during the period	$	(5,678	)	$	(597	)	$	(5,417	)	$	(11,692	)
Accrued severance and workforce reduction costs June 30, 2013	197			—			—			197
Accrued (recovered) during the period and charged to asset impairment, restructuring and related charges	$	(20	)	$	141		$	—		$	121
Costs paid during the period	(120		)	(141		)	—			(261		)
Accrued severance and workforce reduction costs June 29, 2014	$	57		$	—		$	—		$	57

El Segundo Fabrication Facility Closure Initiative

During fiscal year 2013, the Company adopted a restructuring plan and closed its El Segundo wafer fabrication facility in the third quarter of fiscal year 2013. During the fiscal year ended June 29, 2014, the Company incurred de minimis asset impairment, restructuring and related charges. During the fiscal year ended June 30, 2013, the company incurred $6.5 million of asset impairment, restructuring and related charges. No further expenses are expected to be incurred related to this initiative.

In addition to the restructuring charges above, during the fiscal year ended June 30, 2013, the Company recorded $1.5 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. The Company recorded no such charges during the fiscal year ended June 29, 2014.

During the fiscal years ended June 29, 2014 and June 30, 2013, cash payments for this initiative were $0.1 million and $6.1 million, respectively, and are estimated to be approximately $0.1 million in fiscal year 2015.

In addition, the Company estimates it will make total 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.

Newport, Wales Fabrication Facility Resizing Initiative

During fiscal year 2013, the Company adopted a restructuring plan to resize its wafer fabrication facility in Newport, Wales in several phases. The Company currently expects the resizing to be completed by the middle of calendar year 2015. During the fiscal years ended June 29, 2014 and June 30, 2013, the Company incurred $5.7 million and $4.1 million, respectively, of asset impairment, restructuring and related charges. In connection with the plan, the Company estimates total pre-tax costs of approximately $16.3 million. These consist of approximately $0.7 million of asset impairment costs, $2.6 million of severance and workforce reduction costs, $4.4 million of decommissioning costs, and $8.6 million of relocation and re-qualification costs. In addition to the restructuring charges above, during the fiscal years ended June 29, 2014 and June 30, 2013, the Company recorded $2.1 million and $0.5 million, respectively, of other charges related to the restructuring initiative in cost of sales. These other charges, which were for accelerated depreciation, are not classifiable as restructuring costs.

During the fiscal years ended June 29, 2014 and June 30, 2013, cash payments for this initiative were $5.7 million and $3.4 million, respectively, and are estimated to be approximately $6.6 million in fiscal year 2015.

Other Cost Reduction Activities Initiative (completed in fiscal year 2013)

During fiscal year 2013, the Company completed all actions for this initiative to reduce (i) capacity at manufacturing facilities in Mexico, California, and Arizona, and (ii) administrative and research and development costs around the world. As part of the plan, the Company incurred $5.4 million of severance and workforce reduction costs in fiscal year 2013. During the fiscal year ended June 30, 2013, severance and workforce reduction costs included $3.0 million related to manufacturing functions, $1.1 million for general and administrative functions, and $1.3 million for research and development functions.

As part of these efforts, during the fiscal year ended June 30, 2013, the Company also incurred $1.1 million of asset impairment costs for the planned disposition of certain manufacturing equipment related to its manufacturing facility in Mexico. During the fiscal year ended June 30, 2013, cash payments for this initiative were $5.4 million.