Note 2 - Discontinued Operations

12 Months Ended

Jul. 28, 2012

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

2.           DISCONTINUED OPERATIONS

On November 24, 2009, the Company consummated the sale of certain of the assets and product lines of its DMI, to an affiliate of U.M.G. Inc. (“UMG” or the “Acquirer”).

Pursuant to the agreement, the Acquirer (i) assumed all of the Company’s and DMI’s post-closing obligations in connection with the Company’s lease of its facilities in Roselle, Illinois, (the Company remains secondarily liable on the lease obligations), (ii) accepted all of DMI’s inventory related to the DMI business on a consignment basis, (iii) hired select DMI employees, (iv) indemnified the Company for potential employee severance obligations and (v) assumed certain other liabilities of the business, including outstanding warranty obligations.

The operating results of DMI for fiscal 2010 included revenues of $5,377 and a net loss from operations of $1,262 and loss on sale of the assets of $1,895.

On November 3, 2011, the Company completed the sale of Villa.  The Company received proceeds in cash of 16,500,000 euro ($22,761, net of expenses) and an unsecured promissory note for 500,000 euro, initially valued at $688.  The promissory note has a term of 5 years, with interest accruing at a rate of 6% per annum, beginning eighteen months after issuance.  The note may be prepaid at any time, but if prepayment in full occurs during the first eighteen months, the total principal will be reduced to 400,000 euros.  Through July 28, 2012, no payments have been made on the note.  The Company also repurchased 28,104 shares of Common Stock from two employees of Villa for $820.  At the time of this repurchase, the acquired shares had a market value of $253.  As the two employees are also the primary purchasers of Villa, the excess was deemed a reduction in the purchase price described above and reduced the net proceeds to $22,194.  As a part of the transaction, the Company received a dividend of cash held by Villa as of the closing date in the amount of $4,538.

The Company retained the building in Milan, Italy, housing Villa’s operations, which is subject to an initial six year lease with VIV and an option for a subsequent six year period.  Under the terms of the lease, the Company will receive 335,000 euros in annual rent, payable quarterly.  The rent may be adjusted annually for changes in the consumer price index as specified in the lease.

Operating results of Villa through its sales date are as follows:

	Year Ended
	July 28, 2012		July 30, 2011		July 31, 2010
Sales	$	16,714	$	57,138	$	43,695
Income (loss) before taxes	$	1,894	$	4,520	$	2,938
Provision for income taxes		664		1,696		1,125
Net income (loss) from discontinued operations	$	1,230	$	2,824	$	1,813
Gain on disposal of discontinued operations	$	7,627	$	-	$	-
Provision for income taxes		790		-		-
Net gain on sale of discontinued operations	$	6,837	$	-	$	-
Net income from discontinued operations	$	8,067	$	-	$	-

The following table sets forth the assets and liabilities of the discontinued operation included in the balance sheet of the Company:

	July 28, 2012		July 30, 2011
Assets:
Cash (a)	$	-	$	3,406
Accounts receivable		-		14,194
Inventories, net		-		9,022
Prepaid and other current assets		-		2,500
Total current assets	$	-	$	29,122
Property, plant and equipment, net (a)	$	-	$	3,548
Goodwill		-		4,526
Deferred tax assets		-		1,158
Other assets		-		25
Total non-current assets	$	-	$	9,257
Liabilities:
Current portion of long-term debt		-		111
Accounts payable		-		6,395
Accrued expenses		-		6,502
Total current liabilities	$	-	$	13,008
Deferred income tax liabilities (a)	$	-	$	580
Statutory liability for severance pay		-		1,950
Total non-current liabilities	$	-	$	2,530
Shareholders’ Equity:
Accumulated other comprehensive income (a)	$	-	$	2,596

(a)   The Company retained all the cash and $2,967 of the property, plant and equipment and approximately $900 of the accumulated other comprehensive income.  The Company also retained the deferred tax liability associated with the building.