Sale of Vehicle Sensors

12 Months Ended

Mar. 31, 2014

Sale of Vehicle Sensors

Sale of Vehicle Sensors

3. Sale of Vehicle Sensors

        On July 29, 2011, we completed the sale of substantially all of our assets used in connection with our Vehicle Sensors segment to Bendix Commercial Vehicle Systems LLC ("Bendix"), a member of Knorr-Bremse Group, pursuant to an Asset Purchase Agreement (the "Agreement") signed on July 25, 2011 (the "Asset Sale").

        Under the terms of the Agreement, upon the closing of the Asset Sale, Bendix paid us $14 million in cash, subject to a $2 million holdback and adjustments based upon the working capital of the Vehicle Sensors segment at closing, and Bendix assumed certain specified obligations and liabilities of the Vehicle Sensors segment. In October 2012, we received approximately $1.7 million in connection with the holdback provision. Furthermore, we are entitled to additional consideration in the form of the following performance and royalty-related earn-outs: Bendix is obligated to pay us an amount in cash equal to (i) 85% of revenue associated with royalties received under our license and distribution agreements with Audiovox Electronics Corporation and Valeo Schalter and Sensoren GmbH through December 31, 2017 and (ii) 30% of the amount, if any, by which the amount of revenue generated from the sale of our lane departure warning systems exceeds Bendix's projection for such revenue for the two years following closing, each subject to certain reductions and limitations set forth in the Agreement. As of March 31, 2014, we received approximately $1.1 million in connection with royalty-related earn-outs provisions for a total of $14.8 million in cash from the Asset Sale.

        Upon the closing of the Asset Sale and resolution of working capital adjustments (as described above), we recorded aggregate proceeds received of approximately $12.0 million. Legal and other professional fees of approximately $0.6 million that were directly related to the sale transaction were offset against the proceeds to calculate net proceeds from the Asset Sale of approximately $11.4 million.

        The following table summarizes the assets and liabilities of the Vehicle Sensors segment as of the closing date of the Asset Sale (in thousands):

Cash	$	105
Accounts receivable		1,850
Inventories		1,147
Other current assets		31
Property and equipment, net		133
Goodwill		4,671
Total assets		7,937
Current liabilities		(691	)
Net assets	$	7,246

        In comparing the above net assets to the net proceeds received, we recorded a gain on the Asset Sale of $89,000, $1.5 million, and $1.2 million, after tax, in the accompanying consolidated statements of operations for Fiscal 2014, Fiscal 2013, and Fiscal 2012, respectively. The $89,000 gain on the Asset Sale in Fiscal 2014 is related to certain performance and royalty-related earn-outs (as described above) that were achieved through March 31, 2014. Included in the $1.5 million gain on the Asset Sale in Fiscal 2013 was an accrual for approximately $90,000, or $58,000 after tax, related to certain performance and royalty-related earn-outs that were achieved through March 31, 2013. The effective tax rate applicable to the gain was impacted by goodwill of $4.7 million for Fiscal 2012, for which there is no corresponding tax basis.

        In accordance with applicable accounting guidance, we determined that the Vehicle Sensors segment, which constituted one of our operating segments, qualified as a discontinued operation. The applicable financial results of the Vehicle Sensors segment have been reported as a discontinued operation in the consolidated statements of operations for all periods presented. For the fiscal years ended March 31, 2014, 2013 and 2012, Vehicle Sensors net sales classified as part of discontinued operation was $0, $0 and $3.2 million, respectively. We elected not to allocate any interest expense to the discontinued operation.

        We entered into a short-term transitional services agreement with Bendix that terminated at the end of February 2012, pursuant to which we provided them certain ongoing logistical and administrative support services. Bendix paid us a fixed monthly amount for such support services, and also paid us an hourly amount for providing certain development-related services during the transition period.