Sale of Vehicle Sensors

9 Months Ended

Dec. 31, 2012

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, less a $2 million holdback and subject to 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. 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 targets for such revenue for the two years following closing, each subject to certain reductions and limitations set forth in the Agreement. For the three and nine months ended December 31, 2012, we earned approximately $388,000 and $475,000, net of tax, respectively, related to the earn-out provisions of the Agreement. Since July 2011, on a cumulative basis, we have earned approximately $604,000, net of tax, related to the earn-out provisions.

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 accompanying unaudited consolidated statements of operations for all periods presented. For the three and nine months ended December 31, 2012, we recorded a gain on sale of discontinued operations of approximately $1.4 million and $1.5 million, respectively, net of tax, related to deferred payments and  royalty-related earn-outs in the accompanying unaudited consolidated statements of operations.