Discontinued Operations

3 Months Ended

Sep. 01, 2012

Discontinued Operations [Abstract]

DISCONTINUED OPERATIONS

4. DISCONTINUED OPERATIONS

Arrow Transaction

On March 1, 2011, we completed the sale of the assets primarily used or held for use in, and certain liabilities of, our RF, Wireless and Power Division (“RFPD”), as well as certain other Company assets, including our information technology assets, to Arrow Electronics, Inc. (“Arrow”) in exchange for $238.8 million, which included an estimated pre-closing working capital adjustment of approximately $27.0 million (“the Transaction.”) During the fourth quarter of fiscal 2011, we recorded a working capital adjustment of $4.2 million in our results from discontinued operations. During the second quarter of fiscal 2012, we paid Arrow $3.9 million to settle the working capital adjustment.

Financial Summary – Discontinued Operations

Summary financial results for the three months ended September 1, 2012, and September 3, 2011, are presented in the following table (in thousands):

	Three Months
	Sept 1, 2012			Sept 3, 2011
Net sales	$	221		$	875
Gross profit (loss)		(93	)		(109	)
Selling, general, and administrative expenses		65			(317	)
Additonal gain on sale		—			(266	)
Income tax benefit		(71	)		(2,128	)
Income (loss) from discontinued operations, net of tax	$	(87	)	$	2,602

Net sales and gross profit (loss) for the three months ended September 1, 2012, reflect our financial results relating to the Manufacturing Agreement with Arrow that we entered into in connection with the Transaction. Pursuant to the three-year agreement, we agreed to continue to manufacture certain RFPD products for Arrow. During the first quarter ended September 3, 2011, in connection with an examination by the Internal Revenue Service, we reduced our deferred tax liability by $2.1 million related to our un-repatriated foreign earnings based on a determination of the earnings and profits that would remain in certain foreign subsidiaries after the Arrow transaction.

Assets and liabilities classified as discontinued operations on our unaudited consolidated balance sheets as of September 1, 2012, and June 2, 2012, include the following (in thousands):

	Sept 1, 2012		Jun 2, 2012
Inventories		358		503
Prepaid expenses and other assets		—		11
Discontinued operations—Assets	$	358	$	514
Accrued liabilities—current (1)	$	178	$	253
Long-term income tax liabilities (2)		1,380		1,361
Discontinued operations—Liabilities	$	1,558	$	1,614

(1) Included in accrued liabilities as of September 1, 2012, is a payable to Arrow for transition services of $1.3 million, $0.1 million of other accrued liabilities, offset by a receivable due to us from Arrow for transition services of $1.2 million.

(2) Included in long-term income tax liabilities as of September 1, 2012, is the reserve for uncertain tax positions.

In accordance with ASC 230, Statement of Cash Flows, entities are permitted but not required to separately disclose, either in the statement of cash flows or footnotes to the financial statements, cash flows pertaining to discontinued operations. Entities that do not present separate operating cash flows information related to discontinued operations must do so consistently for all periods presented, which may include periods long after the sale or liquidation of the operation. Cash flows related to our discontinued operations are not material.