DISCONTINUED OPERATIONS

9 Months Ended

Mar. 02, 2013

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 and nine months ended March 2, 2013, and March 3, 2012, are presented in the following table (in thousands):

	Three Months						Nine Months
	Mar 2, 2013			Mar 3, 2012			Mar 2, 2013			Mar 3, 2012
Net sales	$	(33	)	$	840		$	466		$	2,532
Gross profit (loss)		(297	)		(44	)		(518	)		(418	)
Selling, general, and administrative expenses		231			377			497			(71	)
Additional gain on sale		—			—			—			(266	)
Income tax provision (benefit)		(346	)		(169	)		(543	)		(1,632	)
Income (loss) from discontinued operations, net of tax	$	(182	)	$	(252	)	$	(472	)	$	1,551

Net sales and gross profit (loss) for the three and nine months ended March 2, 2013, 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. Net sales for the third quarter ended March 2, 2013, reflect a return of inventory from RFPD of approximately $0.1 million. There was also an income tax benefit of $0.3 million recorded during the quarter, reflecting the tax benefit related to the loss from discontinued operations as well as a tax refund from one of our foreign subsidiaries.

Assets and liabilities classified as discontinued operations on our consolidated balance sheets as of March 2, 2013, and June 2, 2012, include the following (in thousands):

			(Audited)
	Mar 2, 2013		Jun 2, 2012
Inventories	$	379	$	503
Prepaid expenses and other assets		—		11
Discontinued operations—Assets	$	379	$	514
Accrued liabilities—current (1)	$	831	$	253
Long-term income tax liabilities (2)		1,461		1,361
Discontinued operations—Liabilities	$	2,292	$	1,614

(1) Included in accrued liabilities as of March 2, 2013, is a payable to Arrow for transition services of $2.4 million, offset by a receivable due to us from Arrow for transition services of $1.6 million.

(2) Included in long-term income tax liabilites as of March 2, 2013, 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.