Discontinued Operations and Assets Held For Sale

9 Months Ended

Jan. 01, 2012

Discontinued Operations and Assets Held For Sale [Abstract]

Discontinued Operations and Assets Held For Sale

Note 6

Discontinued Operations and Assets Held For Sale

On September 26, 2011, the Company completed the transfer of certain assets related to IDT's Hollywood Quality Video (“HQV”) and Frame Rate Conversion (“FRC”) video processing product lines to Qualcomm pursuant to an Asset Purchase Agreement. The sale of these HQV and FRC video processing assets is intended to allow the Company to intensify focus on its analog-intensive mixed-signal, timing, and interface and solutions. Upon the closing of the transaction, Qualcomm paid the Company $58.7 million in cash consideration, of which $6.0 million was withheld in an escrow account and is included in the Company's balance sheet as other assets (non-current). In the second quarter of fiscal 2012, the Company recorded a gain of $45.9 million related to this divestiture. The following table summarizes the components of the gain (in thousands):

Cash proceeds from sale (including amounts held in escrow)	$	58,744
Less cost basis of assets sold and direct costs related to the sale:
Fixed assets transferred to Qualcomm		(434	)
Goodwill write-off		(8,568	)
Intangible assets write-off		(1,818	)
License write-off		(525	)
Transaction and other costs		(1,460	)
Gain on divestiture	$	45,939

The Company's HQV and FRC product lines represented a significant portion of the Company's video processing assets. The Company currently intends to fully divest its remaining video processing product lines within the next twelve months and has classified these assets as held for sale.  As of January 1, 2012 the remaining video processing assets classified as held for sale consisted of $1.0 million in fixed assets and $0.7 million in intangible assets. The video processing lines were included as are part of the Company's Computing and Consumer reportable segment.  For financial statement purposes, the results of operations for these discontinued businesses have been segregated from those of the continuing operations and are presented in the Company's consolidated financial statements as discontinued operations.

The results of discontinued operations for the three and nine months ended January 1, 2012 and January 2, 2011 are as follows (in thousands):

	Three Months Ended						Nine Months Ended
	Jan. 1, 2012			Jan. 2, 2011			Jan. 1, 2012			Jan. 2, 2011
Revenues	$	2,229		$	5,706		$	7,333		$	17,695
Cost of revenue		2,745			4,248			9,309			12,263
Operating expenses		4,774			6,582			18,310			20,836
Gain on divestiture		---			---			45,939			---
Benefit for income taxes		---			(21	)		(89	)		(64	)
Net income (loss) from discontinued operations	$	(5,290	)	$	(5,103	)	$	25,742		$	(15,340	)