Note 4 - Business Dispositions

6 Months Ended

Jul. 01, 2011

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

4.  Business Dispositions

DPS Business:  On June 8, 2010, the Company consummated a transaction with PMC-Sierra, Inc. (“PMC-Sierra”) in which PMC-Sierra purchased certain assets related to the Company’s business of providing data storage hardware and software solutions and products (the “DPS Business”) and PMC-Sierra assumed certain liabilities of the Company related to the DPS Business.  The purchase price for the DPS Business was $34.3 million, of which $29.3 million was received by the Company upon the closing of the transaction and the remaining $5.0 million was withheld in an escrow account (“DPS Holdback”).  The DPS Holdback was to secure potential indemnification obligations pursuant to the Asset Purchase Agreement entered into by PMC-Sierra and ADPT on May 8, 2010.  The DPS Holdback was released to the Company on June 8, 2011, one year after the consummation of the sale of the Company’s DPS Business, except for $80,000 to provide for one disputed claim, and was recognized as contingent consideration in discontinued operations when received.

On June 8, 2010, the Company also entered into a transition service agreement with PMC-Sierra, in which the Company provided certain services required for the operation of the DPS Business through December 2010 and the direct costs associated with providing these services were reimbursed by PMC-Sierra.  As a result of the transition service agreement, cash of $1.7 million was received on behalf of PMC-Sierra upon collection of accounts receivable and was classified as “Restricted cash” and included in “Accounts payable” on the Company’s Unaudited Condensed Consolidated Balance Sheet at December 31, 2010. During the six-month period ended July 1, 2011, the Company completed remitting the $1.7 million to PMC-Sierra.

Revenues and the components of income related to the DPS Business included in discontinued operations follow:

	Three-Month Period Ended		Six-Month Period Ended
	July 2, 2010		July 2, 2010
Revenues	$	11,725	$	27,531
Income from discontinued operations before income taxes	$	253	$	2,477
Provision for income taxes		(915)		(2,529)
Income from discontinued operations, net of taxes	$	(662)	$	(52)

During the three-months ended July 1, 2011, the Company sold patents from its DPS Business for $1.9 million, which was included in income from discontinued operations.

Snap Server Network Attached Storage (“NAS”) Business:  On June 27, 2008, the Company entered into an asset purchase agreement with Overland Storage, Inc. (“Overland”) for the sale of the Snap Server NAS business for $3.3 million, of which $2.1 million was received by the Company upon the closing of the transaction and the remaining $1.2 million, which was reserved as a result of the financial difficulties Overland had reported, was to be received on the 12-month anniversary of the closing of the transaction pursuant to a promissory note issued to the Company.  In the three-month period ended July 3, 2009, the Company amended the promissory note agreement with Overland, which allowed Overland to pay the Company the remaining $1.2 million receivable plus accrued interest over time through March 31, 2010; however, the Company received the final payment from Overland in the three-month period ended July 2, 2010.  Due to the Company’s continued concern regarding Overland’s ability to pay the Company, the Company released the reserve on the receivable as cash was collected.  As a result, in the six-month period ended July 2, 2010, the Company recorded a gain of $0.4 million in “Gain on disposal of discontinued operations, net of taxes,” in the Unaudited Condensed Consolidated Statements of Operations.