DISCONTINUED OPERATION AND CORRESPONDING RESTRUCTURING PLAN

9 Months Ended

Mar. 31, 2014

Notes to Financial Statements

DISCONTINUED OPERATION AND CORRESPONDING RESTRUCTURING PLAN (IN THOUSANDS, EXCEPT EARNINGS PER SHARE AND NUMBER OF SHARES)

The Company’s Indonesia operation and the Indonesia operation’s immediate holding company, which comprise the fabrication services segment, suffered continued operating losses in the past four fiscal years, and the cash flow was minimal for the past four years.  The Company established a restructuring plan to close the fabrication services operation, and in accordance with ASC Topic 205-20, Presentation of Financial Statement Discontinued Operations (“ASC Topic 250-20”), the Company presented the operation results from fabrication services as a discontinued operation, as the Company believed that no continued cash flow would be generated by the discontinued component and that the Company would have no significant continuing involvement in the operation of the discontinued component. In accordance with the restructuring plan, the Company is negotiating with its suppliers to settle the outstanding balance of accounts payable of $381 and is collecting the accounts receivable of $61 as of March 31, 2014, as compared to the accounts payable of $ 413 and accounts receivable of $84 as at June 30, 2013. The Company’s fabrication operation in Indonesia is in the process of winding down.

In January 2010, the Company established a restructuring plan to close the Testing operation in Shanghai, China.  Based on the restructuring plan and in accordance with ASC Topic 205-20, the Company presented the operation results from Shanghai as a discontinued operation, as the Company believed that no continued cash flow would be generated by the discontinued component (Shanghai subsidiary) and that the Company would have no significant continuing involvement in the operations of the discontinued component.

The discontinued operations in Shanghai and in Indonesia incurred general and administrative expenses of $4 and $11, respectively, for the three and nine months ended March 31, 2014 and incurred general and administrative expenses and selling expenses of $18 and $165, respectively, for the same periods in the last fiscal year. The Company anticipates that it may incur additional costs and expenses at the time of winding down the business of the subsidiary through which the facilities operated. The Shanghai operation has an outstanding balance of accounts payable of $40 and an accounts receivable of $2 as of March 31, 2014, as compared to the accounts payable of $ 39 and accounts receivable of $2 as at June 30, 2013.

Loss from discontinued operations was as follows:

	Nine Months Ended						Three Months Ended
	March 31,			March 31,			March 31,			March 31,
	2014			2013			2014			2013
	Unaudited			Unaudited			Unaudited			Unaudited
REVENUE	$	—		$	373		$	—		$	71
COST OF SALES		1			752			(2	)		174
GROSS MARGIN		(1	)		(379	)		2			(103	)
OPERATING EXPENSES
General and administrative		11			165			4			18
Total		11			165			4			18
LOSS FROM DISCONTINUED OPERATION		(12	)		(544	)		(2	)		(121	)
OTHER (EXPENSE) / INCOME		(26	)		3			36			69
(LOSS) / INCOME FROM DISCONTINUED OPERATIONS	$	(38	)	$	(541	)	$	34		$	(52	)

The Company does not provide a separate cash flow statement for the discontinued operations, as the impact of the discontinued operations was immaterial.