Discontinued Operations and Assets Held for Sale

12 Months Ended

Mar. 31, 2011

Notes to Financial Statements [Abstract]

Discontinued Operations and Assets Held for Sale

3.           DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

Discontinued operations includes the following product families that were acquired in the acquisition of SST: NAND Drives, NAND controllers, Smart Card ICs, Combo Memory, Concurrent SuperFlash, Small-Sector Flash and many-time Programmable Flash memories and certain serial NOR Flash products from 512K to 64MB density in the geographic regions of Taiwan, China, Hong Kong, Singapore, Malaysia, Thailand, Indonesia, Vietnam and Philippines.  These product lines were marketed for sale since the acquisition of SST on April 8, 2010 based on management's decision regarding them not being a strategic fit into the Company's product portfolio.  On May 21, 2010, the Company completed a transaction to sell the NAND Drives, NAND controllers, Smart Card ICs, Combo Memory, Concurrent SuperFlash, Small-Sector Flash and many-time Programmable Flash memories to Greenliant Systems Ltd.  The sale price in this transaction was determined by management to represent fair value, and accordingly, no gain or loss was recognized on the sale of the net assets.  In this sale, the Company disposed of approximately $23.6 million of assets held for sale, primarily comprised of inventory, property, plant and equipment, intangible assets and non-marketable securities.  On July 8, 2010, the Company granted an exclusive limited license for the manufacture of certain Serial NOR-Flash products to Professional Computer Technology, Ltd. (PCT).  The license to PCT is limited to the industry segments of optical disc drives, set top boxes, electronic books, video games, digital displays, DVD player/recorder, notebook computers, netbooks, desktop computers, PC monitors, mass storage devices, printers/scanners/copiers/faxes, PC-CAM, point of sale devices, graphic cards, servers/clients/workstations, and mobile phones.  PCT has no license to sell these products to any other industry segment or geographic region other than those listed above.  Certain multi-national customers are excluded from this license.

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.

At the time of the acquisition, the Company determined that it would hold SST's SuperFlash Memory and RF businesses as assets held for sale, in addition to other businesses that the Company has sold since the acquisition date.  After operating the SST business for two quarters, the Company found synergies between SST's RF business and the Company's wireless, microcontroller and analog businesses.  On the memory side, after divesting the low margin business to PCT, the Company had substantially improved the gross margin for the rest of the SuperFlash Memory business.  The Company also determined that running some volume on the memory business is critical to proving out the SuperFlash technology before it can be licensed.  As a result, the Company decided to integrate the SuperFlash Memory and RF businesses of SST into the ongoing businesses of the Company during the second quarter of fiscal 2011.  The operations of these businesses have been included in continuing operations for the period April 8, 2010 through March 31, 2011.

The results of discontinued operations for the year ended March 31, 2011 are as follows (in thousands):

	Year Ended March 31, 2011
Net sales	$	25,177
Cost of sales		32,627
Operating expenses		3,676
Income tax benefit		(909	)
Net loss from discontinued operations	$	(10,217	)

For the year ended March 31, 2011, the cost of sales related to discontinued operations includes approximately $9.4 million of  inventory write-downs.

During the fourth quarter of fiscal 2011, the Company sold a building in Macao that had been actively marketed for sale for approximately $1.1 million, which approximated its net book value, and no gain or loss was recognized.  This sale is also reflected in discontinued operations.