GAIN ON SALE OF ASSETS

3 Months Ended

Mar. 31, 2012

GAIN ON SALE OF ASSETS

GAIN ON SALE OF ASSETS

Note 10 GAIN ON SALE OF ASSETS

DREAM

On February 15, 2011, the Company sold its DREAM business, including its French subsidiary, Digital Research in Electronics, Acoustics and Music SAS (DREAM), which sold custom-designed ASIC chips for karaoke and other entertainment machines, for $2.3 million. The Company recorded a gain of $1.9 million, which is reflected in gain on sale of assets in the condensed consolidated statements of operations.

Rousset

In connection with the sale of its manufacturing operations in France to LFoundry GmbH, the Company retained a minority equity interest in LFoundry Rousset, the entity that holds those manufacturing operations. This equity interest provides limited protective rights to the Company, but no decision-making rights that are significant to the economic performance of LFoundry Rousset. The Company is shielded from economic losses and does not participate fully in LFoundry Rousset’s residual economics; accordingly, the Company has concluded that its equity interest in LFoundry Rousset is an interest in a variable interest entity (“VIE”). At the time of the sale, the Company identified LFoundry Rousset’s significant activities and the parties that have the power to direct them, determined LFoundry Rousset’s equity, profit and loss participation, and reviewed LFoundry Rousset’s funding and operating agreements. Based on the above analysis, the Company determined that it is not the primary beneficiary of LFoundry Rousset and hence does not consolidate LFoundry Rousset in its financial statements. The Company’s maximum exposure related to LFoundry Rousset is not expected to be significantly in excess of the amounts recorded and it does not intend to provide any support to LFoundry Rousset, financial or otherwise.