DISCONTINUED OPERATIONS

12 Months Ended

Mar. 31, 2015

DISCONTINUED OPERATIONS [Abstract]

DISCONTINUED OPERATIONS

NOTE 3. DISCONTINUED OPERATIONS

On March 18, 2015, we entered into an asset purchase agreement (“APA”) with Antech pursuant to which we sold substantially all of the assets of our AVRL business. The sale transaction closed on March 31, 2015. The total purchase price under the APA is $21.0 million in cash. We received $20.1 million in cash proceeds during the fourth quarter of fiscal 2015, while the remaining $0.9 million is being held by Antech until certain conditions are met upon which proceeds may be released on the first year anniversary of the closing date. Such additional cash consideration will be accounted for as a gain on sale of discontinued operations, net of tax, when it is realized or realizable.

In accordance with ASC 205 “Presentation of Financial Statements – Discontinued Operations,” a business is classified as a discontinued operation when: (i) the operations and cash flows of the business can be clearly distinguished and have been or will be eliminated from our ongoing operations; (ii) the business has either been disposed of or is classified as held for sale; and (iii) the Company will not have any significant continuing involvement in the operations of the business after the disposal transactions. In accordance with the accounting guidance, the AVRL business represents a separate asset group and the sale of assets in this business qualifies as a discontinued operation.

In connection with the sale of our AVRL business, we recognized a pre-tax gain of $12.3 million ($7.7 million after-tax) on sale of discontinued operations during fiscal 2015. The pre-tax gain on this sale reflects the excess of the sum of the cash proceeds received over the costs incurred in connection with the sale of AVRL. During the fourth quarter of fiscal 2015, we recorded costs of $7.8 million related to cash payments for employee-related costs, including severance, contract termination and other associated costs. In connection with the transaction, we recorded disposal and an impairment of $1.9 million on long-lived assets. These items partially offset the cash proceeds that we received in accordance with the terms of the APA. The following table summarizes the components of the gain (in thousands):

	Amount
Cash proceeds received	$	20,100
Less: Book value of net assets sold		(618	)
Less: Costs incurred directly attributable to the transaction		(5,211	)
Net proceeds from sale of discontinued operations		14,271
Less:  Disposal and impairment of long-lived assets		(1,941	)
Gain on sale of discontinued operations		12,330
Income tax expense		4,648
Net gain on sale of discontinued operations	$	7,682

The results from discontinued operations were as follows (in thousands):

	Year Ended March 31,
Discontinued operations:	2015			2014			2013
Revenues	$	14,202		$	9,839		$	5,147
Cost of revenues		12,614			10,680			7,891
Gross profit (loss)		1,588			(841	)		(2,744	)
Sales and marketing expense		3,442			2,588			3,143
Other income (expense), net		-			150			-
Loss before income tax provision		(1,854	)		(3,279	)		(5,887	)
Income tax provision (benefit)		(700	)		(1,235	)		(2,219	)
Net loss of discontinued operations	$	(1,154	)	$	(2,044	)	$	(3,668	)
Gain on sale of discontinued operations, net of tax	$	7,682		$	-		$	-

The current and non-current assets and liabilities of discontinued operations were as follows (in thousands):

	March 31,
	2015		2014
Receivables, net	$	2,075	$	1,974
Inventories		-		395
Prepaid expenses and other current assets		-		105
Total current assets of discontinued operations	$	2,075	$	2,474
Property and equipment, net	$	-	$	2,985
Other assets		12		446
Total non-current assets of discontinued operations	$	12	$	3,431
Accounts payable	$	449	$	586
Other current liabilities		5,087		293
Total current liabilities of discontinued operations	$	5,536	$	879
Other non-current liabilities	$	-	$	16
Total non-current liabilities of discontinued operations	$	-	$	16