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Discontinued Operations | 6 Months Ended
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Jun. 28, 2013
Discontinued Operations And Disposal Groups [Abstract] |
Discontinued Operations | NOTE 3: DISCONTINUED OPERATIONS On February 18, 2013, the Company entered into an Asset Purchase Agreement with Aurora pursuant to which the Company agreed to sell its cable access HFC business for $46.0 million in cash. On March 5, 2013, the sale transaction closed and the Company received gross proceeds of $46.0 million from the sale and recorded a net gain of $15.0 million in connection with the sale in the first quarter of fiscal 2013, adjusted by ($0.2) million in the second quarter of fiscal 2013, primarily related to adjustments on inventory and fixed assets sold to Aurora, for a net gain of $14.8 million. 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. On March 5, 2013, the Company entered into a transition service agreement (‘TSA”) with Aurora to provide contract manufacturing for up to five months and other various support, including providing order fulfillment, taking warranty calls, attending to product returns from customers, providing cost accounting analysis, receiving payments from customers and remitting such payments to Aurora for up to two months. The TSA fees are a fixed amount per month and were determined based on the Company’s estimated cost of delivering the transition services. In addition, on April 24, 2013, the Company and Aurora signed a sublease agreement for the Company’s Milpitas warehouse for the remaining period of the lease. On June 19, 2013, the Company and Aurora agreed to amend the TSA to limit it to sales order processing support and quote support through May 2013, warehouse facilities support through July 2013, and accounts receivable collection and accounts payable support through September 2013, and the TSA fees were also amended accordingly. The Company determined that the cash flows generated from these transactions are both insignificant and are considered indirect cash flows. As a result, the sale of the cable access HFC business is appropriately presented as discontinued operations. The TSA billing to Aurora in the three and six months ended June 28, 2013 was $0.6 million and $0.9 million, respectively, and it was recorded in the Condensed Consolidated Statements of Operations under income from continuing operations as an offset to the expenses incurred to deliver the transition services. The table below provides details on the income statement caption under which the TSA billing was recorded (in thousands):
|  | Three months ended |  |  | Six months ended |
|  | June 28, 2013 |
Product cost of revenue |  | $ | 361 |  |  | $ | 536 |
Research and development |  |  | 12 |  |  |  | 21 |
Selling, general and administrative |  |  | 228 |  |  |  | 372 |
Total TSA billing to Aurora |  | $ | 600 |  |  | $ | 928 |
Included within the “Prepaid expenses and other current assets” ending balance at June 28, 2013 on the Condensed Consolidated Balance Sheet is $45,000 due from Aurora for purchases made on Aurora’s behalf and $1.8 million in receivables from customers invoiced on Aurora’s behalf. Included within the “Accrued liabilities” ending balance at June 28, 2013 is $2.2 million due to Aurora primarily for invoicing to customers made on Aurora’s behalf. There is no outstanding payable to third party vendors on Aurora’s behalf as the Company ceased making purchases on Aurora’s behalf at the end of May 2013. The Company recorded a gain of $14.8 million for the six months ended June 28, 2013, in connection with the sale of the cable access HFC business, calculated as follows (in thousands):
Gross Proceeds |  |  |  |  |  | $ | 46,000 |
Less : Carrying value of net assets |  |  |  |  |  |  |  |
Inventories, net |  | $ | 10,579 |  |  |  |  |
Prepaid expenses and other current assets |  |  | 612 |  |  |  |  |
Property and equipment, net |  |  | 1,180 |  |  |  |  |
Goodwill de-recognized |  |  | 14,547 |  |  |  |  |
Deferred revenue |  |  | (4,499 | ) |  |  |  |
Accrued liabilities |  |  | (939 | ) |  |  |  |
Total net assets sold and de-recognized |  |  |  |  |  | $ | 21,480 |
Less : Selling cost |  |  |  |  |  | $ | 2,467 |
Less : Tax effect |  |  |  |  |  | $ | 7,234 |
Gain on disposal, net of tax |  |  |  |  |  | $ | 14,819 |
Since the Company has one reporting unit, upon the sale of the cable access HFC business, approximately $14.5 million of the carrying value of goodwill was allocated to the cable access HFC business based on the relative fair value of the cable access HFC business to the fair value of the Company. The remaining carrying value of goodwill was tested for impairment, and the Company determined that goodwill was not impaired as of March 29, 2013. The results of operations associated with the cable access HFC business are presented as discontinued operations in the Company’s Condensed Consolidated Statements of Operations for all periods presented. Revenue and the components of net income related to the discontinued operations for the three and six months ended June 28, 2013 and June 29, 2012 were as follows:
|  | Three months ended |  |  | Six months ended |
|  | June 28, 2013 |  |  | June 29, 2012 |  |  | June 28, 2013 |  |  | June 29, 2012 |
Revenue |  | $ | — |  |  | $ | 10,574 |  |  | $ | 9,556 |  |  | $ | 21,856 |
Operating income |  | $ | (319 | ) |  | $ | 897 |  |  | $ | 515 |  |  | $ | 2,123 |
Add : Benefit from income taxes |  |  | (60 | ) |  |  | (2,995 | ) |  |  | (194 | ) |  |  | (2,976 | )
Add : Gain on disposal, net of tax |  |  | (137 | ) |  |  | — |  |  |  | 14,819 |  |  |  | — |
Income (loss) from discontinued operations, net of taxes |  | $ | (396 | ) |  | $ | 3,892 |  |  | $ | 15,528 |  |  | $ | 5,099 |

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- Definition The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2941-110230 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e957-107759 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1012-107759 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1510-107760 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1020-107759 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=8077374&loc=d3e2443-110228 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1474-107760 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1436-107760 + Details
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