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Related-Party Transactions
 3 Months Ended
Nov. 30, 2012
Related-Party Transactions  
Related-Party Transactions

9. Related-Party Transactions

 

The following material related-party transactions were reported in the Company’s unaudited interim condensed consolidated statements of operations during the three months ended November 30, 2012 and 2011 (in thousands):

 

 

 

 

 

Three Months Ended
November 30,

 

Related Parties

 

Transactions

 

2012

 

2011

 

China SemiLEDs

 

Sales of goods

 

$

11

 

$

26

 

China SemiLEDs

 

Rendering of service

 

—

 

240

 

China SemiLEDs

 

Purchase of goods

 

20

 

—

 

China SemiLEDs

 

Gain on disposal of patents

 

13

 

13

 

 

Goods were bought and sold and services were provided in the ordinary course of business at prices and on terms negotiated on an arm’s length basis. Income from the assignment of 13 patents to China SemiLEDs pursuant to a patent assignment and license agreement entered into in March 2011 was initially deferred and is being amortized in other income over the life of the assigned patents.

 

In September 2011, the Company sold equipment to China SemiLEDs for total consideration of $244 thousand, determined based on the net book value of such equipment. Consequently, no gain or loss was recognized. The amount due from China SemiLEDs for this transaction of $244 thousand has been fully provided for in the allowance for doubtful accounts receivable from China SemiLEDs.

 

In July 2012, the Company, through a wholly owned subsidiary, entered into an unsecured Renminbi-denominated loan agreement to provide short-term lines of credit that permitted China SemiLEDs to borrow from the Company from time to time in an aggregate principal amount of up to RMB1.4 million (approximately $0.2 million) for working capital purposes. Under the agreement, the term of each borrowing could not exceed three calendar months from the date of each drawdown. Interest is calculated on a variable basis based on the three-month lending rate published by the People’s Bank of China multiplied by 1.1, which is comparable to that charged on China SemiLEDs’ bank borrowings. Total outstanding balances on these lines of credit were $0.2 million as of both November 30, 2012 and August 31, 2012. China SemiLEDs defaulted in its obligations to repay these amounts, which have been fully provided for in the allowance for doubtful accounts receivable from China SemiLEDs.

 

Amounts due from and to China SemiLEDs as of November 30, 2012 and August 31, 2012 were reported in the Company’s consolidated balance sheets as follows (in thousands):

 

 

 

November 30,
2012

 

August 31,
2012

 

Accounts and notes receivable from related parties, net of allowance for doubtful accounts of $1,416 and $1,405 as of November 30, 2012 and August 31, 2012, respectively

 

$

—

 

$

118

 

Other current liabilities

 

$

—

 

$

65