Annual report pursuant to Section 13 and 15(d)

Discontinued Operations

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Discontinued Operations
 12 Months Ended
Mar. 31, 2012
Discontinued Operations [Abstract]  
Discontinued Operations
Note 5.  Discontinued Operations

On February 9, 2011, the Company and SPTS  entered into an Asset Purchase Agreement pursuant to which the Company sold to SPTS all of the shares of Tegal France, SAS, the Company's wholly-owned subsidiary and product lines and certain equipment, intellectual property and other assets relating to the Company's DRIE systems and certain related technology.    SPTS also assumed existing customer contracts, including all installation and warranty obligations of existing customers, and other liabilities arising after the closing of the transaction.
 
The transaction closed immediately after execution of the Asset Purchase Agreement. The consideration paid by SPTS totaled approximately $2.1 million, comprised of approximately $0.5 million of Assumed Liabilities and $1.6 million in cash, of which $200,000 in cash will be held in escrow for one year after the closing of the transaction to satisfy any indemnification obligations of the Company under the Asset Purchase Agreement.
The assets and liabilities of discontinued operations are presented separately under the captions "Other assets of discontinued operations" and "Liabilities of discontinued operations," respectively, in the accompanying consolidated balance sheets at March 31, 2012 and 2011 and consist of the following:

   
March 31,
  
   
2012
    
2011
  
             
Assets of Discontinued Operations:
            
Accounts and other receivables, net of allowances for sales returns and doubtful accounts of $0 and $71 at March 31, 2012 and 2011, respectively
   $ 410     $ 591  
Notes receivable
     --       528  
Prepaid expenses and other current assets
     8       10  
Total assets of discontinued operations
   $ 418     $ 1,129  
                 
Liabilities of Discontinued Operations:
                
Accounts payable
   $ -     $ 522  
Deferred revenue
     --       130  
Accrued expenses and other current liabilities
     246       758  
Total liabilities of discontinued operations
   $ 246     $ 1,410  

In fiscal year 2011, the Company recognized a gain of $506 from the sale of the DRIE assets.  Total revenue from discontinued operations was $0 and $6,629 for the years ended March 31, 2012 and 2011, respectively.  The total (gain)/loss from discontinued operations, including income tax expense (benefit), was ($184) and $1,927, for the same years respectively.  Total losses from discontinued operations for the years ended March 31, 2012 and 2011 included the reclassification of operating expenses related to the manufacture, design, marketing and servicing of the DRIE operations including foreign exchange adjustments and income tax expense (benefit).    The gain in fiscal year ended 2012 results primarily from the sale of the NLD patents.

The Company also recognized $3,750 from the sale of the NLD patents.  As these assets were internally developed, there was a corresponding zero book value.  The NLD gain is recognized in discontinued operations, along with the related costs of $820, which includes $772 in commission expense, resulting in a gain of $2,930.  During the fiscal year ended March 31, 2012, the Company, as part of its proposed sale of its intellectual property portfolio for Nanolayer Deposition Technology (NLD), awarded three of the four offered lots to multiple semiconductor equipment manufacturers.  The Company finalized the sale transaction of the first of the four lots on December 23, 2011.  The Company finalized the sale transaction of the second lot on January 13, 2012.  While the third lot has been awarded, the Company has not yet finalized that transaction.  Sales of NLD patents in future periods will also be recognized in discontinued operations, as well all related expenses to finalize the sales.  NLD is a process technology that bridges the gap between high throughput, non-conformal chemical vapor deposition (CVD) and highly conformal, low throughput atomic layer deposition (ALD).  The portfolio included over 35 US and international patents in the areas of pulsed-CVD, plasma-enhanced ALD, and NLD.  The Company has sold all but nine of those patents to third parties as of March 31, 2012.  The remaining patents are being offered for sale to third parties.

In fiscal year 2012, the Company also recognized deferred revenue of $130, offset by related commission expense, as well as revenue of $89 from the finalization of the sale of the DRIE assets which occurred in the fourth quarter of the prior fiscal year.  In the same period, the Company received $440 from OEM in installment payments related to the sale of legacy assets, and recognized $64 in foreign currency transactions.