Discontinued Operations

9 Months Ended

Dec. 27, 2020

Discontinued Operations

Discontinued Operations

Note 12. Discontinued Operations

At a closing on December 2, 2020, the Company sold most of its retail inventory, the Ventev brand as it relates to mobile device accessory products, and certain other retail-related assets to Voice Comm, LLC (Voice Comm). Cash proceeds of $9.5 million were received at closing, which occurred during the third quarter of fiscal 2021. As part of the sale agreement, the Company is entitled to royalty payments of up to $3.0 million in the aggregate on the sale of Ventev branded products by Voice Comm over a four-year period after the closing. Additionally, future customer returns to the Company may be resold to Voice Comm over a two-year period after the closing.

As a result of the disposal described above, the operating results of the former Retail segment has been included in Income (loss) from discontinued operations, net of taxes, in the Consolidated Statements of (Loss) Income for all periods presented. The pre-tax gain on the sale for the fiscal quarter ended December 27, 2020 of $3.0 million includes costs to sell the inventory and exit the Retail business.

The accompanying Consolidated Financial Statements for all periods presented reflect the results of the Retail segment as a discontinued operation. The following table presents the financial results of the Retail segment for the three and nine months ended December 27, 2020 and December 29, 2019:

	Fiscal Quarters Ended				Nine Months Ended
	December 27,  2020		December 29,  2019		December 27,  2020		December 29,  2019
Revenues	$	26,413,900	$	38,734,200	$	80,512,800	$	108,943,700
Cost of goods sold		21,529,700		35,307,600		67,704,600		94,340,100
Gross profit		4,884,200		3,426,600		12,808,200		14,603,600
Selling, general and administrative expenses		3,215,700		4,484,300		7,442,000		11,863,200
Goodwill impairment		—		2,569,100		—		2,569,100
Income (loss) from operations		1,668,500		(3,626,800)		5,366,200		171,300
Gain on disposal		3,020,800		—		3,020,800		—
Income (loss) before provision for (benefit from) income taxes		4,689,300		(3,626,800)		8,387,000		171,300
(Benefit from) provision for income taxes		(98,200)		(679,400)		681,000		37,300
Net income (loss) attributable to discontinued operations	$	4,787,500	$	(2,947,400)	$	7,706,000	$	134,000

The financial results reflected above may not fully represent our former Retail segment stand-alone operating net profit, as the results reported within Income (loss) from discontinued operations, net of taxes, include only certain costs that are directly attributable to this former segment and exclude certain corporate overhead and operational costs that may have been previously allocated for each period.

The following table summarizes the major classes of assets attributable to discontinued operations that are included in the Current portion of assets held for sale in the Company’s consolidated balance sheets as of December 27, 2020 and March 29, 2020:

	December 27,		March 29,
	2020		2020
ASSETS
Product inventory, net	$	2,684,200	$	18,849,900
Current portion of assets held for sale	$	2,684,200	$	18,849,900

The product inventory remaining at December 27, 2020 represents Retail inventory that was not sold to Voice Comm.  Management intends to sell through this inventory in the near term in alignment with the plan to exit the Retail business.

In our Consolidated Statements of Cash Flows, the cash flows from discontinued operations are not separately classified. Cash provided by operating activities from discontinued operations for the nine months ended December 27, 2020 and December 29, 2019 was $10.6 million and $5.7 million, respectively. Cash provided by investing activities from discontinued operations for the nine months ended December 27, 2020 and December 29, 2019 was $9.2 million and $0 million, respectively.