Discontinued Operations

12 Months Ended

Mar. 28, 2021

Discontinued Operations

Discontinued Operations

Note 19. Discontinued Operations

On December 2, 2020, the Company sold most of its Retail inventory and certain other Retail-related assets to Voice Comm. In addition, we assigned or licensed Ventev^®- related intellectual property to Voice Comm, including the Ventev^® trademark, for their use in connection with the sale of mobile device and accessory products. Cash proceeds of $9.5 million were received at closing. 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.

A pre-tax gain on disposal of $3.0 million was recorded in the fiscal quarter ended December 27, 2020, which is included in Income (loss) from discontinued operations, net of taxes in the Consolidated Statements of (Loss) Income.

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 fiscal years ended March 28, 2021, March 29, 2020 and March 31, 2019:

	Fiscal Years Ended
	March 28, 2021		March 29, 2020		March 31, 2019
Revenues	$	86,728,300	$	131,283,900	$	187,769,000
Cost of goods sold		74,238,800		119,102,800		150,815,000
Gross profit		12,489,500		12,181,100		36,954,000
Selling, general and administrative expenses		7,652,100		15,809,500		17,866,700
Goodwill impairment		—		2,569,100		—
Income (loss) from operations		4,837,400		(6,197,500)		19,087,300
Gain on disposal		3,020,800		—		—
Income (loss) before provision for (benefit from) income taxes		7,858,200		(6,197,500)		19,087,300
Provision for (benefit from) income taxes		2,227,800		(230,000)		4,659,200
Net income (loss) attributable to discontinued operations	$	5,630,400	$	(5,967,500)	$	14,428,100

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 March 28, 2021 and March 29, 2020:

	March 28,		March 29,
	2021		2020
ASSETS
Product inventory, net	$	1,196,900	$	18,849,900
Current portion of assets held for sale	$	1,196,900	$	18,849,900

The product inventory remaining at March 28, 2021 represents Retail inventory that was not sold to Voice Comm.  Management intends to sell through this inventory in the near term in alignment with its complete exit from the Retail business.

Discontinued operations related to this Retail sale in future years will primarily include:

● Revenue related to royalty income, purchase price adjustments and selling inventory from customer returns to Voice Comm

● Sale or liquidation of inventory continuing to be held for sale

● Product returns from customers

● Changes in estimates of inventory and returns reserves

● Minor operating expenses related to above items

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 during fiscal 2021, 2020, and 2019 was $13.2 million, $11.3 million, and $17.3 million, respectively. Cash provided by investing activities from discontinued operations during fiscal 2021, 2020, and 2019 was $9.2 million, $0 million, and $0 million, respectively.