Discontinued Operations

12 Months Ended

Dec. 31, 2013

Discontinued Operations

4. Discontinued Operations

Beginning in 2011, the Company initiated a strategic review of its businesses to focus our priorities and investments, while simplifying and streamlining our business model. In June 2012, the Company committed to a plan for the sale of the Semiconductor Systems operating segment, sold under the GSI brand name, and Laser Systems product lines, sold under the Control Laser and Baublys brand names. The Company began accounting for these businesses as discontinued operations beginning in the second quarter of 2012.

Laser Systems

In October 2012, the Company sold certain assets and liabilities of the Laser Systems business for $7.0 million to Hans Laser, subject to working capital adjustments, and recorded a $2.3 million gain in the consolidated statement of operations during the fiscal year ended December 31, 2012. In September 2013, the Company paid $0.4 million to Hans Laser as the final net working capital adjustment which resulted in an additional loss of $0.2 million, net of tax.

As Hans Laser did not purchase the Orlando facility which had been used as the main operating facility for Laser Systems, the Company retained the facility and is currently leasing the facility to Hans Laser under an operating lease agreement through October 2014. As of the end of the second quarter of 2013, it was determined that it was no longer probable that the facility would be sold within the next twelve months and, as a result, the facility was reclassified from assets of discontinued operations to property, plant and equipment.

Semiconductor Systems

In May 2013, the Company consummated the sale of certain assets and liabilities of the Semiconductor Systems business to Electro Scientific Industries, Inc. (“ESI”) for $8.0 million in cash, subject to closing working capital adjustments. In September 2013, the Company settled final net working capital adjustment with ESI for $1.7 million in favor of the Company, resulting in an adjusted selling price of $9.7 million for the sale. The Company recognized a $0.4 million loss on the sale, net of tax, in the consolidated statements of operations during 2013, which included selling costs of $1.1 million.

The major components of the assets and liabilities of discontinued operations as of December 31, 2013 and 2012, respectively, are as follows (in thousands):

	2013		2012
Accounts receivable, net	$	—	$	2,981
Inventories		—		8,231
Other assets		—		694
Property, plant and equipment, net		—		5,712
Assets of discontinued operations	$	—	$	17,618
Accounts payable	$	10	$	1,358
Accrued expenses and other current liabilities		44		2,116
Deferred revenue		—		1,453
Other liabilities		—		678
Liabilities of discontinued operations	$	54	$	5,605

Liabilities of discontinued operations as of December 31, 2013 primarily relate to accrued severance and professional service costs associated with the closing of the transaction.

The following table presents the Semiconductor Systems and Laser Systems operating results which are reported as discontinued operations in the Company’s consolidated statements of operations (in thousands):

	Year Ended December 31,
	2013			2012			2011
Sales from discontinued operations	$	9,090		$	44,655		$	61,984
Income (loss) from discontinued operations before income taxes	$	(1,713	)	$	(5,041	)	$	7,837
Income (loss) from discontinued operations, net of tax	$	(927	)	$	(5,151	)	$	7,325
Gain (loss) on disposal of discontinued operations, net of tax	$	(592	)	$	2,255		$	—

In 2012, the Company recorded an inventory provision of $1.9 million related to the Semiconductor Systems business. This provision was included in the consolidated statement of operations in income (loss) from discontinued operations, net of tax. The increase in the inventory provision was caused by changes in industry trends in the memory repair market, which resulted in lower expected future demand for the Company’s memory repair products.