Discontinued Operations

12 Months Ended

Dec. 31, 2014

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

4. Discontinued Operations

Beginning in 2011, the Company initiated a strategic review of its businesses to focus its priorities and investments, while simplifying and streamlining its 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.

In the first quarter of 2014, the Company’s Board of Directors committed to a plan to sell the Scientific Lasers business, which was included in the Company’s Laser Products segment. The Company determined that the asset held-for-sale criteria were satisfied and began to account for the Scientific Lasers business as discontinued operations in the first quarter of 2014. As a result, prior period information related to the business has been reclassified into discontinued operations to conform to current period presentation. The discontinued business has been excluded from the following Notes to Consolidated Financial Statements unless otherwise stated.

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, net of tax, in the consolidated statement of operations during the 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.

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 $9.7 million in cash, including working capital adjustments of $1.7 million received in September 2013. The Company recognized a $0.4 million loss on the sale, net of tax, in the consolidated statements of operations during the year ended December 31, 2013.

Scientific Lasers

In July 2014, the Company completed the sale of certain assets and liabilities of the Scientific Lasers business operating under the Continuum brand name for approximately $6.5 million, net of working capital adjustments, and recognized a $1.7 million loss, net of tax, in the consolidated statement of operations during the year ended December 31, 2014. In accordance with the purchase and sales agreement, $1.5 million of the sales proceeds is held in escrow until January 2016. The Company has recorded the $1.5 million escrow in other long term assets on the consolidated balance sheet.

The major components of the assets and liabilities of discontinued operations as of December 31, 2014 and 2013, respectively, are as follows (in thousands):

	2014		2013
Accounts receivable, net	$	95	$	5,361
Inventories		161		8,454
Other assets		375		4,021
Assets of discontinued operations	$	631	$	17,836
Accounts payable	$	16	$	2,393
Accrued expenses and other current liabilities		74		2,332
Other liabilities		234		1,418
Liabilities of discontinued operations	$	324	$	6,143

Assets and liabilities of discontinued operations as of December 31, 2014 primarily include the balances of the India JV.

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

	Year Ended December 31,
	2014			2013			2012
Sales from discontinued operations	$	10,514		$	33,792		$	72,356
Loss from discontinued operations, before income tax	$	(8,059	)	$	(3,361	)	$	(10,209	)
Loss from discontinued operations, net of tax	$	(5,607	)	$	(2,054	)	$	(10,974	)
Gain (loss) on disposal of discontinued operations, net of tax	$	(1,726	)	$	(592	)	$	2,255

The loss from discontinued operations during the year ended December 31, 2014 includes a $3.0 million fair value write-down of the Scientific Lasers business to its fair value less costs to sell and a $0.5 million fair value write-down of the India JV. The Company is currently in negotiations with the joint venture partner to dissolve the joint venture.

In 2012, the Company recorded an inventory provision of $1.9 million related to the Semiconductor Systems business. This provision was included in income (loss) from discontinued operations, net of tax, in the consolidated statement of operations. 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.