Discontinued Operations

3 Months Ended

Apr. 02, 2017

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Disposition of Businesses and Assets

As part of the Company’s continuing efforts to focus on higher growth opportunities, the Company has discontinued certain businesses. When the discontinued operations represent a strategic shift that will have a major effect on the Company's operations and financial statements, the Company has accounted for these businesses as discontinued operations and accordingly, has presented the results of operations and related cash flows as discontinued operations. Any business deemed to be a discontinued operation prior to the adoption of ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of An Entity, continues to be reported as a discontinued operation, and the results of operations and related cash flows are presented as discontinued operations for all periods presented. Any remaining assets and liabilities of these businesses have been presented separately, and are reflected within assets and liabilities of discontinued operations in the accompanying condensed consolidated balance sheets as of April 2, 2017 and January 1, 2017.

In December 2016, the Company entered into a Master Purchase and Sale Agreement (the “Agreement”) with Varian Medical Systems, Inc., which subsequently assigned its rights under the Agreement to Varex Imaging Corporation (“Varex”), under which the Company agreed to sell to Varex all of the outstanding equity interests in the Company’s wholly owned indirect subsidiaries PerkinElmer Medical Holdings, Inc. and Dexela Limited, together with certain assets of the Company and its direct and indirect subsidiaries relating to the Company’s business of designing, manufacturing and marketing flat panel x-ray detectors, and related software, accessories and ancillary products, to x-ray system manufacturers (the “Medical Imaging Business”), for cash consideration of approximately $276.0 million and Varex’s assumption of specified liabilities relating to the Medical Imaging Business (collectively, the “Transaction”). The Medical Imaging Business had been reported in the Diagnostics segment. The Transaction closed on May 1, 2017. The sale of the Medical Imaging Business represents a strategic shift that will have a major effect on the Company's operations and financial statements. Accordingly, the Company has classified the assets and liabilities related to the Medical Imaging Business as assets and liabilities of discontinued operations in the Company's consolidated balance sheets and its results of operations are classified as income from discontinued operations in the Company's consolidated statements of operations. Financial information in this report relating to the first quarter of 2016 has been retrospectively adjusted to reflect this discontinued operation.

The summary pre-tax operating results of the discontinued operations, were as follows for the three months ended:

	April 2, 2017		April 3, 2016
	(In thousands)
Revenue	$	36,094	$	40,766
Cost of revenue	24,795		25,755
Selling, general and administrative expenses	3,943		3,007
Research and development expenses	3,597		3,814
Income from discontinued operations before income taxes	$	3,759	$	8,190

The carrying amounts of the major classes of assets and liabilities included in discontinued operations as of April 2, 2017 and January 1, 2017 consisted of the following:

	April 2, 2017		January 1, 2017
	(In thousands)
Current assets of discontinued operations:
Accounts receivable	$	23,794	$	28,400
Inventories	28,764		26,977
Prepaid income taxes	—		425
Other current assets	3,179		3,183
Total current assets of discontinued operations	55,737		58,985
Property, plant and equipment, net	24,310		25,219
Intangible assets	3,012		3,292
Goodwill	38,974		38,794
Other assets, net	32		1,084
Long-term assets of discontinued operations	66,328		68,389
Total assets of discontinued operations	$	122,065	$	127,374
Current liabilities of discontinued operations:
Accounts payable	$	19,906	$	16,770
Accrued restructuring and contract termination charges	—		209
Accrued expenses and other current liabilities	11,053		9,992
Total current liabilities of discontinued operations	30,959		26,971
Deferred income taxes	8,429		7,851
Long-term liabilities	6,835		7,109
Total long-term liabilities	15,264		14,960
Total liabilities of discontinued operations	$	46,223	$	41,931