Discontinued Operations

6 Months Ended

Mar. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

Sale of Photovoltaics Business

On September 17, 2014, EMCORE entered into the Photovoltaics Agreement with SolAero pursuant to which the Company agreed to sell the Photovoltaics Business for $150.0 million in cash, prior to a working capital adjustment of $0.1 million. On December 10, 2014, EMCORE completed the Photovoltaics Asset Sale.

In connection with this transaction, we sold net assets of $60.3 million to SolAero and incurred transaction costs of $2.7 million. During the three months ended December 31, 2014, we recognized a gain of $56.8 million, net of tax on the sale of the Photovoltaics Business which was recorded within discontinued operations in the consolidated statements of operations and comprehensive income.

On December 22, 2015, we settled all of the outstanding rights and obligations of a solar power venture in Spain, including outstanding non-current receivables, for a payment of $0.7 million. The outstanding non-current receivables had a net book value of $0 at the time of settlement as they were fully allowed for previously. The resulting gain was recorded in the discontinued operations of the Photovoltaics Business for the three months and six months ended March 31, 2016.

No assets and liabilities of the Photovoltaics Business that were sold remain on the condensed consolidated balance sheet as of March 31, 2016 and September 30, 2015. The financial results of the Photovoltaics Business are reported as discontinued operations for the three and six months ended March 31,2016 and 2015, respectively.

The following table presents the statements of operations for the discontinued operations of the Photovoltaics Business:

	For the three months ended March 31,						For the six months ended March 31,
(in thousands)	2016			2015			2016			2015
Revenue	$	—		$	—		$	—		$	12,614
Cost of revenue	—			—			—			8,245
Gross profit	—			—			—			4,369
Operating (income) expense	(34		)	(272		)	(821		)	2,431
Other income	—			—			—			779
Gain on sale of discontinued operations	—			—			—			87,022
Income from discontinued operations before income tax	34			272			821			89,739
Income tax (expense) benefit	(19		)	277			(28		)	(29,926		)
Income from discontinued operations, net of tax	$	15		$	549		$	793		$	59,813

Included in discontinued operations during the three and six months ended March 31, 2016 were $9,200 and $0.1 million, respectively, of New Mexico incentive tax credits received. The credits received resulted in cash refunds. There were no incentive tax credits received during the three and six months ended March 31, 2015.

Sale of Digital Products Business

On October 22, 2014, EMCORE entered into an Asset Purchase Agreement with NeoPhotonics, pursuant to which the Company sold certain assets, and transferred certain liabilities, of the Company's telecommunications business to NeoPhotonics for an aggregate purchase price of $17.5 million, subject to certain adjustments. On January 2, 2015, EMCORE completed the sale of the Digital Products Business for $1.5 million in cash and an adjusted Promissory Note balance of $15.5 million. On April 17, 2015, NeoPhotonics paid in full the outstanding balance of the Promissory Note of $15.5 million, plus accrued interest of $0.2 million.

During the three months ended March 31, 2015, we recognized a gain of $2.0 million on the sale of the Digital Products Business which was recorded within discontinued operations in the condensed consolidated statements of operations and comprehensive income.

In December 2015, we entered into an agreement to terminate our lease and related obligations associated with a facility in Newark, California we abandoned effective February 2016 following the sale of the Digital Products Business for a payment of $0.2 million. As a result of this agreement, we recorded a gain of $0.3 million on the lease termination in the discontinued operations of the Digital Products Business during the three and six months ended March 31, 2016. Also see Note 8 - Accrued Expenses and Other Current Liabilities.

Included in cost of revenue for the three and six months ended March 31, 2016 is $0.4 million due to a reduction in expected product warranty liabilities from a settlement agreement associated with the Digital Products Business.

During the three and six months ended March 31, 2016, we recognized the deferred gain of $3.4 million and reversal of other liabilities of $0.4 million, that had been recorded as of September 30, 2015, resulting in a credit of $3.8 million to deferred gain on sale of assets within discontinued operations of the Digital Products Business as the result of the favorable ruling from the SEI arbitration. Also see Note 11 - Commitments and Contingencies.

No assets or liabilities from the Digital Products Business remain on the condensed consolidated balance sheet as of March 31, 2016 and September 30, 2015. The financial results of the Digital Products Business are reported as discontinued operations for the three and six months ended March 31, 2016 and 2015.

The following table presents the statements of operations for the discontinued operations of the Digital Products Business:

	For the three months ended March 31,						For the six months ended March 31,
(in thousands)	2016			2015			2016			2015
Revenue	$	—		$	40		$	—		$	11,855
Cost of revenue	(445		)	(1		)	(494		)	9,111
Gross profit	445			41			494			2,744
Operating (income) expense	(32		)	446			(330		)	3,158
Recognition of previously deferred gain on sale of assets	3,804			—			3,804			—
Gain on sale of discontinued operations	—			1,994			—			1,994
Income from discontinued operations before income tax	4,281			1,589			4,628			1,580
Income tax (expense) benefit	(152		)	1,870			(156		)	1,873
Income from discontinued operations	$	4,129		$	3,459		$	4,472		$	3,453