Discontinued Operations

6 Months Ended

Jul. 05, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

On July 6, 2015 (the first day of the Company's third quarter), the Company completed the sale of its Surface Inspection Systems Division (SISD) to AMETEK, Inc. (AMETEK) for $160,000,000 in cash, less a working capital adjustment of $1,600,000 and transaction costs of approximately $5,000,000. Accordingly, management concluded that the assets of SISD met all of the criteria to be classified as "held for sale" on the Consolidated Balance Sheets as of July 5, 2015.

Carrying amounts of major assets and liabilities included as part of the disposal group were as follows (in thousands):

	July 5, 2015		December 31, 2014
Accounts receivable, net	$	9,550	$	10,885
Inventories, net	5,943		6,313
Unbilled revenue	2,573		2,356
Prepaid expenses and other current assets	3,391		2,955
Property, plant, and equipment, net	1,720		1,944
Intangible assets, net	11,338		1,029
Goodwill	4,301		4,301
Other assets	111		31
Held for sale assets	$	38,927	$	29,814
Accounts payable	1,470		1,891
Accrued expenses	3,787		4,335
Deferred revenue	9,341		5,965
Held for sale liabilities	$	14,598	$	12,191

Management also concluded that the disposal group met the criteria of a discontinued operation and has presented the profit from operation of this discontinued business separately from continuing operations on the Consolidated Statements of Operations. The pretax gain associated with this sale is expected to be approximately $125,000,000 and will be recorded in the third quarter of 2015.

The major classes of revenue and expense included in discontinued operations were as follows (in thousands):

	Three-months Ended						Six-months Ended
	July 5, 2015			June 29, 2014			July 5, 2015			June 29, 2014
Revenue	$	11,187		$	16,526		$	23,248		$	26,139
Cost of revenue	(5,765		)	(7,506		)	(11,291		)	(11,948		)
Research, development, and engineering expenses	(1,022		)	(1,118		)	(2,126		)	(2,068		)
Selling, general, and administrative expenses	(4,176		)	(3,204		)	(7,800		)	(6,384		)
Foreign currency gain (loss)	77			(22		)	(177		)	(22		)
Pretax income from discontinued operations	301			4,676			1,854			5,717
Income tax expense	103			1,403			626			1,754
Income from discontinued operations, net	$	198		$	3,273		$	1,228		$	3,963

Significant noncash items related to the discontinued business were as follows (in thousands):

	Three-months Ended				Six-months Ended
	July 5, 2015		June 29, 2014		July 5, 2015		June 29, 2014
Capital expenditures	$	171	$	152	$	482	$	261
Stock-based compensation expense	144		248		427		555
Depreciation expense	203		193		401		388
Amortization expense	82		94		165		188

The Company also entered into a Transition Services Agreement (TSA) with AMETEK to ensure an orderly and effective transition of SISD. Under the terms of the TSA, the Company has agreed to continue to perform certain administrative activities related to SISD; however, AMETEK is responsible for monitoring the business and making all strategic decisions. Although the parties intend to complete this transition as quickly as possible, the Company expects this TSA to remain in place throughout the second half of 2015. The income associated with this TSA is expected to be immaterial.