Discontinued Operations

9 Months Ended

Oct. 04, 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 $155,655,000 in cash. Transaction costs totaled $5,090,000 and included $1,106,000 of stock option expense from the accelerated vesting of stock options triggered by the sale.

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

	December 31, 2014
Accounts receivable, net	$	10,885
Inventories, net	6,313
Unbilled revenue	2,356
Prepaid expenses and other current assets	2,955
Property, plant, and equipment, net	1,944
Intangible assets, net	1,029
Goodwill	4,301
Other assets	31
Held for sale assets	$	29,814
Accounts payable	1,891
Accrued expenses	4,335
Deferred revenue	5,965
Held for sale liabilities	$	12,191

The financial results of SISD are reported as a discontinued operation for all periods presented. The pretax gain associated with this sale was $125,465,000 and was recorded in the third quarter of 2015 in "Gain on sale of discontinued business, net of tax" on the Consolidated Statements of Operations.

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

	Three-months Ended					Nine-months Ended
	October 4, 2015		September 28, 2014			October 4, 2015			September 28, 2014
Revenue	$	—	$	15,000		$	23,248		$	41,139
Cost of revenue	—		(6,514		)	(11,291		)	(18,462		)
Research, development, and engineering expenses	—		(1,033		)	(2,126		)	(3,101		)
Selling, general, and administrative expenses	—		(3,364		)	(7,800		)	(9,748		)
Foreign currency gain (loss)	—		(78		)	(177		)	(100		)
Pretax income from discontinued operations	—		4,011			1,854			9,728
Pretax gain on sale of discontinued business	125,465		—			125,465			—
Discontinued operations, pretax	125,465		4,011			127,319			9,728
Income tax expense	47,175		1,292			47,801			3,045
Discontinued operations, net of tax	$	78,290	$	2,719		$	79,518		$	6,683

Significant non-cash items related to the discontinued business were as follows (in thousands):

	Three-months Ended				Nine-months Ended
	October 4, 2015		September 28, 2014		October 4, 2015		September 28, 2014
Stock-based compensation expense	$	1,106	$	231	$	1,533	$	786
Depreciation expense	—		196		401		584
Amortization expense	—		94		165		282
Capital expenditures	—		206		482		467

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 agreed to continue to perform certain administrative activities related to SISD; however, AMETEK is responsible for monitoring the business and making all strategic decisions. Activities under this TSA were completed in October 2015. The income associated with this TSA was immaterial to the three-month and nine-month periods ended October 4, 2015.