Discontinued Operations

9 Months Ended

Oct. 02, 2016

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

On July 6, 2015, the Company completed the sale of its Surface Inspection Systems Division (SISD). The financial results of SISD are reported as a discontinued operation for the three-month and nine-month periods ended October 2, 2016 and October 4, 2015.

A binding arbitration was concluded in the second quarter of 2016 with respect to certain product performance claims made by an SISD customer, for which the Company remained responsible under the indemnity provisions of the sale transaction. In that proceeding, the tribunal ordered the Company to pay the customer approximately $326,000, primarily representing a refund of the product purchase price. The tribunal also ordered the customer to pay the Company approximately $45,000, primarily representing reimbursement of legal fees. The net settlement of $281,000 was recorded in discontinued operations in the second quarter of 2016, along with $123,000 of legal fees. The tax benefit related to this expense was $149,000, resulting in a net loss from discontinued operations of $255,000.

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

	Three-months Ended				Nine-months Ended
	October 2, 2016		October 4, 2015		October 2, 2016			October 4, 2015
Revenue	$	—	$	—	$	—		$	23,248
Cost of revenue	—		—		—			(11,291		)
Research, development, and engineering expenses	—		—		—			(2,126		)
Selling, general, and administrative expenses	—		—		—			(7,800		)
Foreign currency gain (loss)	—		—		—			(177		)
Operating income from discontinued operations	—		—		—			1,854
Gain (loss) on sale of discontinued operations	—		125,465		(404		)	125,465
Income (loss) from discontinued operations before income tax expense (benefit)	—		125,465		(404		)	127,319
Income tax expense (benefit) on discontinued operations	—		47,175		(149		)	47,801
Net income (loss) from discontinued operations	$	—	$	78,290	$	(255	)	$	79,518

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

	Three-months Ended				Nine-months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
Stock-based compensation expense	$	—	$	1,106	$	—	$	1,533
Capital expenditures	—		—		—		482
Depreciation expense	—		—		—		401
Amortization expense	—		—		—		165