Discontinued Operations

12 Months Ended

Dec. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

On August 10, 2015, we announced that we entered into a shares purchase agreement (“the Purchase Agreement”) with Maticmind S.p.A., (the “Purchaser”), a company incorporated under the laws of Italy, for the sale of all of the shares of our wholly-owned subsidiary Tecnonet. The consideration for the transaction included a cash payment by the Purchaser to the Company of €15.6 million (approximately $17.0 million) at closing plus a cash payment by Tecnonet to the Company of €4.1 million (approximately $4.6 million) prior to closing to repay an outstanding intercompany obligation. Tecnonet procured third party debt financing and repaid the loan in full in two payments: €1.5 million was received during the quarter ended September 30, 2015, with the remaining amount received during October 2015. The Purchaser assumed this debt at closing pursuant to the Purchase Agreement. On December 1, 2015, the sale of Tecnonet was approved by the Company's stockholders at the Company's special meeting of stockholders. On December 3, 2015, the Company completed the sale of all of the shares of Tecnonet. On February 19, 2016, the Company received a payment of €4.3 million (approximately $4.8 million) representing the post-closing purchase price adjustment pursuant to the Purchase Agreement. The Purchase Agreement also contains customary representations, warranties, covenants and indemnification obligations.

The Company included the $4.8 million receivable representing the post-closing purchase price adjustment on its consolidated balance sheet within other current assets as of December 31, 2015.

In 2015, the Company reported an after-tax gain on the sale of Tecnonet in the amount of $0.2 million. In addition, the Company recorded a cumulative translation loss $2.2 million and $0.8 million in transaction costs related to the sale, all of which are recorded within discontinued operations in 2015. The $2.2 million of foreign currency related losses included $1.0 million of historical translation related adjustments previously included in accumulated other comprehensive income on the consolidated balance sheet and $1.2 million recognized loss on the intercompany obligation that was settled as part of the transaction.

The results of operations of Tecnonet for the years ended December 31, 2015 and 2014 that are reflected in consolidated statements of operations as discontinued operations consist of the following (in thousands):

Year Ended December 31:	2015			2014
Revenue:
Product revenue	$	32,315		$	47,649
Service revenue	30,274			37,869
Total revenue	62,589			85,518
Cost of Revenue:
Cost of product	28,472			42,883
Cost of services	24,181			29,458
Total cost of revenue	52,653			72,341
Gross profit	9,936			13,177
Selling, general and administrative (1)	6,574			7,615
Operating income	3,362			5,562
Interest expense	(124		)	(305		)
Cumulative translation loss recognized upon sale of Tecnonet	(2,180		)	—
Other expense, net	(307		)	(444		)
Income from discontinued operations before income taxes	751			4,813
Provision for income taxes	1,311			2,430
Income (loss) from discontinued operations, net of tax	(560		)	2,383
Gain on sale of Tecnonet, net of tax	189			—
Net income (loss) from discontinued operations, net of income taxes	$	(371	)	$	2,383

(1) Includes Transaction costs of $0.8 million in 2015.

The assets and liabilities of Tecnonet were removed from our consolidated balance sheet as of the date of the divestiture.