Discontinued Operations

6 Months Ended

Jun. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

EFLS

As part of the strategy to align our resources with developing and selling our energy-efficient LED products into the commercial and government markets, we completed the exit of EFLS, formerly known as our turnkey solutions business, during the third quarter of 2015. We stopped accepting new projects and completed all outstanding solutions-based projects in the first quarter of 2015. Following the completion of these projects, a remaining warranty liability existed for the replacement of potential defective products that were installed as a part of certain solutions-based jobs. The period for potential warranty replacement lasted one year from the time of job commencement. As of September 30, 2015, the exit of our turnkey solutions business was complete. We do not anticipate any significant continuing involvement related to this discontinued operation.

CLL

In August 2015, we sold our wholly-owned United Kingdom subsidiary, CLL. The sale was for nominal consideration under the terms of the agreement. As a result of the transaction and the elimination of this foreign subsidiary consolidated under the equity method of accounting, during the third quarter of 2015, we recorded a one-time loss of $44 thousand, which included a $469 thousand accumulated other comprehensive income reclassification adjustment for foreign currency translation. We do not anticipate any significant continuing involvement related to this discontinued operation.

Pool Products Business

In November 2013, we sold our pool products business for a cash purchase price of $5.2 million. The Purchase Agreement provided for an escrow of $500 thousand of the purchase price to secure customary indemnification obligations with respect to our representations, warranties, covenants and other obligations under the Purchase Agreement. As of December 31, 2015, $200 thousand of the cash held in escrow had been released to us and $300 thousand remained in escrow subject to the resolution of outstanding buyer claims that were the subject of an arbitration claim the buyer filed in February 2015. At December 31, 2015, we offset the full escrow amount by the expected costs to settle this claim, as we had reached an agreement in principle with the buyer. On March 18, 2016, a settlement agreement was executed for this claim and the funds in the escrow account, plus the interest earned on the account, were released to the buyer. The legal fees incurred for the arbitration are included in the loss on disposal of discontinued operations for all periods presented.

As a result of exiting EFLS and selling CLL and the pool products businesses, we have eliminated all net sales and expenses associated with this business from the Condensed Consolidated Statements of Operations, and have reported the net loss from those activities as discontinued operations in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015.

The following table summarizes the components included in loss from discontinued operations in our Condensed Consolidated Statements of Operations for the periods presented (in thousands):

	Three months ended June 30,					Six months ended June 30,
	2016		2015			2016			2015
Net sales	$	—	$	390		$	—		$	947
Cost of sales	—		198			—			505
Gross profit	—		192			—			442
Operating expenses of discontinued operations	—		278			—			562
Other (income) expenses	—		(41		)	—			(6		)
Loss on disposal of discontinued operations	—		36			12			72
Loss from discontinued operations before income taxes	—		(81		)	(12		)	(186		)
Benefit from income taxes	—		—			—			(10		)
Loss from discontinued operations	$	—	$	(81	)	$	(12	)	$	(176	)

The following table shows the components of loss from discontinued operations by business for the periods presented (in thousands):

	Three months ended June 30,					Six months ended June 30,
	2016		2015			2016			2015
Crescent Lighting Limited	$	—	$	(31	)	$	—		$	(83	)
Energy Focus LED Solutions, LLC	—		(14		)	—			(31		)
Loss from discontinued operations	—		(45		)	—			(114		)
Pool division	—		(36		)	(12		)	(72		)
Loss on disposal of discontinued operations	—		(36		)	(12		)	(72		)
Loss from discontinued operations before income taxes	—		(81		)	(12		)	(186		)
Benefit from income taxes	—		—			—			(10		)
Loss from discontinued operations	$	—	$	(81	)	$	(12	)	$	(176	)

Included in the loss on disposal of discontinued operations are legal fees incurred for the arbitration associated with our pool products business, as described above. There were no other revenues or expenses associated with this business.