3. Discontinued Operations

On August 27, 2018, the Company entered into a definitive agreement to sell its semiconductor cryogenics business to Edwards Vacuum LLC (a member of the Atlas Copco Group) for $675.0 million in cash. The purchase price is subject to adjustments for working capital and other items. The Company anticipates closing of the transaction in the first quarter of calendar year 2019 upon satisfaction of various closing conditions and regulatory approvals.

The semiconductor cryogenics business consists of the CTI pump business, Polycold chiller business, the related services business and the Company's 50% share in Ulvac Cryogenics, Inc., a joint venture based in Japan. The semiconductor cryogenics business was originally acquired by the Company in its 2005 merger with Helix Technology Corporation and is included in the Brooks Semiconductor Solutions Group segment as part of the segment.

In connection with the Disposition, the Company and Edwards entered into a transition service agreement, a supply agreement, and lease agreements. The transition service agreement outlines the information technology, people, and facility support the Company expects to provide to Edwards for a period from 1 month to 6 months after transaction closing date. The supply agreement allows the Company to purchase CTI and Polycold goods at cost from Edwards up to an aggregate amount equal to $1.0 million during the one-year term after closing of the Disposition. The lease agreements will provide facility space to Edwards free of charge for three years after the transaction closing date. Edwards will have the option to renew each lease at the then current market rates after the initial three-year lease term has ended. This Disposition is consistent with the Company’s long-standing strategy to increase shareholder value by accelerating the growth of its Life Sciences business with further acquisitions and strengthening its semiconductor automation business with opportunistic acquisitions.

The Disposition met the "held for sale" criteria and the “discontinued operation” criteria in accordance with FASB ASC 205 as of September 30, 2018. As such, its operating results have been reported as a discontinued operation for all periods presented.

The following table presents the financial results of discontinued operations (in thousands):



	Fiscal Year Ended September 30,
	2018		2017		2016
Revenue
Products	$	150,365	$	126,638	$	85,860
Services		45,731		38,748		40,451
Total revenue		196,096		165,386		126,311
Cost of revenue
Products		85,350		73,714		55,144
Services		22,834		22,400		28,974
Total cost of revenue		108,184		96,114		84,118
Gross profit		87,912		69,272		42,193
Operating expenses
Research and development		7,605		6,860		6,932
Selling, general and administrative		25,017		12,536		12,139
Restructuring charges		2		82		1,830
Total operating expenses		32,624		19,478		20,901
Operating income		55,288		49,794		21,292
Interest income
Interest expense
Other (expense) income, net		1,091		1,057		804
Income before income taxes and earnings of equity method investment		56,379		50,851		22,096
Income tax provision		14,420		8,760		9,560
Income before equity in earnings of equity method investment		41,959		42,091		12,536
Equity in earnings of equity method investment		6,788		9,834		3,445
Net income	$	48,747	$	51,925	$	15,981

The Company performed its annual goodwill impairment analysis in April 2018. This analysis was updated upon announcement of the Disposition for the year ended September 30, 2018. The Company has concluded that there is no impairment indicator related to the goodwill of the Disposition group at either date the impairment analysis was performed.

The following table presents the summarized financial information for Ulvac Cryogenics, Inc., the unconsolidated subsidiaries accounted for based on the equity method (in thousands):


	September 30,
	2018		2017
Balance Sheets:
Current assets	$	69,302	$	74,645
Non-current assets		21,338		16,829
Current liabilities		26,006		29,622
Non-current liabilities		8,397		7,860


	Fiscal Year Ended September 30,
	2018		2017		2016
Statements of Operations:
Total revenue	$	94,652	$	104,667	$	68,054
Gross profit		34,982		41,241		23,586
Operating Income		18,405		26,340		10,571
Net income		13,345		19,451		7,492

The following table presents the significant non-cash items and capital expenditures for the discontinued operations that are included in the Consolidated Statements of Cash Flows (in thousands):


	Fiscal Year Ended September 30,
	2018		2017			2016
Depreciation and amortization	$	743	$	919	$	1,034
Capital expenditures		302		1,049		560
Stock-based compensation		966		705		460
Earnings of equity method investment		(6,788)		(9,834)		(3,445)

The carrying value of the assets and liabilities of the discontinued operations on the Consolidated Balance Sheet as of September 30, 2018 and September 30, 2017 were as follows (in thousands):


	Fiscal Year Ended September 30,
	2018			2017
Assets
Accounts receivable, net	$	27,852	$		27,363
Inventories		37,953			32,998
Other current assets		343			310
Total current assets of discontinued operation	$	66,148		$	60,671

Property, plant and equipment, net	$	1,081		$	1,481
Goodwill		26,485			26,485
Intangibles, net		14			16
Equity method investment		31,472			28,570
Other assets		-			1
Total long-term assets of discontinued operation	$	59,052		$	56,553

Liabilities
Deferred revenue	$	1,052		$	1,728
Accrued warranty and retrofit costs		2,464			2,574
Accrued compensation and benefits		3,648			3,189
Other current liabilities		224			334
Total current liabilities of discontinued operation	$	7,388		$	7,825

Long-term liabilities of discontinued operation	$	698		$	652