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Asset sale
6 Months Ended
Jun. 30, 2019
Discontinued Operations and Disposal Groups [Abstract]  
Asset Sale
Asset Sale
NeoRussia
In April 2019, the Company completed the sale of 100% interest in the operations of NeoPhotonics Corporation, LLC (NeoRussia), the Company’s manufacturing operations in Russia, to Joint Stock Company Rusnano (“Rusnano”), a related party. As consideration for the sale, the Company received $2.0 million in cash and settled the $2.0 million Rusnano payment derivative recorded in accrued and other current liabilities.
As of March 31, 2019, assets held for sale was $3.1 million, consisting primarily of $2.6 million of property, plant and equipment and $0.5 million of prepaid expenses and other current assets. After the transfer of assets held for sale and $0.1 million of cash held in the subsidiary, reversal of $0.2 million of loss on sale accrued in the three months ended December 31, 2018 and write off of $0.2 million of accumulated other comprehensive loss along with expenses associated with the sale, the Company recognized a gain on asset sale of approximately $0.8 million within operating expenses in the three months ended June 30, 2019.
APAT
In January 2017, the Company completed the sale of its Low Speed Transceiver Products’ assets to APAT OE pursuant to an asset purchase agreement dated December 14, 2016 for consideration of approximately $25.0 million (in RMB equivalent) plus approximately $1.4 million (in RMB equivalent) post-closing transaction service fees to be received under a transition services agreement with APAT OE in which the Company will provide short-term manufacturing and other specific services pursuant to such agreement. The related supply chain purchase commitments and value-added tax obligations have been assumed by APAT OE. The receivable and payable balances related to the transition service arrangement were $12.0 million and $11.8 million, respectively, as of June 30, 2019.
As of December 31, 2016, the balance in assets held for sale was $13.9 million, consisting of $13.1 million in inventories and $0.8 million in property, plant and equipment. As a result of post-closing adjustments, total consideration was reduced by approximately $3.4 million for inventory. In addition, an immaterial amount of property, plant and equipment was reclassified from assets held for sale. Upon closing, assets sold to APAT OE were approximately $12.8 million, including approximately $12.1 million in inventories and $0.7 million in property, plant and equipment. The adjusted consideration received of approximately $21.6 million is subject to further reduction of up to $10.0 million for any indemnification claims. As of June 30, 2019, the Company has a reserve of $6.8 million within accrued and other current liabilities for warranty claims. The indemnification warranties expired on June 30, 2017. The Company recognized a $2.2 million gain on the sale of these assets within operating loss in 2017.
All of the Low Speed Transceiver Products were part of the Company’s Network Products and Solution product group and included the low speed optical network (PON) products for which the end-of-life plan was announced in mid-2016.