2. Discontinued Operations

On June 29, 2018, the Company completed the sale of the EES Business to Webasto. In accordance with the terms of the Purchase Agreement, as amended by a Side Letter Agreement executed at the closing, the Company received cash consideration of $31,994,000 upon closing, which resulted in a gain of $11,420,000 which has been recorded in “Gain on sale of business, net of tax” in the consolidated statements of operations. The Company will receive additional cash consideration of $6,500,000 (the “Holdback”) upon the assignment of two of the remaining customer contracts to Webasto. The Holdback was not recorded in the Company’s consolidated financial statements as the amount was not realized or realizable as of July 28, 2018.

Concurrent with the execution of the Purchase Agreement, the Company entered into a transition services agreement (the “TSA”) to provide certain general and administrative services to Webasto for a defined period. Income from performing services under the TSA has been recorded in “Other income, net” in the consolidated statements of operations.

The Company determined that the EES Business met the criteria for classification as an asset held for sale as of April 30, 2018 and represents a strategic shift in in the Company’s operations. Therefore, the assets and liabilities and the results of operations of the EES Business are reported as discontinued operations for all periods presented. The table below presents the statements of operations data for the EES Business.


	Three Months Ended
	July 28, 2018		July 29, 2017
Net sales	$	4,256	$	7,610
Cost of sales		4,278		6,510
Gross margin		(22)		1,100
Selling, general and administrative		1,453		2,044
Research and development		1,065		919
Other income, net		1		—
Loss from discontinued operations before income taxes		(2,539)		(1,863)
Benefit for income taxes		(689)		(375)
Net loss from discontinued operations	$	(1,850)	$	(1,488)
Gain on sale of business, net of tax expense of $2,577		8,843		—
Net income (loss) from discontinued operations	$	6,993	$	(1,488)

The major classes of assets and liabilities included in discontinued operations related to the EES Business are presented in the table below.


	April 30,
	2018
Carrying amount of assets classified as discontinued operations
Current assets:
Accounts receivable, net of allowance for doubtful accounts of $139 at April 30, 2018	$	6,889
Inventories, net		15,494
Prepaid expenses and other current assets		185
Property and equipment, net		3,100
Total current assets classified as discontinued operations		25,668
Total assets classified as discontinued operations	$	25,668
Carrying amount of liabilities classified as discontinued operations
Current liabilities:
Accounts payable	$	5,121
Wages and related accruals		1,946
Customer advances		1,028
Other current liabilities		1,199
Total current liabilities		9,294
Total liabilities classified as discontinued operations	$	9,294