Assets Held for Sale and Discontinued Operations

We recently announced that our Board of Directors (the “Board”) determined that it was in the long-term best interest of the Company to exit the solar business segment and focus our strategic efforts on our semiconductor and silicon carbide/polishing business segments in order to more fully realize the opportunities the Company believes are presented in those areas.

The Board made its decision, effective March 28, 2019, after analyzing current market conditions and the strategic outlook for its solar segment, which operates in a highly competitive market among lower cost manufacturers, particularly in China. Historical fluctuations in the solar cell industry combined with downward pricing pressure has negatively affected the Company’s results of operations in recent years. In response, as previously disclosed in our periodic reports, we have been pursuing strategic alternatives for the continued operations of the Solar Segment, including the possibility of restructuring the Solar Segment to achieve profitability and compete more effectively. After further assessment, however (including input from management of the Solar segment and our external advisors), the Board determined that the investment required to return the solar business to profitability would be better utilized to pursue strategic opportunities in the Semiconductor and SiC/LED segments.

The anticipated divestiture of our solar business will include our Tempress and SoLayTec subsidiaries, which comprised substantially all of our Solar segment. We have adopted a plan to sell our Solar operations on or before March 31, 2020. As such, we have classified substantially all of the Solar segment as held for sale in our Condensed Consolidated Balance Sheets and reported its results as discontinued operations in our Condensed Consolidated Statements of Operations. We expect to incur one-time costs to sell the operations of approximately $750,000, which includes $500,000 in broker fees and $250,000 in legal fees, although the final amount could be greater if certain timing and/or price targets are met.

Operating results of our discontinued solar operations were as follows, in thousands:



	Three Months Ended March 31,						Six Months Ended March 31,
	2019			2018			2019			2018
Revenues, net of returns and allowances	$	8,153		$	11,668		$	14,381		$	58,163
Cost of sales	9,229			8,525			15,352			44,643
Gross (loss) profit	(1,076		)	3,143			(971		)	13,520
Selling, general and administrative	4,082			3,159			5,677			7,315
Research, development and engineering	831			1,404			1,911			2,720
Restructuring charges	591			—			601			—
Operating (loss) income	(6,580		)	(1,420		)	(9,160		)	3,485
Interest income (expense) and other income, net	(48		)	(6		)	(70		)	(72		)
(Loss) income from discontinued operations before income taxes	(6,628		)	(1,426		)	(9,230		)	3,413
Income tax provision (benefit)	19			(3,200		)	37			(3,112		)
Net (loss) income	$	(6,647	)	$	1,774		$	(9,267	)	$	6,525

The following table presents a summary of the solar assets and liabilities held for sale included in our Condensed Consolidated Balance Sheets, in thousands:



	March 31, 2019		September 30, 2018
Assets	(Unaudited)
Total current assets	$	20,418	$	39,379
Property, Plant and Equipment - Net	5,559		5,943
Total assets included in the disposal group	25,977		45,322

Total current liabilities	19,545		29,380
Long-Term Debt	2,420		2,418
Total liabilities included in the disposal group	21,965		31,798
Net assets included in the disposal group	$	4,012	$	13,524

Amtech’s Condensed Consolidated Statement of Cash flows combines cash flows from discontinued operations with cash flows from continuing operations within each cash flow statement category. The following table summarizes selected cash flow information for discontinued operations, in thousands:



	Six Months Ended March 31,
	2019			2018
(Loss) income from discontinued operations, net of tax	$	(9,267	)	$	6,525
Depreciation and amortization	$	287		$	324
Provision for allowance for doubtful accounts, net	$	981		$	37
Purchases of property, plant and equipment	$	96		$	220