Assets Held for Sale and Discontinued Operations

In April 2019, we 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 had 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 included our Tempress and SoLayTec subsidiaries, which comprised substantially all of our Solar segment. We adopted a plan to sell our Solar operations on or before March 31, 2020. As such, we 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 Tempress 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.

On June 7, 2019 (“Sale Date”), we completed the sale of our subsidiary, SoLayTec, to a third party located in the Netherlands. Upon the sale, we recognized a gain of approximately $1.6 million, which we reported as gain on sale of subsidiary in our Consolidated Statements of Operations for the three and nine months ended June 30, 2019. Effective on the Sale Date, SoLayTec will no longer be included in our consolidated financial statements. SoLayTec is not material to Amtech’s results of operations or financial position.

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



	Three Months Ended June 30,						Nine Months Ended June 30,
	2019			2018			2019			2018
Revenues, net of returns and allowances	$	5,268		$	12,457		$	19,649		$	70,620
Cost of sales	4,374			8,041			19,726			52,684
Gross profit (loss)	894			4,416			(77		)	17,936
Selling, general and administrative	1,735			2,766			7,412			10,081
Research, development and engineering	736			1,540			2,647			4,260
Restructuring charges	(3		)	—			598			—
Operating (loss) income	(1,574		)	110			(10,734		)	3,595
Gain on sale of subsidiary	1,614			—			1,614			—
Interest expense and other, net	(143		)	(100		)	(213		)	(172		)
(Loss) income from discontinued operations before income taxes	(103		)	10			(9,333		)	3,423
Income tax (benefit) provision	(1,257		)	18			(1,220		)	(3,094		)
Net income (loss)	$	1,154		$	(8	)	$	(8,113	)	$	6,517

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



	June 30, 2019		September 30, 2018
Assets	(Unaudited)
Total current assets	$	17,468	$	39,379
Property, plant and equipment - net	5,497		5,943
Total assets included in the disposal group	22,965		45,322

Total current liabilities	18,191		29,380
Long-term debt	293		2,418
Total liabilities included in the disposal group	18,484		31,798
Net assets included in the disposal group	$	4,481	$	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:



	Nine Months Ended June 30,
	2019			2018
(Loss) income from discontinued operations, net of tax	$	(8,113	)	$	6,517
Depreciation and amortization	$	426		$	561
Provision for (reversal of) allowance for doubtful accounts, net	$	887		$	(9	)
Gain on sale of subsidiary	$	1,614		$	—
Purchases of property, plant and equipment	$	118		$	1,160