Discontinued Operations

12 Months Ended

Dec. 31, 2017

Discontinued Operations and Disposal Groups [Abstract]

On July 6, 2015, the Company completed the sale of its Surface Inspection Systems Division (SISD) to AMETEK, Inc. (AMETEK) for $155,655,000 in cash. Transaction costs totaled $5,198,000 and included $1,106,000 of stock option expense from the accelerated vesting of stock options in connection with the sale.

The financial results of SISD are reported as a discontinued operation for all periods presented. In 2015, a pre-tax gain of $125,357,000 and associated income tax expense of $47,175,000 was recorded in "Net income (loss) from discontinued operations" on the Consolidated Statements of Operations. A binding arbitration was concluded in 2016 with respect to certain product performance claims made by an SISD customer, for which the Company remained responsible under the indemnity provisions of the sale transaction. In that proceeding, the tribunal ordered the Company to pay the customer approximately $326,000, primarily representing a refund of the product purchase price. The tribunal also ordered the customer to pay the Company approximately $45,000, primarily representing reimbursement of legal fees. The net settlement of $281,000 was recorded in discontinued operations in 2016, along with $123,000 of legal fees. The tax benefit related to this expense was $149,000, resulting in a net loss from discontinued operations of $255,000.

The major classes of revenue and expense included in discontinued operations were as follows (in thousands):



	Year Ended December 31,
	2017		2016			2015
Revenue	$	—	$	—		$	23,248
Cost of revenue	—		—			(11,291		)
Research, development, and engineering expenses	—		—			(2,126		)
Selling, general, and administrative expenses	—		—			(7,800		)
Foreign currency loss	—		—			(177		)
Operating income from discontinued business	—		—			1,854
Gain (loss) on sale of discontinued business	—		(404		)	125,357
Income from discontinued operations before income tax expense	—		(404		)	127,211
Income tax expense (benefit) on discontinued operations	—		(149		)	47,801
Net income (loss) from discontinued operations	$	—	$	(255	)	$	79,410

Significant non-cash items related to the discontinued business were as follows (in thousands):



	Year Ended December 31,
	2017		2016		2015
Stock-based compensation expense	$	—	$	—	$	1,533
Depreciation expense	—		—		401
Amortization expense	—		—		165
Capital expenditures	—		—		482