Discontinued Operations | 3. Discontinued Operations Disposition of Semiconductor Automation Business On September 20, 2021, the Company entered into a definitive agreement to sell its semiconductor automation business to THL. On February 1, 2022, the Company completed the sale of the semiconductor automation business for $2.9 billion in cash, subject to working capital and other customary adjustments. Net proceeds from the sale are expected to be $2.5 billion, after excluding estimated taxes payable. Net income from discontinued operations for March 31, 2022 is inclusive of the gain on sale of $2.6 billion. As part of the transaction, the Company recorded an $18.1 million liability related to retention bonuses and cash settled stock based awards for former employees of the Company that were conveyed with the transaction. The Company will remit payment to THL during fiscal 2023, at the end of the retention period which THL will directly remit to the respective individuals. The semiconductor automation business is comprised of the Semiconductor Solution Group segment. Following the completion of the sale, the Company no longer serves the semiconductor market. In connection with the closing of the sale, the Company and THL entered into a transition services agreement, to which both the Company and THL will provide each other with certain transition services related to finance and accounting, information technology, human resources, compliance, facilities, legal and research and development support, for time periods ranging from three . In addition, the Company entered into two separate lease agreements for leases back to the Company for portions of the facilities that have served as its corporate headquarters in Chelmsford, Massachusetts, and were sold to THL as part of the sale agreement. Each lease provides for a term of 24 months , which may be terminated earlier by the Company upon 90 days ’ notice to THL. The transition services agreement and lease agreements approximate fair value and there is no material impact to the Company’s results. During the fourth quarter of fiscal 2021, the Company determined that the semiconductor automation business met the criteria to be classified as a discontinued operation and, as a result, its historical financial results are reflected in the Company’s financial statements as a discontinued operation, and assets and liabilities were classified as assets and liabilities held for sale. The following table presents the financial results of discontinued operations with respect to the semiconductor automation business (in thousands). Three months ended March 31, Six Months Ended March 31, 2022 2021 2022 2021 Revenue Products $ 56,722 $ 144,136 $ 244,962 $ $ 262,290 Services 4,038 12,915 19,468 26,122 Total revenue 60,760 157,051 264,430 288,412 Cost of revenue Products 33,568 82,727 141,165 151,504 Services 2,850 4,950 11,159 11,741 Total cost of revenue 36,418 87,677 152,324 163,245 Gross profit 24,342 69,374 112,106 125,167 Operating expenses Research and development 4,746 11,708 18,486 22,702 Selling, general and administrative 7,466 17,841 30,142 31,940 Restructuring charges - (1) - 126 Total operating expenses 12,212 29,548 48,628 54,768 Operating income 12,130 39,826 63,478 70,399 Other income, net (87) (1,326) Gain on divestiture 2,561,420 - 2,561,374 - Income before income taxes 2,573,550 39,739 2,624,852 69,073 Income tax provision 451,860 8,655 462,700 14,667 Net income from discontinued operations $ 2,121,690 $ 31,084 $ 2,162,152 $ 54,406 On July 1, 2019, the Company sold its semiconductor cryogenics business. During the three and six months ended March 31, 2021, the Company recorded a $1.3 million negative working capital adjustment to the gain on divestiture that was previously recorded in the fourth fiscal quarter of 2019. This adjustment is shown within other income (loss), net within the income statement for the semiconductor automation business. The following table presents the significant non-cash items and capital expenditures for the discontinued operations with respect to the semiconductor automation business that are included in the Consolidated Statements of Cash Flows (in thousands): Three months ended March 31, Six Months Ended March 31, 2022 2021 2022 2021 Depreciation and amortization $ - $ 1,677 $ - $ 3,696 Capital expenditures $ 579 $ 904 $ 2,862 $ 2,731 Stock-based compensation $ 3,109 $ 4,088 $ 8,032 $ 5,963 The carrying value of the assets and liabilities of the discontinued operations with respect to the semiconductor automation business on the Consolidated Balance Sheets as of September 30, 2021 was as follows (in thousands): September 30, 2021 Assets Cash and cash equivalents $ 45,000 Accounts receivable, net 142,256 Inventories 110,735 Other current assets 13,394 Total current assets of discontinued operation $ 311,385 Property, plant and equipment, net $ 32,058 Long-term deferred tax assets 3,167 Goodwill 81,477 Intangibles, net 44,468 Other assets 22,658 Total long-term assets of discontinued operation $ 183,828 Liabilities Accounts payable $ 68,074 Deferred revenue 7,141 Accrued warranty and retrofit costs 6,081 Accrued compensation and benefits 18,144 Accrued Income Taxes 11,702 Accrued expenses and other current liabilities 18,014 Total current liabilities of discontinued operation $ 129,156 Long-term tax reserves 2,356 Long-term deferred tax liabilities 6,548 Long-term pension liabilities 5,490 Long-term operating lease liabilities 15,425 Other long-term liabilities 2,625 Total long-term liabilities of discontinued operation $ 32,444 Acquisition within the Semiconductor Automation Business On April 29, 2021, the Company acquired Precise Automation Inc., a leading developer of collaborative robots and automation subsystems headquartered in Fremont, California. The total cash purchase price for the acquisition was approximately $69.8 million. Precise provides the semiconductor automation business with a product offering and technology portfolio to take advantage of the opportunities in the collaborative robot market. The allocation of the consideration included $38.7 million of technology, $2.5 million of customer relationships, $33.1 million of goodwill, $6.2 million of deferred tax liabilities, and several other assets and liabilities. The Company applied variations of the income approach to estimate the fair values of the intangible assets acquired. The completed technology was valued using excess earnings method and the customer relationships was valued using distributor margin method, both of which have a useful life of 11 years. The intangible assets acquired are amortized over the total weighted average period of 11 years using methods that approximate the pattern in which the economic benefits are expected to be realized. The Company has included the financial results of the acquired operations within income from discontinued operations on its Consolidated Statements of Operations. The goodwill and intangible assets are not The Company did not present a pro forma information summary for its consolidated results of operations because such results were immaterial. During the three months ended March 31, 2022, and prior to the completion of the sale of the semiconductor automation business, the Company exercised an option acquired with the Precise acquisition, to purchase certain technology assets for $4.0 million. The technology assets worth $4.0 million and the option to purchase was deemed to have no fair value at the time of acquisition. |