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Discontinued Operations | 12 Months Ended
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Dec. 31, 2017
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | Discontinued Operations On August 21, 2015, the Company completed the sale of the U.S. and U.K. operations of its Electronic Products Division to Ultra Electronics Holdings plc (“Ultra”), a public limited company formed under the laws of England and Wales and traded on the London Stock Exchange, and Ultra Electronics Defense Inc. (the “Buyer”), a Delaware corporation ultimately owned by Ultra, (the “Transaction”). Pursuant to the terms of that certain Stock Purchase Agreement, dated May 31, 2015, by and among the Company, Ultra and the Buyer (the “Purchase Agreement”), the Company sold to the Buyer all of the issued and outstanding capital stock of its wholly owned subsidiary Herley Industries, Inc. (“Herley”) and certain of Herley’s subsidiaries, including Herley-CTI, Inc., EW Simulation Technology, Ltd. and Stapor Research, Inc. (collectively, the “Herley Entities”), for $260.0 million in cash plus $5.0 million for taxes incurred as part of the Transaction, less a $2.0 million escrow to satisfy any purchase price adjustments, and an estimated working capital adjustment of $8.3 million. The Purchase Agreement also contains certain non-compete and indemnification provisions. Under the Purchase Agreement, the Company entered into an agreement to indemnify the Buyer for any pre-acquisition tax liabilities. The Company also agreed to indemnify Ultra for pre-existing environmental conditions for a period of five years from the closing date and with a maximum indemnification payment of $34.0 million. The Company does not believe payments will be required under the indemnification provision, and the assessment of the fair value is immaterial. Under the terms of the Purchase Agreement, a joint 338(h)(10) election has been made for income tax purposes, providing a “step up” in tax basis to Ultra. The Company incurred approximately $11.5 million in transaction-related costs. The gain on sale of $80.8 million is subject to changes in the indemnification obligations. In accordance with ASC 360-10-45-9, Property, Plant, and Equipment (Topic 360) and ASC 205-20-45-3 Presentation of Financial Statements (Topic 205), the Herley Entities were classified as discontinued operations in the accompanying consolidated financial statements for all periods presented. Immediately prior to the closing of the Transaction, the outstanding shares of the capital stock of (i) General Microwave Corporation, a New York corporation, and its direct and indirect wholly owned subsidiaries General Microwave Israel Corporation, a Delaware corporation, General Microwave Israel (1987) Ltd., an Israeli company, and Herley GMI Eyal Ltd., an Israeli company, (ii) MSI Acquisition Corp., a Delaware corporation and its wholly owned subsidiary Micro Systems, Inc., a Florida corporation, and (iii) Herley-RSS, Inc., a Delaware corporation, were distributed as a dividend by Herley to the Company and continued their current operations as wholly owned subsidiaries of the Company. In November 2015, the Company and Ultra settled the working capital adjustment at $8.1 million, and the net cash position at closing, resulting in a net payment to the Company of $2.7 million. This represents the payment from escrow to the Company of $2.0 million, as well as the payment from Ultra of $0.7 million, reflecting the difference in the estimated working capital and actual working capital and the net cash position at the close of the Transaction. In December 2015, the Company submitted to Ultra for reimbursement the maximum $5.0 million for taxes incurred as part of the Transaction, which was reimbursed in January 2016. The following table presents the results of discontinued operations (in millions):
| Year ended December 31, 2017 |  | Year ended December 25, 2016 |  | Year ended December 27, 2015
Revenue | $ | — |  |  | $ | — |  |  | $ | 59.7 |
Cost of sales | — |  |  | — |  |  | 40.6 |
Selling, general and administrative expenses | — |  |  | 0.1 |  |  | 15.2 |
Interest expense, net | — |  |  | — |  |  | 9.1 |
Other net income (expense) items that are not major | — |  |  | — |  |  | 0.1 |
Loss from discontinued operations before income taxes | — |  |  | (0.1 | ) |  | (5.3 | )
Gain on disposal of discontinued operations before income taxes | — |  |  | — |  |  | 80.8 |
Total gain (loss) of discontinued operations before income taxes | — |  |  | (0.1 | ) |  | 75.5 |
Income tax expense | 0.1 |  |  | — |  |  | 22.5 |
Income (loss) from discontinued operations | $ | (0.1 | ) |  | $ | (0.1 | ) |  | $ | 53.0 |
The results for the year ended December 27, 2015 are through the date of disposal of August 21, 2015. There was $4.2 million of depreciation and amortization expense included in selling, general and administrative expenses for the year ended December 27, 2015. Interest expense is included based on an allocation consistent with the redemption of $175.0 million of the Notes and the repayment of $41.0 million in outstanding borrowings on the Credit Agreement that was repaid upon the completion of the sale of the Herley Entities in accordance with the terms and conditions of the Indenture and the Credit Agreement. Refer to Note 4 for further discussion. Intra-period tax allocation rules require the Company to allocate its provision for income taxes between continuing operations and other categories of earnings, such as discontinued operations. In periods in which there is a year-to-date pre-tax loss from continuing operations and pre-tax income in other categories of earnings, such as discontinued operations, the Company must allocate the tax provision to the other categories of earnings. A related tax benefit is then recorded in continuing operations. Due to the intra-period allocation rules, the Company recorded income tax expense of $0.1 million and $22.5 million in discontinued operations for the years ended December 31, 2017, and December 27, 2015, respectively. There was no income tax recorded in discontinued operations for the year ended December 25, 2016. The following is a summary of the assets and liabilities of discontinued operations as of December 31, 2017 and December 25, 2016 (in millions):
| December 31, 2017 |  | December 25, 2016
Accrued compensation | $ | — |  |  | $ | 0.6 |
Other current liabilities | 1.1 |  |  | 1.0 |
Current liabilities of discontinued operations | $ | 1.1 |  |  | $ | 1.6 |
Other long-term liabilities of discontinued operations | $ | 3.8 |  |  | $ | 3.7 |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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