2. Discontinued Operations of TS segment

On July 31, 2018, CSPi LTD, a wholly owned indirect subsidiary of the Company, completed its sale of all of the outstanding stock of Modcomp GmbH, to Reply AG, an affiliate of Reply SpA, a holding company for a worldwide group of companies, pursuant to the terms of a Share Purchase and Assignment Agreement dated June 27, 2018. Modcomp GmbH, dba CSPI GmbH, through itself and its wholly owned subsidiaries, provided managed security services to customers primarily in Germany.

Upon the closing of the Share Purchase Agreement, Reply AG paid to CSPI total cash at closing of approximately $14.4 million, which consisted of the original purchase price of $11.7 million plus an adjustment at closing for Net Cash (as defined in the Share Purchase Agreement) of approximately $2.7 million. An additional €400 thousand is included in escrow and will be recorded if and when received by the Company. Accordingly, CSPi determined that the assets and liabilities of this reportable segment met the discontinued operations criteria in U.S. GAAP in the year ended September 30, 2018. The gain recorded due to the sale of all the stock of Modcomp GmbH was approximately $16.8 million. No income taxes were provided as the transaction was a tax-free exchange in the U.K. As such, Modcomp GmbH's results have been recorded as discontinued operations in the accompanying consolidated balance sheets and consolidated statements of operations for all periods presented.

Summarized Discontinued Operations Financial Information

The following table provides a reconciliation of the carrying amounts of major classes of assets and liabilities which are included in assets and liabilities of discontinued operations in the accompanying consolidated balance sheets for the years ended September 30, 2018 and 2017:



			September 30, 2018		September 30, 2017
			(Amounts in thousands)
Currents assets:
	Cash and cash equivalents		$	—	$	3,464
	Accounts receivable, net		—		9,957
	Unbilled accounts receivable		—		69
	Inventories, net		—		404
	Deferred costs		—		910
	Deferred income taxes		—		—
	Other current assets		—		63
	Property, equipment and improvements, net		—		—
		Total current assets of discontinued operations	$	—	$	14,867

Property, equipment and improvements, net			$	—	$	589
Deferred costs			—		609
Deferred income taxes			—		864
Other noncurrent assets, net			—		126
		Total noncurrent assets of discontinued operations	$	—	$	2,188

Current liabilities:
	Accounts payable and accrued expenses		$	—	$	3,950
	Deferred revenue		—		5,264
	Pension and retirement plans		—		209
	Other current liabilities		—		304
		Total current liabilities of discontinued operations	$	—	$	9,727

Pension and retirement plans			$	—	$	5,165
Other noncurrent liabilities			—		57
		Total noncurrent liabilities of discontinued operations	$	—	$	5,222

The following table summarizes the results of discontinued operations for the years ended September 30, 2018, and 2017.



		For the years ended
		September 30, 2018			September 30, 2017
	(Amounts in thousands)
Sales		$	18,365		$	22,990
Cost of sales		15,843			18,923
Gross profit		2,522			4,067
Selling, general and administrative expenses		2,837			3,690
Operating income (loss)		(315		)	377
Other income (expenses), net		(95		)	11
Gain (loss) before income taxes		(410		)	388
Income tax expense		—			125
Income (loss) from discontinued operations		(410		)	263
Gain from sale of discontinued operations		16,838			—
Total income from discontinued operations		$	16,428		$	263