Discontinued operations

12 Months Ended

Oct. 31, 2018

Discontinued Operations and Disposal Groups [Abstract]

Note 2 - Discontinued operations

During 2013, the Company sold its RF Neulink and RadioMobile divisions, which together had comprised the Company’s RF Wireless segment. The divisions were sold pursuant to asset purchase agreements, whereby no purchase price was paid at the closing. Rather, the agreements stipulated royalty payments from each of the purchasers over a three-year period. For the years ended October 31, 2018 and 2017, the Company recognized approximately $0 and $174,000, respectively, of aggregate royalty income for RF Neulink and RadioMobile, which amounts have been included within discontinued operations.

During March 2016, the Company announced the shutdown of its Bioconnect division, which comprised the entire operations of the Medical Cabling and Interconnect segment. The closure is part of the Company’s ongoing plan to close or dispose of underperforming divisions that are not part of the Company’s core operations. For the fiscal year ended October 31, 2018, no income was recognized related to the Bioconnect division. For the year ended October 31, 2017, the Company recognized approximately $10,000 of income related to the sale of equipment for the Bioconnect division, which amounts have been included within discontinued operations.

The following summarized financial information related to the RF Neulink, RadioMobile and Bioconnect divisions is segregated from continuing operations and reported as discontinued operations for the year ended October 31, 2017 (in thousands):

	2017

Royalties	$	174
Bioconnect		10
Provision for income taxes		(68	)
Income from discontinued operations, net of tax	$	116

On October 31, 2018, the Company sold all of the assets and liabilities of its subsidiary, Comnet Telecom Supply (“Comnet Telecom”). The Company and RAP Acquisition Inc. (“RAP Acquisition”), a New Jersey corporation, entered into a stock purchase agreement under which RAP Acquisition agreed to purchase 100% of the issued and outstanding shares of Comnet Telecom for a purchase price of $4,200,000 in cash. Comnet Telecom is a New Jersey-based manufacturer and supplier of telecommunications and data products, including fiber optics cables, cabling technologies, custom patch cord assemblies, data center consoles and other data center equipment. This division was one of the three subsidiaries of the “Custom Cabling Manufacturing and Assembly” segment. Comnet Telecom was acquired by the Company in January 2015 from Robert Portera, and has been a wholly-owned subsidiary of the Company since that time. Mr. Portera served as the President of Comnet Telecom during the period that Comnet Telecom was owned by the Company, and is the founder and principal of RAP Acquisition.

For the years ended October 31, 2018 and 2017, the Company recognized pretax loss of $221,000 and pretax income of $168,000, respectively, from the discontinued operations of the Comnet Telecom division, and an income tax benefit of $41,000 and expense of $72,000, respectively. The major line items constituting the income (loss) of discontinued operations of Comnet are as follows (in thousands):

	Years Ended October 31,
	2018			2017
Major line items constituting pretax income from discontinued operations:
Net sales	$	8,343		$	7,981
Cost of sales		(6,199	)		(6,246	)
Gross profit		2,144			1,735
Selling, general and administrative expense		(1,569	)		(1,567	)
Pretax income from discontinued operations		575			168
Pretax loss on sale of Comnet		(796	)		-
Total pretax income (loss) from discontinued operations		(221	)		168
Provision (benefit) for income taxes		(41	)		72
Income (loss) from discontinued operations	$	(180	)	$	96

For the prior 2017 period presented on the consolidated balance sheet, the major classes of assets and liabilities of assets held for sale are as follows (in thousands):

	October 31,
	2017
Carrying amounts of major classes of assets included as part of discontinued operations:
Cash and cash equivalents	$	831
Trade accounts receivable, net of allowance for doubtful accounts		998
Inventories		566
Other current assets		239
Fixed assets, net		146
Non-amortizable intangibles		580
Intangibles, net of accumulated amortization		1,387
Goodwill		1,879
Total assets included in Comnet sale	$	6,626

Carrying amounts of major classes of liabilities included as part of discontinued operations:
Accounts payable	$	320
Other liabilities		451
Total liabilities included in Comnet sale	$	771