Quarterly report pursuant to Section 13 or 15(d)

Divestiture Activities

Divestiture Activities
6 Months Ended
Jun. 29, 2019
Discontinued Operations and Disposal Groups [Abstract]  
Divestiture Activities Divestiture ActivitiesAs of December 31, 2018, the Company’s Board of Directors approved a plan to sell the semiconductor test business within the Test Systems segment. Accordingly, the assets and liabilities associated with these operations had been classified as held for sale in the consolidated Balance Sheet at December 31, 2018. The carrying value of the disposal group was lower than its fair value, less costs to sell, and accordingly, no impairment loss was required at December 31, 2018.
The following is a summary of the assets and liabilities held for sale as of December 31, 2018:
(In thousands) December 31, 2018
Assets Held for Sale
Inventories $ 14,385 
Prepaid Expenses and Other Current Assets 87
Net Property, Plant and Equipment 3,521
Other Assets 714
Intangible Assets, Net of Accumulated Amortization 651
Total Assets Held for Sale $ 19,358 
Liabilities Held for Sale
Deferred Income Taxes $ 906 
On February 13, 2019, the Company completed the divestiture. The total proceeds of the divestiture amounted to $103.8 million. The Company recorded a pre-tax gain on the sale of $80.1 million in the first quarter of 2019. The income tax expense relating to the gain is expected to be $21.3 million.
The transaction also included two elements of contingent earnouts. The “First Earnout” is calculated based on a multiple of all future sales of existing and certain future derivative products to existing and future customers in each annual period from 2019 through 2022. The First Earnout may not exceed $35.0 million in total. The “Second Earnout” is calculated based on a multiple of future sales related to an existing product and program with an existing customer exceeding an annual threshold for each annual period from 2019 through 2022. The Second Earnout is not capped. For the Second Earnout, if the applicable sales in an annual period do not exceed the annual threshold, no amounts will be paid relative to such annual period; the sales in such annual period do not carry over to the next annual period. Due to the degree of uncertainty associated with estimating the future sales levels of the divested business and its underlying programs, and the lack of reliable predictive market information, the Company will recognize such earnout proceeds, if received, as additional gain on sale when such proceeds are realized or realizable.