Discontinued Operations

In November 2016, the Company announced a plan to restructure its operations to refocus its research and development, increase operational efficiency and improve profitability. As part of these actions, the Company began an active program to locate buyers for several businesses. The Company concluded that the divestitures of these businesses represented a strategic shift that has a major effect on the Company’s operations and financial results. These businesses were deemed not to align with the Company’s core business. The Company classified these businesses as discontinued operations for all periods presented in its consolidated financial statements.

In February 2017, the Company entered into an agreement to sell the assets of one of these businesses, the Broadband operations. The transaction closed on April 4, 2017. Based on the terms of the agreement, the Company received sale consideration of $23.0 million in cash proceeds. The divestiture resulted in a pre-tax gain on sale of $8.2 million, which is included in income from discontinued operations in the consolidated statements of operations.

In May 2017, the Company sold the assets of a second business, the LTE thin-modem operations. The transaction closed on May 18, 2017. Based on the terms of the agreement, the Company received sale consideration of $52.9 million. The sale consideration included $3.6 million related to the Company's tax withholding liability paid by the buyer to tax authorities. The divestiture resulted in a pre-tax gain on sale of $34.0 million, which is included in income from discontinued operations in the consolidated statements of operations.

In June 2017, the Company entered into an agreement to sell the assets of a third business, the Multimedia operations. The transaction closed on September 8, 2017. Based on the terms of the agreement, the Company received sale consideration of $93.7 million in cash proceeds. The divestiture resulted in a pre-tax gain on sale of $46.2 million which is included in income from discontinued operations in the consolidated statements of operations.

The following table presents a reconciliation of the carrying amounts of major classes of assets and liabilities of the discontinued operations to the total assets and liabilities of the disposal group classified as held for sale that are presented separately in the consolidated balance sheets (in thousands):



	February 3, 2018		January 28, 2017
Current assets held for sale:
Inventory	$	—	$	9,281
Property and equipment, net	—		5,270
Goodwill	—		36,636
Acquired intangible assets, net	—		3,799
Other	—		1,490
Current assets held for sale for discontinued operations	—		56,476
Other assets held for sale
Property and equipment, net	30,767		601
Total assets of the disposal group classified as held for sale	$	30,767	$	57,077
Current liabilities held for sale:
Deferred Income	$	—	$	5,818
Total liabilities of the disposal group classified as held for sale	$	—	$	5,818

Other assets held for sale as of February 3, 2018 consist of a building and land.

The following table presents a reconciliation of the major financial lines constituting the results of operations for discontinued operations to the net income (loss) from discontinued operations presented separately in the consolidated statement of operations (in thousands):



	Year Ended
	February 3, 2018		January 28, 2017			January 30, 2016
Net revenue	$	94,137	$	115,437		$	123,332
Cost of goods sold	47,499		72,764			88,616
Gross Profit	46,638		42,673			34,716
Operating expenses:
Research and development	34,530		88,538			99,603
Selling, general and administrative	6,925		6,415			6,442
Total operating expenses	41,455		94,953			106,045
Income (loss) from discontinued operations before income taxes	5,183		(52,280		)	(71,329		)
Gain from sale of discontinued operations	88,406		—			—
Provision for income taxes	5,900		1,390			1,630
Net income (loss) from discontinued operations	$	87,689	$	(53,670	)	$	(72,959	)

Non-cash operating amounts reported for discontinued operations include share-based compensation expense of $1.6 million, $12.6 million and $11.0 million in fiscal 2018, 2017 and 2016, respectively. Depreciation, amortization and capital expenditures are not material. The proceeds from sale of the Multimedia business of $93.7 million, proceeds from sale of the LTE thin-modem business of $49.2 million and proceeds from sale of the Broadband business of $23.0 million are classified in investing activities for fiscal 2018, and the gain on sale of such business is presented in operating activities in the consolidated statements of cash flows. Due to the Company's transfer pricing arrangements, the Company generates income in most jurisdictions in which it operates, regardless of a loss that may exist on a consolidated basis. In addition, the Company recognized a tax expense of $0.5 million on the sale of its Multimedia business for fiscal 2018, and a tax expense of $4.5 million on the sale of its LTE thin-modem business for fiscal 2018. As such, the Company has reflected a tax expense of $5.9 million, $1.4 million, and $1.6 million for fiscal 2018, 2017, and 2016, respectively, attributable to discontinued operations.