The following discussion and analysis of our financial condition and results of operations should be read in conjunction with "Risk Factors" appearing in Item 1A of this Annual Report on Form 10-K, "Selected Financial Data" appearing in Item 6 of this Annual Report on Form 10-K and our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K, including Note 1, Business and Summary of Significant Accounting Policies, to such consolidated financial statements, which have been prepared assuming that we will continue as a going concern. Our independent registered public accounting firm has issued an opinion on our consolidated financial statements that states that our recurring operating losses and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern. This discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated by the forward-looking statements due to, among other things, our critical accounting estimates discussed below and important other factors set forth in this Annual Report on Form 10-K. Please see "Special Note Regarding Forward-Looking Statements" appearing elsewhere in this Annual Report on Form 10-K. Overview During our fiscal year 2013, we were one of the largest providers of optical components, modules and subsystems for the optical communications market. We offer a differentiated solution that is designed to make it easier for our customers to do business by combining optical technology innovation, photonic integration and a vertically integrated approach to manufacturing and product development. Our customers include ADVA Optical Networking; Alcatel-Lucent; Ciena; Cisco; Coriant; Ericsson;
Fiberhome Technologies Group; Fujitsu; Huawei; and Tellabs, Inc. Recent Developments On September 12, 2013, we sold our Oclaro Switzerland GmbHsubsidiary and associated laser diodes and pump business (the "Zurich Business") to II-VI Incorporated (II-VI). We received proceeds of $92.3 millionin cash on September 12, 2013. We will also receive $6.0 millionsubject to hold-back by II-VI until December 31, 2014to address any post-closing adjustments or claims, and $2.0 millionsubject to a potential post-closing working capital adjustment. In addition, we retained approximately $14.7 millionin accounts receivable related to the Zurich Business and approximately $9.6 millionof supplier and employee related payables related to the Zurich Business which were not included in the Oclaro Switzerland GmbHsubsidiary. As part of the agreement, II-VI has purchased our Switzerlandsubsidiary, which includes its GaAs fabrication facility, and also the corresponding high power laser diodes, VCSEL and 980 nm pump laser product lines, including intellectual property, inventory, equipment and a related research and development facility in Tucson, Arizona, all of which are associated with this business. 42
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We will continue the back-end manufacturing of the 980 nm pump and certain high power laser diode products at our
Shenzhen, Chinamanufacturing facility and supply them to II-VI under a manufacturing services agreement. The employees of Shenzhen, Chinawill continue to be employed by us. In addition, various supply and transition service agreements have been established between the companies to ensure a smooth transition.