Note 3 Divestiture

On November 14, 2012, we completed the sale of Diversey G.K. (“Diversey Japan”) (an indirect subsidiary of Diversey, Inc.) to an investment vehicle of The Carlyle Group (“Carlyle”) for gross proceeds of $323 million, including certain purchase price adjustments. After transaction costs of $10 million, we used substantially of all the net proceeds of $313 million to prepay a portion of our term loans outstanding under our senior secured credit facilities (see Note 12, “Debt and Credit Facilities”). We recorded a pre-tax gain on the sale of $211 million ($179 million net of tax) which is included in net earnings in the consolidated statement of operations for the year ended December 31, 2012.

Diversey Japan was acquired as part of the acquisition of Diversey on October 3, 2011. See Note 4, “Acquisition of Diversey Holdings, Inc.” The Diversey Japan business was part of the Company’s Diversey reportable segment. In accordance with the applicable accounting guidance for the disposal of long-lived assets, the results of the Diversey Japan business are presented as discontinued operations, net of tax, in the consolidated statements of operations for the years ended December 31, 2012 and 2011 and Cash Flows and related disclosures and, as such, have been excluded from both continuing operations and segment results for all years presented. Assets and liabilities of the Diversey Japan business have been segregated as assets and liabilities held for sale in the consolidated balance sheet as of December 31, 2011.

Following is selected financial information included in net earnings from discontinued operations:


	Year Ended December 31,
	2012		2011
Net sales	$	273.5	$	90.0

Operating profit	$	34.1	$	17.9

Earnings from discontinued operations before income tax provision	$	33.0	$	18.1
Income tax provision		12.1		7.5

Net earnings from discontinued operations	$	20.9	$	10.6

Gain on sale of discontinued operations before income tax provision	$	210.8	$	—
Income tax provision on sale		31.9		—

Net gain on sale of discontinued operations	$	178.9	$	—

The carrying value of the major classes of assets and liabilities for these discontinued operations were as follows:


	Year Ended December 31, 2011
Assets:
Cash and cash equivalents	$	19.2
Receivables, net		68.8
Inventories		20.6
Property and equipment, net		52.9
Goodwill		10.9
Intangible assets, net		69.4
Other assets, net		37.2

Assets held for sale	$	279.0

Liabilities:
Accounts payable	$	64.1
Other liabilities		152.6

Liabilities held for sale	$	216.7

In connection with the sale, the Company entered into several agreements to provide certain supply and transitional services to Diversey Japan after closing of the sale. While those agreements are expected to generate future revenues and cash flows for the Company, the estimated amounts and the Company’s continuing involvement in Diversey operations in Japan are not expected to be significant to the Company as a whole.