Discontinued Operations

12 Months Ended

Dec. 31, 2011

Discontinued Operations [Abstract]

DISCONTINUED OPERATIONS

NOTE 2: DISCONTINUED OPERATIONS

In 2005, we sold substantially all the assets of our Chemicals business to Basic Chemicals, a subsidiary of Occidental Chemical Corporation. In addition to the initial cash proceeds, Basic Chemicals was required to make payments under two earn-out agreements subject to certain conditions. During 2007, we received the final payment under the ECU (electrochemical unit) earn-out, bringing cumulative cash receipts to its $150,000,000 cap.

Proceeds under the second earn-out agreement are based on the performance of the hydrochlorocarbon product HCC-240fa (commonly referred to as 5CP) from the closing of the transaction through December 31, 2012 (5CP earn-out). The primary determinant of the value for this earn-out is the level of growth in 5CP sales volume. At the June 7, 2005 closing date, the value assigned to the 5CP earn-out was limited to an amount that resulted in no gain on the sale of the business, as the gain was contingent in nature. A gain on disposal of the Chemicals business is recognized to the extent cumulative cash receipts under the 5CP earn-out exceed the initial value recorded.

During 2011, we received a payment of $12,284,000 under the 5CP earn-out related to performance during the year ended December 31, 2010. Any future payments received pursuant to the 5CP earn-out will be recorded as additional gain on disposal of discontinued operations. During 2010 and 2009, we received payments of $8,794,000 and $11,625,000, respectively, under the 5CP earn-out related to the respective years ended December 31, 2009 and December 31, 2008. Through December 31, 2011, we have received a total of $54,991,000 under the 5CP earn-out, a total of $21,890,000 in excess of the receivable recorded on the date of disposition.

We are liable for a cash transaction bonus payable to certain former key Chemicals employees. This transaction bonus is payable if cash receipts realized from the two earn-out agreements described above exceed an established minimum threshold. The bonus is payable annually based on the prior year’s results. Payments for the transaction bonus were $1,228,000 in 2011, $882,000 in 2010 and $521,000 in 2009. We have paid a total of $2,631,000 of these transaction bonuses through December 31, 2011.

The financial results of the Chemicals business are classified as discontinued operations in the accompanying Consolidated Statements of Comprehensive Income for all periods presented. There were no net sales or revenues from discontinued operations for the years presented. Results from discontinued operations are as follows:

in thousands	2011			2010			2009
Discontinued Operations
Pretax earnings (loss) from results		($3,669	)		$2,103			$18,872
Gain on disposal, net of transaction bonus		11,056			7,912			584
Income tax (provision) benefit		(2,910	)		(3,962	)		(7,790	)
Earnings on discontinued operations, net of income taxes		$4,477			$6,053			$11,666

The 2011 pretax loss from discontinued operations of ($3,669,000) includes a $7,575,000 pretax gain recognized on recovery from an insurer in lawsuits involving perchlorethylene (perc). This gain was offset by general and product liability costs, including legal defense costs, and environmental remediation costs. The 2010 pretax earnings from results of discontinued operations of $2,103,000 are due primarily to a $6,000,000 pretax gain recognized on recovery from an insurer in perc lawsuits. This gain was offset in part by general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business. The 2009 pretax earnings from results of discontinued operations relate primarily to settlements with two of our insurers in perc lawsuits resulting in pretax gains of $23,500,000. All of these insurance recoveries and settlements represent a partial recovery of legal and settlement costs recognized in prior years.