DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2012

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.

During the nine months ended September 30, 2012, we received payments totaling $11,369,000 under the 5CP earn-out related to performance during the year ended December 31, 2011. During the first quarter of 2011, we received $12,284,000 under the 5CP earn-out related to the year ended December 31, 2010. Through September 30, 2012, we have received a total of $66,360,000 under the 5CP earn-out, a total of $33,259,000 in excess of the receivable recorded on the date of disposition.

We are liable for a cash transaction bonus payable annually to certain former key Chemicals employees based on the prior year’s 5CP earn-out results. Payments for this transaction bonus were $1,137,000 during the first nine months of 2012 and $1,228,000 during the first nine months of 2011.

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

	Three Months Ended  September 30						Nine Months Ended  September 30
in thousands	2012			2011			2012			2011
Discontinued Operations
Pretax earnings (loss) from results		($2,283	)		($4,068	)		($6,360	)		($481	)
Gain on disposal, net of transaction bonus		30			0			10,232			11,056
Income tax (provision) benefit		892			1,615			(1,534	)		(4,176	)
Earnings (loss) on discontinued operations, net of tax		($1,361	)		($2,453	)		$2,338			$6,399

The third quarter pretax losses from results of discontinued operations of $2,283,000 in 2012 and $4,068,000 in 2011 were due primarily to general and product liability costs, including legal defense costs, and environmental remediation costs associated with our former Chemicals business. The pretax loss from results of discontinued operations of $6,360,000 for the nine months ended September 30, 2012 was also due primarily to general and product liability claims, including legal defense costs, and environmental remediation costs associated with our former Chemicals business. The pretax loss from results of discontinued operations of $481,000 for the nine months ended September 30, 2011 include a $7,500,000 pretax gain recognized on recovery from an insurer in lawsuits involving perchloroethylene. This gain was offset by general and product liability costs, including legal defense costs, and environmental remediation costs.