Discontinued Operations (Notes)

12 Months Ended

Dec. 31, 2019

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

3. DISCONTINUED OPERATIONS

On August 26, 2019, the Company completed the sale of its Distribution business for total cash consideration of $700.0 million, excluding certain working capital adjustments. The sale of the Distribution business was a result of the Company's shift in strategy to be a highly focused, technologically differentiated aerospace and engineered products company. As a result of the sale, the Distribution segment met the criteria set forth in ASC 205-20, Presentation of Financial Statements - Discontinued Operations for discontinued operations.

Upon closing, the Company entered into a transition services agreement ("TSA") with the buyer, pursuant to which the Company agreed to support the information technology, human resources and benefits, tax and treasury functions of the Distribution business for six to twelve months. The buyer has the option to extend the support period for up to an additional year for certain services. The Company incurred $4.7 million in costs associated with the TSA in 2019, which was included in costs from transition services agreement on the Company's Consolidated Statement of Operations. The Company earned $3.7 million in income associated with the TSA in 2019, which was included in income from transition services on the Company's Consolidated Statement of Operations.

Cash outflows from the Company to its former Distribution business after the sale totaled $7.8 million in 2019, which primarily related to Distribution employee and employee-related costs incurred prior to the sale. Cash inflows from the Company's former Distribution business to the Company after the sale totaled $3.6 million in 2019, which primarily related to cash received for services performed under the TSA.

The related assets and liabilities of the Company's former Distribution business were reclassified to assets held for sale and liabilities held for sale, respectively, as of December 31, 2018 on the Company's Consolidated Balance Sheets. The following table is a summary of the assets and liabilities held for sale:



	December 31, 2018
In thousands
Assets
Cash and cash equivalents	$	1,816
Accounts receivable, net	151,756
Contract assets	9,600
Inventories	163,343
Other current assets	24,746
Total assets held for sale, current portion	351,261
Property, plant and equipment, net of accumulated depreciation of $70,021	47,112
Goodwill	149,204
Other intangible assets, net	32,440
Deferred income taxes	146
Other assets	336
Total assets held for sale	$	580,499

Liabilities
Accounts payable – trade	$	101,801
Accrued salaries and wages	13,839
Other current liabilities	15,407
Total liabilities held for sale, current portion	131,047
Deferred income taxes	13,630
Other long-term liabilities	1,972
Total liabilities held for sale	$	146,649

3. DISCONTINUED OPERATIONS (CONTINUED)

The results of operations for the Company's former Distribution business were included in discontinued operations on the Company's Consolidated Statement of Operations. The following table provides information regarding the results of discontinued operations:



	For the Year Ended December 31,
	2019			2018			2017
In thousands
Net sales from discontinued operations	$	748,451		$	1,139,431		$	1,080,965
Cost of sales from discontinued operations	536,749			816,711			769,403
Gross profit from discontinued operations	211,702			322,720			311,562
Selling, general and administrative expenses from discontinued operations	177,475			272,633			262,384
Restructuring costs from discontinued operations	—			655			—
Net loss (gain) on sale of assets from discontinued operations	8			(669		)	(225		)
Operating income from discontinued operations	34,219			50,101			49,403
Interest expense, net from discontinued operations	25			51			3
Other income, net from discontinued operations	(12		)	(51		)	(56		)
Earnings from discontinued operations before income taxes	34,206			50,101			49,456
Income tax expense	5,179			11,809			19,338
Earnings from discontinued operations before gain on disposal	29,027			38,292			30,118
Gain on disposal of discontinued operations, pretax	167,757			—			—
Income tax expense on gain on disposal	43,401			—			—
Gain on disposal of discontinued operations, net of tax	124,356			—			—
Earnings from discontinued operations, net of tax	$	153,383		$	38,292		$	30,118

3. DISCONTINUED OPERATIONS (CONTINUED)

The following table provides information on the gain recorded on the sale of the Company's former Distribution business for 2019. These amounts reflect the closing balance sheet of its Distribution business upon the closing of the sale on August 26, 2019.



Net proceeds received from sale of Distribution⁽¹⁾	$	659,009

Distribution assets
Cash and cash equivalents	$	21,834
Accounts receivable, net	150,317
Contract assets	9,128
Inventories	163,995
Other current assets	20,289
Property plant and equipment, net of accumulated depreciation of $73,795	51,039
Operating right-of-use assets, net	68,049
Goodwill	149,204
Other intangible assets, net	28,361
Deferred income taxes	133
Other assets	195
Total Distribution assets	$	662,544

Distribution liabilities
Accounts payable - trade	$	67,975
Accrued salaries and wages	12,916
Operating lease liabilities, current portion	19,981
Other current liabilities	22,024
Deferred income taxes	78
Operating lease liabilities, noncurrent portion	48,130
Other long-term liabilities	188
Total Distribution liabilities	$	171,292

Gain on sale of Distribution before income taxes	$	167,757

⁽¹⁾ The proceeds received from the sale of the Distribution business were included in net cash provided by (used in) investing activities of continuing operations on the Company's Consolidated Statement of Cash Flows. These proceeds were net of transaction costs of $33.1 million and working capital adjustments. The final consideration and gain on sale is subject to a working capital adjustment expected to be settled in the first quarter of 2020.