Discontinued Operations (Notes)

12 Months Ended

Dec. 31, 2020

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

2. DISCONTINUED OPERATIONS AND LIABILITIES HELD FOR SALE

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 ("ASC 205-20") for discontinued operations.

2. DISCONTINUED OPERATIONS AND LIABILITIES HELD FOR SALE (CONTINUED)

Discontinued Operations - continued

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 exercised the option to extend the support period for up to a maximum of an additional year for certain IT services. The buyer has the right to terminate individual services at any point over the renewal term and began to terminate certain services in the third quarter of 2020. All services are expected be terminated by the end of the first quarter of 2021. Since the sale of the Distribution business, costs associated with the TSA were $17.2 million through December 31, 2020. The Company incurred $12.5 million and $4.7 million in costs associated with the TSA in 2020 and 2019, respectively, which was included in costs from transition services agreement on the Company's Consolidated Statement of Operations. Since the sale of the Distribution business, the Company earned $12.1 million in income associated with the TSA through December 31, 2020. The Company earned $8.4 million and $3.7 million in income associated with the TSA in 2020 and 2019, respectively, which was included in income from transition services agreement on the Company's Consolidated Statement of Operations.

Since the sale of the Distribution business, cash outflows from the Company to its former Distribution business totaled $8.1 million through December 31, 2020, which primarily related to Distribution employee and employee-related costs incurred prior to the sale. Cash outflows from the Company to its former Distribution business after the sale totaled $0.3 million and $7.8 million for the years ended December 31, 2020 and 2019, respectively. Since the sale of the Distribution business, cash inflows from the Company's former Distribution business to the Company totaled $16.9 million through December 31, 2020, which primarily related to cash received for services performed under the TSA and the $5.2 million working capital adjustment settled in the first quarter of 2020. Cash inflows from the Company's former Distribution business after the sale totaled $13.3 million and $3.6 million for the years ended December 31, 2020 and 2019, respectively.

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,
	2020		2019		2018
In thousands
Net sales from discontinued operations	$	—	$	748,451	$	1,139,431
Cost of sales from discontinued operations	—		536,749		816,711
Gross profit from discontinued operations	—		211,702		322,720
Selling, general and administrative expenses from discontinued operations	—		177,475		272,633
Restructuring costs from discontinued operations	—		—		655
Net loss (gain) on sale of assets from discontinued operations	—		8		(669)
Operating income from discontinued operations	—		34,219		50,101
Interest expense, net from discontinued operations	—		25		51
Other income, net from discontinued operations	—		(12)		(51)
Earnings from discontinued operations before income taxes	—		34,206		50,101
Income tax expense	—		5,179		11,809
Earnings from discontinued operations before gain on disposal	—		29,027		38,292
Gain on disposal of discontinued operations, pretax	925		167,757		—
Income tax expense on gain on disposal	233		43,401		—
Gain on disposal of discontinued operations, net of tax	692		124,356		—
Earnings from discontinued operations, net of tax	$	692	$	153,383	$	38,292

In the year ended December 31, 2020, the Company recorded a gain on disposal of discontinued operations as a result of the final settlement of the working capital adjustment, partially offset by transaction costs.

2. DISCONTINUED OPERATIONS AND LIABILITIES HELD FOR SALE (CONTINUED)

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)	$	659,934

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	$	168,682

(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 $33.4 million and working capital adjustments. The final consideration and gain on sale was settled in the first quarter of 2020.

2. DISCONTINUED OPERATIONS AND LIABILITIES HELD FOR SALE (CONTINUED)

Liabilities Held for Sale

In the fourth quarter of 2020, the Company received approval from its Board of Directors to sell its UK Composites division. Subsequent to the end of the year, the Company sold its UK Composites division in a transaction that closed on February 2, 2021.

The following table provides information on the accrued loss recorded on the anticipated sale of the UK Composites business for the year ended December 31, 2020. These amounts reflect the balance sheet of the UK Composites business as of December 31, 2020, prior to the impairment recorded on the assets and the reclassification of liabilities to liabilities held for sale, discussed below.


Estimated fair value	$	3,600

Assets	24,284
Liabilities	7,255
Net book value of business	17,029

UK cumulative foreign currency translation adjustment balance	22,856

Impairment on assets held for sale	$	36,285

At December 31, 2020, the assets of the UK Composites business were considered impaired as the estimated fair value of the disposal group was lower than the estimated carrying value of the UK Composites business. As a result, $24.3 million in assets were written off and the remaining loss of $12.0 million was accrued for in liabilities held for sale, current portion on the Company's Consolidated Balance Sheets at December 31, 2020, resulting in a total loss of $36.3 million recorded to impairment on assets held for sale on the Company's Consolidated Statements of Operations in the year ended December 31, 2020. Transaction costs associated with the anticipated sale are not expected to be material.

The sale of the UK Composites business did not meet the criteria set forth in ASC 205-20, for discontinued operations as it does not reflect a shift in the Company's strategy. As a result of the approved plan, the UK Composites division met the criteria set forth in ASC 205-20 for held for sale presentation. The related liabilities of the UK division to be sold were reclassified to liabilities held for sale, as of December 31, 2020 on the Company's Consolidated Balance Sheets. The following table is a summary of the liabilities held for sale:


In thousands	December 31, 2020
Liabilities
Accounts payable – trade	$	2,977
Accrued salaries and wages	140
Operating lease liabilities, current portion	496
Contract liabilities, current portion	1,212
Other current liabilities(1)	13,261
Total liabilities held for sale, current portion	18,086
Operating lease liabilities, noncurrent portion	912
Other long-term liabilities	259
Total liabilities held for sale	$	19,257

(1) Other current liabilities primarily reflects the residual loss on the business related to the anticipated release of the cumulative translation adjustment upon disposal.

Cash and cash equivalents and restricted cash at the end of the period on the Company’s Consolidated Statement of Cash Flows for the year ended December 31, 2020 includes $6.6 million of cash that is included in the UK Composites business disposal group. However, given the assets of the disposal group are recognized net of the impairment charge, such amounts are not reflected on the Company’s Consolidated Balance Sheet at December 31, 2020.