Discontinued Operations

9 Months Ended

Sep. 30, 2016

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

Note 2: Discontinued Operations

As discussed in Note 1, during the second quarter of 2016, we determined that our previously reported Climate Control Business met the criteria to be classified as a discontinued operation as a result of entering into a definitive agreement for the sale of substantially all of the common stock of the Climate Control Group.  

On July 1, 2016, LSB completed the sale of the Climate Control Group to NIBE pursuant to the terms of the Stock Purchase Agreement which, among other things, Consolidated sold all of the stock of the Climate Control Group for an aggregate purchase price of approximately $364 million, before the adjustments as set forth in the Stock Purchase Agreement.  As a result, we recognized a pre-tax gain on the sale of $281.6 million. Additionally, pursuant to the Stock Purchase Agreement, we paid approximately $2.6 million of the cost of a representation and warranty insurance policy and excess directors’ and officers’ insurance policy and agreed to have a certain portion of the purchase price proceeds deposited in both an indemnity escrow and a working capital adjustment escrow account (collectively, the “Escrow Accounts”).  In conjunction with the Climate Control Business sale, we entered into a transition services agreement (“TSA”), pursuant to which, among other things, we agreed to provide certain information technology, payroll, legal, tax and other general services for up to 18 months at an approximate total cost of $2.3 million.  At September 30, 2016, our accounts receivable includes approximately $10.1 million relating to the purchase price, of which a total of $4.7 million is being held in the escrow accounts.  Additionally, our current and noncurrent accrued and other liabilities include approximately $7.2 million relating primarily to estimated contingent liabilities, costs associated with the TSA and severance agreements associated with the sale of the Climate Control Business.

At December 31, 2015, the carrying amounts of the assets and liabilities of the Climate Control Group are as follows:

	December31,
	2015
	(In Thousands)
Cash and cash equivalents	$	119
Accounts receivable, net		43,001
Inventories, net		28,780
Other current assets		1,096
Property, plant and equipment, net		26,779
Intangible and other, net		7,002
Total assets classified as held for sale		106,777
Less noncurrent assets classified as held for sale		33,781
Current assets classified as held for sale	$	72,996
Accounts payable		20,003
Current and noncurrent accrued and other liabilities		24,659
Total liabilities classified as held for sale		44,662
Less noncurrent liabilities classified as held for sale		12,136
Current liabilities classified as held for sale	$	32,526

Note 2: Discontinued Operations (continued)

Summarized results of discontinued operations are as follows for:

	September 30,
	Three Months Ended				Nine Months Ended
	2016		2015		2016		2015
	(In Thousands)
Net sales	$	—	$	75,050	$	138,609	$	207,090
Cost of sales		—		52,072		93,178		144,069
Selling, general and administrative expense		—		15,520		32,719		46,720
Transaction costs		—		—		2,535		—
Interest expense		—		5		—		7
Other expense (income), net		—		168		117		417
Income from operations of discontinued operations		—		7,285		10,060		15,877
Gain on sale of discontinued operation		281,590		—		281,590		—
Provision for income taxes		108,549		4,627		95,006		7,516
Income from discontinued operations, including taxes	$	173,041	$	2,658	$	196,644	$	8,361

Summarized condensed cash flow information of discontinued operations is as follows:

	Nine Months Ended
	September 30,
	2016		2015
	(In Thousands)
Deferred income taxes	$	91,497	$	7,427
Depreciation and amortization of property, plant    and equipment	$	1,607	$	3,468
Stock-based compensation	$	955	$	443
Expenditures for property, plant and equipment	$	273	$	728
Software and software development costs	$	675	$	1,603