DISCONTINUED OPERATIONS

3 Months Ended

Mar. 31, 2020

Discontinued Operations And Disposal Groups [Abstract]

NOTE 4—DISCONTINUED OPERATIONS

As discussed in Note 2, Basis of Presentation, in connection with the entry of the Confirmation Order, the Bankruptcy Court approved the Lummus Technology sale. The sale is expected to be completed on or prior to the Effective Date. We considered the operations of the Technology segment to be a discontinued operation in the first quarter of 2020, as the anticipated sale represents a strategic shift and will have a material effect on our operations and financial results. Operating results of the Technology reporting segment have been classified as a discontinued operation within the Statements of Operations for the three months ended March 31, 2020 and 2019. Further, the assets and liabilities of the Technology segment have been classified as assets and liabilities of discontinued operations held for sale within our March 31, 2020 and December 31, 2019 Balance Sheets, with all balances reported as current on our March 31, 2020 Balance Sheet. Cash flows of the Technology segment are not reported separately within our Statements of Cash Flows.

Assets and Liabilities Held for Sale—The carrying values of the major classes of assets and liabilities of the discontinued operations of the Lummus Technology business included within our Balance Sheets as of March 31, 2020 and December 31, 2019 were as follows:

	March 31, 2020			December 31, 2019
	(In millions)
Assets
Current assets:
Cash and cash equivalents	$	11		$	10
Restricted cash and cash equivalents		2			-
Accounts receivable—trade, net		148			144
Accounts receivable—other		4			6
Contracts in progress		92			92
Project-related intangible assets, net		13			15
Inventory		22			33
Other current assets		4			6
Property, plant and equipment, net		59			-
Operating lease right-of-use assets		14			-
Investments in unconsolidated affiliates		384			-
Goodwill		1,137			-
Other intangibles, net		561			-
Total current assets of discontinued operations held for sale	$	2,451		$	306
Property, plant and equipment, net		-			62
Operating lease right-of-use assets		-			15
Investments in unconsolidated affiliates		-			381
Goodwill		-			1,140
Other intangibles, net		-			573
Other non-current assets		-			2
Total assets of discontinued operations held for sale	$	2,451		$	2,479

Liabilities
Current liabilities:
Lease obligations		5			5
Accounts payable		15			21
Advance billings on contracts		217			228
Long-term lease obligations		9			-
Accrued and other liabilities		180			129
Total current liabilities of discontinued operations held for sale		426			383
Long-term lease obligations		-			10
Other non-current liabilities		-			66
Total liabilities of discontinued operations held for sale	$	426		$	459

Accumulated other comprehensive loss	$	(14	)	$	(11	)

Results of Operations—The results of discontinued operations of Lummus Technology, which have been reflected within discontinued operations in our Statements of Operations for the three months ended March 31, 2020 and 2019, were as follows:

	Three months ended March 31,
	2020			2019
	(In millions)
Revenues	$	150		$	148
Costs and Expenses:
Cost of operations		90			89
Project intangibles and inventory-related amortization		2			4
Total cost of operations		92			93
Research and development expenses		7			6
Selling, general and administrative expenses		6			5
Other intangibles amortization		11			11
Total expenses		116			115
Income from investments in unconsolidated affiliates		5			8
Investment in unconsolidated affiliates-related amortization		(2	)		(2	)
Operating income from discontinued operations		37			39
Interest expense, net ⁽¹⁾		(26	)		(1	)
Reorganization items, net ⁽²⁾		(19	)		-
(Loss) income from discontinued operations before provision for income taxes		(8	)		38
Income tax expense		6			-
Net (loss) income from discontinued operations		(14	)		38

⁽¹⁾

^{Interest expense was allocated to the discontinued operations, due to a requirement to use the proceeds from the sale to repay our debtor-in-possession financing, and included: (1) $26 million of interest expense associated with the DIP Credit Agreement (discussed in Note 11, Debt); (2) an $11 million non-cash charge included in interest expense and associated with the accretion of the make-whole amount owed to the lenders under our Superpriority Credit Agreement, which was rolled up and deemed issued under the DIP Credit Agreement; (3) $17 million of expense related to amortization of the discount offset by a $28 million gain, resulting from the remeasurement of embedded derivative liability, both of which are associated with the indebtedness and other obligations under our Superpriority Credit Agreement, which were rolled up and deemed issued under the DIP Credit Agreement.}

⁽²⁾	^{Reorganization items allocated to the discontinued operations include professional and other fees associated with the Lummus Technology sale process, which were incurred post-Petition Date.}

Cash Flows—Cash flows provided by the operating activities of the discontinued operations of Lummus Technology for the three months ended March 31, 2020 and 2019 were $31 million and $54 million, respectively. Cash flows associated with investing activities were not significant for either period.

Partnering Arrangements — Lummus Technology has a 50%/50% joint venture with a unit of Chevron Corporation (“Chevron-Lummus Global”), which provides proprietary process technology licenses and associated engineering services and catalysts, primarily for the refining industry. The venture is accounted for using the equity method.