Discontinued Operations

12 Months Ended

Dec. 31, 2014

Discontinued Operations [Abstract]

Discontinued Operations

NOTE 4.  DISCONTINUED OPERATIONS

European Resilient Flooring

On December 4, 2014, our Board of Directors approved the cessation of funding to our former DLW subsidiary, which was our former European flooring business.  As a result DLW management filed for insolvency in Germany on December 11, 2014. The German insolvency court subsequently appointed an administrator (the “Administrator”) to oversee DLW operations.  As a result of the insolvency filing, the appointment of the Administrator and our resulting loss of control of DLW’s operations to the German insolvency court and its Administrator, effective December 11, 2014, we deconsolidated DLW from our financial statements and presented DLW for all historical periods as a discontinued operation.

The following provides a summary of the operating results of the European flooring business for the past three years.  These results were previously presented as part of the Resilient Flooring reporting segment.

	2014	2013	2012
Net sales	$ 175.2	$ 192.5	$ 190.2
Loss before income tax	(23.7)	(26.8)	(14.2)
Income tax benefit	-	-	-
Net loss from discontinued business	($23.7)	($26.8)	($14.2)

In addition, during the fourth quarter of 2014, we recorded  a$13.5 million pre-tax loss on disposal of discontinued business resulting from the deconsolidation of DLW, which was comprised of the following items:

Recognition of pension accumulated other comprehensive income	($14.7)
Transaction related fees	(3.4)
Reserve for previous intercompany receivables	(1.1)
Recognition of cumulative foreign currency translation adjustments	5.7
Loss on disposal of discontinued business	($13.5)
Income tax benefit	1.2
Net loss on disposal of discontinued business	($12.3)

At deconsolidation, DLW had a net liability of $12.9 million, representing assets of $151.9 million and liabilities of $164.8 million, which were removed from our balance sheet.  Various foreign net operating loss (“NOL”) carryforwards were permanently lost in connection with the activities surrounding the insolvency filing.  The deferred tax assets associated with these NOL carryforwards were subject to a full valuation allowance, both of which were removed from our balance sheet in connection with the deconsolidation (See Note 14 for further information).  DLW’s net liability on deconsolidation of $12.9 million was recognized as a contingent liability on our consolidated balance sheet pending the closure and results of the insolvency proceedings.  Any shortfall will be recognized immediately when identified and any excess will be reflected when insolvency proceedings are finalized, all through discontinued operations.

We expect to enter into various supply and transition services agreements with the Administrator, pursuant to which we may agree to continue to purchase linoleum and homogenous flooring products for sale in the Americas and the Pacific Rim, and we may agree to continue to provide administrative support services to DLW for information technology and accounts receivables and payables for a limited transition period.  These agreements will not be material.

Cabinets

In September 2012, we entered into a definitive agreement to sell our cabinets business to American Industrial Partners (“AIP”) for $27.0 million in cash.  During the third quarter of 2012, we recorded an impairment charge of $17.5 million on the cabinets’ assets to reflect the expected proceeds from the sale. The sale was completed in October 2012, with working capital adjustments completed in the second quarter of 2013.

During the third quarter of 2013, we recorded an estimated liability of $7.5 million for a potential withdrawal liability related to a multi-employer pension plan.  During the second quarter of 2014, we recorded an additional $3.3 million expense to increase the total estimated remaining liability to $10.0 million.  In August 2014, we entered into a settlement agreement with the Carpenters Labor-Management Pension Fund (the “Fund”) to resolve this matter for $10.3 million, including a complete release of all claims against us.  As a result of the settlement, we recorded an additional charge of $0.3 million during the third quarter of 2014.  Payment was made to the Fund in the third quarter of 2014. 

The following is a summary of the results related to the cabinets business, which are included in discontinued operations.

			2012
Net sales			$ 115.7
Loss before income tax			(19.3)
Income tax benefit			7.1
Net loss from discontinued business			($12.2)
	2014	2013	2012
Loss before income tax	($3.5)	($10.0)	($1.5)
Income tax benefit	1.3	3.6	0.6
Net loss on disposal of discontinued business	($2.2)	($6.4)	($0.9)

The Consolidated Statement of Cash Flows does not separately report the cash flows of the discontinued operations.