Discontinued Operations

3 Months Ended

Mar. 31, 2020

NOTE 5. DISCONTINUED OPERATIONS

EMEA AND PACIFIC RIM BUSINESSES

On November 17, 2017, we agreed to sell certain subsidiaries comprising our businesses in EMEA and the Pacific Rim to Knauf. The Sale was completed on September 30, 2019. Prior to completion of the Sale, each quarter, we compared the anticipated sales proceeds

from Knauf to the carrying value of EMEA and Pacific Rim net assets. We recorded an estimated loss when the carrying value exceeded the anticipated sales proceeds. Net gains were only recorded to the extent of previous estimated losses.

During the three months ended March 31, 2019, we recorded a net gain of $2.2 million, which included $9.1 million of favorable Accumulated Other Comprehensive Income (“AOCI”) adjustments, primarily to accumulated foreign currency translation amounts. During the three months ended March 31, 2020, we recorded a net loss of $5.0 million representing preliminary working capital and other adjustments. The transaction and final gain or loss amount are subject to finalization of customary working capital and other adjustments, as provided in the Purchase Agreement, which we expect to be completed in the second quarter of 2020.

See Note 1 for further discussion of the Sale.

Summarized Financial Information of Discontinued Operations

The following tables detail the businesses and line items that comprise discontinued operations on the Condensed Consolidated Statements of Operations and Comprehensive Income.

	Three Months Ended
	March 31,
	2020			2019
EMEA and Pacific Rim Businesses
Net sales	$	-		$	96.9
Cost of goods sold		-			75.7
Gross profit		-			21.2
Selling, general and administrative expenses		-			20.8
Operating income		-			0.4
Earnings from discontinued operations before income tax		-			0.4
Income tax (benefit)		-			(0.1	)
Net earnings from discontinued operations, net of tax	$	-		$	0.5

(Loss) gain from disposal of discontinued businesses, before income tax	$	(5.0	)	$	2.2
Income tax (benefit)		(1.4	)		-
(Loss) gain from disposal of discontinued businesses, net of tax	$	(3.6	)	$	2.2

Net (loss) earnings from discontinued operations	$	(3.6	)	$	2.7

The following is a summary of total estimated gains and losses, capital expenditures and operating lease information related to our former EMEA and Pacific Rim businesses which are presented as discontinued operations and included as components of operating and investing cash flows on our Condensed Consolidated Statements of Cash Flows.

	Three Months Ended
	March 31,
	2020		2019
Estimated loss on sale to Knauf ⁽¹⁾	$	5.0	$	-
Reversal of previous estimated loss on sale to Knauf ⁽²⁾		-		(2.2	)
Purchases of property, plant and equipment		-		(0.4	)
Operating lease cost ⁽³⁾		-		2.3
Right-of-use assets obtained in exchange for lease obligations ⁽⁴⁾		-		24.6

(1)

Represents preliminary working capital and other adjustments.

(2)

Represents comparison of the EMEA and Pacific Rim net assets to the expected final sales proceeds.

(3)

The amount of cash paid for amounts included in the measurement of lease liabilities was not materially different from the operating lease cost for the three months ended March 31, 2019.

(4)

Represents initial right-of-use assets recognized upon adoption on January 1, 2019. We did not obtain any new right-of-use assets in exchange for lease obligations during the three months ended March 31, 2019.