Acquisitions and Dispositions

Acquisition of Ceilings Plus

On November 30, 2017, we completed our acquisition of Ceilings Plus for $52 million with an expected working capital adjustment to be measured and recorded in 2018. The addition of Ceilings Plus to our U.S. Ceilings segment expands our operations in the specialty ceilings markets. The preliminary fair value of tangible assets acquired, less liabilities assumed, in connection with the Ceilings Plus acquisition was $16 million. The preliminary fair value of intangible assets acquired, which included customer relationships and trade names, totaled $20 million. The resulting preliminary goodwill recorded was $16 million and all is expected to be deductible for tax purposes. The goodwill resulting from this acquisition consists largely of the company’s expected future product sales and synergies with the existing U.S. Ceilings product offerings. No impairments were recorded in 2017. The acquisition is immaterial to our consolidated statement of income for the year end December 31, 2017.

Discontinued Operations

On October 31, 2016, we completed the sale of our L&W distribution business to ABC Supply for total cash consideration of $675 million inclusive of the final working capital adjustment and recorded a gain on the sale of $279 million.

For the year ended December 31, 2016, L&W met the criteria to be classified as held for sale and to be presented as a discontinued operation. Accordingly, we reclassified the results of operations and the cash flows of L&W to discontinued operations in our consolidated statements of income and consolidated statements of cash flows for all periods presented.

The summarized financial information related to L&W that has been excluded from continuing operations and reported as a discontinued operation is as follows:



(millions)	For the year ended December 31,
	2016(a)		2015
Net sales	$	1,252	$	1,428
Cost of products sold	1,196		1,387
Gross profit	56		41
Selling and administrative expenses ^(b)	22		15
Operating profit	34		26
Income tax expense	12		11
Net income from discontinued operations ^(c)	$	22	$	15

Gain on sale of discontinued operations	$	279	$	—


(a)	Operating results for 2016 are presented for the ten months ended October 31, 2016.


(b)	The ten month period ended October 31, 2016 included transaction costs of $8 million.


(c)	The year ended December 31, 2016 included $2 million of net loss from discontinued operations from our European business, which were sold in 2012.

For the twelve months ended December 31, 2017, we recorded a net loss of $9 million to "(Loss) income from discontinued operations," which reflected a $8 million loss for L&W primarily due to a pension settlement and a loss of $1 million for our European operations which were sold in December 2012.

Additionally, upon the close of the sale, we entered into a supply agreement with L&W. For the year ended December 31, 2017, we recorded sales of $510 million and cash inflows related to payments on trade receivables of $489 million. For the years ended December 31, 2016 and 2015, the sales that were sold by L&W to third party customers were $568 million and $531 million, respectively. For the two months in 2016 after the sale of L&W, we recorded a cash inflow of $102 million related to payments on trade receivables.