Discontinued Operations

9 Months Ended

Oct. 02, 2011

Discontinued Operations.

Discontinued Operations

3. Discontinued Operations

In the first quarter of 2010, the Company recorded an estimated reserve of $5.3 million in discontinued operations in connection with its investigation of potential violations of the Foreign Corrupt Practices Act (FCPA) at Watts Valve (Changsha) Co., Ltd. (CWV), a former indirect wholly-owned subsidiary of the Company in China (see Note 10). On October 13, 2011, the Company entered into a settlement with the Securities and Exchange Commission to resolve allegations concerning potential violations of the FCPA at CWV.  Under the terms of the settlement, without admitting or denying the SEC’s allegations, the Company consented to entry of an administrative cease-and-desist order under the books and records and internal controls provisions of the FCPA.  The Company has also agreed to pay to the SEC $3.6 million in disgorgement and prejudgment interest, and $200,000 in penalties.  The Company anticipates that this settlement resolves all government investigations concerning CWV’s sales practices and potential FCPA violations.  The Company recorded an estimated reserve of $5.3 million in the first quarter of 2010 and subsequently recorded a decrease of the reserve of $1.7 million in the second quarter of 2011, which reflects the final settlement. There were no material developments with respect to our environmental remediation proceedings during the first nine months ended October 2, 2011. See Note 3 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Condensed operating statements for discontinued operations are summarized below:

	Third Quarter Ended				Nine Months Ended
	October 2, 2011		October 3, 2010		October 2, 2011		October 3, 2010
	(in millions)
(Cost and expenses) benefit - FCPA matter	$	—	$	—	$	1.7	$	(5.6	)
Loss on sale — CWV	—		—		—		(0.1		)
Gain (loss) on disposal — TEAM	0.1		—		0.4		(0.1		)
Income (loss) before income taxes	0.1		—		2.1		(5.8		)
Income tax expense (benefit)	—		—		0.3		(1.6		)
Income (loss) from discontinued operations, net of taxes	$	0.1	$	—	$	1.8	$	(4.2	)

The carrying amounts of major classes of assets and liabilities associated with discontinued operations are as follows:

	October 2, 2011		December 31, 2010
	(in millions)
Prepaid expenses and other assets	$	—	$	0.4
Deferred income taxes	1.4		1.4
Assets of discontinued operations	$	1.4	$	1.8
Accrued expenses and other liabilities	$	3.9	$	5.8
Liabilities of discontinued operations	$	3.9	$	5.8