Discontinued Operations

9 Months Ended

Sep. 29, 2013

Discontinued Operations

Discontinued Operations

3. Discontinued Operations

On August 1, 2013, the Company completed the sale of all of the outstanding shares of an indirectly wholly-owned subsidiary, Watts Insulation GmbH (Austroflex), receiving net cash proceeds of $7.9 million.  Austroflex is an Austrian-based manufacturer of pre-insulated flexible pipe systems for district heating, solar applications and under-floor radiant heating systems. Austroflex did not meet performance expectations since its purchase approximately three years ago.  The loss after tax on disposal of the business was approximately $2.2 million. Further, during the year ended December 31, 2011, the Company wrote down Austroflex’s long-lived assets by $14.8 million. The Company evaluated the operations of Austroflex and determined that it would not have a substantial continuing involvement in Austroflex’s operations and cash flows. Austroflex’s results of operations have been presented as discontinued operations in the quarter ended September 29, 2013 and all comparative periods presented have been adjusted in the consolidated interim financial statements to reflect Austroflex’s results as discontinued operations.

On December 21, 2012, the Company completed the sale of all of the outstanding shares of its indirectly wholly-owned subsidiary, Flomatic Corporation (Flomatic). The sale excluded the backflow product line of Flomatic, which was retained by the Company.  Flomatic, located in Glens Falls, New York, specializes in manufacturing and selling check valves, foot valves and automatic hydraulic control valves for the well water industry. The Company acquired Flomatic as part of its acquisition of Danfoss Socla S.A.S. (Socla) in April 2011.  The Company evaluated the operations of Flomatic and determined that it would not have a substantial continuing involvement in Flomatic’s operations and cash flows. As a result, Flomatic’s cash flows and operations were eliminated from the continuing operations of the Company and classified as discontinued operations for all periods presented.

Pretax profit or losses in discontinued operations are as follows:

	Third Quarter Ended					Nine Months Ended
	September 29, 2013			September 30, 2012		September 29, 2013			September 30, 2012
	(in millions)
Flomatic pretax profit in discontinued operations	$	—		$	0.4	$	—		$	1.1
Austroflex pretax (loss) profit in discontinued operations	(2.1		)	0.2		(2.4		)	(0.1		)
Total pretax (loss) profit in discontinued operations	$	(2.1	)	$	0.6	$	(2.4	)	$	1.0

Revenues reported in discontinued operations are as follows:

	Third Quarter Ended				Nine Months Ended
	September 29, 2013		September 30, 2012		September 29, 2013		September 30, 2012
	(in millions)
Flomatic revenues	$	—	$	3.4	$	—	$	10.1
Austroflex revenues	1.8		5.0		9.5		13.6
Total revenues	$	1.8	$	8.4	$	9.5	$	23.7