Divestitures and Held for Sale

9 Months Ended

Sep. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

As part of the Company’s Accelerated Transformation Plan, during 2018, the Company announced it was exploring strategic options for its industrial and commercial product assets, including its Waddington Group, Process Solutions, Rubbermaid Commercial Products, Rexair and Mapa/Spontex businesses, as well as non-core consumer businesses, including its Jostens, Pure Fishing, Rawlings, Rubbermaid Outdoor, Closet, Refuse and Garage, Goody Products and U.S. Playing Cards businesses. Due to a change in strategy, management recommended and the Company’s Board of Directors approved the decision in July 2019 not to continue pursuing the sale of the majority of the Commercial Business (see Footnote 1). These businesses, with the exception of the Commercial Business, are classified as discontinued operations. Prior periods have been reclassified to conform with the current presentation. During 2018 and 2019, the Company sold Goody Products, Inc. (“Goody”), Jostens, Inc. (“Jostens”), Process Solutions, Pure Fishing, Inc. (“Pure Fishing”), the Rawlings Sporting Goods Company, Inc. (“Rawlings”), Rexair and Waddington Group, Inc. (“Waddington”) and other related subsidiaries as part of the Accelerated Transformation Plan. The Company currently expects to complete the divestiture of the U.S. Playing Cards business by the end of 2019 (see Footnote 19).

The following table provides a summary of amounts included in discontinued operations for the periods indicated (in millions):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net sales	$	147.5		$	587.8		$	684.9		$	2,821.6
Cost of products sold	99.7			379.7			486.2			1,780.5
Selling, general and administrative expenses	26.5			126.6			111.5			577.9
Restructuring costs, net	—			1.8			0.5			6.2
Impairment of goodwill, intangibles and other assets	236.9			628.8			422.6			1,082.8
Operating loss	(215.6		)	(549.1		)	(335.9		)	(625.8		)
Non-operating expense (income)	(1.9		)	(27.6		)	0.6			(488.5		)
Loss before income taxes	(213.7		)	(521.5		)	(336.5		)	(137.3		)
Income tax expense (benefit)	(41.8		)	64.2			(19.0		)	243.9
Net loss	$	(171.9	)	$	(585.7	)	$	(317.5	)	$	(381.2	)

Held for Sale

The following table presents information related to the major classes of assets and liabilities that were classified as assets and liabilities held for sale in the Condensed Consolidated Balance Sheets as of the dates indicated (in millions):



	September 30, 2019		December 31, 2018
Accounts receivable, net	$	124.2	$	206.9
Inventories	109.2		236.7
Prepaid expenses and other	12.9		37.7
Property, plant and equipment, net	94.0		288.0
Operating lease assets, net	13.3		—
Goodwill	38.7		219.7
Other intangible assets, net	565.0		1,263.0
Other assets	9.4		12.9
Current assets held for sale	$	966.7	$	2,264.9

Accounts payable	$	64.6	$	146.0
Accrued compensation	29.3		49.1
Other accrued liabilities	67.6		80.3
Deferred income taxes	129.8		251.7
Operating lease liabilities	8.6		—
Other liabilities	8.8		15.1
Current liabilities held for sale	$	308.7	$	542.2

2019 Divestiture Activity

On May 1, 2019, the Company sold its Rexair business to investment funds affiliated with Rhône Capital for approximately $235 million, subject to customary working capital and other post-closing adjustments. As a result, during the three and nine months ended September 30, 2019, the Company recorded a pretax loss of $4.0 million and net pretax gain of $1.6 million, respectively, which are included in the loss from discontinued operations, net of tax in the Company’s Condensed Consolidated Statement of Operations.

On May 1, 2019, the Company sold its Process Solutions business to an affiliate of One Rock Capital Partners, LLC, for approximately $500 million, subject to customary working capital and other post-closing adjustments. As a result, during the three and nine months ended September 30, 2019, the Company recorded a pretax gain of $13.2 million and a net pretax loss of $8.8 million, respectively, which are included in the loss from discontinued operations, net of tax in the Company’s Condensed Consolidated Statement of Operations.

On June 4, 2019, the Company entered into a definitive agreement to sell its U.S. Playing Cards business to Cartamundi Inc. and Cartamundi España S.L. for approximately $220 million, subject to customary working capital and other post-closing adjustments. The Company expects the transaction to be completed in the fourth quarter of 2019, subject to certain customary conditions, including regulatory approvals.

During the three and nine months ended September 30, 2019, the Company recorded impairment charges totaling $237 million and $423 million, respectively, which are included in the loss from discontinued operations, net of tax in the Company’s Condensed Consolidated Statement of Operations related to the write-down of the carrying value of the net assets of certain held for sale businesses based on their estimated fair value.

2018 Divestiture Activity

On June 29, 2018, the Company sold Rawlings, its Team Sports business, to a fund managed by Seidler Equity Partners with a co-investment of Major League Baseball, for approximately $400 million, subject to customary working capital and other post-closing adjustments. As a result, during the three and nine months ended September 30, 2018, the Company recorded a pretax gain of $5.7 million, and a pretax net loss of $131 million, respectively, which are included in the loss from discontinued operations, net of tax in the Company’s Condensed Consolidated Statement of Operations.

On June 29, 2018, the Company sold Waddington to Novolex Holdings LLC for approximately $2.3 billion, subject to customary working capital and other post-closing adjustments. As a result, during the three and nine months ended September 30, 2018, the Company recorded a pretax gain of approximately $1.4 million and $599 million, respectively, which are included in the loss from discontinued operations, net of tax in the Company’s Condensed Consolidated Statement of Operations

On August 31, 2018, the Company sold its Goody business to a fund managed by ACON Investments, LLC for approximately $110 million, subject to customary working capital and other post-closing adjustments. As a result, during the three and nine months ended September 30, 2018, the Company recorded a pretax gain of $20.4 million, which is included in the loss from discontinued operations, net of tax in the Company’s Condensed Consolidated Statement of Operations.

On December 21, 2018, the Company sold Jostens to a fund managed by Platinum Equity, LLC for approximately $1.3 billion, subject to customary working capital and other post-closing adjustments.

On December 21, 2018, the Company sold Pure Fishing to a fund managed by Sycamore Partners L.P. for approximately $1.3 billion, subject to customary working capital and other post-closing adjustments.

During the three and nine months ended September 30, 2018, the Company recorded impairment charges totaling $629 million and $1.1 billion, respectively, which are included in the loss from discontinued operations, net of tax in the Company’s Condensed Consolidated Statement of Operations related to the write-down of the carrying value of the net assets of certain held for sale businesses based on their estimated fair value.