Footnote 4 — Divestitures and Held for Sale

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 The Waddington Group, Process Solutions, Rubbermaid Commercial Products, Rexair and Mapa businesses, as well as non-core consumer businesses, including Jostens, Pure Fishing, Rawlings, Rubbermaid Outdoor, Closet, Refuse and Garage, Goody Products and U.S. Playing Cards businesses. These businesses are classified as discontinued operations at December 31, 2018. Prior periods have been reclassified to conform with the current presentation. During 2018, the Company sold Goody Products, Inc. (“Goody”), Jostens, Inc. (“Jostens”), Pure Fishing, Inc. (“Pure Fishing”), the Rawlings Sporting Goods Company, Inc. (“Rawlings”) and Waddington Group, Inc. (“Waddington”) and other related subsidiaries as part of the Accelerated Transformation Plan. The Company expects to complete the remaining divestitures by the end of 2019.

The following table provides a summary of amounts included in discontinued operations for the years ended December 31, (in millions):


	2018			2017			2016
Net sales (1)	$	4,402.2		$	5,142.8		$	4,055.2
Cost of products sold (1)		2,812.5			3,316.5			2,627.3
Selling, general and administrative expenses		836.8			971.6			621.3
Restructuring costs, net		9.5			24.3			12.7
Impairment of goodwill, intangibles and other assets		1,467.5			0.7			—

Operating income (loss)		(724.1	)		829.7			793.9
Non-operating expense (income) (2)		(831.9	)		(6.9	)		(1.1	)

Income before income taxes		107.8			836.6			795.0
Income tax expense		236.1			258.6			228.9

Net income (loss)	$	(128.3	)	$	578.0		$	566.1

(1)	2018 includes a reclassification from cost of products sold to net sales of $51.3 million related to the adoption of Topic 606. See Footnotes 1 and 2 for additional information regarding the Company’s adoption of Topic 606.

(2)	2018 includes a gain on sale of discontinued operations of $832 million.

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 Consolidated Balance Sheets as of December 31, (in millions):


	2018		2017
Accounts receivable, net	$	411.7	$	794.7
Inventories, net		338.7		836.4
Prepaid expenses and other		40.4		87.6
Property, plant and equipment, net (1) (2)		515.9		291.9
Goodwill (1)		954.4		1,966.3
Other intangible assets, net (1)		1,270.8		2,364.1
Other assets (1)		9.4		29.4

Current assets held for sale	$	3,541.3	$	6,370.4

Property, plant and equipment, net	$	—	$	447.2
Goodwill		—		1,720.8
Other intangible assets, net		—		1,672.3
Other assets (1)		—		1.9

Noncurrent assets held for sale	$	—	$	3,842.2

Accounts payable	$	256.7	$	534.8
Accrued compensation		57.0		101.6
Other accrued liabilities		152.9		434.0
Deferred income taxes (1)		170.3		526.0
Other liabilities (1)		13.5		64.9

Current liabilities held for sale	$	650.4	$	1,661.3

Deferred income taxes (1)	$	—	$	228.3
Other liabilities (1)		—		14.2

Noncurrent liabilities held for sale	$	—	$	242.5

(1)	Classification as current or long-term based on management’s best estimate as to the timing of the disposal of the underlying asset or liability as of the respective dates indicated.

(2)	Balance at December 31, 2017, includes a $4.0 million building held for sale that is not included in discontinued operations. This building was sold during 2018.

Divestitures

2018 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 transaction adjustments. As a result, during 2018, the Company recorded a pretax loss of $128 million, which is included in the income (loss) from discontinued operations.

On June 29, 2018, the Company sold Waddington to Novolex Holdings LLC for approximately $2.3 billion, subject to customary working capital and transaction adjustments. As a result, during 2018, the Company recorded a pretax gain of $599 million, which is included in the income (loss) from discontinued operations.

On August 31, 2018, the Company sold its Goody business, to a fund managed by ACON Investments, L.L.C. for approximately $109 million, subject to customary working capital and transaction adjustments. As a result, during 2018, the Company recorded a pretax gain of $20.3 million, which is included in the income (loss) from discontinued operations.

On December 21, 2018, the Company sold Jostens to Platinum Equity for approximately $1.3 billion, subject to customary working capital and transaction adjustments. As a result, during 2018, the Company recorded a pretax loss of $32.1 million, which is included in the income (loss) from discontinued operations.

On December 21, 2018, the Company sold Pure Fishing to Sycamore Partners for approximately $1.3 billion, subject to customary working capital and transaction adjustments. As a result, during 2018, the Company recorded a pretax gain of $372 million, which is included in the income (loss) from discontinued operations.

During 2018, the Company recorded an impairment charge primarily related to goodwill and indefinite-lived intangible assets totaling $1.5 billion, respectively, which is included in the income (loss) from discontinued operations, primarily 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.

2017 Activity

On July 14, 2017, the Company sold its Winter Sports business for a selling price of approximately $240 million, subject to customary working capital and transaction adjustments. For 2017, net sales from the Winter Sports business were not material. During 2017, the Company recorded an impairment charge of $59.1 million related to the write-down of the carrying value of the net assets of the Winter Sports business to their estimated fair market value.

During 2017, the Company sold its Rubbermaid^® consumer storage totes business, its stroller business under the Teutonia^® brand, its Lehigh business, its Firebuilding business and its triathlon apparel business under the Zoot^® and Squadra^® brands. The selling prices for these businesses were not significant. During 2017, the Company recorded impairment charges of $15.3 million related to the write down of the carrying value of the net assets of the Frebuilding and Teutonia^® stroller businesses to their estimated fair market value.

In March 2017, the Company sold its Tools business, including the Irwin^®, Lenox^® and Hilmor^® brands. The selling price was $1.95 billion, subject to customary working capital and transaction adjustments. As a result, during 2017, the Company recorded a pretax gain of $768 million, which is included in other (income) expense, net. Net sales for the Tools business in 2017 were not material.

2016 Activity

In June 2016, the Company sold its Décor business, including Levolor^® and Kirsch^® window coverings and drapery hardware, for consideration, net of fees of approximately $224 million, resulting in a pretax gain of $160 million, which is included in other (income) expense, net for 2016.

Subsequent Event

On February 25, 2019, the Company signed a definitive agreement to sell its Rexair business to investment funds affiliated with Rhône Group for $235 million, subject to customary working capital and transaction adjustments. The transaction is expected to close by the end of the second quarter 2019, subject to customary closing conditions, including regulatory approvals.