HELD FOR SALE, DIVESTITURES AND ACQUISITIONS

9 Months Ended

Sep. 28, 2019

HELD FOR SALE, DIVESTITURES AND ACQUISITIONS

Assets Held for Sale

In December 2018, the Company signed an agreement to sell its Regal Drive Technologies business which had been included in the Company's Commercial and Industrial Systems segment. This transaction closed in January 2019.

In January 2019, the Company signed an agreement to sell its CapCom business which had been included in the Company's Climate Solutions segment. This transaction closed in April 2019.

As of December 29, 2018, the Company presented assets and liabilities of certain assets and businesses held for sale as the Company had both the intent and ability to sell these assets and businesses. The businesses were divested as they were considered non-core to the Company's operations.

The table below presents the balances that were classified as Assets Held for Sale as of September 28, 2019 and Assets and Liabilities Held for Sale as of December 29, 2018, as the Company has both the intent and ability to sell these assets and liabilities, (in millions):



	September 28, 2019		December 29, 2018
Trade Receivables	$	—	$	19.2
Inventories	—		34.7
Prepaid Expenses and Other Current Assets	—		5.0
Property, Plant, and Equipment	2.8		19.9
Intangible Assets	—		12.0
Goodwill	—		1.3
Assets Held for Sale	$	2.8	$	92.1

Accounts Payable	$	—	$	8.1
Accrued Compensation and Employee Benefits	—		0.5
Other Accrued Expenses	—		7.3
Other Noncurrent Liabilities	—		1.1
Liabilities Held for Sale	$	—	$	17.0

The businesses classified as held for sale at December 29, 2018 had fiscal 2018 Net Sales and Income from Operations of $138.9 million and $15.7 million, respectively.

2019 Divestitures

Regal Drive Technologies

On January 7, 2019, the Company sold its Regal Drive Technologies business and received proceeds of $119.9 million subject to customary finalization. Regal Drive Technologies was included in the Company's Commercial and Industrial Systems segment and considered a non-core business. The Company recognized a gain on sale of $41.0 million in the Condensed Consolidated Statements of Income.

Velvet Drive

On April 1, 2019, the Company sold its Velvet Drive business and received proceeds of $8.9 million subject to customary finalization. This business was included in the Company's Power Transmissions Solutions segment and considered a non-core business. The Company recognized a loss on sale of $0.1 million in the Condensed Consolidated Statements of Income.

CapCom

On April 1, 2019, the Company sold its CapCom business and received proceeds of $9.9 million subject to customary finalization. This business was included in the Company's Climate Solutions segment and considered a non-core business. The Company recognized a gain on sale of $6.0 million in the Condensed Consolidated Statements of Income.

Vapor Recovery

On July 1, 2019, the Company sold its Vapor Recovery business and received proceeds of $20.9 million subject to customary finalization. The business was included in the Company's Commercial and Industrial Systems segment and considered a non-core business. The Company recognized a loss on sale of $1.7 million in the Condensed Consolidated Statements of Income.

Exit of Business

On July 31, 2018, the Company received notification from a customer of its Hermetic Climate business that it would wind down operations. As a result of this notification, the Company accelerated its plans to exit this business. The Company continues to wind down its operations and this is expected to be completed by the end of fiscal 2019. The Hermetic Climate business accounted for sales of $52.6 million for the fiscal year ended 2018 and $0.9 million and $19.3 million of sales were recorded for the three and nine months ended September 28, 2019, respectively, compared to $11.0 million and $42.9 million for the three and nine months ended September 29, 2018, respectively. The Company recognized exit and exit related charges of $34.9 million during the third quarter of fiscal 2018. The charges included goodwill impairment of $9.5 million, customer relationship intangible asset impairment of $5.5 million, technology intangible asset impairment of $2.1 million and fixed asset impairment of $1.1 million. In addition to the impairments, the Company took charges on accounts receivable and inventory along with recognizing other expenses related to exiting the business.

Acquisitions

The results of operations of acquired businesses are included in the Condensed Consolidated Financial Statements from the date of acquisition. There were $0.1 million acquisition and acquisition related expenses for the nine months ended September 28, 2019. Acquisition and acquisition related expenses were $1.4 million for the three and nine months ended September 29, 2018.

Nicotra Gebhardt

On April 10, 2018, the Company acquired Nicotra Gebhardt S.p.A ("NG") for $161.5 million in cash, net of $8.5 million of cash acquired. NG is a leader in critical, energy-efficient systems for ventilation and air quality. NG manufactures, sells and services fans and blowers under the industry leading brands of Nicotra and Gebhardt. The financial results of NG have been included in the Company's Commercial & Industrial Systems segment from the date of acquisition.

The following table summarizes the fair value of assets acquired and liabilities assumed (in millions):



	As of April 10, 2018
Other Current Assets	$	17.2
Trade Receivables	28.0
Inventories	22.1
Property, Plant, and Equipment	44.6
Intangible Assets	37.8
Goodwill	58.7
Other Noncurrent Assets	2.5
Total Assets Acquired	210.9
Accounts Payable	16.7
Current Liabilities Assumed	14.2
Long-Term Liabilities Assumed	10.0
Net Assets Acquired	$	170.0

Other Disclosures

The Condensed Consolidated Statements of Income include the results of operations of NG since the date of acquisition, and such results are reflected in the Commercial and Industrial Systems segment. Results of operations since the date of acquisition and supplemental pro forma financial information have not been presented for the NG acquisition as such information is not material to the results of operations. No adjustments were made since the filing of the Company's 10-K on February 26, 2019.

South Africa

During the third quarter of fiscal 2018 the Company purchased the remaining shares owned by the joint venture partner in a South African distribution business for a purchase price of $0.8 million. The purchase price of the South African distribution business is reflected as a component of equity.