Discontinued Operations

12 Months Ended

Dec. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Note 4. Discontinued Operations

The results of total (loss) income from discontinued operations for the years ended December 31, 2015, December 31, 2014, and December 31, 2013 were as follows:

	December 31,
	2015			2014			2013
	(in thousands)
(Loss) income from discontinued operations before income taxes:
Divested operations - RFL	$	—		$	8,215		$	2,852
Environmental costs		(2,960	)		(896	)		(1,620	)
Total (loss) income from discontinued operations before income taxes	$	(2,960	)	$	7,319		$	1,232
(Loss) income from discontinued operations, net of tax:
Divested operations - RFL	$	—		$	5,338		$	1,854
Environmental costs		(1,700	)		(623	)		(1,092	)
Total (loss) income from discontinued operations, net of tax	$	(1,700	)	$	4,715		$	762

The loss from discontinued operations due to environmental costs in 2015, 2014, and 2013 is related to remediation costs, consulting fees, and legal expenses associated with the past operations of the Company’s five environmental sites (See Note 18 – Commitments and Contingencies for further information concerning the environmental sites).

On November 17, 2014, SL Delaware Holdings, Inc. (“SL Delaware Holdings”), a wholly-owned subsidiary of the Company, entered into a definitive Stock Purchase Agreement (the “Purchase Agreement”) with Hubbell Power Systems, Inc. (“Hubbell”), a subsidiary of Hubbell Incorporated, pursuant to which SL Delaware Holdings sold all of the issued and outstanding capital stock of RFL Electronics Inc. (“RFL”) to Hubbell for aggregate cash consideration of $20,000,000, subject to a post-closing working capital adjustment which amounted to $299,000 and was received in February 2015. As a result, the Company recognized a pre-tax gain of $6,650,000 ($4,322,000 net of tax) as of December 31, 2014.

A portion of the cash consideration was held in escrow to secure the indemnification obligations of SL Delaware Holdings. The Company was eligible to receive 50% of the total $2,000,000 escrow, or $1,000,000, subject to certain adjustments, after the first nine months from the date of sale, and the remainder after eighteen months from the date of sale. During the third quarter of 2015, the Company collected $835,000 of the escrow, which was net of a $165,000 payment related to a service agreement for a former executive. This amount had been accrued in 2014. As a result, no income or expense was recorded in 2015.

The Company concluded that the accounting requirements for reporting the results of operations and cash flows of the divested business as discontinued operations were met at November 17, 2014. As a result, the consolidated statements of income, the consolidated statements of cash flows, and the notes to the consolidated financial statements for the periods presented reflect the formerly owned RFL businesses as discontinued operations.

The results of the discontinued operations for RFL for the years ended December 31, 2014 and December 31, 2013 were as follows:

	December 31,
	2014			2013
	(in thousands)
Net sales	$	17,093		$	20,030
Costs and expenses:
Cost of products sold		8,287			9,405
Engineering and product development		1,829			1,714
Selling, general and administrative		5,027			5,839
Depreciation and amortization		352			396
Total cost and expenses		15,495			17,354
Income from operations		1,598			2,676
Other income (expense):
Interest expense		(33	)		(26	)
Other gain (loss), net		—			202
Gain on disposal		6,650			—
Income from discontinued operations before income taxes		8,215			2,852
Income tax provision		2,877			998
Income from discontinued operations, net of tax	$	5,338		$	1,854

In the Consolidated Statements of Cash Flows, environmental costs and the financial results of the RFL segment were included in net cash (used in) operating activities from discontinued operations, net cash provided by (used in) investing activities from discontinued operations, and net cash (used in) financing activities from discontinued operations.