Disposals

3 Months Ended

Apr. 03, 2022

Discontinued Operations and Disposal Groups [Abstract]

We classify assets and liabilities as held for sale (disposal group) when management, having the authority to approve the action, commits to a plan to sell the disposal group, the sale is probable within one year, and the disposal group is available for immediate sale in its present condition. We also consider whether an active program to locate a buyer has been initiated, whether the disposal group is marketed actively for sale at a price that is reasonable in relation to its current fair value, and whether actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. When we classify a disposal group as held for sale, we test for impairment. An impairment charge is recognized when the carrying value of the disposal group exceeds the estimated fair value, less costs to sell. We also cease depreciation and amortization for assets classified as held for sale.

During the first quarter of 2021, we committed to a plan to sell our oil and gas cable business in Brazil that met all of the criteria to classify the assets and liabilities of this business, formerly part of the Industrial Automation Solutions segment, as held for sale. At such time, the carrying value of the disposal group exceeded the fair value less costs to sell, which we determined based upon the expected sale price, by $3.4 million. Therefore, we recognized an impairment charge in Selling, General and Administrative Expenses equal to this amount in the first quarter of 2021. The impairment charge was excluded from Segment EBITDA of our Industrial Automation Solutions segment. We completed the sale of our oil and gas cable business in Brazil during the second quarter of 2021 for $10.9 million, net of cash delivered with the business.

Discontinued Operations

On February 7, 2022, we signed a definitive agreement to divest Tripwire for $350 million in cash, and completed the transaction on February 22, 2022. We recognized a loss on disposal of discontinued operations, net of tax of $4.6 million during the three months ended April 3, 2022. The divestiture of Tripwire represents a strategic shift impacting our operations and financial results. As a result, the Tripwire disposal group, which was included in our Industrial Automation Solutions segment, is reported within discontinued operations. The following table summarizes the operating results of the Tripwire disposal group up to the February 22, 2022 disposal date during the first quarter of 2022 and 2021, respectively :


	January 1, 2022 - February 22, 2022		January 1, 2021 - April 4, 2021
	(In thousands)
Revenues	$	12,067	$	27,698
Cost of sales	(3,256)		(5,257)
Gross profit	8,811		22,441
Selling, general and administrative expenses	(8,185)		(10,819)
Research and development expenses	(5,528)		(8,888)
Amortization of intangible assets	(638)		(1,954)
Income (loss) before taxes	$	(5,540)	$	780

During the three months ended April 3, 2022 and April 4, 2021, the Tripwire disposal group had capital expenditures of approximately $0.0 million and $0.7 million, respectively, and recognized share-based compensation expense of $0.2 million and $0.7 million, respectively. The disposal group did not have any significant non-cash charges for investing activities during the three months ended April 3, 2022 and April 4, 2021.

The following table provides the major classes of assets and liabilities of the disposal group as of December 31, 2021:


	December 31, 2021
	(In thousands)
Assets:
Cash and cash equivalents	$	2,194
Receivables, net	28,773
Inventories, net	150
Other current assets	7,418
Property, plant and equipment, less accumulated depreciation	6,250
Operating lease right-of-use assets	3,893
Goodwill	331,024
Intangible assets, less accumulated amortization	63,541
Deferred income taxes	834
Other long-lived assets	5,325
Total assets of Tripwire disposal group	$	449,402

Liabilities:
Accounts payable	$	6,458
Accrued liabilities	56,208
Deferred income taxes	10,964
Long-term operating lease liabilities	5,257
Other long-term liabilities	20,192
Total liabilities of Tripwire disposal group	$	99,079

The Tripwire disposal group also had $3.4 million of accumulated other comprehensive income as of December 31, 2021.