Disposals

12 Months Ended

Dec. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

Tripwire

On February 22, 2022, we sold Tripwire for gross cash consideration of $350 million. The divestiture of Tripwire represented 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. We recognized a loss on disposal of discontinued operations, net of tax of $9.2 million during 2022. The following table summarizes the operating results of the Tripwire disposal group up to the February 22, 2022 disposal date:


	Years Ended December 31,
	2022		2021		2020
	(In thousands)
Revenues	$	12,067	$	106,840	$	110,524
Cost of sales	(3,256)		(24,321)		(22,857)
Gross profit	8,811		82,519		87,667
Selling, general and administrative expenses	(8,185)		(48,308)		(42,741)
Research and development expenses	(5,528)		(34,433)		(34,276)
Amortization of intangible assets	(638)		(7,716)		(35,354)
Asset impairments	—		(131,178)		—
Loss before taxes	$	(5,540)	$	(139,116)	$	(24,704)

During the year ended December 31, 2022, the Tripwire disposal group did not have any capital expenditures and recognized share-based compensation expense of $0.2 million. During the year ended December 31, 2021, the Tripwire disposal group had capital expenditures of $6.1 million and recognized share-based compensation expense of $2.2 million. During the year ended December 31, 2020, the Tripwire disposal group had capital expenditures of $7.7 million and recognized share-based compensation expense of $2.6 million. The disposal group did not have any significant non-cash charges for investing activities during the years ended December 31, 2022, 2021, and 2020.

The following table provides the major classes of assets and liabilities of the Tripwire disposal group:


	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	584
Other long-lived assets	5,325
Total assets of Tripwire disposal group	$	449,152

Liabilities:
Accounts payable	$	6,458
Accrued liabilities	56,208
Deferred income taxes	8,878
Long-term operating lease liabilities	5,257
Other long-term liabilities	20,192
Total liabilities of Tripwire disposal group	$	96,993

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

Brazil Oil & Gas Cable Business

During 2021, we sold 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 of $3.4 million (includes a goodwill impairment of $1.7 million and intangible asset impairment of $1.0 million) in 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 2021 for $10.9 million, net of cash delivered with the business.

Grass Valley

During 2020, we sold Grass Valley to Black Dragon Capital for gross cash consideration of $120.0 million, or approximately $56.2 million net of cash delivered with the business. We recognized a loss of $9.9 million, net of $7.5 million income tax expense and recognized asset impairments totaling $113.0 million during the year ended December 31, 2020. The divestiture of Grass Valley represented a strategic shift impacting our operations and financial results. As a result, the Grass Valley disposal group, which was included in our Enterprise Solutions segment, is reported in discontinued operations.

The sale also included deferred consideration consisting of a $175.0 million seller’s note, up to $88 million in PIK (payment-in-kind) interest on the seller’s note, and $178.0 million in potential earnout payments. Based upon a third party valuation specialist using certain assumptions in a Monte Carlo analysis, the estimated fair value of the seller’s note was $34.9 million. During 2021, we sold the seller's note to a third party for $62.0 million and recognized a gain on sale of $27.0 million. We accounted for the earnout under a loss recovery approach and did not record an asset as of the disposal date. Any subsequent recognition of an earnout will be based on the gain contingency guidance.

The following table summarizes the operating results of the disposal group up to the July 2, 2020 disposal date for the year ended December 31, 2020:


	Year Ended December 31,
	2020
	(In thousands)
Revenues	$	109,195
Cost of sales	(70,199)
Gross profit	38,996
Selling, general and administrative expenses	(39,947)
Research and development expenses	(15,083)
Asset impairment of discontinued operations	(113,007)
Interest expense, net	(432)
Non-operating pension cost	(169)
Loss before taxes	$	(129,642)

During 2020, the disposal group did not recognize any depreciation and amortization expense, but incurred capital expenditures and share-based compensation credits of $16.7 million and $0.9 million, respectively. The disposal group did not have any significant non-cash charges for investing activities during the year ended December 31, 2020.