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Discontinued operations and related assets held for sale
 6 Months Ended 12 Months Ended
Jun. 30, 2018
Dec. 31, 2017
Discontinued Operations and Disposal Groups [Abstract]    
Discontinued operations and related assets held for sale

(2)   Discontinued operations and related assets held for sale

On February 26, 2016, the Company announced that it had initiated a strategic review of its Engineered Solutions business segment to better direct its resources and simplify its operations. As of June 30, 2016, the Engineered Solutions segment qualified for reporting as discontinued operations as its divestiture represents a strategic shift for the Company.

During 2016, we evaluated the fair value of the Engineered Solutions business segment utilizing the market approach (Level 3 measure). As a result, we incurred an impairment charge to our Engineered Solutions business segment of $120 million to align the carrying value with estimated fair value. We continued to update this estimate and during 2017, we further reduced the estimated fair value by $5.3 million.

On November 30, 2016, we completed the sale of our Fiber Materials Inc. business, which was a business line within our former Engineered Solutions business. The sale resulted in cash proceeds of $15.9 million and a loss of $0.2 million. We have the ability to realize up to $8.5 million of additional proceeds based on the earnings of the Fiber Materials business over the 24 months following the transaction. We have elected to record this contingent consideration as it is realized and accordingly, it has not been recognized to date.

On July 3, 2017, we completed the sale of our Advanced Energy Technologies ("AET") business. AET was a product line within our Engineered Solutions business which had been classified as held for sale since the second quarter of 2016. The sale resulted in cash proceeds of $28.5 million.

On September 30, 2017, we completed the sale of the majority of the U.S. assets of our GrafTech Advanced Graphite Materials ("GAGM") business, which was a component of our Engineered Solutions business. The sale of the Italian GAGM assets closed on October 5, 2017. In the jurisdictions where the GAGM assets were not acquired, we initiated the wind down of the business. The sale was structured as a non cash transaction with the buyer assuming certain liabilities associated with the assets acquired. In addition, GrafTech retained certain current assets of GAGM, mostly receivables, which have been substantially realized in the fourth quarter of 2017.

The disposition of the Engineered Solutions business is now substantially complete and, in accordance with our Old Credit Agreement (as defined below), all cash proceeds from these sales were used to pay down our $225 million revolving facility (the "Old Revolving Facility") and the $40 million senior secured delayed draw term loan facility (the "Old Term Loan Facility").

The following tables summarize the results of the Engineered Solutions business segment, reclassified as discontinued operations for the six months ended June 30, 2018 and 2017.

                                                                                                                                                                                    

 
    
    
  
​ ​ ​ ​ ​ ​ ​ ​
 
   For the six months
ended June 30,		  
 
   2018
   2017
  
​ ​ ​ ​ ​ ​ ​ ​
 
   (Dollars in thousands)
  

Net sales

   $ 2,468   $ 64,193  

Cost of sales

     1,335     57,022  
​ ​ ​ ​ ​ ​ ​ ​

Gross (loss) profit

     1,133     7,171  

Research and development

     —     1,281  

Selling and administrative expenses

     (244 )   7,800  

Gain on sale of assets

     —     —  

Impairments

     —     5,300  
​ ​ ​ ​ ​ ​ ​ ​

Operating (loss) income

     1,377     (7,210 )

Other (income) expense

     66     (18 )

Interest expense

     —     1,133  
​ ​ ​ ​ ​ ​ ​ ​

(Loss) income from discontinued operations before income taxes

     1,311     (8,325 )

Benefit from income taxes on discontinued operations

     —     (209 )
​ ​ ​ ​ ​ ​ ​ ​

(Loss) income from discontinued operations

   $ 1,311   $ (8,116 )
​ ​ ​ ​ ​ ​ ​ ​

The significant components of our Statements of Cash Flows for the Engineered Solutions business segment held for sale are as follows:

                                                                                                                                                                                    

 
    
    
  
​ ​ ​ ​ ​ ​ ​ ​
 
   For the six months
ended June 30,		  
 
   2018
   2017
  
​ ​ ​ ​ ​ ​ ​ ​
 
   (Dollars in thousands)
  

Depreciation and amortization

   $ —   $ 2,311  

Impairment

     —     5,300  

Deferred income taxes

     —     (209 )

Capital expenditures

     —     432  
​ ​ ​ ​ ​ ​ ​ ​

The following table summarizes the carrying value of the assets and liabilities of discontinued operations as of June 30, 2018 and December 31, 2017.

                                                                                                                                                                                    

 
    
    
  
​ ​ ​ ​ ​ ​ ​ ​
 
   As of
June 30, 2018
   As of
December 31, 2017
  
​ ​ ​ ​ ​ ​ ​ ​
 
   (Dollars in thousands)
  

Assets of discontinued operations:

              

Accounts receivable

   $ 1,234   $ 3,351  

Inventories

     191     502  

Prepaid expenses and other current assets

     326     1,137  

Net property plant and equipment

     —     226  

Other assets

     96     97  
​ ​ ​ ​ ​ ​ ​ ​

Total assets of discontinued operations

     1,847     5,313  
​ ​ ​ ​ ​ ​ ​ ​

Liabilities of discontinued operations:

              

Accounts payable

   $ 905   $ 512  

Accrued income and other taxes

     181     158  

Other accrued liabilities

     1,675     2,742  
​ ​ ​ ​ ​ ​ ​ ​

Total current liabilities of discontinued operations

     2,761     3,412  
​ ​ ​ ​ ​ ​ ​ ​

Other long-term obligations

     376     376  
​ ​ ​ ​ ​ ​ ​ ​

Total liabilities of discontinued operations

   $ 3,137   $ 3,788  
​ ​ ​ ​ ​ ​ ​ ​

 

(3)   Discontinued operations and related assets held for sale

On February 26, 2016, the Company announced that it had initiated a strategic review of its Engineered Solutions business segment to better direct its resources and simplify its operations. Any potential sale of assets was prohibited by its revolving facility without approval of the requisite lenders thereunder. On April 27, 2016, GrafTech and certain of its subsidiaries entered into an amendment to the revolving facility (see Note 6 "Debt and Liquidity") which, among other things, permits the sale of assets with the restriction that the proceeds be utilized to pay down revolver borrowings. As of June 30, 2016, the Engineered Solutions segment qualified for reporting as discontinued operations as its divestiture represented a strategic shift for the Company.

During 2016, we evaluated the fair value of the Engineered Solutions business segment utilizing the market approach (Level 3 measure). As a result, we incurred an impairment charge to our Engineered Solutions business segment of $120 million to align the carrying value with estimated fair value. We continued to update this estimate and during 2017, we further reduced the estimated fair value by $5.3 million based upon current information at that time.

On November 30, 2016, we completed the sale of our Fiber Materials Inc. business, which was a business line within our former Engineered Solutions business. The sale resulted in cash proceeds of $15.9 million and a loss of $0.2 million. We have the ability to realize up to $8.5 million of additional proceeds based on the earnings of the Fiber Materials business over the 24 months following the transaction. We have elected to record this contingent consideration as it is realized and accordingly, it has not been recognized to date.

On July 3, 2017, we completed the sale of our Advanced Energy Technologies (AET) business. AET was a product line within our Engineered Solutions business that had been classified as held for sale since the second quarter of 2016. The sale resulted in cash proceeds of $28.5 million.

On September 30, 2017, we completed the sale of the majority of the U.S. assets of our GrafTech Advanced Graphite Materials (GAGM) business, which was a component of our Engineered Solutions business. The sale of the Italian GAGM assets closed on October 5, 2017. In the jurisdictions where the GAGM assets were not acquired, we initiated the wind-down of the business. The sale was structured as a non-cash transaction with the buyer assuming certain liabilities associated with the assets acquired. In addition, GrafTech retained certain current assets of GAGM, mostly receivables, which have been substantially realized in the fourth quarter of 2017.

As a result of the sales described above, we recorded a gain of $6.1 million in 2017. The disposition of the Engineered Solutions business is now substantially complete.

In accordance with our Credit Facility, all cash proceeds from these sales were used to pay down our revolving facility and term loan.

The following tables summarize the results of the Engineered Solutions business segment, reclassified as discontinued operations:

                                                                                                                                                                                    

 

 

 

 

 

 

 

 

 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​

 

 

 

 

 

 

 

 

 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​

 

 

For the year
ended
December 31,
2017

 

For the year
ended
December 31,
2016

 

For the period
August 15
through
December 31,
2015

 

For the period
January 1
through
August 14,
2015

 

​  

​ 

​  

​ 

​  

​ 

​  

​ 

​  

​

 

 

(Dollars in thousands)

 

Net sales

 

$
82,299

 

$
115,336

 

$
55,608

 

$
98,024

 

Cost of sales

 
74,723

 
98,440

 
49,068

 
94,817

 

​

​

​  

​  

​  

​  

​  

​  

​  

​

Gross profit

 
7,576

 
16,896

 
6,540

 
3,207

 

Research and development

 
1,429

 
3,145

 
1,265

 
2,179

 

Selling and administrative expenses

 
12,239

 
19,220

 
8,627

 
16,764

 

Gain on sale of assets

 
(6,091

)

—

 

—

 

—

 

Rationalizations

 
(35

)
(405

)
791

 
4,492

 

Impairment

 
5,300

 
119,907

 

—

 

—

 

​

​

​  

​  

​  

​  

​  

​  

​  

​

 

 
(5,266

)
(124,971

)
(4,143

)
(20,228

)

Other expense (income)

 
(115

)
(66

)
(135

)
(90

)

Interest expense

 
1,133

 
3,258

 
918

 
907

 

​

​

​  

​  

​  

​  

​  

​  

​  

​

Loss from discontinued operations before income taxes

 
(6,284

)
(128,163

)
(4,926

)
(21,045

)

Benefit for income taxes on discontinued operations

 
(55

)
(1,189

)

—

 
(2,366

)

​

​

​  

​  

​  

​  

​  

​  

​  

​

Loss from discontinued operations

 

$
(6,229

)

$
(126,974

)

$
(4,926

)

$
(18,679

)

​  

​  

​  

​  

​  

​  

​  

​  

​  

​

The significant components of our Statements of Cash Flows for discontinued operations are as follows:

                                                                                                                                                                                    

 

 

 

 

 

 

 

 

 

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​

 

 

Successor

 

Predecessor

 

 

 

For the year
ended
December 31,
2017

 

For the year
ended
December 31,
2016

 

For the period
August 15
through
December 31,
2015

 

For the period
January 1
through
August 14,
2015

 

​  

​ 

​  

​ 

​  

​ 

​  

​ 

​  

​

 

 

(Dollars in thousands)

 

Depreciation and amortization

 

$
2,418

 

$
5,277

 

$
4,194

 

$
7,988

 

Impairment

 
5,300

 
119,907

 

—

 

—

 

(Gain) loss on sale of assets

 
(6,091

)
198

 

—

 

—

 

Net change in inventory

 
15,217

 
(917

)
3,514

 
(2,481

)

Cash received from divestitures

 
27,254

 
15,889

 

—

 

—

 

Credit facility reductions

 
(27,254

)
(15,889

)

—

 

—

 

Deferred income taxes

 
(55

)
(1,189

)

—

 
(2,366

)

Capital expenditures

 
558

 
4,713

 
4,447

 
10,104

 

​  

​  

​  

​  

​  

​  

​  

​  

​  

​

The following table summarizes the carrying value of the assets and liabilities of discontinued operations as of December 31, 2017 and 2016.

                                                                                                                                                                                    

 

 

 

 

 

 

​  

​  

​  

​  

​  

​

 

 

As of
December 31,
2017

 

As of
December 31,
2016

 

​  

​ 

​  

​ 

​  

​

 

 

(Dollars in thousands)

 

Assets of discontinued operations:

 

 

 

 

 

Accounts receivable

 

$
3,351

 

$
17,094

 

Inventories

 
502

 
71,816

 

Prepaid expenses and other current assets

 
1,137

 
320

 

Net property, plant and equipment

 
226

 
79,048

 

Other assets

 
97

 
12,608

 

​

​

​  

​  

​  

​

Total assets of discontinued operations

 
5,313

 
180,886

 

​

​

​  

​  

​  

​

Impairment of assets held for sale

 

—

 
(119,907

)

Total assets of discontinued operations

 

$
5,313

 

$
60,979

 

​

​

​  

​  

​  

​

Liabilities of discontinued operations:

 

 

 

 

 

Accounts payable

 

$
512

 

$
7,253

 

Accrued income and other taxes

 
158

 
2,326

 

Other accrued liabilities

 
2,742

 
10,463

 

​

​

​  

​  

​  

​

Total current liabilities of discontinued operations

 
3,412

 
20,042

 

​

​

​  

​  

​  

​

Other long-term obligations

 
376

 
850

 

Total liabilities of discontinued operations

 

$
3,788

 

$
20,892

 

​  

​  

​  

​  

​  

​