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Discontinued Operations | 6 Months Ended
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Jun. 30, 2015
Discontinued Operations |
Discontinued Operations | B. DISCONTINUED OPERATIONS The presentation of discontinued operations includes a component or group of components that we have or intend to dispose of, and represent a strategic shift that has (or will have) a major effect on our operations and financial results. For spin off transactions, discontinued operations treatment is appropriate following the completion of the spin off. On September 30, 2014, we announced a plan to spin off 100 percent of our Installation and Other Services businesses into an independent, publicly-traded company named TopBuild Corp. (TopBuild) through a tax-free distribution of the stock of TopBuild to our stockholders. We initiated the spin off as TopBuild was no longer considered core to our long-term growth strategy in branded building products. On June 30, 2015, immediately prior to the effective time of the spin off, TopBuild paid a cash distribution to us of $200 million using the proceeds of its new debt financing arrangement. This transaction was reported as a financing activity in the condensed consolidated statements of cash flows. We have accounted for the spin off of TopBuild as a discontinued operation. (Losses) gains from this discontinued operation were included in (loss) gain from discontinued operations, net, in the condensed consolidated statements of operations. The major classes of line items constituting pre-tax (loss) profit of discontinued operations, in millions:
|  | Three Months Ended |  | Six Months Ended |
|  | June 30, |  | June 30, |
|  | 2015 |  | 2014 |  | 2015 |  | 2014 |
Net sales |  | $ | 404 |  | $ | 384 |  | $ | 762 |  | $ | 719 |
Cost of sales |  | 318 |  | 298 |  | 603 |  | 568 |
Gross profit |  | 86 |  | 86 |  | 159 |  | 151 |
Selling, general and administrative expenses |  | 80 |  | 67 |  | 148 |  | 133 |
Income from discontinued operations |  | $ | 6 |  | $ | 19 |  | $ | 11 |  | $ | 18 |
Loss on disposal of discontinued operations, net (1) |  | — |  | (1 | ) | — |  | (3 | )
Income before income tax |  | 6 |  | 18 |  | 11 |  | 15 |
Income tax expense (2) |  | (10 | ) | (3 | ) | (12 | ) | (4 | )
(Loss) gain from discontinued operations, net |  | $ | (4 | ) | $ | 15 |  | $ | (1 | ) | $ | 11 |
| (1) |  | Included in loss on disposal of discontinued operations, net in 2014 are additional costs and charges related to the 2013 sale of Tvilum.
| (2) |  | The unusual relationship between income tax expense and income before income tax for the three months and six months ended June 30, 2015 resulted primarily from certain non-deductible transaction costs related to the spin off of TopBuild.
The financial results reflected above may not represent TopBuild’s stand-alone operating results, as the results reported within (loss) gain from discontinued operations, net include certain costs that are directly attributable to TopBuild and are factually supportable (such as transaction costs), and exclude corporate overhead costs that were previously allocated to TopBuild for each period. The carrying amount of major classes of assets and liabilities included as part of the TopBuild discontinued operations, in millions:
|  | December 31, |
|  | 2014 |
Cash |  | $ | 4 |
Receivables |  | 220 |
Inventories |  | 107 |
Deferred income taxes |  | 38 |
Prepaid expenses and other |  | 4 |
Property and equipment, net |  | 93 |
Goodwill |  | 1,044 |
Other intangible asset, net |  | 3 |
Other assets |  | 1 |
Total assets classified as held for sale |  | $ | 1,514 |
Accounts payable |  | $ | 229 |
Accrued liabilities |  | 71 |
Other liabilities |  | 40 |
Deferred income taxes |  | 167 |
Total liabilities classified as held for sale |  | $ | 507 |
Other selected financial information for TopBuild during the period owned by us, were as follows, in millions:
|  | Six Months Ended |
|  | June 30, |  | June 30, |
|  | 2015 |  | 2014 |
Depreciation and amortization |  | $ | 6 |  | $ | 13 |
Capital expenditures |  | $ | 7 |  | $ | 6 |
In conjunction with the spin off, we have entered into a Transition Services Agreement with TopBuild to provide TopBuild administrative services subsequent to the separation. The expected fees for services rendered under the Transition Services Agreement are not expected to be material to our results of operations.

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- Definition The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1436-107760 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1474-107760 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1510-107760 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e957-107759 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1020-107759 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1012-107759 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=8077374&loc=d3e2443-110228 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2941-110230 + Details
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