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Discontinued Operations | 12 Months Ended
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Dec. 31, 2012
Discontinued Operations |
Discontinued Operations | (3) Discontinued Operations On December 21, 2012, the Company completed the sale of all of the outstanding shares of its subsidiary, Flomatic Corporation (Flomatic). The sale excluded the backflow product line of Flomatic, which was retained by the Company. Flomatic Corporation, located in Glens Falls, New York, specializes in manufacturing and selling check valves, foot valves and automatic hydraulic control valves for the well water industry. The Company acquired Flomatic as part of its acquisition of Danfoss Socla S.A.S. (Socla) in April 2011. The Company evaluated the operations of Flomatic and determined that it would not have a substantial continuing involvement in Flomatic's operations and cash flows. As a result, Flomatic's cash flows and operations were eliminated from the continuing operations of the Company and classified as discontinued operations for all periods presented. In the first quarter of 2010, the Company recorded an estimated reserve of $5.3 million in discontinued operations in connection with its investigation of potential violations of the Foreign Corrupt Practices Act (FCPA) at Watts Valve (Changsha) Co., Ltd. (CWV), a former indirect wholly-owned subsidiary of the Company in China. On October 13, 2011, the Company entered into a settlement for $3.8 million with the Securities and Exchange Commission to resolve allegations concerning potential violations of the FCPA at CWV. (see Note 14). The Company received a $1.1 million payment from a service provider related to issues concerning a former divested operation. Condensed operating statements for discontinued operations are summarized below:
|  | Years Ended December 31, |
--- | --- | --- | ---
|  | 2012 |  | 2011 |  | 2010 |
|  | (in millions) |
Operating income (loss)—FCPA matter (CWV) |  | $ | 1.1 |  | $ | 1.7 |  | $ | (5.7 | )
Operating income—Flomatic |  |  | 1.3 |  |  | 0.4 |  |  | — |
Loss on disposal—Flomatic |  |  | (3.8 | ) |  | — |  |  | — |
Other |  |  | 0.3 |  |  | 0.2 |  |  | (0.3 | )
Income (loss) before income taxes |  |  | (1.1 | ) |  | 2.3 |  |  | (6.0 | )
Income tax benefit (expense) |  |  | (1.1 | ) |  | (0.3 | ) |  | 1.7 |
Income (loss) from discontinued operations, net of taxes |  | $ | (2.2 | ) | $ | 2.0 |  | $ | (4.3 | )
The Company did not recognize a tax benefit on the loss on the disposal of the Flomatic shares, as the Company does not believe it is more likely than not that a tax benefit would be realized. Revenues reported in discontinued operations are as follows:
|  | Years Ended December 31, |
--- | --- | --- | ---
|  | 2012 |  | 2011 |  | 2010 |
|  | (in millions) |
Flomatic revenues—discontinued operations |  | $ | 12.9 |  | $ | 8.5 |  | $ | — |
The carrying amounts of major classes of assets and liabilities at December 31, 2012 and December 31, 2011 associated with discontinued operations are as follows:
|  | December 31, 2012 |  | December 31, 2011 |
--- | --- | --- | --- | --- | ---
|  | (in millions) |
Inventory and accounts receivable |  | $ | — |  | $ | 4.8 |
Prepaid expenses and other assets |  |  | — |  |  | 5.6 |
Property, plant and equipment |  |  | — |  |  | 3.6 |
Assets of discontinued operations |  | $ | — |  | $ | 14.0 |
Accrued expenses and other liabilities |  |  | — |  |  | 0.6 |
Deferred income taxes |  |  | — |  |  | 2.0 |
Liabilities of discontinued operations |  | $ | — |  | $ | 2.6 |

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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 3 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1474-107760 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 Statement of Financial Accounting Standard (FAS) -Number 144 -Paragraph 43-48 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: 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 5: 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 6: 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 Reference 7: 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 8: 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 9: 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 10: 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 + Details
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