Discontinued Operations

9 Months Ended

Sep. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

As previously announced on August 25, 2020, we signed a definitive agreement to divest our cryobiological products business within our Distribution & Storage Western Hemisphere (“D&S West”) segment to Cryoport, Inc. (“Buyer”). On October 1, 2020, we finalized the sale for net cash proceeds of $317.1, inclusive of the base purchase price of $320.0 less estimated closing date adjustments of $2.9 (the “Divestiture”). The strategic decision to divest of our cryobiological products business reflects our strategy and capital allocation approach to focus on our core capabilities and offerings.

Our cryobiological products business asset group, met the criteria to be held for sale. Furthermore, we determined that the assets held for sale qualify for discontinued operations. As such, the financial results of the cryobiological products business are reflected in our unaudited condensed consolidated statements of income and comprehensive income as discontinued operations for all periods presented. Furthermore, current and non-current assets and liabilities of discontinued operations are reflected in the unaudited condensed consolidated balance sheets for both periods presented.

Summarized Financial Information of Discontinued Operations

The following table represents income from discontinued operations, net of tax:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2020		2019
Sales	$	19.4	$	19.8	$	59.5	$	62.6
Cost of sales	9.5		11.4		31.4		33.6
Selling, general and administrative expenses	1.4		1.8		4.3		5.6

Operating income ⁽¹⁾	8.5		6.6		23.8		23.4
Other expenses (income), net	0.2		0.3		(0.1)		0.3
Income before income taxes from discontinued operations	8.3		6.3		23.9		23.1
Income tax expense ⁽²⁾	2.2		1.3		5.0		4.1
Income from discontinued operations, net of tax	$	6.1	$	5.0	$	18.9	$	19.0

________________

⁽¹⁾Includes depreciation expense of $0.2 and $0.3 for the three months ended September 30, 2020 and 2019, respectively. Includes depreciation expense of $0.8 for both the nine months ended September 30, 2020 and 2019.

⁽²⁾Income tax expense of $2.2 and $1.3 for the three months ended September 30, 2020 and 2019, respectively, represents taxes on both U.S. and foreign earnings at a combined effective tax rate of 26.5% and 20.6%, respectively. Income tax expense of $5.0 and $4.1 for the nine months ended September 30, 2020 and 2019, respectively, represents taxes on both U.S. and foreign earnings at a combined effective tax rate of 20.9% and 17.7%, respectively.

The effective income tax rate of 26.5% and 20.9% for the three and nine months ended September 30, 2020, respectively, differed from the U.S. federal statutory rate of 21% primarily due to excess tax benefits associated with foreign-derived intangible income, which is offset by the effect of income earned by our certain foreign entities being taxed at higher rates than the U.S. federal statutory rate.

The effective income tax rate of 20.6% and 17.7% for the three and nine months ended September 30, 2019, respectively, differed from the U.S. federal statutory rate of 21% primarily due to excess tax benefits associated with foreign-derived intangible income, which is offset by the effect of income earned by our certain foreign entities being taxed at higher rates than the U.S. federal statutory rate.

The following table represents the assets and liabilities from discontinued operations:


	September 30, 2020		December 31, 2019
Accounts receivable, net	$	9.7	$	11.0
Inventories, net	11.8		9.4
Prepaid expenses	0.2		0.3
Other current assets	1.2		0.9
Property, plant, and equipment, net	6.3		6.8
Goodwill ⁽¹⁾	33.5		33.5
Identifiable intangible assets, net	6.7		6.7
Total assets of discontinued operations	$	69.4	$	68.6

Current assets of discontinued operations ⁽¹⁾	$	69.4	$	21.6
Non-current assets of discontinued operations	—		47.0
Total assets of discontinued operations	$	69.4	$	68.6

Accounts payable	$	2.9	$	4.2
Customer advances and billings in excess of contract revenue	0.3		0.1
Accrued salaries, wages, and benefits	1.2		1.5
Current portion of warranty reserve	0.2		0.1
Other current liabilities	0.1		—
Other long-term liabilities	1.2		0.2
Total liabilities of discontinued operations	$	5.9	$	6.1

Current liabilities of discontinued operations ⁽²⁾	$	5.9	$	5.9
Non-current liabilities of discontinued operations	—		0.2
Total liabilities of discontinued operations	$	5.9	$	6.1