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Discontinued Operations | 3 Months Ended
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Mar. 31, 2016
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | DISCONTINUED OPERATIONS The Company recorded a net gain from discontinued operations and disposal of $3.2 million in the three months ended March 31, 2016, primarily driven by the $4.0 million net gain on disposal of the Fire Rescue Group, which was discontinued in 2015, partially offset by the $0.6 million net loss that the Fire Rescue Group realized in its 2016 operations up to the January 29, 2016 sale completion date. The net gain on disposal includes a $1.5 million charge to recognize a liability in connection with a Latvian commercial dispute. In the three months ended March 31, 2015, the Company recorded a net gain from discontinued operations and disposal of $0.5 million, primarily driven by net income generated by the operations of the Fire Rescue Group. The activity of the Company’s discontinued operations in the three months ended March 31, 2016 and 2015 is described further below: Fire Rescue Group On December 11, 2015, the Company signed a definitive agreement to sell Bronto to Morita for €80.0 million in cash (approximately $87 million), subject to certain post-closing working capital and net debt adjustments. Prior to sale, Bronto was the only remaining operation in the Company’s Fire Rescue Group, which was previously identified as an operating segment of the Company as defined under ASC 280. Upon completion of the transaction, the Company will no longer operate the Fire Rescue Group, which the Company considers a significant strategic shift in the Company’s operations. The Fire Rescue Group is being presented as a discontinued operation in the Company’s condensed consolidated financial statements. On January 29, 2016, the Company completed the sale, initially receiving proceeds of €76 million in cash (approximately $82.3 million), with the remaining purchase price expected to be paid, in connection with the payment of the working capital and net debt adjustments, by the end of the second quarter of 2016. At March 31, 2016, a receivable of $6.0 million was recorded as a component of current assets of discontinued operations, representing the additional sales proceeds expected to be received, including the working capital and net debt adjustments. Under the terms of the sale, the Company and Morita agreed that the Company will remain in control of negotiations and proceedings relating to the appeal of the ruling issued in the Latvian commercial dispute, discussed further in Note 7 – Commitments and Contingencies, and also fund the legal costs associated therewith. The Company also agreed to compensate Morita for 50% of any liability resulting from a final and non-appealable decision of a court of competent jurisdiction, net of any actual income tax benefit to Bronto as a result of the judgment, and less 50% of legal fees incurred by the Company between the January 29, 2016 date of sale and the date of receiving such non-appealable decision. The Company’s appeal of the initial judgment, heard in April 2016, was unsuccessful, and a charge of $1.5 million was recorded as a component of Gain from discontinued operations and disposal, net of tax in the three months ended March 31, 2016 to reflect the Company’s share of the liability. The Company is currently evaluating its further options for appeal. On December 16, 2015, the Company entered into a foreign currency forward contract with a notional contract value of €76.0 million to mitigate its foreign exchange exposure related to the receipt of the euro-denominated sales proceeds. Prior to its settlement on January 29, 2016, the derivative was being marked-to-market, with related gains or losses reported in the Company’s Consolidated Statement of Operations. The forward contract had a fair value of $0.9 million on settlement, and a gain of $0.3 million was recorded as a component of Other (income) expense, net in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2016. The forward contract had a fair value of $0.6 million at December 31, 2015. An asset of $0.6 million was included as a component of Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets as of December 31, 2015. The fair value of the forward contract was determined using readily available pricing sources for comparable instruments (Level 2 input). In accordance with ASC 740, a tax liability should be recognized for the excess of the financial reporting basis over the tax basis (or the tax benefit when the tax basis exceeds the financial reporting basis) of an investment in a subsidiary (outside basis difference) when it is apparent that the temporary differences will reverse in the foreseeable future. In connection with presenting the Fire Rescue Group as a discontinued operation as of December 31, 2015, the Company was required to re-evaluate its position related to the recognition of a deferred tax asset or liability for the outside basis differences of the Bronto entities being sold to Morita. In prior years, deferred taxes for such outside basis differences had not been recognized, either because of the Company’s assertion of permanent reinvestment, or because recognition was not required applying one of the exceptions provided for in ASC 740. Due to the pending sale, these exceptions no longer applied at December 31, 2015, as the outside basis differences were expected to reverse in the foreseeable future. As a result, a net deferred tax liability of $6.3 million was recorded as a component of long-term liabilities of discontinued operations on the Condensed Consolidated Balance Sheets as of December 31, 2015. Upon completion of the sale in the three months ended March 31, 2016, this net deferred tax liability was recognized as a component of the tax expense on the gain on disposal. After recognition of the accumulated foreign currency translation loss attributable to the Fire Rescue Group, as described in Note 10 – Stockholders’ Equity, the actuarial losses described in Note 6 – Pensions, the $1.5 million liability recorded in connection with the Latvian commercial dispute, as well as $4.6 million of net income tax expense, the Company recognized a net gain of $4.0 million on disposal of the Fire Rescue Group upon completion of the sale in the three months ended March 31, 2016. The following table presents the operating results of the Company’s discontinued Fire Rescue Group for the three months ended March 31, 2016 and 2015:
| Three Months Ended March 31,
(in millions) | 2016 (a) |  | 2015
Net sales | $ | 4.2 |  |  | $ | 25.1 |
Cost of sales | 3.9 |  |  | 20.8 |
Gross profit | 0.3 |  |  | 4.3 |
Selling, engineering, general and administrative expenses | 1.1 |  |  | 4.0 |
Operating (loss) income | (0.8 | ) |  | 0.3 |
Other expense (income), net | — |  |  | (0.3 | )
Income (loss) before income taxes | (0.8 | ) |  | 0.6 |
Income tax (benefit) expense | (0.2 | ) |  | 0.1 |
Net (loss) income from operations | $ | (0.6 | ) |  | $ | 0.5 |
(a) | Only includes activity in the period up to the completion of the sale on January 29, 2016.
Assets and liabilities of discontinued operations The following table presents the assets and liabilities of the Company’s discontinued operations, which include the Fire Rescue Group, as well as other operations discontinued in prior periods, as of March 31, 2016 and December 31, 2015:
| March 31, 2016 |  | December 31, 2015
(in millions) | Fire Rescue |  | Other |  | Total |  | Fire Rescue |  | Other |  | Total
Cash and cash equivalents | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 5.0 |  |  | $ | — |  |  | $ | 5.0 |
Accounts receivable, net | 6.0 |  |  | — |  |  | 6.0 |  |  | 15.5 |  |  | — |  |  | 15.5 |
Inventories | — |  |  | — |  |  | — |  |  | 40.4 |  |  | — |  |  | 40.4 |
Prepaid expenses | — |  |  | — |  |  | — |  |  | 2.7 |  |  | — |  |  | 2.7 |
Other current assets | — |  |  | — |  |  | — |  |  | 0.2 |  |  | — |  |  | 0.2 |
Current assets of discontinued operations | $ | 6.0 |  |  | $ | — |  |  | $ | 6.0 |  |  | $ | 63.8 |  |  | $ | — |  |  | $ | 63.8 |
Properties and equipment, net | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 13.4 |  |  | $ | — |  |  | $ | 13.4 |
Goodwill | — |  |  | — |  |  | — |  |  | 28.3 |  |  | — |  |  | 28.3 |
Deferred tax assets | 0.7 |  |  | 1.5 |  |  | 2.2 |  |  | — |  |  | 1.6 |  |  | 1.6 |
Long-term assets of discontinued operations | $ | 0.7 |  |  | $ | 1.5 |  |  | $ | 2.2 |  |  | $ | 41.7 |  |  | $ | 1.6 |  |  | $ | 43.3 |
Accounts payable | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 7.3 |  |  | $ | — |  |  | $ | 7.3 |
Customer deposits | — |  |  | — |  |  | — |  |  | 10.6 |  |  | — |  |  | 10.6 |
Accrued liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Compensation and withholding taxes | — |  |  | — |  |  | — |  |  | 4.3 |  |  | — |  |  | 4.3 |
Other current liabilities | 1.5 |  |  | 2.2 |  |  | 3.7 |  |  | 4.0 |  |  | 2.4 |  |  | 6.4 |
Current liabilities of discontinued operations | $ | 1.5 |  |  | $ | 2.2 |  |  | $ | 3.7 |  |  | $ | 26.2 |  |  | $ | 2.4 |  |  | $ | 28.6 |
Long-term pension and other post-retirement benefit liabilities | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 0.7 |  |  | $ | — |  |  | $ | 0.7 |
Other long-term liabilities | 0.7 |  |  | 2.6 |  |  | 3.3 |  |  | 5.5 |  |  | 9.1 |  |  | 14.6 |
Long-term liabilities of discontinued operations | $ | 0.7 |  |  | $ | 2.6 |  |  | $ | 3.3 |  |  | $ | 6.2 |  |  | $ | 9.1 |  |  | $ | 15.3 |
The Company retains certain liabilities for other operations discontinued in prior periods, primarily for environmental remediation and product liability. Included in liabilities of discontinued operations at March 31, 2016 and December 31, 2015 is $0.7 million and $0.9 million, respectively, related to environmental remediation at the Pearland, Texas facility, and $2.3 million and $2.3 million, respectively, relating to estimated product liability obligations of the discontinued North American refuse truck body business. Long-term assets of discontinued operations at March 31, 2016 and December 31, 2015 include gross deferred tax assets of $3.8 million and $3.5 million, respectively, offset by a full valuation allowance. These assets primarily relate to Canadian net operating loss carryforwards that were largely generated by the discontinued North American refuse truck body business. These net operating loss carryforwards begin to expire in 2026. As it is currently not considered more likely than not that such deferred tax assets will be realized, a full valuation allowance has been recorded, such that the net deferred tax assets included assets of discontinued operations is zero at March 31, 2016 and December 31, 2015. However, tax planning strategies or acquisitions may result in these assets being realized as part of the Company’s continuing operations in future periods.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=51716988&loc=SL51721533-107759 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721665-107760 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5C -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721675-107760 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3A -URI http://asc.fasb.org/extlink&oid=51719941&loc=SL51724579-110230 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721663-107760 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=51719941&loc=d3e2941-110230 Reference 7: 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=51717284&loc=d3e1361-107760 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5B -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721673-107760 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3A -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721659-107760 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5A -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721671-107760 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5D -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721677-107760 Reference 12: 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=51717284&loc=d3e1474-107760 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=51717284&loc=SL51721683-107760 + Details
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