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Divestiture-Related Activities
 6 Months Ended
Jun. 26, 2011
Divestiture-Related Activities  
Divestiture-Related Activities

Note 15 — Divestiture-related activities

Discontinued Operations

During the first six months of 2011, management approved plans to sell the Company's cargo container business and cargo systems business, reporting units constituting the Company's Aerospace Segment. The Company is actively marketing these businesses while it continues to serve its customers. For financial statement purposes, the assets, liabilities, results of operations and cash flows of these businesses have been segregated from continuing operations and are presented in the Company's condensed consolidated financial statements as discontinued operations for all periods presented. See "Assets and Liabilities Held for Sale" below for details of the businesses' assets and liabilities.

During the second quarter of 2011, the Company recorded approximately $8.7 million of reserves associated with retained liabilities related to businesses that have been divested. These contingencies arose from and were directly related to the operations of the respective divested businesses prior to the disposal and have been reflected in operating income from discontinued operations.

On March 22, 2011, the Company completed the sale of its marine business to an affiliate of H.I.G. Capital, LLC for $123.1 million (consisting of $100.9 million in cash, net of $1.5 million of cash included in the marine business as part of the net assets sold), plus a subordinated promissory note in the amount of $4.5 million and the assumption by the buyer of approximately $15.5 million in liabilities related to the marine business). The Company realized a gain of $57.0 million, net of tax benefits, from the sale of the business. The marine business consisted of the Company's businesses that were engaged in the design, manufacture and distribution of steering and throttle controls and engine and drive assemblies for the recreational marine market, heaters for commercial vehicles and burner units for military field feeding appliances. The marine business represented the Company's entire Commercial Segment.

 

On December 31, 2010, the Company completed the sale of the Actuation business of its subsidiary Telair International Incorporated to TransDigm Group, Incorporated for approximately $94 million and realized a gain of $51.0 million, net of tax, from the sale of the business.

On June 25, 2010, the Company completed the sale of its rigging products and services business ("Heavy Lift") to Houston Wire & Cable Company for $50 million and realized a gain of $17.0 million, net of tax, from the sale of the business.

On March 2, 2010, the Company completed the sale of its SSI Surgical Services Inc. business ("SSI"), a reporting unit within its Medical Segment, to a privately-owned healthcare company for approximately $25 million and realized a gain of $2.2 million, net of tax, from the sale of the business.

The prior period financial statements have been revised to present the marine business and the cargo container and cargo systems businesses as discontinued operations.

The following table presents the operating results of the operations that have been treated as discontinued operations for the periods presented:

 

     Three Months Ended      Six Months Ended  
     June  26,
2011		     June  27,
2010		      June  26,
2011		     June  27,
2010		  
     (Dollars in thousands)  

Net revenues

    $ 53,299      $ 122,073       $ 140,352      $ 218,194   

Costs and other expenses

      53,155        105,264         133,045        196,747   

Gain (loss) on disposition(1)

     (4,504 )      28,825         52,269        38,562   
  

 

 

    

 

 

     

 

 

    

 

 

  

Income (loss) from discontinued operations before income taxes

      (4,360 )      45,634         59,576        60,009   

Provision for income taxes(2)

     (7,260 )      17,454         (7,521 )      26,620   
  

 

 

    

 

 

     

 

 

    

 

 

  

Income from discontinued operations

      2,900        28,180         67,097        33,389   

Less: Income from discontinued operations attributable to noncontrolling interest

      159        119         318        233   
  

 

 

    

 

 

     

 

 

    

 

 

  

Income from discontinued operations attributable to common shareholders

    $ 2,741      $ 28,061       $ 66,779      $ 33,156   
  

 

 

    

 

 

     

 

 

    

 

 

  

 

(1) Gain on disposition during the first quarter of 2011 includes curtailment and settlement losses of approximately $11.5 million on the pension and postretirement obligations that were transferred to the buyer in connection with the sale of the marine business. The loss on disposition during the second quarter of 2011 includes an adjustment to the pension and postretirement liabilities of $3.5 million.

 

(2) The provision for income taxes for the three months ended June 26, 2011 was impacted favorably by the realization of net tax benefits resulting from the resolution (including the expiration of statutes of limitation) of U.S. federal, state, and foreign tax matters relating to prior years. In addition, the provision for income taxes for the six months ended June 26, 2011 was further impacted favorably by tax on the sale of the marine business being incurred at significantly lower than statutory effective tax rates.

Net assets and liabilities of the discontinued operations sold in 2011 were comprised of the following:

 

     (Dollars in thousands)  

Net assets

    $ 109,979   

Net liabilities

      (36,399 ) 
  

 

 

  
   $ 73,580   
  

 

 

  

 

Assets and Liabilities Held for Sale

The table below provides information regarding assets and liabilities held for sale at June 26, 2011 and December 31, 2010. At June 26, 2011, the assets and liabilities held for sale included the Company's cargo container and cargo systems businesses and five buildings which the Company is actively marketing.

 

     June 26, 2011      December 31, 2010  
     (Dollars in thousands)  

Assets held for sale:

   

Accounts receivable, net

    $ 30,512       $ —     

Inventories, net

      50,159         —     

Other current assets

      2,288         —     

Property, plant and equipment, net

      27,155         7,959   

Other assets

      5,346         —     
                 

Total assets held for sale

    $ 115,460       $ 7,959   
                 

Liabilities held for sale:

      

Current liabilities

    $ 40,567       $ —     

Noncurrent liabilities

      5,260         —     
                 

Total liabilities held for sale

    $ 45,827       $ —     
                 

The cargo systems business uses leased facilities in its operations. In connection with these operating leases, the Company's cargo systems business had a residual value guarantee in the amount of approximately $7.8 million at June 26, 2011. The future payments under the operating leases cannot exceed the minimum rent obligation plus the residual value guarantee amount. The residual value guarantee amount is based upon the unamortized lease value of the asset under lease, and is payable by the Company's cargo systems business if the lease is not renewed or the purchase option is not exercised with respect to the leased assets. At June 26, 2011, the Company's cargo systems business had no liabilities recorded for these obligations. Any residual value guarantee amounts paid to the lessor may be recovered by the Company from the sale of the assets to a third party.