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Divestiture-Related Activities | 6 Months Ended
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Jul. 01, 2012
Divestiture-Related Activities | Note 16—Divestiture-related activities When dispositions occur in the normal course of business, gains or losses on the sale of such businesses or assets are recognized in the income statement line item Gain on sales of businesses and assets. During the second quarter of 2012, the Company sold a building, with a net book value of zero, that had been classified as an asset held for sale and realized a gain of approximately $0.3 million. Discontinued Operations On July 18, 2012, the Company announced that it has entered into a definitive agreement to sell the orthopedic business of its OEM Segment to Tecomet for $45.2 million. The transaction is subject to certain regulatory approvals and other customary closing conditions and is expected to close by the end of the third quarter of 2012. The current and prior period income statements and cash flows have been revised to present the orthopedic business as discontinued operations. The July 1, 2012 balance sheet contains the net assets and net liabilities of the orthopedic business, net of assets and liabilities retained by the Company, in the assets and liabilities held for sale. The December 31, 2011 balance sheet has not been changed. Additionally, the Company has recorded $1.2 million and $0.2 million of expense during the three and six months ended July 1, 2012, respectively, associated with retained liabilities related to businesses that have been divested. On December 2, 2011, the Company completed the sale of its business units that design, engineer and manufacture air cargo systems and air cargo containers and pallets to a subsidiary of AAR CORP for $280.0 million in cash and realized a gain of $126.8 million, net of tax, from the sale. In the second quarter of 2012, the Company received an additional $16.8 million in proceeds as a working capital adjustment pursuant to the terms of the agreement related to the sale of the business, which resulted in recognizing an additional gain on sale of $2.2 million, net of tax. These business units represented the sole remaining businesses in the Company’s former Aerospace Segment. On March 22, 2011, the Company completed the sale of its marine business to an affiliate of H.I.G. Capital, LLC for consideration of $123.1 million (consisting of $103.1 million in cash, 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). Net assets transferred to the buyer in the sale included $1.5 million of cash, resulting in net cash proceeds to the Company of $101.6 million. The Company realized a gain of $57.3 million, net of tax benefits, from the sale of the business. As a result of the disposition, the Company realized accumulated losses from pension and postretirement obligations of approximately $8.4 million and cumulative translation gains of approximately $33.4 million as part of the gain on sale, resulting in a net change of approximately $25.0 million in accumulated other comprehensive income. 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 sole remaining business in the Company’s former Commercial Segment. 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 |
|  | July 1, 2012 |  |  | June 26, 2011 |  |  | July 1, 2012 |  |  | June 26, 2011 |
|  | (Dollars in thousands) |
Net revenues |  | $ | 6,637 |  |  | $ | 63,417 |  |  | $ | 13,827 |  |  | $ | 158,893 |
Costs and other expenses |  |  | 7,250 |  |  |  | 62,506 |  |  |  | 13,511 |  |  |  | 150,045 |
Goodwill impairment(1) |  |  | 9,700 |  |  |  | — |  |  |  | 9,700 |  |  |  | — |
Gain (loss) on disposition(2) |  |  | 2,264 |  |  |  | (4,504 | ) |  |  | 2,264 |  |  |  | 52,269 |
Income (loss) from discontinued operations before income taxes |  |  | (8,049 | ) |  |  | (3,593 | ) |  |  | (7,120 | ) |  |  | 61,117 |
Provision for income taxes(3) |  |  | (3,682 | ) |  |  | (6,982 | ) |  |  | (3,358 | ) |  |  | (6,966 | )
Income (loss) from discontinued operations |  |  | (4,367 | ) |  |  | 3,389 |  |  |  | (3,762 | ) |  |  | 68,083 |
Less: Income from discontinued operations attributable to noncontrolling interest |  |  | — |  |  |  | 159 |  |  |  | — |  |  |  | 318 |
Income (loss) from discontinued operations attributable to common shareholders |  | $ | (4,367 | ) |  | $ | 3,230 |  |  | $ | (3,762 | ) |  | $ | 67,765 |
(1) | During the second quarter of 2012, the Company recognized a non-cash goodwill impairment charge of $9.7 million to adjust the carrying value of the orthopedic business to its estimated fair value.
(2) | The $2.3 million pre-tax gain on disposition in 2012 reflects the gain recognized on the working capital adjustment in the second quarter related to the sale of the cargo systems and cargo container businesses.
(3) | The provision for income taxes for the three and six months ended July 1, 2012 was impacted favorably by the realization of a tax benefit on impairment of goodwill. 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 because taxes on the sale of the marine business were incurred at a rate that was significantly lower than the statutory tax rate.
Assets and Liabilities Held for Sale The table below provides information regarding assets and liabilities held for sale at July 1, 2012 and December 31, 2011. At July 1, 2012, the assets and liabilities held for sale included the Company’s orthopedic business and three buildings. These assets and liabilities are classified as current within the consolidated balance sheets as the Company expects these businesses to be sold within 12 months of July 1, 2012.
|  | July 1, 2012 |  |  | December 31, 2011 |
|  | (Dollars in thousands) |
Assets held for sale: |  |  |  |  |  |  |  |
Accounts receivable, net |  | $ | 2,471 |  |  | $ | — |
Inventories, net |  |  | 7,514 |  |  |  | — |
Other current assets |  |  | 41 |  |  |  | — |
Property, plant and equipment, net |  |  | 17,050 |  |  |  | 7,902 |
Goodwill |  |  | 18,476 |  |  |  | — |
Intangible assets, net |  |  | 8,338 |  |  |  | — |
Total assets held for sale |  | $ | 53,890 |  |  | $ | 7,902 |
Liabilities held for sale: |  |  |  |  |  |  |  |
Current liabilities |  | $ | 1,749 |  |  | $ | — |
Total liabilities held for sale |  | $ | 1,749 |  |  | $ | — |

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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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