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Discontinued Operations
 12 Months Ended
May. 31, 2015
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations
NOTE 2 Discontinued Operations

During September 2014, the Corporation made a strategic decision to exit the recreational vehicle industry in order to focus on its core housing business. As a result, on October 7, 2014 (“Closing Date”), the Corporation completed the sale of certain assets associated with its recreational vehicle segment (the “Transaction”) to Evergreen Recreational Vehicles, LLC (“ERV”).

The Transaction was completed pursuant to the terms of an Asset Purchase Agreement entered into between the Corporation and ERV on the Closing Date, as well as the terms of a Real Property Purchase Agreement entered into on that same date between the Corporation and an affiliate of ERV, Skyline RE Holding LLC (which, collectively with ERV, is referred to herein as “Evergreen”). The assets of the recreational vehicle segment disposed of in the Transaction include:

 

  •  

A recreational vehicle manufacturing facility consisting of approximately 135,000 square feet situated on 18.2 acres located in Bristol, Indiana;

 

  •  

Intellectual properties such as trademarks, licenses, and product designs associated with the recreational vehicle segment;

 

  •  

Furniture, machinery, software, and equipment;

 

  •  

Raw material and work-in-process inventories;

 

  •  

Product designs, plans, and specifications; and

 

  •  

Customer purchase orders and contracts, customer lists, and supplier lists.

The amount and nature of the consideration received by the Corporation for the assets sold included:

 

  •  

A cash payment of $175,000;

 

  •  

A separate cash payment of approximately $806,000, less prorated property taxes of approximately $73,000 and selling expenses of approximately $2,000, for the Bristol, Indiana manufacturing facility; and

 

  •  

Evergreen had the right, but not the obligation, to purchase the raw material inventory at 50 percent of the Corporation’s cost of approximately $1,600,000, which it exercised as described below. Consequently, the Corporation incurred an approximate $910,000 charge in the second and fourth quarters reflecting the reduction in value of the inventory plus inventory that will not be used by Evergreen. Through May 31, 2015, the Corporation received approximately $681,000 for inventory used by Evergreen. Subsequent to May 31, 2015, the Corporation received final payment for the inventory.

In addition, under the Asset Purchase Agreement Evergreen did not assume or agree to pay, perform, or discharge any of the Corporation’s liabilities or obligations, which remained the liabilities and obligations of the Corporation.

The Bristol facility, and assets other than raw material and finished goods inventories, was sold at approximately net book value.

The following table summarizes the results of discontinued operations:

 

     Year Ended  
     2015      2014  
     (Dollars in thousands)  

Net Sales

    $ 9,676       $ 38,651   
  

 

 

     

 

 

  

Operating loss of discontinued operations

    $ (5,986 )     $ (4,557 ) 

Loss on disposal of discontinued operations

      (240 )       —   
  

 

 

     

 

 

  

Loss before income taxes

      (6,226 )       (4,557 ) 

Income tax benefit

      —         —   
  

 

 

     

 

 

  

Loss from discontinued operations, net of taxes

    $ (6,226 )     $ (4,557 ) 
  

 

 

     

 

 

  

 

Loss on disposal of discontinued operations consisted of a $910,000 charge associated with the reduction in value of raw material inventory, less a gain of approximately $670,000 resulting from the sale of two idle recreational vehicle manufacturing facilities in Elkhart, Indiana to Forest River Manufacturing, LLC.

The Corporation’s park model business, which was formerly reported in the recreational vehicle segment, was not disposed as part of the transaction with Evergreen and is now reported in continuing operations because net sales do not warrant separate segment reporting.

The following is a summary of assets and liabilities of discontinued operations:

 

     May 31,  
     2015      2014  
     (Dollars in thousands)  

Current Assets:

      

Accounts receivable

    $ 30       $ 4,770   

Inventories

      110         2,703   
  

 

 

     

 

 

  
   $ 140       $ 7,473   
  

 

 

     

 

 

  

Property, Plant and Equipment:

      

Property, plant and equipment, at cost

    $ —       $ 9,812   

Less accumulated depreciation

      —         7,901   
  

 

 

     

 

 

  
   $ —       $ 1,911   
  

 

 

     

 

 

  

 

     May 31,  
     2015      2014  
     (Dollars in thousands)  

Current Liabilities:

      

Accounts payable, trade

    $ 8       $ 2,089   

Accrued salaries and wages

      —         419   

Accrued marketing programs

      37         330   

Other accrued liabilities

      59         186   
  

 

 

     

 

 

  
   $ 104       $ 3,024   
  

 

 

     

 

 

  

In accordance with the Asset Purchase Agreement, the Corporation is responsible for the payment of product warranty claims associated with recreational vehicles sold by the Corporation. Consequently, this obligation is not included in the liabilities of discontinued operations on the Consolidated Balance Sheets at May 31, 2015 and May 31, 2014.