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Note 5 - Discontinued Operations

9 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

5) Discontinued Operations

In pursuing our business strategy, the Company continues to divest certain businesses and record activities of these businesses as discontinued operations.

During the third quarter of fiscal 2020, in order to focus its financial assets and managerial resources on its remaining portfolio of businesses, the Company entered into a definitive agreement to sell the Refrigerated Solutions Group, consisting of the Master-Bilt and NorLake operating segments, to Ten Oaks Group for a cash purchase price of $10.6 million, subject to post-closing adjustments and various transaction fees. The Refrigerated Solutions Group was a part of the Company's Food Service Equipment segment, and manufactured refrigerated cabinets and walk-ins for customers food service and retail end markets. The sale was completed on April 16, 2020.

During the first quarter of fiscal 2019, the Company decided to divest its Cooking Solutions Group, which consisted of three operating segments and a minority interest investment. In connection with the divestiture, during the second quarter of fiscal 2019, the Company sold its minority interest investment to the majority shareholders. During the third quarter of fiscal 2019, the Company entered into a definitive agreement to sell the three operating segments to The Middleby Corporation for a cash purchase price of $105 million, subject to post-closing adjustments and various transaction fees.

The transaction closed on March 31, 2019 and resulted in a pre-tax gain of $20.5 million less related transaction expenses of $4.4 million. The Company reported a tax benefit related to the sale due to the write-off of deferred tax liabilities related to the Cooking Solutions Group. Because the transaction closed on a non-business day, cash proceeds related to the sale were not received until the next business day which resulted in a receivable of $106.9 million recorded at March 31, 2019.

Results of the Refrigerated Solutions Group in current and prior periods and results of the Cooking Solutions Group in prior periods have been classified as discontinued operations in the Condensed Consolidated Financial Statements and excluded from the results of continuing operations. Activity related to the Refrigerated Solutions Group, the Cooking Solutions Group, and other discontinued operations for the three and nine months ended March 31, 2020 and 2019 is as follows (in thousands):

		*Three Months Ended*								*Nine Months Ended*
		*March 31,*								*March 31,*
		*2020*				*2019*				*2020*				*2019*
Net Sales		$	31,565			$	57,367			$	108,918			$	183,566
Gain on Sale of Business, Cooking Solutions Group		$	-			$	20,539			$	-			$	20,539
Asset Impairment Charge		$	(19,996	)		$	-			$	(19,996	)		$	-
Income (Loss) from Operations		$	(22,422	)		$	14,412			$	(19,891	)		$	18,075
Profit (Loss) Before Taxes		$	(22,422	)		$	14,645			$	(19,891	)		$	17,305
Benefit (Provision) for Taxes		$	4,047				2,969			$	3,329				2,542
Net income (loss) from Discontinued Operations		$	(18,375	)		$	17,614			$	(16,562	)		$	19,847

Assets and liabilities related to our discontinued operations that appear in the condensed consolidated balance sheets are as follows (in thousands):

		*March 31, 2020*				*June 30, 2019*
Accounts receivable		$	12,857			$	16,215
Inventories			22,977				12,343
Prepaid expenses			1,684				9,052
Total current assets			37,518				37,610

Property, plant, equipment, net			787				13,785
Intangible assets, net			921				-
Goodwill			-				7,660
Other non-current assets			3,171				584
Total non-current assets			4,879				22,029
Total assets			42,397				59,639

Accounts payable			14,998				18,402
Accrued and Other short-term liabilities			11,364				13,101
Total current liabilities			26,362				31,503

Non-current liabilities			2,720				2,223
Total liabilities			29,082				33,726

Net assets		$	13,315			$	25,913