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Discontinued Operations | 6 Months Ended
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Jun. 30, 2018
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | Discontinued Operations On April 30, 2018, we closed the sale our S&IP business, which included the name “Halyard Health” (and all variations thereof and related intellectual property rights) and our information technology (“IT”) system (the “Divestiture”) pursuant to an Amended and Restated Purchase Agreement (“Amended and Restated Purchase Agreement”) dated April 30, 2018 by and among us and certain of our affiliates and Owens & Minor, Inc. (“Buyer”). The purchase price paid for the Divestiture was $710 million in cash plus certain adjustments as provided in the Amended and Restated Purchase Agreement, and resulted in a gain of $89.9 million. A portion of the net proceeds have been used to retire the remainder of our senior secured term loan (see Note 7, “Debt”). The remaining net proceeds will continue to be invested in the business through acquisitions (see Note 4, “Business Acquisitions) and organic growth. We have entered into certain commercial agreements, including transition services agreements with the Buyer, pursuant to which we and the Buyer, and each company’s respective affiliates, will provide to each other various transitional services. The services will terminate no later than two years after the Divestiture. We have also entered into distribution agreements with the Buyer under which we will remain a limited risk distributor for S&IP products on the Buyer’s behalf for sales outside of the United States and Canada. As a result, we have $33.7 million of S&IP products included in “Prepaid expenses and other current assets” in the accompanying condensed consolidated balance sheet as of June 30, 2018. We anticipate the transition services and limited risk distributor arrangements will terminate no later than two years following the Divestiture. As a result of the Divestiture, the results of operations from our S&IP business are reported in the accompanying condensed consolidated income statements as “Income from discontinued operations, net of tax” for the three and six months ended June 30, 2018 and 2017, and the related assets and liabilities are classified as held-for-sale as of December 31, 2017 in the accompanying balance sheet. The remaining business is managed with one reportable business segment, the Medical Devices business. The following table summarizes the financial results of our discontinued operations for all periods presented herein (in millions):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
Net Sales | $ | 89.0 |  |  | $ | 250.1 |  |  | $ | 353.0 |  |  | $ | 500.0 |
Cost of products sold | 65.8 |  |  | 190.0 |  |  | 260.3 |  |  | 378.5 |
Research and development | 0.2 |  |  | 0.6 |  |  | 1.1 |  |  | 1.3 |
Selling, general and other expenses | 10.9 |  |  | 19.0 |  |  | 38.1 |  |  | 35.4 |
Gain on Divestiture | (89.9 | ) |  | — |  |  | (89.9 | ) |  | — |
Other expense, net | 0.1 |  |  | (0.8 | ) |  | 0.4 |  |  | (0.4 | )
Income from discontinued operations before income taxes | 101.9 |  |  | 41.3 |  |  | 143.0 |  |  | 85.2 |
Tax provision from discontinued operations | (67.9 | ) |  | (12.8 | ) |  | (77.5 | ) |  | (29.0 | )
Income from Discontinued Operations, net | $ | 34.0 |  |  | $ | 28.5 |  |  | $ | 65.5 |  |  | $ | 56.2 |
In accordance with accounting principles generally accepted in the United States (“GAAP”), only expenses specifically identifiable and related to a business to be disposed may be allocated to discontinued operations. Accordingly, certain expenses that were historically presented as a component of the S&IP business were kept in continuing operations. These expenses, on a pre-tax basis, were $9.1 million and $37.0 million in the three and six months ended June 30, 2018, respectively, and were $28.4 million and $57.3 million in the three and six months ended June 30, 2017, respectively. Details on assets and liabilities classified as held for sale in the accompanying condensed consolidated balance sheet as of December 31, 2017 are presented in the following table (in millions):
| December 31, 2017
Assets held for sale - discontinued operations |
Accounts receivable, net of allowances | $ | 1.5 |
Inventories | 198.3 |
Prepaid and other current assets | 2.3 |
Current assets held for sale - discontinued operations | 202.1 |
Property, plant and equipment, net | 150.8 |
Goodwill | 267.3 |
Other intangible assets, net | 0.9 |
Non-current deferred tax assets | 7.1 |
Other assets | 0.4 |
Total assets held for sale - discontinued operations | 628.6 |
Other assets classified as held for sale | 3.9 |
Total assets classified as held for sale | $ | 632.5 |
Liabilities held for sale - discontinued operations |
Accounts payable | $ | 15.5 |
Accrued expenses | 11.2 |
Current liabilities held for sale - discontinued operations | 26.7 |
Deferred tax liabilities | 0.3 |
Other long-term liabilities | 6.9 |
Total liabilities held for sale - discontinued operations | $ | 33.9 |
Assets and liabilities held for sale as of December 31, 2017 were classified as current since we anticipated the closing of the Divestiture within one year. Other assets and liabilities held for sale that were not related to discontinued operations related primarily to our IT system. There were no assets or liabilities held for sale following the Divestiture on April 30, 2018. The following table provides operating and investing cash flow information for our discontinued operations (in millions):
| Six Months Ended June 30,
| 2018 |  | 2017
Operating Activities: |  |  |
Depreciation and amortization | $ | — |  |  | $ | 11.9 |
Stock-based compensation expense | (1.5 | ) |  | 0.8 |
Investing Activities: |  |  |
Capital expenditures | 2.9 |  |  | 3.2 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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