Divestitures and Assets Held for Sale

9 Months Ended

Sep. 30, 2020

Mergers, Acquisitions and Dispositions Disclosures

Divestitures

On August 24, 2020, the Company entered into a definitive agreement to sell its Personal Care business for an aggregate purchase price of approximately $60.5 million, subject to customary adjustments. The Company completed this divestiture at the end of October 2020. In connection with the execution of the definitive agreement and classification of the Personal Care business as discontinued operations, a non-cash impairment charge of $45.1 million was recognized during the three months ended September 30, 2020. In addition, the Company agreed to provide certain transition services related to finance, human resources and information technology. The Personal Care business was previously reported in the PE Films segment.

The following table summarizes the financial results of discontinued operations reflected in the Consolidated Statements of Income for the three and nine months ended September 30, 2020 and 2019:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenues and other items:
Sales	$	29,509	$	37,249	$	98,053	$	111,920
Other income (expense), net	(37)		6,362		(298)		6,332
	29,472		43,611		97,755		118,252
Costs and expenses:
Cost of goods sold	25,481		31,576		83,408		96,479
Freight	1,436		1,898		4,711		5,455
Selling, general and administrative	6,502		3,977		13,649		12,607
Research and development	3,138		2,933		8,451		8,926
Asset impairments and costs associated with exit and disposal activities, net of adjustments	801		1,366		1,327		2,987
Held for sale impairment loss on divested assets	45,054		—		45,054		—
Total	82,412		41,750		156,600		126,454
Income (loss) from discontinued operations before income taxes	(52,940)		1,861		(58,845)		(8,202)
Income tax expense (benefit)	(4,703)		(220)		(5,814)		(2,126)
Income (loss) from discontinued operations, net of tax	$	(48,237)	$	2,081	$	(53,031)	$	(6,076)

The assets and liabilities of the discontinued operations reflected in the Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, respectively were as follows:


	September 30,		December 31,
	2020		2019
Assets
Accounts and other receivables, net	$	15,455	$	18,441
Income tax recoverable	1,082		1,439
Inventories	15,839		17,175
Prepaid expenses and other	394		363
Total current assets (a)			37,418
Property, plant and equipment, net	57,068		69,334
Right-of-use leased assets	342		728
Deferred income taxes	679		694
Other assets	150		105
Total non-current assets (a)			70,861
Valuation allowance on assets held for sale	(45,054)		—
Total assets of discontinued operations classified as held for sale	$	45,955	$	108,279

Liabilities
Accounts payable	$	13,844	$	16,361
Accrued expenses	7,058		6,344
Lease liability, short-term	231		575
Income taxes payable	87		—
Total current liabilities (a)			23,280
Lease liability, long-term	113		351
Deferred income taxes	—		—
Total non-current liabilities (a)			351
Total liabilities of discontinued operations classified as held for sale (b)	$	21,333	$	23,631
(a) The assets and liabilities of the disposal group classified as held for sale are classified as current on the September 30, 2020 Consolidated Balance Sheet as it was probable that sale of the Personal Care business would occur and proceeds would be collected within one year of September 30, 2020. (b) Pension and other postretirement benefit liabilities related to the Personal Care business have been retained by the Company.

Additional information related to the amounts recognized in the discontinued operations balance sheet as of September 30, 2020 is summarized below:


	September 30,
(In thousands)	2020

Total carrying value of assets of discontinued operations classified as held for sale before valuation allowances	$	91,009
Total liabilities of discontinued operations classified as held for sale	(21,333)
Carrying value of net assets of discontinued operations classified as held for sale before valuation allowances	$	69,676
Valuation allowance to reflect net assets at fair value less cost to sell	(20,509)
Estimated fair value less cost to sell of net assets of discontinued operations classified as held for sale	$	49,167
Valuation allowance for other comprehensive loss on foreign currency translation adjustments reflected in shareholder’s equity (“FCTA”) to be released into earnings along with the FCTA upon sale	(24,545)
Net assets of discontinued operations classified as held for sale reflected in the Company’s consolidated balance sheets	$	24,622

The following table provides significant operating and investing cash flow information for discontinued operations:


	Nine Months Ended September 30,
(In thousands)	2020		2019
Operating activities
Depreciation and amortization	$	6,625	$	6,362
Held for sale impairment loss on divested assets	45,054		—
Total	51,679		6,362
Investing activities
Capital expenditures	$	2,989	$	13,921

Assets Held For Sale

In July 2019, the Company committed to a plan to close its manufacturing facility in Lake Zurich, Illinois, which historically was reported by the Company within the personal care component of its PE Films segment. In March 2020, this facility was shut down and the production of elastic materials it previously produced was transferred to Terre Haute, Indiana.

As of September 30, 2020, the held for sale criteria was met since the Company expects the sale of the facility to be completed within one year. The disposal group carrying value of $4.6 million consists of land, building, and building improvements and is reported in "Prepaid expenses and other" in the Consolidated Balance Sheet. These assets were not included as part of the sale of the Personal Care business.