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Discontinued Operations
 9 Months Ended
Sep. 30, 2014
Discontinued Operations [Abstract]  
Discontinued Operations

(3) Discontinued Operations

 

Wiring Business

 

On May 26, 2014, the Company entered into an asset purchase agreement to sell substantially all of the assets and liabilities of the former Wiring segment to Motherson Sumi Systems Ltd., an India-based manufacturer of diversified products for the global automotive industry and a limited company incorporated under the laws of the Republic of India, and MSSL (GB) LIMITED, a limited company incorporated under the laws of the United Kingdom (collectively, “Motherson”), for $65,700 in cash and the assumption of certain related liabilities of the Wiring business. 

 

On August 1, 2014, the Company completed the sale of substantially all of the assets and liabilities of its Wiring business to Motherson for $71,386 in cash that consisted of the stated purchase price and a working capital adjustment on the closing date.  The final purchase price is subject to post-closing working capital and other adjustments which may impact the amount of the loss on disposal. Any disputes regarding the working capital and other adjustments that are not amicably resolved between the Company and MSSL will be subject to arbitration.

 

Certain of the Company’s debt agreements contain restrictions on the usage of funds received from the sale of assets.  The proceeds received from the sale of the Wiring business are subject to these restrictions which generally require such cash to be used for the repayment of debt or other qualifying expenditures. At September 30, 2014, the Company’s restricted cash balance was $52,692.  These restricted funds were subsequently used as part of the redemption of the senior secured notes on October 15, 2014.  See Note 8 for additional details.

 

The Company recorded an estimated loss on disposal, net of tax of $1,233 at June 30, 2014 to adjust the carrying value of the Wiring assets to their estimated fair value less cost to sell, based on the terms of the agreement and transaction costs of $233 in the condensed consolidated statements of operations for the six months ended June 30, 2014.

 

The Company recorded a loss on disposal, net of tax of $6,548 and $7,781 for the three and nine months ended September 30, 2014. The loss on disposal for the nine months ended September 30, 2014 included the recognition of previously deferred foreign currency translation of $2,734, income tax on the sale of Wiring’s Mexican businesses of $1,621 and transaction costs of $1,274.

 

The Company also entered into short-term transition services agreements with Motherson expected to conclude in the first quarter of 2015 associated with information systems, accounting, administrative, occupancy and support services as well as contract manufacturing and production support in Estonia and China.

 

The Company’s Electronics segment had post-disposition sales (August 1, 2014 through September 30, 2014) to the Wiring business acquired by Motherson of $5,244 for the three months ended September 30, 2014. Post-disposition purchases by the Company’s Electronics segment from the Wiring business acquired by Motherson were $587 for the three months ended September 30, 2014.

 

 

 

 

 

 

The following tables display summarized activity in our condensed consolidated statements of operations for discontinued operations during the three and nine months ended September 30, 2014 and 2013, related to the Wiring business.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

 

 

September 30,

 

September 30,

 

 

 

 

2014 (A)

 
2013 

 

2014 (A)

 
2013 

Net sales

 

 

$
21,142 

$
71,955 

$
167,434 

$
221,755 

Cost of goods sold (C)

 

 

 
21,669 

 
68,165 

 
154,787 

 
204,599 

Selling, general and administrative (C)

 

 

 
2,048 

 
5,687 

 
12,645 

 
17,179 

Interest expense, net

 

 

 
43 

 
49 

 
69 

 
244 

Other expense, net

 

 

 
(147)

 
(222)

 
(58)

 
(314)

Income (loss) from operations of discontinued

 

 

 

 

 

 

operations before income taxes (C) (D)

 

 

 
(2,471)

 
(1,724)

 
(9)

 
47 

Income tax (provision) benefit on discontinued operations
911 

 
(222)

 
95 

 
(900)

Income (loss) from discontinued operations, net of tax
(1,560)

 
(1,946)

 
86 

 
(853)

 

 

 

 

 

 

 

 

 

 

 

Loss on disposal (B)

 

 

 
(4,263)

 

 -

 
(6,160)

 

 -

Income tax provision on loss on disposal

 

 

 
(2,285)

 

 -

 
(1,621)

 

 -

Loss on disposal, net of tax

 

 

 
(6,548)

 

 -

 
(7,781)

 

 -

 

 

 

 

 

 

 

 

 

 

 

Loss from discontinued operations

 

 

$
(8,108)

$
(1,946)

$
(7,695)

$
(853)

 

 

(A)

The operations of the Wiring business were included only for the one and seven months ended July 31, 2014 as the sale was completed on August 1, 2014. 

 

(B)

Included in loss on disposal for the three and nine months ended September 30, 2014 were transaction costs of $377 and $1,274, respectively, and $2,734 in previously deferred foreign currency translation.

 

(C)

The assets and liabilities of the Wiring business were reclassified as held for sale effective May 26, 2014.  Accordingly, depreciation and amortization for the Wiring assets were not recorded after that date.

 

(D)

Management fees, which had been reported in the Wiring business in prior periods, of $1,863 and $5,589 for the three and nine months ended September 30, 2013, respectively, have been excluded as they are not directly attributable to the business.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

 

 

September 30,

 

September 30,

 

 

 

 
2014 

 
2013 

 
2014 

 
2013 

Depreciation and amortization

 

 

$

 -

$
1,199 

$
2,111 

$
3,606 

Capital expenditures

 

 

 
397 

 
1,261 

 
1,238 

 
2,765 

 

 

Intercompany sales to Wiring were $2,158 and $6,552 for the three months ended September 30, 2014 and 2013, respectively, and $17,448 and $19,953 for the nine months ended September 30, 2014 and 2013, respectively. 

 

Intercompany purchases from Wiring were $481 and $2,041 for the three months ended September 30, 2014 and 2013, respectively, and $4,025 and $5,842 for the nine months ended September 30, 2014 and 2013, respectively.

 

 

The following table displays a summary of the Wiring assets and liabilities held for sale as of December 31, 2013.

 

 

 

 

 

 

 

 

 

 

December 31,

 

 
2013 

Assets

 

 

 

 

Accounts receivable, less reserves

 

 

$
31,287 

Inventories, net

 

 

 
34,530 

Prepaid expenses and other current assets

 

 

 
1,786 

Property, plant and equipment, net

 

 

 
24,549 

Goodwill

 

 

 
4,173 

Intangible assets, net

 

 

 
344 

Other assets

 

 

 
300 

Total assets

 

 

$
96,969 

 

 

 

 

 

Liabilities

 

 

 

 

Accounts payable

 

 

 
27,413 

Accrued expenses and other current liabilities

 

 

 
9,341 

Total liabilities

 

 

$
36,754 

 

 

 

 

 

Total net assets held for sale

 

 

$
60,215