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Discontinued Operations | 12 Months Ended
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Dec. 31, 2020
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | Discontinued Operations In August 2020, we entered into a Stock Purchase Agreement (the “SPA”) with affiliates of American Securities LLC for the sale of our Life Sciences business for an aggregate purchase price of up to $825 million, which includes a $755 million cash base purchase price and a potential earnout payment of up to $70 million. The cash base purchase price was subject to certain adjustments and was payable at the closing of the transaction, which occurred on October 6, 2020. The earnout payment is subject to the performance of the Life Sciences business during the year ending December 31, 2022, measured by Adjusted EBITDA targets, as defined by the SPA. The Life Sciences business includes facilities that are engaged in the production of a variety of components, assemblies, and instruments, such as surgical knives, bioresorbable implants, surgical staples, cases and trays, orthopaedic implants and tools, laparoscopic devices, and drug delivery devices for the orthopaedics and medical/surgical end markets. The sale of the Life Sciences business furthers management’s strategy to improve liquidity and creates the financial flexibility to pursue key growth areas in the Mobile Solutions and Power Solutions segments. After working capital and other closing adjustments, the final cash purchase price was approximately $753.3 million. We received cash proceeds at closing of $757.2 million and recorded a $3.9 million payable at December 31, 2020, for the balance. We prepaid $700.0 million in the aggregate on the Senior Secured Term Loan and the Incremental Term Loan immediately following the sale. We also paid in full the outstanding balance on the Senior Secured Revolver. We recognized a gain on sale of $214.9 million, net of income taxes. Under the terms of a transition services agreement, we are providing certain support services for up to 180 days from the closing date of the sale. In accordance with the terms of the SPA, we agreed to indemnify the buyer for certain tax liabilities on its consolidated federal income tax return related to the Life Sciences business during the portion of the year ended December 31, 2020, prior to the change in ownership on October 6, 2020. We estimate that the tax indemnification will result in a payment of approximately $1.2 million to the buyer during the year ending December 31, 2021, and we have recorded this estimated obligation in the “Other current liabilities” line item on the Consolidated Balance Sheets at December 31, 2020. In accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations, the operating results of the Life Sciences business are classified as discontinued operations. The presentation of discontinued operations includes revenues and expenses of the discontinued operations and will also include any gain on the disposition of the business, all net of tax, as one line item on the Consolidated Statements of Operations and Comprehensive Income (Loss). The Consolidated Statements of Operations and Comprehensive Income (Loss) for all periods presented have been revised to reflect this presentation. Accordingly, the results of the Life Sciences business have been excluded from continuing operations and segment results for all periods presented in the consolidated financial statements and the accompanying notes unless otherwise stated. The Consolidated Statements of Cash Flows include cash flows of the Life Sciences business in each line item unless otherwise stated. The following table presents the results of operations of the discontinued operations.
|  |  |  | Years Ended December 31,
|  |  |  |  |  | 2020 |  | 2019 |  | 2018
Net sales |  |  |  |  |  | $ | 225,255 |  |  | $ | 357,937 |  |  | $ | 246,463 |
Cost of sales (exclusive of depreciation and amortization shown separately below) |  |  |  |  |  | 160,464 |  |  | 249,157 |  |  | 175,787 |
Selling, general, and administrative expense |  |  |  |  |  | 20,779 |  |  | 34,328 |  |  | 20,927 |
Acquisition related costs excluded from selling, general and administrative expense |  |  |  |  |  | — |  |  | — |  |  | 5,763 |
Depreciation and amortization |  |  |  |  |  | 35,731 |  |  | 46,950 |  |  | 28,102 |
Restructuring and integration expense, net |  |  |  |  |  | — |  |  | — |  |  | 1,438 |
Goodwill impairment |  |  |  |  |  | 146,757 |  |  | — |  |  | — |
Other operating expense (income), net |  |  |  |  |  | 41 |  |  | 20 |  |  | (737) |
Income (loss) from operations |  |  |  |  |  | (138,517) |  |  | 27,482 |  |  | 15,183 |
Interest expense |  |  |  |  |  | 48,893 |  |  | 44,125 |  |  | 49,928 |
Loss on extinguishment of debt and write-off of debt issuance costs |  |  |  |  |  | 1,388 |  |  | 2,753 |  |  | 19,562 |
Other expense (income), net |  |  |  |  |  | (322) |  |  | 178 |  |  | (675) |
Loss from discontinued operations before costs of disposal and benefit for income taxes |  |  |  |  |  | (188,476) |  |  | (19,574) |  |  | (53,632) |
Benefit for income taxes |  |  |  |  |  | 12,468 |  |  | 3,582 |  |  | 11,865 |
Loss from discontinued operations before gain on disposal |  |  |  |  |  | (176,008) |  |  | (15,992) |  |  | (41,767) |
Gain on disposal of discontinued operations |  |  |  |  |  | 212,319 |  |  | — |  |  | — |
Benefit for income taxes on gain on disposal |  |  |  |  |  | 2,587 |  |  | — |  |  | — |
Income (loss) from discontinued operations, net of tax |  |  |  |  |  | $ | 38,898 |  |  | $ | (15,992) |  |  | $ | (41,767) |
During the first quarter of 2020, our market capitalization declined to a level that was less than the net book value of our stockholders’ equity. The decline in market capitalization was a triggering event that caused us to perform a goodwill impairment analysis as of March 31, 2020. The carrying value of the Life Sciences reporting unit exceeded its estimated fair value as of March 31, 2020. As a result of our analysis, we recorded an impairment loss on goodwill of $146.8 million for Life Sciences. The judgments, assumptions, and estimates involved in the goodwill impairment analysis for the Life Sciences reporting unit are consistent with those discussed in Note 8. Our credit facility required us to use proceeds from the sale of the Life Sciences business to prepay a portion of our existing debt. We paid $700 million in the aggregate on our term loans as described in Note 12. The prepayment was applied to debt in accordance with the prepayment provisions of the Credit Agreement immediately after the transaction closed on October 6, 2020. Average quarterly interest rates were multiplied by the required prepayment amounts to calculate interest expense to be reclassified to discontinued operations for all periods presented. Write-offs of credit facility debt issuance costs were allocated to discontinued operations by multiplying the ratio of the required prepayment amounts as a percentage of total outstanding principal by the total write-off charges in each period. Write-offs of credit facility debt issuance costs that have been allocated to discontinued operations are presented in the “Loss on extinguishment of debt and write-off of debt issuance costs” line the table above. The following table summarizes the amount of interest expense related to the credit facility that has been reclassified to discontinued operations.
|  |  |  | Years Ended December 31,
|  |  |  |  |  | 2020 |  | 2019 |  | 2018
Interest on debt |  |  |  |  |  | $ | 35,147 |  |  | $ | 40,996 |  |  | $ | 46,406 |
Amortization of debt issuance costs |  |  |  |  |  | 13,990 |  |  | 3,368 |  |  | 3,571 |
Capitalized interest and other |  |  |  |  |  | (244) |  |  | (239) |  |  | (49) |
Total interest expense of discontinued operations |  |  |  |  |  | $ | 48,893 |  |  | $ | 44,125 |  |  | $ | 49,928 |
The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations for each of the periods presented.
|  | December 31, 2020 |  | December 31, 2019
Cash and cash equivalents |  | $ | — |  |  | $ | 13,792 |
Accounts receivable, net |  | — |  |  | 48,318 |
Inventories |  | — |  |  | 51,644 |
Other current assets |  | — |  |  | 3,246 |
Total current assets of discontinued operations |  | — |  |  | 117,000 |
Property, plant and equipment, net |  | — |  |  | 118,536 |
Operating lease right-of-use assets |  | — |  |  | 20,044 |
Goodwill |  | — |  |  | 344,316 |
Intangible assets, net |  | — |  |  | 211,847 |
Other non-current assets |  | — |  |  | 311 |
Total non-current assets of discontinued operations |  | — |  |  | 695,054 |
Total assets of discontinued operations |  | $ | — |  |  | $ | 812,054 |
Accounts payable |  | $ | — |  |  | $ | 16,367 |
Accrued salaries, wages and benefits |  | — |  |  | 14,844 |
Income tax payable |  | — |  |  | 344 |
Current portion of operating lease liabilities |  | — |  |  | 2,364 |
Other current liabilities |  | — |  |  | 7,627 |
Total current liabilities of discontinued operations |  | — |  |  | 41,546 |
Deferred tax liabilities |  | — |  |  | 61,338 |
Operating lease liabilities, net of current portion |  | — |  |  | 18,405 |
Other non-current liabilities |  | — |  |  | 4,456 |
Total non-current liabilities of discontinued operations |  | — |  |  | 84,199 |
Total liabilities of discontinued operations |  | $ | — |  |  | $ | 125,745 |
The following table presents the significant noncash items and cash paid for capital expenditures of discontinued operations for each period presented.
|  | Years Ended December 31,
|  | 2020 |  | 2019 |  | 2018
Depreciation and amortization |  | $ | 35,731 |  |  | $ | 46,950 |  |  | $ | 28,102 |
Goodwill impairment |  | 146,757 |  |  | — |  |  | — |
Amortization of debt issuance costs |  | 13,990 |  |  | 3,368 |  |  | 3,571 |
Loss on extinguishment of debt and write-off of debt issuance costs |  | 1,388 |  |  | 2,753 |  |  | 19,562 |
Acquisition of property, plant and equipment |  | 8,416 |  |  | 21,834 |  |  | 14,759 |
Right-of-use assets obtained in exchange for new finance lease liabilities |  | 695 |  |  | 5,321 |  |  | — |
Right-of-use assets obtained in exchange for new operating lease liabilities (1) |  | 6,174 |  |  | 51 |  |  | — |
_______________________________ (1) Includes new leases, renewals, and modifications after the adoption of ASC Topic 842, Leases, on January 1, 2019.

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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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