Discontinued Operations

3 Months Ended

Mar. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

During the fourth quarter of 2019, we entered into an agreement to sell the Fairbanks Morse division, which comprised our entire Power Systems segment. The sale of Fairbanks Morse closed on January 21, 2020 to an affiliate of funds managed by private equity firm Arcline Investment Management for a sales price of $450.0 million. The preliminary pre-tax gain on the disposition of Fairbanks Morse was $274.3 million ($209.7 million, net of tax). We have reported, for all periods presented, the financial condition, results of operations, and cash flows of Fairbanks Morse as discontinued operations in the accompanying financial statements.

For the three months ended March 31, 2020 and 2019, the results of operations from Fairbanks Morse, prior to sale on January 21, 2020, were as follows:

	2020			2019
	(in millions)
Net sales	$	7.6		$	57.9
Cost of sales	7.6			44.3
Gross profit	—			13.6
Operating expenses:
Selling, general, and administrative expenses	1.5			6.3
Other	(0.1		)	—
Total operating expenses	1.4			6.3
Income (loss) from discontinued operations before income tax	(1.4		)	7.3
Income tax benefit (expense)	0.3			(2.0		)
Income (loss) from discontinued operations, net of tax	(1.1		)	5.3
Gain from sale of discontinued operations, net of tax	209.7			—
Income from discontinued operations, net of tax	$	208.6		$	5.3

The major classes of assets and liabilities for Fairbanks Morse as of December 31, 2019 are shown below:

(in millions)
Assets:
Accounts receivable	$	107.8
Inventories	60.2
Property, plant, and equipment	63.0
Goodwill	11.8
Other assets	11.3
Total assets of discontinued operations	$	254.1
Liabilities:
Accounts payable	$	36.9
Accrued expenses	48.2
Other liabilities	4.4
Total liabilities of discontinued operations	$	89.5