Discontinued Operations

During fiscal 2019, the Company's Board of Directors approved a plan to sell the net assets of the VAG business, which was previously included within the Water Management platform. The operating results of the VAG business are reported as discontinued operations in the consolidated statements of operations for all periods presented, as the sale of VAG represented a strategic shift that had a major impact on operations and financial results.

On November 26, 2018, the Company completed the sale of the VAG business. Net proceeds from the sale were $9.0 million and included gross proceeds of $21.5 million, less fees and VAG cash and cash equivalents included in the sale. The purchase price is subject to customary working capital and cash balance adjustments that have not been finalized with the buyer as of the date of this filing, therefore, the purchase price is subject to change. The sale agreement also provides for the Company to receive contingent consideration of up to an additional $20.0 million based on, and subject to, the VAG business attainment of Earn-out EBITDA, as defined in the sale agreement, in the Company’s fiscal years ended March 31, 2019, and ending March 31, 2020 and 2021; however, the Company does not anticipate it will receive the $5.0 million of potential contingent consideration associated with fiscal 2019 performance, although a final determination has not been made. In connection with the completed sale of VAG, Company recorded a non-cash pre-tax loss on the sale of VAG of $22.5 million during fiscal 2019 resulting primarily from the reclassification of historical foreign currency translation adjustments into the statement of operations.

The major components of the Loss from discontinued operations, net of tax associated with the VAG business presented in the consolidated statements of operations during the fiscal years ended March 31, 2019, 2018 and 2017 are included in the table below (in millions):



	Fiscal Years Ended
	March 31, 2019 (1)			March 31, 2018			March 31, 2017
Net sales	$	124.3		$	214.4		$	205.7
Cost of sales	94.9			166.5			166.3
Selling, general and administrative expenses	35.1			56.5			57.2
Restructuring and other similar charges	—			4.7			5.5
Amortization of intangible assets	0.3			1.4			1.1
Non-cash asset impairments (2)	126.0			111.2			—
Loss on sale of discontinued operations	22.5			—			—
Other non-operating expenses, net	3.2			4.7			0.9
Loss from discontinued operations before income tax	(157.7		)	(130.6		)	(25.3		)
Income tax benefit	3.0			—			7.7
Loss from discontinued operations, net of tax	$	(154.7	)	$	(130.6	)	$	(17.6	)

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(1)	Results from operations in fiscal 2019 reflect the period through November 26, 2018, the date on which the sale of the VAG business was completed.

(2)

During the fourth quarter of fiscal 2018, the Company performed an interim assessment of the VAG reporting unit's goodwill for impairment following the Company’s decision to explore strategic alternatives. The fair value of the VAG reporting unit was estimated using both an income valuation model (discounted cash flow) and a market approach based on the estimated selling price in the then-current market environment. As a result of the assessment, the Company recognized a non-cash goodwill impairment charge in fiscal 2018 of $111.2 million. Upon the Company’s Board of Directors approving management’s plan to sell the VAG business in the first quarter of fiscal 2019, the net assets of the VAG business were reclassified as held for sale in accordance with the authoritative guidance. Accordingly, during the period leading up to the final disposition of VAG, the Company continuously assessed the carrying value of the net assets of the VAG business compared to the value expected to be obtained in the sale process. As a result of this assessment, the Company recorded additional non-cash asset impairment charges in fiscal 2019 of $126.0 million.

The carrying amounts of major classes of assets and liabilities associated with the VAG business included as part of discontinued operations presented in the consolidated balance sheet as of March 31, 2018 are as follows (in millions):



	March 31, 2018
Assets
Cash and cash equivalents	$	24.4
Receivables, net	58.5
Inventories	40.7
Other current assets	6.7
Total current assets held for sale	$	130.3

Property, plant and equipment, net	$	59.9
Intangible assets, net	46.6
Other assets	2.0
Total non-current assets held for sale	$	108.5

Liabilities
Trade payables	$	36.1
Compensation and benefits	6.1
Other current liabilities	22.9
Total current liabilities held for sale	$	65.1

Deferred income taxes	$	7.3
Other liabilities	6.5
Total non-current liabilities held for sale	$	13.8

The consolidated statements of cash flows for the current and prior periods presented have not been adjusted to separately disclose cash flows related to discontinued operations. However, the significant investing cash flows and other significant non-cash operating items associated with the discontinued operations were as follows (in millions):



	Fiscal Years Ended
	March 31, 2019		March 31, 2018		March 31, 2017
Depreciation	$	4.1	$	8.6	$	8.2
Amortization of intangible assets	0.3		1.4		1.1
Non-cash discontinued operations asset impairments	126.0		111.2		—
Non-cash loss on sale of discontinued operations	22.5		—		—
Stock-based compensation	—		0.5		0.3
Capital expenditures	2.4		2.7		3.7
Net proceeds from divestiture of discontinued operations	9.0		—		—