DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2015

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

NOTE 4—DISCONTINUED OPERATIONS

On August 16, 2011, the Company entered into an equity purchase agreement to sell its Quality Assurance (“QA”) business to Underwriters Laboratories (“UL”) for $275,000 plus assumed cash. The QA business provided consumer product testing, inspection, auditing and consulting services that enabled retailers and manufacturers to determine whether products and facilities met applicable safety, regulatory, quality, performance, social and ethical standards. In addition, the Company and UL entered into a transition services agreement, pursuant to which the Company agreed to provide certain services to UL following the closing of the sale, including accounting, tax, legal, payroll and employee benefit services. UL agreed to provide certain information technology services to the Company pursuant to such agreement. On September 1, 2011, pursuant to the terms and conditions of the equity purchase agreement, as amended, the Company transferred the applicable assets, liabilities, subsidiaries and employees of the QA business to Nutmeg Holdings, LLC (“Nutmeg”) and STR International, LLC (“International,” and together with Nutmeg and their respective subsidiaries, the “Nutmeg Companies”), and immediately thereafter sold its equity interest in each of the Nutmeg Companies to designated affiliates of UL for total net cash proceeds of $283,376, which included $8,376 of estimated cash assumed in certain QA locations.

In accordance with ASC 250—20—Presentation of Financial Statements—Discontinued Operations and ASC 740—20—Income Taxes—Intraperiod Tax Allocation, the accompanying Condensed Consolidated Statements of Comprehensive Loss and Condensed Consolidated Cash Flows present the results of the QA business as discontinued operations. Prior to the sale, the QA business was a segment of the Company. The Company has no continuing involvement in the operations of the QA business and does not have any direct cash flows from the QA business subsequent to the sale. Accordingly, the Company has presented the QA business as discontinued operations in these condensed consolidated financial statements.

During the third quarter of 2015, the Company received proposed audit adjustments for the tax years 2009, 2010 and 2011 related to state filings of the Company’s QA business sold in 2011. As a result, the Company recorded an income tax expense to discontinued operations of $21 in the current year. Additionally, the Company recorded an income tax benefit to discontinued operations of $4,057 relating to the reversal of uncertain tax positions due to the expiration of the statute of limitations.

During the third quarter of 2014, the Company received proposed audit adjustments for the tax years 2009, 2010 and 2011 related to state filings of the Company’s QA business sold in 2011. As a result, the Company recorded an aggregate income tax expense to discontinued operations of $685.

The following tables set forth the operating results of the QA business presented as a discontinued operation for the three and nine months ended September 30, 2015 and 2014, respectively:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net sales	$	—		$	—		$	—		$	—
Net earnings (loss) from discontinued operations before income tax (benefit) expense	$	—		$	—		$	—		$	—
Income tax (benefit) expense.	$	(4,036	)	$	685		$	(4,036	)	$	685
Net earnings (loss) from discontinued operations.	$	4,036		$	(685	)	$	4,036		$	(685	)