Discontinued Operations and Disposal Groups (Tables)

12 Months Ended

Dec. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations

Income (loss) from discontinued operations for the years ended December 31, 2019, 2018 and 2017 were as follows:

	Year ended December 31,
	2019		2018		2017
Revenues	$	489.7	$	496.2	$	468.3
Cost of products sold(1)(2)	353.2		353.0		339.4
Gross profit	136.5		143.2		128.9
Selling, general and administrative(1)	100.2		81.9		83.4
Intangible amortization(1)	1.9		3.9		3.8
Loss on Disposal Group(3)	201.0		—		—
Charge related to procurement agreement(3)	5.0		—		—
Asset impairment charges	—		0.2		—
Restructuring and other related charges	—		0.8		1.5
Operating income (loss)	(171.6)		56.4		40.2
Other income (expense), net	(1.6)		0.4		(2.6)
Interest expense, net(3)	(11.8)		(12.8)		(16.3)
Income (loss) from discontinued operations before income taxes	(185.0)		44.0		21.3
Income tax benefit (provision)(4)	35.3		(9.8)		(8.5)
Income (loss) from discontinued operations, net of tax	(149.7)		34.2		12.8
Less: Income (loss) attributable to noncontrolling interests	0.3		(0.3)		(0.6)
Income (loss) from discontinued operations, net of tax and noncontrolling interests	$	(150.0)	$	34.5	$	13.4

(1)During the six months ended December 31, 2019, depreciation of property, plant and equipment and amortization of intangible assets, related to our discontinued operations, were ceased, as the assets of the Disposal Group were classified as held-for-sale for the period.

(2)During the year ended December 31, 2019, we recorded a charge to “Cost of products sold” of $17.0 related to the settlement and payment of a demand from a customer related to a project of the Disposal Group. See Note 16 for further information regarding this settlement and the related payment demand.

(3)See previous paragraphs for further discussion regarding the (i) loss on Disposal Group. (ii) charge related to the Procurement Agreement to be entered into with the Buyer in connection with the Transaction, and (iii) the allocation of interest expense to discontinued operations.

(4)During the year ended December 31, 2019, we recorded an income tax benefit of $35.3 on $185.0 of pre-tax loss from discontinued operations, resulting in an effective tax rate of 19.1%. The effective tax rate for 2019 was impacted by (i) a benefit of $30.2 resulting from basis differences that will be realized through the disposition of the held-for-sale assets and (ii) the effect that the majority of the pre-tax loss on Disposal Group and pre-tax charge related to the Procurement Agreement will not result in a tax benefit, such that only $9.7 of tax benefit was recognized on those pre-tax charges.

During the year ended December 31, 2018, we recorded an income tax provision of $9.8 on $44.0 of pre-tax income from discontinued operations, resulting in an effective tax rate of 22.3%.

During the year ended December 31, 2017, we recorded an income tax provision of $8.5 on $21.3 of pre-tax income from discontinued operations, resulting in an effective tax rate of 39.9%. The effective tax rate for 2017 was impacted by an expense of $0.8 resulting from losses occurring in certain jurisdictions for which the tax benefit of those losses is not expected to be recognized.

The major classes of assets and liabilities, excluding intercompany balances, as they are excluded from the sale and expected to be settled prior to closing, classified as held-for-sale in the accompanying consolidated balance sheets, were as follows:

	December 31, 2019		December 31, 2018
ASSETS
Current assets:
Cash and equivalents	$	3.1	$	16.3
Accounts receivable, net	99.4		97.3
Contract assets	43.0		35.5
Inventories, net	72.8		84.3
Other current assets	12.9		11.0
Total current assets	231.2		244.4
Property, plant and equipment, net	87.4		84.2
Goodwill	194.9		193.9
Intangibles, net	92.3		93.1
Other assets(1)	59.2		41.2
Total long-term assets(2)	433.8		412.4
Total assets, before valuation allowance	665.0		656.8
Less: valuation allowance(3)	(201.0)		—
TOTAL ASSETS, net of valuation allowance(2)	$	464.0	$	656.8
LIABILITIES
Current liabilities:
Accounts payable	$	46.6	$	46.7
Contract liabilities	43.6		38.5
Accrued expenses(1)	52.6		46.3
Income taxes payable	1.6		1.5
Current maturities of long-term debt	0.5		0.4
Total current liabilities	144.9		133.4
Long-term debt	3.6		3.8
Deferred and other income taxes	13.6		12.1
Other long-term liabilities(1)	58.4		44.7
Total long-term liabilities(2)	75.6		60.6
TOTAL LIABILITIES(2)	$	220.5	$	194.0

(1)As of December 31, 2019, “Other assets” included $13.1 of operating lease ROU assets, “Accrued expenses” included $4.2 of current portion of operating lease liabilities and “Other long-term liabilities” included $9.2 of long-term portion of operating lease liabilities, each related to the Company’s adoption of the new lease pronouncement effective January 1, 2019.

(2)The total assets and liabilities of discontinued operations are classified in current assets and liabilities, respectively, in our consolidated balance sheet as of December 31, 2019, as the disposition of the Disposal Group is expected to occur within twelve months of that date. The assets and liabilities of discontinued operations are classified in their respective current or long-term classifications, respectively, in our consolidated balance sheet as of December 31, 2018, in accordance with the nature and underlying classification of such assets and liabilities, as the disposition of the Disposal Group did not occur within twelve months of that date.

(3)See previous paragraphs for further discussion regarding the valuation allowance recorded as of December 31, 2019.

The following table summarizes the significant non-cash operating items and capital expenditures reflected in cash flows of discontinued operations for the years ended December 31, 2019, 2018 and 2017:

	Year ended December 31,
	2019		2018		2017
Loss on Disposal Group(1)	$	201.0	$	—	$	—
Charge related to procurement agreement(1)	5.0		—		—
Depreciation and amortization(2)	7.8		17.0		17.5
Impairment of long-lived assets	—		0.2		—
Capital expenditures	7.5		6.3		3.2

(1)See previous paragraphs for further discussion regarding the loss on Disposal Group and charge related to the Procurement Agreement.

(2)As noted above, depreciation of property, plant and equipment and amortization of intangible assets were ceased during the six months ended December 31, 2019, as the assets of the Disposal Group were classified as held-for-sale for the period.