Discontinued Operations

3 Months Ended

Mar. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

On July 3, 2017, the Company completed the sale of Darex to Henkel for $1.06 billion in cash (the “Disposition”). The agreement with Henkel governing the Disposition (the “Amended Purchase Agreement”) provides for a series of delayed closings in certain non-U.S. jurisdictions for which sale proceeds were received on the July 3, 2017 closing date. The delayed closings implement the legal transfer of the Darex business in the delayed closing jurisdictions in accordance with local law. In January 2020, the final remaining delayed closing in Venezuela was completed which did not result in a gain or a loss recognized during the three months ended March 31, 2020. During the three months ended March 31, 2019, the Company completed the delayed closing in Indonesia and recorded an after-tax gain on sale of $7.2 million. Up to the time of the delayed closings, the results of the operations of the Darex business within the delayed close countries are reported as “(Loss) income from discontinued operations, net of income taxes” in the accompanying unaudited Consolidated Statements of Operations, with the exception of operations in Venezuela which were deconsolidated during 2017.

As of December 31, 2019, an asset of $0.5 million related to operations in Venezuela and a liability of $0.5 million related to the deferred sale proceeds received on July 3, 2017 were recognized in "Non-current assets held for sale" and “Other current liabilities” in the Consolidated Balance Sheets. During the three months ended March 31, 2020, GCP derecognized the entire asset and liability amounts due to completing the delayed closing in Venezuela and recognizing the related sale proceeds. As of March 31, 2020, there were no remaining assets held for sale and no remaining liabilities for the consideration received on July 3, 2017 related to the delayed closings in connection with the sale of Darex.

The following table includes a reconciliation of the gain on the sale of the Darex business related to delayed close entities recorded during the three months ended March 31, 2019:


	Three Months Ended March 31,
(In millions)	2019
Net proceeds included in gain	$	12.7
Net assets derecognized	(3.1)
Gain recognized before income taxes	9.6
Tax effect of gain recognized	(2.4)
Gain recognized after income taxes	$	7.2

In connection with the Disposition and related gain, as noted above, the Company recorded tax expense of $2.4 million within discontinued operations during the three months ended March 31, 2019.

In connection with the Disposition, the Company and Henkel entered into a Master Tolling Agreement, whereby Henkel will operate certain equipment at facilities being sold in order to manufacture and prepare for shipping certain products related to product lines that the Company continues to own. The Company and Henkel expect these services to be provided for a period of 35 months following the closing date.

Under the Amended Purchase Agreement, GCP is required to indemnify Henkel for certain possible future tax liabilities. As of March 31, 2020 and December 31, 2019, GCP has recorded an indemnification payable of $0.9 million as a result of the Disposition.

The following table sets forth the components of "(Loss) income from discontinued operations, net of income taxes" in the accompanying unaudited Consolidated Statements of Operations:


	Three Months Ended March 31,
(In millions)	2020		2019
Net sales	$	—	$	—
Cost of goods sold	—		—
Gross profit	—		—
Selling, general and administrative expenses	0.2		0.3
Restructuring expenses and asset impairments	—		0.1
Gain on sale of business	—		(9.6)
Other expenses, net	0.1		0.1

(Loss) income from discontinued operations before income taxes	(0.3)		9.1
Provision for income taxes	—		(2.3)
(Loss) income from discontinued operations, net of income taxes	$	(0.3)	$	6.8