Discontinued Operations

3 Months Ended

Mar. 29, 2019

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

NOTE 3. DISCONTINUED OPERATIONS

Divestiture of A&S Business

On October 1, 2018, we completed the split-off of four of our operating companies from the Automation & Specialty platform (the “A&S Business”) in a tax efficient Reverse Morris Trust transaction with Altra Industrial Motion Corp. (“Altra”). The total consideration received was $2.7 billion and consisted of (i) $1.3 billion through a fully-subscribed exchange offer, in which we accepted and subsequently retired 15,824,931 shares of our own common stock from our stockholders in exchange for the 35,000,000 shares of common stock of Stevens Holding Company, Inc., an entity created to hold the A&S Business; (ii) $1.0 billion in cash paid to us for the direct sales of certain assets and liabilities of the A&S Business; (iii) $250 million as part of a debt-for-debt exchange that reduced outstanding indebtedness of Fortive; and (iv) $150 million in cash paid to us by Steven’s Holding Company, Inc. as a dividend. We recognized an after-tax gain on the transaction of $1.9 billion.

The accounting requirements for reporting the disposition of the A&S Business as a discontinued operation were met when the separation and merger were completed in the fourth quarter of 2018. Accordingly, the accompanying consolidated financial statements reflect this business as discontinued operations for all periods presented.

We are providing certain support services to Altra under transition services agreements. The impact of these services on our consolidated condensed financial statements was immaterial.

The key components of income from discontinued operations for the three month periods ended March 29, 2019 and March 30, 2018 were as follows ($ in millions):

	March 29, 2019			March 30, 2018
Sales	$	5.7		$	248.5
Cost of sales	(5.8		)	(144.0		)
Selling, general and administrative expenses	—			(35.2		)
Research and development expenses	—			(9.0		)
Gain on disposition of discontinued operations before income taxes	0.5			—
Interest expense and other	—			(1.3		)
Earnings before income taxes	0.4			59.0
Income taxes	—			(11.8		)
Net earnings	$	0.4		$	47.2

Interest expense related to the debt retired as part of the debt-for-debt exchange was allocated to discontinued operations for all periods prior to the disposition.

The following table summarizes the major classes of assets and liabilities of discontinued operations that were included in our accompanying Consolidated Condensed Balance Sheets as of March 29, 2019 and December 31, 2018 ($ in millions):

	March 29, 2019		December 31, 2018
ASSETS
Trade accounts receivable, net	$	5.1	$	4.2
Inventories	—		4.4
Other current assets	21.2		21.4
Total current assets, discontinued operations	$	26.3	$	30.0
LIABILITIES
Current liabilities:
Trade accounts payable	$	5.4	$	9.2
Accrued expenses and other current liabilities	17.3		21.5
Total current liabilities, discontinued operations	$	22.7	$	30.7