DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

As part of a strategic portfolio review conducted in 2014 the Corporation has identified certain businesses which it considers non-core. The Corporation considers businesses non-core when the business' products or services do not complement its existing businesses and where the long-term growth prospects are below the Corporation's expectations. As part of this initiative, the Corporation has divested three businesses, two in the second quarter of 2014 and one in the third quarter of 2014. Additionally, during the third quarter of 2014, the Corporation classified certain other businesses as held for sale. The results of operations of these businesses are reported as discontinued operations within our Condensed Consolidated Statements of Earnings and prior year amounts have been restated to conform to the current year presentation.

COMMERCIAL/INDUSTRIAL

Surface Technologies

During the third quarter of 2014, the Corporation committed to a plan to sell two surface technology treatment facilities, within the Commercial/Industrial segment. As of September 30, 2014, the business has been classified as held for sale and the results of operations for the businesses have been presented as discontinued operations. Discontinued operations for the three and nine months ended September 30, 2014, included net sales of $1.2 million and $3.7 million, respectively, and a loss before income taxes of $1.1 million for both the three and nine months ended September 30, 2014. Included in the three and nine months ended September 30, 2014 loss before income taxes is a $1.0 million impairment on the held for sale asset disposal group.

DEFENSE

Aviation Ground Support Equipment

During the third quarter of 2014, the Corporation committed to a plan to sell its aviation ground support equipment business, within the Defense segment. As of September 30, 2014, the business has been classified as held for sale and the results of operations for the business have been presented as discontinued operations. Discontinued operations for the three and nine months ended September 30, 2014, included net sales of $7.4 million and $21.1 million, respectively, and a loss before income taxes of $6.6 million and $7.7 million, respectively. Included in the three and nine months ended September 30, 2014 loss before income taxes is a $6.5 million impairment on the held for sale asset disposal group.

Engineered Packaging

During the third quarter of 2014, the Corporation committed to a plan to sell its Engineered Packaging business, within the Defense segment. As of September 30, 2014, the business has been classified as held for sale and the results of operations for the business have been presented as discontinued operations. Discontinued operations for the three and nine months ended September 30, 2014, included net sales of $4.5 million and $15.0 million, respectively, and a loss before income taxes of $2.6 million and $1.4 million, respectively. Included in the three and nine months ended September 30, 2014 loss before income taxes is a $3.0 million impairment on the held for sale asset disposal group.

Benshaw

On June 30, 2014, the Corporation sold the assets of its Benshaw business, which was reported in the Defense segment, to Regal-Beloit Corporation for $49.7 million in cash, net of cash sold, and the final working capital adjustment. Benshaw's operating results are included in discontinued operations in the Corporation’s Consolidated Statement of Earnings for all periods presented. Discontinued operations included net sales of $14.3 million and $29.0 million for the three and six months ended June 30, 2014, respectively. Discontinued operations included a loss before income taxes of $2.4 million and $3.1 million for the three and six months ended June 30, 2014, respectively. The Corporation recognized a pre-tax loss on divestiture of $7.3 million.

3D Radar

On April 30, 2014, the Corporation sold the assets of the 3D Radar business, within the Defense segment, to Chemring Group PLC for $2.4 million in cash, net of the final working capital adjustment. 3D Radar's operating results are included in discontinued operations in the Corporation’s Consolidated Statement of Earnings for all periods presented. The disposal resulted in a $0.6 million pre-tax gain. Discontinued operations included net sales of $0.2 million and $0.3 million for the three and six months ended June 30, 2014, respectively and a loss before income taxes of $0.3 million and $1.1 million for the three and six months ended June 30, 2014, respectively.

ENERGY

Downstream

During the third quarter of 2014, the Corporation committed to a plan to sell its downstream oil and gas business, within the Energy segment. As of September 30, 2014, the business has been classified as held for sale and the results of operations for the business has been presented as discontinued operations. Discontinued operations for the three and nine months ended September 30, 2014, included net sales of $29.0 million and $85.0 million, respectively, and a loss before income taxes of $10.3 million for both the three and nine months ended September 30, 2014. Included in the three and nine months ended September 30, 2014 loss before income taxes is a $7.0 million impairment on the Downstream held for sale asset disposal group.

Upstream

During the third quarter of 2014, the Corporation committed to a plan to sell its upstream oil and gas business, within the Energy segment. As of September 30, 2014, the business has been classified as held for sale and the results of operations for the business has been presented as discontinued operations. Discontinued operations for the three and nine months ended September 30, 2014, included net sales of $35.1 million and $116.0 million, respectively, and earnings before income taxes of $3.7 million and $11.1 million for the three and nine months ended September 30, 2014, respectively.

Vessels

During the third quarter of 2014, the Corporation completed the sale of its Vessels business, within the Energy segment, for $2.0 million in cash, net of transaction costs. The Corporation recognized a pre-tax loss on divestiture of $8.6 million. Discontinued operations for the three and nine months ended September 30, 2014, included net sales of $1.8 million and $5.5 million, respectively, and a loss before income taxes of $2.8 million and $10.8 million, respectively.

The aggregate financial results of all discontinued operations were as follows:



	(In thousands)
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Net sales	$	79,099		$	88,258		$	275,612		$	277,625
Loss from discontinued operations before income taxes⁽¹⁾	(19,642		)	(2,642		)	(24,317		)	(6,045		)
Income tax benefit	5,470			1,068			6,849			2,379
Loss on sale businesses ⁽²⁾	$	(5,105	)	$	—		$	(9,529	)	$	—
Loss from discontinued operations	$	(19,277	)	$	(1,574	)	$	(26,997	)	$	(3,666	)

(1) - Loss from discontinued operations before income taxes includes approximately $17.6 million of held for sale impairment expense in the three and nine months ended September 30, 2014.

(2) - Net of tax benefit for the three and nine months ended September 30, 2014 of $3.0 million and $5.8 million, respectively.

The aggregate components of the assets classified as held for sale, are as follows:



	September 30, 2014
Assets held for sale:
Receivables, net	$	73,021
Inventories, net	52,469
Property, plant, and equipment, net	34,973
Goodwill	106,531
Intangibles	62,719
Other assets	4,028
Reserve for assets held for sale	(17,530		)
Total assets held for sale, current	$	316,211
Liabilities held for sale
Accounts payable	$	21,170
Accrued expenses	11,066
Income taxes payable	298
Other current liabilities	16,471
Deferred tax liabilities, net	28,262
Other liabilities	36
Total liabilities held for sale, current	$	77,303