Discontinued Operations

9 Months Ended

Sep. 30, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

4. Discontinued Operations

The results of discontinued operations for the nine months ended September 30, 2014 and the three and nine months ended September 30, 2013 include the historical results of Knowles prior to its distribution on February 28, 2014. Costs incurred by Dover to complete the spin-off of Knowles totaled $327 and $10,637 for the three months ended September 30, 2014 and 2013, respectively, and $27,055 and $13,959 for the nine months ended September 30, 2014 and 2013, respectively. See also Note 2 Spin-off of Knowles Corporation.

Additionally, the results of discontinued operations reflect the net earnings of certain non-core businesses serving the electronic assembly and test markets that have been previously sold. The Company completed the sale of one of these businesses, Everett Charles Technologies ("ECT"), in the fourth quarter of 2013. Earnings from discontinued operations for the nine months ended September 30, 2014 include an after-tax gain of $3,224 on the sale of ECT upon receipt of a working capital settlement of $4,482 in the second quarter. Earnings from discontinued operations for the nine months ended September 30, 2013 include net earnings of ECT prior to disposal, as well as a goodwill impairment charge of $54,532 ($44,188 after tax) to write down the carrying value of ECT to its estimated fair value at the time, based on the current sales price. Additionally, the Company recognized a benefit of $25,520 in 2013 as a result of the elimination of certain deferred tax liabilities in connection with a change in the expected manner of disposing of the electronic test and assembly businesses.

On July 2, 2014, the Company completed the sale of DEK International, the remaining business classified as held for sale, for total proceeds of $174,897, of which $173,630 has been received to date in cash. The sale of this business resulted in an after-tax loss on sale of $6,885, of which a loss of $7,201was recorded in the second quarter of 2014 to write down the carrying value of this business to fair value, based on estimated net proceeds at the time.

The benefit from income taxes for the three and nine months ended September 30, 2013 includes $1,971 and $54,425, respectively, of discrete tax benefits principally related to the conclusion of certain federal, state, and international tax audits.

Summarized results of the Company’s discontinued operations are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenue	$	—		$	419,527		$	239,237		$	1,195,277
Gain (loss) on sale and impairments, net of tax	512			—			(3,661		)	(18,668		)
(Loss) earnings from operations before taxes	(355		)	53,020			(16,118		)	129,669
(Provision for) benefit from income taxes	(1,138		)	(10,141		)	(872		)	46,659
(Loss) earnings from operations, net of tax	(1,493		)	42,879			(16,990		)	176,328
(Loss) earnings from discontinued operations, net of tax	$	(981	)	$	42,879		$	(20,651	)	$	157,660

Assets and liabilities of discontinued operations are summarized below:

	September 30, 2014		December 31, 2013
Assets of Discontinued Operations:
Accounts receivable	$	—	$	346,486
Inventories, net	—		166,948
Prepaid and other current assets	8,512		79,356
Total current assets	8,512		592,790
Property, plant and equipment, net	297		370,586
Goodwill and intangible assets, net	—		1,425,909
Other assets and deferred charges	2,078		43,001
Total assets	$	10,887	$	2,432,286
Liabilities of Discontinued Operations:
Accounts payable	$	17,498	$	252,605
Other current liabilities	12,297		99,009
Total current liabilities	29,795		351,614
Deferred income taxes	19,217		78,723
Other liabilities	31,719		73,981
Total liabilities	$	80,731	$	504,318

At September 30, 2014, the assets and liabilities of discontinued operations relate to tax-related accruals and unrecognized benefits, as well as other accruals for compensation, legal, environmental, and warranty contingencies, relating to businesses that were sold in prior years, none of which are individually significant. At December 31, 2013, these balances also reflect the historical assets and liabilities of Knowles, which was spun off in the first quarter of 2014, and DEK, which was sold in the third quarter of 2014.