Note 2 - Discontinued Operations

12 Months Ended

Dec. 31, 2015

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

2. DISCONTINUED OPERATIONS

On March 31, 2015, we and CRC Industries, Inc., a Pennsylvania corporation (“CRC”), entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) whereby we sold all of the issued and outstanding stock of our wholly owned subsidiary, ChemFree Corporation (“ChemFree”), to CRC (the “ChemFree Sale”). The purchase price for the all-cash sale was $21,600,000, subject to customary post-closing adjustments, including a working capital adjustment. The company retained all net cash of ChemFree as of the closing date. In the quarter ended March 31, 2015, the company recorded a gain on the sale of ChemFree of $18,746,000 and has retroactively classified the ChemFree operations as discontinued operations in all periods presented. Following the closing of the sale, the company recorded a net of $56,000 in post-closing adjustments primarily to reduce our estimated tax liability, resulting in a gain on the sale of $18,802,000 in the year ended December 31, 2015. The company is applying operating loss and capital loss carryforwards against the gain on sale and expects to incur an alternative minimum tax liability of approximately $120,000 on the transaction, which amount is included in liabilities of discontinued operations as of December 31, 2015. At the closing, a total of $3,300,000 of the purchase price was placed in escrow for purposes of securing our obligations to indemnify CRC and to refund a portion of the purchase price if ChemFree’s actual working capital amount on the closing date is less than the agreed upon target set forth in the Stock Purchase Agreement. In the quarter ended September 30, 2015, $880,000 of the escrow amount, net of the final working capital adjustment of $220,000 was released to the company. The remaining escrow balance of $2,200,000, which will remain in escrow until September 30, 2016, is shown as Restricted Cash as of December 31, 2015.

The following condensed financial information is provided for the ChemFree discontinued operations for the periods shown:

Year ended December 31 , (in thousands)	2015			2014
Net sales	$	2,902		$	10,398
Operating income		197			2,021
Net income before income taxes		6			1,146
Income taxes		9			35
Net income (loss) from discontinued operations	$	(3	)	$	1,111

Following are the major components of the assets and liabilities of discontinued operations presented separately on the balance sheet:

As of December 31, (in thousands)	2015		2014
Major classes of assets included as part of discontinued operations:
Accounts receivable	$	--	$	1,276
Inventories		--		1,042
Property, plant & equipment		--		488
Other assets		--		206
Total assets of discontinued operations	$	--	$	3,012
Major classes of liabilities included as part of discontinued operations:
Accounts payable	$	--	$	190
Accrued payroll		--		152
Other current liabilities		120		284
Other liabilities		--		212
Total liabilities of discontinued operations	$	120	$	838