Discontinued Operations

6 Months Ended

Apr. 01, 2016

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

Note 14 – Discontinued Operations

The Company’s board of directors previously approved the plan to sell certain non-core business units including Eclipse Electronic Systems, Inc. (Eclipse), a manufacturer of embedded communication intercept receivers for signal intelligence applications; Wallop Defence Systems, Ltd. (Wallop), a manufacturer of flare countermeasure devices; Pacific Aerospace and Electronics Inc. (PA&E), a manufacturer of hermetically sealed electrical connectors; a small distribution business and a small manufacturing business.

On June 5, 2015, the Company sold Eclipse for $7.9 million and retained ownership of the land, building and building improvements, which are held for sale.  In addition, on July 20, 2015, the Company sold PA&E for $23.4 million.  Under the terms of the stock purchase agreements for the sale of Eclipse and PA&E, the Company agreed to indemnify the buyer for certain breaches of the Company’s representations and warranties and certain other items for up to $2.8 million and $3.9 million, respectively.  An escrow account in the amount of $1.1 million was established at closing of the sale of PA&E to partially cover the Company’s indemnification obligations.  A claim against the escrow amount, if paid, would result in a corresponding decrease in the purchase price for the sale of PA&E.  

During the second fiscal quarter of 2016 and 2015, the Company incurred a loss of $2.0 million and $14.6 million, respectively, on discontinued operations. During the first six months of fiscal 2016 and 2015, the Company incurred a loss of $6.8 million and $20.5 million, respectively.  For the first and second fiscal quarters of fiscal 2016, the Company incurred a loss on assets held for sale at Advanced Materials of $2.2 million and $1.4 million, respectively. The loss on assets held for sale in both quarters was principally due to the effect of changes in foreign currency exchange rates on the estimated sale price and Wallop’s assets held for sale.  Principal assumptions used in measuring the estimated loss on assets held for sale included estimated selling price of the discontinued business, discount rates, industry growth rates, and pricing of comparable transactions in the market.

During the first six months of fiscal 2015, the Company recorded a $1.7 million increase in a liability related to environmental remediation at a previously sold business for which the Company provided indemnification.  A loss of $1.1 million, net of tax, is reflected in discontinued operations.

The operating results of the discontinued operations for the three month period ended April 1, 2016, consisted of the following:

In Thousands	Avionics &		Sensors &			Advanced
	Controls		Systems			Materials			Other			Total
Net Sales	$	4,479	$	-		$	2,289		$	-		$	6,768
Operating earnings (loss)		1,072		(151	)		(2,874	)		(7	)		(1,960	)
Tax expense (benefit)		273		-			(210	)		-			63
Income (loss) from discontinued    operations	$	799	$	(151	)	$	(2,664	)	$	(7	)	$	(2,023	)
Included in Operating Earnings (Loss):
Gain (loss) on net assets held    for sale		326		-			(1,381	)		-			(1,055	)

The operating results of the discontinued operations for the six month period ended April 1, 2016, consisted of the following:

In Thousands	Avionics &		Sensors &			Advanced
	Controls		Systems			Materials			Other			Total
Net Sales	$	10,061	$	-		$	4,773		$	-		$	14,834
Operating earnings (loss)		1,969		(307	)		(8,867	)		(11	)		(7,216	)
Tax expense (benefit)		686		-			(1,099	)		-			(413	)
Income (loss) from discontinued    operations	$	1,283	$	(307	)	$	(7,768	)	$	(11	)	$	(6,803	)
Included in Operating Earnings (Loss):
Gain (loss) on net assets held    for sale		56		-			(3,628	)		-			(3,572	)

The operating results of the discontinued operations for the recast three month period ended March 27, 2015, consisted of the following:

In Thousands	Avionics &			Sensors &		Advanced
	Controls			Systems		Materials			Other			Total
Net Sales	$	13,429		$	6,329	$	2,709		$	-		$	22,467
Operating earnings (loss)		(10,624	)		1,449		(4,236	)		(1,180	)		(14,591	)
Tax expense (benefit)		318			524		(420	)		(413	)		9
Income (loss) from discontinued    operations	$	(10,942	)	$	925	$	(3,816	)	$	(767	)	$	(14,600	)
Included in Operating Earnings (Loss):
Loss on net assets held for sale		(11,439	)		-		(3,008	)		-			(14,447	)

The operating results of the discontinued operations for the recast six month period ended March 27, 2015, consisted of the following:

In Thousands	Avionics &			Sensors &		Advanced
	Controls			Systems		Materials			Other			Total
Net Sales	$	27,591		$	12,257	$	6,150		$	-		$	45,998
Operating earnings (loss)		(11,395	)		1,749		(11,221	)		(1,692	)		(22,559	)
Tax expense (benefit)		(89	)		672		(2,076	)		(590	)		(2,083	)
Income (loss) from discontinued    operations	$	(11,306	)	$	1,077	$	(9,145	)	$	(1,102	)	$	(20,476	)
Included in Operating Earnings (Loss):
Loss on net assets held for sale		(11,439	)		-		(3,008	)		-			(14,447	)

Assets and Liabilities Held for Sale within the Consolidated Balance Sheet at April 1, 2016, are comprised of the following:

In Thousands	Avionics &			Sensors &		Advanced
	Controls			Systems		Materials		Total
Accounts receivable, net	$	4,341		$	-	$	221	$	4,562
Inventories		11,954			-		2,380		14,334
Prepaid expenses		82			-		239		321
Current Assets of Businesses Held for Sale		16,377			-		2,840		19,217
Net property, plant and equipment		5,417			-		9,463		14,880
Intangibles, net		-			-		3,779		3,779
Deferred income tax benefits		(147	)		-		1,370		1,223
Other assets		-			-		1,423		1,423
Non-Current Assets of Businesses Held for Sale		5,270			-		16,035		21,305
Accounts payable		765			-		1,837		2,602
Accrued liabilities		8,006			-		3,572		11,578
Current Liabilities of Businesses Held for Sale		8,771			-		5,409		14,180
Deferred income tax liabilities		-			-		319		319
Other liabilities		503			-		-		503
Non-Current Liabilities of Businesses Held for Sale		503			-		319		822
Net Assets of Businesses Held for Sale	$	12,373		$	-	$	13,147	$	25,520

Assets and Liabilities Held for Sale within the Consolidated Balance Sheet at October 2, 2015, were comprised of the following:

In Thousands	Avionics &			Sensors &		Advanced
	Controls			Systems		Materials		Total
Accounts receivable, net	$	5,360		$	-	$	1,546	$	6,906
Inventories		14,763			-		5,841		20,604
Prepaid expenses		156			-		185		341
Current Assets of Businesses Held for Sale		20,279			-		7,572		27,851
Net property, plant and equipment		5,474			-		12,199		17,673
Intangibles, net		945			-		4,928		5,873
Deferred income tax benefits		(147	)		-		-		(147	)
Other assets		-			-		1,518		1,518
Non-Current Assets of Businesses Held for Sale		6,272			-		18,645		24,917
Accounts payable		1,878			-		4,837		6,715
Accrued liabilities		8,340			-		2,051		10,391
Current Liabilities of Businesses Held for Sale		10,218			-		6,888		17,106
Deferred income tax liabilities		-			-		194		194
Other liabilities		2,215			-		-		2,215
Non-Current Liabilities of Businesses Held for Sale		2,215			-		194		2,409
Net Assets of Businesses Held for Sale	$	14,118		$	-	$	19,135	$	33,253