Discontinued Operations

12 Months Ended

Dec. 31, 2020

4. Discontinued Operations

During the fourth quarter of 2019, substantially all of the assets and liabilities of our Tile Coatings business were classified as held-for-sale in the accompanying consolidated balance sheets. We entered into a definitive agreement to sell our Tile Coatings business which has historically been a part of our Performance Coatings reportable segment. Therefore, the associated operating results, net of income tax, have been classified as discontinued operations in the accompanying consolidated statements of operations for all periods presented.

On February 25, 2021, we completed the sale of our Tile Coatings business to Pigments Spain, S.L., a company of the Esmalglass-Itaca-Fritta group (the “Buyer”), which is a portfolio company of certain Lone Star Funds, for $460.0 million in cash, subject to post-closing adjustments. The transaction resulted in net proceeds of approximately $420.0 million after expenses. We entered into a Transition Services Agreement (“TSA”) with the Buyer, which is designed to facilitate an orderly transfer of business operations. The services provided under the TSA will terminate within at various times between six to twelve months. Except for customary post-closing adjustments and transition services, we have no continuing involvement with the Buyer subsequent to the completion of the sale.

The table below summarizes results for the Tile Coatings business for the year ended December 31, 2020, 2019 and 2018 which are reflected in our consolidated statements of operations as discontinued operations. Interest expense has been allocated to the discontinued operations based on the ratio of net assets of the business to consolidated net assets excluding debt.




(Dollars in thousands)	2020		2019		2018
Net sales	$	440,501	$	491,493	$	537,712
Cost of sales		327,505		388,959		420,168
Gross profit		112,996		102,534		117,544
Selling, general and administrative expenses		72,033		71,591		58,858
Restructuring and impairment charges		2,290		44,378		6,179
Interest expense		10,650		11,556		12,835
Interest earned		(184)		(122)		(125)
Foreign currency losses (gains), net		6,608		(2,397)		1,852
Miscellaneous expense, net		2,281		2,127		3,896
Income (loss) from discontinued operations before income taxes		19,318		(24,599)		34,049
Income tax expense		5,315		2,812		9,153
Income (loss) from discontinued operations, net of income taxes		14,003		(27,411)		24,896
Less: Net income attributable to noncontrolling interests		171		290		2
Net income (loss) attributable to Tile Coatings business	$	13,832	$	(27,701)	$	24,894

The following table summarizes the assets and liabilities which are classified as held-for-sale at December 31, 2020 and 2019:



	December 31,		December 31,
(Dollars in thousands)	2020		2019
Cash and cash equivalents	$	8,200	$	8,200
Accounts receivable, net		211,548		156,645
Inventories		84,239		101,127
Other receivables		1,630		22,442
Other current assets		2,237		3,006
Current assets held-for-sale		307,854		291,420
Property, plant and equipment, net		108,145		96,762
Amortizable intangible assets, net		42,126		39,692
Deferred income taxes		12,267		14,425
Other non-current assets		6,384		7,052
Non-current assets held-for-sale		168,922		157,931
Total assets held-for-sale	$	476,776	$	449,351

Loans payable and current portion of long-term debt	$	3,927	$	3,678
Accounts payable		85,308		96,998
Accrued payrolls		5,946		4,838
Accrued expenses and other current liabilities		12,364		28,266
Current liabilities held-for-sale		107,545		133,780
Long-term debt, less current portion		56,359		25,805
Postretirement and pension liabilities		8,119		7,473
Other non-current liabilities		6,671		5,063
Non-current liabilities held-for-sale		71,149		38,341
Total liabilities held-for-sale	$	178,694	$	172,121

The following table summarizes cash flow data relating to discontinued operations for the years ended December 31, 2020, 2019 and 2018:



(Dollars in thousands)	2020		2019		2018
Depreciation	$	—	$	11,264	$	10,778
Amortization of intangible assets		—		3,192		3,219
Capital expenditures		(4,713)		(9,965)		(5,830)
Non-cash operating activities - fixed asset impairment		—		—		—
Non-cash operating activities - goodwill impairment		—		42,515		—
Non-cash operating activities - restructuring		1,080		127		—
Non-cash investing activities - capital expenditures, consisting of unpaid capital expenditure liabilities at year end		1,493		1,087		5,926