Note 6 - Assets and Liabilities Held for Sale

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

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

6.    ASSETS AND LIABILITIES HELD FOR SALE

During the first half of 2019, the Company initiated plans to sell several entities as part of its ongoing strategic actions intended to generate higher returns and more predictable and sustainable long-term earnings growth. Within Infrastructure Solutions, the Company initiated plans to divest its CIPP contracting businesses in Europe: Insituform Netherlands, Insituform Spain and Environmental Techniques. See Notes 1 and 17 for additional information on the sale of the CIPP contracting operations of Insituform Netherlands and Insituform Spain. Within Corrosion Protection, the Company initiated plans to divest its interest in United Mexico. See Note 1 for additional information on the sale of the Company’s interest in United Mexico. During the fourth quarter of 2019, the Company’s board of directors approved the action to sell several parcels of land located near its corporate headquarters.

The Company is currently in various stages of discussions with third parties for Environmental Techniques and believes that it is probable that a sale will occur in the first half of 2020. The Company also believes it is probable that a sale of the land parcels will occur in 2020. In the event the Company is unable to liquidate the assets and liabilities at a price that is less than favorable, the Company could incur a loss on disposal.

During 2018, the Company’s board of directors approved a plan to divest the assets and liabilities of Insituform Australia. See Note 17 for additional information on the sale of Insituform Australia, effective January 24, 2020.

The relevant asset and liability balances at December 31, 2019 and 2018 are accounted for as held for sale and measured at the lower of carrying value or fair value less cost to sell. Based on management’s expectation of fair value less cost to sell, the Company recorded an impairment of assets held for sale of $23.4 million in the Consolidated Statement of Operations during 2019. During the second quarter of 2019, impairment charges of $5.1 million and $3.9 million were recorded for Insituform Australia and Insituform Netherlands, respectively, which are reported within the Infrastructure Solutions reportable segment, and $1.1 million and $1.8 million were recorded for Corrpower and United Mexico, respectively, which are reported within the Corrosion Protection reportable segment. During the fourth quarter of 2019, certain terms of the Insituform Netherlands transaction changed and the sale resulted in further impairment charges of $2.6 million. Additionally, impairment charges of $6.0 million and $2.9 million, respectively, were recorded in the fourth quarter of 2019 for Insituform Spain, which is reported within the Infrastructure Solutions reportable segment, and Corporate based on management’s current expectation of fair value less cost to sell. In the event the Company is unable to sell the assets and liabilities or sells them at a price or on terms that are less favorable, or at a higher cost than currently anticipated, the Company could incur additional impairment charges or a loss on disposal.

The following table provides the components of assets and liabilities held for sale (in thousands):

	December 31,
		2019(1)			2018(2)
Assets held for sale:
Current assets
Receivables, net	$	4,136		$	1,309
Retainage		518			15
Contract assets		5,350			1,777
Inventories		2,097			2,123
Prepaid expenses and other current assets		799			300
Total current assets		12,900			5,524
Property, plant & equipment, less accumulated depreciation		10,962			2,268
Goodwill		4,224			—
Intangible assets, less accumulated amortization		1,528			—
Operating lease assets		326			—
Other non-current assets		130			—
Impairment of assets held for sale		(13,978	)		—
Total assets held for sale	$	16,092		$	7,792
Liabilities held for sale:
Current liabilities
Accounts payable	$	2,174		$	1,331
Accrued expenses		3,961			3,891
Contract liabilities		122			38
Total current liabilities		6,257			5,260
Operating lease liabilities		174			—
Other non-current liabilities		54			—
Total liabilities held for sale	$	6,485		$	5,260

(1)	Includes Insituform Australia, Insituform Spain, Environmental Techniques and land held at Corporate.
(2)	Includes Insituform Australia.