Discontinued Operations

12 Months Ended

Jul. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued operations consist of the Asia Die-Cut and Balkhausen Die-cut businesses ("Die-Cut"), which were classified as held for sale beginning in the third quarter of fiscal 2013. In addition, the following previously divested businesses were reported within discontinued operations: Brady Medical and Varitronics (divested in fiscal 2013) and Etimark (divested in fiscal 2012). These divested businesses were part of the IDS business segment.

The Company entered into an agreement with LTI Flexible Products, Inc. (d/b/a Boyd Corporation) on February 24, 2014, for the sale of its Die-Cut businesses. The first phase of the divestiture closed on May 1, 2014 and the Company received approximately $54.2 million of cash proceeds for its businesses in Korea, Thailand and Malaysia, and its Balkhausen business in Europe. The second phase included the remainder of the Die-Cut businesses located in China. This portion of the divestiture closed on August 1, 2014.

The following table summarizes the operating results of discontinued operations for the fiscal years ending July 31, 2014, 2013, and 2012:

	2014			2013			2012
Net sales	$	179,050		$	214,137		$	259,668
Earnings (loss) from discontinued operations (1)	6,715			4,083			(117,905		)
(Loss) on write-down of disposal group (2)	—			(15,658		)	—
Income tax (expense) (3)	(3,299		)	(4,703		)	(3,499		)
Loss on sale of discontinued operations (4)	(1,602		)	—			—
Income tax benefit on sale of discontinued operations (5)	364			—			—
Earnings (loss) from discontinued operations, net of tax	$	2,178		$	(16,278	)	$	(121,404	)

(1) The loss from operations of discontinued businesses in fiscal 2012 was primarily attributable to the $115.7 million goodwill impairment charge recorded during the three months ended January 31, 2012, which was related to the Die-Cut business.

(2) The Company recorded a $15.7 million loss to write-down the Die-Cut business to its estimated fair value less costs to sell in the three months ended April 30, 2013.

(3) Fiscal 2013 income tax expense was significantly impacted by the fiscal 2013 losses in China and Sweden, which had no tax benefit, and the increase in valuation allowance related to Shenzhen, China.

(4) Represents the loss incurred on the sale of the Die-Cut business, recorded in the three months ended July 31, 2014 and includes $3.9 million in liabilities retained as part of the divestiture agreement.

(5) The income tax benefit on the sale of discontinued operations was significantly impacted by the release of a reserve for uncertain tax positions of $4.0 million, which was triggered as a result of the Thailand stock sale during the three months ended July 31, 2014. This was offset by $3.6 million in tax expense related to the gain on the sale of the Balkhausen assets. The Thailand stock sale and the Balkhausen asset sale were included in the first phase of the Die-Cut divestiture.

The first phase of the Die-Cut sale closed in the fourth quarter of fiscal 2014 and the second phase closed in the first quarter of fiscal 2015. The assets and liabilities of the second phase were classified as held for sale as of July 31, 2014 and were as follows:

	July 31, 2014
Accounts receivable—net	$	20,174
Total inventories	5,883
Prepaid expenses and other current assets	52
Total current assets	26,109
Other assets:
Goodwill	8,923
Other intangible assets	280
Other	89
Property, plant and equipment—net	14,141
Total assets	$	49,542
Current liabilities:
Accounts payable	$	9,199
Wages and amounts withheld from employees	1,140
Other current liabilities	301
Total current liabilities	10,640
Net assets of disposal group at fair value	38,902

In accordance with authoritative literature, accumulated other comprehensive income will be reclassified to the statement of earnings upon liquidation or substantial liquidation of the disposal group. As of July 31, 2014, the accumulated other comprehensive income attributable to the second phase of the Die-Cut divestiture was approximately $35,000, which reduces the net book value of the disposal group.