Discontinued Operations

6 Months Ended

Jun. 30, 2013

Discontinued Operations

Discontinued Operations

3. Discontinued Operations

On December 21, 2012, the Company completed the sale of all of the outstanding shares of its subsidiary, Flomatic Corporation (Flomatic). The sale excluded the backflow product line of Flomatic, which was retained by the Company.  Flomatic, located in Glens Falls, New York, specializes in manufacturing and selling check valves, foot valves and automatic hydraulic control valves for the well water industry. The Company acquired Flomatic as part of its acquisition of Danfoss Socla S.A.S. (Socla) in April 2011.  The Company evaluated the operations of Flomatic and determined that it would not have a substantial continuing involvement in Flomatic’s operations and cash flows. As a result, Flomatic’s cash flows and operations were eliminated from the continuing operations of the Company and classified as discontinued operations for all periods presented.

	Second Quarter Ended				Six Months Ended
	June 30, 2013		July 1, 2012		June 30, 2013		July 1, 2012
	(in millions)
Operating income — Flomatic	$	—	$	0.5	$	—	$	0.8
Income before income taxes	—		0.5		—		0.8
Income tax expense .	—		0.2		—		0.3
Income from discontinued operations, net of taxes	$	—	$	0.3	$	—	$	0.5

Revenues reported in discontinued operations are as follows:

	Second Quarter Ended				Six Months Ended
	June 30, 2013		July 1, 2012		June 30, 2013		July 1, 2012
	(in millions)
Flomatic revenues.	$	—	$	3.7	$	—	$	6.7

Sale of Watts Insulation GmbH Austria (“Austroflex”)

On August 1, 2013, the Company completed the sale of all of the outstanding shares of an indirectly wholly-owned subsidiary, Austroflex, receiving proceeds from the sale of approximately $9 million.  Austroflex is an Austrian-based manufacturer of pre-insulated flexible pipe systems for district heating, solar applications and under-floor radiant heating systems. Austroflex did not meet performance expectations since its purchase approximately three years ago.  The estimated loss after tax on disposal of the business is approximately $2 million. Further, for the year ended December 31, 2011, the Company wrote down Austroflex’s long-lived assets by $14.8 million. Austroflex’s results of operations will be presented as discontinued operations beginning the third quarter of 2013. The carrying amounts of major classes of assets and liabilities associated with the assets held in use as of June 30, 2013 and December 31, 2012 are as follows:

	June 30, 2013		December 31, 2012
	(in millions)
Inventory and accounts receivable	$	4.9	$	3.7
Prepaid expenses and other assets	2.9		3.8
Property, plant and equipment	1.6		1.9
Goodwill	4.2		4.2
Assets of discontinued operations	$	13.6	$	13.6
Accrued expenses and other liabilities	$	2.3	$	1.9
Deferred income taxes	0.3		0.3
Liabilities of discontinued operations	$	2.6	$	2.2