Discontinued Operations

12 Months Ended

Dec. 31, 2016

Discontinued Operations [Abstract]

Discontinued Operations

R.   DISCONTINUED OPERATIONS

On January 3, 2017, the Company and its wholly-owned subsidiary, Presto Absorbent Products, Inc. (“PAPI”), entered into an asset purchase agreement wherein substantially all PAPI assets were sold and certain liabilities were assigned to Drylock Technologies, LTD. (“Drylock”) in exchange for $67,000,000, subject to customary post-closing adjustments.  The asset purchase agreement also provides for additional proceeds of $4,000,000 upon the sale of certain delayed assets, consisting of machinery and equipment that were the subject of an involuntary conversion, at a future date.  As a result of this transaction, effective in the fourth quarter of 2016, the Company classified its results of operations for all periods presented to reflect its Absorbent Products business as a discontinued operation and classified the assets and liabilities of its Absorbent Products business as held for sale. As the selling price less selling costs exceeded the carrying value of the assets and liabilities subject to the purchase agreement, no impairment was indicated or recorded as of December 31, 2016.

The following table summarizes the results of the Absorbent Products business within discontinued operations for each of the periods presented:

	For the years ended December 31,
(in thousands)	2016		2015		2014
Net sales	$	76,555	$	72,041	$	65,165
Cost of sales		(70,848)		(71,897)		(69,270)
Selling and general expenses		(2,618)		(2,275)		(1,794)
Other income (expense)		976		(1)		(1)
Earnings (loss) from discontinued operations before provision for income taxes		4,065		(2,132)		(5,900)
Provision for (benefit from) income taxes from discontinued operations		1,416		(466)		(1,625)
Earnings (loss) from discontinued operations, net of tax	$	2,649	$	(1,666)	$	(4,275)

The following table summarizes the major classes of assets and liabilities of the Absorbent Products business held for sale for each of the periods presented:

	Year Ended December 31,
(in thousands)	2016		2015
Accounts receivable, net	$	13,781	$	11,950
Inventories		10,747		9,713
Property, plant and equipment, net		34,365		38,147
Assets held for sale	$	58,893	$	59,810
Accounts payable	$	5,245	$	4,788
Accrued liabilities		1,008		828
Liabilities held for sale	$	6,253	$	5,616

The Consolidated Statements of Cash Flows do not present the cash flows from discontinued operations separately from cash flows from continuing operations.  Cash provided by operating activities from discontinued operations was $4,477,000,  $4,733,000, and $3,517,000 for the years ended December 31, 2016, 2015, and 2014, respectively. Cash used in investing activities related to discontinued operations was $1,139,000,  $2,385,000, and $9,551,000 for the years ended December 31, 2016, 2015, and 2014, respectively.

In connection with the asset purchase agreement discussed above, the Company entered into a 10-year lease agreement with Drylock for a portion of its manufacturing and warehouse facilities.  The lease agreement provides for total annual payments of $1,288,000 initially and provides Drylock an option for early termination of the lease after the initial five years and an option to modify the space subject to the agreement. The agreement also allows for adjustments to the rental payments based on certain price indices.  The Company has also entered into a transition services agreement with Drylock which is expected to continue through the end of 2017.