Discontinued Operations and Exit of Product Lines

9 Months Ended

Sep. 29, 2012

Discontinued Operations and Exit of Product Lines

Discontinued Operations and Exit of Product Lines

Note 2.  Discontinued Operations and Exit of Product Lines

Discontinued Operations

In December 2011, the Company signed a definitive agreement to sell its Office and Consumer Products (“OCP”) business to 3M Company (“3M”) for gross cash proceeds of $550 million, subject to adjustment in accordance with the terms of the agreement.  This business comprises substantially all of the Company’s previously reported OCP segment. On October 3, 2012, the Company and 3M mutually agreed to terminate the definitive agreement.  The Company continues to pursue the divestiture of the OCP business.

The Company has classified the operating results from the OCP business, together with certain costs associated with the planned divestiture, as discontinued operations in the unaudited Consolidated Statements of Income for the three and nine months ended September 29, 2012 and October 1, 2011.  Assets and liabilities of this business are classified as “held for sale” in the unaudited Condensed Consolidated Balance Sheets at September 29, 2012 and December 31, 2011.

The operating results of these discontinued operations were as follows:

	Three Months Ended				Nine Months Ended
(In millions)	September 29, 2012		October 1, 2011		September 29, 2012		October 1, 2011
Net sales	$	213.1	$	218.7	$	549.1	$	576.9
Income before taxes	$	30.7	$	24.8	$	46.3	$	53.3
Provision for income taxes	10.5		10.4		15.6		10.8
Income from discontinued operations, net of tax	$	20.2	$	14.4	$	30.7	$	42.5

The comparison of the operating results to the respective prior periods are affected primarily by a number of factors, including the cessation of depreciation and amortization in the current period as the assets of the business were classified as "held for sale," the elimination of certain corporate cost allocations, and the inclusion of certain divestiture-related costs.

Net sales of the Company’s continuing operations to its discontinued operations were $21.4 million and $62.7 million for the three and nine months ended September 29, 2012, respectively, and $19.5 million and $64 million for the three and nine months ended October 1, 2011, respectively.  These sales have been included in “Net sales” in the unaudited Consolidated Statements of Income.

Exit of Product Lines

In the third quarter of 2012, the Company exited the product lines in the retained portion of the previously reported OCP segment, incurring exit costs of $2.1 million (included in “Other expense, net” in the unaudited Consolidated Statements of Income).  The operating results of these product lines, which are not significant, are included in other specialty converting businesses for all periods presented.

The carrying values of the major classes of assets and liabilities related to these discontinued operations were as follows:

(In millions)	September 29, 2012		December 31, 2011
Assets
Trade accounts receivable, net	$	116.1	$	117.7
Inventories, net	66.5		50.9
Other current assets	9.3		5.9
Total current assets	191.9		174.5
Property, plant and equipment, net	77.2		74.2
Goodwill	166.8		166.0
Other intangibles resulting from business acquisitions, net	32.1		32.9
Other assets	7.0		7.3
	$	475.0	$	454.9
Liabilities
Short-term borrowings	$	–	$	1.1
Accounts payable	31.8		34.7
Other current liabilities	102.2		105.1
Total current liabilities	134.0		140.9
Non-current liabilities	13.0		13.6
	$	147.0	$	154.5