Discontinued Operations

12 Months Ended

Dec. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

In October 2020, we sold our Life Sciences business under the terms of a Stock Purchase Agreement (the “SPA”) with affiliates of American Securities LLC for $753.3 million cash. The Life Sciences business included facilities that were engaged in the production of a variety of components, assemblies, and instruments, such as surgical knives, bioresorbable implants, surgical staples, cases and trays, orthopaedic implants and tools, laparoscopic devices, and drug delivery devices for the orthopaedics and medical/surgical end markets. The sale of the Life Sciences business furthered management’s strategy to improve liquidity and create the financial flexibility to pursue key growth areas in the Mobile Solutions and Power Solutions segments. The SPA included a potential earnout payment of up to $70.0 million based on the performance of the Life Sciences business during the year ended December 31, 2022. Since the sold Life Sciences business did not meet the minimum threshold as defined by the SPA, no earnout payment will be received.

After working capital and other closing adjustments, we received cash proceeds at closing of $757.2 million in 2020 and paid $3.9 million to the buyer during the year ended December 31, 2021, for post-closing adjustments. Under the terms of a transition services agreement, we provided certain support services after the sale. In accordance with the terms of the SPA, we agreed to indemnify the buyer for certain tax liabilities on its consolidated federal income tax return related to the Life Sciences business during the portion of the year ended December 31, 2020, prior to the change in ownership on October 6, 2020. We recognized a tax indemnification of $1.2 million during the year ended December 31, 2020 which was reversed during the year ended December 31, 2021, as the actual tax liability was determined to be $0.

In accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations, the operating results of the Life Sciences business are classified as discontinued operations. The presentation of discontinued operations includes revenues and expenses of the discontinued operations and the gain on the disposition of the business, all net of tax, as one line item on the Consolidated Statements of Operations and Comprehensive Income (Loss). The Consolidated Statements of Operations and

Comprehensive Income (Loss) for all periods presented have been revised to reflect this presentation. Accordingly, the results of the Life Sciences business have been excluded from continuing operations and segment results for all periods presented in the consolidated financial statements and the accompanying notes unless otherwise stated. The Consolidated Statements of Cash Flows include cash flows of the Life Sciences business in each line item unless otherwise stated.

The following table presents the results of operations of the discontinued operations.


	Years Ended December 31,
	2021		2020
Net sales	$	—	$	225,255
Cost of sales (exclusive of depreciation and amortization shown separately below)	—		160,464
Selling, general, and administrative expense	—		20,779

Depreciation and amortization	—		35,731

Goodwill impairment	—		146,757
Other operating expense, net	—		41
Income from operations	—		(138,517)
Interest expense	—		48,893
Loss on extinguishment of debt and write-off of debt issuance costs	—		1,388

Other expense, net	—		(322)
Loss from discontinued operations before costs of disposal and benefit for income taxes	—		(188,476)
Benefit for income taxes	—		12,468
Loss from discontinued operations before costs of disposal	—		(176,008)
Gain on disposal of discontinued operations	1,200		212,319
Benefit for income taxes on costs of disposal	—		2,587
Income (loss) from discontinued operations, net of tax	$	1,200	$	38,898

During the first quarter of 2020, our market capitalization declined to a level that was less than the net book value of our stockholders’ equity. The decline in market capitalization was a triggering event that caused us to perform a goodwill impairment analysis as of March 31, 2020. The carrying value of the Life Sciences reporting unit exceeded its estimated fair value as of March 31, 2020. As a result of our analysis, we recorded an impairment loss on goodwill of $146.8 million for Life Sciences during the year ended December 31, 2020. The judgments, assumptions, and estimates involved in the goodwill impairment analysis for the Life Sciences reporting unit are consistent with those discussed in Note 7.

Our previous credit facility, which was in place at the time, required us to use proceeds from the sale of the Life Sciences business to prepay a portion of our previous debt. We paid $700.0 million in the aggregate on our term loans during the fourth quarter of 2020. The prepayment was applied to debt in accordance with the prepayment provisions of the previous credit agreement, which was in place at the time. Average quarterly interest rates were multiplied by the required prepayment amounts to calculate interest expense to be reclassified to discontinued operations for historical periods presented.

The following table summarizes the amount of interest expense related to the previous credit facility that was reclassified to discontinued operations.


	Years Ended December 31,
	2021		2020
Interest on debt	$	—	$	35,147
Amortization of debt issuance costs	—		13,990
Capitalized interest and other	—		(244)
Total interest expense of discontinued operations	$	—	$	48,893

The following table presents the significant noncash items and cash paid for capital expenditures of discontinued operations for each period presented.


	Years Ended December 31,
	2021		2020
Depreciation and amortization	$	—	$	35,731
Goodwill impairment	—		146,757
Amortization of debt issuance costs	—		13,990
Loss on extinguishment of debt and write-off of debt issuance costs	—		1,388
Acquisition of property, plant and equipment	—		8,416
Right-of-use assets obtained in exchange for new finance lease liabilities	—		695
Right-of-use assets obtained in exchange for new operating lease liabilities (1)	—		6,174

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(1) Includes new leases, renewals, and modifications.