Discontinued Operations

12 Months Ended

Dec. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

ote 3. Discontinued Operations

The Company has early adopted ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity" ("ASU 2014-08").

On September 4, 2014, the Company, ViSalus and certain of ViSalus’s preferred stockholders entered into a recapitalization agreement pursuant to which ViSalus was recapitalized by exchanging each share of ViSalus preferred stock for 38.2 shares of ViSalus common stock, thereby (i) reducing the Company’s ownership interest in ViSalus from approximately 80.9% to 10.0% and (ii) eliminating the obligation of ViSalus to redeem the preferred stock in 2017 (for approximately $143.2 million) and the related guaranty by the Company of ViSalus’s performance of such obligation. In addition, the Company agreed to make available to ViSalus a revolving credit facility.

On October 17, 2014, the Company and ViSalus entered into a revolving loan agreement (the "Blyth Revolving Loan Agreement") pursuant to which the Company agreed to lend ViSalus up to $6.0 million. Loans under the revolving credit agreement bear interest at a rate of 10% per annum. Interest will be paid monthly and there will be no higher default rate of interest. The revolving loan involves related parties. Robert B. Goergen, Robert B. Goergen, Jr. and Todd A. Goergen own 8.29%, 0.34% and 2.81%, respectively, of the outstanding capital stock of ViSalus. On October 17, 2014, the founders of ViSalus and Robert B. Goergen (the “Founder Lenders”) entered into a substantially similar loan agreement with ViSalus (the “Founder Revolving Loan Agreement”) pursuant to which they made a revolving credit facility available to ViSalus in an amount up to $6.0 million on terms that are substantially identical to the terms of the Blyth Revolving Loan Agreement. Loans made under the Blyth Revolving Loan Agreement and loans made under the Founder Revolving Loan Agreement will be made at the same time in equal amounts and will rank equally with each other. As of December 31, 2014, ViSalus owed the Company $3.0 million under the Blyth Revolving Loan Agreement. In February 2015, the Company lent an additional $0.8 million under the agreement, bringing the amount outstanding to $3.8 million.

As a result of its reduced ownership in ViSalus, the Company will no longer consolidate ViSalus's results in the Company's financial statements; rather, the ViSalus investment will be recorded on a cost basis subject to annual impairment reviews to ensure its investment is properly stated. The Company's investment in ViSalus was evaluated for impairment at December 31, 2014 and, as a result, a $2.9 million impairment charge was recorded to the ViSalus investment bringing the ending investment value to $6.9 million. This transaction is presented as discontinued operations in the Consolidated Financial Statements and results of operations for the years ended December 31, 2014, 2013 and 2012.

The Company recorded a gain on the recapitalization of ViSalus of $118.9 million, net of income tax benefit of $0.7 million, as a result of the exchange of the ViSalus preferred stock for ViSalus common stock, which eliminated the Company’s guaranty of ViSalus’s agreement to redeem the preferred stock. This transaction is non-cash and was treated as a tax free exchange, as the preferred stockholders received ViSalus common stock in exchange for their preferred stock.

On October 29, 2012, the Company completed the sale of its Sterno business for $23.5 million in cash and recorded a gain of $5.5 million, net of income tax expense of $3.1 million. This transaction is presented as discontinued operations in the Consolidated Financial Statements and results of operations for the year ended December 31, 2012.

The following table details net earnings (loss) of discontinued operations for the years ended December 31:

(In thousands)	2014			2013			2012
Net sales	$	138,860		$	351,187		$	671,848
Cost of goods sold	42,179			113,273			216,068
Selling, administrative and other expenses	104,199			230,154			371,546
Other income and expenses	1,657			(333		)	(227		)
Earnings (loss) before income taxes and noncontrolling interest	(9,175		)	8,093			84,461
Income tax expense (benefit)	(176		)	4,457			35,758
Less: Net earnings (loss) attributable to noncontrolling interests	(1,768		)	690			12,961
Net earnings (loss) attributable to discontinued operations	$	(7,231	)	$	2,946		$	35,742

The following table details assets and liabilities of discontinued operations as of December 31, 2013:

Total assets of discontinued operations (In thousands)
Cash	$	7,914
Accounts receivable, net	149
Inventories	21,113
Prepaid and other	1,349
Deferred tax current	2,517
Other current assets	1,166
Current assets of discontinued operations	34,208
Net plant, property and equipment	18,602
Investments	1,177
Deferred tax non-current	5,800
Intangible assets	2,028
Non-current assets of discontinued operations	27,607
Total	$	61,815
Total liabilities of discontinued operations
Accounts payable	$	5,870
Accrued expenses	17,986
Income taxes payable	110
Current liabilities of discontinued operations	23,966
Other liabilities	865
Redeemable preferred stock	146,603
Non-current liabilities of discontinued operations	147,468
Total	$	171,434