Discontinued Operations
On November 4, 2013, the Company completed the sale of its tungsten materials business, which produces tungsten powder, tungsten heavy alloys, tungsten carbide materials, and carbide cutting tools. The Company received cash proceeds, net of transaction costs, of $600.9 million on the sale of this business and recognized a $428.3 million pre-tax ($261.4 million after tax) gain which has been recorded in discontinued operations.
Also, during the third quarter of 2013, the Company completed a strategic review of its iron castings and fabricated components businesses. Based on current and forecasted results, these businesses were not projected to meet the Company's long-term profitable growth and return on capital employed expectations. As a result of this review, the Company closed its fabricated components business and recorded $8.1 million of pre-tax exit costs, including $7.3 million of non-cash impairment charges for long-lived assets, and $0.8 million primarily related to lease exit costs. The Company expects the cash requirements associated with lease-related exit costs to be approximately $4 million, to be incurred over the next four years. The planned divestiture of the iron castings business, which is held for sale at December 31, 2013, resulted in a $11.3 million pre-tax, non-cash long-lived asset impairment charge based on an analysis of the estimated fair value of the business, which represents Level 3 unobservable information in the fair value hierarchy.
The tungsten materials, iron castings and fabricated components businesses were all previously reported as part of the Company's former Engineered Products segment. The net assets of the iron castings and fabricated components businesses were classified as held for sale as of the end of fiscal year 2013 and the operating results of all three of these businesses have been included in discontinued operations in the Company's consolidated statements of income for all periods presented. Results of discontinued operations for 2013 include $19.5 million pre-tax ($11.9 million after-tax) of charges associated with the iron castings and fabricated components divestitures. Results of discontinued operations for 2012 include a $13.0 million pre-tax ($8.8 million after-tax) charge to write down the value of the long-lived assets with the closing of the Alpena, MI iron casting facility.
The following table presents summarized results for these discontinued operations (in millions): |
| | | | | | | | | | | |
| 2013 | | 2012 | | 2011 |
Sales | $ | 268.2 |
| | $ | 364.6 |
| | $ | 370.7 |
|
Income before income tax provision | $ | 414.2 |
| | $ | 11.7 |
| | $ | 17.3 |
|
Net assets of discontinued operations were $4.2 million at December 31, 2013 and consisted of the following items (in millions):
|
| | | |
| 2013 |
Accounts receivable, net of allowances for doubtful accounts | $ | 2.9 |
|
Inventories, net | 3.1 |
|
Prepaid expenses and other current assets | 0.1 |
|
Property, plant and equipment, net | 3.7 |
|
Total Assets | 9.8 |
|
Accounts payable | 1.8 |
|
Accrued liabilities | 3.1 |
|
Long-term liabilities | 0.7 |
|
Total Liabilities | 5.6 |
|
Net Assets | $ | 4.2 |
|
