Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations & Other Divestiture Charges Discontinued Operations & Divestiture Activities (Details)

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Discontinued Operations & Other Divestiture Charges Discontinued Operations & Divestiture Activities (Details) - USD ($)
3 Months Ended 9 Months Ended
Dec. 02, 2019
Oct. 31, 2019
Oct. 22, 2019
Sep. 20, 2019
Dec. 31, 2018
Dec. 19, 2018
May 31, 2020
Feb. 29, 2020
Nov. 30, 2019
May 31, 2019
Feb. 28, 2019
May 31, 2020
May 31, 2019
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                          
Proceeds from sale of business/product line                       $ 10,226,000 $ 0
Impairment & divestiture (benefits) charges             $ (1,443,000)     $ (12,988,000)   (3,567,000) 14,031,000
Other Divestiture Charges             2,400,000         4,900,000  
Impairment & Divestiture Benefit                       $ 800,000  
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]                      
Note 5. Discontinued Operations and Other Divestiture Activities
Discontinued Operations
On October 31, 2019, as part of our overall strategy to become a pure-play industrial tools and services company, the Company completed the previously announced sale of the businesses comprising its former Engineered Components & Systems ("EC&S") segment to wholly owned subsidiaries of BRWS Parent LLC, a Delaware limited liability company and affiliate of One Rock Capital Partners II, LP, for a purchase price of approximately $214.5 million (which included approximately $3.0 million to be paid in four equal quarterly installments after closing, of which $0.7 million was received in the nine months ended May 31, 2020). In connection with the completion of the sale in the three months ended November 30, 2019, the Company recorded a net loss of $4.2 million comprised of a loss of $22.4 million representing the excess of the net assets (exclusive of deferred tax assets and liabilities associated with subsidiaries of the Company whose stock was sold as part of the transaction) as compared to the purchase price less costs to sell and the recognition in earnings of the cumulative effect of foreign currency exchange gains and losses during the quarter largely offset by an income tax benefit of $18.2 million associated with the write off of the net deferred tax liability on subsidiaries of the EC&S segment for which the stock was divested. The Company also recognized an additional $3.3 million of impairment & divestiture costs in the three months ended November 30, 2019 associated with the accelerated vesting of restricted stock awards associated with employees terminated as part of the transaction and $2.7 million of additional divestiture charges which were necessary to complete the transaction. In the three months ended February 29, 2020, the Company incurred approximately $0.3 million of additional miscellaneous divestiture related costs. In the three months ended ended May 31, 2020, the Company finalized the customary negotiation of final working capital amounts and received an additional $1.3 million of proceeds in June 2020. For the three months ended May 31, 2020, the Company recognized a negligible impairment & divestiture benefit associated with the transaction which was comprised of $0.4 million from the finalization of the working capital amounts offset by miscellaneous transaction related costs including finalization of termination costs for employees in certain foreign jurisdictions.
During the first quarter of fiscal 2019, the Company determined that the Precision Hayes business was a non-core asset, did not align with the strategic objectives of the Company and, as a result, the Company committed to a plan to sell this business. The Company completed the sale of the Precision Hayes business on December 31, 2018 for $23.6 million cash net of final transaction costs, working capital adjustments, accelerated vesting of equity compensation, retention bonuses and other adjustments which were recognized within the second quarter of fiscal 2019. The Company recorded $9.5 million of impairment & divestiture charges during the nine months ended May 31, 2019, of which the charges represented the excess of the net book value of the net assets held for sale less the anticipated proceeds, less costs to sell.
The Company completed the sale of the Cortland Fibron business on December 19, 2018 for $12.5 million in cash. During the three and nine months ended May 31, 2019, the Company recognized $0.0 million and $4.3 million of impairment & divestiture charges associated with the divestiture of the Cortland Fibron business.
In addition to the above disclosed matters, the Company also incurred $2.4 million and $4.9 million of divestiture related costs during the three and nine months ended May 31, 2019, respectively.
As the aforementioned divestitures were a part of our strategic shift to become a pure-play industrial tools and services company, the results of their operations (including the stated impairment & divestiture charges) are recorded as a component of "Loss from discontinued operations" in the Condensed Consolidated Statements of Operations for all periods presented.
The following represents the detail of "(Loss) earnings from discontinued operations, net of income taxes" within the Condensed Consolidated Statements of Operations (in thousands):
 
 
Three Months Ended May 31,
 
Nine Months Ended May 31,
 
 
2020
 
2019
 
2020*
 
2019
Net sales
 
$

 
$
117,171

 
$
67,010

 
$
363,270

Cost of products sold
 

 
87,224

 
49,749

 
272,456

Gross profit
 

 
29,947

 
17,261

 
90,814

 
 
 
 
 
 
 
 
 
Selling, administrative and engineering expenses
 
116

 
16,801

 
11,567

 
54,184

Amortization of intangible assets
 

 
1,573

 

 
5,142

Restructuring (benefit) charges
 

 

 
(11
)
 
446

Impairment & divestiture (benefit) charges
 
(31
)
 
2,392

 
28,699

 
18,711

Operating (loss) earnings
 
(85
)
 
9,181

 
(22,994
)
 
12,331

Financing costs, net
 

 
109

 
14

 
102

Other expense (income), net
 

 
1,165

 
(104
)
 
1,712

(Loss) earnings before income tax (benefit) expense
 
(85
)
 
7,907

 
(22,904
)
 
10,517

Income tax (benefit) expense
 
(16
)
 
2,347

 
(16,828
)
 
3,999

Net (loss) earnings from discontinued operations
 
$
(69
)
 
$
5,560

 
$
(6,076
)
 
$
6,518

* "(Loss) earnings from discontinued operations, net of income taxes" for the periods presented in fiscal 2020 include the results of the EC&S segment for the two months ended October 31, 2019 (the divestiture date) as well as the ancillary impacts from certain retained liabilities subsequent to the divestiture. As a result of the classification of the segment as assets and liabilities held for sale for the two months ended October 31, 2019, the Company did not record amortization or depreciation expense in the results of operations in accordance with U.S. GAAP. Furthermore, the Company excluded EC&S segment employees from the fiscal 2020 bonus compensation plan, hence there are no expenses associated with the plan for that period.
Other Divestiture Activities
On September 20, 2019, the Company completed the sale of the UNI-LIFT product line, a component of our Milwaukee Cylinder business (IT&S segment) for initial net cash proceeds of $6.0 million, which resulted in an impairment & divestiture benefit of $4.6 million in the three months ended November 30, 2019. In the three months ended February 28, 2020, the Company recorded an additional benefit of $0.1 million related to agreement with the buyer on final working capital amounts and various other benefits. In March 2020, the buyer of the UNI-LIFT product line extended a long-term supply agreement with a significant customer. Pursuant to the sales agreement, this action triggered the requirement for the buyer to pay $1.5 million of contingent proceeds which was received by the Company in the three months ended May 31, 2020 and recorded as an "Impairment & divestiture benefit" within the Condensed Consolidated Statements of Operations.
After the sale of the UNI-LIFT product line, the Company determined that the remaining Milwaukee Cylinder business was a non-core asset, did not align with the strategic objectives of the Company and, as a result, the Company committed to a plan to sell this business. The Company recorded impairment & divestiture charges of $4.6 million in the three months ended November 30, 2019 comprised of impairment charges of $2.5 million representing the excess of net assets held for sale compared to the anticipated proceeds less costs to sell, $1.9 million associated with our requirement to withdraw from the multi-employer pension plan associated with that business and $0.2 million of other divestiture related charges. The Company completed the divestiture of the Milwaukee Cylinder business on December 2, 2019 for a negligible amount. In the three months ended May 31, 2020, the Company recorded inconsequential amounts of impairment & divestiture charges associated with changes in estimate on retained liabilities.
The historical results of the Milwaukee Cylinder business, inclusive of the UNI-LIFT product line, (which had net sales of $4.3 million in the three months ended May 31, 2019 and $2.9 million and $7.1 million in the nine months ended May 31, 2020 and May 31, 2019, respectively) are not material to the condensed consolidated financial results.
On October 22, 2019, the Company completed the sale of the Connectors product line (IT&S segment) for net cash proceeds of $2.7 million, which resulted in an impairment & divestiture benefit of $1.3 million in the three months ended November 30, 2019. During the three months ended February 28, 2020, the Company recorded $0.1 million of impairment & divestiture charges related to working capital adjustment. The historical results of the Connectors product line (which had net sales of $1.0 million in the three months ended May 31, 2019 and $0.2 million and $2.5 million in the nine months ended May 31, 2020 and May 31, 2019, respectively) are not material to the condensed consolidated financial results.
As of February 28, 2020, the Company determined that it was no longer probable that a loss would occur related to an outstanding legal matter associated with a previously divested business, as such, recorded an impairment & divestiture benefit of $0.8 million in the nine months ended May 31, 2020.
In the three months ended May 31, 2019, the Company recognized an impairment & divestiture benefit of $13.0 million related to the Cortland U.S. business representing the restoration of the cumulative effect of foreign currency rate changes since acquisition that had been recorded as impairment & divestiture charges in previous periods in fiscal 2019. As a result of triggering events identified as of November 30, 2018 and February 28, 2019, the Company recorded impairment & divestiture charges of $13.7 million for the nine months ended May 31, 2019, associated with Goodwill impairments in the Cortland U.S. business.
 
Engineered Components & Systems [Member]                          
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                          
Disposal Date   Oct. 31, 2019                      
Proceeds from sale of business/product line   $ 214,500,000         1,300,000            
Quarterly Installment Payments   $ 3,000,000.0         700,000            
Discontinued Operation, Income (Loss) from Discontinued Operation, before Income Tax                 $ (4,200,000)        
Asset Impairment Charges                 (22,400,000)        
Income Tax Benefit Related to Write Down of Assets                 18,200,000        
Impairment & divestiture (benefits) charges               $ 300,000 3,300,000        
Additional loss through final working capital             400,000            
Other Divestiture Charges                 2,700,000        
Precision-Hayes International [Member]                          
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                          
Disposal Date         Dec. 31, 2018                
Proceeds from sale of business/product line         $ 23,600,000                
Impairment & divestiture (benefits) charges                         9,500,000
Cortland Fibron [Domain]                          
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                          
Disposal Date           Dec. 19, 2018              
Proceeds from sale of business/product line           $ 12,500,000              
Impairment & divestiture (benefits) charges             0.0           4,300,000
UNI-LIFT Product Line [Domain]                          
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                          
Disposal Date       Sep. 20, 2019                  
Proceeds from sale of business/product line       $ 6,000,000.0                  
Impairment & divestiture (benefits) charges       $ 4,600,000       $ (100,000)          
Contingent Proceeds             $ 1,500,000            
Milwaukee Cylinder (excluding UNI-LIFT) [Member]                          
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                          
Disposal Date Dec. 02, 2019                        
Impairment & divestiture (benefits) charges                 4,600,000        
Other Divestiture Charges                 200,000        
Goodwill, Impairment Loss                 2,500,000        
Charges Associated with Withdrawl of Pension Plan                 1,900,000        
Milwaukee Cylinder (including UNI-LIFT) [Member]                          
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                          
Disposal Group, Not Discontinued Operation, annual revenue                   4,300,000   $ 2,900,000 7,100,000
Connectors Product Line [Member]                          
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                          
Disposal Date     Oct. 22, 2019                    
Proceeds from sale of business/product line     $ 2,700,000                    
Impairment & divestiture (benefits) charges                 $ 1,300,000   $ 100,000    
Disposal Group, Not Discontinued Operation, annual revenue                   1,000,000.0   $ 200,000 2,500,000
Other Operating Segment [Member]                          
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]                          
Goodwill, Impairment Loss                         $ 13,700,000
Impairment & Divestiture Benefit                   $ (13,000,000.0)