Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

 v2.3.0.11
Discontinued Operations
 9 Months Ended
May 31, 2011
Discontinued Operations  
Discontinued Operations

Note 3. Discontinued Operations

During the fourth quarter of fiscal 2010, the Company committed to a plan to divest its European Electrical business (included in the Electrical Segment), which designs, manufactures and markets electrical sockets, switches and other tools and consumables predominately in the European DIY retail market. This planned divestiture was part of the Company's portfolio management process to focus on businesses that create the most shareholder value. Weak economic conditions throughout Europe and reduced demand in the retail DIY markets, combined with the decision to divest the business, caused the Company to reduce the projected sales, operating profit and cash flows of the business, which resulted in a $36.1 million non-cash asset impairment charge to adjust the carrying value of the asset group to fair value. This impairment charge was recognized in the fourth quarter of fiscal 2010 and consisted of $24.5 million of goodwill, $2.3 million of intangible assets and $9.3 million of property, plant and equipment and other assets. On February 28, 2011, the Company completed the sale of the business for total cash proceeds of $3.5 million, net of transaction costs. As a result of the sale transaction, the Company recognized a loss on disposal of $13.7 million, including an $11.4 million charge to cover future lease payments on an unfavorable real estate lease of the divested business. As a result of certain post closing adjustments and correction of an immaterial prior period amount, the Company recorded an additional loss on the disposition of $2.0 million during the third quarter of fiscal 2011.

 

The results of operations for the European Electrical business are reported as discontinued operations for all periods presented and are summarized as follows (in thousands):

 

     Three Months Ended May 31,     Nine Months Ended May 31,  
     2011     2010     2011     2010  

Net sales

    $ —        $ 24,501      $ 49,305      $ 83,832   

Loss from operations of divested businesses

      —          (1,853 )      (1,157 )      (3,491 ) 

Loss on disposal of businesses

      (2,086 )      —          (15,829 )      —     

Income tax benefit (expense)

      84        (4,605 )      —          (5,111 ) 
                                

Loss from discontinued operations, net of taxes

    $ (2,002 )    $ (6,458 )    $ (16,986 )    $ (8,602 )