|3 Months Ended|
Mar. 31, 2016
|Discontinued Operations and Disposal Groups [Abstract]|
European Resilient Flooring
On December 4, 2014, AWI's Board of Directors approved the cessation of funding to our DLW subsidiary, which at the time was our European flooring business. As a result, DLW management filed for insolvency in Germany on December 11, 2014.
The DLW insolvency filing in December 2014 resulted in our disposal and presentation of DLW for all historical periods as a discontinued operation. However, the insolvency filing did not meet the U.S. tax criteria to be consider disposed of until the first quarter of 2015. In determining the U.S tax impact of the disposition, the liabilities, including an unfunded pension liability of approximately $115 million, were considered proceeds. However, pension deductions for tax purposes result only when the benefit payments are made. Accordingly, a deferred tax asset and non-cash income tax benefit of $43.4 million were recorded in the first quarter of 2015 within discontinued operation for the tax benefit of the future pension deductions.
At the date of insolvency, DLW had a net liability of $12.9 million, representing assets of $151.9 million and liabilities of $164.8 million, which were removed from AWI’s balance sheet. This net liability was recognized as a contingent liability on AWI’s balance sheet pending the closure and results of the insolvency proceedings. Any shortfall will be the responsibility of AWI immediately when identified and any excess will be reflected by AWI when insolvency proceedings are finalized. The liability has been excluded from AFI’s Combined Balance Sheets as AWI will be solely responsible for any shortfall, and the beneficiary of any excess, at the closure of the insolvency proceedings.
The following is a summary of the operating results of our discontinued business. These results were previously presented as part of the Resilient Flooring reporting segment.
The $0.1 million and $1.2 million pre-tax losses on disposal of discontinued business recorded in 2016 and 2015 were comprised of selling, general and administrative expenses.
The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.
Reference 1: http://www.xbrl.org/2003/role/presentationRef