Annual report pursuant to Section 13 and 15(d)

Discontinued Operations

v3.20.1
Discontinued Operations
12 Months Ended
Dec. 31, 2019
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations DISCONTINUED OPERATIONS
In November 2018, we entered into a definitive agreement to sell our wood business to TZI, an affiliate of AIP. The sale was completed in December 2018. The proceeds from the sale were $90.2 million, net of closing costs, transaction fees and taxes. The transaction was subject to a customary post-closing working capital adjustment process which resulted in us making a $1.9 million payment to TZI in the third quarter of 2019.
On December 31, 2018, in connection with the sale of our wood business, TZI and AFI entered into agreements related to transition services, intellectual property, and subleases.
Pursuant to the transition service agreement AFI provided transitional services in areas including human resources, customer service, operations, finance and IT. In consideration for the services, TZI paid AFI $11.9 million of net fees that varied based on the scope of services provided, plus a $3.0 million administrative fee, which are reflected as a reduction of SG&A expense. TZI reimbursed AFI for AFI’s out-of-pocket costs and expenses in connection with providing the services.
Pursuant to the intellectual property agreement, AFI provided TZI a non-exclusive, royalty-free, non-sublicensable, non-assignable license in and to certain trademarks.
Under the subleases agreement TZI leased certain premises located at the AFI campus through March 30, 2021 with the option to terminate the sublease any time after six months from the effective date of the sublease with 30-days' prior notice. TZI terminated the lease in 2019 and paid a termination fee of $2.5 million. Sublease income received prior to the termination totaled $1.5 million.
As a part of the transition service agreement, we facilitated sales into Canada for TZI in 2019 through our Canadian subsidiary as an agent.
The financial results of the wood business have been classified as discontinued operations for all periods presented. The Consolidated Statements of Cash Flows does not separately report the cash flows of the discontinued operation.

The following is a summary of the operating results of the wood business, which are included in discontinued operations. These results exclude overhead allocations.
 
 
 
2018
 
2017
Net Sales
$
387.0

 
$
429.6

Cost of goods sold
330.7

 
407.5

Gross profit
56.3

 
22.1

Selling, general and administrative expenses
36.6

 
39.4

Intangible asset impairment

 
12.5

Operating earnings (loss)
19.7

 
(29.8
)
Interest expense

 
0.1

Other expense, net

 
1.0

Earnings (loss) before income tax
19.7

 
(30.9
)
Income tax expense (benefit)
9.8

 
(6.2
)
Net earnings (loss) from discontinued operations
$
9.9

 
$
(24.7
)
 
2018
 
2017
Depreciation and Amortization
$
10.3

 
$
40.0

Capital Expenditures
(8.0
)
 
(12.3
)

The following is a summary of the results related to the net gain (loss) on disposal of wood business which is included in discontinued operations:
 
2019
2018
Gain (loss) on disposal of discontinued operations before income tax
$
10.4

$
(153.8
)
Income tax expense


Net gain (loss) on disposal of discontinued operations
$
10.4

$
(153.8
)

During the second quarter of 2019, we reached a resolution in our antidumping case resulting in a reversal of a previously recognized liability of $11.4 million, which was reflected in gain on disposal of discontinued operations. See Note 22 for further information.