Note 2: DISCONTINUED OPERATIONS
On August 1, 2006, the Company completed the sale of its
Performance Coatings & Finishes business (the "Coatings
Business") to PPG Industries, Inc. ("PPG") for $115,000,000 in
cash upon the closing, plus post-closing adjustments of
$13,663,000, not including interest. In 2006, the Company
recognized a pretax gain of $862,000 subject to final purchase
price adjustment. Provision for income tax related to the gain was
$1,019,000 which resulted in a net loss of $157,000.
During 2007, the Company completed disposition of several
retained properties formerly used by the Coatings Business and
recognized a net gain of $5,251,000. In 2007, the Company also
recognized a net gain of $107,000 resulting from the final
settlement with PPG. In addition, the Company recognized
$156,000 of research and development tax credits related to the
Coatings Business in 2007. The 2007 tax credit was due to the
retroactive application of tax legislation enacted in 2007. During
the fourth quarter of 2007, the Company recognized a net tax
benefit of $585,000 due to an adjustment in tax expense related to
the gain on the sale of the Coatings Business. This benefit
represents a correction, rather than a change in estimate, of
amounts recorded in prior period financial statements.
Management believes this to be immaterial to prior interim and
annual financial statements.
The results of operations for the discontinued business were as
follows for the year ended November 30:
| (In thousands) |
2007 |
2006 |
2005 |
|
| Revenue from discontinued
operations |
— |
$152,190 |
$209,807 |
| Income from discontinued
operations before disposal,
before income taxes |
— |
5,308 |
6,531 |
| Income taxes on income from
discontinued operations |
156 |
(3,011) |
(3,430) |
| Income from discontinued
operations before disposal,
net of taxes |
156 |
2,297 |
3,101 |
| Gain from sale of discontinued,
operations, before income taxes |
5,358 |
862 |
— |
| Income taxes on gain from sale
of discontinued operations |
585 |
(1,019) |
— |
| Loss on sale of discontinued
operations,net of taxes |
5,943 |
(157) |
— |
| |
|
| Income from discontinued operations, net of taxes |
$ 6,099 |
$ 2,140 |
$ 3,101 |
|
|
|
The income taxes on gain from sale of discontinued operations in
2006 reflects the allocation of sale proceeds to various taxing
jurisdictions, which resulted in certain tax losses without tax
benefits. Prior period income statement amounts have been reclassified to present the operating results of the Coatings
Business as a discontinued operation. Prior period balance sheets
and cash flow statements have not been adjusted. |
