Manitex International, Inc. - 10-K filing on 2017-03-10

Discontinued Operations

12 Months Ended

Dec. 31, 2016

Discontinued Operations And Disposal Groups [Abstract]

Note 25. Discontinued Operations

Company Sells Load King

On December 28, 2015, the Company completed the sale of the membership interests of Load King, LLC, a Michigan limited liability company previously known as Manitex Load King, Inc. (“Load King”) pursuant to a Purchase Agreement (the “Purchase Agreement”) with Utility One Source Forestry Equipment LLC, a Delaware limited liability company (the “Buyer”). The Company owned all of the outstanding membership interests of Load King prior to the completion of the transaction.

The Company received cash consideration of $6,525 in connection with sale of Load King. The company recognized a pre-tax loss of $2,142 on the sale including transaction expenses of $720, with a corresponding tax benefit of $764.

Company Sells Liftking

On September 30, 2016, the Company completed the sale of Manitex Liftking, ULC, an Alberta unlimited liability corporation pursuant to a Share Purchase Agreement (the “Liftking Purchase Agreement”) with Mi-Jack Products, Inc. and its wholly-owned subsidiary Liftking Acquisition ULC.

The Company received cash consideration of $14 million. The Company recognized a pre-tax loss of $9,296 on the sale including transaction expenses of $551. The pre-tax loss includes a non-cash portion related to intangible assets and goodwill write-offs of $2,710 and $3,686, respectively. The aforementioned intangible and goodwill represents an allocation of a portion of the Lifting Equipment segment’s intangibles and goodwill that existed on the date of sale. The allocation percentage was arrived at by computing the full value of the Lifting Equipment segment and subtracting the value of the cash consideration that the Company received related to the Liftking disposition. The Company did record an income tax benefit of $453 attributable to this transaction.

Company Sells CVS

On December 22, 2016, Manitex International, Inc. (the “Company”) completed the sale of its CVS Ferrari srl (“CVS”) subsidiary to two Italian companies BP S.r.l. and NEIP III S.p.A. (collectively the “Purchasers”) for $5 million in cash, less $1.3 million payable for inventory due in 2017, and the assumption of $14 million of net CVS debt (the “Transaction”). The Transaction was consummated pursuant to a Sale and Purchase Agreement between the Company and the Purchasers (the “Purchase Agreement”). The Purchasers are privately-held manufacturers and service providers for terminal handling equipment provided around the world. As part of the transaction, the Company retained the operations of CVS’s Valla division, which offers a full range of electric precision pick and carry cranes.

The Company recognized a pre-tax loss of $7,984 on the sale including transaction expenses of $650. The pre-tax loss includes a non-cash portion related to intangible assets and goodwill write-offs of $2,649 and $4,358, respectively. The aforementioned intangible and goodwill represents an allocation of a portion of CVS’s segment’s intangibles and goodwill that existed on the date of sale. The allocation percentage was arrived at by computing the full value of the Lifting Equipment segment and subtracting the value of the cash consideration that the Company received related to the CVS disposition. The Company did record an income tax benefit of $100 attributable to this transaction.

As disclosed in Note 22, in March 2016 the Company recognized a gain of $2,212 from the sale of inventory and intellectual property related to CVS’s terminal tractor line.

The following is the detail of major classes of assets and liabilities of discontinued operations that were summarized on the Company’s Consolidated Balance Sheets:

	As of December 31, 2015
ASSETS
Current assets
Cash	$	2,660
Trade receivables (net)		13,286
Other receivables		1,511
Inventory, net		19,425
Prepaid expense and other		478
Total current assets of discontinued operations		37,360
Long-term assets
Total fixed assets (net)		604
Intangible assets (net)		6,954
Other long-term assets		8,752
Total long-term assets of discontinued operations		16,310
Total assets of discontinued operations	$	53,670

Current liabilities
Notes payable—short-term	$	3,111
Revolving credit facilities		1,795
Accounts payable		8,536
Accrued expenses		3,345
Other current liabilities		83
Total current liabilities of discontinued operations		16,870
Long-term liabilities
Notes payable - long-term		3,466
Revolving credit facilities		7,225
Other long-term liabilities		564
Total long-term liabilities of discontinued operations		11,255
Total liabilities of discontinued operations	$	28,125

The following is the detail of major line items that constitute the loss from discontinued operations:

	For the Year Ended December 31,
	2016			2015			2014
Net revenues	$	66,538		$	67,056		$	70,162
Cost of sales		56,043			56,456			58,976
Research and development costs		729			846			1,009
Selling, general and administrative expenses		7,823			5,739			7,640
Interest expense		934			1,141			923
Other (income) expense		(137	)		355			1,530
Income from discontinued operations before income taxes		1,146			2,519			84
Loss on sale of discontinued operations including transactions expense of $1,201 and $720, in 2016 and 2015 respectively		(15,068	)		(2,142	)		—
Total (loss) gain on discontinued operations before income taxes		(13,922	)		377			84
Income tax expense related to discontinued operations		37			440			160
Net loss on discontinued operations	$	(13,959	)	$	(63	)	$	(76	)