Quarterly report pursuant to sections 13 or 15(d)

Discontinued Operations and Divestitures

v2.4.0.6
Discontinued Operations and Divestitures
 9 Months Ended
Sep. 30, 2012
Discontinued Operations and Divestitures [Abstract]  
Discontinued Operations and Divestitures
10.
Discontinued Operations and Divestitures
 
Our discontinued operations consist of our Perma-Fix of South Georgia, Inc. ("PFSG") facility which met the held for sale criteria under ASC 360, "Property, Plant, and Equipment" on October 6, 2010.  Our discontinued operations also encompass our Perma-Fix of Fort Lauderdale, Inc. ("PFFL"), Perma-Fix of Orlando, Inc. ("PFO"), Perma-Fix of Maryland, Inc. ("PFMD"), Perma-Fix of Dayton, Inc. ("PFD"), and Perma-Fix Treatment Services, Inc. ("PFTS") facilities, which were divested on August 12, 2011, October 14, 2011,  January 8, 2008, March 14, 2008, and May 30, 2008, respectively.  Our discontinued operations also includes two previously closed locations, Perma-Fix of Michigan, Inc. ("PFMI") and Perma-Fix of Memphis, Inc. ("PFM"), which were approved as discontinued operations by our Board of Directors effective October 4, 2004, and March 12, 1998, respectively.

On August 12, 2011, we completed the sale of our wholly-owned subsidiary, PFFL, pursuant to the terms of a Stock Purchase Agreement, dated June 13, 2011.  In consideration for the sale of 100% of the capital stock of PFFL, the buyer paid us $5,500,000 in cash at closing.  The cash consideration was subject to certain working capital adjustments within one hundred twenty days after closing.  As of September 30, 2012, expenses related to the sale of PFFL totaled approximately $160,000, of which all have been paid ($3,000 was paid during the first quarter of 2012).  As of September 30, 2012, the gain on the sale of PFFL totaled approximately $1,707,000 (net of taxes of $1,067,000), which included a working capital adjustment of $185,000 recorded during the fourth quarter of 2011. The gain was recorded during the year ended December 31, 2011.

On October 14, 2011, we completed the sale of our wholly-owned subsidiary, PFO, pursuant to the terms of an Asset Purchase Agreement, dated August 12, 2011.  In consideration for such assets, the buyer paid us $2,000,000 in cash at the closing and assumed certain liabilities of PFO.  The cash consideration was subject to certain working capital adjustments within one hundred twenty days after closing.  As of September 30, 2012, expenses related to the sale of PFO totaled approximately $37,000, of which all have been paid ($17,000 was paid during the first quarter of 2012).  As of September 30, 2012, loss on the sale of PFO totaled approximately $198,000 (net of taxes of $209,000), which was recorded during the fourth quarter of 2011.  No working capital adjustment has been made on the sale of PFO.

We continue to market our PFSG facility for sale.  As required by ASC 360, based on our internal financial valuations, we concluded that no tangible asset impairments existed for PFSG as of September 30, 2012. No intangible asset exists at PFSG.
 
The following table summarizes the results of discontinued operations for the three and nine months ended September 30, 2012 and 2011. The operating results of discontinued operations are included in our Consolidated Statements of Operations as part of our "Loss from discontinued operations, net of taxes."
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
September 30,
 
 
September 30,
 
(Amounts in Thousands)
 
2012
 
 
2011
 
 
2012
 
 
2011
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
 
$
533
 
 
$
1,266
 
 
$
1,749
 
 
 
6,433
 
Interest expense
 
$
(8
 )
 
$
(18
 )
 
$
(26
 )
 
$
(55
 )
Operating loss from discontinued operations (1)
 
$
(61
 )
 
 
(187
 )
 
$
(258
 )
 
 
(7
 )
Gain on disposal of discontinued operations (2)
 
$
-
 
 
 
1,777
 
 
$
-
 
 
 
1,777
 
(Loss) income from discontinued operations
 
$
(61
 )
 
$
1,590
 
 
$
(258
 )
 
$
1,770
 

(1) Net of tax benefit of $37,000 and tax benefit of $133,000 for the three and nine months ended September 30, 2012, respectively, and net of tax benefit of $101,000 and tax benefit of $4,000 for the corresponding periods of 2011.

(2) Net of taxes of $812,000 for each of the three and nine months ended September 30, 2011, respectively.

Assets related to discontinued operations total $2,140,000 and $2,343,000 as of September 30, 2012 and December 31, 2011, respectively, and liabilities related to discontinued operations total $3,671,000 and $3,972,000 as of September 30, 2012 and December 31, 2011, respectively.

The following table presents the major classes of asset and liabilities of discontinued operations that are classified as held for sale as of September 30, 2012 and December 31, 2011.  The held for sale assets and liabilities may differ at the closing of a sale transaction from the reported balances as of September 30, 2012:
 
September 30,
 
 
December 31,
 
(Amounts in Thousands)
 
2012
 
 
2011
 
 
 
 
 
 
 
Accounts receivable, net (1)
 
$
432
 
 
$
385
 
Inventories
 
 
30
 
 
 
25
 
Other assets
 
 
13
 
 
 
22
 
Property, plant and equipment, net (2)
 
 
1,614
 
 
 
1,650
 
Total assets held for sale
 
$
2,089
 
 
$
2,082
 
Accounts payable
 
$
249
 
 
$
190
 
Accrued expenses and other liabilities
 
 
535
 
 
 
577
 
Note payable
 
 
80
 
 
 
105
 
Environmental liabilities
 
 
1,496
 
 
 
1,497
 
Total liabilities held for sale
 
$
2,360
 
 
$
2,369
 

(1) net of allowance for doubtful accounts of $47,000 and $48,000 as of September 30, 2012 and December 31, 2011, respectively.

(2) net of accumulated depreciation of $60,000 and $62,000 as of September 30, 2012 and December 31, 2011, respectively.

The following table presents the major classes of assets and liabilities of discontinued operations that are not held for sale as of September 30, 2012 and December 31, 2011:
 
September 30,
 
 
December 31,
 
(Amounts in Thousands)
 
2012
 
 
2011
 
 
 
 
 
 
 
Other assets
 
$
51
 
 
$
261
 
Total assets of discontinued operations
 
$
51
 
 
$
261
 
Accrued expenses and other liabilities
 
$
1,012
 
 
$
1,083
 
Accounts payable
 
 
15
 
 
 
15
 
Environmental liabilities
 
 
284
 
 
 
505
 
Total liabilities of discontinued operations
 
$
1,311
 
 
$
1,603
 

The environmental liabilities for our discontinued operations consist of remediation projects currently in progress at PFMI, PFM, PFD, and PFSG. These remediation projects principally entail the removal/remediation of contaminated soil, and in some cases, the remediation of surrounding ground water.  All of the remedial clean-up projects were an issue for years prior to our acquisition of the facility and were recognized pursuant to a business combination and recorded as part of the purchase price allocation to assets acquired and liabilities assumed.  The environmental liability for PFD was retained by the Company upon the sale of PFD in March 2008 and pertains to the remediation of a leased property which was separate and apart from the property on which PFD's facility was located.  The reduction of approximately $222,000 in environmental liabilities from the December 31, 2011 balance of $2,002,000 reflects payment on remediation projects.

"Accrued expenses and other liabilities" (not held for sale) for our discontinued operations include a pension payable at PFMI of $359,000 as of September 30, 2012.  The pension plan withdrawal liability is a result of the termination of the union employees of PFMI.  The PFMI union employees participated in the Central States Teamsters Pension Fund ("CST"), which provides that a partial or full termination of union employees may result in a withdrawal liability, due from PFMI to CST.  The recorded liability is based upon a demand letter received from CST in August 2005 that provided for the payment of $22,000 per month over an eight year period.  This obligation is recorded as a long-term liability, with a current portion of $244,000 that we expect to pay over the next year.