Annual report pursuant to Section 13 and 15(d)

Dispositions and Closures

v3.3.1.900
Dispositions and Closures
 12 Months Ended
Dec. 31, 2015
Discontinued Operations and Disposal Groups [Abstract]  
Dispositions and Closures
Dispositions and Closures
On August 29, 2014, the Company completed the sale of all of the issued and outstanding membership interests of its wholly owned subsidiary Ram-Fab to a subsidiary of Primoris Services Corporation ("Primoris"). The transaction was valued at less than $10 million, which consideration included cash at closing, Synalloy's ability to receive potential future earn-out payment(s) and the retention of specified Ram-Fab current assets. The future earn-out calculation was based upon the Company and Primoris sharing the profits for the sales order that was in process at the time of sale. The respective sales order was completed and shipped during 2015. Primoris realized minimal profit on this order, which resulted in the Company not receiving an earn-out payment. The Company realized a one-time charge in the third quarter of 2014 of $1,996,000 for costs associated with the closure plus a $947,000 charge to write-off the Company's investment in Ram-Fab. These charges, along with all non-recurring expenses associated with Ram-Fab are included in the respective consolidated financial statements as discontinued operations. Ram-Fab was reported as a part of the Metals Segment.
On June 27, 2014, the Company completed the planned closure of Bristol Fab. Bristol Fab's collective bargaining agreement with the Union expired on February 15, 2014. Also, upon closure of the operation, the Company was legally obligated to pay a withdrawal liability to the Union's pension fund of approximately $1,900,000. This obligation is payable over 26 months ending October 1, 2016 with an interest rate of 4.51 percent. The balance as of December 31, 2015 of $644,000 is included in accrued expenses on the accompanying consolidated balance sheet. The Company realized charges in the fourth quarter of 2015 and in the second quarter of 2014 of $1,902,000 and $6,988,000, respectively, for costs associated with the closure of Bristol Fab. These costs, along with all non-recurring expenses associated with Bristol Fab, are included in the respective consolidated financial statements as discontinued operations. Bristol Fab was reported as a part of the Metals Segment.
As of December 31, 2015, the Company has successfully completed the majority of the items and processes identified when the one-time closing charges were developed. A charge of $1,251,000, net of tax, was recorded as discontinued operations during 2015 for the legal claim filed against Synalloy Fabrication as discussed in Note 13 and Note 22. The Company believes the ending reserve at December 31, 2015 is sufficient to allow the Company to complete all of the remaining closing activities.
The Company's results from discontinued operations are summarized below:
 
2015
 
2014
 
2013
Net sales
$
—

 
$
21,963,078

 
$
23,998,379

Loss before income taxes
$
(1,902,058
)
 
$
(10,963,524
)
 
$
(1,949,484
)
Benefit from income taxes
(651,000
)
 
(3,807,000
)
 
(812,000
)
Net loss from discontinued operations
$
(1,251,058
)
 
$
(7,156,524
)
 
$
(1,137,484
)