Quarterly report pursuant to Section 13 or 15(d)

Sale of Joseph Abboud Trademarks

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Sale of Joseph Abboud Trademarks
3 Months Ended
May 02, 2020
Sale of Joseph Abboud Trademarks  
Sale of Joseph Abboud Trademarks

2. Sale of Joseph Abboud Trademarks

On March 4, 2020, we closed on our previously announced transaction to sell the Joseph Abboud trademarks to WHP Global (“WHP”) for $115.0 million. We also entered into a licensing agreement with WHP for the exclusive rights to sell and rent Joseph Abboud branded apparel and related merchandise in the U.S. and Canada. As of February 1, 2020, the book value of the Joseph Abboud trademarks was $30.0 million and was included within assets held for sale.  

During the three months ended May 2, 2020, we received cash proceeds of $115.0 million and recorded a gain on the sale of the Joseph Abboud transaction totaling $82.7 million, which reflects the excess of the sale price over the book value, less approximately $2.3 million in related transaction costs, and is included as a separate line in the condensed consolidated statement of (loss) earnings.

Per the provisions of the credit agreement governing our term loan, we plan to reinvest these proceeds in our business over a 365-day period commencing on March 4, 2020.  As a result, the proceeds of the sale, reduced by estimated taxes payable related to the sale and transaction related costs, were deposited in a separate account administered by the term loan agent and are presented as restricted cash on the condensed consolidated balance sheet as of May 2, 2020.  As of May 2, 2020, the restricted cash balance totaled $94.5 million and is primarily restricted for the purchase of property, equipment and other tangible assets to be used in the operations of the business, such as capital expenditures and purchase of rental product.