Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

v3.20.2
Discontinued Operations
3 Months Ended
May 02, 2020
Discontinued Operations  
Discontinued Operations

4. Discontinued Operations

On August 16, 2019, we completed the sale of MWUK Limited, our UK corporate apparel operations conducted under the Dimensions, Alexandra, and Yaffy brand names to Project Dart Bidco Limited, pursuant to a Share Purchase Agreement entered into on August 16, 2019.  In addition, we also completed the sale of Twin Hill Acquisition Company, Inc. (“Twin Hill”), our U.S. corporate apparel operation, to TH Holdco Inc., pursuant to a Stock Purchase Agreement entered into on August 16, 2019.  The aggregate consideration for all of the outstanding equity of MWUK Limited and Twin Hill (collectively, the “corporate apparel business”) was approximately $62 million, subject to certain working capital adjustments. After consideration of working capital adjustments and other related items, we received $49.3 million in cash during the third quarter of 2019 and $5.9 million in cash in the first quarter of fiscal 2020.  

We determined that the sale of the corporate apparel business represents a strategic shift that will have a major effect on our results of operations and, as a result, have reported the disposal as discontinued operations.  We have presented the results of the corporate apparel business within discontinued operations in the condensed consolidated statement of (loss) earnings for all periods presented.  Certain costs previously allocated to the corporate apparel business for segment reporting purposes do not qualify for classification within discontinued operations and have been reallocated to continuing operations.  

The related assets and liabilities of the corporate apparel business are presented as current and non-current assets and liabilities of discontinued operations in the condensed consolidated balance sheet as of May 4, 2019. The following table provides details of the carrying amounts of major classes of assets and liabilities related to discontinued operations as of May 4, 2019 (in thousands):

May 4,

2019

ASSETS

Cash and cash equivalents

$

16,821

Accounts receivable, net

39,863

Inventories

106,718

Other current assets

3,717

Total current assets

167,119

Property and equipment, net

14,745

Other assets

21,095

Total assets

$

202,959

LIABILITIES

Accounts payable

$

16,397

Accrued expenses and other current liabilities

20,625

Total current liabilities

37,022

Other liabilities

14,428

Total liabilities

$

51,450

The following table provides details of the amounts reflected in earnings from discontinued operations, net of tax in the condensed consolidated statements of (loss) earnings for the three months ended May 4, 2019 (in thousands):

For the Three

Months Ended

    

May 4, 2019

    

Net sales

$

56,725

Cost of sales

41,044

Selling, general and administrative expenses

14,383

Earnings from discontinued operations before taxes

1,298

Income tax expense

636

Earnings from discontinued operations, net of tax

$

662

The cash flows related to discontinued operations have not been segregated, and are included in the condensed consolidated statement of cash flows. The following table provides selected information on cash flows related to discontinued operations for the three months ended May 4, 2019 (in thousands):

For the Three

Months Ended

    

May 4, 2019

Depreciation and amortization

$

1,442

Capital expenditures

$

1,155