Assets And Liabilities Held-For-Sale

12 Months Ended

Dec. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

Assets And Liabilities Held-For-Sale

ASSETS AND LIABILITIES HELD-FOR-SALE

As part of our strategic decision to renew our focus on connected in-home fitness we sold OF Holdings. The OF Holdings business was reported within our Retail segment.

On October 14, 2020, we entered into a stock purchase agreement (the “Agreement”) with True Fitness Technology, Inc., a Missouri corporation (“True Fitness”). Pursuant to the terms of the Agreement, on October 14, 2020, True Fitness purchased 100% of the issued and outstanding capital stock of our wholly-owned subsidiary OF Holdings, Inc., a Delaware corporation (“Holdings”), which included Holding’s wholly-owned subsidiary Octane Fitness, LLC, a Minnesota limited liability company (collectively, “Octane Fitness”). In addition, effective October 14, 2020, pursuant to terms of a U.K. Asset Transfer Agreement, a subsidiary of True Fitness, True Fitness Technology U.K. Limited, purchased certain assets and assumed certain Octane Fitness brand-related liabilities of our U.K. subsidiary, Octane Fitness UK Ltd. Contemporaneously with the transactions described above, True Fitness Technology Ireland Limited, a subsidiary of True Fitness, entered into an NL Asset Transfer Agreement with Octane Fitness International B.V., a company organized under the laws of the Netherlands, providing for the True Fitness subsidiary to purchase certain assets and assume certain Octane brand-related liabilities of Octane Fitness International B.V. The above-described transactions are collectively referred to as the “Sale of the Octane Business”.

The aggregate consideration for the Sale of the Octane Business as provided by the Stock Purchase Agreement and the asset transfer agreements consists of a base purchase price of $25.0 million subject to adjustments for cash and cash equivalents, indebtedness, transaction expenses and working capital. True Fitness assumed $2.8 million of warranty liabilities and $0.5 million of vendor recourse lease obligations. We incurred selling costs of $3.0 million in connection with the Sale of the Octane Business.

The assets and liabilities of the Octane Fitness® disposal group sold were as follows (in thousands):

	As of
	October 14, 2020
Assets:
Cash and cash equivalents	$	497
Trade receivables	3,904
Inventories	10,099
Prepaids and other current assets	560
Property, plant and equipment, net	1,571
Other intangible assets	32,045
Other assets	23
Total assets sold	$	48,699
Liabilities:
Trade payables	3,766
Accrued liabilities	1,058
Warranty obligations	2,762
Deferred income tax liabilities	1,513
Total liabilities sold	$	9,099

	As of
	October 14, 2020
Assets	$	48,699
Liabilities	9,099
Carrying value	$	39,600
Current fair value (Consideration)	$	25,000
Plus cash and cash equivalents	497
Less disposal costs	(2,976)
Less working capital adjustment	(3,589)
Net fair value	18,932
Loss on disposal group	$	20,668

DISCONTINUED OPERATIONS

Following is a summary of certain financial information regarding our discontinued operations (in thousands):

	Year Ended December 31,
	2020		2019		2018
Loss from discontinued operations before income taxes	$	(162)	$	(206)	$	(206)
Income tax expense	527		299		246
Total loss from discontinued operations	$	(689)	$	(505)	$	(452)