Discontinued Operations

9 Months Ended

Oct. 02, 2021

Discontinued Operations

Note B - Discontinued Operations

Note B – Discontinued Operations

We have determined that the companies included in our Diversified Products segment no longer fit with our long-term strategy and we have initiated the process of selling the companies within the Diversified Products segment. Selling the companies within this segment will allow management to focus on our core capabilities and offerings.

The Diversified Products segment met the criteria to be held for sale and furthermore, we determined that the assets held for sale qualify for discontinued operations. As such, the financial results of the Diversified Products segment are reflected in our unaudited condensed consolidated statements of operations as discontinued operations for all periods presented. Additionally, current and non-current assets and liabilities of discontinued operations are reflected in the unaudited condensed consolidated balance sheets for both periods presented.

On November 3, 2021 the Company sold its Greenwald Industries, Inc. division (“Greenwald”) for a sales price of $8.0 million, subject to a final working capital adjustment. Greenwald, which is located in Chester, CT, is an OEM manufacturer offering a range of payment solutions from coin-vending products to smart card systems and payment applications.

Summarized Financial Information of Discontinued Operations

The following table represents income from discontinued operations, net of tax:

	Three Months Ended						Nine Months Ended
	October 2, 2021			October 3, 2020			October 2, 2021			October 3, 2020
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net sales	$	11,477,553		$	10,099,961		$	36,495,452		$	32,905,085
Cost of products sold		(8,749,365	)		(9,096,533	)		(29,793,971	)		(29,929,876	)
Gross margin		2,728,188			1,003,428			6,701,481			2,975,209
Selling and administrative expenses		(1,093,716	)		(1,064,433	)		(3,407,113	)		(7,509,147	)
Restructuring costs		1,308,639			-			(9,274,439	)		-
Operating income (loss)		2,943,111			(61,005	)		(5,980,071	)		(4,533,938	)
Interest expense		(142,409	)		(161,768	)		(462,838	)		(520,321	)
Gain (Loss) from discontinued operations before income taxes		2,800,702			(222,773	)		(6,442,909	)		(5,054,259	)
Income tax (expense) benefit		(659,285	)		51,833			1,516,661			1,167,345
Income (loss) from discontinued operations, net of tax	$	2,141,417		$	(170,940	)	$	(4,926,248	)	$	(3,886,914	)

The following table represents the assets and liabilities from discontinued operations:

	October 2, 2021		January 2, 2021
	(unaudited)
Cash	$	1,307,998	$	809,809
Accounts receivable		6,982,532		5,944,922
Inventory		11,006,353		9,990,656
Prepaid expenses		1,527,417		1,192,530
Property, plant and equipment, net		14,139,198		13,813,553
Patents and other intangibles net of accumulated amortization		-		6,935
Goodwill		-		5,900,837
Right of use assets		81,066		173,364
Total assets of discontinued operations	$	35,044,564	$	37,832,606
Current assets of discontinued operations¹	$	35,044,564	$	17,937,917
Non-current assets of discontinued operations		-		19,894,689
Total assets of discontinued operations	$	35,044,564	$	37,832,606
Accounts payable	$	3,125,295	$	2,196,101
Accrued compensation and other accrued expenses		3,804,230		960,074
Current portion of lease liability		75,547		125,049
Other long-term liabilities		81,066		48,315
Total liabilities of discontinued operations	$	7,086,138	$	3,329,539
Current liabilities of discontinued operations¹	$	7,086,138	$	3,281,224
Non-current liabilities of discontinued operations		-		48,315
Total liabilities of discontinued operations	$	7,086,138	$	3,329,539
¹ The total assets and liabilities of discontinued operations are presented as current in the October 2, 2021 balance sheet
as we expect to sell the discontinued operations and collect proceeds within one year.