ASSETS HELD FOR SALE (Policies)

12 Months Ended

Feb. 02, 2020

ASSETS HELD FOR SALE

The Company entered into a definitive agreement on January 9, 2020 to sell its Speedo North America business to Pentland, the parent company of Speedo International Limited, for $170.0 million in cash, subject to a working capital adjustment. Speedo International Limited licenses the Speedo trademark to a subsidiary of the Company for perpetual use in North America and the Caribbean. The Company will deconsolidate the net assets of the Speedo business and no longer license the Speedo trademark upon closing of the sale, which is expected to occur in the first quarter of 2020, subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which was received early in the first quarter of 2020.

The Company classified the assets and liabilities of the Speedo North America business as held for sale and recorded a pre-tax noncash loss of $142.0 million during the fourth quarter of 2019 (including a $116.4 million noncash impairment charge related to the Speedo perpetual license right) to reduce the carrying value of the Speedo North America business to its estimated fair value, less costs to sell. The estimated fair value, less costs to sell, reflects the amount of consideration the Company expects to receive upon closing of the transaction, inclusive of the working capital adjustment. The loss was recorded

in other noncash loss, net in the Company’s Consolidated Income Statement. The loss will be remeasured in connection with the closing of the transaction and will be impacted by changes to the net assets of the Speedo North America business subsequent to February 2, 2020.

The noncash impairment charge related to the Speedo perpetual license right was recorded to write down its carrying value of $203.8 million to a fair value of $87.4 million, which was implied by the expected amount of consideration to be received upon closing of the transaction. The Company classified this as a Level 3 fair value measurement due to the use of significant unobservable inputs.

The Speedo transaction was also a triggering event that prompted the need for the Company to perform an interim goodwill impairment test for its Heritage Brands Wholesale reporting unit. No goodwill impairment resulted from this interim test.

The assets and liabilities of the Speedo North America business classified as held for sale in the Company’s Consolidated Balance Sheet as of February 2, 2020 were included in the Heritage Brands Wholesale segment and consisted of the following:



(In millions)
Assets held for sale:
Trade receivables	$	48.8
Inventories, net	54.3
Prepaid expenses	0.6
Other current assets	0.6
Property, plant and equipment, net	6.1
Operating lease right-of-use assets	9.0
Goodwill	48.1
Other intangibles, net ⁽¹⁾	95.3
Allowance for reduction of assets held for sale	(25.6		)
Total assets held for sale	$	237.2

Liabilities related to assets held for sale:
Accounts payable	$	38.7
Accrued expenses	5.4
Current portion of operating lease liabilities	0.6
Long-term portion of operating lease liabilities	10.6
Other liabilities	1.8
Total liabilities related to assets held for sale	$	57.1

⁽¹⁾ Other intangibles, net includes a perpetual license right of $87.4 million and customer relationships of $7.9 million.