ASSETS HELD FOR SALE

9 Months Ended

Oct. 03, 2020

Property, Plant and Equipment Assets Held-for-sale Disclosure [Abstract]

ASSETS HELD FOR SALE

ASSETS HELD FOR SALE

We record assets held for sale at the lower of the carrying value or fair value less costs to sell. The following criteria are used to determine if property is held for sale: (i) management has the authority and commits to a plan to sell the property; (ii) the property is available for immediate sale in its present condition; (iii) there is an active program to locate a buyer and the plan to sell the property has been initiated; (iv) the sale of the property is probable within one year; (v) the property is being actively marketed at a reasonable sale price relative to its current fair value; and (vi) it is unlikely that the plan to sell will be withdrawn or that significant changes to the plan will be made.

In determining the fair value of the assets less cost to sell, we consider factors including current sales prices for comparable assets in the area, recent market analysis studies, appraisals and any recent legitimate offers. If the estimated fair value less cost to sell of an asset is less than its current carrying value, the asset is written down to its estimated fair value less cost to sell. The total carrying value of assets held for sale was $5.1 million and $1.8 million as of October 3, 2020 and December 31, 2019, respectively. Assets held for sale at October 3, 2020 are actively marketed for sale or were under contract.

During the three and nine months ended October 3, 2020, the Company reclassified certain facilities within the Commercial segment that have a net book value of $4.3 million to assets held for sale. Additionally, during the nine months ended October 3, 2020, the Company acquired certain real property assets of $0.8 million through its executive relocation program which are classified as held for sale as of October 3, 2020.

During the three and nine months ended October 3, 2020, the Company sold certain real property assets with a net book value of $1.8 million which had previously been classified as held for sale. In connection with the sale, the Company recognized a net loss of $0.4 million which is included in Corporate restructuring and impairment charges, net, in the consolidated statements of operations for the three and nine months ended October 3, 2020.

Due to uncertainties in the estimation process, actual results could differ from the estimates used in our historical analysis. Our assumptions about property sales prices require significant judgment because the current market is highly sensitive to changes in economic conditions. We determined the estimated fair values of assets held for sale based on current market conditions and assumptions made by management, which may differ from actual results and may result in impairments if market conditions deteriorate. Certain assets held for sale are valued at fair value and are measured at fair value on a nonrecurring basis. Assets held for sale are reported at fair value, if, on an individual basis, the fair value of the asset is less than carrying value. The fair value of assets held for sale is estimated using Level 3 inputs, such as broker quotes for like-kind assets or other market indications of a potential selling value that approximates fair value. Assets held for sale, reported at fair value, less costs to sell, totaled $0.8 million as of October 3, 2020.