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