Gain on Sale and Other Costs, Net

12 Months Ended

Dec. 31, 2022

Restructuring and Related Activities [Abstract]

A summary of the items included in gain on sale and other costs, net is as follows:


(In thousands)	December 31, 2022		January 1, 2022		January 2, 2021
Gain on Sale of Assets	$	(20,190)	$	(515)	$	—
Impairment Costs	731		804		1,861
Restructuring Costs	603		176		1,118
	$	(18,856)	$	465	$	2,979

Gain on Sale of Assets

The Company entered into several agreements with the local government in China to sell the existing manufacturing building and land use rights at one of its subsidiaries in China for $25,159,000 and relocate to a new facility (China Transaction). The agreements became effective in the first quarter of 2022 after a 31% down payment was received, including 25% in 2021 and 6% in the first quarter of 2022, and a land use right in a new location was secured. As a result, the Company recognized a gain on the China Transaction of $20,190,000, or $15,143,000, net of deferred taxes of $5,047,000, in the first quarter of 2022. A receivable of $16,082,000 was recognized for the present value of the remaining amount of the sale proceeds, which is due the earlier of when the government sells the property or within two years from the effective date of the agreements. The receivable outstanding at December 31, 2022 was $15,181,000 and is included in other long-term assets in the consolidated balance sheet. The subsidiary, which is part of the Industrial Processing segment, will continue to occupy its current facility until construction of its new facility is complete, which is expected in 2023.

A summary of the change in the outstanding receivable on the China Transaction is as follows:


(In thousands)	December 31, 2022
Balance at Inception	$	17,294
Present value discount	(1,212)
Receivable recorded, net	16,082
Accretion of interest income	422
Currency translation	(1,323)
Balance at End of Year	$	15,181

In 2021, gain on sale of assets included $515,000 related to a gain on the sale of a building in Theodore, Alabama, within the Company's Industrial Processing segment for net cash proceeds of $1,634,000. The building was vacated as part of the Company's 2017 restructuring plan to consolidate three of its stock-preparation operations into a single new facility, which was completed in 2018.

Impairment and Restructuring Costs

During 2022, the Company recorded impairment costs of $731,000 and restructuring costs of $35,000 within its Industrial Processing segment. The impairment costs included $549,000 primarily related to the write-down of inventory at the Company's business in Russia and $182,000 related to the write-down of certain fixed assets that will not be moved to the new manufacturing facility in China.

During the fourth quarter of 2021, the Company initiated a restructuring plan within its Flow Control segment to eliminate a redundant ceramic blade manufacturing operation that resulted from its acquisition of Clouth. The plan consisted of severance costs related to the termination of five employees, and facility and other closure costs. Severance costs totaled $381,000, of which $205,000 were recorded in 2022 and $176,000 in 2021, and facility and other closure costs totaled $363,000, all of which were recorded in 2022. During 2021, the Company also recorded asset impairment charges related this restructuring plan of $499,000 for the write-down of an intangible asset, $226,000 for the write-down of certain machinery and equipment, and $79,000 for the write-down of a ROU asset. The Company does not expect to incur additional restructuring charges related to this restructuring plan.

During 2020, the Company recorded restructuring costs totaling $1,118,000, representing severance costs of $659,000 for 34 employees within its Flow Control segment, $277,000 for 26 employees in its Industrial Processing segment, and $182,000 for four employees in its Material Handling segment. The Company also reduced its workforce by 21 employees in its Industrial Processing segment with no associated severance costs. The Company took these cost-containment actions to reduce payroll-related overhead and operating costs in response to the slowdown in the global economy, largely driven by the COVID-19 pandemic.

A summary of the changes in accrued restructuring costs included in other current liabilities in the accompanying consolidated balance sheet, which are expected to be paid in 2023, are as follows:


(In thousands)	Severance Costs		Facility and Other Closure Costs		Total
2021 Restructuring Plan
Provision	$	176	$	—	$	176
Usage	(19)		—		(19)
Currency translation	(1)		—		(1)
Balance at January 1, 2022	156		—		156
Provision	205		398		603
Usage	(159)		(231)		(390)
Currency translation	(13)		33		20
Balance at December 31, 2022	$	189	$	200	$	389

2020 Restructuring Plan
Provision	$	1,118	$	—	$	1,118
Usage	(1,052)		—		(1,052)
Currency translation	(5)		—		(5)
Balance at January 2, 2021	61		—		61
Usage	(61)		—		(61)
Balance at January 1, 2022	$	—	$	—	$	—

During the fourth quarter of 2020, due to the continued and anticipated decline in demand for the Company's timber-harvesting business' products, the Company performed a quantitative analysis of the recoverability of the related intangible assets in which the income approach discounted cash flow methodology was used. As a result of this analysis, the Company determined that the fair values of the timber-harvesting product line's definite-lived intangible assets related to customer relationships, product technology and tradename were less than their carrying values, and therefore recorded additional impairment charges totaling $1,861,000 in 2020 following $2,336,000 of impairment charges recognized in 2019.