Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations (Notes)

v3.20.1
Discontinued Operations (Notes)
 3 Months Ended
Mar. 28, 2020
Discontinued Operations and Disposal Groups [Abstract]  
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] Discontinued Operations

On June 27, 2019, the Company completed the sale of its Fitness business to KPS Capital Partners, LP. As a result, the Company classified the assets and liabilities of the Fitness business as held for sale on the Condensed Consolidated Balance Sheets for all prior periods. Additionally, this business, which was previously reported in the Company's Fitness segment, is being reported as discontinued operations in the Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Cash Flows for all periods presented. Refer to Note 3 in the 2019 Form 10-K for further information.

The sale of the Fitness business resulted in net proceeds of $473.7 million and an after-tax loss of $43.9 million. In connection with the sale of its Fitness business, the Company retained assets of $26.4 million primarily related to VAT receivables, and retained liabilities of $45.1 million primarily related to VAT payables, product warranty liabilities and certain employee benefits. As of March 28, 2020, retained assets and liabilities were $11.1 million and $30.4 million, respectively.

The following table discloses the results of operations of the business reported as discontinued operations for the three months ended March 28, 2020 and March 30, 2019, respectively:
(in millions)
March 28, 2020
 
March 30, 2019
Net sales
$
—

 
$
225.2

Cost of sales
—

 
167.1

Selling, general and administrative expense (A)
0.8

 
56.4

Research and development expense
—

 
6.2

Restructuring, exit and impairment charges (B)
—

 
138.3

Loss from discontinued operations before income taxes (A) (B)
$
(0.8
)
 
$
(142.8
)
Income tax benefit
(0.2
)
 
(30.3
)
Loss from discontinued operations, net of tax (B) (A)
(0.6
)
 
(112.5
)
Loss on disposal of discontinued operations, net of tax (C)
(1.1
)
 
—

Net loss from discontinued operations, net of tax
$
(1.7
)
 
$
(112.5
)

(A) The Company recorded $7.8 million for the three months ended March 30, 2019 of net costs incurred in connection with the sale of the Fitness business.
(B) In the first quarter of 2019, the Company re-evaluated the fair value of the Fitness reporting unit and determined the fair value of the business was less than its carrying value. As a result, the Company recorded a $137.2 million ($103.0 million after tax) goodwill impairment charge for the three months ended March 30, 2019.
(C) Loss on disposal of discontinued operations, net of tax, for the three months ended March 28, 2020 includes a pre-tax loss of $1.5 million and a tax benefit of $0.4 million.

There were no assets and liabilities held for sale related to discontinued operations as of March 28, 2020. The following table reflects the summary of assets and liabilities held for sale as of March 30, 2019 primarily related to the Fitness business included in discontinued operations:
(in millions)
March 30,
2019
Accounts and notes receivable, net
$
184.5

Net inventory
173.8

Prepaid expenses and other
11.1

Current assets held for sale
369.4

 
 
Net property (A)
107.6

Goodwill
252.3

Other intangibles, net
58.6

Other long-term assets
74.0

Long-term assets held for sale 
492.5

Assets held for sale
$
861.9

 
 
Accounts payable
$
52.7

Accrued expenses
188.2

Current liabilities held for sale
240.9

 
 
Other liabilities
119.3

Long-term liabilities held for sale
119.3

Liabilities held for sale
$
360.2


(A) As of March 30, 2019, the Company had $8.9 million of net long-term assets classified as held for sale that were not related to the business reported as discontinued operations.