Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations (Notes)

v3.20.2
Discontinued Operations (Notes)
 6 Months Ended
Jun. 27, 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, 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 June 27, 2020, retained assets and liabilities were $10.8 million and $28.5 million, respectively.

The following table discloses the results of operations of the business reported as discontinued operations for the three months and six months ended June 27, 2020 and June 29, 2019, respectively:
 
Three Months Ended
 
Six Months Ended
(in millions)
June 27,
2020
 
June 29,
2019
 
June 27,
2020
 
June 29,
2019
Net sales
$
—

 
$
223.1

 
$
—

 
$
448.3

Cost of sales
—

 
167.5

 
—

 
334.6

Selling, general and administrative expense (A)
0.6

 
52.8

 
1.4

 
109.1

Research and development expense
—

 
6.0

 
—

 
12.3

Restructuring, exit and impairment charges (B)
—

 
—

 
—

 
138.3

Loss from discontinued operations before income taxes (A) (B)
$
(0.6
)
 
$
(3.2
)
 
$
(1.4
)
 
$
(146.0
)
Income tax benefit
(0.1
)
 
(10.1
)
 
(0.3
)
 
(40.4
)
Earnings (loss) from discontinued operations, net of tax (A) (B)
(0.5
)
 
6.9

 
(1.1
)
 
(105.6
)
Loss on disposal of discontinued operations, net of tax (C)
—

 
(41.5
)
 
(1.1
)
 
(41.5
)
Net loss from discontinued operations, net of tax
$
(0.5
)
 
$
(34.6
)
 
$
(2.2
)
 
$
(147.1
)

(A) The Company recorded $3.1 million and $10.9 million for the three and six months ended June 29, 2019, respectively, 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 six months ended June 29, 2019.
(C) Loss on disposal of discontinued operations, net of tax, for the six months ended June 27, 2020 includes a pre-tax loss of $1.5 million and a tax benefit of $0.4 million. Loss on disposal of discontinued operations, net of tax, for the three and six months ended June 29, 2019 includes a pre-tax loss of $47.7 million and a tax benefit of $6.2 million.