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Assets Held For Sale | 3 Months Ended
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Apr. 01, 2023
Asset, Held-for-Sale, Not Part of Disposal Group [Abstract] |
Assets Held For Sale | ASSET HELD-FOR-SALE AND DIVESTITURE Asset Held-For-Sale On October 11, 2022, the Company entered into a definitive agreement with Infineum USA L.P. (“Infineum”) for the sale of its Pipeline and Industrials Materials (“PIM”) business, which became part of the Company with the acquisition of CMC Materials. The PIM business reports into the Specialty Chemicals and Engineered Materials segment of the Company. Effective February 10, 2023, the Company terminated the definitive agreement. In accordance with the terms of the agreement, the Company received a $12.0 million termination fee from Infineum in the first quarter of 2023 and incurred a transaction adviser fee of $1.1 million. The net amount of $10.9 million is recorded in Other (income) expense, net in the condensed consolidated statement of operations. At the time of the termination, the transaction had not received clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). During the fourth quarter of 2022, the related assets and liabilities were classified as held-for-sale in the Company’s consolidated balance sheet and measured at the lower of their carrying amount or fair value less cost to sell. The assets and liabilities continue to be classified as held-for-sale at April 1, 2023. The planned disposition of the PIM business did not meet the criteria to be classified as a discontinued operation in the Company’s financial statements since the disposition did not represent a strategic shift that had, or will have, a major effect on the Company’s operations and financial results. Assets-held-for sale comprise the following as of April 1, 2023:
(In thousands) |  |
Assets: |  | April 1, 2023
Accounts Receivable |  | $ | 25,838 |
Inventory |  | 23,674 |
Other current assets |  | 396 |
Property, Plant and Equipment, net |  | 109,865 |
Intangible assets, net |  | 76,692 |
Goodwill |  | 10,213 |
Other assets |  | 1,254 |
Total assets-held-for sale |  | $ | 247,932 |
Liabilities: |  |
Accounts payable |  | $ | 4,829 |
Accrued expenses |  | 5,447 |
Long-term liabilities |  | 1,341 |
Total liabilities-held-for sale |  | $ | 11,617 |
Income before income taxes attributable to the PIM business was $8.6 million for the three months ended April 1, 2023. Divestiture During the first quarter of 2023, the Company announced entry into a definitive agreement to sell QED Technologies International, Inc. (“QED”), which offers magnetorheological finishing polishing and subaperture stitching interferometry metrology manufacturing solutions. QED was a part of Specialty Chemicals and Engineered Materials segment and became part of the Company with the acquisition of CMC Materials. The Company completed the divestiture of the QED on March 1, 2023 and received proceeds of $134.8 million after adjustments with respect to cash, working capital, indebtedness and transaction expenses. The disposition of QED did not meet the criteria to be classified as a discontinued operation in the Company’s financial statements since the disposition did not represent a strategic shift that had a major effect on the Company’s operations and financial results. The following table summarizes the fair value of the sale proceeds received in connection with the divestiture, which are subject to further post-closing adjustment:
(In thousands) |  | April 1, 2023
Fair value of sale consideration |  | $ | 137,500 |
Preliminary working capital adjustment |  | 1,602 |
Cash transferred to the buyer on the closing balance sheet |  | (1,465) |
Direct costs to sell |  | (2,780) |
Fair value of sale consideration |  | $ | 134,857 |
The net sales proceeds received from the QED business divestiture presented under cash flows from investing activities represent the cash portion of the sale consideration, which was determined as the fair value of sale consideration reduced by the amount held in escrow. We expect that the amount held in escrow should be paid out within the next six months. The following table summarizes the different components of net proceeds received from the QED business divestiture presented under Cash flows from investing activities:
(In thousands) |  | April 1, 2023
Fair value of sale consideration |  | $ | 134,857 |
Amount held in escrow |  | 1,330 |
Net sales proceeds received from business divestiture |  | $ | 133,527 |
The carrying amount of net assets associated with the QED business was approximately $148.5 million. The major classes of assets and liabilities sold consisted of the following:
(In thousands) |  | April 1, 2023
Assets: |  |
Trade accounts receivable, net |  | $ | 4,818 |
Inventories, net |  | 8,658 |
Other current assets |  | 5,743 |
Property, plant and equipment, net |  | 2,663 |
Goodwill |  | 89,271 |
Intangible assets, net |  | 48,661 |
ROU assets |  | 806 |
Other long-term assets |  | 37 |
Total assets |  | $ | 160,657 |
Liabilities: |  |
Accounts payable |  | $ | 1,340 |
Short-term lease obligation |  | 271 |
Accrued expenses and other current liabilities |  | 6,922 |
Payroll and related costs |  | 1,557 |
Long-term lease obligation |  | 517 |
Other long-term liabilities |  | 1,551 |
Total liabilities |  | $ | 12,158 |
As a result of the QED divestiture, the Company recognized a pre-tax loss of approximately $13.6 million presented in selling, general and administrative expenses on the Condensed Consolidated Statements of Operations for the quarter ended April 1, 2023. The Company also recognized the income tax expense associated with the QED divestiture of approximately $17.0 million based on preliminary estimates as of April 1, 2023.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent + Details
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