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Divestitures (Notes) | 3 Months Ended
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Mar. 30, 2024
Divestitures [Abstract] |
Mergers, Acquisitions and Dispositions Disclosures | DIVESTITURES AND ASSETS AND LIABILITIES HELD FOR SALE Divestiture of Sperry® Business On January 10, 2024, the Company entered into a Purchase Agreement with ABG Intermediate Holdings 2 LLC, an affiliate of Authentic Brands Group LLC. (the "ABG Buyer"), pursuant to which the ABG Buyer agreed to purchase all of the outstanding equity of certain subsidiaries of the Company that own or hold for use intellectual property used by the Company exclusively in the footwear, apparel, and accessories business conducted by the Company under the Sperry® brand. In addition, on January 10, 2024 the Company entered into an Inventory Purchase Agreement with Aldo U.S. Inc., an affiliate of the Aldo Group (the "Aldo Buyer"), pursuant to which the Aldo Buyer agreed to purchase certain inventory and other assets of the Sperry® business, and to assume certain contracts of the Sperry® business, including Sperry® retail store leases. The sale was effective January 10, 2024, in accordance with the terms and conditions of the Purchase Agreement. The aggregate purchase price under these two purchase agreements was $97.4 million in cash. As of December 30, 2023, the Company recognized an impairment charge of $95.0 million which included $6.0 million for disposal costs. In determining the amount of the impairment loss for the assets of this transaction during the fourth quarter of 2023, the Company included $1.0 million of accumulated foreign currency translation gains, which were classified within AOCI. The Company determined that the divestiture of the Sperry® business did not represent a strategic shift that had or will have a major effect on the consolidated condensed results of operations, and therefore results of this business were not classified as discontinued operations. Divestiture of Merrell and Saucony China Joint Venture Entities On December 17, 2023, the Company and Xtep entered into a Purchase Agreement pursuant to which Xtep agreed to purchase the Company’s equity interest in the Merrell and Saucony joint venture entities that sourced and marketed Merrell® and Saucony® footwear and apparel products in China (Saucony Brand Operations Ltd., Saucony Distribution Operations Ltd., Merrell Brand Operations Ltd. and Merrell Distribution Operations Ltd.), transitioning the business from a joint venture model to a license and distribution rights model under which Xtep will exclusively carry out the development, marketing and distribution of footwear, apparel and accessories for the Saucony and Merrell brands in China. The sale was effective January 1, 2024, in accordance with the terms and conditions of the Purchase Agreement and the purchase price was $22.0 million in cash. As of December 30, 2023, the Company recognized an impairment charge of $1.8 million. In determining the amount of the impairment loss for the assets of this transaction during the fourth quarter of 2023, the Company included $0.8 million of accumulated foreign currency translation losses, which were classified within AOCI. Divestiture of Asia-based Leathers Business On December 14, 2023, the Company completed the sale of its Asia-based performance leathers business to Interhides Public Company Limited, a current materials vendor of the Company. The Company received $8.2 million in cash for the sale. The assets sold, which were included in the Other segment category, consist of $8.2 million in inventory. Sale-Leaseback of Louisville Distribution Facility On December 28, 2023, the Company completed a sale and leaseback transaction with an independent third party for the land, building and related fixed assets of the Company’s distribution center located in Louisville, Kentucky for a sale price of $23.5 million. The distribution center was leased back to the Company via a two-year lease agreement, which includes a one year renewal option. The transaction qualifies for sales recognition under the sale leaseback accounting requirements and the Company recorded a gain of $12.6 million in the fourth quarter of 2023. Divestiture of Hush Puppies intellectual property in China, Hong Kong, and Macau On September 1, 2023, the Company entered into an asset purchase agreement to sell the Hush Puppies® trademarks, patents, copyrights and domains in China, Hong Kong and Macau to its current sublicensee, Beijing Jiaman Dress Co., Ltd. for cash of $58.8 million and recognized a gain on sale of $55.8 million in the third quarter of 2023. The gain on sale is net of transaction related fees of $3.0 million. The transaction closed on September 14, 2023. The Company will continue to own the Hush Puppies® brand throughout the rest of the world. Divestiture of U.S. Wolverine Leathers Business On August 23, 2023, the Company completed the sale of its U.S. Wolverine Leathers business to its long-time customer, New Balance. The Company received $4.0 million in cash for the sale and recognized a gain on sale of $1.9 million. The assets sold, which were included in the Other segment category, consist of $2.1 million in inventory. Divestiture of Keds® Business On February 7, 2023 the Company entered into an Asset Purchase Agreement with Designer Brands, Inc. (the "Buyer") pursuant to which the Buyer agreed to purchase the global Keds® business. The sale was effective February 4, 2023, in accordance with the terms and conditions of the Asset Purchase Agreement. The following table summarizes the net gain recognized in the first quarter of 2023 in connection with the divestiture:
(In millions) |
Net proceeds | $ | 83.4 |
Net assets disposed | (65.9) |
Direct costs to sell | (1.6) |
AOCI reclassification adjustment, foreign currency translation | 4.2 |
Gain on sale of business | $ | 20.1 |
The Company determined that the divestiture of the Keds® business did not represent a strategic shift that had or will have a major effect on the Consolidated Results of Operations, and therefore results were not classified as discontinued operations. The proceeds from the sales were used to reduce outstanding revolver borrowings. Assets and Liabilities Held for Sale The Sperry® business and the Merrell® and Saucony® China Joint Venture Entities met the criteria to be classified as held for sale as of December 30, 2023, and therefore the Company reclassified the related assets and liabilities as held for sale on the Consolidated Balance Sheets as of December 30, 2023. The performance leathers business met the criteria to be classified as held for sale as of April 1, 2023, and therefore the Company reclassified the related assets and liabilities as held for sale on the Consolidated Balance Sheets as of April 1, 2023. The following is a summary of the major categories of assets and liabilities that have been classified as held for sale on the consolidated condensed balance sheets:
(In millions) |  | December 30, 2023 |  | April 1, 2023
Cash and cash equivalents |  | $ | 5.6 |  |  | $ | 4.4 |
Accounts receivables, net |  | 15.4 |  |  | 6.5 |
Inventories |  | 83.3 |  |  | 11.2 |
Other current assets |  | 2.9 |  |  | — |
Property, plant and equipment, net |  | 3.8 |  |  | — |
Lease right-of-use assets |  | 7.6 |  |  | — |
Goodwill |  | 43.0 |  |  | — |
Indefinite-lived intangibles |  | 67.0 |  |  | — |
Amortizable intangibles, net |  | 21.0 |  |  | — |
Other assets |  | 7.8 |  |  | — |
Impairment of carrying value |  | (96.8) |  |  | — |
Total assets held for sale |  | $ | 160.6 |  |  | $ | 22.1 |
Accounts payable |  | $ | 4.8 |  |  | $ | 4.8 |
Lease liabilities |  | 9.0 |  |  | — |
Accrued liabilities |  | 9.0 |  |  | 0.8 |
Other liabilities |  | 1.4 |  |  | — |
Total liabilities held for sale |  | $ | 24.2 |  |  | $ | 5.6 |

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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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