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Assets and Liabilities Held for Sale | 3 Months Ended
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Apr. 02, 2022
Discontinued Operations and Disposal Groups [Abstract] |
Disposal Groups, Including Discontinued Operations, Disclosure | Assets and Liabilities Held for Sale Assets and liabilities classified as held for sale in the Condensed Consolidated Balance Sheets as of April 2, 2022, January 1, 2022 and April 3, 2021 consist of the following:
| April 2, 2022 |  | January 1, 2022 |  | April 3, 2021
U.S. Sheer Hosiery business - continuing operations | $ | 7,959 |  |  | $ | 5,426 |  |  | $ | — |
European Innerwear business - discontinued operations | — |  |  | 321,731 |  |  | 303,045 |
Total current assets held for sale | $ | 7,959 |  |  | $ | 327,157 |  |  | $ | 303,045 |
U.S. Sheer Hosiery business - continuing operations | $ | 7,959 |  |  | $ | 5,426 |  |  | $ | — |
European Innerwear business - discontinued operations | — |  |  | 311,476 |  |  | 288,936 |
Total current liabilities held for sale | $ | 7,959 |  |  | $ | 316,902 |  |  | $ | 288,936 |
U.S. Sheer Hosiery Business - Continuing Operations In the fourth quarter of 2021, the Company reached the decision to divest its U.S. Sheer Hosiery business, including the L’eggs brand, as part of its strategy to streamline its portfolio under its Full Potential plan and determined that this business met held-for-sale accounting criteria. The related assets and liabilities are presented as held for sale in the Condensed Consolidated Balance Sheets at April 2, 2022 and January 1, 2022. The Company recorded a non-cash charge of $38,364 in the fourth quarter of 2021, to record a valuation allowance against the net assets held for sale to write down the carrying value of the disposal group to the estimated fair value less costs of disposal. In the quarter ended April 2, 2022, the Company recorded a non-cash gain of $6,528 to adjust the valuation allowance resulting from a decrease in carrying value due to changes in working capital. The operations of the U.S. Sheer Hosiery business are reported in “Other” for all periods presented in Note “Business Segment Information”. The Company is currently exploring potential purchasers for this business and expects to complete the sale of this business during 2022. European Innerwear Business - Discontinued Operations In the first quarter of 2021, the Company announced that it reached the decision to exit its European Innerwear business as part of its strategy to streamline its portfolio under its Full Potential plan and determined that this business met held-for-sale and discontinued operations accounting criteria. Accordingly, the Company began to separately report the results of its European Innerwear business as discontinued operations in its Condensed Consolidated Statements of Income, and to present the related assets and liabilities as held for sale in the Condensed Consolidated Balance Sheets. On November 4, 2021, the Company announced that it had reached an agreement to sell its European Innerwear business to an affiliate of Regent, L.P. and completed the sale on March 5, 2022. Under the agreement, the purchaser received all the assets and operating liabilities of the European Innerwear business. The operations of the European Innerwear business were previously reported primarily in the International segment. Upon meeting the criteria for held-for-sale classification in the first quarter of 2021which qualified as a triggering event, the Company performed a full impairment analysis of the disposal group's indefinite-lived intangible assets and goodwill. As a result of the strategic decision to exit the European Innerwear business, forecasts were revised to include updated market conditions and the removal of strategic operating decisions that would no longer occur under the Company's ownership. The revised forecasts indicated impairment of certain indefinite-lived trademarks and license agreements as well as the full goodwill balance attributable to the European Innerwear business. As a result of this impairment analysis, a non-cash charge of $155,745 was recorded as "Impairment of intangible assets and goodwill" in the summarized discontinued operations financial information for the quarter ended April 3, 2021. In addition, the Company recorded a valuation allowance against the net assets held for sale to write down the carrying value of the disposal group to the estimated fair value less costs of disposal, resulting in a non-cash charge of $226,352 for the quarter ended April 3, 2021, as "(Gain) loss on sale of business and classification of assets held for sale" in the summarized discontinued operations financial information. In the quarter ended April 2, 2022, the Company recorded the final gain on the sale of the European Innerwear business of $187 primarily resulting from changes in working capital balances and foreign exchange rates. Additionally, the Company recorded an impairment charge of $7,302 in continuing operations on an indefinite-lived trademark for the quarter ended April 3, 2021 which is reflected in the “Selling, general and administrative expenses” line in the Condensed Consolidated Statements of Income. This charge related to the full impairment of an indefinite-lived trademark related to a specific brand within the European Innerwear business that was excluded from the disposal group as it was not marketed for sale and that the Company intends to exit. The Company has continued certain sales from its supply chain to the European Innerwear business on a transitional basis after the sale of the business. Under the terms of the Manufacturing and Supply Agreement, the Company will provide these services for periods up to 34 months from the closing date of the transaction. Additionally, the Company entered into a Transitional Services Agreement pursuant to which the Company will provide transitional services including information technology, human resources, facilities management, and limited finance and accounting services for periods up to 12 months from the closing date of the transaction. The sales and the related profit are included in continuing operations in the Condensed Consolidated Statements of Income and in “Other” in Note “Business Segment Information” in all periods presented and have not been eliminated as intercompany transactions in consolidation. The related receivables from the European Innerwear business are included in “Trade accounts receivable, net” in the Condensed Consolidated Balance Sheets for all periods presented. The operating results of the discontinued operations only reflect revenues and expenses that are directly attributable to the European Innerwear business that are eliminated from continuing operations. Discontinued operations does not include any allocation of corporate overhead expense or interest expense. The key components from discontinued operations related to the European Innerwear business are as follows:
| Quarters Ended |  |
| April 2, 2022 |  | April 3, 2021 |  |  |  |
Net sales | $ | 101,314 |  |  | $ | 135,845 |  |  |  |  |
Cost of sales | 60,415 |  |  | 75,523 |  |  |  |  |
Gross profit | 40,899 |  |  | 60,322 |  |  |  |  |
Selling, general and administrative expenses | 54,689 |  |  | 83,392 |  |  |  |  |
Impairment of intangible assets and goodwill | — |  |  | 155,745 |  |  |  |  |
(Gain) loss on sale of business and classification of assets held for sale | (187) |  |  | 226,352 |  |  |  |  |
Operating loss | (13,603) |  |  | (405,167) |  |  |  |  |
Other expenses | 283 |  |  | 334 |  |  |  |  |
Interest expense, net | 10 |  |  | 90 |  |  |  |  |
Loss from discontinued operations before income tax expense | (13,896) |  |  | (405,591) |  |  |  |  |
Income tax benefit | (18,421) |  |  | (13,925) |  |  |  |  |
Net income (loss) from discontinued operations, net of tax | $ | 4,525 |  |  | $ | (391,666) |  |  |  |  |
Assets and liabilities of discontinued operations classified as held for sale in the Condensed Consolidated Balance Sheets as of April 2, 2022, January 1, 2022 and April 3, 2021 consist of the following:
| April 2, 2022 |  | January 1, 2022 |  | April 3, 2021
Cash and cash equivalents | $ | — |  |  | $ | 24,352 |  |  | $ | 10,304 |
Trade accounts receivable, net | — |  |  | 87,353 |  |  | 80,458 |
Inventories | — |  |  | 141,653 |  |  | 106,192 |
Other current assets | — |  |  | 21,926 |  |  | 11,190 |
Property, net | — |  |  | 62,659 |  |  | 61,763 |
Right-of-use assets | — |  |  | 32,603 |  |  | 34,779 |
Trademarks and other identifiable intangibles, net | — |  |  | 205,204 |  |  | 208,601 |
Deferred tax assets | — |  |  | 4,174 |  |  | 8,505 |
Other noncurrent assets | — |  |  | 4,127 |  |  | 4,860 |
Allowance to adjust assets to estimated fair value, less costs of disposal | — |  |  | (262,320) |  |  | (223,607) |
Total assets of discontinued operations | $ | — |  |  | $ | 321,731 |  |  | $ | 303,045 |
Accounts payable | $ | — |  |  | $ | 84,327 |  |  | $ | 62,199 |
Accrued liabilities | — |  |  | 122,620 |  |  | 120,475 |
Lease liabilities | — |  |  | 6,562 |  |  | 9,159 |
Notes payable | — |  |  | 329 |  |  | 1,574 |
Lease liabilities - noncurrent | — |  |  | 27,426 |  |  | 27,038 |
Pension and postretirement benefits | — |  |  | 38,325 |  |  | 44,428 |
Other noncurrent liabilities | — |  |  | 31,887 |  |  | 24,063 |
Total liabilities of discontinued operations | $ | — |  |  | $ | 311,476 |  |  | $ | 288,936 |
The cash flows related to discontinued operations have not been segregated and are included in the Condensed Consolidated Statements of Cash Flows. The following table presents cash flow and non-cash information related to discontinued operations:
| Quarters Ended |  |
| April 2, 2022 |  | April 3, 2021 |  |  |  |
Depreciation | $ | — |  |  | $ | 2,608 |  |  |  |  |
Amortization | $ | — |  |  | $ | 1,460 |  |  |  |  |
Capital expenditures | $ | 715 |  |  | $ | 3,335 |  |  |  |  |
Impairment of intangible assets and goodwill | $ | — |  |  | $ | 155,745 |  |  |  |  |
(Gain) loss on sale of business and classification of assets held for sale | $ | (187) |  |  | $ | 226,352 |  |  |  |  |
Capital expenditures included in accounts payable at end of period | $ | — |  |  | $ | 52 |  |  |  |  |
Right-of-use assets obtained in exchange for lease obligations | $ | 461 |  |  | $ | 1,495 |  |  |  |  |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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