Held for Sale

6 Months Ended

Jul. 02, 2023

Russia Operations

In the second quarter of 2022, the Company announced its intention to transition its business in Russia. On June 30, 2022, the Company entered into a definitive agreement to sell its Russia operations ("disposal group"), which was included in the Company's International operating segment. As of the date of the agreement and until closing of the sale, the disposal group was classified as held for sale and measured at the lower of its carrying amount or fair value less estimated costs to sell. As of July 3, 2022, the assets and liabilities that met the classification as held for sale were $38.4 million and $13.7 million, respectively. The fair value as of July 3, 2022 less costs to sell was estimated based on the terms of the definitive agreement and was $7.3 million. As a result, the Company recorded a held for sale impairment charge of $18.5 million in the second quarter of 2022, which was recorded as a reduction to the assets in the assets held for sale in the consolidated balance sheet and in asset impairment charge in the consolidated statements of earnings. The impairment charge included $1.1 million for the anticipated liquidation of the cumulative translation adjustment. On July 20, 2022, subsequent to the end of the second quarter, the sale was completed and the Company no longer operates in Russia.

The disposal group did not meet the requirements to be classified as discontinued operations as the sale did not have a material effect on the Company's operations and does not represent a strategic shift in the Company's strategy. Our consolidated earnings before taxes for the second quarter of 2022 included $0.7 million from the Russia operations and for June year-to-date 2022 included $1.1 million from the Russia operations.

The major classes of assets and liabilities of the disposal group that met the classification of held for sale as of July 3, 2022 were as follows (in millions of dollars):


	July 3, 2022
Assets held for sale
Cash and equivalents	$	12.2
Trade accounts receivable, net	23.9
Prepaid expenses and other current assets	0.8
Property and equipment, net	0.6
Operating lease right-of-use assets	0.2
Deferred taxes	0.4
Other assets	0.3
Assets held for sale	38.4

Liabilities held for sale
Accounts payable and accrued liabilities	(0.5)
Operating lease liabilities	(0.2)
Accrued payroll and related taxes	(8.3)
Income and other taxes	(4.7)
Liabilities held for sale	(13.7)

Disposal group, net	$	24.7

Cash and equivalents in the consolidated statements of cash flows as of the second quarter-end 2022 included $12.2 million of cash that was included in the disposal group. The disposal group's cash was not reflected as cash and equivalents in the consolidated balance sheet as of second quarter-end 2022, as the assets of the disposal group were recognized net of the impairment charge as assets held for sale.

Subsequent to the second quarter-end 2022, the sale was completed and the Company received proceeds of $7.4 million, including purchase price adjustments, in July 2022. The assets and liabilities were derecognized in the third quarter of 2022 as well as any adjustments to the loss on the sale.

Real Property

Kelly Properties, LLC, a wholly owned subsidiary of the Company, entered into an agreement on May 11, 2022 to sell real property located in Troy, Michigan. Accordingly, during the second quarter of 2022, the transaction met the criteria to classify the property as held for sale. The property held for sale included the property and all improvements to the property, together with all rights and easements. Assets held for sale are recorded at the lower of their carrying value or fair value less estimated costs to sell, and depreciation is suspended on assets upon classification to held for sale. The carrying amount of the property held for sale as of the second quarter-end 2022 was $4.7 million, which was less than the sales price in the purchase agreement, less estimated costs to sell. The Company presented these assets as current assets held for sale in the consolidated balance sheet as of the second quarter-end 2022. The sale was completed in the fourth quarter of 2022 and the Company received proceeds of $5.6 million, net of commissions and transaction expense.