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Discontinued Operations
 9 Months Ended
Nov. 01, 2014
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations

Note 4. Discontinued Operations

On November 27, 2013, in connection with the IPO and Restructuring Transactions, we separated the Vince and non-Vince businesses whereby the non-Vince business is now owned by Kellwood Holding, LLC, which is controlled by affiliates of Sun Capital. In connection with the Restructuring Transactions, the Company issued the Kellwood Note Receivable to Kellwood Company, LLC, in the amount of $341,500, which was immediately repaid with proceeds from the IPO and new Term Loan Facility. There was no remaining balance on the Kellwood Note Receivable after such repayment. Proceeds from the repayment of the Kellwood Note Receivable were used by Kellwood to (i) repay, discharge or repurchase indebtedness of Kellwood Company, LLC (including approximately $9,100 of accrued and unpaid interest on such indebtedness), and (ii) pay (A) the restructuring fee payable to Sun Capital Management and (B) the debt recovery bonus payable to our Chief Executive Officer.

As the Company and Kellwood Holding, LLC were under the common control of affiliates of Sun Capital, this separation transaction resulted in a $73,081 adjustment to additional paid-in capital on our condensed consolidated balance sheet at February 1, 2014.

As a result of the separation with the non-Vince businesses, the financial results of the non-Vince businesses through the separation date of November 27, 2013, are now included in results from discontinued operations, including the three and nine months ended November 2, 2013. The non-Vince businesses continue to operate as a stand-alone company. Due to differences in the basis of presentation for discontinued operations and the basis of presentation as a stand-alone company, the financial results of the non-Vince businesses included within discontinued operations of the Company may not be indicative of actual financial results of the non-Vince businesses as a stand-alone company.

On November 27, 2013, we entered into a Shared Services Agreement with Kellwood pursuant to which Kellwood provides support services in various operational areas as further discussed in Note 15. Other than the payments for services provided under this agreement, we do not expect any future cash flows related to the non-Vince business.

 

The separation of the non-Vince businesses was completed on November 27, 2013. Accordingly, there are no results from discontinued operations reflected on the condensed consolidated statement of operations for the three and nine months ended November 1, 2014. The results of the non-Vince businesses included in discontinued operations for the three and nine months ended November 2, 2013 are summarized in the following table (in thousands).

 

     Three Months
Ended
November 2,
2013		     Nine Months
Ended
November 2,
2013		  

Net sales

    $ 128,254      $ 378,660   

Cost of products sold

      101,411        295,693   
  

 

 

    

 

 

  

Gross profit

      26,843        82,967   

Selling, general and administrative expenses

      29,313        91,349   

Restructuring, environmental and other charges

      124        1,459   

Impairment of long-lived assets (excluding goodwill)

      933        1,367   

Change in fair value of contingent consideration

      —          (54 ) 

Interest expense, net

      14,760        42,550   

Other expense, net

      469        420   
  

 

 

    

 

 

  

Loss before income taxes

      (18,756 )      (54,124 ) 

Income taxes

      71        (11,038 ) 
  

 

 

    

 

 

  

Net loss from discontinued operations, net of taxes

    $ (18,827 )    $ (43,086 ) 
  

 

 

    

 

 

  

Effective tax rate

      0.4 %      20.4 % 
  

 

 

    

 

 

  

The effective tax rate for the three months ended November 2, 2013 differs from the U.S. statutory rate of 35% primarily due to additional valuation allowance. The effective tax rate for the nine months ended November 2, 2013 differs from the U.S. statutory rate of 35% primarily due to a release of valuation allowance. The release in valuation allowance is primarily due to the allocation of the disallowed tax loss on the sale of the Baby Phat trademark to intangible assets with indefinite lives resulting in fewer deferred tax liabilities that cannot be offset against deferred tax assets for valuation allowance purposes.

At November 1, 2014 and February 1, 2014, there are no remaining assets or liabilities of the non-Vince businesses reflected in the condensed consolidated balance sheet.