v3.20.4

Basis of Presentation | 3 Months Ended
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Oct. 31, 2020
Accounting Policies [Abstract] |
Basis of Presentation | Basis of Presentation Basis of Consolidation These unaudited interim condensed consolidated financial statements present all the assets, liabilities, revenues, expenses and cash flows of entities in which the Company has a controlling financial interest and is determined to be the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. Fiscal Period Fiscal 2021 will end on July 31, 2021 and will be a 52-week period. Fiscal year 2020 ended on August 1, 2020 and was a 52-week period. The three months ended October 31, 2020 and November 2, 2019 were 13-week periods, respectively. Interim Financial Statements These interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and are unaudited. In the opinion of management, such condensed consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the condensed consolidated financial condition, results of operations, comprehensive income, cash flows and equity of the Company for the interim periods presented. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted from this report as permitted by the SEC’s rules and regulations. However, the Company believes that the disclosures herein are adequate to ensure that the information is fairly presented. The consolidated balance sheet data as of August 1, 2020 is derived from the audited consolidated financial statements included in the Company’s Fiscal 2020 10-K, which should be read in conjunction with these interim financial statements. Reference is made to the Fiscal 2020 10-K for a complete set of financial statements. Discontinued Operations Sale of Catherines Intellectual Property In September 2020, following a comprehensive sales process and auction conducted under Section 363 of the U.S. Bankruptcy Code, the Company announced the sale of Catherines’ intellectual property assets for a base sale price of $40.8 million, subject to adjustment. The transaction closed on October 13, 2020. At closing, the parties entered into a 30-day Transition Services Agreement (the “TSA”) in order to provide for a transition of the e-commerce business. Amounts received under the TSA were not material. Subsequent to the sale, the Company returned $1.1 million based on the final inventory amount and other adjustments. Any further sale price adjustments are not expected to be material. In addition, all Catherines store locations were closed by the end of the first quarter of Fiscal 2021 and its operations ceased. As a result, the Company's Catherines business has been classified as a component of discontinued operations within the condensed consolidated financial statements for all periods presen ted. In connection with the Catherines wind down, we have incurred cumulative costs of approximately $21.5 million, primarily reflecting non-cash lease termination write-offs. Of that total, approximately $1.7 million was incurred during the first quarter of Fiscal 2021. All of those amounts are included in discontinued operations. The following table summarizes the results of Catherines which are classified as discontinued operations:
| Three Months Ended |  |
| October 31, 2020 |  | November 2, 2019 |  |  |  |
| (millions)
Net sales | $ | 31.7 |  |  | $ | 59.1 |  |  |  |  |
Depreciation and amortization expense | (0.4) |  |  | (0.9) |  |  |  |  |
Operating income | 12.3 |  |  | 8.1 |  |  |  |  |
Reorganization items, net | 19.9 |  |  | — |  |  |  |  |
Gain on disposal of discontinued operations, net of tax | 38.9 |  |  | — |  |  |  |  |
Pretax income from discontinued operations | 71.1 |  |  | 8.1 |  |  |  |  |
Income from discontinued operations, net of tax | $ | 71.1 |  |  | $ | 7.7 |  |  |  |  |
The major components of Catherines assets and liabilities related to discontinued operations are summarized below:
| October 31, 2020 |  | August 1, 2020
| (millions)
Cash and cash equivalents | $ | 0.4 |  |  | $ | 5.3 |
Inventories | — |  |  | 15.9 |
Prepaid expenses and other current assets | 6.7 |  |  | 6.2 |
Property and equipment, net | — |  |  | 0.3 |
Operating lease right-of-use assets | — |  |  | 0.6 |
Other assets | — |  |  | 0.2 |
Total assets related to discontinued operations | $ | 7.1 |  |  | $ | 28.5 |
Accounts payable and other current liabilities | $ | 6.4 |  |  | $ | 14.7 |
Liabilities subject to compromise | 20.9 |  |  | 49.8 |
Other liabilities | 5.0 |  |  | 3.0 |
Total liabilities related to discontinued operations | $ | 32.3 |  |  | $ | 67.5 |
Dressbarn Wind Down In May 2019, the Company announced the wind down of its Dressbarn brand, which was completed in the second quarter of Fiscal 2020. All Dressbarn store locations were closed as of December 31, 2019. Activities during the first quarter of Fiscal 2020 include additional employee related accruals, the closure of stores and the negotiation of lease terminations, as well as the Company sold the direct channel rights to Dressbarn intellectual property to a third-party for approximately $5 million, which was treated as a reduction of the wind down costs. In connection with the Dressbarn wind down, we have incurred cumulative costs of approximately $50 million. Of these costs, approximately $8 million of income was reflected during the three months ending October 31, 2020 as non-cash lease-related accruals for terminated store leases, which were reversed due to the bankruptcy proceedings . Approximately $1 million was incurred during the three months ending November 2, 2019. The following table summarizes the results of Dressbarn reclassified as discontinued operations:
| Three Months Ended |  |
| October 31, 2020 |  | November 2, 2019 |  |  |  |
| (millions) |  |  |  |
Net sales | $ | — |  |  | $ | 177.5 |  |  |  |  |
Depreciation and amortization expense | — |  |  | (7.2) |  |  |  |  |
Operating (loss) income | (0.7) |  |  | 25.6 |  |  |  |  |
Reorganization items, net | 8.5 |  |  | — |  |  |  |  |
Pretax (loss) income from discontinued operations | 7.8 |  |  | 25.6 |  |  |  |  |
(Loss) income from discontinued operations, net of tax | $ | 7.8 |  |  | $ | 25.6 |  |  |  |  |
The major components of Dressbarn assets and liabilities related to discontinued operations are summarized below:
| October 31, 2020 |  | August 1, 2020
| (millions)
Prepaid expenses and other current assets | $ | 3.3 |  |  | $ | 3.5 |
Total assets related to discontinued operations | $ | 3.3 |  |  | $ | 3.5 |
Accounts payable and other current liabilities | $ | 14.0 |  |  | $ | 5.5 |
Liabilities subject to compromise | 1.6 |  |  | 19.9 |
Other liabilities | 3.9 |  |  | 4.0 |
Total liabilities related to discontinued operations | $ | 19.5 |  |  | $ | 29.4 |
Cash Flow Information Related to Discontinued Operations The major components of cash flows related to discontinued operations are summarized below:
| Three Months Ended
| October 31, 2020 |  | November 2, 2019
| (millions)
Cash provided by operations of discontinued operations | $ | 17.7 |  |  | $ | (1.1) |
Cash provided by investing activities of discontinued operations | 40.8 |  |  | 4.3 |
Condensed Consolidated Statements of Cash Flows Reconciliation A reconciliation of cash, cash equivalents and restricted cash in the condensed consolidated balance sheets to the amounts shown on the condensed consolidated statements of cash flows is shown below:
Reconciliation of cash, cash equivalents and restricted cash: |  | October 31, 2020 |  | August 1, 2020 |  | November 2, 2019 |  | August 3, 2019
Cash and cash equivalents |  | $ | 380.3 |  |  | $ | 575.1 |  |  | $ | 255.0 |  |  | $ | 322.9 |
Restricted cash included in other current assets |  | 1.2 |  |  | 1.2 |  |  | 1.2 |  |  | 1.2 |
Cash included in discontinued operations |  | 0.4 |  |  | 5.3 |  |  | 7.1 |  |  | 5.1 |
Total cash, cash equivalents and restricted cash |  | $ | 381.9 |  |  | $ | 581.6 |  |  | $ | 263.3 |  |  | $ | 329.2 |

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- Definition The entire disclosure for the basis of accounting, or basis of presentation, used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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