Discontinued Operations

12 Months Ended

Jan. 03, 2022

Discontinued Operations And Disposal Groups [Abstract]

(3)	Discontinued Operations

On January 19, 2020, the Company entered into a definitive equity interests purchase agreement for the sale of the Company’s Mobility business unit. The sale was completed on April 17, 2020 for a base purchase price of $550,000, subject to customary purchase price adjustments. The base purchase price did not include certain accounts receivable of the divested business, which were estimated to total approximately $95,000. After the price adjustments, the final purchase price was $569,246, which did not include approximately $83,000 accounts receivable of the divested business.

On April 18, 2020, the Company entered into a Transition Services Agreement (TSA) with the Purchaser pursuant to which the Purchaser is receiving certain services (the Services) to enable it to operate the Mobility business unit after the closing of the sale of the Mobility business unit. The Services include finance and accounting, human resources, legal and compliance, sales, information technology, and other corporate support services. Under the TSA, the Services are being provided at cost for a period of up to 24 months. In addition, the Company entered into a Manufacturing Supply Agreement with the Purchaser pursuant to which the Purchaser will supply products to a few customers of the Company. There was no material impact on the Company’s consolidated financial statements.

Further, on June 29, 2020, the Company entered into a Sales Force Agreement with the Purchaser pursuant to which the Company’s sales representatives assist the Purchaser in selling PCBs manufactured by the Purchaser to certain customers for a commission for a period up to April 17, 2021. There was no material impact on the Company’s consolidated financial statements.

As the sale of the Company’s Mobility business unit represents a strategic shift that had a major effect on the Company’s operations and financial results, in accordance with the provisions of FASB authoritative guidance on the presentation of financial statements, Mobility business unit results are classified as discontinued operations in the consolidated statements of operations for all periods presented.

The following table summarizes the results of Mobility operations for each period prior to sale:

	For the Year Ended
	December 28,			December 30,
	2020			2019
	(In thousands, except per share data)
Net sales	$	143,951		$	556,098
Cost of goods sold		136,800			531,592
Gross profit		7,151			24,506
Operating expenses:
Selling and marketing		1,461			4,840
General and administrative		2,317			4,875
Research and development		147			—
Amortization of definite-lived intangibles		809			2,698
Restructuring charges		—			1,601
Total operating expenses		4,734			14,014
Operating income		2,417			10,492
Other (expense) income:
Interest expense		(223	)		(1,147	)
Gain on sale of the Mobility business unit		237,253			—
Other, net		1,160			2,513
Total other income, net		238,190			1,366
Income from discontinued operations before income taxes		240,607			11,858
Income tax provision		(46,686	)		(2,478	)
Income from discontinued operations, net of income taxes	$	193,921		$	9,380

Earnings per share from discontinued operations:
Basic earnings per share	$	1.82		$	0.09
Diluted earnings per share	$	1.82		$	0.09

Depreciation expense related to the discontinued operations for the years ended December 28, 2020 and December 30, 2019, was $21,375 and $73,204, respectively.

During the year ended December 28, 2020, the Company’s income tax expense related to the discontinued operations was impacted by a net discrete tax expense of $46,686. The net income tax expense for the year ended December 28, 2020 is related mainly to (i) China withholding tax related to gain on sale, (ii) U.S. income tax related to Global Intangible Low Taxed Income (GILTI) inclusion net of IRC Section 250 deduction and foreign tax credits, offset by (iii) release of U.S. uncertain tax positions as a result of available excess foreign tax credits.

Proceeds from the sale of the Company’s Mobility business unit have been presented in the consolidated statements of cash flows within net cash provided by investing activities from discontinued operations. The following is a reconciliation of the final gain recorded for the sale of the Company’s Mobility business unit (in thousands):

Net proceeds from the sale of the Mobility business unit ⁽¹⁾	$	569,246

Mobility business unit assets:
Cash and cash equivalents		12,513
Restricted cash		35,412
Accounts receivable, net		12
Contract assets		40,072
Inventories		4,988
Prepaid expenses and other current assets		4,593
Property, plant and equipment, net		328,648
Goodwill		68,267
Definite-lived intangibles, net		5,520
Deposits and other non-current assets		6,291
Total Mobility business unit assets		506,316

Mobility business unit liabilities:
Accounts payable		142,636
Accrued salaries, wages and benefits		9,392
Other current liabilities		8,890
Other long-term liabilities		303
Total Mobility business unit liabilities		161,221

Derecognition of foreign currency translation adjustments and unrealized losses on cash flow hedges recorded in accumulated other comprehensive loss		26,957

Other transaction costs incurred as part of the sale of the Mobility business unit ⁽²⁾		13,855

Gain on sale of the Mobility business unit before income taxes	$	237,253

(1)	Net proceeds from the sale of the Mobility business unit are net of the finalized customary purchase price adjustments.

(2)	Costs directly incurred as a result of the sale of the Company’s Mobility business unit, including bank fees, legal fees, professional fees, and other costs.