DISCONTINUED OPERATIONS

9 Months Ended

Apr. 02, 2023

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

3. DISCONTINUED OPERATIONS

On September 2, 2022, the Company sold its NauticStar business to certain affiliates of Iconic Marine Group, LLC ("Purchaser"). Pursuant to the terms of the purchase agreement, substantially all of the assets of NauticStar were sold, including, among other things, all of the issued and outstanding membership interests in its wholly-owned subsidiary NS Transport, LLC, all owned real property, equipment, inventory, intellectual property and accounts receivable, and the Purchaser assumed substantially all of the liabilities of NauticStar, including, among other things, product liability and warranty claims.

In conjunction with the purchase agreement, the Company entered into a joint employer services agreement and a transition services agreement, which provide certain services to the Purchaser for various periods of time after the sale. Both agreements ended during the second quarter of fiscal 2023. These agreements did not a have a material impact on expenditures, earnings, nor cash flows during the three and nine months ended April 2, 2023.

Further, the Company entered into the Second Amendment to the Credit Agreement as described further in Note 9 related to waivers of restrictions within the Credit Agreement, as amended, on the sale of assets.

During the nine months ended April 2, 2023, the Company recognized a $22.5 million loss on sale, subject to further changes based upon a customary working capital adjustment. Furthermore, assets and liabilities retained, primarily related to certain claims, are subject to change, with activity after the date of sale being recorded as discontinued operations.

The following table summarizes the operating results of discontinued operations for the following periods:

	Three Months Ended			Nine Months Ended
	April 3,			April 2,			April 3,
	2022			2023			2022
NET SALES	$	17,392		$	7,767		$	45,817
COST OF SALES		19,433			9,732			49,481
GROSS LOSS		(2,041	)		(1,965	)		(3,664	)
OPERATING EXPENSES:
Selling, general and administrative		1,578			2,639			4,322
Amortization of other intangible assets		498			—			1,533
Total operating expenses		2,076			2,639			5,855
OPERATING LOSS		(4,117	)		(4,604	)		(9,519	)
Loss on sale of discontinued operations		—			22,487			—
LOSS BEFORE INCOME TAX BENEFIT		(4,117	)		(27,091	)		(9,519	)
INCOME TAX BENEFIT		746			5,952			1,845
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX	$	(3,371	)	$	(21,139	)	$	(7,674	)

The operating results, and components thereof, of discontinued operations for the three months ended April 2, 2023 were not significant.

The following table summarizes the assets and liabilities associated with discontinued operations:

	June 30,
	2022
CURRENT ASSETS:
Accounts receivable, net of allowance	$	3,130
Inventories, net		20,044
Other current assets		434
Total current assets classified as discontinued operations	$	23,608
NON-CURRENT ASSETS:
Property, plant and equipment, net	$	5,924
Other long-term assets		63
Total non-current assets classified as discontinued operations	$	5,987
CURRENT LIABILITIES:
Accounts payable	$	4,675
Accrued expenses and other current liabilities		3,212
Total current liabilities classified as discontinued operations	$	7,887