Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations

KC’s operating results are reflected as discontinued operations in the Consolidated Statements of Operation for all periods presented. The major line items constituting the loss from discontinued operations, net of tax are as follows:

	Year Ended December 31
	2019			2018			2017
	(In thousands)
Revenue	$	100,860		$	113,469		$	128,520
Cost of sales	62,927			61,972			69,708
Gross profit	37,933			51,497			58,812
Selling, general and administrative expenses (1)	54,047			58,035			61,033
Lease termination expense (2)	15,186			—			435
Operating loss	(31,300		)	(6,538		)	(2,656		)
Interest expense	583			361			258
Other expense, net	26			33			57
Loss from discontinued operations before income taxes	(31,909		)	(6,932		)	(2,971		)
Income tax benefit	(3,309		)	(1,571		)	(746		)
Loss from discontinued operations, net of tax	$	(28,600	)	$	(5,361	)	$	(2,225	)

(1) Selling, general and administrative expenses includes $1.8 million of severance termination benefits of which $0.4 remains unpaid as of December 31, 2019 and included within accrued compensation (current liabilities of discontinued operations).

(2) KC recognized lease termination expense of $15.2 million for the estimated costs to terminate lease agreements in 2019 as a result of the decision to wind down the business. The lease termination obligation is measured at fair value using significant observable inputs, which is Level 2 as defined in the fair value hierarchy. The fair value of the lease termination obligation is based on the remaining lease rentals, including common area maintenance costs, real estate taxes, and penalties, adjusted for the effects of deferred rent, and reduced by estimated sublease rentals that could be reasonably obtained.

KC’s assets and liabilities are reflected as assets and liabilities of discontinued operations in the Company’s Consolidated Balance Sheets for all periods presented. The major classes of assets and liabilities included as part of discontinued operations are as follows:

	December 31
	2019		2018
	(In thousands)
Assets
Cash and cash equivalents	$	5,022	$	1,932
Credit card receivables	51		1,771
Inventory	—		21,994
Prepaid expenses and other current assets	310		2,182
Current assets of discontinued operations	$	5,383	$	27,879
Property, plant and equipment, net	$	—	$	1,788
Deferred income taxes	614		2,645
Other non-current assets	—		173
Non-current assets of discontinued operations	$	614	$	4,606
Liabilities
Accounts payable	$	4,594	$	13,704
Accrued compensation	1,058		1,498
Accrued product returns	—		243
Lease termination liability	17,248		—
Other current liabilities	6,823		7,375
Current liabilities of discontinued operations	$	29,723	$	22,820
Other long-term liabilities	—		$	1,960
Non-current liabilities of discontinued operations	$	—	$	1,960

Future Minimum Operating Lease Payments

KC has operating leases for retail stores, a distribution warehouse and corporate office that contractually expire at various dates through 2026. Future minimum operating lease payments at December 31, 2019 are:

	Operating Leases
2020	$	10,942
2021	5,863
2022	4,027
2023	2,458
2024	1,534
Subsequent to 2024	1,669
Total minimum lease payments (1)	$	26,493

(1) Minimum lease payments have not been reduced by minimum sublease rentals of $6.2 million due in the future under contractual sublease agreements.