Discontinued Operations

12 Months Ended

Jan. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

On July 17, 2015, we entered into a sale and purchase agreement with an unrelated party pursuant to which we sold 100% of the equity interests of our Ben Sherman business, consisting of Ben Sherman Limited and its subsidiaries and Ben Sherman Clothing LLC, for £40.8 million. The final purchase price received by us was subject to adjustment based on, among other things, the actual debt and net working capital of the Ben Sherman business on the closing date, which was finalized during February 2016. We do not anticipate significant operations or earnings related to the discontinued operations in future periods, with cash flow attributable to discontinued operations in future periods primarily limited to the post-closing purchase price adjustment of $2.0 million which was paid in February 2016 and amounts associated with certain retained lease obligations. The estimated lease liability of $4.6 million represents our best estimate of the net loss anticipated with respect to certain retained lease obligations, however, the ultimate loss remains uncertain as the amount of any sub-lease income is dependent upon negotiated terms of any sub-lease agreements entered into for the spaces in the future.

In connection with the Ben Sherman disposal transaction we, among other things, entered into a transitional services agreement with the purchaser pursuant to which we and our subsidiaries are providing, in exchange for various fees, certain transitional support services (primarily in the United States) to the purchaser in connection with its operation of the Ben Sherman business following the transaction. The duration of the transitional services vary but are expected to cease during Fiscal 2016.

We have not classified as discontinued operations any corporate or shared service expenses historically charged to Ben Sherman which we determined may not be eliminated as a result of its disposal or offset by any transitional services income amounts. Recognizing these expenses and income as continuing operations in Corporate and Other reflects the uncertainty of whether there will be a reduction in such corporate or shared service expenses in the future as a result of the sale of Ben Sherman as well as the uncertainty regarding the term of any transitional services income. Interest expense under our prior U.K. revolving credit agreement, which was satisfied in connection with the transaction, is the only interest expense included in discontinued operations in our consolidated financial statements as this represents the interest expense directly attributable to the discontinued operations.

The following represents major classes of assets and liabilities related to the discontinued operations included in our consolidated balance sheets as of the following dates (in thousands):

	January 30, 2016			January 31, 2015
Receivables, net	$	—		$	14,517
Inventories, net	—			27,602
Other current assets, net	—			6,004
Property and equipment, net	—			9,037
Intangible assets, net	—			21,635
Other non-current assets, net	—			1,075
Total assets	$	—		$	79,870
Accounts payable and other accrued expenses	$	2,394		$	13,253
Short-term debt	—			4,126
Non-current liabilities	4,571			1,826
Deferred income taxes	—			3,745
Total liabilities	$	6,965		$	22,950
Net (liabilities) assets	$	(6,965	)	$	56,920

Operating results of the discontinued operations are shown below (in thousands):

	Fiscal 2015			Fiscal 2014			Fiscal 2013
Net sales	$	28,081		$	77,481		$	67,218
Cost of goods sold	17,414			40,751			35,124
Gross profit	$	10,667		$	36,730		$	32,094
SG&A	20,698			50,130			48,816
Royalties and other operating income	1,919			4,184			5,080
Operating loss	$	(8,112	)	$	(9,216	)	$	(11,642	)
Interest expense, net	146			247			229
Loss from discontinued operations before income taxes	$	(8,258	)	$	(9,463	)	$	(11,871	)
Income taxes	(800		)	(1,424		)	(1,734		)
Loss from discontinued operations, net of taxes	$	(7,458	)	$	(8,039	)	$	(10,137	)
Loss on sale of discontinued operations, net of taxes	(20,517		)	—			—
Net loss from discontinued operations, net of taxes	$	(27,975	)	$	(8,039	)	$	(10,137	)

Certain information pertaining to depreciation and amortization as well as capital expenditures associated with our discontinued operations has been included below (in thousands):

	Fiscal 2015		Fiscal 2014		Fiscal 2013
Depreciation and amortization (1)	$	667	$	3,082	$	3,154
Capital expenditures	$	660	$	4,290	$	1,137

(1) For Fiscal 2015, amounts reflect expense recognized prior to classification as held for sale, which occurred on March 24, 2015. No expense for depreciation or amortization was recognized in our consolidated statements of operations subsequent to qualifying as held for sale.