Discontinued Operations

6 Months Ended

Dec. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

On August 20, 2019, the Company announced plans to divest the product distribution businesses in Europe, the UK, Mexico, Colombia, Chile, Peru and the Miami-based export operations ("Divestitures") as these businesses had been performing below management's expectations. The Company will continue to operate its digital business in these countries. Management determined that the Company did not have sufficient scale in these markets to maximize the value-added model for product distribution, leading the Company to focus and invest in its higher-growth, higher-margin businesses. Results from the Divestitures were included within each reportable segment, which includes the Worldwide Barcode, Networking & Security and Worldwide Communications & Services segments.

During the quarter ended June 30, 2020, the Company recorded a pre-tax loss on sale classification of $88.9 million to reduce the carrying value of the Divestitures to its estimate of fair value (the net proceeds received at closing), less estimated costs to sell. As this loss was determined not to be attributable to any individual components in the Divestitures' net assets, it was reflected as a valuation allowance against the total assets of the Divestitures. During the quarter and six months ended December 31, 2020, the Company recorded an additional pre-tax loss on disposal group of $23.1 million and $33.8 million, respectively. This loss includes the realization of cumulative translation adjustments of $11.6 million for the quarter and six months ended December 31, 2020. Additional losses during the quarter and six months ended December 31, 2020 are primarily attributable to a reduction in the net proceeds received for the Divestitures.

The Company signed an agreement on July 23, 2020 with Intcomex for its businesses located in Latin America, outside of Brazil. The Company finalized the sale of the Latin America businesses on October 30, 2020. The Company also finalized the sale of the Europe and UK business on November 12, 2020. Total cash received during the quarter and six months ended December 31, 2020 for the sale of divestitures was $34.4 million. At December 31, 2020, the Company included $3.0 million in prepaid expenses and other assets on the condensed consolidated balance sheets for a receivable from Intcomex under the stock purchase agreement.

Major components of net loss from discontinued operations for the quarters ended December 31, 2020 and 2019 were as follows:


	Quarter ended December 31,				Six months ended December 31,
	2020		2019		2020		2019
	(in thousands)				(in thousands)
Net sales	$	68,323	$	155,912	$	213,373	$	311,628
Cost of goods sold	63,977		140,347		198,512		282,489
Gross profit	4,346		15,565		14,861		29,139
Selling, general and administrative expenses	6,378		15,016		17,291		28,825
Depreciation expense	—		298		—		546
Intangible amortization expense	—		321		—		746

Operating loss	(2,032)		(70)		(2,430)		(978)
Interest expense, net	269		430		394		913
Loss on disposal group	23,122		—		33,808		—
Other (income) expense, net	(181)		(188)		310		(531)
Loss from discontinued operations before taxes	(25,242)		(312)		(36,942)		(1,360)
Income tax expense (benefit)	13		(52)		17		(339)
Net loss from discontinued operations	$	(25,255)	$	(260)	$	(36,959)	$	(1,021)

The major classes of assets and liabilities classified as held-for-sale in the accompanying consolidated balance sheets, were as follows as of December 31, 2020 and June 30, 2020:



	December 31, 2020		June 30, 2020
	(in thousands)
Assets
Current assets:
Cash and cash equivalents	$	—	$	4,970
Accounts receivable, net	—		117,200
Inventories, net	—		106,779
Prepaid expenses and other current assets	—		23,808

Total current assets	—		252,757
Property and equipment, net	—		1,833


Deferred income taxes	—		9,349
Other non-current assets	—		6,215
Total assets, before valuation allowance	—		270,154
Less: valuation allowance	—		(88,923)
Total assets, net of valuation allowance (1)	$	—	$	181,231
Liabilities
Current liabilities:
Accounts payable	$	—	$	56,098
Accrued expenses and other current liabilities	—		14,815
Other taxes payable	—		20,378
Short-term borrowings	—		3,524
Income tax payable	—		1,085
Total current liabilities	—		95,900
Borrowings under revolving credit facility	—		24,704
Other long-term liabilities	—		7,418
Total liabilities(1)	$	—	$	128,022

(1) Total assets and liabilities of discontinued operations are classified in current assets and liabilities, respectively, in the Company's consolidated balance sheet as of June 30, 2020. The discontinued operations were disposed of during the quarter ended December 31, 2020.

Significant non-cash operating items and capital expenditures reflected in the cash flows from discontinued operations for the six months ended December 31, 2020 and 2019 were as follows:



	Six months ended December 31,
	2020		2019
	(in thousands)
Loss on disposal group	$	33,808	$	—

Depreciation and amortization	—		1,292
Capital expenditures	(58)		(8)