Discontinued Operations

12 Months Ended

Jun. 30, 2022

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, (the "Divestitures"), as these businesses were performing below management's expectations. The Company continues 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: Specialty Technology Solutions and Modern Communications & Cloud.

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 businesses on November 12, 2020.

During the fiscal year 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 fiscal year ended June 30, 2021, the Company recorded an additional pre-tax loss on disposal group of $34.5 million, which was primarily attributable to a reduction in the net proceeds realized at closing for the Divestitures. During the quarter ended December 31, 2021, the

Company received the second and final payment of $3.1 million for its businesses in Latin America, outside of Brazil, related to working capital adjustments and in accordance with the Share Purchase Agreement between Intcomex and the Company. The receipt of payment resulted in a gain on disposal group of $0.1 million. Cash received for the sale of the Divestitures totaled $3.1 million and $34.4 million for the fiscal years ended June 30, 2022 and 2021, respectively.

Major components of net loss from discontinued operations for the years ended June 30, 2022, 2021 and 2020 were as follows:


	Fiscal Year Ended June 30,
	2022		2021		2020
	(in thousands)
Net sales	$	—	$	213,373	$	561,496
Cost of goods sold	—		198,512		513,003
Gross profit	—		14,861		48,493
Selling, general and administrative expenses	—		17,291		53,946
Depreciation expense	—		—		975
Intangible amortization expense	—		—		1,403
Impairment charges	—		—		13,747
Operating loss	—		(2,430)		(21,578)
Interest expense, net	—		394		1,399
(Income) loss on held for sale classification	(100)		34,597		88,923
Other expense, net	—		310		1,124
Income (loss) from discontinued operations before taxes	100		(37,731)		(113,024)
Income tax (benefit) expense	—		(3,137)		403
Net income (loss) from discontinued operations	$	100	$	(34,594)	$	(113,427)

For fiscal year ended June 30, 2020, the Company allocated goodwill to discontinued operations based on relative fair value of the discontinued operations compared to the consolidated reporting units and impaired such goodwill totaling $1.0 million for the Specialty Technology Solutions segment and $7.5 million for the Modern Communications & Cloud segment. Identifiable intangible assets, including customer relationships and distributor agreements, were also impaired, totaling $5.2 million for fiscal year ended June 30, 2020. The impairment charges are included in net loss from discontinued operations in the Consolidated Income Statements.

Significant non-cash operating items and capital expenditures reflected in the cash flows from discontinued operations for the fiscal years ended June 30, 2022, 2021 and 2020 were as follows:



	Fiscal Year Ended June 30,
	2022		2021		2020
	(in thousands)
Loss on held for sale classification	$	—	$	34,597	$	88,923
Impairment charges	—		—		13,747
Depreciation and amortization	—		—		2,378
Capital expenditures	—		(58)		(77)