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DISCONTINUED OPERATIONS | 12 Months Ended
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Dec. 31, 2016
DISCONTINUED OPERATIONS | NOTE 3. DISCONTINUED OPERATIONS In the second quarter of 2016, following termination of the Staples Agreement, the Company disclosed its intention to explore strategic alternatives regarding its European business of the International Division. On September 23, 2016, the Company announced that it had received an irrevocable offer from Aurelius Rho Invest DS GmbH, a subsidiary of The AURELIUS Group (the “Purchaser”) to acquire the Company’s European business operations (the “OD European Business”). The transaction was structured as an equity sale with the Purchaser acquiring the OD European Business with its operating assets and liabilities. In addition to approving the sale of the OD European Business in the third quarter of 2016, the Company’s Board of Directors approved a plan to sell substantially all of the remaining operations of the International Division. On December 31, 2016, the Company closed the sale of the OD European Business contemplated by the Sale and Purchase Agreement dated November 22, 2016 as amended to complete the sale (the “SPA”). Approximately $70 million has been accrued at December 31, 2016 under a working capital adjustment provision. The draft working capital adjustment submitted by the Company to the Purchaser is subject to a dispute resolution provision as provided for in the SPA. The Company is actively marketing for sale the businesses in South Korea, mainland China, Australia and New Zealand and expects to complete the dispositions within the one year period associated with held for sale assets. Collectively, the OD European Business sale and other planned dispositions represent a strategic shift that has a major impact on the Company’s operations and financial results and has been accounted for as discontinued operations. The retained sourcing and trading operations of the former International Division are presented as Other in Note 16, Segment Information. The Company has presented the operating results of the OD European Business as well as the entities to be sold within discontinued operations, net of tax in the Consolidated Statements of Operations for all periods presented. The related assets and liabilities of the disposal groups are presented as current and non-current assets and liabilities of discontinued operations in the Consolidated Balance Sheets as of December 31, 2016 and December 26, 2015. Cash flows from the Company’s discontinued operations are presented in the Consolidated Statements of Cash Flows for all periods. Certain portions of the former International Division assets and operations are being retained or did not meet the held for sale criteria at December 31, 2016 and, therefore, remain in continuing operations. The loss on classification as discontinued operations relating to the remaining entities was measured at the lower of carrying value or estimated fair value less costs to sell and is included in the valuation allowance in the balance sheet as shown below. Completion of the sale of the remaining international operations may be for amounts different from the current estimates and will be evaluated each reporting period until the dispositions are complete. In accordance with the Company’s annual goodwill impairment test $15 million of goodwill in the Australia/New Zealand reporting unit was considered impaired in the third quarter of 2016 based on a decrease in the long-term projected cash flows and related estimated terminal value of that business. Restructuring charges incurred by the International Division that previously had been presented as part of Corporate costs have been included in the measurement and presentation of discontinued operations in all periods presented. The SPA contains customary warranties of the Company and the Purchaser, with the Company’s warranties limited to an aggregate of EUR 10 million. The Company will provide various transition and product sourcing services to the Purchaser for a period of six to 24 months under a separate agreement after the closing. Also, as part of the disposition, the Company retained responsibility for the frozen defined benefits pension plan in the United Kingdom. As part of the OD European Business sale transaction, the Purchaser shall indemnify and hold the Company harmless in connection with any guarantees in place as of September 23, 2016 and given by Company in respect of the liabilities or obligations of the OD European Business. Further, if the Purchaser wishes to terminate any such guarantee or cease to comply with any underlying obligation which is subject to such a guarantee, the Purchaser shall obtain an unconditional and irrevocable release of the guarantee. However, the Company is contingently liable in the event of a breach by the Purchaser of any such obligation. The Company does not believe it is probable it would be required to perform under any of these guarantees or such underlying obligations. The major components of Discontinued operations, net of tax presented in the Consolidated Statements of Operations for the years ended December 31, 2016, December 26, 2015 and December 27, 2014 include the following.
(In millions) |  | 2016 |  |  | 2015 |  |  | 2014 |
Sales |  | $ | 2,564 |  |  | $ | 2,758 |  |  | $ | 3,386 |
Cost of goods sold and occupancy costs |  |  | 2,019 |  |  |  | 2,119 |  |  |  | 2,586 |
Operating expenses |  |  | 573 |  |  |  | 617 |  |  |  | 746 |
Asset impairments |  |  | 90 |  |  |  | — |  |  |  | 32 |
Restructuring charges |  |  | 11 |  |  |  | 90 |  |  |  | 69 |
Interest income |  |  | 1 |  |  |  | 2 |  |  |  | 2 |
Interest expense |  |  | (5 | ) |  |  | (2 | ) |  |  | (2 | )
Other income (expense), net |  |  | (2 | ) |  |  | — |  |  |  | (2 | )
Loss on sale or held for sale classification |  |  | (223 | ) |  |  | — |  |  |  | — |
Income tax expense (benefit) |  |  | (208 | ) |  |  | 16 |  |  |  | 10 |
Discontinued operations, net of tax |  | $ | (150 | ) |  | $ | (84 | ) |  | $ | (59 | )
Disposition of the OD European Business on December 31, 2016 resulted in a pre-tax loss on sale of $108 million and is included in the table above. The tax benefit associated with discontinued operations differs from the statutory rate due to the mix of earnings and loss in the various jurisdictions, the impact of various permanent items and other factors. Assets and liabilities of discontinued operations presented in the Consolidated Balance Sheets at December 31, 2016, and December 26, 2015 are included in the following table. As the sale of the OD European Business was completed before year end 2016, accordingly, the assets and liabilities of that business are not included as of December 31, 2016.
(In millions) |  | 2016 |  |  | 2015 |
Assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 44 |  |  | $ | 209 |
Receivables, net |  |  | 88 |  |  |  | 420 |
Inventories |  |  | 82 |  |  |  | 292 |
Prepaid expenses and other current assets |  |  | 4 |  |  |  | 35 |
Property and equipment, net |  |  | 31 |  |  |  | — |
Other assets |  |  | 6 |  |  |  | — |
Valuation allowance |  |  | (113 | ) |  |  | — |
Current assets of discontinued operations |  | $ | 142 |  |  | $ | 956 |
Property and equipment, net |  | $ | — |  |  | $ | 119 |
Goodwill |  |  | — |  |  |  | 15 |
Other assets |  |  | — |  |  |  | 48 |
Non-current assets of discontinued operations |  | $ | — |  |  | $ | 182 |
Liabilities |  |  |  |  |  |  |  |
Trade accounts payable |  | $ | 60 |  |  | $ | 331 |
Accrued expenses and other current liabilities |  |  | 27 |  |  |  | 282 |
Income taxes payable |  |  | 2 |  |  |  | 4 |
Short-term borrowings and current maturities of long-term debt |  |  | 9 |  |  |  | 5 |
Deferred income taxes and other long-term liabilities |  |  | 6 |  |  |  | — |
Current liabilities of discontinued operations |  | $ | 104 |  |  | $ | 622 |
Deferred income taxes and other long-term liabilities |  | $ | — |  |  | $ | 40 |
Long-term debt, net of current maturities |  |  | — |  |  |  | 6 |
Non-current liabilities of discontinued operations |  | $ | — |  |  | $ | 46 |
Cash flows from discontinued operations included depreciation and amortization of $19 million, $30 million, and $36 million for the years ended December 31, 2016, December 26, 2015 and December 27, 2014 respectively, as well as capital expenditures of $9 million, $19 million, and $27 million for the years ended December 31, 2016, December 26, 2015 and December 27, 2014, respectively.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=65878427&loc=SL51721533-107759 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721665-107760 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5C -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721675-107760 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3A -URI http://asc.fasb.org/extlink&oid=64862545&loc=SL51724579-110230 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721663-107760 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=64862545&loc=d3e2941-110230 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=64827811&loc=d3e1361-107760 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5B -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721673-107760 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3A -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721659-107760 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5A -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721671-107760 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5D -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721677-107760 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=64827811&loc=d3e1474-107760 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721683-107760 + Details
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