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DISCONTINUED OPERATIONS | 6 Months Ended
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Jun. 30, 2018
Discontinued Operations And Disposal Groups [Abstract] |
DISCONTINUED OPERATIONS | NOTE 4. DISCONTINUED OPERATIONS In the third quarter of 2016, the Company’s Board of Directors approved a plan to sell substantially all of the International Operations through four disposal groups (Europe, South Korea, Australia and New Zealand, and mainland China). Collectively, these dispositions represented a strategic shift that had a major impact on the Company’s operations and financial results and have been accounted for as discontinued operations. The Company is presenting the operating results and cash flows of these disposal groups within discontinued operations through their respective dates of disposal, including all prior periods. The assets and liabilities of the disposal groups remaining at the end of each period are presented as current assets and liabilities of discontinued operations in the Condensed Consolidated Balance Sheets. Certain portions of the former International Division assets and operations are being retained and, therefore, remain in continuing operations. The retained global sourcing operations are presented as Other in Note 13, Segment Information. As of the end of fiscal 2017, the Company sold its European, South Korean and mainland China businesses. The sale of the Company’s businesses in Australia and New Zealand was completed on February 5, 2018 and May 4, 2018, respectively, as two separate transactions with the same purchaser. Both transactions were structured and accounted for as an equity sale. Upon the sale of this last disposal group, the sale of the International Operations is complete. Prior to the sale of its business in Australia (the “Australia Business”), the Company had recorded an aggregate reduction of $44 million in 2017 and 2016 to the carrying amount of its Australia Business based on its updated estimates of fair value less cost to sell. The disposition of the Australia Business resulted in a pre-tax loss on sale of $1 million during the first quarter of 2018, which has been reflected in the Net loss on sale of discontinued operations in the table below, resulting in a cumulative loss of $45 million. Similarly, prior to the sale of its business in New Zealand (the “New Zealand Business”), the Company had recorded an aggregate reduction of $13 million in prior periods to the carrying amount of the New Zealand Business based on its updated estimates of fair value less cost to sell. The disposition of the New Zealand Business resulted in a pre-tax loss on sale of $3 million during the second quarter of 2018, which has been reflected in the Net loss on sale of discontinued operations in the table below, resulting in a cumulative loss of $16 million. The purchaser had previously paid the Company $8 million in connection with extending the purchase agreement in 2017, which is presented in Accrued expenses and other current liabilities in the Condensed Consolidated Balance Sheet as of December 30, 2017. This amount was applied towards the purchase price of the New Zealand Business when the transaction was completed in 2018. Associated with the Company’s sale of its European business operations in 2016, the sale and purchase agreement (the “SPA”) contained customary warranties of the Company and the purchaser, with the Company’s warranties limited to an aggregate of EUR 10 million. The Company monitors its estimated exposure to liabilities under the warranties under the SPA, and as of June 30, 2018, the Company believes it has made adequate provisions for its potential exposures related to these warranties. The Company will continue to provide various transition and product sourcing services to the purchaser of the European business operations for a period of up to 24 months following the closing date of December 31, 2016, under a separate agreement. The proceeds and related costs from these services are not material and are presented in Other income, net as part of continuing operations in the Condensed Consolidated Statements of Operations. The Company also retains certain guarantees in place with respect to the liabilities or obligations of the European business and remains contingently liable for these obligations. However, the purchaser must indemnify and hold the Company harmless for any losses in connection with these guarantees. The Company currently does not believe it is probable it would be required to perform under any of these guarantees or any of the underlying obligations. The major components of Discontinued operations, net of tax presented in the Condensed Consolidated Statements of Operations are presented below. The results include the operations of the businesses sold up to the dates of sale.
|  | Second Quarter |  |  | First Half |
(In millions) |  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Sales |  | $ | 21 |  |  | $ | 119 |  |  | $ | 115 |  |  | $ | 287 |
Cost of goods sold and occupancy costs |  |  | 16 |  |  |  | 97 |  |  |  | 88 |  |  |  | 233 |
Operating expenses |  |  | 4 |  |  |  | 26 |  |  |  | 21 |  |  |  | 52 |
Restructuring charges |  |  | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 2 |
Other income (expense), net |  |  | 1 |  |  |  | — |  |  |  | (1 | ) |  |  | — |
Net (increase) reduction of loss on discontinued operations held for sale |  |  | — |  |  |  | (2 | ) |  |  | (1 | ) |  |  | 45 |
Net gain (loss) on sale of discontinued operations |  |  | (3 | ) |  |  | 13 |  |  |  | (4 | ) |  |  | 3 |
Income tax expense (benefit) |  |  | 1 |  |  |  | 3 |  |  |  | (6 | ) |  |  | 3 |
Discontinued operations, net of tax |  | $ | (3 | ) |  | $ | 3 |  |  | $ | 5 |  |  | $ | 45 |
Assets and liabilities of discontinued operations presented in the Condensed Consolidated Balance Sheets as of December 30, 2017 are included in the following table. The Company completed the sale of its final disposal group in the second quarter of 2018, and therefore no assets or liabilities are presented as current assets and liabilities of discontinued operations as of June 30, 2018.
|  | December 30, |
(In millions) |  | 2017 |
Assets |  |  |  |
Cash and cash equivalents |  | $ | 14 |
Receivables, net |  |  | 64 |
Inventories |  |  | 78 |
Prepaid expenses and other current assets |  |  | 4 |
Property and equipment, net |  |  | 31 |
Other assets |  |  | 3 |
Valuation allowance |  |  | (55 | )
Current assets of discontinued operations |  | $ | 139 |
Liabilities |  |  |  |
Trade accounts payable |  | $ | 38 |
Accrued expenses and other current liabilities |  |  | 24 |
Deferred income taxes and other long-term liabilities |  |  | 5 |
Current liabilities of discontinued operations |  | $ | 67 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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