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DISCONTINUED OPERATIONS | 6 Months Ended
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Jun. 29, 2024
Discontinued Operations and Disposal Groups [Abstract] |
DISCONTINUED OPERATIONS | NOTE 11. DISCONTINUED OPERATIONS On April 24, 2024, the Company’s Board of Directors approved management’s commitment to a plan to sell its Varis Division through a single disposal group. The Company is actively marketing its Varis Division for sale at a price that the Company believes is reasonable in relation to its current fair value. The Varis Division is available for immediate sale in its present condition and any sale is expected to be subject to customary regulatory approvals. Based on these considerations and management’s experience and ability to complete similar transactions in the past, management believes the sale is probable and expects to complete it within one year. Further, subsequently in July 2024, the Company signed a non-binding term sheet with a potential buyer of the Varis Division. However, there can be no assurance regarding the ultimate timing of this planned disposition or that such disposition will be completed. The Varis Division disposal group has met the accounting criteria to be classified as held for sale as of April 2024 and therefore is presented as such in the second quarter of 2024. The planned disposition of the Varis Division represents a strategic shift that will have a major impact on the Company’s operations and financial results. Accordingly, the Company has presented the operating results and cash flows of its Varis Division as discontinued operations for all periods presented. The Company incurred a $77 million non-cash loss from classification to held for sale related to the Varis Division in the second quarter of 2024, which was measured at the lower of its carrying amount or estimated fair value less costs to sell and is included in the valuation allowance of the current assets held for sale. The loss from the sale of the Varis Division may be different from this estimate based on the final selling price once a transaction is completed, but it is expected that any difference would not be material. Also, restructuring expenses incurred by the Varis Division, which were previously presented as Corporate expenses, are included in the measurement and presentation of discontinued operations for all periods presented. The following table represents a reconciliation of the major components of discontinued operations, net of tax, as presented in the Condensed Consolidated Statements of Operations.
|  | Second Quarter |  |  | First Half |
(In millions) |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Major components of discontinued operations before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Sales |  | $ | 2 |  |  | $ | 2 |  |  | $ | 3 |  |  | $ | 4 |
Cost of goods and occupancy costs: |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 2 |
Gross profit |  |  | 2 |  |  |  | 1 |  |  |  | 3 |  |  |  | 2 |
Selling, general and administrative expenses |  |  | 11 |  |  |  | 14 |  |  |  | 26 |  |  |  | 32 |
Merger and restructuring expenses, net |  |  | — |  |  |  | — |  |  |  | 8 |  |  |  | — |
Operating loss |  |  | (9 | ) |  |  | (13 | ) |  |  | (31 | ) |  |  | (30 | )
Loss from major components of discontinued operations before income taxes |  |  | (9 | ) |  |  | (13 | ) |  |  | (31 | ) |  |  | (30 | )
Loss on disposal of discontinued operations |  |  | (77 | ) |  |  | — |  |  |  | (77 | ) |  |  | — |
Loss from discontinued operations before income taxes |  |  | (86 | ) |  |  | (13 | ) |  |  | (108 | ) |  |  | (30 | )
Income tax benefit |  |  | (17 | ) |  |  | (4 | ) |  |  | (23 | ) |  |  | (10 | )
Discontinued operations, net of tax |  | $ | (69 | ) |  | $ | (9 | ) |  | $ | (85 | ) |  | $ | (20 | )
The following table represents the major classes of assets and liabilities of the disposal group classified as held for sale presented in the Condensed Consolidated Balance Sheets as of June 29, 2024 and December 30, 2023.
|  | June 29, |  |  | December 30, |
(In millions) |  | 2024 |  |  | 2023 |
Major classes of assets included in discontinued operations: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 10 |  |  | $ | 10 |
Receivables, net |  |  | 1 |  |  |  | 2 |
Deferred tax assets |  |  | 13 |  |  |  | — |
Property and equipment, net |  |  | 61 |  |  |  | 62 |
Less: valuation allowance |  |  | (77 | ) |  |  |
Total assets of the disposal group classified as held for sale |  | $ | 8 |  |  | $ | 74 |
Major classes of liabilities included in discontinued operations: |  |  |  |  |  |
Accrued expenses and other current liabilities |  | $ | 5 |  |  | $ | 8 |
Deferred income taxes and other long-term liabilities |  |  | 3 |  |  |  | 4 |
Total liabilities of the disposal group classified as held for sale |  | $ | 8 |  |  | $ | 12 |
The Company had previously sold its CompuCom Division on December 31, 2021, through a transaction that was structured and accounted for as an equity sale. The Company did not have any financial results related to discontinued operations of the CompuCom Division on its Condensed Consolidated Statements of Operations for the periods presented. The Company received $5 million of cash from the purchaser in the first quarter of 2023 related to the settlement of the total cash purchase price, which is reflected in cash flows from investing activities of discontinued operations on the Condensed Consolidated Cash Flow Statement. In addition, the Company has a promissory note with a principal balance of $59 million from the purchaser of the CompuCom Division and a $9 million receivable related to an earn-out provision included in the securities purchase agreement. The promissory note and the earn-out are non-current receivables as of June 29, 2024.

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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 -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//360/tableOfContent + Details
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