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DISCONTINUED OPERATIONS | 9 Months Ended
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Sep. 28, 2024
Discontinued Operations and Disposal Groups [Abstract] |
DISCONTINUED OPERATIONS | NOTE 12. 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 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 a nd cash flows of its Varis Division as discontinued operations for all periods presented beginning in the second quarter of 2024. Subsequently, on October 18, 2024, the Company sold its Varis Division to an affiliate of Arising Ventures, a third-party, while retaining a minority interest of 19.9% after the sale. Under the terms of the related stock purchase agreement, the Company will fund up to $4 million of expenses that may be incurred by Varis following the transaction date until December 31, 2025, and has no further obligations to contribute capital to Varis. The terms of sale did not result in a materially different impact than previously estimated on the Company’s financial statements. The Company will deconsolidate its Varis Division effective October 18, 2024 by removing the associated assets and liabilities held for sale on its balance sheet. The Company will account for its retained minority interest of 19.9% in Varis as an equity method investment going forward. The Company incurred an $81 million non-cash loss from classification to held for sale related to the Varis Division year-to-date 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. Of this amount, $77 million was incurred in the second quarter of 2024, the period in which the Varis Division was classified as held for sale, and the remaining $4 million was incurred in the third quarter of 2024. 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.
|  | Third Quarter |  |  | Year-to-Date |
(In millions) |  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Major components of discontinued operations before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Sales |  | $ | 2 |  |  | $ | 2 |  |  | $ | 5 |  |  | $ | 5 |
Cost of goods and occupancy costs: |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 2 |
Gross profit |  |  | 2 |  |  |  | 1 |  |  |  | 5 |  |  |  | 3 |
Selling, general and administrative expenses |  |  | 8 |  |  |  | 18 |  |  |  | 34 |  |  |  | 50 |
Merger and restructuring expenses, net |  |  | — |  |  |  | — |  |  |  | 8 |  |  |  | — |
Operating loss |  |  | (6 | ) |  |  | (17 | ) |  |  | (37 | ) |  |  | (47 | )
Loss from major components of discontinued operations before income taxes |  |  | (6 | ) |  |  | (17 | ) |  |  | (37 | ) |  |  | (47 | )
Loss on disposal of discontinued operations |  |  | (4 | ) |  |  | — |  |  |  | (81 | ) |  |  | — |
Loss from discontinued operations before income taxes |  |  | (10 | ) |  |  | (17 | ) |  |  | (118 | ) |  |  | (47 | )
Income tax expense (benefit) |  |  | — |  |  |  | (5 | ) |  |  | (23 | ) |  |  | (15 | )
Discontinued operations, net of tax |  | $ | (10 | ) |  | $ | (12 | ) |  | $ | (95 | ) |  | $ | (32 | )
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 September 28, 2024 and December 30, 2023.
|  | September 28, |  |  | December 30, |
(In millions) |  | 2024 |  |  | 2023 |
Major classes of assets included in discontinued operations: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 11 |  |  | $ | 10 |
Receivables, net |  |  | 2 |  |  |  | 2 |
Deferred tax assets |  |  | 11 |  |  |  | — |
Property and equipment, net |  |  | 63 |  |  |  | 62 |
Less: valuation allowance |  |  | (81 | ) |  |  |
Total assets of the disposal group classified as held for sale |  | $ | 6 |  |  | $ | 74 |
Major classes of liabilities included in discontinued operations: |  |  |  |  |  |
Trade accounts payable |  | $ | 1 |  |  | $ | — |
Accrued expenses and other current liabilities |  |  | 5 |  |  |  | 8 |
Deferred income taxes and other long-term liabilities |  |  | — |  |  |  | 4 |
Total liabilities of the disposal group classified as held for sale |  | $ | 6 |  |  | $ | 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 September 28, 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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