Discontinued Operations

3 Months Ended

May 31, 2018

Note 4 – Discontinued Operations

On December 20, 2017, we completed the divestiture of the Nutritional Supplements segment through the sale of Healthy Directions LLC and its subsidiaries to Direct Digital, LLC. The Nutritional Supplements segment sold premium branded doctor formulated nutritional supplements, skincare and pain relief products through highly targeted catalog and other printed collateral mailings, online and direct response print, radio and television media.

The purchase price from the sale is comprised of $46.0 million in cash, which was paid at closing, and a supplemental payment with a target value of $25.0 million, payable on or before August 1, 2019. The final amount of the supplemental payment may be adjusted up or down based on the performance of Healthy Directions through February 28, 2018. In conjunction with the sale of the business, we have agreed to provide certain transition services for up to an eighteen-month period following the closing of the transaction.

There were no balance sheet amounts related to discontinued operations for either period presented. The results of operations associated with discontinued operations are presented in the following table:


		Three Months Ended May 31,
(in thousands)		2018		2017
Sales revenue, net	$	-	$	31,619
Cost of goods sold		-		9,236
Gross profit		-		22,383

Selling, general and administrative expense ("SG&A")		-		24,200
Asset impairment charges (1)		-		32,000
Operating loss		-		(33,817)

Gain (loss) on sale before income tax (2)		(484)		-
Interest expense		-		(114)
Loss before income tax		(484)		(33,931)

Income tax benefit		103		12,491
Loss from discontinued operations	$	(381)	$	(21,440)

⁽¹⁾

Includes pre-tax goodwill impairment charges of $26.0 million and indefinite-lived trademark impairment charges of $6.0 million during the first quarter of fiscal 2018. Total after tax asset impairment charges were $19.6 million for the first quarter of fiscal 2018.

⁽²⁾

Includes adjustments recorded in the first quarter of fiscal 2019 to the initial estimated gain on sale before income tax recorded in the fourth quarter of fiscal 2018.