Acquisitions, Divestitures and Discontinued Operations

6 Months Ended

Jun. 30, 2020

Acquisitions, Divestitures and Discontinued Operations

Acquisitions

The Company acquired several businesses for approximately $33,047 and $378,744, net of cash acquired, during the six months ended June 30, 2020 and June 30, 2019, respectively. The Company finalized the acquisition accounting for certain businesses acquired in prior periods, but there have been no significant measurement period adjustments during the three and six months ended June 30, 2020.

Divestitures

The Company received cash proceeds from divestitures of businesses totaling $382,737 and $12,028 for the six months ended June 30, 2020 and June 30, 2019, respectively.

Grupo Auto Todo

On March 7, 2019, the Company sold all of its equity in Grupo Auto Todo, a Mexican subsidiary within the Automotive Parts Group. Grupo Auto Todo contributed annual revenues of approximately $15,900 for the year ended December 31, 2019. The Company incurred realized currency losses of $27,037 from this transaction during the three months ended June 30, 2019. These losses are included within other non-operating (income) expenses on the condensed consolidated statements of income.

Discontinued Operations

Business Products Group

Effective June 30, 2020, the Company completed the divestiture of its Business Products Group by selling Supply Source Enterprises, Inc. ("SSE") and S.P. Richards Company ("SPR") in separate transactions. There may be additional cash payments or receipts in subsequent quarters as the Company finalizes customary post-transaction working capital adjustments. These divestitures are part of the Company's long-term strategic initiative to streamline its operations and optimize its portfolio so that it can drive shareholder value by focusing on its global Automotive and Industrial Parts Groups. The Business Products Group was previously a reportable segment of the Company. These divestitures, together with prior period divestitures of Garland C. Norris (effective December 13, 2019), SPR Canada (effective January 1, 2020) and Safety Zone Canada (effective March 2, 2020), represent a single plan to exit the Business Products Group segment and are considered a strategic shift that will have a major effect on the Company’s operations and financial results. Therefore, the results of operations, financial position and cash flows for the Business Products Group are reported as discontinued operations for all periods presented.

The Company maintains an immaterial investment in SPR and has concluded that SPR is a variable interest entity. The Company is not the primary beneficiary and therefore does not consolidate SPR. Among other things, the Company does not have any voting rights and does not have the power to direct the activities that most significantly affect SPR's economic performance.

The Company’s results of operations for discontinued operations were:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Net sales	$	379,938	$	476,329	$	846,944	$	954,033
Cost of goods sold	277,614		360,452		632,007		722,786
Gross profit	102,324		115,877		214,937		231,247
Operating expenses	89,385		95,947		179,461		190,820
Loss (gain) on disposal	216,133		—		220,318		1,000
Income before income taxes	(203,194)		19,930		(184,842)		39,427
Income taxes (1)	(2,323)		5,019		1,840		9,950
Net (loss) income from discontinued operations	$	(200,871)	$	14,911	$	(186,682)	$	29,477
Basic (loss) earnings per share from discontinued operations	$	(1.39)	$	0.10	$	(1.29)	$	0.20
Diluted (loss) earnings per share from discontinued operations	$	(1.39)	$	0.10	$	(1.29)	$	0.20
Weighted average common shares outstanding	144,262		146,075		144,657		146,029
Weighted average common shares outstanding – assuming dilution	144,262		146,736		144,657		146,713

(1)Income taxes include a $7,125 tax benefit associated with the (loss) gain on the disposal for the three and six months ended June 30, 2020.

The Company’s assets and liabilities for discontinued operations, by major class, were:


	December 31, 2019
Assets
Trade accounts receivable, net	$	194,903
Merchandise inventories, net	387,307
Prepaid expenses and other current assets	132,041
Other intangible assets, less accumulated amortization	76,829
Operating lease assets	80,302
Other assets	91,640
Total assets of discontinued operations	$	963,022

Liabilities
Trade accounts payable	$	158,163
Other current liabilities	59,954
Operating lease liabilities	68,906
Total liabilities of discontinued operations	$	287,023