Discontinued Operations

12 Months Ended

Jun. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

On August 20, 2019, the Company announced plans to divest the product distribution businesses in Europe, the UK, Mexico, Colombia, Chile, Peru and the Miami-based export operations as these businesses have been performing below management's expectations. The Company will continue to operate its digital business in these countries. Management determined that the Company did not have sufficient scale in these markets to maximize our value-added model for product distribution, leading us to focus and invest in our higher-growth, higher margin businesses. Results from the Divestitures were included within each of our reportable segments; Worldwide Barcode, Networking & Security segment and Worldwide Communications & Services segment.

The Company actively marketed the sale these businesses during fiscal year 2020. An agreement was signed July 23, 2020, subsequent to our fiscal year end, with Intcomex for our divestitures located in Latin America, outside of Brazil. The Company expects to finalize the sale of the Latin America divestitures on or around September 30, 2020. The Company is actively working on sales opportunities for our divestitures in Europe and the UK and expects to finalize a sale within twelve months from the current reporting period.

Major components of net loss from discontinued operations for the years ended June 30, 2020, 2019 and 2018 were as follows:


	Fiscal Year Ended June 30,
	2020		2019		2018
	(in thousands)
Net sales	$	561,496	$	623,312	$	681,551
Cost of goods sold	513,003		563,543		614,731
Gross profit	48,493		59,769		66,820
Selling, general and administrative expenses	53,946		61,574		65,183
Depreciation expense	975		1,127		1,026
Intangible amortization expense	1,403		1,839		1,977
Impairment charges	13,747		—		—
Operating loss	(21,578)		(4,771)		(1,366)
Interest expense, net	1,399		195		24
Loss on held for sale classification	88,923		—		—
Other expense, net	1,124		763		733
Loss from discontinued operations before taxes	(113,024)		(5,729)		(2,123)
Income tax expense	403		1,533		180
Net loss from discontinued operations	$	(113,427)	$	(7,262)	$	(2,303)

For fiscal year ended June 30, 2020, the Company allocated goodwill to our discontinued operations based on relative fair value of the discontinued operations compared to the consolidated reporting units and impaired such goodwill totaling $1.0 million for the Worldwide Barcode, Networking & Security segment and $7.5 million for the Worldwide Communications & Services segment. Identifiable intangible assets, including customer relationships and distributor agreements, were impaired for discontinued operations totaling $5.2 million for fiscal year ended June 30, 2020. The impairment charges are included in net loss from discontinued operations in the Consolidated Income Statements.

The major classes of assets and liabilities classified as held-for-sale in the accompanying consolidated balance sheets, were as follows as of June 30, 2020 and 2019:



	June 30, 2020		June 30, 2019
	(in thousands)
Assets
Current assets:
Cash and cash equivalents	$	4,970	$	4,513
Accounts receivable, net	117,200		131,560
Inventories, net	106,779		143,263
Prepaid expenses and other current assets	23,808		17,417

Total current assets	252,757		296,753
Property and equipment, net	1,833		2,793
Goodwill	—		8,823
Identifiable intangible assets, net	—		6,726
Deferred income taxes	9,349		9,277
Other non-current assets	6,215		1,460
Total assets, before valuation allowance	270,154		325,832
Less: valuation allowance	(88,923)		—
Total assets, net of valuation allowance ⁽¹⁾	$	181,231	$	325,832
Liabilities
Current liabilities:
Accounts payable	$	56,098	$	69,810
Accrued expenses and other current liabilities	14,815		14,763
Other taxes payable	20,378		12,018
Short-term borrowings	3,524		4,590
Income tax payable	1,085		351
Total current liabilities	95,900		101,532
Borrowings under revolving credit facility	24,704		28,427
Other long-term liabilities	7,418		3,730
Total liabilities⁽¹⁾	128,022		133,689

(1) Total assets and liabilities of discontinued operations are classified in current assets and liabilities, respectively, in the Company's consolidated balance sheet as of June 30, 2020, as the discontinued operations are expected to be disposed of within twelve months of the balance sheet date. The assets and liabilities of discontinued operations are classified in their respective current and long-term classifications, respectively, in the Company's consolidated balance sheet as of June 30, 2019 in accordance with the nature and underlying classification of such assets and liabilities.

The Company has a bank overdraft facility with Bank of America used by its European subsidiaries recognized as Short-term borrowings. The facility allows the Company to disburse checks in excess of bank balances up to $14.0 million U.S. dollar equivalent for up to seven days. Borrowings under the overdraft facility bear interest at a rate equal to a spread of 1.0% over the applicable currency's London Interbank Offered Rate ("LIBOR") with a zero percent floor. Since borrowings outstanding under the overdraft facility at June 30, 2020 were denominated in euros, which bore a negative LIBOR rate, the interest applicable to the Company was 1.0%.

Significant non-cash operating items and capital expenditures reflected in the cash flows from discontinued operations for the fiscal years ended June 30, 2020, 2019 and 2018 were as follows:



	Fiscal Year Ended June 30,
	2020		2019		2018
	(in thousands)
Loss on held for sale classification	$	88,923	$	—	$	—
Impairment charges	13,747		—		—
Depreciation and amortization	2,378		2,966		3,003
Capital expenditures	(77)		(1,416)		(1,161)