Discontinued Operations

3 Months Ended

Sep. 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 the value-added model for product distribution, leading the Company to focus and invest in its higher-growth, higher margin businesses. Results from the Divestitures were included within each reportable segment; Worldwide Barcode, Networking & Security segment and Worldwide Communications & Services segment.

During the quarter ended June 30, 2020, the Company recorded a pre-tax loss on held for sale classification of $88.9 million to reduce the carrying value of the Divestitures to its estimate of fair value (the net proceeds expected to be realized at closing), less estimated costs to sell. As this loss was determined not to be attributable to any individual components in the Divestitures' net assets, it was reflected as a valuation allowance against the total assets of the Divestitures. During the quarter ended September 30, 2020, the Company recorded an additional pre-tax loss on held for sale classification of $10.7 million. This additional loss was attributable primarily to a reduction in the net proceeds expected to be realized at closing for the Divestitures.

The Company signed an agreement on July 23, 2020 with Intcomex for its businesses located in Latin America, outside of Brazil. The Company finalized the sale of the Latin America businesses on October 30, 2020. The Company is actively working on sales opportunities for businesses in Europe and the UK.

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


	Quarter ended September 30,
	2020		2019
	(in thousands)
Net sales	$	145,049	$	155,716
Cost of goods sold	134,534		142,142
Gross profit	10,515		13,574
Selling, general and administrative expenses	10,913		13,810
Depreciation expense	201		248
Intangible amortization expense	—		424

Operating loss	(599)		(908)
Interest expense, net	125		483
Loss on held for sale classification	10,686		—
Other expense, net	291		(343)
Loss from discontinued operations before taxes	(11,701)		(1,048)
Income tax expense	3		(287)
Net loss from discontinued operations	$	(11,704)	$	(761)

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



	September 30, 2020		June 30, 2020
	(in thousands)
Assets
Current assets:
Cash and cash equivalents	$	5,678	$	4,970
Accounts receivable, net	130,553		117,200
Inventories, net	95,560		106,779
Prepaid expenses and other current assets	27,465		23,808

Total current assets	259,256		252,757
Property and equipment, net	1,724		1,833


Deferred income taxes	9,633		9,349
Other non-current assets	5,899		6,215
Total assets, before valuation allowance	276,512		270,154
Less: valuation allowance	(99,609)		(88,923)
Total assets, net of valuation allowance (1)	$	176,903	$	181,231
Liabilities
Current liabilities:
Accounts payable	$	84,657	$	56,098
Accrued expenses and other current liabilities	15,834		14,815
Other taxes payable	23,136		20,378
Short-term borrowings	—		3,524
Income tax payable	1,338		1,085
Total current liabilities	124,965		95,900
Borrowings under revolving credit facility	19,932		24,704
Other long-term liabilities	7,362		7,418
Total liabilities(1)	$	152,259	$	128,022

(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 September 30, 2020 and June 30, 2020, as the discontinued operations are expected to be disposed of by June 30, 2021.

Significant non-cash operating items and capital expenditures reflected in the cash flows from discontinued operations for the three months ended September 30, 2020 and 2019 were as follows:



	Three months ended September 30,
	2020		2019
	(in thousands)
Loss on held for sale classification	$	10,686	$	—

Depreciation and amortization	201		672
Capital expenditures	(36)		(1)