Discontinued Operations

12 Months Ended

Jun. 30, 2021

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.

During the quarter ended June 30, 2020, the Company recorded a pre-tax loss on sale classification of $88.9 million to reduce the carrying value of the Divestitures to its estimate of fair value (the net proceeds received 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 fiscal year ended June 30, 2021, the Company recorded an additional pre-tax loss on disposal group of $34.6 million. This loss includes the realization of cumulative translation adjustments of $11.6 million for the fiscal year ended June 30, 2021. Additional losses for the fiscal year ended June 30, 2021 are primarily attributable to a reduction in the net proceeds received for the Divestitures.

The Company finalized the sale of the Latin America businesses, outside of Brazil, on October 30, 2020. The Company also finalized the sale of the Europe and the UK business on November 12, 2020. Total cash received for the sale of divestitures was $34.4 million.

Major components of net loss from discontinued operations for the years ended June 30, 2021, 2020 and 2019 were as follows:


	Fiscal Year Ended June 30,
	2021		2020		2019
	(in thousands)
Net sales	$	213,373	$	561,496	$	623,312
Cost of goods sold	198,512		513,003		563,543
Gross profit	14,861		48,493		59,769
Selling, general and administrative expenses	17,291		53,946		61,574
Depreciation expense	—		975		1,127
Intangible amortization expense	—		1,403		1,839
Impairment charges	—		13,747		—
Operating loss	(2,430)		(21,578)		(4,771)
Interest expense, net	394		1,399		195
Loss on held for sale classification	34,597		88,923		—
Other expense, net	310		1,124		763
Loss from discontinued operations before taxes	(37,731)		(113,024)		(5,729)
Income tax (benefit) expense	(3,137)		403		1,533
Net loss from discontinued operations	$	(34,594)	$	(113,427)	$	(7,262)

For fiscal year ended June 30, 2020, the Company allocated goodwill to 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, 2021 and 2020:



	June 30, 2021		June 30, 2020
	(in thousands)
Assets
Current assets:
Cash and cash equivalents	$	—	$	4,970
Accounts receivable, net	—		117,200
Inventories, net	—		106,779
Prepaid expenses and other current assets	—		23,808

Total current assets	—		252,757
Property and equipment, net	—		1,833
Goodwill	—		—
Identifiable intangible assets, net	—		—
Deferred income taxes	—		9,349
Other non-current assets	—		6,215
Total assets, before valuation allowance	—		270,154
Less: valuation allowance	—		(88,923)
Total assets, net of valuation allowance (1)	$	—	$	181,231
Liabilities
Current liabilities:
Accounts payable	$	—	$	56,098
Accrued expenses and other current liabilities	—		14,815
Other taxes payable	—		20,378
Short-term borrowings	—		3,524
Income tax payable	—		1,085
Total current liabilities	—		95,900
Borrowings under revolving credit facility	—		24,704
Other long-term liabilities	—		7,418
Total liabilities(1)	$	—	$	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 June 30, 2020. The discontinued operations were disposed of during the quarter ended December 31, 2020.

Significant non-cash operating items and capital expenditures reflected in the cash flows from discontinued operations for the fiscal years ended June 30, 2021, 2020 and 2019 were as follows:



	Fiscal Year Ended June 30,
	2021		2020		2019
	(in thousands)
Loss on held for sale classification	$	34,597	$	88,923	$	—
Impairment charges	—		13,747		—
Depreciation and amortization	—		2,378		2,966
Capital expenditures	(58)		(77)		(1,416)