Discontinued Operations

9 Months Ended

Mar. 31, 2022

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 ("Divestitures") as these businesses were performing below management's expectations. The Company continues 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, which includes the Specialty Technology Solutions and Modern Communications & Cloud segments.

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 nine months ended March 31, 2021, the Company recorded an additional pre-tax loss on disposal group of $34.5 million, which was primarily attributable to a reduction in the net proceeds realized at closing for the Divestitures. During the quarter ended December 31, 2021, the Company received the second and final payment for its businesses in Latin America, outside of Brazil, related to working capital adjustments and in accordance with the Share Purchase Agreement between Intcomex and the Company. The receipt of payment resulted in a gain on disposal group of $0.1 million.

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 also finalized the sale of the Europe and UK business on November 12, 2020. During the quarter ended December 31, 2021, the Company received a final $3.1 million cash payment for the sale of the Latin America business. Total cash received for the sale of divestitures was $37.5 million.

Major components of net loss (income) from discontinued operations for the quarters and nine months ended March 31, 2022 and 2021 were as follows:



	Quarter ended March 31, 2022		Quarter ended March 31, 2021		Nine months ended March 31, 2022		Nine months ended March 31, 2021
	(in thousands)
Net sales	$	—	$	—	$	—	$	213,373
Cost of goods sold	—		—		—		198,512
Gross profit	—		—		—		14,861
Selling, general and administrative expenses	—		—		—		17,291



Operating loss	—		—		—		(2,430)
Interest expense, net	—		—		—		394
Loss (gain) on disposal group	—		688		(100)		34,496
Other expense, net	—		—		—		310
(Loss) income from discontinued operations before taxes	—		(688)		100		(37,630)
Income tax expense	—		—		—		17
Net (loss) income from discontinued operations	$	—	$	(688)	$	100	$	(37,647)

There were no assets or liabilities classified as held-for-sale in the accompanying consolidated balance sheets at March 31, 2022 and June 30, 2021.

There were no cash flows from discontinued operations for the nine months ended March 31, 2022. Significant non-cash operating items and capital expenditures reflected in the cash flows from discontinued operations for the nine months ended March 31, 2021 were as follows:



	Nine months ended March 31, 2021
	(in thousands)
Loss on disposal group	$	34,496


Capital expenditures	$	(58)