DISCONTINUED OPERATIONS
In March 2009, the Company committed to a plan to sell its Israel Consumer Products business. This business primarily sold consumer products to the Israeli market, including cosmetics, toiletries and detergents, and was previously reported as part of the Company’s Other category. Based on management’s strategic review of its portfolio of businesses, the Company decided to sell the Israel Consumer Products business to a third party. In the third quarter of fiscal 2009, the Israel Consumer Products business had met the criteria to be accounted for as discontinued operations.
On November 2, 2009, the Company announced that it had signed a definitive agreement to sell the Israel Consumer Products business to Emilia Group. On February 26, 2010, the sale to Emilia Group was completed for approximately $47.0 million, of which approximately $11.0 million, subject to foreign currency fluctuations between the Israeli shekel and the U.S. dollar, was contingent upon satisfaction of contingency factors specified in the agreement. The sale was completed in the third quarter of fiscal 2010 resulting in a pre-tax gain on the sale of $0.8 million, excluding the contingent consideration. The sales price was subject to post-closing working capital adjustments as defined by the agreement. During the third quarter of fiscal 2011, as part of an arbitration ruling, the Company made a $3.6 million payment to Emilia Group settling the final post-closing working capital adjustment. Of this amount, $2.2 million was charged to earnings and included in discontinued operations in the third quarter of fiscal 2011. In the fourth quarter of fiscal 2012, upon satisfaction of the contingency factors specified in the agreement, the Company recorded additional consideration of $8.6 million, which was included in discontinued operations. As a result, the final pre-tax gain on the sale of the Israel Consumer Products business was $7.2 million. Under the terms of the agreement, the Company provided distribution and support services for the importation of private label cosmetics from this business into the U.S. market for 12 months after the close of the transaction. These services were fully transferred to Emilia Group during the third quarter of fiscal 2011.
The Company has reflected the results of this business as discontinued operations in the consolidated statements of income for all periods presented. There was no activity related to discontinued operations in fiscal 2013.
Results of discontinued operations were as follows (in millions):
|
| | | | | | | | |
| Fiscal Year Ended |
| | June 30, 2012 | | June 25, 2011 |
Net sales | | $ | — |
| | $ | 17.5 |
|
Gain (loss) on sale | | $ | 8.6 |
| | $ | (2.2 | ) |
| | | | |
Income before income taxes | | $ | 8.6 |
| | $ | 0.1 |
|
Income tax expense | | — |
| | (1.5 | ) |
Income (loss) from discontinued operations, net of tax | | $ | 8.6 |
| | $ | (1.4 | ) |
