DISCONTINUED OPERATIONS

6 Months Ended

Aug. 02, 2015

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

NOTE 3 — DISCONTINUED OPERATIONS

In July 2015, the Company entered into a definitive agreement to sell its Power Solutions business, a leading provider of a diverse product and service offering serving investor owned utility, public power, construction and industrial markets, to Anixter Inc. for $825 million, payable in cash at closing and subject to customary post-closing working capital and other adjustments. The transaction is expected to close in the third quarter of fiscal 2015 upon the satisfaction of customary closing conditions.

In January 2015, the Company sold substantially all of the assets of its Hardware Solutions business to Home Depot. The Company received cash proceeds of approximately $198 million, net of $2 million of transaction costs. As a result of the sale, the Company recorded an $8 million pre-tax gain in fiscal 2014.

In January 2014, the Company approved the disposal of Litemor, a specialty lighting distributor within the Company’s HD Supply Canada business. During fiscal 2014, the Company finalized the disposal process of Litemor through liquidation and branch sales, resulting in a pre-tax loss on disposal of $15 million, which includes cash and non-cash charges.

Summary Financial Information

In accordance with Accounting Standards Codification (“ASC”) 205-20, “Discontinued Operations” and Accounting Standards Update (“ASU”) 2014-08, “Reporting discontinued operations and disclosure of disposals of components of an entity”, the results of Power Solutions are classified as a discontinued operation. The results of the Hardware Solutions and Litemor operations and the gains/losses on sales of the businesses are also classified as discontinued operations. The presentation of discontinued operations includes revenues and expenses of the discontinued operations and gain/loss on the disposition of businesses, net of tax, as one line item on the Consolidated Statements of Operations and Comprehensive Income. All Consolidated Statements of Operations and Comprehensive Income presented have been revised to reflect this presentation.

The following table provides additional detail related to the results of operations of the discontinued operations (amounts in millions):

	Three Months Ended				Six Months Ended
	August 2, 2015		August 3, 2014		August 2, 2015		August 3, 2014
Net Sales	$	525	$	567	$	1,024	$	1,111
Cost of sales	448		456		872		900
Gross Profit	77		111		152		211
Operating expenses:
Selling, general and administrative	60		79		115		168
Depreciation and amortization	6		10		13		21
Restructuring	—		1		—		1
Total operating expenses	66		90		128		190
Income before provision for income taxes	$	11	$	21	$	24	$	21
Provision for income taxes	4		4		7		5
Income from discontinued operations, net of tax	$	7	$	17	$	17	$	16

At August 2, 2015 and February 1, 2015, the carrying amounts of major classes of assets and liabilities of discontinued operations included in the Consolidated Balance Sheets are as follows (amounts in millions):

	August 2, 2015		February 1, 2015
Current assets:
Receivables, less allowance for doubtful accounts of $1 and $1	$	233	$	221
Inventories	337		284
Other current assets	4		4
Total current assets	574		509
Goodwill	202		202
Intangible assets, net	46		55
Other non-current assets	35		38
Total assets of discontinued operations	$	857	$	804
Current liabilities:
Accounts payable	$	218	$	178
Accrued compensation and benefits	12		18
Other current liabilities	23		21
Total liabilities of discontinued operations	$	253	$	217

For the six months ended August 2, 2015, net cash provided by operating activities and used in investing activities, related to discontinued operations, were approximately $11 million and $2 million, respectively. For the six months ended August 3, 2014, net cash provided by operating activities and used in investing activities, related to discontinued operations, were approximately $46 million and $9 million, respectively.