Discontinued operations

9 Months Ended

May 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

On January 6, 2021, the Company entered into the Share Purchase Agreement with AmerisourceBergen. Pursuant to the terms and subject to the conditions set forth in the Share Purchase Agreement, AmerisourceBergen agreed to purchase the Disposal Group for approximately $6.5 billion, comprised of $6.275 billion in cash, subject to certain purchase price adjustments, and 2 million shares of AmerisourceBergen common stock. Alliance Healthcare’s investments in China and Italy and its operations in Germany are not included in the Disposal Group. The Company's retail pharmacy international operations in the Netherlands, Norway and Lithuania are included in the Disposal Group. On June 1, 2021 the Company completed the Transaction. See Note 20 Subsequent events.

The Company classified assets and liabilities of the Disposal Group as held for sale in the Consolidated Condensed Balance Sheets at the lower of cost or fair value. Depreciation and amortization ceased on assets classified as held for sale. The Company allocated goodwill to the Disposal Group using relative fair value of the Disposal Group and businesses retained within the respective reporting units. The assets and liabilities and operating results of the Disposal Group are reported as discontinued operations, for all periods presented, as the disposition reflects a strategic shift that has, or will have, a major effect on the Company’s operations and financial results.

Results of discontinued operations were as follows (in millions):


	Three months ended May 31,				Nine months ended May 31,
	2021		2020		2021		2020
Sales	$	5,500	$	4,714	$	16,070	$	14,550
Cost of sales	4,956		4,235		14,486		13,089
Gross profit	544		479		1,584		1,461
Selling, general and administrative expense	394		381		1,211		1,173
Operating income from discontinued operations	150		98		373		288
Other expense	(2)		(2)		(7)		(6)
Interest expense, net	(13)		(7)		(23)		(20)
Earnings before income tax – discontinued operations	135		89		342		262
Income tax provision	44		3		68		24
Post tax earnings from other equity method investments	4		2		15		9
Net earnings from discontinued operations	$	95	$	88	$	289	$	248

Sales from the Disposal Group to the Company's continuing operations are not eliminated and aggregate to (in millions):


	Three months ended May 31,				Nine months ended May 31,
	2021		2020		2021		2020
Sales	$	471	$	448	$	1,385	$	1,370

The following table presents cash flows from operating and investing activities for discontinued operations (in millions):


	Nine months ended May 31,
	2021		2020
Cash used in operating activities - discontinued operations	$	(132)	$	(157)
Cash used for investing activities - discontinued operations	(58)		(42)

Asset and liabilities of discontinued operations were as follows (in millions):


	May 31, 2021		August 31, 2020
Cash and cash equivalents	$	239	$	47
Accounts receivable, net	3,524		3,022
Inventories	1,669		1,534
Other current assets	410		376
Property, plant and equipment, net 1	943		—
Goodwill and intangibles	4,110		—
Other assets	202		—
Assets of discontinued operations - current	$	11,097	$	4,979
Property, plant and equipment, net 1	$	—	$	816
Goodwill and intangibles	—		3,936
Other non-current assets	—		230
Assets of discontinued operations - non-current 2	$	—	$	4,983
Short term debt	$	366	$	273
Trade accounts payables	4,608		4,313
Accrued expenses and other liabilities	759		746
Income taxes	11		14
Deferred income taxes	139		—
Other liabilities	308		—
Liabilities of discontinued operations - current	$	6,191	$	5,347
Deferred income taxes	$	—	$	131
Other non-current liabilities	—		280
Liabilities of discontinued operations - non-current 2	$	—	$	412

1 Includes Operating lease right-of-use assets

2 Assets and liabilities of Disposal Group are presented as current, in the current period, as the Company completed the Transaction on June 1, 2021.

See Note 6 Equity method investments and Note 17 Related parties for more information on the Company's equity method investment in AmerisourceBergen and the Company's continuing involvement.