Note 2 — Discontinued Operations

During the third quarter of fiscal 2018, we decided to pursue the sale of our Contractor-Owned, Contractor-Operated (“COCO”) business previously included in our Expeditionary Services segment. Due to this strategic shift, the assets, liabilities, and results of operations of our COCO business have been reported as discontinued operations for all periods presented. Goodwill was allocated to this business based on its relative fair value to the reporting unit. The fair value of the reporting unit was determined based on a combination of the expected net proceeds upon sale and a discounted cash flow analysis. As the fair value of the COCO business was below its carrying value, a goodwill impairment charge of $9.8 million, representing the estimated loss on disposal, was recorded in the third quarter of fiscal 2018.

Our COCO business completed certain contracts in the second quarter of fiscal 2018. As the aircraft supporting these contracts were not placed on new contracts combined with the continued decline in operational tempo within the U.S. Department of Defense and an excess supply of aircraft assets in the market, we determined there was an impairment triggering event and tested the recoverability of our COCO assets. As a result, we recognized impairment and other charges of $54.2 million in the second quarter of fiscal 2018. The fair value of the aircraft and related assets was based on available market data for similar assets.

The COCO business is available for immediate sale and we continue to actively market the COCO business at a reasonable price in relation to its fair value. We expect a sale of the COCO business to be completed before the end of fiscal 2019.

No amounts for general corporate overhead or interest expense were allocated to discontinued operations during the periods presented. Unless otherwise noted, amounts and disclosures throughout these Notes to Consolidated Financial Statements relate to our continuing operations.

Operating results for discontinued operations were comprised of the following:

	Three Months Ended August 31,
	2018			2017
Sales	$	20.0		$	41.3
Cost of sales	(22.3		)	(38.4		)
Selling, general and administrative expenses	(2.5		)	(3.6		)

Operating loss from discontinued operations	(4.8		)	(0.7		)
Provision for income taxes (benefit)	(1.0		)	(0.3		)

Loss from discontinued operations	$	(3.8	)	$	(0.4	)

The carrying amounts of the major classes of assets and liabilities for our discontinued operations are as follows:

	August 31,		May 31,
	2018		2018
Inventory, rotable assets, and equipment	$	100.9	$	106.1
Accounts receivable, net	10.1		14.7
Other assets	3.7		4.2

Assets of discontinued operations	$	114.7	$	125.0


Liabilities of discontinued operations	$	24.7	$	25.0