The Company sold its CompuCom division on December 31, 2021, through a transaction that was structured and accounted for as an equity sale. The disposition represented a strategic shift that had a major impact on the Company’s operations and financial statements, and as a result the operating results and cash flows related to the CompuCom Division are presented as discontinued operations. The related Securities Purchase Agreement (“SPA”) provided for consideration consisting of a cash purchase price equal to $125 million (subject to customary adjustments, including for cash, debt and working capital), an interest-bearing promissory note in the amount of $55 million, and a holding fee (“earn-out”) provision providing for payments of up to $125 million in certain circumstances. The promissory note accrues interest at six percent per annum, payable on a quarterly basis in cash or in-kind, and is due in full on June 30, 2027. Under the earn-out provision, if the purchaser receives dividends or sale proceeds from the CompuCom business equal to (i) three times its initial capital investment in the CompuCom business plus (ii) 15% per annum on subsequent capital investments, the Company will be entitled to 50% of any subsequent dividends or sale proceeds up to and until the Company has received an aggregate of $125 million. The Company also provided certain transitional services to the purchaser for a period of three to twelve months under a separate agreement after closing. The SPA contains customary warranties of the Company and the purchaser.

The Company and the purchaser settled on the cash, debt and working capital adjustments in 2022, which resulted in the total cash purchase price of $104 million. At the closing date of the transaction, on December 31, 2021, the Company had previously received $95 million from the purchaser. Of the additional $9 million to be received to settle the total cash purchase price, $5 million was received in the first quarter of 2023, and the promissory note was amended in February 2023 to include the remaining $4 million, bringing its principal balance to $59 million. The earn-out provision was identified to be a derivative in accordance with ASC 815, and its fair value was determined using a Monte Carlo simulation as $9 million. The promissory note and the earn-out are non-current receivables as of December 30, 2023.

The Company did not have any financial results related to discontinued operations in its Consolidated Statements of Operations in 2023. In 2022, the Company had loss on disposal of $12 million, which included $21 million of loss on sale based on the final total cash price, and $2 million of additional third-party professional fees incurred in connection with the sale. These losses were partially offset by $10 million of insurance proceeds in 2022 for the malware incident that occurred in 2021, and an income tax benefit on discontinued operations of $1 million.

The following table represents a reconciliation of the major components of Discontinued operations, net of tax presented in the Consolidated Statements of Operations.


(In millions)	2023		2022			2021
Major components of discontinued operations before income taxes:
Sales	$	—	$	—		$	802
Cost of goods and occupancy costs		—		—			645
Gross profit		—		—			157
Selling, general and administrative expenses		—		—			152
Asset impairments		—		—			252
Merger, restructuring and other operating expenses, net		—		—			(2	)
Operating loss		—		—			(245	)
Other income (expense), net		—		—			(1	)
Loss from major components of discontinued operations before income taxes		—		—			(246	)
Loss from classification to held for sale		—		(13	)		(170	)
Loss from discontinued operations before income taxes		—		(13	)		(416	)
Income tax benefit		—		(1	)		(21	)
Discontinued operations, net of tax	$	—	$	(12	)	$	(395	)