3. Acquisitions and Discontinued operations

Acquisition of Softweb Solutions

At the end of December 2018, the Company acquired Softweb Solutions (“Softweb”) a privately held software and artificial intelligence company that delivers software solutions for Internet of Things (“IoT”) applications and systems designed to increase efficiency, speed time to market, and help businesses transform. The impact of this acquisition was not material to the Company’s consolidated balance sheets or statements of operations and as a result, the Company has not disclosed the preliminary allocation of purchase price or the pro-forma impact of the acquisition.

Discontinued Operations

In February 2017, the Company completed the sale of its Technology Solutions (“TS”) business to Tech Data Corporation (the “Buyer”). The TS business and the financial impacts of the divestiture are classified as discontinued operations in all periods presented. In August 2018, the Company executed a settlement agreement with the Buyer resulting in a final adjustment of $120.0 million and a final geographic allocation of the TS business sales price for tax reporting purposes. This incremental consideration received from the sale of the TS business as well as cash settlements from the resolution of indemnification claims and other cash reimbursements have been classified as cash flow from discontinued operations investing activities. Income tax payments related to the gain on sale of the TS business have been classified as cash flow from discontinued operations operating activities.

Under the contractual terms of the sale of the TS business, the Company has indemnified the Buyer for certain liabilities including tax related matters, which may result in future indemnification expenses and indemnification payments to the Buyer depending upon the outcome of those matters subject to indemnification.

Financial results of the TS business for fiscal 2017 including the gain on sale is presented as “Income (loss) from discontinued operations, net of tax” on the Consolidated Statements of Operations and is summarized as follows:


	Year Ended
	July 1,
	2017
	(Thousands)
Sales	$	5,432,140
Cost of sales		4,883,945
Gross profit		548,195
Selling, general and administrative expenses		430,003
Restructuring, integration and other expenses		7,280
Operating income		110,912
Interest and other expense, net		(24,291)
Income from discontinued operations before income taxes		86,621
Income tax expense		47,050
Income from discontinued operations, net of taxes		39,571
Gain on sales of discontinued operations, net of tax		222,356
Net income from discontinued operations, net of taxes	$	261,927

Included within the estimated gain on sale of $222.4 million, net of tax, recorded in fiscal 2017, was $181.5 million of expense reclassified out of accumulated comprehensive income primarily related to TS business cumulative translation adjustments.

Included within selling, general and administrative expenses of discontinued operations was $34.9 million of corporate expenses specific to or benefiting the TS business for fiscal 2017.

During fiscal 2019, the Company recorded $3.8 million of losses from discontinued operations, net of tax. During fiscal 2018, the Company recorded $13.5 million of losses from discontinued operations, net of tax, of which $14.9 million related to pension settlement expenses associated with former TS employee pension withdrawals.