Discontinued Operations

3 Months Ended

Aug. 01, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

3. Discontinued Operations

On July 1, 2015, the Company entered into a definitive agreement to sell all of the outstanding shares of common stock of Patterson Medical Holdings, Inc., our wholly owned subsidiary responsible for the Patterson Medical line of business (“Patterson Medical”), for $715,000 in cash to Madison Dearborn Partners. The definitive agreement included a working capital adjustment provision that impacted the final sale price. On August 28, 2015, the Company completed the sale of Patterson Medical. The Company anticipates recognizing an after-tax gain during the second quarter of fiscal 2016 on this sale.

In connection with the above described transaction, the Company also entered into a transition services agreement with our former subsidiary, pursuant to which it will pay the Company to provide, among other things, certain information technology, distribution, facilities, finance, tax and treasury, and human resources services for up to 24 months after closing.

As of August 1, 2015, the Company classified the results of operations of Patterson Medical as discontinued operations for all periods presented in the condensed consolidated statements of income. The assets and liabilities of Patterson Medical were reflected as held for sale in the condensed consolidated balance sheets as of August 1, 2015 and April 25, 2015. The classification was based on the Company entering into the definitive agreement to sell Patterson Medical, the entity being available for sale in its present condition and the sale being probable as of August 1, 2015. The operations and cash flows of Patterson Medical will be eliminated from ongoing operations of the Company, which was previously recorded as the rehabilitation supply reportable segment.

The following summarizes the assets and liabilities of Patterson Medical:

	August 1,		April 25,
	2015		2015
Assets held for sale
Receivables, net of allowance for doubtful accounts	$	66,876	$	57,876
Inventory		52,022		48,265
Prepaid expenses and other current assets		11,408		12,206
Property and equipment, net		22,489		22,672
Goodwill		537,985		537,175
Identifiable intangibles, net		74,484		74,804
Other long-term assets		1,798		1,143
Total assets held for sale	$	767,062	$	754,141
Liabilities held for sale
Accounts payable	$	30,108	$	26,341
Accrued liabilities and other current liabilities		9,415		12,975
Long-term liabilities		49,189		49,414
Total liabilities held for sale	$	88,712	$	88,730

The following summarizes the results of operations of our discontinued Patterson Medical operations for the periods presented:

	Three months ended
	August 1,			July 26,
	2015			2014
Net sales	$	130,811		$	120,573
Cost of sales		82,873			74,965
Gross profit		47,938			45,608
Operating expenses		32,039			26,850
Operating income		15,899			18,758
Other income and expense		(90	)		132
Income before taxes		15,809			18,890
Income taxes		6,417			6,926
Net income from discontinued operations	$	9,392		$	11,964

Income taxes have been allocated to Patterson Medical based on the accounting requirements for presenting discontinued operations. Depreciation and amortization were ceased during the three months ended August 1, 2015 in accordance with accounting for discontinued operations.