DISCONTINUED OPERATIONS

In March 2018, the Company’s Board of Directors approved a plan to sell all of the operations of the HPPC and Empire operating segments, which are reported in the aggregate as the Hain Pure Protein reportable segment. Collectively, these dispositions represent a strategic shift that will have a major impact on the Company’s operations and financial results and have been accounted for as discontinued operations. The Company is actively marketing the sale of Hain Pure Protein, and a sale is anticipated to occur within twelve months of the Board of Directors’ approval, which occurred in March 2018.

The Company is presenting the operating results and cash flows of Hain Pure Protein within discontinued operations in the current and prior periods. The assets and liabilities of Hain Pure Protein are presented as assets and liabilities of discontinued operations in the Consolidated Balance Sheets for all periods presented.

The fair value of the Hain Pure Protein operating segments was determined based on a combination of the expected net proceeds upon sale and a discounted cash flow analysis. We completed an initial assessment of the assets and liabilities of the Hain Pure Protein operating segments and based on our best estimates as of the date of issuance of financial results for the third quarter of the fiscal year ended June 30, 2018, no impairment was indicated. In the three months ended June 30, 2018, results for HPPC (which comprises the Plainville and FreeBird brands) were below our projections. The fourth quarter results, as well as negative market conditions in the sector, required the Company to reduce the internal projections for the business, which resulted in the Company lowering the projected long-term growth rate and profitability levels for HPPC. Accordingly, the updated projections indicated that the fair value of the HPPC business is below carrying value. As a result, the Company recorded a reserve of $78,464 to adjust the carrying value of Hain Pure Protein to its fair value, less its cost to sell, which is reflected in Net (loss) income from discontinued operations, net of taxes.

The following table presents the major classes of Hain Pure Protein’s line items constituting the “Net (loss) income from discontinued operations, net of tax” in our Consolidated Statements of Income:



	Fiscal Year Ended June 30,
	2018			2017			2016
Net sales	$	509,475		$	509,606		$	492,510
Cost of sales	486,023			487,631			443,842
Gross profit	23,452			21,975			48,668
Asset impairments	78,464			—			—
Selling, general and administrative expense	18,743			19,180			15,740
Other expense	4,699			1,530			1,590
Net (loss) income from discontinued operations before income taxes	(78,454		)	1,265			31,338
(Benefit) provision for income taxes	(5,720		)	(624		)	11,480
Net (loss) income from discontinued operations, net of tax	$	(72,734	)	$	1,889		$	19,858

Included above within (Benefit) provision for income taxes for the year ended June 30, 2018 is a $20,166 deferred tax benefit arising from asset impairment charges and a $12,250 deferred tax liability related to Hain Pure Protein being classified as held for sale.

Assets and liabilities of discontinued operations presented in the Consolidated Balance Sheets as of June 30, 2018 and June 30, 2017 are included in the following table:




Assets	June 30, 2018			June 30, 2017
Cash and cash equivalents	$	6,461		$	9,937
Accounts receivable, less allowance for doubtful accounts	21,616			22,671
Inventories	105,359			85,313
Prepaid expenses and other current assets	5,604			5,866
Total current assets*				123,787
Property, plant and equipment, net	83,776			78,645
Goodwill	41,089			41,089
Trademarks and other intangible assets, net	51,029			52,040
Other assets	4,381			3,330
Total noncurrent assets of discontinued operations*				175,104
Impairments of long-lived assets held for sale	(78,464		)	—
Total assets of discontinued operations	$	240,851		$	298,891

Liabilities
Accounts payable	$	31,762		$	35,943
Accrued expenses and other current liabilities	6,880			2,005
Total current liabilities of discontinued operations*				37,948
Deferred tax liabilities	11,111			23,129
Other noncurrent liabilities	93			193
Total noncurrent liabilities of discontinued operations*				23,322
Total liabilities of discontinued operations	$	49,846		$	61,270

* The assets and liabilities of Hain Pure Protein are classified as current on the June 30, 2018 Consolidated Balance Sheet because it is probable that the sale will occur within the next twelve months of the Board of Directors’ approval.