Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

v2.4.0.6
Discontinued Operations
 3 Months Ended
Apr. 30, 2012
Discontinued Operations

5. Discontinued Operations

 

On May 4, 2012, we completed the sale of the broadcast servers and storage business and received a cash payment, net of certain adjustments, of $4.9 million. The financial results of the broadcast server and storage business for the first quarter of fiscal 2013 was a loss of $2.0 million on revenues of $1.5 million and was included as a discontinued operation in our Consolidated Statement of Operations.

 

 

On May 21, 2012, we completed the sale of ourMedia Services business, On Demand Group (ODG), to Avail Media Inc. for a purchase price of $27 million plus working capital adjustments of approximately $3.2 million in cash less a reduction of certain liabilities of $2.7 million and less $5.7 million cash being held in escrow for a total payment received of $21.8 million. We believe that $4.0 million held in escrow relating to an indemnification will be released to us during our second fiscal quarter of fiscal year 2013. In addition, we received a separate payment of $1.0 million for the payment of certain intercompany indebtedness. Lastly, we incurred investment advisor fees of approximately $1.0 million as well as legal fees, which are expensed as incurred. The financial result of the Media Services business for the first quarter of fiscal 2013 was a loss of $17.3 million which included a non-cash goodwill impairment charge of $17 million. The financial results for this business unit was included as a discontinued operation in our Consolidated Statement of Operations as ODG's results were previously reported as a separate operating segment.

 

The following table details selected financial information for our former Servers and Storage and Media Services business units:

 

    Quarter  ended April 30, 2012     Quarter  ended April 30, 2011  
    Servers and
Storage		     Media
Services		     Total
Discontinued
Operations		     Servers and
Storage		     Media
Services		     Total
Discontinued
Operations		  
    (in thousands)     (in thousands)  
Revenues:                                    
Products   $ 839     $ -     $ 839     $ 1,633     $ -     $ 1,633  
Services     705       7,426       8,131       1,354       8,904       10,258  
Total revenues   $ 1,544     $ 7,426     $ 8,970     $ 2,987     $ 8,904     $ 11,891  
Loss from discontinued operations:                                                
(Loss) income from discontinued operations, before tax   $ (2,019 )   $ (17,188 )   $ (19,207 )   $ (615 )   $ 752     $ 137  
Income tax expense (benefit)     25       (49 )     (24 )     25       102       127  
Loss in investment in affiliates     -       (142 )     (142 )     -       8       8  
(Loss) income from discontinued operations, after tax   $ (2,044 )   $ (17,281 )   $ (19,325 )   $ (640 )   $ 658     $ 18  

 

The major classes of assets and liabilities related to discontinued operations are as follows:

 

    April 30, 2012     January 31, 2012  
    Servers and
Storage		     Media
Services		     Total
Discontinued
Operations		     Servers and
Storage		     Media
Services		     Total
Discontinued
Operations		  
    (in thousands)     (in thousands)  
Assets                                                
Current assets:                                                
Cash   $ -     $ -     $ -     $ -     $ -     $ -  
Accounts receivable     -       8,734       8,734       -       8,372       8,372  
Inventories, net     2,592       -       2,592       2,940       -       2,940  
Prepaid expenses and other current assets     59       3,123       3,182       170       2,724       2,894  
Total current assets related to discontinued operations     2,651       11,857       14,508       3,110       11,096       14,206  
Non current assets:                                                
Goodwill     594       2,932       3,526       594       19,226     $ 19,820  
Intangibles     -       1,335       1,335       -       1,329       1,329  
Property and equipment, net     1,199       10,675       11,874       1,653       10,404       12,057  
Other assets     105       370       475       108       343       451  
Total non-current assets related to discontinued operations   $ 1,898     $ 15,312     $ 17,210     $ 2,355     $ 31,302     $ 33,657  
                                                 
Liabilities                                                
Current liabilities:                                                
Accounts payable   $ -     $ 1,394     $ 1,394     $ -     $ 1,148     $ 1,148  
Accrued expenses     -       7,125       7,125       -       6,140       6,140  
Deferred revenues     2,582       657       3,239       2,779       738       3,517  
Other current liabilities     -       222       222               -       -  
Total current liabilities related to discontinued operations   $ 2,582     $ 9,398     $ 11,980     $ 2,779     $ 8,026     $ 10,805  
Non current liabilities:                                                
Other non-current liabilities     -       927       927       -       739       739  
Total non current liabilities related to discontinued operations   $ -     $ 927     $ 927     $ -     $ 739     $ 739