Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

v2.4.0.6
Discontinued Operations
 6 Months Ended
Jul. 31, 2012
Discontinued Operations and Disposal Groups [Abstract]  
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

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 and recorded a total gain in this transaction, net of tax in the amount of $1.5 million. The financial results are included as a discontinued operation in our Consolidated Statement of Operations.

 

On May 21, 2012, we completed the sale of our Media Services business, On Demand Group (ODG), to Avail Media, Inc. for a purchase price of $27 million plus certain working capital adjustments. We received an initial cash payment of $21.8 million in May 2012, and as part of the purchase agreement, approximately $5.7 million in cash is being held by Avail Media, Inc in escrow of which $4.0 million is tied to a specific indemnity matter and $1.7 million is related to a general indemnity provision. We believe that the $4.0 million held in escrow relating to a specific indemnity matter will be released to us during our fourth quarter of fiscal year 2013. In addition, as part of the transaction, we received a separate payment of $1.0 million for the payment of certain intercompany indebtedness. In relation to this transaction, we incurred investment advisor fees of approximately $1.0 million as well as legal fees that approximated $500,000, which were expensed as incurred. Lastly, the financial result for the sale of Media Services business included a non-cash goodwill impairment charge of $17 million that we recorded in the first quarter of fiscal 2013. The financial results for the Media Services segment are included as a discontinued operation in our Consolidated Statement of Operations.

 

The following table details selected financial information for our former Broadcast Servers and Storage and Media Services business units: (in thousands)

 

    Quarter  ended July 31, 2012     Six months  ended July 31, 2012  
    Servers and
Storage		     Media
Services		     Total
Discontinued
Operations		     Servers and
Storage		     Media
Services		     Total
Discontinued
Operations		  
Revenues:                                                
                                                 
Products   $ -     $ -     $ -     $ 839     $ -     $ 839  
Services     21       1,889       1,910       726       9,315       10,041  
Total revenues   $ 21     $ 1,889     $ 1,910     $ 1,565     $ 9,315     $ 10,880  
Loss from discontinued operations:                                                
(Loss) income from discontinued operations, before tax   $ (265 )   $ (90 )   $ (355 )   $ (2,284 )   $ (248 )   $ (2,532 )
Income tax expense (benefit)     25       36       61       50       (13 )     37  
Loss in investment in affiliates     -       (31 )     (31 )     -       (173 )     (173 )
(Loss) income from discontinued operations, after tax   $ (290 )   $ (157 )   $ (447 )   $ (2,334 )   $ (408 )   $ (2,742 )

 

    Quarter  ended July 31, 2011     Six months  ended July 31, 2011  
    Servers and
Storage		     Media
Services		     Total
Discontinued
Operations		     Servers and
Storage		     Media Services     Total
Discontinued
Operations		  
Revenues:                                                
Products   $ 2,568     $ -     $ 2,568     $ 4,202     $ -     $ 4,202  
Services     1,364       7,769       9,133       2,718       16,673       19,391  
Total revenues   $ 3,932     $ 7,769     $ 11,701     $ 6,920     $ 16,673     $ 23,593  
Loss from discontinued operations:                                                
(Loss) income from discontinued operations, before tax   $ (35 )   $ 58     $ 23     $ (650 )   $ 813     $ 163  
Income tax expense (benefit)     25       103       128       50       207       257  
Loss in investment in affiliates     -       (74 )     (74 )     -       (65 )     (65 )
(Loss) income  from discontinued operations, after tax   $ (60 )   $ (119 )   $ (179 )   $ (700 )   $ 541     $ (159 )

 

The major classes of assets and liabilities related to discontinued operations are as follows at January 31, 2012:

 

    January 31, 2012  
    Servers and
Storage		     Media
Services		     Total
Discontinued
Operations		  
    (in thousands)  
Assets                         
Current assets:                        
Accounts receivable   $ -     $ 8,372     $ 8,372  
Inventories, net     2,940       -       2,940  
Prepaid expenses and other current assets     170       2,724       2,894  
Total current assets related to discontinued operations     3,110       11,096       14,206  
Non current assets:                        
Goodwill     594       19,226     $ 19,820  
Intangibles     -       1,329       1,329  
Property and equipment, net     1,653       10,404       12,057  
Other assets     108       343       451  
Total non-current assets related to discontinued operations   $ 2,355     $ 31,302     $ 33,657  
                         
Liabilities                        
Current liabilities:                        
Accounts payable   $ -     $ 1,148     $ 1,148  
Accrued expenses     -       6,140       6,140  
Deferred revenues     2,779       738       3,517  
Total current liabilities related to discontinued operations   $ 2,779     $ 8,026     $ 10,805  
Non-current liabilities:                        
Other non-current liabilities     -       739       739  
Total non-current liabilities related to discontinued operations   $ -     $ 739     $ 739