|
10. Discontinued Operations
During the quarter ended June 30, 2011, management committed to a plan to sell certain assets and the operations of our Springbox unit, since it was deemed to not be part of our core business going forward. We anticipate completing a sale by June 30, 2012. As a result, the Springbox assets and operating results have been reclassified to discontinued operations in the accompanying consolidated balance sheets and statements of income. The Springbox assets of discontinued operations are as follows (in thousands):
|
|
|
|
|
|
|
|
|
Assets |
|
December 31,
2011 |
|
December 31,
2010 |
|
|
Property and equipment, net |
|
$ |
350 |
|
$ |
81 |
|
|
Intangible assets, net |
|
|
416 |
|
|
2,578 |
|
| |
|
|
|
|
|
|
Total |
|
$ |
766 |
|
$ |
2,659 |
|
| |
|
|
|
|
|
Operating results of discontinued operations for the years ended December 31, 2011, 2010 and 2009 are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
|
|
|
2011 |
|
2010 |
|
2009 |
|
|
Revenues |
|
$ |
4,523 |
|
$ |
6,200 |
|
$ |
8,173 |
|
|
Cost of revenues |
|
|
4,370 |
|
|
4,933 |
|
|
5,764 |
|
|
Depreciation and amortization |
|
|
374 |
|
|
756 |
|
|
765 |
|
|
Impairment of intangible assets |
|
|
1,800 |
|
|
5,866 |
|
|
— |
|
|
Other operating expenses |
|
|
1,400 |
|
|
867 |
|
|
683 |
|
| |
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
(3,421 |
) |
|
(6,222 |
) |
|
961 |
|
|
Provision (benefit) for income taxes |
|
|
(1,368 |
) |
|
(2,489 |
) |
|
384 |
|
| |
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations |
|
$ |
(2,053 |
) |
$ |
(3,733 |
) |
$ |
577 |
|
| |
|
|
|
|
|
|
|
During 2010 our Springbox unit performed below our expectations primarily due to customer losses. As a result, in the fourth quarter we conducted an impairment analysis of its long-lived assets using a discounted cash flow model (Level 3 measurement) and determined they were not fully recoverable. Substantially all of Springbox's long-lived assets consist of intangible assets (customer relationships and trade name). We estimated the fair value of Springbox's assets and determined an impairment charge of $5.9 million was necessary. During 2011, Springbox's operating results deteriorated further and in the fourth quarter again we conducted an impairment analysis of its long-lived assets and determined an impairment charge of $1.8 million was necessary. We used a market approach in estimating the fair value. |