Discontinued Operations |
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| Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Discontinued Operations | Discontinued Operations During the year ended December, 2015, in order to improve our core business and further enhance stockholder value, we entered into definitive agreements to divest our EZ Prints, Groups and Arts businesses in which we received proceeds of $38.3 million, net of expenses. Income from discontinued operations, net of tax, in the Company’s Consolidated Statements of Operations, represents the net income from the disposal of assets and liabilities associated with the sale of these operations, the impairment charge associated with the writedown of EZ Prints net assets to fair value in the second quarter of 2015, the gain on disposal of the businesses during 2015, as well as the historical operations of the EZ Prints, Art and Groups businesses for all periods presented in accordance with ASC 205-20 Discontinued Operations. EZ Prints business asset sale On September 1, 2015, we sold our EZ Prints business, which provided a suite of enterprise class deployable software products and services focused on private label e-commerce customization services, pursuant to an asset purchase agreement with EZ Prints Holdings, Inc. (“EZP Holdings”). Vincent Sarrecchia, the chief executive officer of EZP Holdings, was previously serving as the interim chief executive officer of the EZ Prints business pursuant to a consulting agreement with us. Total consideration for the sale was $0.6 million, of which $0.1 million has been received and $0.5 million is in the form of a non-interest bearing note receivable due on or before December 31, 2018. As part of the closing of the sale, we agreed to pay a current obligation of $1.25 million to one of our current customers. In the second quarter of 2015, prior to the sale, we reviewed the carrying value of the EZ Prints assets as compared to the fair value of such assets as measured by the offers received. Accordingly, as prescribed by ASC 360, Impairment or Disposal of Long-Lived Assets, we recorded an impairment charge of $7.3 million to lower the carrying value of the assets to fair value, which is included in the operating section of “Discontinued Operations” in the Consolidated Statement of Operations. As noted above, we completed the sale of our EZ Prints business in the third quarter of 2015 and recorded a gain on the sale of $0.3 million. We also entered into a transition services agreement with EZP Holdings for a maximum period of one year from the closing date, a license agreement whereby we continue to have the right to use certain software, and cross fulfillment agreements whereby each party agrees to fulfill certain products for the other party. Groups business asset sale On March 6, 2015, we sold our Groups business, which provided personalized apparel and merchandise for groups and organizations through its e-commerce websites, pursuant to an asset purchase agreement with Logo Sportswear Inc. (“Logo Sportswear”). We received proceeds of $9.2 million, net of expenses, of which $1.0 million was placed in escrow for our indemnification obligations pursuant to an escrow agreement between the Company, Logo Sportswear and the escrow agent. The amount in escrow was released in its entirety in June 2016. In connection with the sale of the Groups business, we also entered into a transition services agreement for a period of one year from the closing date and a referral agreement with Logo Sportswear for a period of two years following the closing date and is not considered material. Art business asset sale On March 1, 2015, we sold our Art business, which enabled users to transform photographs and images into canvas works of art, pursuant to an asset purchase agreement with Circle Graphics, Inc. (“Circle Graphics”). We received proceeds of $28.5 million, net of expenses, of which $2.4 million was placed in escrow for its indemnification obligations pursuant to an escrow agreement between us, Circle Graphics and the escrow agent. The amount in escrow was released in its entirety in June 2016. We also entered into a transition services agreement with Circle Graphics for a period of one year from the closing date and a commercial agreement whereby certain products purchased on our websites will be exclusively fulfilled by Circle Graphics for a period of three years following the closing date. There is no material relationship between us and Circle Graphics. Financial information Prior year financial statements have been recast to reflect the sale of our EZ Prints, Groups and Arts businesses in accordance with the ASC 205-20 within discontinued operations. Results of discontinued operations are excluded from the accompanying notes to the consolidated financial statements for all periods presented, unless otherwise noted. Financial information for the combined discontinued operations is summarized as follows (in thousands):
Condensed cash flow information for EZ Prints discontinued operations is summarized as follows (in thousands):
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