Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

v2.4.0.8
Discontinued Operations
6 Months Ended
Jun. 30, 2014
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations
Discontinued Operations

On April 24, 2014, the Company entered into an asset purchase agreement (the “asset purchase agreement”) with Equus Holdings, Inc. and Redwood Acquisition, Inc. (now known as Rimage Corporation, “Buyer”). Under the terms of the asset purchase agreement, the Company agreed to sell to Buyer all of the assets primarily used or primarily held for use in connection with its disc publishing business. Buyer also agreed to assume on the closing date certain agreements and liabilities relating to the disc publishing business and the acquired assets.
At a special meeting of the Company's shareholders held on June 27, 2014, the Company's shareholders approved the sale of the disc publishing assets as contemplated by the asset purchase agreement. As a result, effective June 27, 2014, the disc publishing business is classified as held for sale and qualifies for discontinued operations presentation as the disc publishing business will be eliminated from ongoing operations and the Company will not have any significant continuing involvement in the operations after the disposal transaction is completed.
In accordance with ASC 205-20, the results of the discontinued disc publishing business have been presented as discontinued operations for the three and six months ended June 30, 2014. Previously reported results for comparable periods in 2013 have also been restated to reflect this reclassification.
The operational results of the disc publishing business are presented in the “Net income from discontinued operations, net of tax” line item on the Condensed Consolidated Statements of Operations. Also included in this line item for the 2014 periods are non-recurring expenses incurred by the Company in preparation for and as part of the sale of the disc publishing business, including third party transaction specific costs, one-time income tax related impacts that resulted directly from the reorganization of international legal entities to facilitate the sale and the acceleration of vesting of cash-based long-term incentive and stock-based awards payable to employees of the disc publishing business upon completion of the asset sale transaction. The described non-recurring expenses and income tax related impacts amounted to approximately $2.9 million and $3.0 million for the three and six months ended June 30, 2014, respectively. In accordance with ASC 205-20, no general corporate charges were allocated to the discontinued business. The assets and liabilities of the discontinued business are presented on the Condensed Consolidated Balance Sheets as assets and liabilities from discontinued operations.
Other than consolidated amounts reflecting operating results and balances for both the continuing and discontinued operations, all remaining amounts presented in the accompanying condensed consolidated financial statements and notes reflect the financial results and financial position of the Company's continuing enterprise video content management software business.
Revenue, operating income, income tax expense (benefit) and net income from discontinued operations were as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Net revenue
$
15,059

 
$
16,419

 
$
29,922

 
$
31,566

Operating income
1,475

 
2,177

 
4,617

 
3,636

Income tax expense (benefit)
498

 
36

 
438

 
(21
)
Net income from discontinued operations
$
864

 
$
2,110

 
$
4,269

 
$
3,571


The major classes of assets and liabilities from discontinued operations were as follows:
 
June 30,
2014
 
December 31,
2013
Receivables, net
$
7,996

 
$
8,778

Inventories
4,745

 
3,983

Other current assets
1,365

 
1,305

Current assets from discontinued operations
14,106

 
14,066

Property and equipment, net
3,753

 
4,040

Intangible assets, net
242

 
352

Other assets - non-current
27

 
28

Non-current assets from discontinued operations
4,022

 
4,420

Trade accounts payables
2,439

 
3,225

Accrued compensation
3,260

 
2,568

Deferred revenue
6,310

 
5,645

Other current liabilities
1,689

 
427

Current liabilities from discontinued operations
13,698

 
11,865

Non-current liabilities from discontinued operations
$
2,172

 
$
2,637