Discontinued Operation

9 Months Ended

Sep. 30, 2011

Discontinued Operation

Discontinued Operation

Note 6—Discontinued Operation

During 2009, the Company decided to discontinue the operations of its MicroEdge subsidiary, which provided products and services to the not-for-profit business community, to concentrate on its core investment management business. In connection with this decision, the Company completed the sale of MicroEdge on October 1, 2009 to an affiliate of Vista Equity Partners III, LLC (“Purchaser”). The Company sold net assets in MicroEdge totaling $3.0 million.  The total consideration received by the Company in connection with the divestiture was approximately $30.0 million in cash, of which $27.0 million in cash was paid on the closing date. The remaining $3.0 million of the Purchase Price was held in escrow and was released to the Company in March 2011, resulting in the Company recording a gain of $1.7 million in “net income from discontinued operation, net of applicable taxes” in the first quarter of 2011.

As part of the disposition, certain assets and obligations of the Company’s discontinued operation were excluded from the sale and are reflected on the Company’s balance sheet as of September 30, 2011 and December 31, 2010. Assets excluded from the sale include cash and deferred tax assets.  Liabilities excluded from the sale include sales tax and other tax-related obligations, future payments related to a two year service and maintenance agreement, and continuing lease obligations included as part of the restructuring noted below.

In connection with the sale of MicroEdge, the Company vacated its MicroEdge facilities in New York and entered into a sub-lease agreement with the Purchaser, whereby the Purchaser contracted to sub-lease the premises for two years with the option to extend the sub-lease term through the end of the lease term in 2018. The sub-lease agreement was amended during the first quarter of 2011. Under the amended sub-lease agreement, the Purchaser will sub-lease the premises through the end of the lease term, with an option to terminate in September 2013, subject to penalties. As a result of the amendment to the sub-lease agreement, the Company revised its facility exit assumptions and recorded a restructuring accrual adjustment benefit of approximately $226,000 in its discontinued operations results during the first quarter of 2011.

The following table sets forth an analysis of the components of the restructuring charges related to the Company’s discontinued operation and the payments and non-cash charges made against the accrual during the nine months ended September 30, 2011 (in thousands):

	Facility Exit
	Costs
Balance of restructuring accrual at December 31, 2010	$	5,249
Net restructuring benefit	(210		)
Cash payments	(43		)
Accretion of prior restructuring costs	124
Balance of restructuring accrual at September 30, 2011	$	5,120

Net revenues and net income (loss) from the Company’s discontinued operation were as follows for the following periods (in thousands):

	Three Months Ended September 30						Nine Months Ended September 30
	2011			2010			2011		2010
Net revenues	$	—		$	—		$	—	$	—
Income (loss) from operation of discontinued operation (net of applicable taxes of $(17), $(19), $32 and $(69) respectively)	$	(27	)	$	(23	)	48		(98		)
Gain on disposal of discontinued operation (net of applicable taxes of $0, $0, $1,279 and $0, respectively)	—			—			1,725		—
Net income (loss) from discontinued operation	$	(27	)	$	(23	)	$	1,773	$	(98	)

The following table sets forth the assets and liabilities of the MicroEdge discontinued operation included in the condensed consolidated balance sheets of the Company (in thousands):

	September 30		December 31
	2011		2010
Assets:
Deferred taxes, long-term	$	2,028	$	2,095
Total noncurrent assets of discontinued operation	$	2,028	$	2,095
Liabilities:
Total current liabilities of discontinued operation	$	1,773	$	165
Accrued restructuring, long-term portion	$	4,734	$	5,228
Total noncurrent liabilities of discontinued operation	$	4,734	$	5,228