Discontinued Operations

3 Months Ended

Mar. 31, 2012

Discontinued Operations

Discontinued Operations

(10) Discontinued Operations

Digital Operations

        On June 2, 2011, IMI completed the sale of the Digital Business to Autonomy pursuant to the Digital Sale Agreement. In the Digital Sale, Autonomy purchased (1) the shares of certain of IMI's subsidiaries through which IMI conducted the Digital Business and (2) certain assets of IMI and its subsidiaries relating to our Digital Business. The Digital Sale qualified as discontinued operations because (1) the remaining direct gross cash inflows and outflows of the Digital Business by IMI post-close are not expected to be significant in relation to the direct gross cash inflows and outflows absent the Digital Sale and (2) there is no significant continuing involvement because IMI does not retain the ability to influence the operating and financial policies of the Digital Business. As a result, the financial position, operating results and cash flows of the Digital Business, for all periods presented, including the gain on the sale, have been reported as discontinued operations for financial reporting purposes.

        Pursuant to the Digital Sale Agreement, IMI received approximately $395,400 in cash, consisting of the initial purchase price of $380,000 and a preliminary working capital adjustment of approximately $15,400, which remains subject to a customary post-closing adjustment based on the amount of working capital at closing. The purchase price for the Digital Sale will be increased on a dollar-for-dollar basis if the working capital balance at the time of closing exceeds the target amount of working capital as set forth in the Digital Sale Agreement and decreased on a dollar-for-dollar basis if such closing working capital balance is less than the target amount. We and Autonomy are in disagreement regarding the working capital adjustment in the Digital Sale Agreement. As a result, as contemplated by the Digital Sale Agreement, the matter has been referred to an independent third party accounting firm for determination of the appropriate adjustment amount. Any change in the estimated amount of working capital adjustment will be recorded within gain (loss) on the sale of discontinued operations, net of tax within our consolidated statement of operations. Transaction costs relating to the Digital Sale amounted to $7,387 ($449 of such costs were unpaid as of March 31, 2012). Additionally, $11,075 of inducements are payable to Autonomy and have been netted against the proceeds in calculating the gain on the Digital Sale ($6,000 of such amount was unpaid as of March 31, 2012).

        The table below summarizes certain results of operations of the Digital Business for the three months ended March 31, 2011 and 2012:

	Three Months Ended March 31,
	2011			2012
Total Revenues	$	46,678		$	—
(Loss) Income Before (Benefit) Provision for Income Taxes of Discontinued Operations	$	(3,586	)	$	755
(Benefit) Provision for Income Taxes		(1,116	)		291
(Loss) Income from Discontinued Operations, Net of Tax	$	(2,470	)	$	464

        There have been no allocations of corporate general and administrative expenses to discontinued operations. In accordance with our policy, we have allocated corporate interest associated with all debt that is not specifically allocated to a particular component based on the proportion of the assets of the Digital Business to our total consolidated assets at the applicable weighted average interest rate associated with such debt for such reporting period. Interest allocated to the Digital Business and included in loss from discontinued operations amounted to $1,418 for three months ended March 31, 2011.

        The revenues and corresponding expenses associated with the above agreements are reflected in our continuing operating results. None of these services gives us the ability to influence the operating and financial policies of the Digital Business. We have concluded that the direct cash flows associated with these agreements are not significant because they are estimated to represent less than 5% of both direct cash inflows and outflows of the Digital Business for the one-year period subsequent to the Digital Sale, and, therefore, we have reported the Digital Business as discontinued operations in the accompanying consolidated financial statements for all periods presented. We will continue to assess the cash flows associated with these agreements and our conclusion that the Digital Business be reported as discontinued operations through one year after the Digital Sale.

New Zealand Business

        We completed the sale of the New Zealand Business on October 3, 2011 for a purchase price of approximately $10,000. For all periods presented, the financial position, operating results and cash flows of the New Zealand Business, including the gain on the sale, have been reported as discontinued operations for financial reporting purposes.

        The table below summarizes certain results of operations of the New Zealand Business for the three months ended March 31, 2011:

	Three Months Ended March 31, 2011
Total Revenues	$	1,983
Loss Before Benefit for Income Taxes of Discontinued Operations	$	(72	)
Benefit for Income Taxes		—
Loss from Discontinued Operations, Net of Tax	$	(72	)

Italian Business

        We committed in December 2011 to a plan to sell the Italian Business and beginning in the fourth quarter of 2011, the Italian Business has been classified as held for sale and, for all periods presented, the financial position, operating results and cash flows of the Italian Business have been reported as discontinued operations for financial reporting purposes. We sold the Italian Business on April 27, 2012.

        The table below summarizes certain results of operations of the Italian Business for the three months ended March 31, 2011 and 2012:

	Three Months Ended March 31,
	2011			2012
Total Revenues	$	4,283		$	2,138
Loss Before Benefit for Income Taxes of Discontinued Operations	$	(4,094	)	$	(6,124	)
Benefit for Income Taxes		(79	)		(567	)
Loss from Discontinued Operations, Net of Tax	$	(4,015	)	$	(5,557	)

        The carrying amounts of the major classes of assets and liabilities of the Italian Business were as follows:

	December 31, 2011		March 31, 2012
Accounts receivable, net	$	4,676	$	4,731
Prepaid expenses and other		602		611
Current assets of discontinued operations		5,278		5,342
Other assets, net		1,978		1,952
Non-current assets of discontinued operations		1,978		1,952
Assets of discontinued operations	$	7,256	$	7,294
Current portion of long-term debt	$	118	$	102
Accounts payable		563		2,216
Accrued expenses		2,552		5,372
Deferred revenue		41		144
Current liabilities of discontinued operations		3,274		7,834
Other long-term liabilities		43		25
Non-current liabilities of discontinued operations		43		25
Liabilities of discontinued operations	$	3,317	$	7,859