2. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

9 Months Ended

Sep. 30, 2015

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

Discontinued Operations

As described in Note 1, "Basis of Presentaion," on August 13, 2015, Swisher Hygiene Inc. announced that it had agreed to sell the stock of its wholly owned U.S. subsidiary Swisher International, Inc. and other assets relating to Swisher Hygiene Inc's U.S. operations, which comprise all of the Company’s remaining operating interests, to Ecolab. At closing, Ecolab paid the closing purchase price of approximately $40.5 million, less a $2 million holdback to address working capital and other adjustments in accordance with the agreement governing the Sale Transaction. As a result, the Company recorded an impairment charge at August 31, 2015 for $22.6 million as discussed in Note 2, "Discontinued Operations and Assets Held for Sale," and Note 3, "Goodwill and Other Intangible Assets." In the Sale Transaction, the Company retained certain debt and liabilities as set forth in the purchase agreement governing the sale. The sale was approved at the Annual Meeting of Stockholders on October 15, 2015, and the sale was completed on November 2, 2015, with an effective date of  November 1, 2015. Swisher Hygiene Inc. will no longer have any continuing involvement with the operations or cash flows of Swisher International, Inc., and as a result, Swisher Hygiene Inc. has presented the operations of Swisher International, Inc. as discontinued operations for the current and prior year. Assets and liabilities related to discontinue operations have been classified as held for sale.

In accordance with the criteria specified in ASC 205, Presentation of Financial Statements and ASC 360, Property, Plant and Equipment, the assets and liabilities sold in the Sale Transaction are classified as assets held for sale. The following tables provide a reconciliation of the carrying amounts of major classes of assets and liabilities which are held for sale in the accompanying Condensed Consolidated Balance Sheets at September 30, 2015 and December 31, 2014:

	September 30,		December 31,
Assets Held for Sale	2015		2014
Current assets:
Cash and cash equivalents	$	1,098	$	7,233
Restricted cash		231		231
Accounts receivable		14,730		18,751
Inventory		13,161		15,426
Deferred tax asset		492		534
Other current assets		2,057		1,615
Total current assets		31,769		43,790
Property and equipment		17,258		37,037
Intangibles		13,602		29,446
Other noncurrent assets		1,439		1,812
Total noncurrent assets		32,299		68,295
Total Assets	$	64,068	$	112,085

	September 30,		December 31,
Liabilities Held for Sale	2015		2014
Current liabilities:
Accounts payable		9,298		13,119
Accrued payroll and benefits		1,415		2,893
Accrued expenses		6,849		5,873
Short-term obligations		370		94
Total current liabilities		17,932		21,979
Deferred tax liabilities		492		558
Long-term obligations		776		831
Total noncurrent liabilities		1,268		1,389
Total liabilities	$	19,200	$	23,368

The following table summarizes the results of discontinued operations for the three and nine months ended September 30, 2015 and 2014:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Revenue	$	41,370		$	49,650		$	130,046		$	147,900
Cost of sales		20,012			22,671			60,680			67,456
Route expense		10,794			13,192			34,116			38,153
Selling, general and administrative		12,227			15,180			40,695			48,198
Depreciation and amortization		3,728			5,044			12,847			15,577
Impairments		22,641			-			22,807			8,810
Other (income) expenses		(775	)		185			(1,332	)		1,330
Income tax benefit		(66	)		(55	)		(43	)		(78	)
Net loss from discontinued operations	$	(27,191	)	$	(6,567	)	$	(39,724	)	$	(31,546	)

Assets Held For Sale

In accordance with ASC 360, Property, Plant and Equipment, the Company’s estimates of fair value require significant judgment and are regularly reviewed and subject to change based on market conditions, changes in the customer base of the operations or routes, and our continuing evaluation as to an acceptable sale price.  

During 2014, the Company updated its estimates of the fair value of certain linen routes and operations to reflect various events that occurred during the period. The cumulative impairment loss for the nine months ended September 30, 2014 was $3.0 million, of which $1.9 million was attributable to a reduction in the estimate of net sale proceeds for a linen processing operation. The factors driving the $1.9 million reduction were the cancellation notifications, received from three major customers, resulting in a significant loss of forecasted revenue; and the operation’s 2014 year-to-date loss which was in excess of the Company’s estimates. The Company made the decision to close this linen processing operation and the fair value was written down to zero. During the first quarter of 2015, the Company completed the sale of equipment of this closed operation classified as asset held for sale, resulting in the net receipt of $0.3 million in cash and a $0.3 million gain. The gain is included in “Other income (expense), net” as part of discontinued operations in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

During March 2015, the Board of Directors of the Company approved a resolution to sell the Company’s remaining linen operation. In accordance with ASC 360, Property, Plant and Equipment, these assets were classified as assets held for sale at March 31, 2015 and were adjusted to the lower of historical carrying amount or fair value, less costs to sell, which was $3.1 million. The estimated fair value was derived based on the assessment of the potential net selling price. The Company completed the sale of this linen operation on May 12, 2015 receiving $4.0 million in cash and notes receivable plus purchased accounts receivables, resulting in a gain of $0.9 million. The gain is included in “Other income (expense), net” as part of discontinued operations in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

For the three and nine months ended September 30, 2015, linen related revenue attributable to the assets held for sale and sold linen assets was $0.0 million and $2.3 million, respectively, and $0.7 million and $3.1 million for the three and nine months ended September 30, 2014, respectively. The 2014 annual revenue was $9.6 million attributable to the assets held for sale and sold linen assets.

As described in Note 1, "Basis of Presentation," on October 15, 2015 at the Company's Annual Meeting of Stockholders, the sale of  the stock of the Company's wholly owned U.S. subsidiary Swisher International, Inc.  and other assets relating to its U.S. operations, which comprise all of the Company’s remaining operating interests, to Ecolab was approved, and the Sale Transaction was completed on November 2, 2015, with an effective date of November 1, 2015. In accordance with the criteria specified in ASC 360, Property, Plant and Equipment, the assets of Swisher International, Inc. are classified as assets held for sale, and the reconciliation of major classes of assets included as held for sale are presented in the tables above.

As a result of the Sale Transaction, the Company performed an impairment analysis of its long-lived assets in accordance with ASC 360-10, Impairment or Disposal of Long-Lived Assets, and an impairment analysis on intangible assets in accordance with ASC 350, Intangible-Goodwill and Other, as of August 31, 2015. Based on the analysis performed, it was determined that an impairment of the Company’s fixed assets and intangible assets had occurred, resulting in an impairment charge of $12.6 million and $10.0 million, respectively, which is reported as part of discontinued operations.