DISCONTINUED OPERATIONS

On October 1, 2012, the Company completed the sale of the Banking Security Systems Integration business unit for $3.5 million subject to closing adjustments related to a non-compete agreement and third-party consents. On October 1, 2012, the Company received cash proceeds of $1.2 million (net of selling costs) and a promissory note of $1.4 million from the purchaser. The note receivable is due in consecutive monthly installments beginning on November 1, 2012, with the last scheduled payment due on October 1, 2017. The promissory note bears interest at the 30 day LIBOR rate plus 5.5%. The selling price is also subject to a contingent consideration payment up to a maximum amount of $0.9 million. The contingent payment is based on the purchaser's revenues for the first year of its ownership of the Banking Security Systems Integration business unit. If these revenues exceed $10 million, the Company is entitled to a contingent payment amount of 10.0% of the revenues above $10.0 million, subject to certain adjustments, not to exceed a total contingent consideration payment of $0.9 million. The loss on sale of the Banking Security Systems Integration business unit of $15 thousand is recorded through discontinued operations on the Consolidated Statement of Operations for the year ended December 30, 2012.

Our discontinued operations reflect the operating results for the disposal group through the date of disposition. Impairments in 2011 and 2012 reflect write-downs to estimates of fair value less costs to sell the Banking Security Systems Integration business unit. These nonrecurring fair value measurements, which fall within Level 3 of the fair value hierarchy, were determined utilizing an expected selling price less costs to sell approach.

In December, 2011, we classified our Banking Security Systems Integration business unit as held for sale. At December 25, 2011, the Banking Security Systems Integration business unit had recorded goodwill of $3.8 million related to a series of three acquisitions completed during 2007 and 2008. As a result of the conclusion to report the business as held for sale, we tested the goodwill of the disposal group and determined that there was a $3.4 million impairment charge. We also recorded an impairment of definite-lived customer relationships of $2.8 million as a result of our decision to sell the Banking Security Systems Integration business unit. The impairment charges were recorded in discontinued operations on the Consolidated Statement of Operations.

During the second quarter of 2012, we performed an impairment test based on updated fair value information regarding the Banking Security Systems Integration business unit. As a result of this impairment test, we determined that there was a $0.4 million impairment charge in the goodwill reporting unit of our Shrink Management Solutions segment and a $0.7 million impairment of customer relationship intangible assets. During the third quarter of 2012, we performed an impairment test based on final negotiations of the selling price for the Banking Security Systems Integration business unit. As a result of this impairment test, we determined that there was an $0.8 million additional impairment of customer relationship intangible assets. These impairment charges were included in discontinued operations on the Consolidated Statement of Operations during the second and third quarters ended June 24, 2012 and September 23, 2012, respectively.

The results for the years ended December 30, 2012, December 25, 2011 and December 26, 2010 have been reclassified to show the results of operations for the Banking Security Systems Integration business unit as discontinued operations, net of tax, on the Consolidated Statement of Operations. Below is a summary of these results:



(amounts in thousands)	December 30, 2012			December 25, 2011			December 26, 2010
Net revenue	$	10,751		$	13,565		$	12,820
Gross profit	1,335			2,541			2,874
Selling, general, & administrative expense	2,550			4,095			4,043
Restructuring expenses	—			113			—
Asset impairment	1,442			2,781			—
Goodwill impairment	370			3,411			—
Operating loss	(3,027		)	(7,859		)	(1,169		)
Loss on disposal	(15		)	—			—
Loss from discontinued operations before income taxes	(3,042		)	(7,859		)	(1,169		)
Loss from discontinued operations, net of tax	$	(3,042	)	$	(7,514	)	$	(773	)

The assets and liabilities associated with this business have been adjusted to fair value, less costs to sell, and reclassified into assets of discontinued operations held for sale and liabilities of discontinued operations held for sale, as appropriate, on the Consolidated Balance Sheet. As of December 25, 2011 the classification was as follows:



(amounts in thousands)	December 25, 2011
Accounts receivable, net	$	1,519
Inventories	1,087
Property, plant, and equipment , net	11
Goodwill	370
Other intangibles, net	1,754
Other assets	1,579
Assets of discontinued operations held for sale	$	6,320

Accounts payable	$	551
Accrued compensation and related taxes	40
Other accrued expenses	599
Unearned revenues	169
Restructuring reserve	78
Other liabilities	3
Liabilities of discontinued operations held for sale	$	1,440

In December of 2012, our U.S. and Canada based CheckView^® business included in our Shrink Management Solutions segment met the criteria for classification as discontinued operations. The classification of this business as discontinued operations was determined to be a triggering event for testing goodwill impairment. As a result of this impairment test, we determined that there was a $3.3 million impairment charge of goodwill in our Shrink Management Solutions segment and a $0.3 million impairment of property, plant and equipment. These impairment charges were included in discontinued operations on the Consolidated Statement of Operations. After a full impairment of its long-lived assets, the remaining carrying value of our CheckView^® business at December 30, 2012 exceeded its fair value by approximately $0.8 million.

Our discontinued operations reflect the operating results for the disposal group. Impairments in 2012 reflect write-downs to estimates of fair value less costs to sell the U.S. and Canada based CheckView^® business. These nonrecurring fair value measurements, which fall within Level 3 of the fair value hierarchy, were determined utilizing an expected selling price less costs to sell approach. The results for the years ended December 30, 2012, December 25, 2011, and December 26, 2010 have been reclassified to show the results of operations for the U.S. and Canada based CheckView^® business as discontinued operations, net of tax, on the Consolidated Statement of Operations. Below is a summary of these results:



(amounts in thousands)	December 30, 2012		December 25, 2011	December 26, 2010
Net revenue	76,519		101,594	105,227
Gross profit	11,585		20,560	29,325
Selling, general, & administrative expense	12,253		13,700	13,866
Research and development	410		544	831
Asset impairment	329		—	—
Goodwill impairment	3,263		—	—
Operating (loss) income	(4,670	)	6,316	14,628
(Loss) earnings from discontinued operations before income taxes	(4,670	)	6,316	14,628
(Loss) earnings from discontinued operations, net of tax	(4,917	)	6,349	9,098



(amounts in thousands)	December 30, 2012
Accounts receivable, net	$	14,558
Inventories	9,721
Property, plant, and equipment, net	—
Other assets	5,347
Deferred income taxes	$	238
Assets of discontinued operations held for sale	$	29,864

Accounts payable	$	3,413
Accrued compensation and related taxes	94
Other accrued expenses	5,600
Unearned revenues	581
Liabilities of discontinued operations held for sale	$	9,688

Net cash flows of our discontinued operations from each of the categories of operating, investing and financing activities were not significant.