DISCONTINUED OPERATIONS

In December of 2011, we classified our Banking Security Systems Integration business unit as held for sale. Our discontinued operations reflect the operating results for the disposal group through the date of disposition. On October 1, 2012, we 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, we 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, we are entitled to a contingent payment amount of 10% of the revenues above $10 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 was recorded through discontinued operations on the Consolidated Statement of Operations for the year ended December 30, 2012.

The results for the three and nine months ended September 23, 2012 were 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:



	Quarter			Nine Months
	(13 weeks) Ended			(39 weeks) Ended
(amounts in thousands)	September 23, 2012			September 23, 2012
Net revenue	$	2,808		$	10,504
Gross profit	355			1,431
Selling, general, and administrative expenses	752			2,416
Intangible impairment	770			1,442
Goodwill impairment	—			370
Operating loss	(1,167		)	(2,797		)
Loss from discontinued operations before income taxes	(1,167		)	(2,797		)
Loss from discontinued operations, net of tax ⁽¹⁾	$	(1,167	)	$	(2,797	)

⁽¹⁾ As this business was located in the U.S. and a full valuation allowance was recorded in the U.S., there was no tax

impact on the discontinued operations for the three and nine months ended September 23, 2012.

In December of 2012, our U.S. and Canada based CheckView^® business included in our Merchandise Availability 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 Merchandise Availability 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.

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. On March 19, 2013, we entered into an asset purchase agreement for the sale of our U.S. and Canada based CheckView^® business for $5.4 million in cash, subject to a working capital adjustment to the extent that the net working capital of the business deviates from targeted working capital of $17.9 million.

On April 28, 2013, we completed the sale of our U.S. and Canada based CheckView^® business unit for $5.4 million less a working capital adjustment of $4.1 million to arrive at cash proceeds of $1.3 million received on April 29, 2013. We recorded a receivable from the buyer of $0.2 million as a working capital adjustment based on the final closing balance sheet, pending the buyer's review of the final closing balance sheet. We have incurred selling costs of $1.1 million in connection with the transaction. We also issued a guarantee to the lessor of the related facilities and executed a transition services agreement with the buyer to provide services including but not limited to standalone information technology environment setup access, systems modifications, human resources and payroll processing support. The transition services have various contract periods, ranging from 60 days to one year. The leases on the facilities for which we issued a guarantee terminate in 2018. Our maximum potential future payments under the guarantee are $4.5 million as of September 29, 2013. We have a lease guarantee liability of $0.1 million recorded in other current liabilities and other long term liabilities on the Consolidated Balance Sheets as of September 29, 2013. Direct costs incurred by us in connection with this agreement will be billed to the buyer on a monthly basis. Transition services income, net of transition services expense, was $0.1 million and $0.1 million for the three and nine months ended September 29, 2013. These amounts are included within other gain (loss), net on the Consolidated Statement of Operations for the three and nine months ended September 29, 2013. Costs incurred to carve-out the CheckView^®business from our enterprise resource planning system for the buyer totaled $0.4 million and is recorded through discontinued operations on the Consolidated Statement of Operations for the three and nine months ended September 29, 2013. The loss on our sale of the U.S. and Canada based CheckView^® business of $13.0 million is recorded through discontinued operations on the Consolidated Statement of Operations for the nine months ended September 29, 2013.

The results for the three and nine months ended September 29, 2013 and September 23, 2012 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:



	Quarter					Nine Months
	(13 weeks) Ended					(39 weeks) Ended
(amounts in thousands)	September 29, 2013			September 23, 2012		September 29, 2013			September 23, 2012
Net revenue	$	2		$	19,350	$	16,086		$	58,245
Gross profit	(81		)	3,354		201			9,025
Selling, general, and administrative expenses	—			3,069		3,970			9,621
Research and development	—			106		105			323
Operating (loss) income	(81		)	179		(3,874		)	(919		)
Loss on disposal	(19		)	—		(13,043		)	—
Loss from discontinued operations before income taxes	(100		)	179		(16,917		)	(919		)
Loss from discontinued operations, net of tax	$	(100	)	$	62	$	(16,985	)	$	(1,033	)

Upon meeting the criteria for classification as held for sale, the assets and liabilities associated with this business were 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 30, 2012 the classification was as follows:



(amounts in thousands)	December 30, 2012
Accounts receivable, net	$	14,558
Inventories	9,721
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.