DISCONTINUED OPERATIONS

Banking Security Systems Integration

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 10.0% 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 was recorded through discontinued operations on the Consolidated Statement of Operations for the year ended December 30, 2012. In the fourth quarter of 2013, we received the contingent payment of $13 thousand, which is recorded through discontinued operations in the Consolidated Statement of Operations for the year ended December 29, 2013.

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 29, 2013, December 30, 2012 and December 25, 2011 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 29, 2013		December 30, 2012			December 25, 2011
Net revenue	$	—	$	10,751		$	13,565
Gross profit	—		1,335			2,541
Selling, general, & administrative expense	—		2,550			4,095
Restructuring expenses	—		—			113
Asset impairment	—		1,442			2,781
Goodwill impairment	—		370			3,411
Operating loss	—		(3,027		)	(7,859		)
Gain (loss) on disposal	13		(15		)	—
Gain (loss) from discontinued operations before income taxes	13		(3,042		)	(7,859		)
Gain (loss) from discontinued operations, net of tax ⁽¹⁾	$	13	$	(3,042	)	$	(7,514	)


⁽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 years ended December 29, 2013 and December 30, 2012.

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

U.S and Canada CheckView^®

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 initially recorded a receivable from the buyer of $0.2 million as a working capital adjustment based on the closing balance sheet. In the fourth quarter of 2013, the buyer disputed some amounts on the closing balance sheet. As a result, we recorded a payable to the buyer of $0.9 million as a working capital adjustment based on the buyer’s preliminary 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, which started in the first quarter of 2012, 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 $4.3 million as of December 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 December 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 for the year ended December 29, 2013. This amount is included within other gain (loss), net on the Consolidated Statement of Operations for the year ended December 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 year ended December 29, 2013. The loss on our sale of the U.S. and Canada based CheckView^® business of $13.6 million is recorded through discontinued operations on the Consolidated Statement of Operations for the year ended December 29, 2013.

The results for the years ended December 29, 2013, December 30, 2012, and December 25, 2011 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 29, 2013		December 30, 2012		December 25, 2011
Net revenue	16,084		76,519		101,594
Gross profit	449		11,585		20,560
Selling, general, & administrative expense	3,970		12,253		13,700
Research and development	105		410		544
Asset impairment	—		329		—
Goodwill impairment	—		3,263		—
Operating (loss) income	(3,626	)	(4,670	)	6,316
Loss on disposal	(13,611	)	—		—
(Loss) earnings from discontinued operations before income taxes	(17,237	)	(4,670	)	6,316
(Loss) earnings from discontinued operations, net of tax	(17,169	)	(4,917	)	6,349



(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.