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. 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, which bears interest at the 30 day LIBOR rate plus 5.5%, matures in consecutive monthly installments through October 1, 2017. 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 selling price also had a contingent consideration payment up to a maximum amount of $0.9 million. 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. We received $0.3 million and $0.3 million of principal on the note receivable for the years ended December 28, 2014 and December 29, 2013, respectively. The proceeds are included in cash proceeds from the sale of discontinued operations on the Consolidated Statement of Cash Flows.

Our discontinued operations reflect the operating results for the disposal group through the date of disposition and impairment charges recognized in 2012. The impairment charges include write-downs to goodwill and our customer relationships intangible asset reflecting 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.

The results for the years ended December 29, 2013, and December 30, 2012 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
Net revenue	$	—	$	10,751
Gross profit	—		1,335
Selling, general, & administrative expense	—		2,550
Asset impairment	—		1,442
Goodwill impairment	—		370
Operating loss	—		(3,027		)
Gain (loss) on disposal	13		(15		)
Gain (loss) from discontinued operations before income taxes	13		(3,042		)
Gain (loss) from discontinued operations, net of tax ⁽¹⁾	$	13	$	(3,042	)


⁽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.

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 $3.5 million as of December 28, 2014. 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 28, 2014. Direct costs incurred by us in connection with this agreement will be billed to the buyer on a monthly basis. Transition services expense, net of transition services income, was $13 thousand expense and $132 thousand income for the years ended December 28, 2014 and December 29, 2013. This amount is included within other gain (loss), net on the Consolidated Statement of Operations for the years ended December 28, 2014 and 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, and December 30, 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:



(amounts in thousands)	December 29, 2013		December 30, 2012
Net revenue	16,084		76,519
Gross profit	449		11,585
Selling, general, & administrative expense	3,970		12,253
Research and development	105		410
Asset impairment	—		329
Goodwill impairment	—		3,263
Operating loss	(3,626	)	(4,670	)
Loss on disposal	(13,611	)	—
Loss from discontinued operations before income taxes	(17,237	)	(4,670	)
Loss from discontinued operations, net of tax	(17,169	)	(4,917	)

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