Divestitures

Under the Plan, we announced we would divest all product lines which are not considered core product lines of our business: Actional, Artix, DataXtend, FuseSource, ObjectStore, Orbacus, Orbix, Savvion, Shadow and Sonic. The FuseSource and Shadow product lines were divested in fiscal year 2012. The remaining product lines were divested in the first quarter of fiscal year 2013.

In June 2013, we entered into a definitive purchase and sale agreement to divest our Apama product line to Software AG. The sale is expected to close in July 2013 for $44.3 million. As of the end of the fiscal second quarter of 2013, we met the requirements to classify the Apama product line as both held for sale and discontinued operations in the condensed consolidated financial statements.

Revenues and direct expenses of the divested product lines and the Apama product line have been reclassified as discontinued operations for all periods presented. The fiscal year 2012 results include revenues and direct expenses of all divested product lines and the Apama product line, since we earned revenues and incurred direct expenses for all or part of fiscal year 2012 for each of those product lines. The fiscal year 2013 results include the revenues and direct expenses of Apama and the divested product lines which had not occurred prior to the start of fiscal year 2013.

The components included in discontinued operations on the condensed consolidated statements of income are as follows (in thousands):



	Three Months Ended						Six Months Ended
	May 31, 2013			May 31, 2012			May 31, 2013			May 31, 2012
Revenue	$	4,431		$	40,468		$	15,606		$	82,423
Income (loss) before income taxes	(4,802		)	(16,572		)	(3,117		)	(29,718		)
Income tax provision (benefit)	(570		)	(5,809		)	(433		)	(10,584		)
Gain on sale, net of tax	—			—			19,757			—
Income (loss) from discontinued operations, net	$	(4,232	)	$	(10,763	)	$	17,073		$	(19,134	)

Apama

The assets and liabilities being sold to Software AG are classified as assets and liabilities held for sale on the condensed balance sheet as of May 31, 2013 and are recorded at the lower of their carrying values or fair values less costs to sell. The major categories of the assets and liabilities held for sale are as follows (in thousands):



Assets:
Accounts receivable	$	3,672
Other current assets	165
Goodwill and intangible assets	6,990
Other long-term assets	409
Total assets held for sale	$	11,236
Liabilities:
Deferred revenue	$	4,012
Total liabilities held for sale	$	4,012

Artix, Orbacus and Orbix

In the first quarter of fiscal year 2013, we entered into a definitive purchase and sale agreement to divest our Artix, Orbacus and Orbix product lines to a subsidiary of Micro Focus International plc (Micro Focus). The divestiture of these product lines was part of the Plan. The sale closed in February 2013 for total consideration of $15.0 million.

The gain on sale of the Artix, Orbacus and Orbix product lines is calculated as follows (in thousands):



Purchase price	$	15,000
Less: transaction costs	826
Less: indemnification obligation	1,000
Less: net assets
Accounts receivables	2,300
Goodwill and intangible assets	24,325
Other assets	20
Impairment reserve	(8,601		)
Deferred revenue	(5,893		)
Gain on sale	1,023
Tax provision	—
Gain on sale, net of tax	$	1,023

In February 2013, upon the closing of the sale of Artix, Orbacus and Orbix, we amended the definitive purchase and sale agreement with Micro Focus to provide an additional indemnification obligation with respect to a specified vendor. The fair value of the indemnification obligation on the date the sale closed and the carrying value at May 31, 2013 is $1.0 million, and is included in other accrued liabilities in the condensed consolidated balance sheet. Our maximum indemnification obligation with respect to this matter is $11.3 million. The term of the indemnification is indefinite; however, we expect the matter to be substantially resolved within the next nine months.

In the fourth quarter of fiscal year 2012, we recorded an $8.6 million impairment loss on the Artix, Orbacus and Orbix assets held for sale based on our expectations of a sales price as compared to our estimation of the net assets to be sold at closing. The impairment loss was recorded as a reserve against the assets held for sale as of November 30, 2012. The gain recorded in the first quarter of fiscal year 2013 was the result of differences in our estimation of net assets to be sold at closing versus the actual value of the net assets sold at closing.

Actional, DataXtend, ObjectStore, Savvion and Sonic

In the fourth quarter of fiscal year 2012, we entered into a definitive purchase and sale agreement to divest our Actional, DataXtend, Savvion and Sonic product lines to the investment arm of Trilogy Enterprises. In December 2012, the agreement was amended to include the sale of our ObjectStore product line. The divestiture of these product lines was part of the Plan. The sale closed in December 2012 for total consideration of $60.5 million.

The gain on sale of the Actional, DataXtend, ObjectStore, Savvion and Sonic product lines is calculated as follows (in thousands):



Purchase price	$	60,500
Less: transaction costs	1,211
Less: net assets
Accounts receivables	12,004
Goodwill and intangible assets	31,693
Other assets	976
Deferred revenue	(19,168		)
Other liabilities	(299		)
Gain on sale	34,083
Tax provision	15,349
Gain on sale, net of tax	$	18,734