Discontinued Operations

12 Months Ended

Dec. 31, 2012

Discontinued Operations

Discontinued Operations

10. Discontinued Operations

        During 2011, management committed to a plan to sell certain assets and the operations of our Springbox unit since it was not deemed to be part of our core business going forward. As a result, the Springbox assets and operating results have been reclassified to discontinued operations in the accompanying consolidated balance sheets and statements of operations.

        On June 1, 2012, we sold the principal assets and operations of our Springbox unit for $0.1 million in cash and a percentage of the revenues collected from the business for three years after the closing date. We have estimated the fair value of the future revenue sharing arrangement at $0.8 million. In addition, the buyer has assumed our obligations under existing customer contracts. The loss on the sale of the Springbox unit is calculated as follows (in thousands):

Consideration received:
Cash	$	100
Fair value of future revenue sharing		768
Total		868
Assets sold:
Cash		259
Receivables and other current assets		843
Property and equipment		350
Intangible assets		416
Total		1,868
Loss on sale of discontinued operation before income taxes		(1,000	)
Benefit for income taxes		400
Loss on sale of discontinued operation, net of tax	$	(600	)

        Operating results of discontinued operations for the five months ended May 31, 2012, and the years ended December 31, 2011 and 2010, are as follows (in thousands):

				Years Ended December 31,
	Five Months Ended May 31, 2012
				2011			2010
Revenues	$	1,585		$	4,523		$	6,200
Cost of revenues		1,677			4,370			4,933
Depreciation and amortization		—			374			756
Impairment of intangible assets		—			1,800			5,866
Other operating expenses		708			1,400			867
Loss before income taxes		(800	)		(3,421	)		(6,222	)
Benefit for income taxes		320			1,368			2,489
Loss from discontinued operations		(480	)		(2,053	)		(3,733	)
Loss on sale of discontinued operations, net of tax		(600	)		—			—
Loss from discontinued operations	$	(1,080	)	$	(2,053	)	$	(3,733	)

        During 2010 our Springbox unit performed below our expectations primarily due to customer losses. As a result, in the fourth quarter we conducted an impairment analysis of its long-lived assets using a discounted cash flow model (Level 3 measurement) and determined they were not fully recoverable. Substantially all of Springbox's long-lived assets consisted of intangible assets (customer relationships and trade name). We estimated the fair value of Springbox's assets and determined an impairment charge of $5.9 million was necessary. During 2011, Springbox's operating results deteriorated further and in the fourth quarter we again conducted an impairment analysis of its long-lived assets and determined an impairment charge of $1.8 million was necessary. We used a market approach in estimating the fair value (a level 3 fair value measurement).