Discontinued Operations

3 Months Ended

Mar. 31, 2017

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

The operating results for the Legacy Businesses, which includes the IronKey business, are presented in our Condensed Consolidated Statements of Operations as discontinued operations for all periods presented and reflect revenues and expenses that are directly attributable to these businesses that were eliminated from our ongoing operations.

GAAP requires accumulated foreign currency translation balances to be reclassified into the Consolidated Statement of Operations once the liquidation of the net assets of a foreign entity is substantially complete. As of March 31, 2016, because we had ceased operations in all of our international legal entities other than those associated with Nexsan, we had determined that the liquidations of our international entities associated with our Legacy Businesses are substantially complete. All remaining activities associated with these entities, including the final disposition of remaining balance sheet amounts and formal dissolution of these entities are being managed and controlled by the Company’s U.S. corporate function. Accordingly, the Company reclassified into discontinued operations $75.7 million of foreign currency translation losses associated with our Legacy Businesses for the three months ended March 31, 2016.

Additionally, in February 2016 the Company sold its IronKey mobile security solutions business to Kingston Digital, Inc. (“Kingston”) and DataLocker Inc. (“DataLocker”) pursuant to two asset purchase agreements which qualified as the sale of a business. The Company recorded a pre-tax gain on the IronKey sale of $3.8 million during the first quarter of 2016.

The key components of the results of discontinued operations were as follows:

	Three Months Ended
	March 31,
(In millions)	2017			2016
Net revenue	$	—		$	2.0
Cost of goods sold	—			0.6
Gross Profit	—			1.4
Selling, General and administrative	2.0			4.0
Research and development	—			0.5
Restructuring and other	0.1			(0.3		)
Reclassification of cumulative translation adjustment	—			75.7
Other (Income) Expense	(0.1		)	0.3
Loss from discontinued operations, before income taxes	(2.0		)	(78.8		)
Gain on sale of discontinued businesses, before income taxes	—			3.8
Income tax provision	—			1.4
Loss from discontinued operations, net of income taxes	$	(2.0	)	$	(76.4	)

The income tax provision related to discontinued operations were $0.0 million and $1.4 million for the quarters ended March 31, 2017 and 2016, respectively. See Note 10 - Income Taxes for additional information.

Current assets of discontinued operations of $10.9 million as of March 31, 2017 principally include approximately $9.8 million of restricted cash, primarily associated with our disputing of certain payables to a vendor. Current assets of discontinued operations of $10.5 million as of December 31, 2016 principally included approximately $9.4 million of restricted cash, primarily associated with our disputing of certain payables to a vendor. See Note 15 - Litigation, Commitments and Contingencies for additional information.

Current liabilities of discontinued operations of $41.0 million as of March 31, 2017 included accounts payable of $22.7 million, $3.1 million of customer credit and rebate accruals, $12.6 million of legal accruals and $2.6 million of other current liability amounts. Current liabilities of discontinued operations of $39.7 million as of December 31, 2016 included $22.8 million of accounts payable, $3.2 million of customer credit and rebate accruals, $11.0 million of legal accruals and $2.7 million of other current liability amounts. See Note 15 - Litigation, Commitments and Contingencies for additional information.