Discontinued Operations

9 Months Ended

Sep. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Note 4 — Discontinued Operations

On March 31, 2019, the Company entered into a securities purchase agreement with IMN Capital Holdings, Inc., a Delaware company (“IMN Capital”) to sell its entire ownership of its international subsidiaries and Imation Latin America Corp., a Delaware corporation (the “Imation Subsidiaries”) (the “Subsidiary Sale”). In connection with the sale, the purchase price furnished by IMN Capital to the Company consisted of (i) $277,900 payable upon the execution of the IMN Capital Agreement and (ii) 75% of all net proceeds from subsidiary litigation (which, for the avoidance of doubt, shall be calculated after the payment of (i) the retirement of the Germany pension liability; (ii) contingency fees payable to attorneys engaged in connection with the Subsidiary Litigation; (iii) fees payable to Mach 5, the litigation financing company and (iv) the payment of all applicable taxes including income taxes in connection with the subsidiary litigation). The Company recorded a one-time non-cash gain of approximately $10.0 million in connection with IMN Capital Agreement transaction.

The operating results for the Legacy Businesses and the Nexsan 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.

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(In millions)	2019			2018			2019			2018
Net revenue	$	—		$	5.1		$	0.1		$	23.9
Cost of goods sold		—			3.1			0.1			13.0
Gross profit		—			2.0			—			10.9
Selling, general and administrative		—			0.9			0.3			8.3
Research and development		—			0.5			—			2.4
Restructuring and other		0.2			(2.2	)		—			(2.5	)
Other (income) expense		—			—			(0.6	)		(0.8	)
Income (loss) from discontinued operations, before income taxes		(0.2	)		2.8			0.3			3.5
Income on sale of discontinued businesses, before income taxes		—			6.1			9.6			6.1
Income tax benefit		—			0.1			0.9			0.2
Gain (Loss) from discontinued operations, net of income taxes	$	(0.2	)	$	9.0		$	10.8		$	9.8

Net income of discontinued operations for the three months ended September 30, 2019 decreased by $9.2 million compared to the same period last year mainly due to the sale of the Imation Subsidiaries. Net income of discontinued operations for the nine months ended September 30, 2019 increased by $1.0 million compared to the same period last year mainly due to the sale of the Imation Subsidiaries.

Current assets of discontinued operations were $0.0 million as of September 30, 2019. Current assets of discontinued operations as of December 31, 2018 of $3.2 million included $0.7 million of accounts receivable, $1.0 million related to funds held in escrow and $0.7 million of other current assets. The decrease of the current assets in 2019 was due to the sale of the Imation Subsidiaries.

Current liabilities of discontinued operations were $0.9 million as of September 30, 2019. Current liabilities of discontinued operations of $4.9 million as of December 31, 2018 included $1.7 million of accounts payable, $1.0 million due to CMC and $2.2 million of other current liabilities. The decrease of the current liabilities in 2019 was due to the sale of the Imation Subsidiaries.

Other liabilities of discontinued operations were $0.2 million as of September 30, 2019. Other liabilities of discontinued operations of $2.2 million as of December 31, 2018 included $0.3 million of withholding tax and $1.1 million of other liabilities. The decrease of the other liabilities in 2019 was due to the sale of the Imation Subsidiaries.