Discontinued Operations

9 Months Ended

Sep. 30, 2012

Discontinued Operations

Discontinued Operations

(10) Discontinued Operations

Digital Operations

        On June 2, 2011, IMI completed the sale of the Digital Business to Autonomy pursuant to the Digital Sale Agreement. In the Digital Sale, Autonomy purchased (1) the shares of certain of IMI's subsidiaries through which IMI conducted the Digital Business and (2) certain assets of IMI and its subsidiaries relating to the Digital Business. The Digital Sale qualified as discontinued operations and, as a result, the financial position, operating results and cash flows of the Digital Business, for all periods presented, including the gain on the sale, have been reported as discontinued operations for financial reporting purposes.

        Pursuant to the Digital Sale Agreement, IMI received approximately $395,400 in cash, consisting of the initial purchase price of $380,000 and a preliminary working capital adjustment of approximately $15,400, which remains subject to a customary post-closing adjustment based on the amount of working capital at closing. The purchase price for the Digital Sale will be increased on a dollar-for-dollar basis if the working capital balance at the time of closing exceeds the target amount of working capital as set forth in the Digital Sale Agreement and decreased on a dollar-for-dollar basis if such closing working capital balance is less than the target amount. We and Autonomy are in disagreement regarding the working capital adjustment in the Digital Sale Agreement. As a result, as contemplated by the Digital Sale Agreement, the matter has been referred to an independent third party accounting firm for determination of the appropriate adjustment amount. Any change in the estimated amount of working capital adjustment will be recorded within gain (loss) on the sale of discontinued operations, net of tax within our consolidated statement of operations. Transaction costs relating to the Digital Sale amounted to $7,387. Additionally, $11,075 of inducements are payable to Autonomy and have been netted against the proceeds in calculating the gain on the Digital Sale. Also, an estimated tax benefit of $6,734 and tax provision of $45,571 associated with the gain recorded on the Digital Sale was recorded during the three and nine months ended September 30, 2011, respectively. A gain on sale of discontinued operations in the amount of $177 ($6,911, inclusive of tax benefit) and $245,831 ($200,260, net of tax) was recorded during the three and nine months ended September 30, 2011, respectively, as a result of the Digital Sale.

        The table below summarizes certain results of operations of the Digital Business:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2012			2011(1)			2012
Total Revenues	$	—		$	—		$	79,199		$	—
Loss Before Benefit for Income Taxes of Discontinued Operations	$	(1,554	)	$	(537	)	$	(21,952	)	$	(159	)
Benefit for Income Taxes		(932	)		(1,094	)		(8,462	)		(803	)
(Loss) Income from Discontinued Operations, Net of Tax	$	(622	)	$	557		$	(13,490	)	$	644
Gain on Sale of Discontinued Operations	$	177		$	—		$	245,831		$	—
(Benefit) Provision for Income Taxes		(6,734	)		—			45,571			—
Gain on Sale of Discontinued Operations, Net of Tax	$	6,911		$	—		$	200,260		$	—
Total Income from Discontinued Operations and Sale, Net of Tax	$	6,289		$	557		$	186,770		$	644

(1)

The nine months ended September 30, 2011 includes the Digital Business results of operations through June 2, 2011, the date the Digital Sale was consummated.

        There have been no allocations of corporate general and administrative expenses to discontinued operations. In accordance with our policy, we have allocated corporate interest associated with all debt that is not specifically allocated to a particular component based on the proportion of the assets of the Digital Business to our total consolidated assets at the applicable weighted average interest rate associated with such debt for such reporting period. Interest allocated to the Digital Business and included in loss from discontinued operations amounted to $0 and $2,396 for three and nine months ended September 30, 2011, respectively.

New Zealand Business

        We completed the sale of the New Zealand Business on October 3, 2011 for a purchase price of approximately $10,000. During the second quarter of 2011, we recorded an impairment charge of $4,900 to write-down the long-lived assets of the New Zealand Business to its estimated net realizable value, which is included in income (loss) from discontinued operations. Additionally, we recorded a tax benefit of $7,606 during the nine months ended September 30, 2011 associated with the outside tax basis of our New Zealand Business, which is also reflected in income (loss) from discontinued operations. No valuation allowance was provided against this benefit as such amount is recoverable against the capital gain associated with the Digital Sale. For all periods presented, the financial position, operating results and cash flows of the New Zealand Business, including the gain on the sale, have been reported as discontinued operations for financial reporting purposes.

        The table below summarizes certain results of operations of the New Zealand Business:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2012			2011			2012
Total Revenues	$	2,346		$	—		$	6,489		$	—
Income (Loss) Before Provision (Benefit) for Income Taxes of Discontinued Operations	$	1		$	(88	)	$	(4,947	)	$	(88	)
Provision (Benefit) for Income Taxes		1,836			—			(7,606	)		—
(Loss) Income from Discontinued Operations, Net of Tax	$	(1,835	)	$	(88	)	$	2,659		$	(88	)

Italian Business

        We completed the sale of the Italian Business on April 27, 2012. We agreed to indemnify the buyers of the Italian Business for certain possible costs associated with the fire in Italy discussed more fully in Note 8.e. A loss on sale of discontinued operations in the amount of $1,885 was recorded during the nine months ended September 30, 2012 as a result of the sale of the Italian Business. Approximately $383 of cumulative translation adjustment associated with the Italian Business was reclassified from accumulated other comprehensive items, net and reduced the loss on the sale by the same amount. During the three and nine months ended September 30, 2011, we recorded an impairment charge of $17,100 to write down the long-lived assets of the Italian Business to its estimated net realizable value, which is included in loss from discontinued operations. For all periods presented, the financial position, operating results and cash flows of the Italian Business, including the loss on the sale, have been reported as discontinued operations for financial reporting purposes.

        The table below summarizes certain results of operations of the Italian Business:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2012			2011			2012
Total Revenues	$	3,776		$	—		$	12,397		$	2,138
Loss Before Benefit for Income Taxes of Discontinued Operations	$	(18,792	)	$	(437	)	$	(24,895	)	$	(6,823	)
Benefit for Income Taxes		(1,869	)		—			(2,027	)		(567	)
Loss from Discontinued Operations, Net of Tax	$	(16,923	)	$	(437	)	$	(22,868	)	$	(6,256	)
Loss on Sale of Discontinued Operations	$	—		$	—		$	—		$	(1,885	)
Provision for Income Taxes		—			—			—			—
Loss on Sale of Discontinued Operations, Net of Tax	$	—		$	—		$	—		$	(1,885	)
Total Loss from Discontinued Operations and Sale, Net of Tax	$	(16,923	)	$	(437	)	$	(22,868	)	$	(8,141	)