Discontinued Operations

9 Months Ended

Sep. 23, 2012

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

We evaluate our businesses and product lines periodically for their strategic fit within our operations. Beginning in December of 2011, we began to actively market our Banking Security Systems Integration business unit included in our Shrink Management Solutions segment. As a result of this divestiture decision, we are accounting for this business as discontinued operations.  The classification of this business as discontinued operations was determined to be a triggering event for testing impairment.  As a result of this impairment test, we determined that there was a $3.4 million impairment charge in the goodwill reporting unit of our Shrink Management Solutions segment and a $2.8 million impairment of customer relationship intangible assets.  These impairment charges were included in discontinued operations on the Consolidated Statement of Operations during the fourth quarter ended December 25, 2011.

During the second quarter of 2012, we performed an impairment test based on updated fair value information regarding the Banking Security Systems Integration business unit. As a result of this impairment test, we determined that there was a $0.4 million impairment charge in the goodwill reporting unit of our Shrink Management Solutions segment and a $0.7 million impairment of customer relationship intangible assets. During the third quarter of 2012, we performed an impairment test based on final negotiations of the selling price for the Banking Security Systems Integration business unit. As a result of this impairment test, we determined that there was a $0.8 million additional impairment of customer relationship intangible assets. These impairment charges were included in discontinued operations on the Consolidated Statement of Operations during the second and third quarters ended June 24, 2012 and September 23, 2012, respectively.

On October 1, 2012, we completed the sale of this business. For further information, refer to Note 15, "Subsequent Events".

The Company’s discontinued operations reflect the operating results for the disposal group.  The results for the three and nine months ended September 23, 2012 and September 25, 2011 have been reclassified to show the results of operations for the Banking Security Systems Integration business unit as discontinued operations, net of tax, on the Consolidated Statement of Operations. Below is a summary of these results:

	Quarter						Nine Months
	(13 weeks) Ended						(39 weeks) Ended
(amounts in thousands)	September 23, 2012			September 25, 2011			September 23, 2012			September 25, 2011
Net revenue	$	2,808		$	3,077		$	10,504		$	8,985
Gross profit	355			532			1,431			1,329
Selling, general, and administrative expenses	752			1,055			2,416			3,090
Restructuring expenses	—			113			—			113
Intangible impairment	770			—			1,442			—
Goodwill impairment	—			—			370			—
Operating loss	(1,167		)	(636		)	(2,797		)	(1,874		)
Loss from discontinued operations before income taxes	(1,167		)	(636		)	(2,797		)	(1,874		)
Loss from discontinued operations, net of tax(1)	$	(1,167	)	$	(1,069	)	$	(2,797	)	$	(1,874	)

⁽¹⁾  As this business is located in the U.S. and a full valuation allowance is recorded in the U.S., there is no tax impact on the loss from discontinued operations for the three and nine months ended September 23, 2012, and the nine months ended September 25, 2011.

The assets and liabilities associated with this business have been adjusted to fair value, less costs to sell, and reclassified into assets of discontinued operations held for sale and liabilities of discontinued operations held for sale, as appropriate, on the Consolidated Balance Sheet. As of September 23, 2012 and December 25, 2011 the classification was as follows:

(amounts in thousands)	September 23, 2012		December 25, 2011
Accounts receivable, net	$	1,525	$	1,519
Inventories	1,045		1,087
Property, plant, and equipment, net	18		11
Goodwill	—		370
Other intangibles, net	312		1,754
Other assets	936		1,579
Assets of discontinued operations held for sale	$	3,836	$	6,320
Accounts payable	$	372	$	551
Accrued compensation and related taxes	—		40
Other accrued expenses	284		599
Unearned revenues	421		169
Restructuring reserve	—		78
Other liabilities	1		3
Liabilities of discontinued operations held for sale	$	1,078	$	1,440

Net cash flows of our discontinued operations from each of the categories of operating, investing and financing activities were not significant.