DISCONTINUED OPERATIONS AND DISPOSITIONS:

9 Months Ended

Dec. 31, 2016

DISCONTINUED OPERATIONS AND DISPOSITIONS:

DISCONTINUED OPERATIONS AND DISPOSITIONS:

5.DISCONTINUED OPERATIONS AND DISPOSITIONS:

Disposition of Impact email business

In August 2016, the Company completed the sale of its Impact email business to Zeta Interactive for total consideration of $22.0 million, including a $4.0 million subordinated promissory note with interest accruing at a rate of 6.0% per annum (see note 6). The note is payable on the 12 month anniversary of the closing date, and is included in other current assets in the condensed consolidated balance sheet.  The Company also entered into a separate multi-year contract to provide Zeta Interactive with Connectivity and Audience Solutions services.  Prior to the disposition, the Impact email business was included in the Marketing Services segment results.

The business did not meet the requirements of a discontinued business; therefore, all financial results are included in continuing operations. The Company recorded a gain on sale of $0.8 million, included in gains, losses and other items, net (see note 12).  The transaction also generated a $4.1 million income tax benefit.

Revenue and income from operations from the disposed Impact email business are shown below (dollars in thousands):

	For the quarter ended				For the nine months ended
	December 31,				December 31,
	2016		2015		2016		2015
Revenues	$	—	$	14,967	$	20,375	$	46,490
Income from continuing operations before income taxes	$	—	$	2,435	$	120	$	8,710

IT Infrastructure Management business (“ITO”)

During fiscal 2016, the Company completed the sale of its ITO business to Charlesbank Capital Partners and M/C Partners. The business qualified for treatment as discontinued operations during fiscal 2016. Accordingly, the results of operations, cash flows, and the balance sheet amounts pertaining to ITO, for all periods reported, have been classified as discontinued operations in the condensed consolidated financial statements.

Summary results of operations of ITO for the three months and nine months ended December 31, 2015, are segregated and included in earnings from discontinued operations, net of tax, in the condensed consolidated statements of operations.  The following table is a reconciliation of the major classes of line items constituting earnings (loss) from discontinued operations, net of tax (dollars in thousands):

	For the quarter ended		For the nine months ended
	December 31,		December 31,
	2015		2015
Major classes of line items constituting earnings (loss) from discontinued operations, net of tax:
Revenues	$	—	$	69,410
Cost of revenue		—		50,837
Gross profit		—		18,573
Operating expenses:
Sales and marketing		—		1,192
General and administrative		—		6,053
Gain on sale of discontinued operations		1,011		(9,349)
Total operating expenses		1,011		(2,104)
Earnings (loss) from discontinued operations		(1,011)		20,677
Interest expense		—		(681)
Other, net		—		(230)
Earnings (loss) from discontinued operations before income taxes		(1,011)		19,766
Income taxes (benefit)		(490)		4,076
Earnings (loss) from discontinued operations, net of tax	$	(521)	$	15,690

ITO was a provider of managed hosting and cloud infrastructure services, optimized for mid-tier enterprises.  The Company entered into certain agreements with ITO in which support services, including data center co-location services, are provided from the Company to ITO, and from ITO to the Company. Additionally, the Company entered into certain other agreements with ITO to provide or receive leased office space. The terms of these agreements range from several months to the longest of which continues through July 2020. The agreements generally provide cancellation provisions, without penalty, at various times throughout the term. 

Cash inflows and outflows related to the agreements are included in cash flows from operating activities in the condensed consolidated statements of cash flows.  Revenues and expenses related to the agreements are included in income (loss) from operations in the condensed consolidated statements of operations.  The related cash inflows and outflows and revenues and expenses for all periods reported are shown below (dollars in thousands):

	For the quarter ended				For the nine months ended
	December 31,				December 31,
	2016		2015		2016		2015
Cash inflows	$	1,329	$	1,986	$	5,017	$	2,685
Cash outflows	$	698	$	2,351	$	3,512	$	2,500
Revenues	$	1,502	$	1,752	$	5,055	$	2,918
Expenses	$	447	$	1,845	$	2,785	$	3,001