Discontinued Operations

12 Months Ended

Mar. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

During the fourth quarter of Fiscal 2014, we initiated our plan to sell our PPT^® business, which had been a longstanding legacy business of Rentrak, and a significant component of the Home Entertainment operating division. Our PPT^® business had been in a state of decline due to the decline of physical DVD rentals from retail stores. The strategic decision to sell PPT^® enables us to focus more fully on the growth of our media measurement and advanced consumer targeting business. Accordingly, we have restated our financial results and the PPT^® business is reported as discontinued operations for all periods presented.

Effective January 31, 2015, we entered into an asset purchase agreement (the “APA”) with Vobile, Inc., a California corporation (“Vobile”), to sell the assets associated with the PPT^® business. Pursuant to the APA, we agreed to sell all of the assets used primarily in the PPT^® business, including agreements with customers and vendors (the “Purchased Assets”). Vobile agreed to hire all of the employees of the PPT^® business to continue running the business and will rent space in our corporate headquarters location in Portland, Oregon (see Note 13 for additional information related to the sublease).

In consideration for the purchase of the Purchased Assets, Vobile agreed to assume specified liabilities, to pay $1.0 million cash, to make a $1.0 million promissory note in favor of Rentrak, and to issue to Rentrak 2,857,143 shares of Vobile’s Series D Preferred Stock (the “Series D shares”) having an aggregate liquidation preference of $5.0 million. Vobile also agreed to pay cash for the PPT^® Business’s positive net working capital, and paid an advance on this balance of $1.0 million. The purchase price is subject to adjustments for any claims for indemnification by Vobile. In connection with the issuance of the Series D shares, Vobile granted us certain minority investor rights, including information rights, a right to a board observer, registration and voting rights, and a right of first refusal and co-sale.

The consideration was recorded based on the estimated fair value of the cash and the Series D shares. The Series D shares were valued using an option pricing model with estimates and assumptions provided by management. As of the date of the sale, the Series D shares were valued at $3.7 million. The discount applied to the stated value represents primarily a discount for lack of marketability.

The investment in the Series D shares is reported in other assets as a long-term security on the Consolidated Balance Sheets as of March 31, 2015. Due to the lack of marketability and our inability to exercise significant influence over Vobile, the investment is accounted for using the cost method.

Operating results from discontinued operations are included in our Consolidated Statements of Operations as follows (dollars in thousands):

	Year ended March 31,
	2015			2014		2013
Revenue	$	26,450		$	45,208	$	42,144
Income from operations	$	1,662		$	4,655	$	4,316
Other expense	(36		)	—		(1		)
Income before income taxes	1,626			4,655		4,315
Income tax provision	655			1,872		1,824
Net income from operations	971			2,783		2,491
Gain on disposal, net of tax provision of $1,471	2,180			—		—
Income from discontinued operations, net of income taxes	$	3,151		$	2,783	$	2,491

As of March 31, 2015 and 2014, assets and liabilities relating to discontinued operations are as follows (dollars in thousands):

	March 31,
	2015		2014
Accounts receivable, net of allowances of $0 and $218	$	—	$	5,015
Other current assets	—		167
Property, plant and equipment, net of accumulated depreciation of $0 and $1,086	—		261
Total assets held for sale	$	—	$	5,443
Accounts payable	$	—	$	3,009
Accrued liabilities	—		1
Accrued compensation	—		848
Total liabilities held for sale	$	—	$	3,858

Income before income taxes from discontinued operations consisted of the following (dollars in thousands):

	Year Ended March 31,
	2015		2014		2013
United States	$	1,596	$	4,615	$	4,272
Non-United States	30		40		43
	$	1,626	$	4,655	$	4,315

The provision (benefit) for income taxes from discontinued operations was as follows (dollars in thousands):

	Year Ended March 31,
	2015		2014			2013
Current tax provision (benefit):
Federal	$	—	$	—		$	—
State	—		—			—
Foreign	1		(2		)	10
	1		(2		)	10
Deferred tax provision:
Federal	370		1,414			1,270
State	284		459			543
Foreign	—		1			1
	654		1,874			1,814
	$	655	$	1,872		$	1,824