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Discontinued Operations and Other Dispositions | 9 Months Ended
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Sep. 30, 2017
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | DISCONTINUED OPERATIONS AND OTHER BUSINESS DISPOSITIONS In October 2016, the Company completed a strategic review of its international markets in connection with its efforts to optimize its global footprint and focus on the markets that it believes have the greatest potential to benefit the Company's long-term financial performance. Based on that review, the Company decided to focus its business on 15 core countries and to pursue strategic alternatives for its operations in the remaining 11 countries, which were primarily based in Asia and Latin America. As described below, the dispositions of the Company's operations in those 11 countries were completed between November 2016 and March 2017. A business disposition that represents a strategic shift and has (or will have) a major effect on an entity's operations and financial results is reported as a discontinued operation. The Company determined that the decision reached by its management and Board of Directors to exit those 11 non-core countries, which comprised a substantial majority of its operations outside of North America and EMEA, represented a strategic shift in its business. Additionally, based on its review of quantitative and qualitative factors relevant to the dispositions, the Company determined that the disposition of the businesses in those 11 countries would have a major effect on its operations and financial results. As such, the financial position and results of operations and cash flows for its operations in those 11 countries, including the gains and losses on the dispositions and related income tax effects, are presented as discontinued operations in the accompanying condensed consolidated financial statements as of December 31, 2016 and for the three months and nine months ended September 30, 2017 and 2016. Groupon Israel On March 21, 2017, the Company sold an 83% controlling stake in its subsidiary in Israel. The Company recognized a pretax gain on the disposition of $1.8 million, which represents the excess of (a) the sum of (i) $2.3 million in net consideration received, consisting of the $0.4 million fair value of its retained minority investment and $2.0 million that the acquirer paid into an escrow account that will be settled within 12 months of closing, less $0.1 million in transaction costs, and (ii) a $0.2 million cumulative translation gain, which was reclassified to earnings, over (b) the $0.7 million net book value upon the closing of the transaction. The amount of cash proceeds to be received in connection with this transaction may change due to final working capital adjustments. See Note 4, Investments, for additional information about this transaction. Groupon Singapore On March 10, 2017, the Company sold its subsidiary in Singapore in exchange for a convertible debt investment in the acquirer. The Company recognized a pretax loss on the disposition of $0.5 million, which represents the excess of (a) the sum of (i) the $0.5 million net book value upon closing of the transaction and (ii) a $1.1 million cumulative translation loss, which was reclassified to earnings, over (b) $1.1 million in net consideration received, consisting of the $1.6 million fair value of the investment acquired, less $0.5 million in transaction costs. The Company did not receive any cash proceeds in connection with the transaction. See Note 4, Investments, for additional information about this transaction. Groupon Hong Kong On March 3, 2017, the Company sold its subsidiary in Hong Kong. The Company recognized a pretax gain on the disposition of $0.3 million, consisting of the $0.2 million negative net book value upon closing of the transaction and $0.1 million in net consideration received, consisting of $0.2 million received in cash, less $0.1 million in transaction costs. Groupon Latin America On February 16, 2017 and March 9, 2017, the Company sold its subsidiaries in Argentina, Chile, Colombia, Peru, Mexico, and Brazil in two transactions with the same counterparty. The Company recognized a net pretax loss on the dispositions of $2.9 million, which represents the excess of (a) the sum of (i) a $2.1 million unfavorable contract liability for transition services, (ii) a $5.4 million indemnification liability and (iii) the $13.6 million net book value upon closing of the transactions, over (b) the sum of (i) a $15.7 million cumulative translation gain, which was reclassified to earnings, and (ii) $2.5 million in net consideration received, consisting of $3.2 million in net cash proceeds, less $0.7 million in transaction costs. The amount of net cash proceeds received in connection with these transactions may change due to final working capital adjustments. November 2016 Dispositions within Discontinued Operations In connection with the strategic initiative to exit 11 non-core countries as discussed above, the Company sold its subsidiary in Malaysia and ceased operations in South Africa in November 2016. The results of the Company's operations in Malaysia and South Africa are presented within discontinued operations in the accompanying condensed consolidated financial statements for the three and nine months ended September 30, 2016. Results of Discontinued Operations and Assets and Liabilities of Discontinued Operations The following table summarizes the major classes of line items included in income (loss) from discontinued operations, net of tax, for the three and nine months ended September 30, 2017 and 2016 (in thousands):
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2017 (1) (2) |  | 2016 |  | 2017 (1) (2) |  | 2016
Third-party and other revenue |  | $ | — |  |  | $ | 26,027 |  |  | $ | 12,602 |  |  | $ | 74,519 |
Direct revenue |  | — |  |  | 7,886 |  |  | 2,962 |  |  | 25,200 |
Third-party and other cost of revenue |  | — |  |  | (5,582 | ) |  | (2,557 | ) |  | (16,994 | )
Direct cost of revenue |  | — |  |  | (7,482 | ) |  | (3,098 | ) |  | (24,439 | )
Marketing expense |  | — |  |  | (3,110 | ) |  | (1,239 | ) |  | (8,393 | )
Selling, general and administrative expense |  | (500 | ) |  | (19,288 | ) |  | (11,784 | ) |  | (55,729 | )
Restructuring |  | — |  |  | (296 | ) |  | (778 | ) |  | (1,610 | )
Other income, net |  | — |  |  | 889 |  |  | 3,852 |  |  | 2,249 |
Income (loss) from discontinued operations before loss on dispositions and provision for income taxes |  | (500 | ) |  | (956 | ) |  | (40 | ) |  | (5,197 | )
Loss on dispositions |  | (362 | ) |  | — |  |  | (1,630 | ) |  | — |
Provision for income taxes |  | — |  |  | (389 | ) |  | (81 | ) |  | (1,168 | )
Income (loss) from discontinued operations, net of tax |  | $ | (862 | ) |  | $ | (1,345 | ) |  | $ | (1,751 | ) |  | $ | (6,365 | )
(1) | The income (loss) from discontinued operations before loss on dispositions and provision for income taxes for the three and nine months ended September 30, 2017 includes the results of each business through its respective disposition date.
(2) | Selling, general and administrative expense from discontinued operations for the three and nine months ended September 30, 2017 includes increases to contingent liabilities under indemnification agreements. See Note 7, Commitments and Contingencies, for information about indemnification obligations related to discontinued operations.
The following table summarizes the carrying amounts of the major classes of assets and liabilities classified as discontinued operations in the consolidated balance sheet as of December 31, 2016 (in thousands):
|  | December 31, 2016
Cash |  | $ | 28,866 |
Accounts receivable, net |  | 15,386 |
Prepaid expenses and other current assets |  | 18,994 |
Property, equipment and software, net |  | 1,554 |
Goodwill |  | 9,411 |
Other non-current assets |  | 1,041 |
Assets of discontinued operations |  | $ | 75,252 |
Accounts payable |  | $ | 722 |
Accrued merchant and supplier payables |  | 29,705 |
Accrued expenses and other current liabilities |  | 16,625 |
Deferred income taxes |  | 2,501 |
Other non-current liabilities |  | 426 |
Liabilities of discontinued operations |  | $ | 49,979 |
Other Business Dispositions Groupon Russia On April 12, 2016, the Company sold its subsidiary in Russia ("Groupon Russia"). The Company recognized a pretax gain on the disposition of $8.9 million, consisting of Groupon Russia's $1.6 million negative net book value upon the closing of the transaction and its $7.7 million cumulative translation gain, which was reclassified to earnings, less $0.4 million in transaction costs. The Company did not receive any proceeds in connection with the transaction. Breadcrumb On May 9, 2016, the Company sold its point of sale business ("Breadcrumb") in exchange for a minority investment in the acquirer. The Company recognized a pretax gain on the disposition of $0.4 million, which represents the excess of (a) $8.2 million in net consideration received, consisting of the $8.3 million fair value of the investment acquired, less $0.1 million in transaction costs, over (b) the $7.8 million net book value of Breadcrumb upon the closing of the transaction. The Company did not receive any cash proceeds in connection with the transaction. Groupon Indonesia On August 5, 2016, the Company sold its subsidiary in Indonesia ("Groupon Indonesia") in exchange for a minority investment in the acquirer. The Company recognized a pretax gain on the disposition of $2.1 million, which represents the excess of $2.4 million in net consideration received, consisting of the $2.7 million fair value of the investment acquired, less $0.3 million in transaction costs, over the sum of (i) the $0.1 million net book value of Groupon Indonesia upon closing of the transaction and (ii) its $0.2 million cumulative translation loss, which was reclassified to earnings. The Company did not receive any cash proceeds in connection with the transaction.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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