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DISCONTINUED OPERATIONS, EXIT ACTIVITIES, AND CLINIC OBLIGATIONS
 12 Months Ended
Dec. 31, 2014
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS, EXIT ACTIVITIES, AND CLINIC OBLIGATIONS
13. DISCONTINUED OPERATIONS, EXIT ACTIVITIES, AND CLINIC OBLIGATIONS
 
In 2014, the Company exited the MWCC corporate center model by selling 41 centers to existing franchise partners (24 centers were sold in June 2014 and the remaining 17 centers were sold in December 2014) and closing the remaining 34 corporate centers. In accordance with ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity the assets, liabilities, operating results, and cash flows of the MWCC corporate center channel have been presented separately as discontinued operations in the Consolidated Financial Statements for all periods presented.
 
During 2014, the Company incurred a pre-tax charge of $8.6 million associated with the discontinued operations. This charge includes $0.6 million for one-time termination benefits, $4.4 million for closed clinic lease obligations, $3.3 million for impaired assets, and $0.5 million in other facility related closure costs. These exit activity costs were partially offset by a gain of $0.2 million on the sale of centers.
 
Included in the results of discontinued operations, is $2.1 million of clinic closure costs recorded for the closure of 8 corporate centers in December 2013 and $7.4 million of clinic closure costs for the closure of 34 corporate centers in December 2014. As of December 31, 2014, $6.5 million of clinic closure costs are included in accrued expenses. The accrual is comprised of $4.6 million for closed clinic lease obligations, $0.9 million for customer refunds, $0.6 million for accrued severance charges, and $0.4 million for other closure costs.
 
The following is a summary of the Company’s operating results for discontinued operations for the years ended December 31, 2014, 2013 and 2012:
 
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
Revenue
 
$
22,509,000
 
$
32,832,000
 
$
38,135,000
 
Loss before income taxes from discontinued operations
 
 
(13,150,000)
 
 
(4,856,000)
 
 
(3,898,000)
 
Income benefit provision
 
 
(5,302,000)
 
 
(1,690,000)
 
 
(1,332,000)
 
Loss from discontinued operations, net of tax
 
$
(7,848,000)
 
$
(3,166,000)
 
$
(2,566,000)
 
  
The following table presents the aggregate carrying amounts of the major classes of assets and liabilities divested as of December 31, 2014 included in discontinued operations:
 
 
 
2014
 
 
 
 
 
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Receivables, net
 
$
57,000
 
Inventory
 
 
123,000
 
Prepaid expenses and other current assets
 
 
4,000
 
Total current assets
 
 
184,000
 
 
 
 
 
 
Other assets
 
 
22,000
 
 
 
 
 
 
Total assets
 
$
206,000
 
 
 
 
 
 
LIABILITIES
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and accrued expenses
 
$
4,858,000
 
Total current liabilities
 
 
4,858,000
 
 
 
 
 
 
Long-term lease obligations
 
 
2,756,000
 
 
 
 
 
 
Total liabilities
 
$
7,614,000
 
 
The following table summarizes the exit obligations primarily closed clinic lease obligations, severance accruals, and customer refunds incurred as of December 31, 2014:
 
Ending accrued balance as of December 31, 2012
 
$
-
 
Charges incurred during the period
 
 
1,361,000
 
Payments during the period
 
 
-
 
Ending accrued balance as of December 31, 2013
 
$
1,361,000
 
Charges incurred during the period
 
 
6,006,000
 
Payments during the period
 
 
(833,000)
 
Ending accrued balance as of December 31, 2014
 
$
6,534,000
 
 
These charges were recorded in the balance sheet as of December 31, 2014 as follows:
 
Total current liabilities of discontinued operations
 
$
3,778,000
 
Total long-term liabilities of discontinued operations
 
 
2,756,000
 
Ending accrued balance as of December 31, 2014
 
$
6,534,000