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Discontinued Operations | 9 Months Ended
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Oct. 31, 2022
Discontinued Operations |
Discontinued Operations | (4) Discontinued Operations ​ On June 12, 2022, Skillsoft entered into a Stock Purchase Agreement (the “Purchase Agreement”), by and among Skillsoft, Skillsoft (US) Corporation (“Seller”), Amber Holding Inc. (“SumTotal”), and Cornerstone OnDemand, Inc. (“Buyer”), pursuant to which, subject to the certain terms and conditions contained therein, Seller agreed to sell, and Buyer agreed to purchase, all of Seller’s right, title and interest in and to one hundred percent (100%) of the outstanding shares of capital stock of SumTotal. ​ The sale was completed on August 15, 2022. Skillsoft received net proceeds of $180.0 million and reserved $8.0 million for working capital contingency which is subject to customary adjustments as set forth in the Purchase Agreement, including adjustments based on the working capital, cash and indebtedness of SumTotal and its direct and indirect subsidiaries as of the closing date. ​ In accordance with ASC 810, the Company recorded a gain on sale upon completion of the transaction. The gain was calculated by measuring the difference between the fair value of consideration received less the carrying amount of the assets and liabilities sold. The Company calculated a gain of $53.8 million which is reported as Gain on sale of business in the Statement of Operations. The gain is preliminary and subject to finalization of post-closing adjustments pursuant to the Purchase Agreement. ​ In connection with the sale, the parties to the Purchase Agreement entered into certain other agreements, including a transition services agreement pursuant to which each of Seller and Buyer agreed to provide the other party with certain transition services for a limited period following the closing. ​ The Company determined that the sale of SumTotal met the criteria to be classified as discontinued operations, and its assets and liabilities held for sale, as of June 12, 2022. Accordingly, the Company classified the assets and liabilities of the discontinued operations as held for sale in our consolidated balance sheets at the lower of carrying amount or fair value less cost to sell. Classification for the assets and liabilities in comparative periods retained their previous classification as current or long-term. No losses were recognized upon classification of the discontinued operations assets and liabilities as held for sale. Depreciation and amortization ceased on assets classified as held for sale. The operating results of SumTotal are reported as discontinued operations, for all periods presented, as the disposition reflects a strategic shift that has, or will have, a major effect on our operations and financial results. ​ The financial results of SumTotal are presented as Income from discontinued operations, net of tax on our condensed consolidated Statement of Operations. The following table presents financial results of SumTotal for all periods presented in our condensed consolidated Statement of Operations (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Quarter to Date Results
​ | ​ | Fiscal 2023 | ​ | Fiscal 2022
​ | ​ | Successor | ​ | Successor
​ | ​ | Three Months | ​ | Three Months
​ | ​ | Ended | ​ | Ended
​ |  | October 31, 2022 |  | October 31, 2021
Revenues: |  | ​ |  |  | ​ | ​
Total revenues | ​ | $ | 4,178 | ​ | $ | 30,406
Operating expenses: | ​ |  | ​ | ​ | ​ | ​
Costs of revenues | ​ |  | 1,250 | ​ | ​ | 9,839
Content and software development | ​ |  | 956 | ​ | ​ | 5,975
Selling and marketing | ​ |  | 800 | ​ | ​ | 4,892
General and administrative | ​ |  | 67 | ​ | ​ | 668
Amortization of intangible assets | ​ |  | — | ​ | ​ | 2,658
Recapitalization and acquisition-related costs | ​ | ​ | 1,056 | ​ | ​ | 280
Restructuring | ​ | ​ | (159) | ​ | ​ | 2
Total operating expenses | ​ | ​ | 3,970 | ​ | ​ | 24,314
Operating income from discontinued operations | ​ | ​ | 208 | ​ | ​ | 6,092
Other income (expense), net | ​ | ​ | 2,223 | ​ | ​ | 50
Interest income | ​ | ​ | — | ​ | ​ | 9
Interest expense | ​ | ​ | (101) | ​ | ​ | (513)
Income from discontinued operations before income taxes | ​ |  | 2,330 | ​ | ​ | 5,638
Provision for income taxes | ​ |  | 1,115 | ​ | ​ | (273)
Net income from discontinued operations | ​ | $ | 1,215 | ​ | $ | 5,911
​ ​ ​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Year to Date Results
​ | ​ | Fiscal 2023 | ​ | Fiscal 2022
​ | ​ | Successor | ​ | Successor | ​ | ​ | Predecessor (SLH)
​ | ​ | Nine Months | ​ | From | ​ | ​ | From
​ | ​ | Ended | ​ | June 12, 2021 to | ​ | ​ | February 1, 2021 to
​ |  | October 31, 2022 |  | October 31, 2021 | ​ | ​ | June 11, 2021
Revenues: |  | ​ |  |  | ​ | ​ | ​ | ​ | ​ |
Total revenues | ​ | $ | 60,706 | ​ | $ | 45,952 | ​ | ​ | $ | 37,142
Operating expenses: | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Costs of revenues | ​ |  | 19,027 | ​ | ​ | 15,555 | ​ | ​ | ​ | 13,838
Content and software development | ​ |  | 12,246 | ​ | ​ | 9,637 | ​ | ​ | ​ | 9,072
Selling and marketing | ​ |  | 11,507 | ​ | ​ | 7,432 | ​ | ​ | ​ | 7,539
General and administrative | ​ |  | 730 | ​ | ​ | 913 | ​ | ​ | ​ | 746
Amortization of intangible assets | ​ |  | 6,345 | ​ | ​ | 4,188 | ​ | ​ | ​ | 4,410
Recapitalization and acquisition-related costs | ​ | ​ | 1,609 | ​ | ​ | 377 | ​ | ​ | ​ | 297
Restructuring | ​ | ​ | 42 | ​ | ​ | 31 | ​ | ​ | ​ | (127)
Total operating expenses | ​ | ​ | 51,506 | ​ | ​ | 38,133 | ​ | ​ | ​ | 35,775
Operating income from discontinued operations | ​ | ​ | 9,200 | ​ | ​ | 7,819 | ​ | ​ | ​ | 1,367
Other income (expense), net | ​ | ​ | 2,681 | ​ | ​ | 345 | ​ | ​ | ​ | (326)
Interest income | ​ | ​ | 12 | ​ | ​ | 12 | ​ | ​ | ​ | 4
Interest expense | ​ | ​ | (1,443) | ​ | ​ | (1,044) | ​ | ​ | ​ | (57)
Income from discontinued operations before income taxes | ​ |  | 10,450 | ​ | ​ | 7,132 | ​ | ​ | ​ | 988
Provision for (benefit from) income taxes | ​ |  | 1,967 | ​ | ​ | 3,638 | ​ | ​ | ​ | (187)
Net income from discontinued operations | ​ | $ | 8,483 | ​ | $ | 3,494 | ​ | ​ | $ | 1,175
​ The following table presents the aggregate carrying amounts of the classes of assets and liabilities of discontinued operations of SumTotal (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Successor | ​ | ​ | Successor
​ |  | October 31, 2022 |  |  | January 31, 2022
Carrying amount of assets included as part of discontinued operations |  | ​ |  | ​ |  | ​ |
Cash and cash equivalents | ​ | $ | — | ​ | ​ | $ | 16,496
Restricted cash | ​ |  | — | ​ | ​ |  | 236
Accounts receivable | ​ |  | — | ​ | ​ |  | 38,587
Prepaid expenses and other current assets | ​ |  | — | ​ | ​ |  | 8,755
Current assets of discontinued operations | ​ |  | — | ​ | ​ |  | 64,074
Property and equipment, net | ​ |  | — | ​ | ​ |  | 6,609
Goodwill | ​ |  | — | ​ | ​ |  | 75,693
Intangible assets, net | ​ |  | — | ​ | ​ |  | 75,628
Right of use assets | ​ |  | — | ​ | ​ |  | 1,937
Other assets | ​ |  | — | ​ | ​ |  | 4,945
Long-term assets of discontinued operations | ​ | ​ | — | ​ | ​ | ​ | 164,812
Total assets classified as discontinued operations in the condensed consolidated balance sheet | ​ | $ | — | ​ | ​ | $ | 228,886
​ | ​ |  |  | ​ | ​ |  |
Carrying amounts of liabilities included as part of discontinued operations: | ​ |  |  | ​ | ​ |  |
Accounts payable | ​ | $ | — | ​ | ​ | $ | 1,502
Accrued compensation | ​ |  | — | ​ | ​ |  | 10,293
Accrued expenses and other current liabilities | ​ |  | — | ​ | ​ |  | 3,260
Lease liabilities | ​ |  | — | ​ | ​ |  | 508
Deferred revenue | ​ |  | — | ​ | ​ |  | 71,904
Current liabilities of discontinued operations | ​ |  | — | ​ | ​ |  | 87,467
Deferred tax liabilities | ​ |  | — | ​ | ​ |  | 516
Long term lease liabilities | ​ |  | — | ​ | ​ |  | 1,605
Other long-term liabilities | ​ |  | — | ​ | ​ |  | 305
Current liabilities of discontinued operations | ​ |  | — | ​ | ​ |  | 2,426
Total liabilities classified as discontinued operations in the condensed consolidated balance sheet | ​ | $ | — | ​ | ​ | $ | 89,893
​ | ​ |  |  | ​ | ​ |  |
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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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