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Discontinued Operations | 6 Months Ended
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Oct. 31, 2014
Discontinued Operations | 3. Discontinued Operations On June 12, 2012, the Company acquired PowerReviews, Inc. (“PowerReviews”), a provider of social commerce solutions based in San Francisco, California. The total consideration paid for this transaction was $150.8 million, including the issuance of 6.4 million shares of the Company’s common stock and assumption of vested and unvested options to purchase the common stock of PowerReviews equivalent to options to purchase 1.7 million shares of the Company’s common stock, but excluding the potential cash proceeds that may arise from the exercise of these assumed options. On January 10, 2013, the U.S. Department of Justice (“DOJ”) filed a complaint against the Company with the U.S. District Court for the Northern District of California, San Francisco Division (the “Court”), alleging that the Company’s acquisition of PowerReviews violated Section 7 of the Clayton Act, 15 U.S.C. Section 18 and seeking the Company’s divestiture of assets sufficient to create a competing business that can replace the competitive significance of PowerReviews in the marketplace. On January 8, 2014, the Court ruled that the Company’s acquisition of PowerReviews violated Section 7 of the Clayton Act, 15 U.S.C. Section 18. On April 24, 2014, the Company entered into a Joint Stipulation with the DOJ to resolve the DOJ’s claims in the antitrust action challenging the acquisition of PowerReviews and, together with the DOJ, the Company submitted a proposed order to the Court (the “Order”). Under the terms of the Joint Stipulation and the Order, the Company was required to divest all of the assets of the PowerReviews business. On June 4, 2014, the Company entered into a definitive agreement to divest PowerReviews, LLC, the successor to PowerReviews, to Wavetable Labs, LLC (“Wavetable”) for $30.0 million in cash, $4.5 million of which is to be held in escrow as partial security for the Company’s indemnification obligations under the definitive agreement. Any reduction in proceeds of the escrow would be recorded as an additional loss. The terms of this transaction were approved by the DOJ on June 26, 2014, and the transaction was completed on July 2, 2014. Wavetable subsequently changed its name to PowerReviews. As a result of the foregoing, PowerReviews revenues, related expenses and loss on disposal, net of tax, are components of “loss from discontinued operations” in the Condensed Consolidated Statements of Operations. As of April 30, 2014, on the Condensed Consolidated Balance Sheets, the assets and liabilities of the discontinued operations of PowerReviews were presented as ‘Assets held for sale’ and ‘Liabilities held for sale,’ respectively. The statement of cash flows is reported on a combined basis without separately presenting cash flows from discontinued operations for all periods presented. The Company incurred a total loss on the disposal of the PowerReviews business of $10.7 million; of which, $9.2 million was recognized as an estimated loss on disposal of discontinued operations during the three months ended April 30, 2014. The additional $1.5 million loss was primarily caused by a decrease of $0.5 million in estimated cash proceeds and incremental transaction costs of $0.4 million. The Company recognized the additional loss of $1.5 million in the six months ended October 31, 2014. Summarized results from discontinued operations were as follows (in thousands):
|  | Three Months Ended October 31, |  |  | Six Months Ended October 31, |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Revenues from discontinued operations |  | $ | — |  |  | $ | 4,390 |  |  | $ | 2,535 |  |  | $ | 8,642 |
Income from discontinued operations before income taxes |  | $ | — |  |  | $ | 673 |  |  | $ | 303 |  |  | $ | 1,119 |
Income tax expense |  |  | — |  |  |  | 253 |  |  |  | 23 |  |  |  | 421 |
Net income from discontinued operations |  |  | — |  |  |  | 420 |  |  |  | 280 |  |  |  | 698 |
Loss on disposal of discontinued operations, net of tax |  |  | — |  |  |  | — |  |  |  | (1,537 | ) |  |  | — |
Net income (loss) from discontinued operations, net of tax |  | $ | — |  |  | $ | 420 |  |  | $ | (1,257 | ) |  | $ | 698 |
The carrying amounts of the major classes of assets and liabilities of discontinued operations were as follows (in thousands):
|  | July 2, |  |  | April 30, |
|  | 2014 |  |  | 2014 |
ASSETS: |  |  |  |  |  |  |  |
Restricted cash |  | $ | 104 |  |  | $ | — |
Accounts receivable, net |  |  | 1,097 |  |  |  | 1,036 |
Prepaid expenses and other current assets |  |  | 48 |  |  |  | 49 |
Total current assets |  |  | 1,249 |  |  |  | 1,085 |
Property and equipment, net |  |  | 37 |  |  |  | 37 |
Goodwill |  |  | 9,002 |  |  |  | 9,002 |
Acquired intangible assets, net |  |  | 32,813 |  |  |  | 32,813 |
Total assets |  | $ | 43,101 |  |  | $ | 42,937 |
LIABILITIES: |  |  |  |  |  |  |  |
Accounts payable |  | $ | 76 |  |  | $ | 221 |
Accrued expenses and other current liabilities |  |  | 823 |  |  |  | 895 |
Deferred revenue |  |  | 2,230 |  |  |  | 2,505 |
Total Liabilities |  | $ | 3,129 |  |  | $ | 3,621 |
The Company recorded a loss on the disposal of discontinued operations of $1.5 million, net of tax, in the six months ended October 31, 2014 which was calculated as follows (in thousands):
Cash consideration |  | $ | 30,000 |
Less: |  |  |  |
Basis in net assets as of July 2, 2014 |  |  | 39,972 |
Costs incurred directly attributable to the transaction |  |  | 1,039 |
Loss before income taxes |  |  | (11,011 | )
Income tax benefit |  |  | (282 | )
Loss on disposal of discontinued operations, net of taxes |  |  | (10,729 | )
Loss on disposal of discontinued operations, net of taxes, previously recognized |  |  | 9,192 |
Loss on disposal of discontinued operations, net of tax, recognized in current period |  | $ | (1,537 | )
The carrying amount of assets held for sale in the condensed consolidated balance sheet was calculated as follows (in thousands):
|  | April 30, |
|  | 2014 |
Total assets of discontinued operations |  | $ | 42,937 |
Estimated loss on disposal of discontinued operations, net of tax |  |  | (9,192 | )
Assets held for sale |  | $ | 33,745 |
As of October 31, 2014, there were no “assets held for sale” as the divestiture of the PowerReviews business was completed on July 2, 2014. The $4.5 million held in escrow is recorded as a receivable in “Prepaid expenses and other current assets” on the Condensed Consolidated Balance Sheet as of October 31, 2014. As of October 31, 2014, the Company has received no claims for indemnification under the definitive agreement.

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- Definition The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2941-110230 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e957-107759 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1012-107759 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1510-107760 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1020-107759 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1436-107760 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1474-107760 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=8077374&loc=d3e2443-110228 + Details
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