| Discontinued Operations |
(6) 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 $172.0 million on August 15, 2022, pending final closing adjustments.
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 business 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 its 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 the Company’s 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):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2022 |
|
Fiscal 2021 |
|
Fiscal 2020 |
|
|
Successor |
|
|
Predecessor (SLH) |
|
Predecessor (SLH) |
|
|
Predecessor (PL) |
|
Predecessor (PL) |
|
|
From |
|
|
From |
|
From |
|
|
From |
|
|
|
|
June 12, 2021 to |
|
|
February 1, 2021 |
|
August 27, 2020 to |
|
|
February 1, 2020 to |
|
Fiscal year ended |
|
|
January 31, 2022 |
|
|
to June 11, 2021 |
|
January 31, 2021 |
|
|
August 27, 2020 |
|
January 31, 2020 |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
$ |
75,911 |
|
|
$ |
37,142 |
|
$ |
35,518 |
|
|
$ |
76,179 |
|
$ |
148,410 |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of revenues |
|
|
25,688 |
|
|
|
13,838 |
|
|
17,728 |
|
|
|
24,932 |
|
|
24,283 |
Content and software development |
|
|
16,114 |
|
|
|
9,072 |
|
|
10,751 |
|
|
|
16,030 |
|
|
26,368 |
Selling and marketing |
|
|
13,116 |
|
|
|
7,539 |
|
|
10,784 |
|
|
|
15,152 |
|
|
62,400 |
General and administrative |
|
|
1,164 |
|
|
|
746 |
|
|
887 |
|
|
|
1,583 |
|
|
3,316 |
Amortization of intangible assets |
|
|
6,873 |
|
|
|
4,410 |
|
|
3,593 |
|
|
|
10,643 |
|
|
31,742 |
Impairment of intangible assets |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
132,242 |
|
|
119,258 |
Recapitalization and acquisition-related costs |
|
|
607 |
|
|
|
297 |
|
|
582 |
|
|
|
1,242 |
|
|
(229) |
Restructuring |
|
|
121 |
|
|
|
(127) |
|
|
2,425 |
|
|
|
339 |
|
|
145 |
Total operating expenses |
|
|
63,683 |
|
|
|
35,775 |
|
|
46,750 |
|
|
|
202,163 |
|
|
267,283 |
Operating income from discontinued operations |
|
|
12,228 |
|
|
|
1,367 |
|
|
(11,232) |
|
|
|
(125,984) |
|
|
(118,873) |
Other income (expense), net |
|
|
31 |
|
|
|
(326) |
|
|
(110) |
|
|
|
(129) |
|
|
210 |
Interest income |
|
|
18 |
|
|
|
4 |
|
|
9 |
|
|
|
21 |
|
|
116 |
Interest expense |
|
|
(1,176) |
|
|
|
(57) |
|
|
(92) |
|
|
|
(86) |
|
|
(474) |
Reorganization items, net |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
(32,007) |
|
|
— |
Income from discontinued operations before income taxes |
|
|
11,101 |
|
|
|
988 |
|
|
(11,425) |
|
|
|
(158,185) |
|
|
(119,021) |
Provision for income taxes |
|
|
(839) |
|
|
|
(187) |
|
|
(7,457) |
|
|
|
7,761 |
|
|
(545) |
Net income from discontinued operations |
|
$ |
11,940 |
|
|
$ |
1,175 |
|
$ |
(3,968) |
|
|
$ |
(165,946) |
|
$ |
(118,476) |
The following table presents the aggregate carrying amounts of the classes of assets and liabilities of discontinued operations of SumTotal (in thousands):
|
|
|
|
|
|
|
|
|
|
Successor |
|
|
Successor |
|
|
January 31, 2022 |
|
|
January 31, 2021 |
Carrying amount of assets included as part of discontinued operations |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
16,496 |
|
|
$ |
26,133 |
Restricted cash |
|
|
236 |
|
|
|
236 |
Accounts receivable |
|
|
38,587 |
|
|
|
35,106 |
Prepaid expenses and other current assets |
|
|
8,755 |
|
|
|
6,787 |
Current assets of discontinued operations |
|
|
64,074 |
|
|
|
68,262 |
Property and equipment, net |
|
|
6,609 |
|
|
|
6,071 |
Goodwill |
|
|
75,693 |
|
|
|
3,351 |
Intangible assets, net |
|
|
75,628 |
|
|
|
64,157 |
Right of use assets |
|
|
1,937 |
|
|
|
2,778 |
Other assets |
|
|
4,945 |
|
|
|
1,940 |
Long-term assets of discontinued operations |
|
|
164,812 |
|
|
|
78,297 |
Total assets classified as discontinued operations in the condensed consolidated balance sheet |
|
$ |
228,886 |
|
|
$ |
146,559 |
|
|
|
|
|
|
|
|
Carrying amounts of liabilities included as part of discontinued operations: |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,502 |
|
|
$ |
762 |
Accrued compensation |
|
|
10,293 |
|
|
|
11,229 |
Accrued expenses and other current liabilities |
|
|
3,260 |
|
|
|
3,022 |
Lease liabilities |
|
|
508 |
|
|
|
2,043 |
Deferred revenue |
|
|
71,904 |
|
|
|
57,210 |
Current liabilities of discontinued operations |
|
|
87,467 |
|
|
|
74,266 |
Deferred revenue - non-current |
|
|
292 |
|
|
|
182 |
Deferred tax liabilities |
|
|
516 |
|
|
|
2,435 |
Long term lease liabilities |
|
|
1,605 |
|
|
|
2,042 |
Other long-term liabilities |
|
|
13 |
|
|
|
8 |
Long-term liabilities of discontinued operations |
|
|
2,426 |
|
|
|
4,667 |
Total liabilities classified as discontinued operations in the condensed consolidated balance sheet |
|
$ |
89,893 |
|
|
$ |
78,933 |
In addition, the amounts described in other footnotes within these consolidated financial statements have been updated to reflect the amounts applicable to continuing operations, unless otherwise noted.
|