Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. CENVEO, INC (920321) 10-Q published on Nov 09, 2017 at 5:06 pm
Reporting Period: Sep 29, 2017
Over the course of the second and third quarters of 2017, the Company has been actively marketing for sale its Office Products Business. The Office Products Business is available for immediate sale in its present condition subject only to terms that are usual and customary and the price at which the Office Products Business is being marketed is reasonable in relation to its current fair value. As of the end of the third quarter, management has been given the appropriate authority to move forward with one strategic party on a potential sale of the Office Products Business. During the third quarter of 2017, the Company recorded a non-cash impairment charge of $7.0 million primarily related to goodwill and other intangible assets related to the Office Products Business. Fair value was determined by the Company to be Level 3 under the fair value hierarchy and was based upon current market expectations for the potential sale of the Office Products Business. On November 8, 2017, the Company completed the sale of the Office Products Business for a sales price of $37.8 million. In accordance with the guidance in Accounting Standards Codification ("ASC") 205-20 Presentation of Financial Statements - Discontinued Operations and ASC 360 Property, Plant & Equipment, the Company's historical financial statements have been retroactively adjusted to give recognition to the discontinued operations for all periods presented.
As of September 30, 2017, the Company determined that the year to date declines in net sales and operating income, along with the decrease in the Company’s stock price relative to its fourth quarter 2016 impairment test represented a triggering event, which may require a goodwill impairment test. As of the latest annual goodwill impairment test, the envelope, print and label reporting units’ calculated fair values each exceeded their carrying value by at least 35%. To the extent the net sales and operating income have declined, there may be a negative impact on the future cash flow assumptions which would impact the reporting units’ fair values. The Company will complete its assessment as part of the annual impairment test in the fourth quarter, as the impact on future projected revenues is completed. There were no goodwill impairments recorded in the three and nine months ended September 30, 2017, or October 1, 2016, respectively.
Assets and liabilities measured at fair value on a nonrecurring basis relate primarily to the Company's tangible fixed assets, goodwill and other intangible assets, which are remeasured when the implied fair value is below carrying value on the consolidated balance sheets. For these assets, the Company does not periodically adjust carrying value to fair value except in the event of impairment. When the Company determines that an impairment has occurred, the carrying value of the asset is reduced to fair value and the difference is recorded within operating income in the statement of operations. Refer to Note 2 for further information associated with the impairment of certain assets of discontinued operations. Refer to Note 5 for further information associated with the impairment of certain indefinite lived trade name intangible assets. There were no additional assets or liabilities recorded at fair value on a nonrecurring basis as of September 30, 2017.
On an annual basis, the Company records its pension plan assets at fair value. No additional assets or liabilities were recorded at fair value on a recurring or nonrecurring basis as of December 31, 2016.
Over the course of the second and third quarters of 2017, we have been actively marketing for sale our Office Products Business. The Office Products Business is available for immediate sale in its present condition subject only to terms that are usual and customary and the price at which the Office Products Business is being marketed is reasonable in relation to its current fair value. As of the end of the third quarter, our management has been given the appropriate authority to move forward with one strategic party on a potential sale of the Office Products Business. On November 8, 2017, we completed the sale of our Office Products Business for a sales price of $37.8 million. As a result, the financial results of the Office Products Business have been accounted for as discontinued operations. Our historical financial statements have been retroactively adjusted to give recognition to the discontinued operations for all periods presented. While there can be no assurance that we will ultimately reach a final agreement with this strategic party or the timing of reaching such agreement, we believe that we will do so within a reasonable period of time, not to exceed one year.
As of September 30, 2017, we determined that the year to date declines in net sales and operating income, along with the decrease in the our stock price relative to our fourth quarter 2016 impairment test represented a triggering event, which may require a goodwill impairment test. As of the latest annual goodwill impairment test, the envelope, print and label reporting units’ calculated fair values each exceeded their carrying value by at least 35%. To the extent the net sales and operating income have declined, there may be a negative impact on the future cash flow assumptions which would impact the reporting units’ fair values. We will complete our assessment as part of the annual impairment test in the fourth quarter, as the impact on future projected revenues is completed. There were no goodwill impairments recorded in the three and nine months ended September 30, 2017, or October 1, 2016, respectively.