Hypercom Corporation Annual Report - CiteSeer

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Of the $2.9 million of costs incurred during 2007, $1.6 million was recorded in costs of revenue and $1.3 million was recorded in operating expenses. Of the $2.9 million, $0.6 million was reported in the Americas, $0.4 million in SEMEA, $0.8 million in Asia- Pacific, and $1.1 million in Shared cost centers. During the second quarter of 2008, the Company accrued the remaining lease termination and severance costs related to the exit out of its manufacturing facility in China. The total costs of the lease termination and severance costs of $0.5 million were recorded in costs of revenue in Asia-Pacific. The Company paid the cost during the third quarter of 2008. The following table summarizes these charges and activities during 2008 and 2007 (dollars in thousands): Severance 2008 2007 Transition to Contract Manufacturing Total Severance - 65 - Transition to Contract Manufacturing Total Beginning Balance Accrual $ 1,100 $ — $ 1,100 $ — $ — $ — Charges 500 — 500 1,737 1,183 2,920 Amounts utilized (1,600 ) — (1,600 ) (637 ) (1,183 ) (1,820 ) Ending Balance Accrual $ — $ — $ — $ 1,100 $ — $ 1,100 6. Discontinued Operations and Assets Held for Sale European Lease and Service Operation During the fourth quarter of 2009, the Company made the decision to sell a European lease and service operation, which qualifies as discontinued operations. Accordingly, the lease and service business operating results have been classified as discontinued operations in the statements of operations and cash flows for all periods presented. General corporate overhead costs have not been allocated to discontinued operations. A summary of the operating results for the years ended December 31, 2009 and 2008 included in discontinued operations in the accompanying consolidated statements of operations is as follows (dollars in thousands): 2009 2008 European lease and service operation Net revenue $ 4,644 $ 3,068 Costs of revenue 4,294 2,065 Gross profit 350 1,003 Selling, general and administrative expenses (1,439 ) (1,016 ) Loss from discontinued operations $ (1,089 ) $ (13 ) A summary of the assets and liabilities held for sale related to this European lease and service operation is as follows (dollars in thousands): December 31, December 31, 2009 2008 ASSETS Cash and cash equivalents $ 56 $ 396 Accounts receivable, net 688 488 Net investment in sales-type leases 2,298 2,644 Inventories 326 391 Prepaid expenses and other current assets 5 — Total assets $ 3,373 $ 3,919 LIABILITIES Accounts payable $ 1,172 $ 2,384 Accrued payroll and related expenses 72 26 Total liabilities $ 1,244 $ 2,410
Brazilian building In 2009, the Company began soliciting buyers for its Brazilian building, the net book value of which, at December 31, 2009 and December 31, 2008, was $1.9 million and $2.0 million, respectively. The net book value is classified as current portion of assets held for sale as of December 31, 2009 and as assets held for sale as of December 31, 2008. See Note 11 for further information. Australian Courier Business On March 1, 2009, the Company sold its small courier business in Australia (“Australian Courier Business”) that was acquired in 2007. The Australian Courier Business qualified as discontinued operations and accordingly, the income (loss) from discontinued operations includes direct revenues and direct expenses of this operation. General corporate overhead costs have not been allocated to discontinued operations. A summary of the operating results included in discontinued operations in the accompanying consolidated statements of operations is as follows (dollars in thousands): 2009 2008 2007 Australian Courier Business: Net revenue $ 558 $ 4,381 $ 4,275 Costs of revenue 481 3,703 3,506 Gross profit 77 678 769 Selling, general and administrative expenses (14 ) (323 ) (244 ) Impairment of goodwill and intangible assets — (718 ) — Gain on sale 65 — — Income (loss) from discontinued operations $ 128 $ (363 ) $ 525 Effective March 1, 2009, the Company sold the Australian Courier Business for $0.3 million. The sale agreement includes all related rights and obligations of the Australian Courier Business. The sale agreement contains general warranty and indemnification provisions, which could result in additional liabilities to the Company if certain events occur or fail to occur in the future. U.K. Lease Portfolio During the fourth quarter of 2005, the Company made the decision to sell its United Kingdom leasing business (the “U.K. Lease Business”). As of December 31, 2005, the U.K. Lease Business qualified as discontinued operations. The U.K. Lease Business operating results have been classified as discontinued operations in the statements of operations and cash flows for all periods presented. Effective May 31, 2006, the Company sold the U.K. Lease Business for $12.1 million (the “U.K. Lease Sale”). The U.K. Lease Sale includes the lease arrangements with merchants and all related obligations and rights to payment under such agreements. The U.K. Lease Sale agreement contains covenants and indemnification provisions, which could result in additional liabilities to the Company if certain events occur or fail to occur in the future. The income (loss) from the Company’s discontinued operations for the years ended December 31, 2009, 2008 and 2007 include the following (dollars in thousands): 2009 2008 2007 U.K. Lease Portfolio: Costs of revenues (reversals of commissions) $ (37 ) $ 118 $ (1,098 ) Gross profit (a) 37 (118 ) 1,098 Income (loss) from discontinued operations $ 37 $ (118 ) $ 1,098 (a) During the year ended December 31, 2007, the Company received a rebate of previously paid lease originations related to commission payments. - 66 -
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Hypercom Corporation Annual Report
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CAUTIONARY STATEMENT REGARDING FORW
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On April 1, 2008, we acquired all o
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solution against payment card fraud
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Proprietary Rights We rely upon pat
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Page 36 and 37: Furthermore, we utilize contract ma
Page 38 and 39: economic climate, the credit market
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Page 44 and 45: Lisa Shipley v. Hypercom Corporatio
Page 46 and 47: (e) In September 2006, we completed
Page 48 and 49: of our stock grants and only recogn
Page 50 and 51: In 2009, we incurred employee sever
Page 52 and 53: Costs of Revenue and Gross Profit C
Page 54 and 55: Net Revenues Net revenues increased
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Page 60 and 61: significantly impacted by a 100 bas
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Page 76 and 77: The Company does not provide for fe
Page 78 and 79: The purchase price consisted of the
Page 80 and 81: and assuming no subsequent impairme
Page 84 and 85: 7. Leases Sales-Type Leases The Com
Page 86 and 87: 12. Product Warranty Liability The
Page 88 and 89: Long-term debt, which approximates
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Page 92 and 93: 17. Income Taxes Loss before income
Page 94 and 95: enefit obligations as of December 3
Page 96 and 97: In determining the asset allocation
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Page 102 and 103: First Second Third Fourth Fiscal Qu
Page 104 and 105: EXHIBIT INDEX Exhibit Number Descri
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Page 108 and 109: I, Thomas B. Sabol, certify that: C
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Page 112 and 113: NOTES HYPERCOM CORPORATION
Page 114 and 115: Xi. StoCk perFormanCe Chart The fol
Page 116: World Headquarters: hypercom Corpor
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