Notes to Financial
Statements
NOTE 5—Operations To Be Disposed Of
In December 1998, the Company’s Board of Directors approved
a plan to dispose of the Company’s technology business
segment through (i) a spinoff (the "Spinoff") of ProcureNet
Inc. ("ProcureNet"), the Company’s outsourcing
and supply chain management technology business, and (ii) the
sale of the UniKix Technology software business. As part of
the Spinoff, which was consummated on April 15, 1999, the Company
and ProcureNet entered into a transitional services agreement
pursuant to which Fisher will provide ProcureNet with certain
management and other administrative services and ProcureNet
will continue to provide Fisher and its customers with third
party procurement and electronic commerce support and services.
During the first quarter of 1999, ProcureNet entered into debt
obligations to Fisher totaling $19 million. These notes bear
interest at an annual rate of 9% and are due and payable on
December 31, 2007. Subsequent to the Spinoff, the Company fulfilled
its credit commitment to ProcureNet by providing an additional
$3 million in loans on terms similar to those of the existing
notes. In accordance with the terms of the notes and at the
option of ProcureNet, accrued interest of $1.1 million and $1.7
million was converted to principal during 2000 and 1999, respectively.
In the fourth quarter of 2000, the Company recorded an impairment
charge of $19.4 million in other (income) expense, net to write
down a portion of the outstanding principal of the ProcureNet
loan receivable. The charge was triggered primarily by market
conditions that adversely impacted ProcureNet's cash flows.
The remaining balance of $5.4 million was based upon management’s
estimate of the fair value of this loan at December 31, 2000.
The fair value of the loan was determined based upon a valuation
of the business using a discounted cash flow model.
On July 22, 1999, the Company completed the sale of UniKix for
cash proceeds of approximately $5 million. A gain on the sale
of $2.5 million was recognized and is included in other (income)
expense, net. Revenues, costs and expenses, and cash flows of
the former technology segment have been excluded from their
respective captions in the Statement of Operations and Statement
of Cash Flows. These items have been reported as "loss
from operations to be disposed of" and "net cash flows
from operations to be disposed of" for the years ended
December 31, 1999 and 1998.
Summarized financial information for the former technology segment,
which includes the results of operations of ProcureNet through
April 15, 1999 and UniKix through July 22, 1999, is set forth
below (in millions):
The operating loss in 1999 includes a $5.2 million writeoff
for in-process research and development costs related to the
acquisition of SCS. The operating loss in 1998 includes restructuring
and other nonrecurring costs of $3.5 million.
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