DISCONTINUED OPERATIONS
On October 1, 2013, the Company completed the sale of most of its newspaper publishing businesses. The publishing businesses sold include The Washington Post, Express, The Gazette Newspapers, Southern Maryland Newspapers, Greater Washington Publishing, Fairfax County Times and El Tiempo Latino and related websites (Publishing Subsidiaries). Slate magazine, TheRoot.com and Foreign Policy were not part of the transaction and remain with the Company, as do the Trove and SocialCode businesses, the Company’s interest in Classified Ventures and certain real estate assets, including the headquarters building in downtown Washington, DC.
The Company sold all of the issued and outstanding equity securities of the Publishing Subsidiaries for $250 million, subject to customary adjustments for cash, debt and working capital at closing. A pre-tax gain of $157.5 million was recorded on the sale (after-tax gain of $100.0 million). This gain amount includes net curtailment and settlement gains from the Company’s pension and postretirement plans of $56.6 million. The net loss from discontinued operations also included early retirement program expense of $22.7 million and $8.5 million in 2013 and 2012, respectively, and stock compensation expense of $20.7 million in 2013 as a result of modifications to restricted stock awards and stock options.
In March 2013, the Company sold The Herald. Kaplan sold Kidum in August 2012, EduNeering in April 2012 and Kaplan Learning Technologies (KLT) in February 2012. In addition, the Company divested its interest in Avenue100 Media Solutions in July 2012.
The sale of The Herald resulted in a pre-tax loss of $0.1 million that was recorded in the first quarter of 2013.
The sale of KLT resulted in a pre-tax loss of $3.1 million, which was recorded in the first quarter of 2012. The sale of EduNeering resulted in a pre-tax gain of $29.5 million, which was recorded in the second quarter of 2012. The sale of Kidum resulted in a pre-tax gain of $3.6 million, which was recorded in the third quarter of 2012.
In connection with each of the sales of the Company’s stock in EduNeering and KLT, in the first quarter of 2012, the Company recorded $23.2 million of income tax benefits related to the excess of the outside stock tax basis over the net book value of the net assets disposed.
In connection with the disposal of Avenue100 Media Solutions, Inc., the Company recorded a pre-tax loss of $5.7 million in the third quarter of 2012. An income tax benefit of $44.5 million was also recorded in the third quarter of 2012 as the Company determined that Avenue100 Media Solutions, Inc. had no value. The income tax benefit was due to the Company’s tax basis in the stock of Avenue100 exceeding its net book value as a result of goodwill and other intangible asset impairment charges recorded in prior years, for which no tax benefit was previously recorded.
In October 2011, Kaplan completed the sale of Kaplan Compliance Solutions (KCS) and recorded an after-tax gain on the transaction of $1.5 million. In July 2011, Kaplan completed the sale of Kaplan Virtual Education (KVE) and recorded an after-tax loss on the transaction of $1.2 million.
The results of operations of the Publishing Subsidiaries, The Herald, Kidum, Avenue100, Kaplan EduNeering, KLT, KCS and KVE for 2013, 2012 and 2011, where applicable, are included in the Company’s Consolidated Statements of Operations as Income (Loss) from Discontinued Operations, Net of Tax. All corresponding prior period operating results presented in the Company’s Consolidated Financial Statements and the accompanying notes have been reclassified to reflect the discontinued operations presented. The Company did not reclassify its Consolidated Statements of Cash Flows or prior year Consolidated Balance Sheet to reflect the discontinued operations.
The summarized income (loss) from discontinued operations, net of tax, is presented below: |
| | | | | | | | | | | |
| Year Ended December 31 |
(in thousands) | 2013 | | 2012 | | 2011 |
Operating revenues | $ | 382,705 |
| | $ | 597,425 |
| | $ | 723,605 |
|
Operating costs and expenses | (465,605 | ) | | (639,315 | ) | | (769,129 | ) |
Loss from discontinued operations | (82,900 | ) | | (41,890 | ) | | (45,524 | ) |
Benefit from income taxes | (29,059 | ) | | (13,668 | ) | | (10,934 | ) |
Net Loss from Discontinued Operations | (53,841 | ) | | (28,222 | ) | | (34,590 | ) |
Gain on sales and disposition of discontinued operations | 157,449 |
| | 23,759 |
| | 2,975 |
|
Provision (benefit) for income taxes on sales and disposition of discontinued operations | 57,489 |
| | (64,591 | ) | | 2,616 |
|
Income (Loss) from Discontinued Operations, Net of Tax | $ | 46,119 |
| | $ | 60,128 |
| | $ | (34,231 | ) |
