Discontinued Operations
During fiscal year 2012, BPP completed the sale of its subsidiary, Mander Portman Woodward (“MPW”), a U.K.-based secondary education institution for £54.8 million (equivalent to $85.3 million as of the date of sale). In fiscal year 2011, we sold all of Insight Schools’ issued and outstanding shares for $6.3 million, plus $3.0 million that was held in escrow for one year following the sale, and $15.3 million of additional estimated working capital consideration. We have received all consideration from the sale of Insight Schools, including the funds held in escrow.
The sales of MPW and Insight Schools reflect our strategy to focus on the postsecondary education market and we do not have significant continuing involvement with either business after the sale. The operating results of the sold businesses are presented as discontinued operations on our Consolidated Statements of Income for all periods presented. MPW was included in the Apollo Global reportable segment and Insight Schools was presented as its own reportable segment.
We realized a gain on the sale of MPW of $26.7 million, net of transaction costs, in fiscal year 2012, with no tax expense associated with the gain because it was not taxable under U.K. tax law. We realized a $0.1 million loss on sale, net of transaction costs, associated with the Insight Schools sale in fiscal year 2011. These amounts are included in income from discontinued operations, net of tax on our Consolidated Statements of Income.
We determined cash flows from our discontinued operations individually and in the aggregate are not material and are included with cash flows from continuing operations on our Consolidated Statements of Cash Flows. The following summarizes the operating results for our discontinued operations for the respective periods, which are presented in income from discontinued operations, net of tax on our Consolidated Statements of Income:
|
| | | | | | | |
| Year Ended August 31, |
($ in thousands) | 2012 | | 2011 |
Net revenue | $ | 24,209 |
| | $ | 42,468 |
|
Gain (loss) on sale | 26,678 |
| | (98 | ) |
Costs and other | (14,594 | ) | | (35,748 | ) |
Income from discontinued operations before income taxes | 36,293 |
| | 6,622 |
|
(Provision) benefit from income taxes(1) | (2,470 | ) | | 87 |
|
Income from discontinued operations, net of tax | 33,823 |
| | 6,709 |
|
Income from discontinued operations, net of tax, attributable to noncontrolling interests(2) | (4,871 | ) | | (608 | ) |
Income from discontinued operations, net of tax, attributable to Apollo | $ | 28,952 |
| | $ | 6,101 |
|
(1) There was no tax expense associated with the gain on sale of MPW as discussed above. The tax benefit in fiscal year 2011 includes a $1.6 million tax benefit as a result of the Insight Schools sale generating a capital loss for tax purposes.
(2) The noncontrolling interest represents the portion of MPW’s operating results attributable to Apollo Global’s former noncontrolling shareholder.
The operating results of discontinued operations summarized above only includes revenues and costs directly attributable to the discontinued operations, and not those attributable to our continuing operations. Accordingly, no interest expense or general corporate overhead have been allocated to MPW or Insight Schools. We ceased depreciation and amortization on property and equipment and finite-lived intangibles at Insight Schools in fiscal year 2010 when we determined it was held for sale, and MPW did not meet the held for sale criteria until the period it was sold.
