Discontinued Operations and Assets Held for Sale

3 Months Ended

Mar. 31, 2012

Discontinued Operations and Assets Held for Sale

Discontinued Operations and Assets Held for Sale

Note 4                    Discontinued Operations and Assets Held for Sale

During the three months ended March 31, 2012, we closed our Worldwide Country Tours and Reader’s Digest Bulgaria businesses. These businesses met the criteria under ASC 205, Presentation of Financial Statements, for discontinued operations classification. There is no expectation of continuing cash flows or operations after the closure.

On February 29, 2012, the Company sold Allrecipes.com, for $175.0 in cash, subject to adjustment in accordance with the terms and provisions of the Stock Purchase Agreement.  The sale of Allrecipes.com resulted in a gain of $51.1, net of taxes.

On February 8, 2012, the Company sold Weekly Reader for $3.6; $2.6 was received at closing, with an additional payment of $1.0 due in May 2012.  The sale of Weekly Reader resulted in a loss of $1.5, net of taxes.

During the year ended December 31, 2011, the Company committed to a plan to sell Allrecipes.com, Lifestyle and Entertainment Direct (“LED”) and Weekly Reader.  We met the criteria under ASC 360, Property, Plant, and Equipment (“ASC 360”) to classify these businesses as held for sale.  There is no expectation of continuing cash flows or involvement in the operations after they are sold.  The LED business is classified as held for sale at March 31, 2012.

Income (loss) from discontinued operations, net of taxes, was as follows:

	Successor Company
	Three months ended March 31,
	2012			2011
Revenue	$	35.6		$	42.2
Loss from discontinued operations before income taxes and gain on sales	(4.7		)	(7.7		)
Income tax (benefit) expense on discontinued operations	(2.9		)	18.5
Loss from discontinued operations, net of taxes, before gain on sales	(1.8		)	(26.2		)
Gain on sales of divested businesses, net of taxes	49.6			—
Income (loss) from discontinued operations, net of taxes	$	47.8		$	(26.2	)

Gain on the sales of divested businesses, net of taxes was as follows:

	Successor Company
	Three months ended March 31, 2012
Sales price	$	178.6
Less: cash on hand	—
Net sales price	178.6
Net tangible assets	2.6
Associated intangible assets	88.6
Transaction costs	5.8
Gain on sales of divested businesses, before taxes	81.6
Income tax expense	32.0
Gain on sales of divested businesses, net of taxes	$	49.6

The carrying amounts of major classes of assets and liabilities included in assets held for sale and liabilities held for sale, respectively, in the consolidated balance sheets were as follows:

	Successor Company
	March 31, 2012		December 31, 2011
Assets held for sale
Accounts receivable, net	$	8.6	$	24.5
Inventories	4.8		5.6
Other current assets	7.1		7.3
Other non-current assets	1.8		3.6
Goodwill and other intangible assets, net	1.7		91.7
Total assets held for sale	$	24.0	$	132.7
Liabilities held for sale
Accounts payable	$	8.2	$	9.1
Accrued expenses	5.4		6.9
Deferred revenue	0.7		3.4
Other current liabilities	1.6		2.0
Other non-current liabilities	—		1.5
Total liabilities held for sale	$	15.9	$	22.9