Discontinued Operations

6 Months Ended

12 Months Ended

Jun. 24, 2012

Dec. 25, 2011

Discontinued Operations [Abstract]

Discontinued Operations

5. Discontinued Operations

FSX Service

On October 21, 2011, the Company finalized a decision to terminate the FSX service, and ceased all operations related to the FSX service during the fourth quarter of 2011. The entire component comprising the FSX service has been discontinued. Accordingly, there will not be any significant future cash flows related to these operations.

On April 5, 2012, the Company entered into a Global Termination Agreement with SFL which enabled the Company to terminate early the bareboat charters of the five foreign-built, U.S.-flag vessels that formerly operated in the FSX service. The Global Termination Agreement became effective April 9, 2012. In connection with the Global Termination Agreement, the Company adjusted the restructuring charge related to its vessel lease obligations originally recorded during the 4th quarter of 2011. Based on (i) the issuance to SFL of $40.0 million in aggregate principal amount of Second Lien Notes, (ii) the 9,250,000 warrants issued to SFL on April 9, 2012, (iii) fees associated with the vessel lease termination and reimbursement obligations to the SFL Parties, and (iv) the net present value of the vessel lease liability as of April 9, 2012, the Company recorded an additional restructuring charge of $14.1 million during the 2nd quarter of 2012, which was recorded as part of discontinued operations.

The following table presents the restructuring reserves at June 24, 2012, as well as activity during the year (in thousands):

	Balance at December 25, 2011		Payments			Provisions(1)		Adjustments(2)			Balance at June  24, 2012
Vessel leases, net of estimated sublease(2)	$	77,060	$	(8,159	)	$	4,150	$	(72,300	)	$	751
Rolling stock per-diem and lease termination costs		9,921		(8,897	)				—			1,024
Personnel related costs		5,330		(1,085	)		442		—			4,687
Facility leases		135		(157	)		22		—			—
Total	$	92,446	$	(18,298	)	$	4,614	$	(72,300	)	$	6,462

(1) The Company recorded the net present value of its future lease obligations, net of estimated sublease, during the fourth quarter of 2011. The $4.2 million recorded during the six months of 2012 represents non-cash accretion of the liability.

(2) On April 5, 2012, the Company entered into a Global Termination Agreement which which enabled the Company to terminate these vessel leases in advance of the originally scheduled expiration date.

Logistics Operations

During 2011, the entire component comprising the third-party logistics operations was discontinued. As part of the divestiture, the Company transitioned some of the operations and personnel to other logistics providers. There will not be any significant future cash flows related to these operations. In addition, the Company does not have any significant continuing involvement in the divested logistics operations.

The following table includes the major classes of assets and liabilities that have been presented as Assets of discontinued operations and Liabilities of discontinued operations in the Consolidated Balance Sheets (in thousands):

	June 24, 2012						December 25, 2011
	FSX Service		Logistics		Total		FSX Service		Logistics		Total
Accounts receivable, net of allowance	$	407	$	232	$	639	$	4,414	$	293	$	4,707
Property and equipment, net		6,022		—		6,022		6,031		—		6,031
Deferred tax asset		1,239		—		1,239		620		—		620
Other assets		215		—		215		1,595		22		1,617
Total current assets of discontinued operations	$	7,883	$	232	$	8,115	$	12,660	$	315	$	12,975
	June 24, 2012						December 25, 2011
	FSX Service		Logistics		Total		FSX Service		Logistics		Total
Accounts payable	$	539	$	—	$	539	$	1,312	$	15	$	1,327
Current restructuring liabilities		6,462		—		6,462		41,337		—		41,337
Other current liabilities		790		—		790		2,649		—		2,649
Total current liabilities of discontinued operations		7,791		—		7,791		45,298		15		45,313
Long-term portion of vessel lease obligation		—		—		—		51,109		—		51,109
Deferred tax liability		793		—		793		184		—		184
Total long-term liabilities of discontinued operations		793		—		793		51,293		—		51,293
Total liabilities of discontinued operations	$	8,584	$	—	$	8,584	$	96,591	$	15	$	96,606

The following table presents summarized financial information for the discontinued operations included in the Consolidated Statements of Operations (in thousands):

	Three Months Ended June 24, 2012								Three Months Ended June 26, 2011
	FSX Service			Logistics		Total			FSX Service			Logistics		Total
Operating revenue	$	401		$	—	$	401		$	53,796		$	3,099	$	56,895
Operating (loss) income		(14,341	)		—		(14,341	)		(13,777	)		2,145		(11,632	)
Net (loss) income		(14,934	)		—		(14,934	)		(11,511	)		1,590		(9,921	)

	Six Months Ended June 24, 2012								Six Months Ended June 26, 2011
	FSX Service			Logistics		Total			FSX Service			Logistics		Total
Operating revenue	$	487		$	—	$	487		$	98,430		$	13,683	$	112,113
Operating (loss) income		(16,491	)		—		(16,491	)		(26,469	)		1,365		(25,104	)
Net (loss) income		(20,641	)		—		(20,641	)		(24,604	)		830		(23,774	)

The following table presents summarized cash flow information for the discontinued operations included in the Consolidated Statements of Cash Flows (in thousands):

	Six Months Ended June 24, 2012								Six Months Ended June 26, 2011
	FSX Service			Logistics		Total			FSX Service			Logistics			Total
Net cash (used in) provided by operating activities	$	(20,046	)	$	155	$	(19,891	)	$	(26,073	)	$	5,098		$	(20,975	)
Net cash used in investing activities		—			—		—			(333	)		(57	)		(390	)
Net (decrease) increase in cash from discontinued operations	$	(20,046	)	$	155	$	(19,891	)	$	(26,406	)	$	5,041		$	(21,365	)

6. Discontinued Operations

FSX Service

During the third quarter of 2011, the Company began a review of strategic alternatives for its FSX service. As a result of several factors, including: 1) the projected continuation of volatile trans-Pacific freight rates, 2) high fuel prices, and 3) operating losses, the Company decided to discontinue its FSX service. On October 21, 2011, the Company finalized a decision to terminate the FSX service, and ceased all operations related to the FSX service during the fourth quarter of 2011. The entire component comprising the FSX service has been discontinued. As such, there will not be any significant future cash flows related to these operations.

As a result of the shutdown of the FSX service, the Company recorded a pretax restructuring charge of $119.3 million during the fourth quarter of 2011. The following table presents the details of the $119.3 million restructuring charge recorded the year ended December 25, 2011 (in thousands):

Vessel leases, net of estimated sublease	$	81,865
Rolling stock per-diem and lease termination costs		11,666
Non-cash write-off of FSX related assets		20,100
Personnel related costs		5,496
Facility leases		187
Total restructuring charge	$	119,314

The following table presents the restructuring reserves at December 25, 2011, as well as activity during the year (in thousands):

	Balance at December  26, 2010		Provision		Payments			Balance at December 25, 2011
Vessel leases, net of estimated sublease(1)	$	—	$	81,865	$	(4,805	)	$	77,060
Rolling stock per-diem and lease termination costs		—		11,666		(1,745	)		9,921
Personnel related costs		—		5,496		(166	)		5,330
Facility leases		—		187		(52	)		135
Total	$	—	$	99,214	$	(6,768	)	$	92,446

(1) On April 5, 2012, the Company entered into an agreement to terminate these vessel leases. See Note 18 for additional details.

Logistics Operations

During 2011, the entire component comprising the third-party logistics operations was discontinued and former logistics customers are no longer customers of the Company. As part of the divestiture, the Company transitioned some of the operations and personnel to other logistics providers. There will not be any significant future cash flows related to these operations. In addition, the Company does not have any significant continuing involvement in the divested logistics operations.

During the year ended December 26, 2010, the Company recorded a $5.0 million valuation allowance to adjust the carrying value of the net assets of its discontinued operations to the estimated fair value less costs to sell. As a result of better than expected cash collections of the accounts receivable, the Company reduced the valuation allowance against the net assets of its discontinued operations by $3.2 million during 2011, and decreased the 2011 loss from discontinued operations by the same amount.

The following table includes the major classes of assets that have been presented as assets and liabilities of discontinued operations in the Consolidated Balance Sheets (in thousands):

	December 25, 2011								December 26, 2010
	FSX Service		Logistics			Total			FSX Service		Logistics			Total
Accounts receivable, net of allowance	$	4,414	$	924		$	5,338		$	18,014	$	10,628		$	28,642
Property and equipment, net		6,031		—			6,031			14,660		721			15,381
Deferred tax asset		620		—			620			226		648			874
Other assets		1,595		22			1,617			16,681		178			16,859
Subtotal		12,660		946			13,606			49,581		12,175			61,756
Valuation allowance		—		(631	)		(631	)		—		(4,983	)		(4,983	)
Total current assets of discontinued operations	$	12,660	$	315		$	12,975		$	49,581	$	7,192		$	56,773
	December 25, 2011								December 26, 2010
	FSX Service		Logistics			Total			FSX Service		Logistics			Total
Accounts payable	$	1,312	$	15		$	1,327		$	3,904	$	890		$	4,794
Current restructuring liabilities		41,337		—			41,337			—		—			—
Other current liabilities		2,649		—			2,649			7,778		2,809			10,587
Total current liabilities of discontinued operations		45,298		15			45,313			11,682		3,699			15,381
Long-term portion of vessel lease obligation		51,109		—			51,109			—		—			—
Deferred tax liability		184		—			184			338		—			338
Total long-term liabilities of discontinued operations		51,293		—			51,293			338		—			338
Total liabilities of discontinued operations	$	96,591	$	15		$	96,606		$	12,020	$	3,699		$	15,719

The following table presents summarized financial information for the discontinued operations included in the Consolidated Statements of Operations (in thousands):

	December 25, 2011								December 26, 2010									December 20, 2009
	FSX Service			Logistics		Total			FSX Service			Logistics			Total			FSX Service			Logistics			Total
Operating revenue	$	177,958		$	13,762	$	191,720		$	162,450		$	52,157		$	214,607		$	144,863		$	34,266		$	179,129
Restructuring charge		119,314			—		119,314			—			—			—			—			—			—
Operating (loss) income		(180,002	)		2,114		(177,888	)		(10,742	)		(11,974	)		(22,716	)		(2,136	)		(5,087	)		(7,223	)
Net (loss) income		(177,793	)		1,570		(176,223	)		(10,725	)		(11,670	)		(22,395	)		(2,156	)		(4,865	)		(7,021	)

The following table presents summarized cash flow information for the discontinued operations included in the Consolidated Statements of Cash Flows (in thousands):

	December 25, 2011
	FSX Service			Logistics			Total
Net cash (used in) provided by operating activities	$	(54,527	)	$	3,939		$	(50,588	)
Net cash used in investing activities		(647	)		(58	)		(705	)
Net change in cash from discontinued operations	$	(55,174	)	$	3,881		$	(51,293	)
	December 26, 2010
	FSX Service			Logistics			Total
Net cash used in operating activities	$	(8,599	)	$	(8,409	)	$	(17,008	)
Net cash used in investing activities		(307	)		(238	)		(545	)
Net change in cash from discontinued operations	$	(8,906	)	$	(8,647	)	$	(17,553	)
	December 20, 2009
	FSX Service			Logistics			Total
Net cash used in operating activities	$	(1,910	)	$	(3,583	)	$	(5,493	)
Net cash used in investing activities		(3,159	)		(119	)		(3,278	)
Net change in cash from discontinued operations	$	(5,069	)	$	(3,702	)	$	(8,771	)