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Discontinued Operations and Disposal Groups
 9 Months Ended
Sep. 30, 2023
Discontinued Operations and Disposal Groups [Abstract]  
Disposal Groups, Including Discontinued Operations, Disclosure Discontinued operations
On May 31, 2023, the Company completed the previously announced separation of Knife River, its former construction materials and contracting segment, into a new publicly traded company. The separation was achieved through the Company's pro-rata distribution of approximately 90 percent of the outstanding shares of Knife River to the Company's common stockholders. To effect the separation, the Company distributed to its stockholders one share of Knife River common stock for every four shares of the Company's common stock held on May 22, 2023, the record date for the distribution, with the Company retaining approximately 10 percent, or 5.7 million shares of Knife River common stock immediately following the separation. The Company intends to dispose of the retained shares within twelve months after the separation.
As a result of the separation, the historical assets and liabilities for Knife River have been classified as assets and liabilities of discontinued operations and the historical results of operations are shown in Discontinued operations, net of tax, other than allocated general corporate overhead costs of the Company, which do not meet the criteria for income (loss) from discontinued operations. The Company’s consolidated financial statements and accompanying notes for prior periods have been restated. For the comparative periods, Knife River's operations are only reflected through May 2023, whereas 2022 includes the full three and nine months from Knife River's operations.
On April 25, 2023, Knife River issued $425 million of senior notes, pursuant to an indenture, due 2031 to qualified institutional buyers. Knife River also entered into a new credit agreement which provided a revolving credit facility in an initial amount of up to $350 million and a senior secured term loan facility in an amount up to $275 million. The net proceeds from the notes offering, revolving credit facility and the term loan were used to repay $825 million of Knife River's intercompany obligations owed to Centennial. Centennial used the entirety of these proceeds from Knife River to repay a portion of its existing third-party indebtedness.
As a result of the separation, the Company retained legal ownership of 538,921 shares of the Company's common stock that were historically owned by a subsidiary of Knife River and recorded in Treasury stock at cost. Following the separation, the 538,921 treasury shares were retired.
The Company will provide to Knife River and Knife River will provide to the Company transition services in accordance with the TSA entered into on May 31, 2023. For the three and nine months ended September 30, 2023, the Company received $1.3 million and $1.9 million; and paid $407,000 and $684,000, respectively, for these related activities. The majority of the transition services are expected to be provided for a period of one year, however, no longer than two years after the separation.
Separation related costs of $1.0 million and $47.1 million, net of tax, were incurred during the three and nine months ended September 30, 2023, respectively. Separation costs incurred are presented in income (loss) from discontinued operations in the Consolidated Statements of Income. These charges primarily relate to transaction and third-party support costs, one-time business separation fees and related tax charges.
The Company had no assets or liabilities related to the discontinued operations of Knife River on its balance sheet as of September 30, 2023. The carrying amounts of the major classes of assets and liabilities of discontinued operations included in the Company’s Consolidated Balance Sheets were as follows:
September 30, 2022December 31, 2022
Assets(In Thousands)
Current assets:
Cash and cash equivalents$16,761 $10,090 
Receivables, net447,882 241,302 
Inventories308,829 323,277 
Prepayments and other current assets16,949 17,848 
Total current assets of discontinued operations790,421 592,517 
Noncurrent assets:
Net property, plant and equipment1,275,649 1,315,213 
Goodwill274,302 274,540 
Other intangible assets, net14,097 13,430 
Investments32,326 33,086 
Operating lease right-of-use assets43,431 45,872 
Other3,233 3,610 
Total noncurrent assets of discontinued operations1,643,038 1,685,751 
Total assets of discontinued operations$2,433,459 $2,278,268 
Liabilities
Current liabilities:
Short-term borrowings$100,000 $208,000 
Long-term debt due within one year128,133 30,211 
Accounts payable178,320 131,608 
Taxes payable12,874 8,502 
Accrued compensation27,383 29,192 
Operating lease liabilities due within one year13,000 13,210 
Other accrued liabilities73,852 76,200 
Total current liabilities of discontinued operations533,562 496,923 
Noncurrent liabilities:
Long-term debt581,588 445,546 
Deferred income taxes175,529 175,804 
Asset retirement obligations27,964 33,015 
Operating lease liabilities30,431 32,663 
Other87,159 78,876 
Total noncurrent liabilities of discontinued operations902,671 765,904 
Total liabilities of discontinued operations$1,436,233 $1,262,827 
The reconciliation of the major classes of income and expense constituting pretax income (loss) from discontinued operations to the after-tax income (loss) from discontinued operations on the Consolidated Statements of Income were as follows:
Three Months EndedNine Months Ended
September 30,September 30,
2023202220232022
(In thousands)
Operating revenues$— $974,774 $735,259 $1,995,500 
Operating expenses1,447 825,874 769,407 1,828,602 
Operating income (loss)(1,447)148,900 (34,148)166,898 
Other income (expense)— (1,005)2,382 (4,399)
Interest expense(66)11,173 37,545 26,466 
Income (loss) from discontinued operations before income taxes(1,381)136,722 (69,311)136,033 
Income taxes1,908 31,120 (3,559)32,529 
Discontinued operations, net of tax
$(3,289)$105,602 $(65,752)$103,504