Discontinued Operations Discontinued Operations

6 Months Ended

Jun. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

On June 14, 2016, we entered into a definitive agreement to sell our North American Customer Communications business for cash consideration of $410.0 million, subject to customary working capital and other post-closing adjustments. The transaction closed on July 1, 2016. Additionally, during the second quarter 2016, our Board of Directors approved a plan for management to pursue the divestiture of our United Kingdom Customer Communications business, which we anticipate will be completed within one year. As a result of this significant shift in the strategic direction of our operations, we have classified the results of the businesses being sold as discontinued operations in our Condensed Consolidated Statement of Income and Statement of Cash Flows for all periods presented. Additionally, the related assets and liabilities associated with the discontinued operations are classified as held for sale in our Condensed Consolidated Balance Sheet.

Pursuant to the terms of the transaction, the Company will continue to provide certain information technology and operations processing activities to the North American Customer Communications business for an estimated period of 12 to 18 months following the transaction. Additionally, we will continue to incur costs for certain print related services received from the disposed business for an estimated period of 3 to 5 years following the transaction. The intersegment revenues which will continue post-transaction were approximately $4.0 million and $8.1 million for the three and six months endedJune 30, 2016, as compared to $3.0 million and $6.9 million for the three and six months endedJune 30, 2015. The intersegment expenses which will continue post-transaction were approximately $3.0 million and $8.5 million for the three and six months endedJune 30, 2016, as compared to $4.1 million and $8.9 million for the three and six months endedJune 30, 2015. These revenues and costs have been classified within continuing operations while the offsetting intercompany costs and revenues recorded within Customer Communications have been reclassified to discontinued operations for all periods presented.

The following table summarizes the assets and liabilities classified as held for sale in our Condensed Consolidated Balance Sheet (in millions):

	June 30, 2016		December 31, 2015
Assets
Cash and cash equivalents	$	11.1	$	10.1
Accounts receivable	135.2		140.1
Investments	—		0.3
Unconsolidated affiliates	0.5		0.4
Properties, net	44.1		64.5
Intangible assets, net	19.2		20.6
Goodwill	24.2		24.8
Other assets	38.5		36.7
Total assets held for sale	$	272.8	$	297.5
Liabilities
Current portion of debt	$	0.5	$	—
Accounts payable	30.3		33.7
Accrued compensation and benefits	15.3		26.7
Deferred revenues and gains	5.0		5.5
Long-term debt	2.0		—
Income taxes payable	0.5		—
Other liabilities	87.3		94.0
Total liabilities held for sale	$	140.9	$	159.9

The following table summarizes the comparative financial results of discontinued operations which are presented as Income from discontinued operations, net of tax on our Condensed Consolidated Statement of Income (in millions):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016		2015
Operating revenues	$	151.7		$	151.1		$	311.5	$	306.7
Out-of-pocket reimbursements	184.1			179.9			389.4		370.9
Total revenues	335.8			331.0			700.9		677.6
Costs and expenses	314.7			305.9			649.8		622.2
Depreciation and amortization	5.7			8.1			11.9		16.1
Operating income	15.4			17.0			39.2		39.3
Interest expense	—			(0.3		)	—		(0.3		)
Other income, net	—			0.1			—		0.1
Equity in earnings of unconsolidated affiliates	0.3			0.1			0.2		0.3
Income before income taxes	15.7			16.9			39.4		39.4
Income taxes	(3.0		)	4.9			2.2		12.7
Income from discontinued operations, net of tax	$	18.7		$	12.0		$	37.2	$	26.7

In April 2016, we completed the sale of our United Kingdom Customer Communications’ Bristol production facilities for pretax proceeds totaling approximately $16.0 million. Concurrent with this sale, we leased back approximately two-thirds of the facilities under a 12-year lease. The rent payments and associated rent expense of the Bristol production facilities are approximately $0.7 million per year over the 12-year lease term.