DISCONTINUED OPERATIONS - SALE OF U.S. RETAIL WIRELESS BUSINESS

9 Months Ended

Sep. 30, 2013

DISCONTINUED OPERATIONS - SALE OF U.S. RETAIL WIRELESS BUSINESS

DISCONTINUED OPERATIONS - SALE OF U.S. RETAIL WIRELESS BUSINESS

4.  DISCONTINUED OPERATIONS — SALE OF U.S. RETAIL WIRELESS BUSINESS

On September 20, 2013, the Federal Communications Commission announced its approval of the previously announced proposed sale of the Company’s U.S. retail wireless business operated under the Alltel name to AT&T for approximately $780.0 million in cash plus $17.4 million in working capital adjustments.  The Company previously reported the operations of this business within its U.S. Wireless segment.  As a result of that approval, the Company completed the sale of certain U.S. retail wireless assets on that date and recorded a gain of approximately $305.2 million calculated as follows (in thousands):

Proceeds:
Received			$	702,000
Escrowed			78,000
Working capital- preliminary			24,138
Working capital- adjusted			(6,703		)
Adjust proceeds			797,435
Less: Net assets sold or impaired:
Assets sold or impaired:
Current assets	51,597
Property, plant and equipment, net	190,970
Telecommunications licenses	50,553
Other intangible assets	37,434
Other assets	13,202
Liabilities sold:
Current liabilities	(40,674	)
Other liabilities	(22,796	)
Net assets sold or impaired			280,286
Less: Transaction related costs			13,517
Pre-tax gain			503,632
Less: Income taxes at effective rate			198,435
Net gain on sale			$	305,197

The $797.4 million in cash proceeds includes $78.0 million of cash being held in a general indemnity escrow account which, subject to the terms and conditions of the purchase agreement between AT&T Mobility and the Company governing the sale, this escrow will be released to the Company over the next eighteen months as follows; $19.5 million after 180 days; $19.5 million after 360 days; and the remaining $39.0 million after 18 months.  The Company has recorded the $78.0 million as restricted cash on its September 30, 2013 balance sheet with $39.0 million classified as a current asset and the remaining $39.0 million classified as long-term based on the timing of the expected cash proceeds.

The Alltel trade name was not sold to AT&T Mobility. Due to trade name assignment restrictions, and no planned use through operations, the trade name was fully impaired. As a result, an impairment of $11.9 million was recorded as a part of the disposal and included in the net gain calculation.

The Company also recorded $28.7 million for the minority shareholders’ interests in the sold operation which is based on the estimated final distribution to the minority shareholders and included in non-controlling interests on its September 30, 2013 balance sheet.

The Company has reclassified the assets and liabilities of its Alltel operations to assets of discontinued operations and liabilities of discontinued operations within its December 31, 2012 and September 30, 2013 balance sheets. Those assets and liabilities consist of the following (in thousands):

	December 31, 2012		September 30, 2013
Accounts receivable, net	$	34,225	$	—
Materials and supplies	19,047		—
Prepayments and other current assets	5,386		4,923
Property, plant and equipment, net	212,222		—
Telecommunications licenses	50,553		—
Other intangible assets	42,746		—
Other assets	16,586		—
Assets of discontinued operations	$	380,765	$	4,923
Accounts payable and accrued liabilities	$	20,486	$	17,719
Accrued taxes	3,475		—
Advance payments and deposits	11,435		—
Other current liabilities	27,440		—
Other liabilities	11,074		—
Liabilities of discontinued operations	$	73,910	$	17,719

Revenues and income from discontinued operations related to the Alltel business for the three and nine months ended September 30, 2012 and 2013 were as follows (in thousands):

	Three Months Ended September 30,
	2012		2013
Revenue from discontinued operations	$	115,692	$	88,036
Income (loss) from discontinued operations, net of tax expense (benefit) of $5,369 and $(1,020), respectively	8,922		(1,960		)

	Nine Months Ended September 30,
	2012		2013
Revenue from discontinued operations	$	349,703	$	299,519
Income from discontinued operations, net of tax expense of $15,241 and $3,244, respectively	23,428		5,166