Discontinued Operations

9 Months Ended

Sep. 30, 2012

Discontinued Operations [Abstract]

Discontinued Operations

16. Discontinued Operations

In the third quarter of 2012, the Company entered into an agreement to sell Keen for cash consideration of $100,000,000 and a four-year interest bearing promissory note issued by the purchaser which was valued at $37,500,000; the sale closed in October 2012. The Company also retained Keen's net working capital, principally customer receivables and trade payables. The Company recorded a pre-tax loss on sale of discontinued operations of $19,310,000 ($12,551,000 after taxes) for the periods ended September 30, 2012.

A summary of the results of discontinued operations for the three and nine month periods ended September 30, 2012 and 2011 is as follows (in thousands):

	For the Three Month					For the Nine Month
	Period Ended September 30,					Period Ended September 30,
	2012			2011		2012			2011
Revenues and other income:
Oil and gas drilling services	$	27,260		$	35,984	$	95,674		$	98,593
Investment and other income		466			471		4,582			2,822
		27,726			36,455		100,256			101,415
Expenses:
Direct operating expenses – oil and
gas drilling services		23,467			26,381		79,143			71,016
Interest		24			26		77			119
Salaries and incentive compensation		558			1,206		2,813			3,889
Depreciation and amortization		4,599			5,218		14,740			15,801
Selling, general and other expenses		2,369			1,680		8,152			7,822
		31,017			34,511		104,925			98,647
Income (loss) from discontinued
operations before income taxes		(3,291	)		1,944		(4,669	)		2,768
Income tax provision (benefit)		357			254		(1,638	)		(65	)
Income (loss) from discontinued
operations after income taxes	$	(3,648	)	$	1,690	$	(3,031	)	$	2,833

The Company recognized as income from discontinued operations distributions from its subsidiary, Empire Insurance Company ("Empire"), of $5,663,000 during the three and nine month periods ended September 30, 2012 and $2,748,000 during the nine month period ended September 30, 2011. Empire, which has been undergoing a voluntary liquidation, was classified as a discontinued operation in 2001 and the Company fully wrote-off its remaining book value based on its expected future cash flows at that time. Although Empire no longer writes any insurance business, its orderly liquidation over the years has resulted in reductions to its estimated claim reserves that enabled Empire to pay the distributions, with the approval of the New York Insurance Department. For income tax purposes, the payments are treated as non-taxable distributions paid by a subsidiary. Since future distributions from Empire, if any, are subject to New York insurance law or the approval of the New York Insurance Department, income will only be recognized when received.

In September 2012, the Company sold its small Caribbean-based telecommunications provider for aggregate consideration of $28,006,000 and recognized a pre-tax gain on sale of discontinued operations of $12,193,000 ($7,925,000 after taxes). The Company has not classified this business' historical results of operations or its assets and liabilities as discontinued operations because such amounts were not significant.