Discontinued Operations Discontinued Operations (Notes)

12 Months Ended

Dec. 31, 2015

Discontinued Operations [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

DISCONTINUED OPERATIONS

On June 30, 2014, Avista Capital, completed the sale of its interest in Ecova to Cofely USA Inc., an indirect subsidiary of GDF SUEZ, a French multinational utility company, and an unrelated party to Avista Corp. The sales price was $335.0 million in cash, less the payment of debt and other customary closing adjustments. At the closing of the transaction on June 30, 2014, Ecova became a wholly-owned subsidiary of Cofely USA Inc. and the Company has not had and will not have any further involvement with Ecova after such date.

The purchase price of $335.0 million, as adjusted, was divided among the security holders of Ecova, including minority shareholders, option holders and a warrant holder, pro rata based on ownership. Approximately $16.8 million (5 percent of the purchase price) was held in escrow for 15 months from the closing of the transaction to satisfy certain indemnification obligations under the merger agreement (Escrow). An additional $1.0 million was held in escrow pending resolution of adjustments to working capital. The indemnification escrow and the working capital adjustment escrow amounts above represent the full amounts to be divided among all security holders pro rata based on ownership.

As expected, no claims were made against the Escrow as of September 30, 2015 (the end of the claims period) and accordingly, all Escrow amounts were released in October 2015 and the Company received its full portion of the Escrow proceeds together with the remainder of the working capital adjustment escrow for a total amount of $13.8 million. After consideration of the escrow amounts received, the sales transaction provided cash proceeds to Avista Corp., net of debt, payment to option and minority holders, income taxes and transaction expenses, of $143.7 million and resulted in a net gain of $74.8 million. Almost all of the net gain was recognized in 2014 with some true-ups during 2015.

The summary of cash proceeds associated with the sales transaction are as follows (in thousands):

Reconciliation to Statement of Cash Flows
Contract price	$	335,000
Closing adjustments	4,103
Litigation settlement at Ecova	588
Gross proceeds from sale (1)	339,691
Cash sold in the transaction	(95,932		)
Gross proceeds from sale of Ecova, net of cash sold (per Statement of Cash Flows) (2)	$	243,759
Reconciliation of total net proceeds
Gross proceeds from sale (1)	$	339,691
Repayment of long-term borrowings under committed line of credit	(40,000		)
Payment to option holders and redeemable noncontrolling interests	(20,871		)
Payment to noncontrolling interests	(54,179		)
Transaction expenses withheld from proceeds	(5,461		)
Net proceeds to Avista Capital (prior to tax payments) (2)	219,180
Tax payments made in 2014	(74,842		)
Tax payments made in 2015	(590		)
Total net proceeds related to sales transaction	$	143,748

(1) Of this total amount, approximately $16.8 million was held in escrow for 15 months from the transaction closing date for any indemnity claims and an additional $1.0 million was held in escrow pending resolution of adjustments to working capital. Both of these escrow accounts were resolved during 2015.

(2) Of the total gross proceeds and total net proceeds received, approximately $229.9 million and $205.4 million was received in 2014, respectively, with the remainder being received in 2015.

Prior to the completion of the sales transaction, Ecova was a reportable business segment. The major classes of assets and liabilities and their carrying amounts immediately prior to the completion of the sales transaction were as follows:

	June 30, 2014
Assets:
Current Assets:
Cash and cash equivalents	$	95,932
Accounts and notes receivable-less allowances of $410	32,070
Investments and funds held for clients	114,598
Income taxes receivable	2,548
Other current assets	8,908
Total current assets	254,056
Other Non-current Assets:
Goodwill	71,123
Intangible assets-net of accumulated amortization of $42,266	37,185
Other property and investments-net	4,656
Total other non-current assets	112,964
Total assets	$	367,020

	June 30, 2014
Liabilities:
Current Liabilities:
Accounts payable	$	72,453
Client fund obligations	115,333
Current portion of long-term debt	67
Other current liabilities	35,329
Total current liabilities	223,182
Long-term borrowings under committed line of credit	40,000
Other non-current liabilities	2,117
Total liabilities	$	265,299

Amounts reported in discontinued operations for 2013 through 2015 relate solely to the Ecova business segment. The following table presents amounts that were included in discontinued operations for the years ended December 31 (dollars in thousands):

	2015			2014			2013
Revenues	$	—		$	87,534		$	176,761
Gain on sale of Ecova (1)	777			160,612			—
Transaction expenses and accelerated employee benefits (2)	71			9,062			—
Gain on sale of Ecova, net of transaction expenses	706			151,550			—
Income before income taxes	706			156,025			13,177
Income tax expense (benefit) (3)	(4,441		)	83,614			5,216
Net income from discontinued operations	5,147			72,411			7,961
Net income attributable to noncontrolling interests	—			(187		)	(1,157		)
Net income from discontinued operations attributable to Avista Corp. shareholders	$	5,147		$	72,224		$	6,804

(1) This represents the gross gain recorded to discontinued operations. The total gain net of taxes and transactions expenses is $74.8 million, of which $69.7 million was recognized during 2014.

(2) Avista Corp.'s portion of the total transaction expenses was $9.1 million (including amounts which were withheld from the transaction net proceeds) and this was recognized during the second and third quarters of 2014 and the third and fourth quarters of 2015. All transaction expenses paid on the Ecova sale (including Avista Corp.'s portion and the portion attributable to the minority interest holders of Ecova) were $11.1 million, of which $5.5 million was withheld from the net proceeds and the remainder was paid during the second and third quarters of 2014. The transaction expenses were for legal, accounting and other consulting fees, and the accelerated employee benefits related to employee stock options which were settled in accordance with the Ecova equity plan.

(3) The tax benefit during 2015 primarily resulted from the reversal of a valuation allowance against net operating losses at Ecova because the net operating losses were deemed realizable under the current tax code.