Discontinued Operations

12 Months Ended

Dec. 31, 2013

Discontinued Operations

Discontinued Operations

6.     Discontinued Operations

        During 2012, the Company signed a definitive agreement with First Allied Holdings Inc. to sell all of the common interests of Legend and the sale closed effective January 1, 2013. Based on the value of the consideration the Company expected to receive upon closing, which was less than the carrying value of net assets to be sold, the Company recorded a non-cash impairment charge of $42.4 million, which is reflected in income (loss) from discontinued operations on the statement of income in 2012. The consideration received was subject to working capital and regulatory capital adjustments through the closing date. The Company retained $7.7 million of Legend's excess working capital as part of the agreement. The agreement also includes a maximum earnout provision of $5.0 million based on asset retention for a period of two years following the closing date.

        The operational results of Legend have been presented as discontinued operations in the consolidated financial statements for all periods presented. Legend's revenues and income (loss) before provision for income taxes for the years ended December 31, 2012 and 2011 are as follows:

	2012		2011
	(in thousands)
Revenues	$	74,033		72,644
Income (loss) before provision for income taxes	$	(40,518)		5,810

        For income tax purposes, the sale resulted in a $46.2 million capital loss that may only be utilized to offset future capital gains. Due to the character of the loss and the limited carry forward period permitted by law, the Company may not realize the full tax benefit of the capital loss.

        The assets and liabilities of Legend, classified as discontinued operations held for sale in the consolidated balance sheet at December 31, 2012 are as follows (in thousands):

Assets
Cash and cash equivalents	$	2,303
Cash and cash equivalents - restricted		401
Investment securities		1,352
Receivables		10,345
Prepaid expenses and other current assets		749
Total current assets		15,150
Property and equipment, net		992
Goodwill		16,868
Other non-current assets		150
Total non-current assets		18,010
Total assets		33,160
Liabilities
Accounts payable		464
Accrued compensation		6,243
Other current liabilities		880
Total current liabilities		7,587
Non-current liabilities		281
Total liabilities		7,868
Assets less liabilities	$	25,292