Discontinued Operations

3 Months Ended

Mar. 31, 2013

Discontinued Operations

Discontinued Operations

5. Discontinued Operations

During the third quarter of 2012, the Company committed to a plan to sell Legend.  On October 29, 2012, the Company signed a definitive agreement with First Allied Holdings Inc. to sell all of the common interests of Legend Group Holdings, LLC.  The sale closed effective January 1, 2013.  Based on the value of the consideration the Company expected to receive upon closing of the sale, 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 during the third quarter of 2012.  The agreement also includes an earnout provision based on asset retention for a period of two years following the closing date.

For income tax purposes, the sale resulted in a $48.3 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 operational results of Legend have been presented as discontinued operations in the unaudited consolidated financial statements for the three months ended March 31, 2012.  Legend’s revenues and income before provision for income taxes for that period were $18.7 million and $947 thousand, respectively.

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