Discontinued Operations

12 Months Ended

Dec. 31, 2012

Discontinued Operations

Discontinued Operations

Note P — Discontinued Operations

We sold the assets of our Florida Shoppers operations to Coda Media Corp. on December 31, 2012 for gross proceeds of approximately $2.0 million in the form of a secured promissory note, subject to working capital adjustments.  This transaction resulted in a loss on the sale of $2.7 million, net of $2.1 million of income tax benefit.  The promissory note, which is secured by the assets which were sold, includes an interest rate of 2.5% per annum and is structured to make payments of interest only in each of the first three quarters of 2013, and a payment of total principal and unpaid interest on December 31, 2013.  Due to a number of factors that put the collectability of the note in doubt, we have fully reserved the amount of this note receivable.  These factors include the lack of cash paid at the date of the sale, the structure and length of the note, and historical and projected cash flows from the sold operations.  This reserve was included in the calculation of the loss on the sale.

Because the Florida Shoppers represent a distinct business unit with operations and cash flows that can clearly be distinguished, both operationally and for financial purposes, from the rest of Harte-Hanks, Inc., the results of the Florida Shoppers operations are reported as discontinue operations for all periods presented.  Results of the remaining Harte-Hanks, Inc. business segments are reported as continuing operations.

Summarized operating results for the Florida Shoppers discontinued operations are as follows:

	Year Ended December 31,
In thousands	2012			2011			2010
Revenues	$	36,118		$	39,129		$	39,806
Loss from discontinued operations before impairment charges and income taxes	(4,114		)	(2,696		)	(2,159		)
Impairment of other intangible assets before income taxes	(8,400		)	0			0
Loss on sale before income taxes	(4,863		)	0			0
Income tax benefit	7,128			1,017			569
Loss from discontinued operations	$	(10,249	)	$	(1,679	)	$	(1,590	)

Summarized balance sheet data for the Florida Shoppers discontinued operations are as follows:

	December 31,
In thousands	2012		2011
Current assets	$	0	$	3,879
Property, plant and equipment	0		2,691
Other intangible assets	0		9,484
Other assets	0		134
Total assets	0		16,188
Current liabilities	0		(1,420		)
Other liabilities	0		(21		)
Total liabilities	0		(1,441		)
Net assets of discontinued operations	$	0	$	14,747

The major components of cash flows for the Florida Shoppers discontinued operations are as follows:

	Year Ended December 31,
In thousands	2012			2011			2010
Loss from discontinued operations	$	(10,249	)	$	(1,679	)	$	(1,590	)
Impairment of goodwill and other intangible assets	8,400			0			0
Loss on sale	4,863			0			0
Depreciation and software amortization	563			789			994
Intangible asset amortization	386			572			700
Other, net	513			(724		)	855
Net cash provided by (used in) discontinued operations	$	4,476		$	(1,042	)	$	959