Discontinued Operations

12 Months Ended

Dec. 31, 2014

Discontinued Operations

Discontinued Operations

Note O — 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 quarterly payments of interest until maturity.  In 2013, the maturity date was extended from December 31, 2013 to June 30, 2014.  In 2014 the maturity date was extended from June 30, 2014 to December 31, 2014 and then subsequently extended from December 31, 2014 to December 31, 2018.  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.

We sold the assets of our California Shoppers operations to affiliates of OpenGate Capital Management, LLC (“OpenGate”) on September 27, 2013 for gross proceeds of approximately $22.5 million in cash. In addition, OpenGate agreed to assume certain liabilities associated with the Shoppers division. This transaction resulted in a loss on the sale of $12.4 million, net of $9.0 million of income tax benefit. This loss on sale includes transaction costs of approximately $2.6 million.

Because the Shoppers operations represented distinct business units with operations and cash flows that can clearly be distinguished, both operationally and for financial purposes, from the rest of Harte Hanks, the results of the Shoppers operations are reported as discontinued operations for all periods presented.

Results of the remaining Harte Hanks marketing services business are reported as continuing operations.

Summarized operating results for the Shoppers discontinued operations, through the dates of disposal, are as follows:

	Year Ended December 31,
In thousands	2014		2013			2012
Revenues	$	—	$	140,834		$	222,736
Income (loss) from discontinued operations before impairment charges and income taxes	—		2,509			344
Impairment of goodwill and other intangible assets before income taxes	—		—			(165,336		)
Loss on sale before income taxes	—		(21,402		)	(4,863		)
Income tax benefit (expense)	—		7,822			51,106
Income (loss) from discontinued operations	$	—	$	(11,071	)	$	(118,749	)

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

	Year Ended December 31,
In thousands	2014		2013			2012
Gain (Loss) from discontinued operations	$	—	$	(11,071	)	$	(118,749	)
Impairment of goodwill and other intangible assets	—		—			165,336
Loss on sale	—		12,355			2,716
Deferred Income Taxes	—		10,594			(39,234		)
Depreciation and software amortization	—		2,592			5,062
Other, net	—		2,619			4,725
Net cash provided by (used in) discontinued operations	$	—	$	17,089		$	19,856