Discontinued Operations and Assets Held for Sale

12 Months Ended

Dec. 31, 2012

Notes To Condensed Consolidated Financial Statements [Abstract]

Discontinued Operations

Discontinued Operations and Assets Held for Sale

Discontinued operations include our IMS operations (see Note 1) and our Capital Services business, which was sold in 2006. The details of discontinued operations are shown in the following table:

	Years Ended December 31,
	2012			2011			2010
International Mail Services
Revenue	$	135,222		$	155,378		$	164,898
Cost of revenue	120,251			142,165			163,818
SG&A	19,565			28,220			22,379
Restructuring charges and asset impairments	10,234			11,603			313
Goodwill impairment	18,315			45,650			—
Impairment on assets held for sale	6,941			—			—
Loss before taxes	(40,084		)	(72,260		)	(21,612		)
Tax benefit	(15,003		)	(23,025		)	(7,828		)
Net loss	(25,081		)	(49,235		)	(13,784		)
Capital Services, net of tax	34,312			266,159			(18,104		)
Income (loss) from discontinued operations	$	9,231		$	216,924		$	(31,888	)

In connection with our decision to exit our IMS operations, during the third quarter of 2012, we conducted a goodwill impairment review. We determined the fair value of the IMS operations based on third-party written offers to purchase the business as well applying an income approach with revised cash flow projections. The inputs used to determine the fair value of IMS were classified as Level 3 in the fair value hierarchy. Based on the results of our impairment test, in the third quarter of 2012, we recorded a goodwill impairment charge of$18 million and asset impairment charges of $10 million to write-down the carrying value of goodwill, intangible assets and fixed assets to their respective implied fair values. Based on the terms of the proposed agreement, we recorded an additional pre-tax loss of $7 million in the fourth quarter to write down the carrying value of the net assets of IMS to their estimated fair value less costs to sell.

In 2011, due to the under-performance of our IMS operations and based on information developed during the early stages of our annual budgeting and long-term planning process started in the third quarter, we concluded that it was appropriate to perform a goodwill impairment review for IMS. We determined the fair value of IMS using a combination of techniques including the present value of future cash flows, multiples of competitors and multiples from sales of like businesses, and determined that the IMS reporting unit was impaired. The inputs used to determine the fair value of IMS were classified as Level 3 in the fair value hierarchy. Based on the results of our impairment test, we recorded a goodwill impairment charge of $46 million and an intangible asset impairment charge of $12 million to write-down the carrying value of goodwill and intangible assets to their respective implied fair values.

The assets and liabilities of IMS consists primarily of accounts receivable and accounts payable and other current accruals. At December 31, 2012, assets of IMS were $25 million and liabilities were $25 million.

The amount recognized for Capital Services in 2012 relates to tax benefits from the resolution of tax examinations. In 2011, we entered into a series of settlements with the IRS in connection with their examinations of our tax years 2001-2008. We agreed upon both the tax treatment of a number of disputed issues, including issues related to the Capital Services business, and revised tax calculations. As a result of these settlements, an aggregate $264 million benefit was recognized in discontinued operations. The amount in 2010 includes the accrual of interest on uncertain tax positions.