Discontinued Operations

12 Months Ended

Dec. 31, 2012

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

In December 2008, we announced strategic initiatives to improve our competitive advantage and drive long-term profitable growth. As part of these initiatives, we decided to discontinue SCS operations in South America and Europe. During

the second half of 2009, we ceased SCS service operations in Brazil, Argentina, Chile and European markets. Accordingly, results of these operations, financial position and cash flows are separately reported as discontinued operations for all periods presented in the Consolidated Financial Statements and notes thereto.

Summarized results of discontinued operations were as follows:

	Years ended December 31,
	2012			2011			2010
	(In thousands)
Pre-tax loss from discontinued operations	$	(2,226	)	$	(1,185	)	$	(7,525	)
Income tax benefit (expense)	11,306			(406		)	1,087
Earnings (loss) from discontinued operations, net of tax	$	9,080		$	(1,591	)	$	(6,438	)

Results of discontinued operations in 2012, 2011 and 2010 included $3 million, $2 million and $4 million, respectively, of pre-tax losses related to adverse legal developments and professional and administrative fees associated with our discontinued South American operations. Results of discontinued operations in 2012 also included $1 million of pre-tax income related to the sub-lease of a European SCS facility. During 2010, we recognized pre-tax exit costs of $3 million from the aforementioned SCS facility related to changes in sublease income estimates because of continued weak commercial real estate market conditions. Results of discontinued operations in 2011 also included $1 million of pre-tax income from favorable prior year insurance claims development. Earnings from discontinued operations in 2012 also reflect a tax benefit of $11 million resulting from the expiration of a statute of limitations.

The following is a summary of assets and liabilities of discontinued operations:

	December 31, 2012		December 31, 2011
	(In thousands)
Total assets, primarily deposits	$	4,460	$	4,600
Total liabilities, primarily contingent accruals	$	5,329	$	6,502

Although we discontinued our South American operations in 2009, we continue to be party to various federal, state and local legal proceedings involving labor matters, tort claims and tax assessments. We have established loss provisions for any matters where we believe a loss is probable and can be reasonably estimated. Other than with respect to the matters discussed below, for matters where a reserve has not been established and for which we believe a loss is reasonably possible, as well as for matters where a reserve has been recorded but for which an exposure to loss in excess of the amount accrued is reasonably possible, we believe that such losses will not have a material effect on our consolidated financial statements.

In Brazil, we were assessed $5 million (before and after tax) for various federal income taxes and social contribution taxes for the 1997 and 1998 tax years. We have successfully overturned these federal tax assessments in the lower courts; however, there is a reasonable possibility that these rulings could be reversed and we would be required to pay the assessments. We believe it is more likely than not that our position will ultimately be sustained if appealed and no amounts have been reserved for these matters. We are entitled to indemnification for a portion of any resulting liability on these federal tax claims which, if honored, would reduce the estimated loss.

In Brazil, we were assessed $6 million (before and after tax) for certain state operating tax credits utilized between 2001 and 2003. Although there is a reasonable possibility that we could incur this loss, we believe it is more likely than not that our position will ultimately be sustained and no amounts have been reserved for these matters.

Additionally in Brazil, we were assessed $16 million, including penalties and interest, related to tax due on the sale of our outbound auto carriage business in 2001. On November 11, 2010, the Administrative Tax Court dismissed the assessment. The tax authority filed a motion to review the decision before the Administrative Tax Court. On December 6, 2011, the Administrative Tax Court upheld our position. In the first quarter of 2012, the tax authority decided not to file a final special appeal and the case was dismissed. There was no financial statement impact upon resolution as no amounts were reserved for this matter.