Discontinued Operations

12 Months Ended

Aug. 31, 2011

Notes to Consolidated Financial Statements [Abstract]

Discontinued Operations

Discontinued Operations

In fiscal year 2010, we initiated a formal plan to sell Insight Schools, engaged an investment bank and also began the process of actively marketing Insight Schools as we determined that the business was no longer consistent with our long-term strategic objectives. We completed the sale of Insight Schools during the second quarter of fiscal year 2011 and do not have significant continuing involvement after the sale. We began presenting Insight Schools’ assets and liabilities as held for sale on our Consolidated Balance Sheets in fiscal year 2010, and Insight Schools’ operating results are presented as discontinued operations on our Consolidated Statements of Income for all periods presented. We determined cash flows from discontinued operations are not material and are included with cash flows from continuing operations on our Consolidated Statements of Cash Flows from Continuing and Discontinued Operations. Insight Schools was previously presented as its own reportable segment.

We sold all of Insight Schools’ issued and outstanding shares for $6.3 million, plus $3.0 million that will be held in escrow for one year following the sale, and $15.3 million of additional estimated working capital consideration. As of August 31, 2011, we have received $15.0 million of the working capital consideration and we expect to receive the remaining amount and the funds held in escrow during fiscal year 2012. The funds held in escrow are included in other current assets on our Consolidated Balance Sheets. We realized a $0.1 million loss on sale in fiscal year 2011, which is included in income (loss) from discontinued operations, net of tax on our Consolidated Statements of Income.

The major components of Insight Schools’ assets and liabilities presented separately as held for sale on our Consolidated Balance Sheets as of August 31, 2010 are as follows:

	As of August 31,
($ in thousands)	2010
Accounts receivable, net	$	3,851
Property and equipment, net	6,037
Goodwill	3,342
Other	2,715
Total Insight Schools’ assets	$	15,945
Total Insight Schools’ liabilities	$	4,474

The following table summarizes Insight Schools’ operating results for fiscal years 2011, 2010 and 2009, which are presented in income (loss) from discontinued operations, net of tax in our Consolidated Statements of Income:

	Year Ended August 31,
($ in thousands)	2011			2010			2009
Net revenue	$	20,494		$	32,240		$	20,636
Goodwill impairment(1)	—			(9,400		)	—
Costs and other(2)	(19,596		)	(42,552		)	(47,748		)
Income (loss) from discontinued operations before income taxes	898			(19,712		)	(27,112		)
Benefit from income taxes(1),(3)	1,589			4,288			10,735
Income (loss) from discontinued operations, net of tax	$	2,487		$	(15,424	)	$	(16,377	)

⁽¹⁾ We recognized the goodwill impairment charge in fiscal year 2010 in the quarter we began presenting Insight Schools’ as held for sale. We did not record a tax benefit associated with the goodwill impairment charge because Insight Schools’ goodwill was not deductible for tax purposes.

⁽²⁾ Costs and other includes a $0.1 million loss on sale recorded in fiscal year 2011.

⁽³⁾ Benefit from income taxes during fiscal year 2011 includes a $1.6 million tax benefit recorded in fiscal year 2011 as a result of the Insight Schools sale generating a capital loss for tax purposes.

We include only revenues and costs, including the goodwill impairment charge discussed above, directly attributable to the discontinued operations, and not those attributable to our continuing operations. Accordingly, no interest expense or general corporate overhead have been allocated to Insight Schools. Additionally, we ceased depreciation and amortization on property and equipment and finite-lived intangible assets at Insight Schools in the period we determined it was held for sale.