6. DISCONTINUED OPERATIONS
During the third quarter of 2012, as part of the Company’s review of strategic alternatives, the Company made the decision to sell its Careers-China business. The sale of the Careers-China business to Saongroup, Ltd. (“Saongroup”) was completed on February 5, 2013. The Company received a 10% minority interest in the combined Chinese business of Saongroup. The Company’s 10% minority interest does not provide the Company with representation on the board of directors, the Company is not entitled to any dividend or other forms of cash returns and the Company is not required to make any capital contributions in the future. The Company will carry the 10% interest as a cost basis investment with an estimated fair value of zero which is based on available information.
Prior to the close of the sale of Careers-China, the Company incurred charges relating to severance benefits associated with terminated employees, retention benefits for employees who will remain with the combined operations and certain lease obligation costs. At February 5, 2013, there was $23,109 of accumulated unrealized currency translation gain related to the net assets of Careers-China. With the sale of Careers-China on February 5, 2013, the Company recorded the foreign currency translation adjustment as a reduction of the loss on disposition of discontinued operations. On October 25, 2013, the Company received $1,846 of funds previously held in escrow relating to the sale of Careers-China, which has been recorded as a gain in the consolidated statements of operations in the year ended December 31, 2013. Additionally, the Company recorded a tax benefit of $4,916 for the year ended December 31, 2013. Accordingly, the Company recorded a loss from discontinued operations related to Careers-China, net of tax, of $1,724 in the year ended December 31, 2013. The Company does not expect to incur significant additional charges in future periods relating to Careers-China.
As disclosed in Note 4- Goodwill and Intangibles, the Company recorded a goodwill impairment charge for 100% of the goodwill attributable to Careers-China in the amount of $262,650 in 2012. During the three months ended September 30, 2011, the Company received $17,400 in cash, net of professional fees reimbursed to the Company, relating to the release of the ChinaHR escrowed funds, which is recorded in the consolidated statements of operations for the year ended December 31, 2011 as a component of loss from discontinued operations, net of tax. Further, as disclosed in Note 15- Income Taxes, the Company recorded a full valuation allowance of $9,710 associated with Careers-China deferred tax assets. Finally, the Company recorded an impairment of $5,205 relating to amortizable intangibles.
During the fourth quarter of 2012, the Company made the strategic decision to discontinue operations in Latin America and Turkey. All of the Latin America and Turkey business operations were discontinued on or before December 31, 2012. The Company incurred approximately $8,000 of costs associated with the shutdown of these businesses in the fourth quarter of 2012. For the year ended December 31, 2013, the Company recorded additional costs of $3,565 primarily relating to severance costs associated with terminated employees of our operations in Latin America and Turkey. Additionally, the Company recorded a tax benefit of $1,491 for the year ended December 31, 2013. Accordingly, the Company recorded a loss from discontinued operations related to Latin America and Turkey, net of tax, of $2,074 in the year ended December 31, 2013. The Company does not expect to incur significant additional charges in future periods relating to Latin America or Turkey.
In the aggregate, the Company’s head count was reduced by approximately 1,000 employees as the result of the sale of Careers-China and the exiting of Latin America and Turkey.
Operating results for Careers-China, Latin America and Turkey, which had previously been included in the Company’s Consolidated Statement of Operations, have now been reclassified as discontinued operations for all periods presented. Summarized results of our discontinued operations are as follows:
| The year ended December 31, | ||||||||||||
| 2013 | 2012 | 2011 | ||||||||||
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Net revenue |
$ | 2,399 | $ | 45,590 | $ | 46,459 | ||||||
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Loss from discontinued operations, net of tax |
$ | (3,798 | ) | $ | (316,886 | ) | $ | (12,253 | ) | |||
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The major classes of assets and liabilities of the discontinued operations are presented in the following table. All assets and liabilities have been classified as current in the Consolidated Balance Sheets as the disposition of asset and liabilities of the discontinued operations are expected to be completed within the next 12 months and the sale of the business held for sale was completed on February 5, 2013.
| December 31, 2013 |
December 31, 2012 |
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Accounts receivable net of doubtful accounts of $796 at December 31, 2012 |
$ | — | $ | 7,884 | ||||
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Prepaid and other |
— | 3,932 | ||||||
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Property and equipment, net |
— | 9,886 | ||||||
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Total assets of discontinued operations |
$ | — | $ | 21,702 | ||||
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Accounts payable, accrued expenses and other current liabilities |
$ | 1,049 | $ | 19,924 | ||||
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Deferred revenue |
— | 13,332 | ||||||
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Total liabilities of discontinued operations |
$ | 1,049 | $ | 33,256 | ||||
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