VITRAN CORP INC

2.	Discontinued operations:

On March 4, 2013, the Company completed the sale of its Supply Chain Operation business unit (“SCO”), which was previously a reportable segment. The proceeds from the transaction were $98.8 million, including an adjustment on account of working capital. As of December 31, 2013, the Company has received net cash proceeds of $94.1 million, net of cash divested of $0.4 million, direct selling costs of $2.9 million and income taxes of $1.4 million. The Company used the proceeds to reduce its outstanding debt under its revolving credit facility. The operating results and gain on sale of SCO have been recorded as a discontinued operation.

On September 23, 2013, the Company entered into an agreement to sell the shares of its U.S. Less-Than-Truckload business unit (“U.S. LTL”) to Data Processing LLC, a company owned by Matthew Moroun, for cash consideration of $2.0 million and the assumption of $32.8 million of real estate and capital lease debt by the purchaser. In addition, the purchaser agreed to fund cash deficits incurred by U.S. LTL from September 23, 2013 through to the date of closing of the transaction. The transaction closed on October 7, 2013 and the purchaser funded $1.4 million of cash deficits incurred by U.S. LTL between September 23, 2013 and October 7, 2013. Prior to closing the sale, the Company agreed to capitalize U.S. LTL with cash of $5.0 million. As of December 31, 2013, the Company paid $5.2 million related to the sale of U.S. LTL, which includes cash divested of $0.4 million and direct selling costs of $3.2 million. The operating results and loss on sale of U.S. LTL have been recorded as a discontinued operation.

At the end of the third quarter of 2013, as required by U.S. GAAP, the Company compared the fair value less costs to sell of the net assets of U.S. LTL to its carrying amount. As a result of the comparison, the Company recorded a $49.7 million non-cash write-down in discontinued operations to write-down the U.S. LTL net assets to zero. During the fourth quarter of 2013, the Company recorded the sale of U.S. LTL. The total net loss of $45.9 million is recorded in discontinued operations.

The following table summarizes the operations for all periods presented to classify U.S. LTL and SCO operations as discontinued operations:

 

		2013				2012				2011
Revenue		$	350,241			$	628,714			$	613,283
Loss from discontinued operations			(58,434	)			(34,255	)			(10,974	)
Income tax expense			(433	)			(1,501	)			(1,721	)
Loss from discontinued operations, net of income tax			(58,867	)			(35,756	)			(12,695	)
Gain on sale of SCO			87,892				—				—
Income tax expense (note 6)			(19,019	)			—				—
Utilization of net operating loss carry-forwards (note 6)			17,613				—				—
			86,486				—				—
Reclassification of foreign currency translation from accumulated other comprehensive income			(1,865	)			—				—
Net gain on sale of SCO			84,621				—				—
Loss on sale of U.S. LTL			(54,521	)			—				—
Income tax recovery (note 6)			21,743				—				—
Valuation allowance (note 6)			(21,743	)			—				—
			(54,521	)			—				—
Reclassification of foreign currency translation from accumulated other comprehensive income			8,576				—				—
Net loss on sale of U.S. LTL			(45,945	)			—				—
Net loss from discontinued operations		$	(20,191	)		$	(35,756	)		$	(12,695	)

The following table summarizes the assets and liabilities from discontinued operations:

 

		2013				2012
Accounts receivable		$	—			$	57,587
Income taxes recoverable			—				157
Inventory, deposits and prepaid expenses			—				7,658
Property and equipment			—				79,910
Intangible assets			—				3,457
Goodwill			—				8,872
Deferred income taxes			—				64,048
Deferred income taxes valuation allowance			—				(63,917	)
Total assets from discontinued operations		$	—			$	157,772
Accounts payable and accrued liabilities		$	—			$	57,604
Real estate debt and capital leases			—				45,034
Total liabilities from discontinued operations		$	—			$	102,638