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Discontinued Operations | 9 Months Ended
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Sep. 30, 2018
Discontinued Operations And Disposal Groups [Abstract] |
Discontinued Operations |
NOTE 2. | Discontinued Operations
On August 31, 2018, Hub Group, Inc. entered into the Purchase Agreement with Mode LLC, a direct wholly-owned subsidiary of the Company, and Mode Purchaser, Inc., an affiliate of York Capital Management (“Purchaser”) pursuant to which the Company sold all of the issued and outstanding membership interests of Mode LLC to Purchaser (the “Disposition”). Total consideration received for the transaction was $238.5 million in cash, subject to customary purchase price adjustments. For the three months ended September 30, 2018 and 2017, respectively, Mode LLC had revenue of $10.6 million and $12.7 million from Hub and Hub had revenue of $2.7 million and $12.5 million from Mode LLC. During the nine months ended September 30, 2018 and 2017, respectively, Mode LLC had revenue of $42.2 million and $37.0 million from Hub and Hub had revenue of $17.9 million and $37.4 million from Mode LLC. These sales were eliminated on our Consolidated Statements of Income. In connection with the Disposition, the Company and Mode LLC have entered into a transition services agreement pursuant to which both the Company and Mode will provide certain immaterial transition services to the other party for a period of time following the closing. Results associated with Mode LLC are classified as income from discontinued operations, net of income taxes, in our Consolidated Statements of Income. Prior year results have been adjusted to conform with the current presentation. Income from discontinued operations is comprised of the following:
| Three Months Ended |  |  | Three Months Ended |  |  | Nine Months Ended |  |  | Nine Months Ended |
| September 30, 2018 |  |  | September 30, 2017 |  |  | September 30, 2018 |  |  | September 30, 2017 |
Revenue | $ | 196,546 |  |  | $ | 228,858 |  |  | $ | 739,534 |  |  | $ | 656,288 |
Transportation costs |  | 172,949 |  |  |  | 198,662 |  |  |  | 648,986 |  |  |  | 567,886 |
Gross margin |  | 23,597 |  |  |  | 30,196 |  |  |  | 90,548 |  |  |  | 88,402 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Salaries and benefits |  | 3,317 |  |  |  | 3,148 |  |  |  | 11,043 |  |  |  | 9,700 |
Agent fees and commissions |  | 15,572 |  |  |  | 19,039 |  |  |  | 56,631 |  |  |  | 54,005 |
General and administrative |  | 1,255 |  |  |  | 1,800 |  |  |  | 5,795 |  |  |  | 5,758 |
Depreciation and amortization |  | 153 |  |  |  | 288 |  |  |  | 632 |  |  |  | 884 |
Total costs and expenses |  | 20,297 |  |  |  | 24,275 |  |  |  | 74,101 |  |  |  | 70,347 |
Operating income from discontinued operations |  | 3,300 |  |  |  | 5,921 |  |  |  | 16,447 |  |  |  | 18,055 |
Other income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest and dividend income |  | 3 |  |  |  | 17 |  |  |  | 22 |  |  |  | 56 |
Other, net |  | (1 | ) |  |  | 49 |  |  |  | (15 | ) |  |  | 64 |
Gain on Disposition |  | 113,601 |  |  |  | - |  |  |  | 113,601 |  |  |  | - |
Total other income |  | 113,603 |  |  |  | 66 |  |  |  | 113,608 |  |  |  | 120 |
Income from discontinued operations before income taxes |  | 116,903 |  |  |  | 5,987 |  |  |  | 130,055 |  |  |  | 18,175 |
Provision for income taxes |  | 28,057 |  |  |  | 2,241 |  |  |  | 31,213 |  |  |  | 6,665 |
Income from discontinued operations | $ | 88,846 |  |  | $ | 3,746 |  |  | $ | 98,842 |  |  | $ | 11,510 |
Selling, general and administrative expenses recorded in discontinued operations include corporate costs incurred directly in support of Mode LLC. See the table below for a reconciliation of the gain recorded on the sale of Mode LLC:
Net proceeds received from Disposition (1) | $ | 227,986 |
Mode LLC assets: |  |  |
Accounts receivable |  | 173,669 |
Accounts receivable other |  | 22 |
Prepaid expenses |  | 260 |
Property and equipment |  | 2,501 |
Restricted investments |  | 4,467 |
Other intangibles, net |  | 9,032 |
Goodwill, net |  | 29,389 |
Other assets |  | 209 |
Total Mode LLC assets |  | 219,549 |
Mode LLC liabilities: |  |  |
Accounts payable (2) |  | 97,535 |
Accrued payroll |  | 3,072 |
Accrued other |  | 6,286 |
Non-current liabilities |  | 3,936 |
Total Mode LLC liabilities |  | 110,829 |
Transaction costs for Disposition (3) |  | 5,665 |
Gain on sale of the Mode LLC business before income taxes | $ | 113,601 |
| (1) | The proceeds received from the Disposition are net of working capital adjustments outlined in the sale agreement.
| (2) | Includes $2.3 million of bank overdrafts assumed by the Purchaser.
| (3) | Costs include investment bank fees, legal fees and professional fees.
Due to the Disposition, the related assets and liabilities transferred to the Purchaser were reclassified as held for sale in the Consolidated Balance Sheet as of December 31, 2017 based on the nature of the asset or liability. Assets and liabilities classified as held for sale in our Consolidated Balance Sheet are comprised of the following:
|  | December 31, |
|  | 2017 |
Accounts receivable, net |  | $ | 159,314 |
Accounts receivable, other |  |  | 19 |
Prepaid expenses and other current assets |  |  | 283 |
TOTAL CURRENT ASSETS HELD FOR SALE |  |  | 159,616 |
Restricted investments |  |  | 4,038 |
Property and equipment, net |  |  | 937 |
Other intangibles, net |  |  | 9,601 |
Goodwill, net |  |  | 29,389 |
Other assets |  |  | 51 |
TOTAL NON-CURRENT ASSETS HELD FOR SALE |  |  | 44,016 |
TOTAL ASSETS HELD FOR SALE |  | $ | 203,632 |
Accounts payable |  | $ | 99,067 |
Accrued payroll |  |  | 2,320 |
Accrued other |  |  | 5,798 |
TOTAL CURRENT LIABILITIES HELD FOR SALE |  |  | 107,185 |
Non-current liabilities |  |  | 4,328 |
TOTAL LIABILITIES HELD FOR SALE |  | $ | 111,513 |
Proceeds from the sale of Mode LLC have been presented in the Consolidated Statements of Cash Flows under investing activities for the nine months ended September 30, 2018. Total operating and investing cash flows of discontinued operations for the nine months ended September 30, 2018 and 2017 are comprised of the following, which exclude the effect of income taxes:
(in thousands) | 2018 |  |  | 2017 |
Net cash (used in) provided by operating activities |  | (4,184 | ) |  |  | 24,910 |
Net cash (used in) provided by investing activities |  | 226,358 |  |  |  | (235 | )

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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