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Discontinued Operations | 12 Months Ended
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Dec. 31, 2018
Discontinued Operations And Disposal Groups [Abstract] |
Discontinued Operations |
NOTE 4. | Discontinued Operations
On August 31, 2018, Hub Group, Inc. entered into the Purchase Agreement with Mode, 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 to Purchaser (the “Disposition”). Total consideration received by the Company for the Disposition in the third quarter of 2018 was $238.5 million in cash, subject to customary purchase price adjustments. An additional $19.0 million consideration receivable was recorded in the fourth quarter of 2018 due to net working capital and other contractual adjustments. The receivable is recorded in other receivables in the Consolidated Balance Sheet and the additional gain is recorded as other income in discontinued operations. During the eight months we owned Mode in 2018, Mode had revenue of $42.2 million from Hub and Hub had revenue of $17.9 million from Mode LLC. For the twelve months ended December 31, 2017 and 2016, respectively, Mode had revenue of $50.6 million and $34.4 million from Hub and Hub had $51.0 million and $76.1 million from Mode. These sales were eliminated on our Consolidated Statements of Income. In connection with the Disposition, the Company and Mode 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 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:
| Years Ended December 31, |
| 2018 |  |  | 2017 |  |  | 2016 |
Revenue | $ | 739,534 |  |  | $ | 908,870 |  |  | $ | 819,572 |
Transportation costs |  | 648,986 |  |  |  | 788,982 |  |  |  | 696,107 |
Gross margin |  | 90,548 |  |  |  | 119,888 |  |  |  | 123,465 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |
Salaries and benefits |  | 11,043 |  |  |  | 12,821 |  |  |  | 14,340 |
Agent fees and commissions |  | 56,631 |  |  |  | 73,955 |  |  |  | 72,754 |
General and administrative |  | 5,795 |  |  |  | 8,071 |  |  |  | 7,841 |
Depreciation and amortization |  | 632 |  |  |  | 1,158 |  |  |  | 1,253 |
Total costs and expenses |  | 74,101 |  |  |  | 96,005 |  |  |  | 96,188 |
Operating income from discontinued operations |  | 16,447 |  |  |  | 23,883 |  |  |  | 27,277 |
Other income |  |  |  |  |  |  |  |  |  |  |
Interest income |  | 22 |  |  |  | 67 |  |  |  | 47 |
Other, net |  | (15 | ) |  |  | 56 |  |  |  | 70 |
Gain on Disposition |  | 132,448 |  |  |  | - |  |  |  | - |
Total other income |  | 132,455 |  |  |  | 123 |  |  |  | 117 |
Income from discontinued operations before income taxes |  | 148,902 |  |  |  | 24,006 |  |  |  | 27,394 |
Provision for income taxes |  | 34,823 |  |  |  | 8,867 |  |  |  | 10,235 |
Income from discontinued operations | $ | 114,079 |  |  | $ | 15,139 |  |  | $ | 17,159 |
Selling, general and administrative expenses recorded in discontinued operations include corporate costs incurred directly in support of Mode. See the table below for a reconciliation of the gain recorded on the sale of Mode:
Net proceeds received from Disposition (1) | $ | 227,986 |
Consideration receivable due from Mode (2) |  | 18,981 |
Adjusted proceeds from Disposition | $ | 246,967 |
Mode assets: |  |  |
Accounts receivable |  | 173,669 |
Accounts receivable other |  | 22 |
Prepaid expenses |  | 260 |
Property and equipment |  | 2,501 |
Restricted investments |  | 4,467 |
Other intangibles, net |  | 9,033 |
Goodwill, net |  | 29,389 |
Other assets |  | 209 |
Total Mode assets |  | 219,550 |
Mode liabilities: |  |  |
Accounts payable (3) |  | 97,536 |
Accrued payroll |  | 3,072 |
Accrued other |  | 6,285 |
Non-current liabilities |  | 3,936 |
Total Mode liabilities |  | 110,829 |
Transaction costs for Disposition (4) |  | 5,798 |
Gain on sale of the Mode business before income taxes | $ | 132,448 |
| (1) | The proceeds received from the Disposition are net of working capital adjustments outlined in the Disposition agreement.
| (2) | Additional consideration to be received as a result of post close contractual adjustments
| (3) | Includes $2.3 million of bank overdrafts assumed by the Purchaser.
| (4) | Costs include advisory 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 have been presented in the Consolidated Statements of Cash Flows under investing activities for the twelve months ended December 31, 2018. Total operating and investing cash flows of discontinued operations for the twelve months ended December 31, 2018, 2017 and 2016 are comprised of the following, which exclude the effect of income taxes:
(in thousands) | 2018 |  |  | 2017 |  |  | 2016 |
Net cash (used in) provided by operating activities |  | (4,318 | ) |  |  | 25,147 |  |  |  | 25,183 |
Net cash provided by (used in) investing activities |  | 245,339 |  |  |  | (823 | ) |  |  | (127 | )

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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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