Discontinued Operations

12 Months Ended

Dec. 31, 2019

Discontinued Operations And Disposal Groups [Abstract]

NOTE 4.

Discontinued Operations

On August 31, 2018, Hub sold Mode. 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 $19.4 million receivable resulting from a net working capital adjustment was recorded in other receivables in the Consolidated Balance Sheet in the fourth quarter of 2018 and was received in the first quarter of 2019.

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. For the twelve months ended December 31, 2017, Mode had revenue of $50.6 million from Hub and Hub had $51.0 million from Mode. These sales were eliminated on our Consolidated Statements of Income. In connection with the Disposition, the Company and Mode entered into a transition services agreement pursuant to which both the Company and Mode provided 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
Revenue	$	739,534		$	908,870
Transportation costs		648,986			788,982
Gross margin		90,548			119,888

Costs and expenses:
Salaries and benefits		11,043			12,821
Agent fees and commissions		56,631			73,955
General and administrative		5,795			8,071
Depreciation and amortization		632			1,158
Total costs and expenses		74,101			96,005

Operating income from discontinued operations		16,447			23,883

Other income
Interest income		22			67
Other, net		(15	)		56
Gain on Disposition		132,448			-
Total other income		132,455			123

Income from discontinued operations before income taxes		148,902			24,006
Provision for income taxes		34,823			8,867

Income from discontinued operations	$	114,079		$	15,139

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.

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 and 2017 are comprised of the following, which exclude the effect of income taxes:

	Twelve months ended December 31,
(in thousands)	2018			2017
Net cash (used in) provided by operating activities		(4,318	)		25,147
Net cash provided by (used in) investing activities		245,339			(823	)