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Discontinued Operations | 9 Months Ended
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Sep. 30, 2024
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | Discontinued Operations On June 7, 2024 (the “PGSC Closing Date”), the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Booz Allen Hamilton Inc. ("Booz Allen Hamilton") for the sale of PAR Government Systems Corporation ("PGSC"), a wholly owned subsidiary of the Company. Pursuant to the Purchase Agreement, on the Closing Date, Booz Allen Hamilton acquired 100% of the issued and outstanding shares of common stock of PGSC for a cash purchase price of $95.0 million, before customary post-closing adjustments based on PGSC’s indebtedness, working capital, cash, and transaction expenses at closing. At closing we entered into a transition services agreement with Booz Allen Hamilton pursuant to which the Company and Booz Allen Hamilton provide certain transitional services to each other as contemplated by and subject to the Purchase Agreement. The service period for the transitional services generally ends during the third quarter of 2025. On July 1, 2024 (the "RRC Closing Date"), the Company sold 100% of the issued and outstanding equity interests of Rome Research Corporation ("RRC"), a wholly-owned subsidiary of the Company, to NexTech Solutions Holdings, LLC ("NexTech") for a cash purchase price of $7.0 million, before customary post-closing adjustments based on RRC’s indebtedness, working capital, cash, and transaction expenses at closing. At closing we entered into a transition services agreement with NexTech pursuant to which the Company and NexTech provide certain transitional services to each other as contemplated by and subject to the transition services agreement. The service period for the transitional services generally ends during the third quarter of 2025. The sale of PGSC and RRC comprise the sale of 100% of the Company's Government segment. The Company recognized a pre-tax gain on sale of $77.2 million from the sale of PGSC and RRC in the nine months ended September 30, 2024. Pursuant to the Purchase Agreement, within 120 days following the PGSC Closing Date Booz Allen Hamilton is required to deliver to the Company a closing statement setting forth its determination of net working capital and any resulting net working capital surplus or deficit. To the extent there is an adjustment to net working capital, as agreed to by the Company and Booz Allen Hamilton pursuant to the Purchase Agreement, any such change will be recorded as an adjustment to the gain on sale of discontinued operations for the period such change occurs. Pursuant to the sale of RRC, $0.7 million of the cash purchase price was deposited into an escrow account administered by a third party to fund potential post-closing adjustments and obligations. As of September 30, 2024, the balance in the escrow account remained at $0.7 million. Within 90 days following the RRC Closing Date NexTech is required to deliver to the Company a closing statement setting forth its determination of net working capital and any resulting net working capital surplus or deficit. To the extent there is an adjustment to net working capital, as agreed to by the Company and NexTech pursuant to the sale, any such change will be recorded as an adjustment to the gain on sale of discontinued operations for the period such change occurs. As of September 30, 2024, the Company estimated the federal taxable gain on sale for PGSC and RRC to be $74.6 million, however, we expect to offset the taxable gain through the utilization of several tax benefits including $41.8 million of our net operating loss carryforwards, $22.4 million of our Section 163(j) interest expense limitation carryforwards, and $1.6 million of our research and development tax credits. Additionally, the income tax associated with the gain will be impacted by the final allocation of the sales price, which may be materially different from the Company’s estimates. The impact of changes in estimated income tax (if any) will be recorded as an adjustment to discontinued operations in the period such change in estimate occurs. The Company incurred expenses related to its disposition of PGSC and RRC of approximately $6.9 million which are included in net income from discontinued operations in the condensed consolidated statements of operations. The accounting requirements for reporting the disposition of PGSC and RRC as discontinued operations were met when the disposition of PGSC was completed and the sale of RRC was deemed probable. Accordingly, the historical results of PGSC and RRC have been presented as discontinued operations and, as such, have been excluded from continuing operations for all periods presented. The following table presents the major classes of assets and liabilities of discontinued operations for PGSC and RRC as of December 31, 2023:
(in thousands) |  |  | December 31, 2023
Accounts receivable – net |  |  | $ | 20,703 |
Other current assets |  |  | 987 |
Total current assets |  |  | 21,690 |
Noncurrent assets |  |  | 2,785 |
Total assets of discontinued operations |  |  | $ | 24,475 |
Accounts payable |  |  | 4,209 |
Accrued salaries and benefits |  |  | 5,013 |
Accrued expenses |  |  | 6,910 |
Other current liabilities |  |  | 246 |
Total current liabilities |  |  | 16,378 |
Noncurrent liabilities |  |  | 1,710 |
Total liabilities of discontinued operations |  |  | $ | 18,088 |
The following table presents the major categories of income from discontinued operations:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(in thousands) | 2024 |  | 2023 |  | 2024 |  | 2023
Contract revenue | $ | — |  |  | $ | 38,433 |  |  | $ | 66,540 |  |  | $ | 101,301 |
Contract cost of sales | — |  |  | (34,506) |  |  | (60,218) |  |  | (91,970) |
Operating income from discontinued operations | — |  |  | 3,927 |  |  | 6,322 |  |  | 9,331 |
General and administrative expense | 177 |  |  | (67) |  |  | (693) |  |  | (80) |
Other expense, net | — |  |  | (111) |  |  | — |  |  | (221) |
Gain on sale of discontinued operations | 451 |  |  | — |  |  | 77,205 |  |  | — |
Income from discontinued operations before provision for income taxes | 628 |  |  | 3,749 |  |  | 82,834 |  |  | 9,030 |
Benefit from (provision for) income taxes | 204 |  |  | (31) |  |  | (2,147) |  |  | (57) |
Net income from discontinued operations | $ | 832 |  |  | $ | 3,718 |  |  | $ | 80,687 |  |  | $ | 8,973 |
In accordance with ASC Topic 205, Presentation of Financial Statements, the Company adjusted contract cost of sales to exclude corporate overhead allocated to discontinued operations for all periods presented. The following table presents select non-cash operating and investing activities related to cash flows from discontinued operations:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(in thousands) | 2024 |  | 2023 |  | 2024 |  | 2023
Depreciation and amortization | $ | — |  |  | $ | 116 |  |  | $ | 200 |  |  | $ | 347 |
Capital expenditures | — |  |  | 156 |  |  | 233 |  |  | 370 |
Stock-based compensation | 50 |  |  | 37 |  |  | 1,004 |  |  | 98 |

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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 -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
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