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DISCONTINUED OPERATION:
 9 Months Ended
Jun. 30, 2011
DISCONTINUED OPERATION:  
DISCONTINUED OPERATION:

(3)      DISCONTINUED OPERATION:

 

Other Income of PEO Operation

 

During the three months ended June 30, 2011 the State of Florida determined that approximately $270,000 of escheated funds it was holding was the property of the Company and ordered that such funds be paid to the Company.  The Company’s right to the funds arose in connection with the Company’s former PEO operations that were accounted for as a discontinued operation in fiscal 2003. Accordingly, the Company has accounted for the amounts receivable as income from discontinued operations in the current period after concluding that the amount involved was not material to the results of operations in the year of discontinuance and the funds were received subsequent to June 30, 2011.

 

Sale of TeamStaff Rx

 

Based on an analysis of historical and forecasted results and the Company’s new strategic initiative to focus on core government services business, in the fourth quarter of fiscal 2009, the Company approved and committed to a formal plan to divest the operations of TeamStaff Rx, Inc. a former wholly owned subsidiary of the Company which was focused on commercial temporary staffing. In evaluating the facets of TeamStaff Rx’s operations, management concluded that this business component met the definition of a discontinued operation. Accordingly, the results of operations, cash flows and related assets and liabilities of TeamStaff Rx for all periods presented have been reclassified in the accompanying consolidated financial statements from those of continuing businesses.

 

Effective December 28, 2009, TeamStaff and TeamStaff Rx entered into a definitive Asset Purchase Agreement with Advantage RN, providing for the sale of substantially all of the operating assets of TeamStaff Rx related to TeamStaff Rx’s business of providing travel nurse and allied healthcare professionals for temporary assignments to Advantage RN. The closing of this transaction occurred on January 4, 2010. The Asset Purchase Agreement provides that the purchased assets were acquired by Advantage RN for a purchase price of up to $425,000, of which: (i) $350,000 in cash was paid at the closing, and (ii) $75,000 was subject to an escrowed holdback as described in the Asset Purchase Agreement. On March 25, 2010, the Company and Advantage RN completed the analysis related to escrow release conditions and reached an agreement as to the final purchase price. Of the $75,000 held in escrow, $25,000 was returned to the Company and $50,000 was released to Advantage RN, resulting in a final purchase price of $375,000. Additionally, Advantage RN was obligated to make rent subsidy payments to TeamStaff Rx totaling $125,000, consisting of: (i) $25,000 paid at closing, and (ii) an additional $100,000 payable in 10 equal monthly installments beginning on March 1, 2010. The last rent payment received from Advantage RN was in July 2010. They have since vacated the premises and ceased making installment payments. The Company intends to pursue a claim against Advantage RN for all amounts owed. The Company has provided an allowance for their estimate of uncollectible sub-lease funding. Under the terms of the Asset Purchase Agreement, Advantage RN did not assume any debts, obligations or liabilities of TeamStaff Rx nor did it purchase any accounts receivable outstanding as of the closing date.

 

Condensed results of discontinued operations are as follows:

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

(amounts in thousands)

 

2011

 

2010

 

2011

 

2010

 

Revenues

 

$

—

 

$

—

 

$

—

 

$

1,418

 

Direct expenses

 

—

 

—

 

—

 

(1,255

)

Selling, general and administrative expenses

 

—

 

—

 

—

 

(971

)

Other expense, net

 

—

 

—

 

—

 

(2

)

Loss from Operations

 

—

 

—

 

—

 

(810

)

Loss from disposal

 

—

 

—

 

—

 

(349

)

Other income (expense), net

 

270

 

—

 

270

 

—

 

Net income (Loss)

 

$

270

 

$

—

 

$

270

 

$

(1,159

)

 

Included in selling, general and administrative expense from discontinued operations for the nine months ended June 30, 2010 is a charge of $0.1 million for severance to certain TeamStaff Rx employees, $0.3 million in various accrued expenses related to the sale and shut down of the business, and a loss on the disposal of TeamStaff Rx approximating $0.3 million principally from recognition of the remaining unfunded operating lease payments. There were no tax benefits associated with the losses from the discontinued operation.

 

The following chart details the balance sheet components from the discontinued operations (amounts in thousands):

 

 

 

June 30,

 

September 30,

 

 

 

2011

 

2010

 

ASSETS

 

 

 

 

 

Accounts receivable

 

$

270

 

$

—

 

Total assets

 

$

270

 

$

—

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Accrued expenses and other current liabilities

 

$

232

 

$

289

 

Total liabilities

 

$

232

 

$

289