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Discontinued Operations & Gain on the Sale of the ASO Business Unit | 12 Months Ended
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Jun. 30, 2015
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations & Gain on the Sale of the ASO Business Unit | Discontinued Operations & Gain on the Sale of the ASO Business Unit In August 2014, the Company completed the previously announced sale of substantially all of its assets used in the Company's former ASO business unit to Lockheed Martin Corporation (“the Buyer”) for an agreed upon sales price of $61.0 million, less a working capital adjustment. The sales price was $59.3 million, which included a working capital adjustment of $1.7 million. As of June 30, 2015, the Company has received cash of $53.2 million and has recorded a receivable of $6.1 million for the indemnity holdback. The indemnity holdback is being held in escrow under the terms of an escrow agreement until February 2016 (the 18-month anniversary of the consummation of the transaction). The Company believes it will fully realize the indemnity holdback in February 2016. The ASO business consisted of (i) ownership, operation and maintenance of spacecraft processing facilities in Titusville, Florida and Vandenberg Air Force Base, California (“VAFB”); (ii) supporting government and commercial customers processing complex communication, earth observation and deep space satellite launches; (iii) designing and building spacecraft processing equipment and facilities; and (iv) providing propellant services including designing, building and testing propellant service equipment for fueling spacecraft. Additionally, as part of the Asset Sale, the Company used a portion of the proceeds to pay off the outstanding balance of its term loan of $5.7 million, which was secured by assets of the ASO business. As such, 100% of the interest expense on the debt was allocated to discontinued operations in the amount of $62 thousand and $256 thousand for the years ended June 30, 2015 and 2014, respectively. The sale of our former ASO business, which was previously reported within our former ASO business unit segment, resulted in a pre-tax gain of $25.4 million ($20.6 million after-tax) for the year ended June 30, 2015. The pre-tax gain on this sale reflects the excess of the sum of the cash proceeds received over the net book value of the net assets of the Company’s former ASO business. The total pre-tax gain on the sale for the year ended June 30, 2015, includes the following (in thousands):
Cash proceeds from the sale of the ASO business |  | $ | 53,189 |
Receivable for indemnity holdback |  | 6,100 |
Liabilities assumed by the Buyer |  | 2,478 |
Net book value of assets sold |  | (36,175 | )
Other |  | (156 | )
Gain on sale of our former ASO business |  | $ | 25,436 |
The Company and the Buyer entered into a Transition Services Agreement (“TSA”) to which the Company and the Buyer agreed to provide the other party with certain services, including, among others, services related to benefits, human resources and payroll administration, cash management, financial statements and compliance, each of a type currently provided by or for the Company or our former ASO business unit prior to the Asset Sale. Pursuant to the TSA, the Company agreed to provide services to the Buyer for a period of up to one year, and the Buyer agreed to provide services to the Company for a period of up to six months. Each party has the option to extend the term of the services provided by the other party for a period of one year. The services provided may be terminated by the party receiving such services on an individual basis upon 30 days notice to the providing party. The party receiving services shall pay the providing party, as consideration for such services, on a time and materials basis, fees based upon an agreed upon set fringe rate and fee rate and the salary of the employee of the providing party who is providing such services. While we are a party to the transition services agreement, we have determined that the continuing cash flows generated by this agreement did not constitute significant continuing involvement in the operations of our former ASO business. As such, the net assets, operating results and cash flows related to our former ASO business have been separately reflected as discontinued operations for the years ended June 30, 2015 and 2014. The following table provides a reconciliation of the major assets and liabilities of our former ASO business to the amounts reported in the previously reported consolidated balance sheet (in thousands):
|  | June 30, 2014
Carrying amounts of major classes of assets included as part of discontinued operations |  |  |
Accounts receivable, net |  | $ | 1,220 |
Prepaid expenses and other current assets |  | 185 |
Property and equipment, net |  | 33,858 |
Other assets, net |  | 29 |
Total assets of discontinued operations |  | $ | 35,292 |
Carrying amounts of major classes of liabilities included as part of discontinued operations |  |  |
Accounts payable |  | $ | 184 |
Accrued liabilities and other |  | 632 |
Short-term deferred revenue |  | 873 |
Term note payable |  | 5,655 |
Long-term deferred revenue |  | 237 |
Total liabilities of discontinued operations |  | $ | 7,581 |
The following table provides a reconciliation of the major components of income of our former ASO business to the amounts reported in the consolidated statements of operations (in thousands):
|  |  |  | Year Ended June 30,
|  |  |  |  |  | 2015 |  | 2014
Major line items constituting income of discontinued operations |  |  |  |  |  |  |  |  |  |
Revenue |  |  |  |  |  | $ | 2,807 |  |  | $ | 16,294 |
Cost of revenue |  |  |  |  |  | (1,313 | ) |  | (10,704 | )
Selling, general and administrative |  |  |  |  |  | (128 | ) |  | (786 | )
Other expense, net |  |  |  |  |  | (63 | ) |  | (193 | )
Gain on sale of discontinued operations |  |  |  |  |  | 25,436 |  |  | — |
Income tax expense |  |  |  |  |  | (6,138 | ) |  | (4,154 | )
Income on discontinued operations |  |  |  |  |  | $ | 20,601 |  |  | $ | 457 |
Revenue generated by our former ASO business unit payload processing facilities was recognized ratably over the occupancy period of the satellite while in those facilities from arrival through launch. Those contracts were firm fixed price mission specific contracts. The percentage-of-completion method was used for all contracts where incurred costs could be reasonably estimated and successful completion could be reasonably assured at inception. Changes in estimated costs to complete and provisions for contract losses were recognized in the period they become known. Below is a summary of revenue recognition methods under our former ASO business unit:
Services/Products Provided |  | Contract Type |  | Method of Revenue Recognition
Payload Processing Facilities |  | Firm Fixed Price — Mission Specific |  | Ratably, over the occupancy period of a satellite within the facility from arrival through launch
Construction Contracts |  | Firm Fixed Price |  | Percentage-of-completion based on costs incurred
Engineering Services |  | Cost Reimbursable Award/Fixed Fee |  | Reimbursable costs incurred plus award/fixed fee

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- Definition The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1436-107760 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1474-107760 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1510-107760 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e957-107759 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1020-107759 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1012-107759 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=8077374&loc=d3e2443-110228 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2941-110230 + Details
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