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Discontinued Operations & Gain on the Sale of the ASO Business Unit
 9 Months Ended
Mar. 31, 2016
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 sale of substantially all of its assets used in the Company’s former Astrotech Space Operations (“ASO”) business unit (the “Asset Sale”) to Lockheed Martin Corporation (the “Buyer”) for an agreed-upon sales price of $61.0 million, less a working capital adjustment. The net sales price was $59.3 million, which included a working capital adjustment of $1.7 million and an indemnity holdback of $6.1 million. As of March 31, 2016, the Company has received the full net sales price in cash of $59.3 million. The indemnity holdback was being held in escrow under the terms of an escrow agreement until February 2016 (the 18-month anniversary of the consummation of the transaction). 100% of the indemnity holdback was released on February 25, 2016 and no further claims may be made. 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 certain 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 for the nine months ended March 31, 2015.
 
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


   
Even though we were a party to a transition services agreement that expired on August 22, 2015, 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 operating results and cash flows related to our former ASO business have been separately reflected as discontinued operations for the quarter and nine months ended March 31, 2015.
 
The following table provides a reconciliation of the major components of income of our former ASO business to the amounts reported in the condensed consolidated statements of operations (in thousands): 

 
 
Three Months Ended 
 March 31,
 
Nine Months Ended 
 March 31,
 
 
2016
 
2015
 
2016
 
2015
Major line items constituting income of discontinued operations
 
 

 
 

 
 

 
 

Revenue
 
$
—

 
$
—

 
$
—

 
$
2,807

Cost of revenue
 
—

 
—

 
—

 
(1,313
)
Selling, general and administrative
 
—

 
—

 
—

 
(128
)
Other expense, net
 
—

 
—

 
—

 
(63
)
Gain on sale of discontinued operations (1)
 
—

 
—

 
—

 
25,630

Income tax expense
 
—

 
(753
)
 
—

 
(3,315
)
Gain on discontinued operations
 
$
—

 
$
(753
)
 
$
—

 
$
23,618

1.
An adjustment of $194 thousand was made during the fourth quarter of fiscal year 2015.