Discontinued Operations

3 Months Ended

Sep. 30, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

During the fourth quarter of fiscal 2014, the Company conducted a strategic review of the Mercury Intelligence Systems (“MIS”) business unit which encompassed an assessment of MIS' financial performance and contemporaneous future financial projections. The Company, with Board of Director's approval, concluded that a plan to divest the MIS business unit would be in the best interests of the Company and its shareholders.

The Company's MIS business unit met the "held for sale" criteria in accordance with FASB ASC 205. As the Company does not anticipate continuing involvement in the operations of MIS after its divestiture, the MIS operating results have been reported as a discontinued operation for all periods presented.

MIS is considered its own operating segment and was previously aggregated with MDS into one reportable segment based on similar economic and qualitative factors in accordance with FASB ASC 280. As MIS is a discontinued operation, the results of MIS have been excluded from the MDS reportable segment.  Accordingly, the revenues, costs of revenue, operating expenses, assets and liabilities of MIS have been reported separately in the Consolidated Statements of Operations and Comprehensive Income (Loss) and Consolidated Balance Sheets for all periods presented. The discontinued operation's balances in the Consolidated Balance Sheets do not reflect intercompany receivable balances of MIS, and the results of discontinued operations do not reflect interest expense or the allocation of the Company's corporate general and administrative expenses.

The amounts reported in (loss) income from discontinued operations, net of income taxes were as follows:

	For the Three Months Ended September 30,
	2014			2013
Net revenues of discontinued operations	$	1,839		$	3,214
Costs of discontinued operations:
Cost of revenues	1,225			2,191
Selling, general and administrative	647			780
Research and development	171			32
Amortization of intangible assets	124			123
Acquisition costs and other related expenses	33			—
(Loss) income from discontinued operations before income taxes	(361		)	88
Tax (benefit) provision	(143		)	40
(Loss) income from discontinued operations	$	(218	)	$	48

The amounts reported as assets and liabilities of the discontinued operations were as follows:

	September 30, 2014		June 30, 2014
Accounts receivable, net	$	303	$	925
Unbilled receivables and costs in excess of billings	401		248
Deferred income taxes	88		77
Prepaid expenses and other current assets	102		124
Property and equipment, net	431		475
Goodwill	2,283		2,283
Intangible assets, net	1,938		2,062
Other non-current assets	33		39
Assets of discontinued operations	$	5,579	$	6,233
Accounts payable	$	21	$	127
Accrued expenses	879		802
Accrued compensation	483		689
Deferred income taxes	771		818
Liabilities of discontinued operations	$	2,154	$	2,436

The depreciation, amortization and significant operating and investing non-cash items of the discontinued operations were as follows:

	For the Three Months Ended September 30,
	2014		2013
Depreciation	$	44	$	38
Amortization of intangible assets	$	124	$	123
Stock-based compensation expense	$	63	$	47