DISCONTINUED OPERATIONS

6 Months Ended

Mar. 31, 2013

DISCONTINUED OPERATIONS

12. DISCONTINUED OPERATIONS

In May 2012, our board of directors approved and we committed to a plan to sell our Aerospace Equipment segment, which was comprised of Ampac-ISP Corp. and its wholly-owned foreign subsidiaries (“AMPAC-ISP”). The divestiture is a strategic shift that allows us to place more focus on the growth and performance of our pharmaceutical-related product lines.

On June 4, 2012, we entered into an Asset Purchase Agreement with Moog Inc. (“Moog”) (the “Asset Purchase Agreement”), pursuant to which we sold to Moog substantially all of the assets of Ampac-ISP Corp., including all of the equity interests in its foreign subsidiaries (collectively, the “Purchased Assets”). Additionally, Moog assumed certain liabilities related to the operations and the Purchased Assets. The transaction was completed effective August 1, 2012.

Under the terms of the Asset Purchase Agreement, the total consideration was approximately $46,000 (the “Purchase Price”) in cash. In addition, $4,000 of the Purchase Price (the “Escrow Amount”) will be held in an escrow account for 15 months following the closing of the transaction (the “Escrow Period”) and applied towards our indemnification obligations in favor of Moog, if any. The Asset Purchase Agreement provides that we, subject to certain limitations, indemnify Moog for damages and losses incurred or suffered by Moog as a result of, among other things, breaches of our respective representations, warranties and covenants contained in the Asset Purchase Agreement as well as any of the liabilities that we retained. The balance of the Escrow Amount remaining at the end of the Escrow Period shall be released to us. We have accounted for the Escrow Amount as a contingent gain, and accordingly have deferred recognition of the amount until all contingencies have lapsed or been resolved.

Revenues and expenses associated with the operations of AMPAC-ISP are presented as discontinued operations for all periods presented. Summarized financial information for AMPAC-ISP is as follows:

	Three Months Ended				Six Months Ended
	March 31,				March 31,
	2013		2012		2013		2012
Discontinued Operations:
Revenues	$	-	$	15,042	$	-	$	27,839
Income (loss) from Discontinued Operations, Net of Tax:
Operating income (loss) before tax	$	(78)	$	(98)	$	(64)	$	301
Income tax expense (benefit)		(28)		84		(23)		367
Net loss from discontinued operations		(50)		(182)		(41)		(66)
Adjustment to gain on sale of discontinued operations before tax		32		-		25		-
Income tax expense (benefit)		11		-		9		-
Net adjustment to gain on sale of discontinued operations		21		-		16		-
Loss from discontinued operations, net of tax	$	(29)	$	(182)	$	(25)	$	(66)