General form of registration statement for all companies including face-amount certificate companies

Discontinued Operations

v3.21.2
Discontinued Operations
 6 Months Ended 12 Months Ended
Jun. 30, 2021
Dec. 31, 2020
Discontinued Operations and Disposal Groups [Abstract]    
Discontinued Operations
7.
Discontinued Operations
On June 12, 2020, the Company completed the sale of 100% of its interest in the Launch Division to M&Y Space for a final purchase price of $31.6 million. In connection with the sale, the Bridge Loan (defined below) with Mitsui & Co. (U.S.A.), Inc. (“Mitsui U.S.A.”) of $26.0 million, plus unpaid accrued interest of $0.2 million, was extinguished and deducted from the net proceeds. In connection with the extinguishment of the Bridge Loan, accrued interest of $0.5 million recorded in accordance with the terms of the Bridge Loan was forgiven.
In connection with the 2020 SPA, the Company entered int
o
 a Transition Services Agreement with the Launch Division, wherein the Company will provide post-closing transition services to the Launch Division, including, but not limited to, the sublease of the Company’s office facility in Seattle, Washington, and common area maintenance fees related to the sublease.
Settlement Arrangement for the Sale of the Launch Division
On March 30, 2021, the Company reached an agreement with M&Y Space and the Launch Division (collectively referred to as the “Parties”), whereby the Parties settled certain disputes with respect to the purchase price in the total of $6.8 million which the Company accrued as a liability as of
December 31,
2020 see Note 11
. The Company made an upfront payment of $2.0 million on April 1, 2021. The Company terminated a launch arrangement with M&Y Space in April 2021 and the Company expects to offset the amount due to M&Y Space with a contractual refund of $3.9 million. As a result, the Company recorded a reduction to the accrued liability and a reduction to satellite procurement on the unaudited condensed consolidated balance sheet. Additionally, the Company recognized an unfavorable working capital adjustment of $1.0 million related to a potential shortfall in accounts receivable in the closing balance sheet delivered to M&Y Space. This number may be adjusted in future periods as the Company continues to analyze payments on account and legal remediation through the collection period ending in December 2021.
The following summarizes the components of the gain from discontinued operations, net of tax, that the Company has reported in the unaudited consolidated condensed statements of operations and comprehensive loss:
 
    
Six Months Ended June 30,
  
    
2021
     
2020
  
               
    
(in thousands)
  
Major classes of line items constituting gain from discontinued operations:
                  
Revenue - launch services
    $ —        $ 26,925  
Total cost and expenses
    $ —        $ 28,618  
Operating (loss)/income
    $ —        $ (1,693 )
Loss from discontinued operations, before income taxes.
    $ —        $ (1,712 ) 
(Loss)/gain on disposal of discontinued operations
    $ (1,022 )     $ 30,672  
Total (loss)/gain from discontinued operations, net of income taxes
    $ (1,022 )     $ 28,960  
 
7.
Discontinued Operations
On June 12, 2020, the Company completed the sale of 100% of its interest in the Launch Division to M&Y Space for a final purchase price of $31.6 million. In connection with the sale, the Bridge Loan (defined below) with Mitsui & Co. (U.S.A.), Inc. (“Mitsui U.S.A.”) of $26.0 million, plus unpaid accrued interest of $0.2 million, was extinguished and deducted from the net proceeds. In connection with the extinguishment of the Bridge Loan, accrued interest of $0.5 million recorded in accordance with the terms of the Bridge Loan was forgiven.
In connection with the 2020 SPA, the Company entered into a Transition Services Agreement with the Launch Division, wherein the Company will provide post-closing transition services to the Launch Division, including, but not limited to, the sublease of the Company’s office facility in Seattle, Washington, and common area maintenance fees related to the sublease.
The Company determined that as of December 31, 2019, the Launch Division met the criteria to be classified as held for sale. The Launch Division was a separate division prior to the announcement of the sale to M&Y Space. As the sale of the Launch Division represented a strategic shift that had a major effect on the Company’s operations, the Launch Division results met the criteria to be reported as discontinued operations. For the year ended December 31, 2020, the Company has reported the operating results and cash flows related to the Launch Division through June 11, 2020.
These consolidated financial statements present the Company’s results of continuing operations for the years ended December 31, 2020 and 2019, as well as the financial position as of December 31, 2020 and
 
2019, after giving effect to the disposal of the Launch Division, with the Launch Division’s historical financial results reflected as discontinued operations. During 2020 and 2019, the Company incurred significant expenses such as legal, consulting, and other transaction-related fees associated with the sale of the Launch Division, as well as other separation-related costs, that are included within discontinued operations.
The following summarizes the components of the gain/(loss) from discontinued operations, net of tax, that the Company has reported in the consolidated statements of operations and comprehensive loss:
 
    
Year Ended December 31,
  
    
    2020    
     
    2019    
  
    
(in thousands)
  
Major classes of line items constituting loss from discontinued operations:
      
Revenue - launch services
    $ 26,925    $ 46,366
Cost and expenses:
      
Service costs, excluding depreciation
      21,161      45,040
Provision for doubtful accounts
      2,128      176
General and administrative expenses
      3,590      6,908
Depreciation
      2,514      200
  
 
 
     
 
 
  
Operating loss
      (2,468 )       (5,958 ) 
Interest expense, net
      (3 )       (40 ) 
Other expense, net
      (16 )       (162 ) 
  
 
 
     
 
 
  
Loss from discontinued operations, before income taxes.
      (2,487 )       (6,160 ) 
Gain on disposal of discontinued operations
      30,672      —    
Income tax (provision) benefit
      —          —    
  
 
 
     
 
 
  
Total gain/(loss) of discontinued operations, net of income taxes
    $ 28,185    $ (6,160 ) 
  
 
 
     
 
 
  
The carrying amounts of the major classes of assets and liabilities, which are classified as held for sale in the consolidated balance sheet, are as follows:
 
    
Year Ended
December 31,
  
    
2019
  
    
(in thousands)
  
Carrying amounts of the major classes of assets included in discontinued operations
   
Cash and cash equivalents
    $ 11,383
Accounts receivable - net
      4,176
Unbilled revenue - net
      4,205
Inventory
      967
Contract advances, prepaid expenses and other current assets
      767
Property and equipment - net
      710
Other
      11
  
 
 
  
Current assets of discontinued operations
      22,219
  
 
 
  
Total Assets
      22,219
  
 
 
  
Accounts payable
      6,367
Accrued expenses
-
net
      19,206
Accrued payroll
      446
Deferred revenue
      4,648
Other liabilities
      549
  
 
 
  
Current liabilities of discontinued operations
      31,216
  
 
 
  
Total liabilities
      31,216