On September 2, 2022, the Company sold its NauticStar business to certain affiliates of Iconic Marine Group, LLC (“Purchaser”). Pursuant to the terms of the purchase agreement, substantially all of the assets of NauticStar were sold, including, among other things, all of the issued and outstanding membership interests in its wholly-owned subsidiary NS Transport, LLC, all owned real property, equipment, inventory, intellectual property and accounts receivable, and the Purchaser assumed substantially all of the liabilities of NauticStar, including, among other things, product liability and warranty claims.

In conjunction with the purchase agreement, the Company entered into a joint employer services agreement and a transition services agreement, which provided certain services to the Purchaser for various periods of time after the sale. Both agreements ended during the second quarter of fiscal 2023. These agreements did not a have a material impact on expenditures, earnings, nor cash flows during the year ended June 30, 2023.

Further, the Company entered into the Second Amendment to the Credit Agreement as described further in Note 9 related to waivers of restrictions within the Credit Agreement, as amended, on the sale of assets.

During the year ended June 30, 2023, the Company recognized a $22.5 million loss on sale. The final settlement of the purchase price was subject to customary working capital adjustments that had been in arbitration as of June 30, 2023, but were settled in October 2023 without a significant impact to the loss on sale previously recorded. Under the terms of the settlement, the agreed upon amounts will be paid in installments through July 2025. The value of the assets and liabilities that were retained at the time of sale, which were primarily related to certain claims, are subject to change. Certain of these claims have been settled or are expected to settle for higher amounts than previously estimated, with the related activity being recorded as discontinued operations.

The following table summarizes the results of discontinued operations for the following periods:


	Fiscal Year Ended
	June 30,			June 30,			June 30,
	2024			2023			2022
NET SALES	$	81		$	7,766		$	66,253
COST OF SALES		231			10,253			72,081
GROSS LOSS		(150	)		(2,487	)		(5,828	)
OPERATING EXPENSES:
Selling, general and administrative		1,229			2,859			6,645
Amortization of other intangible assets		—			—			2,032
Impairments		—			—			23,833
Total operating expenses		1,229			2,859			32,510
OPERATING LOSS		(1,379	)		(5,346	)		(38,338	)
Gain (loss) on sale of discontinued operations		187			(22,487	)		—
LOSS BEFORE INCOME TAX BENEFIT		(1,192	)		(27,833	)		(38,338	)
INCOME TAX BENEFIT		270			6,318			8,607
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX	$	(922	)	$	(21,515	)	$	(29,731	)

In the fourth quarter of fiscal year 2022, the NauticStar reporting unit recorded unplanned negative operating results despite ongoing efforts to improve sales volumes and yield more favorable margins, including the engagement of third-party consulting resources. These results, combined with the outlook for further supply chain disruptions, labor challenges, and higher costs from inflationary pressures, resulted in an impairment trigger in the fourth quarter related to the NauticStar reporting unit’s intangible and other long-lived assets. Based on our evaluation of projected future cash flows, we concluded that the trade name intangible asset of $8.0 million was fully impaired as of June 30, 2022.

We then performed a probability-weighted undiscounted cash flow analysis for the asset group related to the NauticStar reporting unit that considered projected cash flows from continuing to operate the assets through their remaining estimated useful lives, a potential sale, and a potential exit of the business other than through a sale and concluded that the carrying value of the asset group was not recoverable. The fair value of the finite-lived dealer network intangible asset was estimated using these cash flows, resulting in a full impairment of $10.5 million. The fair value of the fixed assets, which primarily comprised of machinery and equipment, such as tooling, was estimated using liquidation values, resulting in an impairment charge of $5.3 million against the asset group’s fixed assets.

As a result of our impairment analyses, we recorded total impairment charges of $23.8 million related to the NauticStar reporting unit’s intangible and fixed assets during the year ended June 30, 2022, which are included in Impairments in the results of discontinued operations above.