Discontinued Operations

3 Months Ended

Sep. 30, 2012

Discontinued Operations

Note 4. – Discontinued Operations

All of the businesses discussed below are reported as discontinued operations and the condensed consolidated financial statements for all prior periods have been adjusted to reflect this presentation.

Results for all of the businesses included in discontinued operations are presented in the following table:

	Three Months Ended
	September 30,
	2012			2011
Net Revenues:
Dexter	$	4,829		$	5,061
Memorial		0			3,610
	$	4,829		$	8,671
Earnings (loss) before income taxes:
Dexter	$	432		$	791
Memorial		(21	)		(463	)
Life sciences and engineering		(34	)		(22	)
Earnings (loss) before income taxes		377			306
Gain on Sale - Memorial		1,191			0
Income tax expense		1,370			118
Earnings from discontinued operations	$	198		$	188

Dexter Hospital - On October 26, 2012, the Company and its Dexter subsidiary entered into an Agreement with SoutheastHEALTH to sell substantially all of the assets of Dexter to SoutheastHEALTH (see Note 3 – Subsequent Events). Dexter’s operations have been reclassified as discontinued operations in our condensed consolidated financial statements as of September 30, 2012 and June 30, 2012 and for the three month periods ended September 30, 2012 and 2011.

Memorial Hospital of Adel – On July 2, 2012, the Company and its HealthMont of Georgia, Inc. subsidiary completed the sale of substantially of all the assets of the Company’s Memorial Hospital of Adel and Memorial Convalescent Center (collectively “Memorial”) to Hospital Authority of Tift County, Georgia (“Tift”) for approximately $8,350. Excluded assets include accounts receivable as of the March 31, 2012 (“Cutoff Date”) and all Medicare and Medicaid incentive payments (“EHR Funds”) for meaningful use of electronic health record technology and all receivables, claims and settlements made pursuant to the Indigent Care Trust Fund of the State of Georgia (“ICTF”) paid with respect to the State of Georgia’s fiscal year ended June 30, 2012. Retained liabilities consist of liabilities incurred prior to July 2, 2012. The net proceeds from the sale of approximately $7,500 were used to repay a portion of the Company’s senior debt under the Term Loan under the Company’s Credit Facility. Memorial’s operations have been reclassified as discontinued operations in our condensed consolidated financial statements as of September 30, 2012 and June 30, 2012 and for the three month periods ended September 30, 2012 and 2011.

Life Sciences and Engineering Segment – SunLink retained a defined benefit retirement plan which covered substantially all of the employees of this segment when the segment was sold in fiscal 1998. Effective February 28, 1997, the plan was amended to freeze participant benefits and close the plan to new participants. Pension expense and related tax benefit or expense is reflected in the results of operations for this segment for the three months ended September 30, 2012 and 2011. The components of pension expense for the three months ended September 30, 2012 and 2011, respectively, were as follows:

	Three Months Ended
	September 30,
	2012			2011
Interest Cost	$	17		$	18
Expected return on assets		(10	)		(10	)
Amortization of prior service cost		27			14
Net pension expense	$	34		$	22

SunLink did not contribute to the plan in the three months ended September 30, 2012. We expect to make contributions of $80 to the plan through the end of the fiscal year ending June 30, 2013.