Discontinued Operations

6 Months Ended

Jun. 30, 2019

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

6. DISCONTINUED OPERATIONS

In 2018, in a continuing effort to streamline our business and align our business strategy for further integration of services and products, the Company committed to divest the business of our full range of permanent downhole monitoring systems and related services, which had been part of our Production Enhancement segment.

On June 7, 2019, we entered into a definitive purchase agreement for the divestiture of our full range of permanent downhole monitoring systems and related services, which was previously part of our Production Enhancement segment for approximately $16.6 million in cash. The purchase agreement also provides for additional proceeds of up to $2.5 million based on the results of operations of the sold business in 2019 and 2020, none of which has been recognized. A pre-tax gain of $8.8 million was recognized in connection with this transaction, subject to adjustments for working capital purposes and is classified in Income from discontinued operations in the Consolidated Statements of Operations.

The associated results of operations are separately reported as Discontinued Operations for all periods presented on the Consolidated Statements of Operations. Balance sheet items for this discontinued business, including an allocation of goodwill from the Production Enhancement segment, have been reclassified to Other current assets and Other current liabilities in the Consolidated Balance Sheet as of December 31, 2018. Cash flows from this discontinued business are shown below. As such, the results from continuing operations for the Company and segment highlights for Production Enhancement, exclude these discontinued operations.

Selected data for this discontinued business consisted of the following (in thousands):

	Three Months Ended
	June 30, 2019		June 30, 2018
Service revenue	$	466	$	427
Product sales		2,465		1,179
Total revenue		2,931		1,606
Cost of services, exclusive of depreciation expense shown below		345		309
Cost of product sales, exclusive of depreciation expense shown below		1,554		1,361
Depreciation and amortization		—		44
Other expense		117		14
Operating income (loss)		915		(122	)
Gain on sale		8,804		—
Income (loss) from discontinued operations before income tax expense		9,719		(122	)
Income tax expense		1,748		206
Income (loss) from discontinued operations, net of income taxes	$	7,971	$	(328	)

	Six Months Ended
	June 30, 2019		June 30, 2018
Service revenue	$	1,165	$	902
Product sales		4,233		1,710
Total revenue		5,398		2,612
Cost of services, exclusive of depreciation expense shown below		690		874
Cost of product sales, exclusive of depreciation expense shown below		3,196		2,180
Depreciation and amortization		—		102
Other expense		91		22
Operating income (loss)		1,421		(566	)
Gain on sale		8,804		—
Income (loss) from discontinued operations before income tax expense		10,225		(566	)
Income tax expense		1,995		108
Income (loss) from discontinued operations, net of income taxes	$	8,230	$	(674	)

	June 30, 2019		December 31, 2018
Current assets	$	—	$	3,712
Non-current assets		—		1,848
Total assets	$	—	$	5,560
Current liabilities	$	—	$	1,633
Non-current liabilities		—		82
Total liabilities	$	—	$	1,715

Net cash provided by (used in) operating activities of discontinued operations for the six months ended June 30, 2019 and 2018 was $(1.8) million and $0.1 million, respectively.

Net cash provided by investing activities of discontinued operations for the six months ended June 30, 2019 and 2018 was $16.6 million and $0.0 million, respectively.