Discontinued Operations

9 Months Ended

Sep. 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 $8.3 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
	September 30, 2019			September 30, 2018
Service revenue	$	—		$	167
Product sales		—			2,058
Total revenue		—			2,225
Cost of services, exclusive of depreciation expense shown below		—			87
Cost of product sales, exclusive of depreciation expense shown below		—			1,944
Depreciation and amortization		—			14
Other expense		—			(1	)
Operating income (loss)		—			181
Adjustment to gain on sale		(485	)		—
Income (loss) from discontinued operations before income tax expense		(485	)		181
Income tax expense (benefit)		(88	)		(27	)
Income (loss) from discontinued operations, net of income taxes	$	(397	)	$	208

	Nine Months Ended
	September 30, 2019		September 30, 2018
Service revenue	$	1,165	$	1,069
Product sales		4,233		3,768
Total revenue		5,398		4,837
Cost of services, exclusive of depreciation expense shown below		690		961
Cost of product sales, exclusive of depreciation expense shown below		3,196		4,124
Depreciation and amortization		—		115
Other expense		91		22
Operating income (loss)		1,421		(385	)
Gain on sale		8,319		—
Income (loss) from discontinued operations before income tax expense		9,740		(385	)
Income tax expense		1,907		81
Income (loss) from discontinued operations, net of income taxes	$	7,833	$	(466	)

	September 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 nine months ended September 30, 2019 and 2018 was $0.1 million and $(0.5) million, respectively.

Net cash provided by investing activities of discontinued operations for the nine months ended September 30, 2019 and 2018 was $14.8 million and $0.0 million, respectively.