DISCONTINUED OPERATIONS

On March 31, 2018, the Company completed the sale of its RTM Businesses in Belgium, Europe (excluding Belgium) and Asia Pacific in separate transactions to Value Plus NV, Morgan Philips Group S.A., and Apache Group Holdings Pty Limited, respectively. The gross proceeds from the sale were $38,960. In addition $17,626 of debt was assumed by the buyers.

The following is a reconciliation of the gross proceeds to the net proceeds from the Sales Transaction as presented in the statements of cash flows for the year ended December 31, 2018.



Gross proceeds	$	38,960
Add: purchase price adjustments	176
Less: cash and restricted cash sold	(9,547		)
Less: transaction costs	(1,797		)
Net cash proceeds as presented in the statements of cash flows	$	27,792

The divestiture generated a pre-tax gain of $13,861 for the year ended December 31, 2018, which includes a benefit of $10,819 reclassification adjustment relating to the net foreign currency translation gains previously included in accumulated other comprehensive income. The pre-tax gain is subject to adjustment for various purchase price adjustments.

The RTM businesses met the criteria for discontinued operations set forth in ASC 205 on March 31, 2018 subsequent to approval of the sale by our stockholders. The Company reclassified its discontinued operations for all periods presented and has excluded the results of its discontinued operations from continuing operations and from segment results for all periods presented.

The carrying amounts of the classes of assets and liabilities from the RTM businesses included in discontinued operations were as follows:



	December 31, 2018		December 31, 2017
Cash	$	—	$	15,460
Accounts receivable	—		60,333
Prepaid and other current assets	941		3,737
Total current assets	941		79,530
Property and equipment, net	—		6,251
Deferred tax assets, non-current	—		6,080
Other assets, non-current	—		1,570
Total non-current assets	—		13,901
Total assets	$	941	$	93,431

Accounts payable	$	—	$	5,764
Accrued expenses and other current liabilities	115		39,108
Short-term borrowings	—		7,080
Total current liabilities	115		51,952
Total non-current liabilities	—		6,210
Total liabilities	$	115	$	58,162

Reported results for the discontinued operations by period were as follows:



	Year Ended December 31,
	2018			2017
Revenue	$	108,463		$	397,106
Direct costs	69,800			252,430
Gross profit	38,663			144,676
Operating expenses:
Salaries and related	29,032			107,611
Office and general	7,441			26,171
Marketing and promotion	914			3,691
Depreciation and amortization	680			2,387
Goodwill impairment	—			1,909
Business reorganization	50			842
Operating income (loss)	546			2,065
Non-operating income (expense):
Interest income (expense), net	(88		)	(394		)
Other non-operating income (loss)	216			(352		)
Income (Loss) from discontinued operations before taxes and gain (loss) on sale	674			1,319
Gain (loss) from sale of discontinued operations	13,861			—
Income (loss) from discontinued operations before income taxes	14,535			1,319
Provision (benefit) for income taxes	1,402			1,416
Income (loss) from discontinued operations	$	13,133		$	(97	)

Depreciation, capital expenditures, and significant operating and investment non cash items of the discontinued operations by period were as follows:



	Year Ended December 31,
	2018		2017
Depreciation and amortization	$	680	$	2,387
Stock-based compensation expense	$	233	$	249
Capital expenditures	$	284	$	1,471

RTM Revenue Recognition

The Company's RTM businesses delivered permanent recruitment, contracting, and talent management solutions to its clients. The contracts have a single performance obligations and we recognized revenue from these services over time in an amount that reflects the consideration expected to be entitled to in exchange for our services. We do not incur incremental costs to obtain these contracts. The costs to fulfill these contracts were expensed as incurred. See Note 2 for additional information on the Company's revenue recognition policies.

Permanent recruitment revenue. We recognize permanent placement revenue when employment candidates accept offers of permanent employment. We have a substantial history of estimating the financial impact of permanent placement candidates who do not remain with its clients through the typically 90-day guarantee period. Fees to clients are generally calculated as a percentage of the new employee’s annual compensation. No fees for permanent placement services are charged to employment candidates.

Temporary contracting revenue. We recognize temporary contracting revenue over time in the amount to which the Company has a right to invoice, when the services are rendered by the Company’s temporary employees which is generally calculated as hours worked multiplied by the agreed-upon hourly bill rate. The client simultaneously receives and consumes the benefits of the services as they are provided. We do not incur costs to obtain our temporary contracting contracts. The costs incurred to fulfill these contracts are expensed as incurred.

Talent management revenue. Talent management services generally contain a single performance obligation satisfied over time. Revenue is recognized over time as the performance obligation is satisfied, because the services provided do not have any alternative use to the Company, and contracts generally include language giving the Company an enforceable right to payment for services provided to date. We measure revenue using an output method. Cost incurred represents work performed and thereby best depicts the transfer of control to the customer.

Disaggregation of Revenue

The following table presents our disaggregated revenues from discontinued operations by revenue source.



	Year Ended December 31, 2018
	Permanent Recruitment		Contracting		Talent Management		Other		Total
Revenue	$	20,700	$	76,615	$	10,694	$	454	$	108,463
Direct costs (1)	190		67,980		1,225		405		69,800
Gross profit	$	20,510	$	8,635	$	9,469	$	49	$	38,663

	Year Ended December 31, 2017
	Permanent Recruitment		Contracting		Talent Management		Other		Total
Revenue	$	81,490	$	275,375	$	38,092	$	2,149	$	397,106
Direct costs (1)	359		243,244		6,687		2,140		252,430
Gross profit	$	81,131	$	32,131	$	31,405	$	9	$	144,676

(1)

Direct costs include the direct staffing costs of salaries, payroll taxes, employee benefits, travel expenses, and insurance costs for the Company’s contractors and reimbursed out-of-pocket expenses and other direct costs. Other than reimbursed out-of-pocket expenses, there are no other direct costs associated with the Permanent Recruitment and Other categories. Gross profit represents revenue less direct costs. The region where services are provided, the mix of contracting, and permanent recruitment, and the functional nature of the staffing services provided can affect gross profit.