DISCONTINUED OPERATIONS

6 Months Ended

Jun. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

As part of our acquisition of Furmanite, we acquired a pipeline inspection business from Furmanite that primarily performs process management inspection services to contractors and operators participating primarily in the midstream oil and gas market in the United States. The business generates approximately $60 million in annual revenues. We have concluded that this business is not a strategic fit for Team and therefore we have decided not to retain it and are marketing the business to prospective buyers. We expect to complete the sale of the business within one year of the Furmanite acquisition date. We have concluded that this business qualifies as a discontinued operation upon its acquisition under GAAP. Therefore, we have classified the operating results and related assets and liabilities as discontinued operations in our condensed consolidated financial statements. Discontinued operations does not include any allocation of corporate overhead expense or interest expense.

Income from discontinued operations, net of income tax, from the date of the Furmanite acquisition, consists of the following (in thousands):

	Three Months Ended June 30, 2016		Six Months Ended June 30, 2016
	(unaudited)		(unaudited)
Revenues	$	15,906	$	21,674
Operating expenses	14,686		19,961
Gross margin	1,220		1,713
Selling, general and administrative expenses	577		858
Income from discontinued operations, before income tax	643		855
Less: Provision for income taxes	257		343
Income from discontinued operations, net of income tax	$	386	$	512

Assets and liabilities of discontinued operations classified as held for sale in the condensed consolidated balance sheet as of June 30, 2016 consist of the following (in thousands):

	June 30, 2016
	(unaudited)
Current assets of discontinued operations:
Receivables	$	14,467
Prepayments and other assets	343
Total assets of discontinued operations	14,810
Current liabilities of discontinued operations:
Other accrued liabilities	$	2,328

As discussed in Note 2, the Furmanite purchase price allocation is based on provisional measurements and is subject to change. Accordingly, the amounts of assets and liabilities attributable to discontinued operations may be adjusted upon completion of the final valuation of the acquisition.

For the three and six months ended June 30, 2016, there were no material amounts of depreciation, amortization, capital expenditures or significant operating or investing non-cash items related to discontinued operations.