Note 5 - Assets and Liabilities Held for Sale

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

5. ASSETS AND LIABILITIES HELD FOR SALE

During the first half of 2019, the Company initiated plans to sell several entities as part of its ongoing strategic actions intended to generate more predictable and sustainable long-term earnings growth.  Within Infrastructure Solutions, the Company plans to divest its CIPP contracting businesses in Europe: Insituform Netherlands, Insituform Spain and Environmental Techniques.  Within Corrosion Protection, the Company plans to divest its interests in Corrpower, Aegion South Africa and United Mexico.  The Company is currently in various stages of discussions with third parties for each of the entities and believes that it is probable that a sale of each entity will occur in the second half of 2019.

During 2018, the Company’s board of directors approved a plan to divest the assets and liabilities of Insituform Australia.  During the second quarter of 2019, the Company ended its negotiations with a potential third-party acquirer and began discussions with another third party.  Because of these new negotiations, management believes that it is probable that a sale will occur in the second half of 2019.

The relevant asset and liability balances at June 30, 2019 and December 31, 2018 are accounted for as held for sale and measured at the lower of carrying value or fair value less cost to sell.  Based on management’s current expectation of fair value less cost to sell, the Company recorded an impairment of assets held for sale of $11.9 million in the Consolidated Statement of Operations during the quarter ended June 30, 2019.  Impairment charges of $5.1 million and $3.9 million were recorded for Insituform Australia and Insituform Netherlands, respectively, which are reported within the Infrastructure Solutions reportable segment, and $1.1 million and $1.8 million were recorded for Corrpower and United Mexico, respectively, which are reported within the Corrosion Protection reportable segment.  In the event the Company is unable to sell the assets and liabilities or sells them at a price or on terms that are less favorable, or at a higher cost than currently anticipated, the Company could incur additional impairment charges or a loss on disposal.

The following table provides the components of assets and liabilities held for sale (in thousands):

	June 30, 2019(1)			December 31, 2018(2)
Assets held for sale:
Current assets
Cash and cash equivalents	$	1,330		$	—
Restricted cash		379			—
Receivables, net		9,888			1,309
Retainage		623			15
Contract assets		8,301			1,777
Inventories		5,136			2,123
Prepaid expenses and other current assets		2,264			300
Total current assets		27,921			5,524
Property, plant & equipment, less accumulated depreciation		8,823			2,268
Goodwill		4,224			—
Intangible assets, less accumulated amortization		1,470			—
Operating lease assets		769			—
Deferred income tax assets		730
Other assets		170			—
Impairment of assets held for sale		(11,946	)		—
Total assets held for sale	$	32,161		$	7,792
Liabilities held for sale:
Current liabilities
Accounts payable	$	5,779		$	1,331
Accrued expenses		7,971			3,891
Contract liabilities		2,081			38
Current maturities of long-term debt		864			—
Total current liabilities		16,695			5,260
Operating lease liabilities		357			—
Other non-current liabilities		340			—
Total liabilities held for sale	$	17,392		$	5,260

⁽¹⁾  Includes Insituform Australia, Insituform Netherlands, Insituform Spain, Environmental Techniques, Corrpower, Aegion South Africa and United Mexico.

⁽²⁾  Includes Insituform Australia.