Discontinued Operations

3 Months Ended

Mar. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

During 2019, management completed the sale of our Government Solutions (“GS”) segment as a result of the Firm’s decision to focus solely on the commercial technical and professional staffing services and solutions space. The GS segment consisted of Kforce Government Solutions, Inc. (“KGS”), our federal government solutions business, and TraumaFX® Solutions, Inc. (“TFX”), our federal government product business. The results of operations for both KGS and TFX have been reported as discontinued operations in our consolidated financial statements for all prior periods presented.

The following table summarizes the line items of pretax profit of the GS segment for the three months ended March 31, 2019 (in thousands):

Revenue	$	26,426
Direct costs	19,015
Gross profit	7,411
Selling, general and administrative expenses	5,432
Depreciation and amortization	235
Income from discontinued operations	1,744
Other expense, net	864
Income from discontinued operations, before income taxes	880
Income tax benefit (1)	18,001
Income from discontinued operations, net of tax	$	18,881

⁽¹⁾ During the three months ended March 31, 2019, we entered into a definitive agreement to sell KGS and recorded an increase of $18.5 million to deferred tax assets since it became apparent that the temporary difference for the excess of the outside tax basis in the equity of KGS over the amount of the inside basis in the assets of KGS would reverse in the foreseeable future. This deferred tax asset of $18.5 million was utilized and recorded as income tax expense during the three months ended June 30, 2019 when the divestiture was completed.

The accompanying Unaudited Condensed Consolidated Statements of Cash Flows are presented on a combined basis (continuing operations and discontinued operations). For the three months ended March 31, 2019, cash provided by operating activities and cash used in investing activities for discontinued operations were $5.7 million and $0.1 million, respectively.