Discontinued Operations

12 Months Ended

Dec. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

During 2019, management divested the Government Solutions (“GS”) segment as a result of the Firm’s decision to focus its efforts on its Technology and FA businesses. The GS segment consisted of Kforce Government Solution (“KGS”), our former federal government solutions business, and TFX, our federal government product business.

On April 1, 2019, Kforce completed the sale of all of the issued and outstanding stock of Kforce Government Holdings, Inc., including its wholly-owned subsidiary KGS, to ManTech International Corporation for a cash purchase price of $115.0 million. Our gain on the sale of KGS, net of transaction costs, was $72.3 million. Total transaction costs were $9.6 million, which primarily includes legal and broker fees, transaction bonuses and accelerated stock-based compensation expense for KGS management triggered by a change in control of KGS.

On June 7, 2019, Kforce completed the sale of all of the issued and outstanding stock of TFX to an unaffiliated third party for a cash purchase price of $18.4 million less a post-closing working capital adjustment of $0.7 million. Our gain on the sale of TFX, net of transaction costs, was $7.0 million. Total transaction costs were $2.2 million, which primarily includes legal and broker

fees and transaction bonuses. Due to the sale of TFX, we finalized the settlement of a contingent consideration liability related to the acquisition of TFX in 2014 and paid $0.6 million during the year ended December 31, 2019.

Since the divestitures, Kforce has had no significant continuing involvement in the operations of KGS and TFX.

The results of operations for both KGS and TFX have been reported as discontinued operations in our consolidated financial statements prior to their disposition. The following table summarizes the income from discontinued operations, net of tax for the GS segment (in thousands):


	YEAR ENDED DECEMBER 31, 2019
Revenue	$	27,737
Direct costs	19,494
Gross profit	8,243
Selling, general and administrative expenses	6,988
Depreciation and amortization	307
Income from discontinued operations	948
Gain on sale of discontinued operations	79,318
Other (expense) income, net	(436)
Income from discontinued operations, before income taxes	79,830
Income tax expense	3,534
Income from discontinued operations, net of tax	$	76,296

The effective tax rate for discontinued operations, including the gain on sale of discontinued operations, was 4.4% for the year ended December 31, 2019. There are no reportable results for the years ended December 31, 2021 and December 31, 2020.

The accompanying Consolidated Statements of Cash Flows are presented on a combined basis (continuing operations and discontinued operations). The following table provides information for the total operating and investing cash flows for the GS segment (in thousands):



Cash Provided by	YEAR ENDED DECEMBER 31, 2019
GS Operating Activities	$	4,547
GS Investing Activities	$	117,798