Divestiture of SYA

The Company early adopted ASU 2014-08 during the second quarter of 2014. On July 29, 2014, the Company completed the sale of our wholly-owned subsidiary, SYA. As a result of the early adoption of ASU 2014-08, the divestiture of SYA is reported in continuing operations for all periods presented. The purchaser of SYA paid approximately $1,300,000 for 100% of the capital stock and $60,000 for estimated excess working capital which is subject to adjustment within 90 days of the closing date, in cash, to the Company at the closing, with $50,000 of such consideration placed in escrow for a period of one year to cover any claims by the purchaser for indemnification for certain limited types of losses incurred by the purchaser following the closing.  The proceeds received were used to pay down our revolver and used for working capital. SYA was a professional engineering and environmental consulting services company and was in the Company’s Services Segment. As of September 30, 2014, expenses related to the sale of SYA totaled approximately $92,000. The Company recorded a loss on the sale of SYA of approximately $48,000 (net of taxes of $0), which included an additional estimated excess working capital of approximately $42,000. The loss on the sale of $48,000 was included in “other” expense on our Consolidated Statements of Operations. In 2013, SYA had net revenues of $2,564,736 and a net loss of $621,288.

Discontinued Operations

In accordance with ASU 2014-08, the Company continues to present discontinued operations as previously presented in the Company’s fiscal 2013 Annual Report on Form 10-K prior to the adoption of ASU 2014-08 as follows:

Our discontinued operations consist of our Perma-Fix of South Georgia, Inc. (“PFSG”) facility which met the held for sale criteria under ASC 360, “Property, Plant, and Equipment” on October 6, 2010. Our discontinued operations also encompass our Perma-Fix of Fort Lauderdale, Inc. (“PFFL”), Perma-Fix of Orlando, Inc. (“PFO”), Perma-Fix of Maryland, Inc. (“PFMD”), Perma-Fix of Dayton, Inc. (“PFD”), and Perma-Fix Treatment Services, Inc. (“PFTS”) facilities, which were divested on August 12, 2011, October 14, 2011, January 8, 2008, March 14, 2008, and May 30, 2008, respectively. Our discontinued operations also include two previously shut down locations, Perma-Fix of Michigan, Inc. (“PFMI”), and Perma-Fix of Memphis, Inc. (“PFM”).

On August 14, 2013, our PFSG facility incurred fire damage which left it non-operational. Certain equipment and portions of the building structures were damaged. The Company carries general liability, pollution, property and business interruption, and workers compensation insurance with a maximum deductible of approximately $300,000. On June 20, 2014, the Company entered into a settlement agreement and release with one of its insurance carriers, resulting in receipt of approximately $3,850,000 in insurance settlement proceeds on June 30, 2014, which was used to pay down the Company’s Revolving Credit facility. As of September 30, 2014, the Company recognized a gain of $3,530,000 (of which a $11,000 loss was recognized in the third quarter of 2014), which was comprised of a $2,977,000 gain on disposal of property and equipment and $553,000 of expenses, clean-up costs, and business interruption recoveries. During the nine months ended September 30, 2014, the Company received $8,462,000 of insurance proceeds of which $5,727,000 was for property and equipment and $2,735,000 was for expenses, clean-up costs, and business interruption recoveries. During the twelve months ended December 31, 2013, the Company received $3,664,000 of insurance proceeds of which $1,750,000 was for property and equipment and $1,914,000 was for expenses, clean-up costs, and business interruption recoveries.

The Company is currently evaluating options regarding the future operation of the PFSG facility. The Company continues to market our PFSG facility for sale. As required by ASC 360, based on our internal financial valuations, the Company concluded that tangible asset impairments existed for PFSG as of September 30, 2014 and recorded approximately $723,000 of asset impairment charges, of which approximately $38,000 was recorded in the third quarter of 2014, with the remaining $685,000 recorded in the second quarter of 2014. The asset impairment charges are included in “loss from discontinued operations, net of taxes.” No remaining intangible assets exist at PFSG at September 30, 2014.

The following table summarizes the results of discontinued operations for the three and nine months ended September 30, 2014 and 2013. The operating results of discontinued operations are included in our Consolidated Statements of Operations as part of our “Income (loss) from discontinued operations, net of taxes.”