Team (TISI)

Nine Months Ended February 28, 2007 Compared To Nine Months Ended February 28, 2006

Revenues. Revenues from continuing operations for the nine month period ended February 28, 2007 were $222.2 million compared to $183.8 million in the nine month period ended February 28, 2006, an increase of $38.4 million or 21%. Revenue growth reflects continued market share growth due to continued procurement consolidation trends by our major customers, extensive turnaround and new project work across the country and more favorable pricing resulting from the increased demand. Revenues increased for both our TMS division and TCM division and in 12 out of 13 of the geographic regions in which our two divisions operate. Revenues for the TCM division in the nine month period ended February 28, 2007 were $116.2 million compared to $102.0 million in the prior period, an increase of $14.2 million or 14%. Revenues for the TMS division in the nine month period ended February 28, 2007 were $106.0 million compared to $81.8 million in the prior period, an increase of $24.1 million, or 30%.

Gross Margin. Gross margin from continuing operations in the nine month period ended February 28, 2007 was $76.3 million compared to $61.7 million in the nine month period ended February 28, 2006, an increase of $14.6 million or 24%. Gross margin as a percentage of sales was consistent at 34% in the current year period when compared to the prior year period. For the current year period, gross margin was $40.6 million for the TMS division and $35.7 million for the TCM division. For the current year period, gross margin as a percentage of sales was 38% for the TMS division and 31% for the TCM division. For the prior year period, gross margin was $31.1 million for the TMS division and $30.6 million for the TCM division. For the prior year period, gross margin as a percentage of sales was 38% for the TMS division and 30% for the TCM division.

Selling, General and Administrative Expenses. SG&A of continuing operations in the nine month period ended February 28, 2007 was $55.5 million compared to $47.2 million in the nine month period ended February 28, 2006, an increase of $8.3 million or 18%. For the current year period, SG&A attributable to field operations was $45.4 million and SG&A attributable to corporate administration was $10.1 million, which included stock option related expense of $0.9 million and $0.6 million of costs relating to the independent investigation (please see Note 10). For the prior year period, SG&A attributable to field operations was $39.6 million and SG&A attributable to corporate administration was $7.6 million, which included no stock option related expense. The increase in SG&A attributable to field operations was primarily due to field level resources and infrastructure to support the growth of the business.

Bad Debt Expense. Bad debt expense from continuing operations was $1.8 million in the nine month period ended February 28, 2007 compared to $0.9 million in the nine month period ended February 28, 2006, an increase of $0.9 million. The increase in bad debt expense is attributable to increased levels of sales, a billing dispute with a large customer and a $0.4 million pre-tax charge related to an internal investigation (please see Note 10).

Interest. Interest expense attributable to continuing operations was $3.2 million in the nine month period ended February 28, 2007 compared to $2.9 million in the nine month period ended February 28, 2006. This increase is the result of higher interest rates on our LIBOR based debt.

Taxes. The provision for income taxes on continuing operations was $6.4 million on pretax income of $15.8 million for the nine month period ended February 28, 2007. The provision for income taxes for the nine month period ended February 28, 2006 was $4.1 million on pretax income of $10.7 million. The effective tax rate for the nine month period ended February 28, 2007 was 40% compared to 38% for the nine month period ended February 28, 2006. The increase in effective tax rates is primarily due to the tax related effects of new stock option accounting rules.