Notes to Consolidated Financial Statements
As of October 31, 2010
NOTE 1: Business
Volt Information Sciences, Inc. (Company) is a leading international
provider of staffing services, call center computer systems, telecommunication services and other information solutions. Operating through an international network of servicing locations, the Company fulfills information technology (IT),
engineering, administrative, and industrial workforce requirements of its customers for temporary and contingent personnel, managed service programs and personnel recruitment services. Call center computer systems are primarily for directory
assistance, operator services, call centers and database management. Telecommunication services include the design, engineering, construction, installation and maintenance of voice, data, video and utility infrastructure. Other information solutions
include IT managed services and maintenance and telephone directory publishing and printing. The Company was incorporated in New York in 1957.
NOTE 2: Restatement of Previously Issued Financial Statements and Other Significant Events
On July 17, 2009, the Company received an inquiry from the Securities and Exchange Commission (SEC), which the Company believes to have
resulted from allegations of a purported whistleblower. The inquiry focused on the Companys accounting for certain revenue transactions within its Computer Systems segment. As a result of this inquiry the Audit Committee of the Board
of Directors directed management to commence a review of the accounting surrounding these transactions.
On September 9, 2009, the Company
announced a delay in the filing of its Quarterly Report on Form 10-Q for the quarter ended August 2, 2009 because it required additional time to finalize its results as it was reexamining the accounting for certain revenue transactions
recorded during the year ended November 2, 2008 and the year ended October 28, 2007. In particular, the Company announced that it was reviewing the applicability of certain accounting standards associated with revenue recognition related
to its Computer Systems segment, to assess whether certain revenues and related costs should have been recorded in later periods.
As a result
of the initial findings of the review, on December 23, 2009 the Company announced its financial statements as of and for the years ended November 2, 2008 and October 28, 2007 included in the Companys Annual Reports on Form 10-K
and the Companys consolidated financial statements for the quarterly periods through May 3, 2009 included in the Companys Quarterly Reports on Form 10-Q should no longer be relied upon and would be restated
(Restatement). Additionally, the Company announced that the scope of the review had been further expanded to include additional customer contracts for the Computer Systems segment.
On May 11, 2010, the Company announced that as part of the restatement process it was also performing an overall review of its consolidated financial statements to determine whether any additional
adjustments were necessary beyond those identified in the Computer Systems segment. Subsequently, the Company announced that it had determined that additional adjustments beyond those identified for the Computer Systems segment were necessary. In
connection with the Restatement, the Board of Directors engaged experienced independent counsel to investigate the circumstances surrounding the significant restatement areas and senior managements involvement with the underlying transactions.
These internal investigations were completed in 2012.
F-7
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
On November 8, 2010, the Company reported that the Staff of the SEC was conducting a non-public
investigation, which the Company believed to be focused on accounting matters and that the Company was fully cooperating with the investigation. On January 10, 2013, the Company reached an agreement with the SEC regarding this investigation
under which it did not admit or deny the SECs allegations, was not required to pay any monetary penalty and consented to a judgment enjoining the Company from violating Section 17(a) of the Securities Act, Sections 10(b), 13(a),
13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and SEC Rules 10b-5, 12b-20, 13a-1 and 13a-11. The settlement was approved by the United States District Court for the Southern District of New York on January 18, 2013.
As a result of the Companys delays in filing its Annual Report on Form 10-K for the year ended November 1, 2009, the NYSE Regulation, Inc. (the
NYSE) suspended trading of the Companys common stock effective January 27, 2011. On that date, the Companys common stock commenced trading on the over-the-counter market under the symbol VISI, where it
continues to be traded as of the date of this filing. Effective May 30, 2011, the NYSE removed the Companys common stock from listing on the NYSE.
In connection with the Companys Restatement and associated investigations, the Company has incurred various legal and accounting expenses in the amount of $29.2 million and $0.9 million in 2010 and
2009, respectively.
The adjustments required to correct errors in the consolidated financial statements as a result of completing the
Restatement are described below. The cumulative adjustments required to correct the errors in the financial statements prior to the fiscal year ended November 2, 2008 are reflected in the restated stockholders equity as of
October 28, 2007. The cumulative effect of those adjustments reduced previously reported retained earnings by $70.7 million, increased additional paid-in-capital by $18.3 million, and increased accumulated other comprehensive income by $5.0
million at October 28, 2007.
F-8
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
The table below summarizes the effects of the Restatement adjustments on the Consolidated Statement of
Operations for the year ended November 2, 2008 (in thousands, except per share amounts).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
Revenue recognition & related
customer costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported (1)
|
|
|
Software
systems
revenue
|
|
|
Service
and other
revenue
|
|
|
Services
gross - net
presentation
|
|
|
Employment
taxes and
benefits
|
|
|
Intangible
assets
|
|
|
Income
taxes and
other
|
|
|
Restatement
tax impacts
|
|
|
As
restated
|
|
|
|
|
|
|
REVENUE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staffing services revenue
|
|
$
|
2,037,499
|
|
|
$
|
-
|
|
|
$
|
30,228
|
|
|
$
|
308,473
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
196
|
|
|
$
|
-
|
|
|
$
|
2,376,396
|
|
Other revenue
|
|
|
389,819
|
|
|
|
(40,786
|
)
|
|
|
113
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
496
|
|
|
|
-
|
|
|
|
349,642
|
|
|
|
|
|
|
NET REVENUE
|
|
|
2,427,318
|
|
|
|
(40,786
|
)
|
|
|
30,341
|
|
|
|
308,473
|
|
|
|
-
|
|
|
|
-
|
|
|
|
692
|
|
|
|
-
|
|
|
|
2,726,038
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct cost of staffing services revenue
|
|
|
1,704,841
|
|
|
|
-
|
|
|
|
(1,073
|
)
|
|
|
308,473
|
|
|
|
438
|
|
|
|
-
|
|
|
|
298
|
|
|
|
-
|
|
|
|
2,012,977
|
|
Cost of other revenue
|
|
|
347,043
|
|
|
|
(2,652
|
)
|
|
|
(5,308
|
)
|
|
|
-
|
|
|
|
186
|
|
|
|
101
|
|
|
|
761
|
|
|
|
-
|
|
|
|
340,131
|
|
Selling, administrative and other operating costs
|
|
|
360,298
|
|
|
|
(5,532
|
)
|
|
|
(743
|
)
|
|
|
-
|
|
|
|
1,214
|
|
|
|
(38
|
)
|
|
|
3,207
|
|
|
|
-
|
|
|
|
358,406
|
|
Amortization of purchased intangible assets
|
|
|
7,880
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,640
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,520
|
|
Restructuring costs
|
|
|
1,504
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,504
|
|
Impairment of purchased intangibles and goodwill
|
|
|
46,400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
88,832
|
|
|
|
-
|
|
|
|
-
|
|
|
|
135,232
|
|
|
|
|
|
|
TOTAL EXPENSES
|
|
|
2,467,966
|
|
|
|
(8,184
|
)
|
|
|
(7,124
|
)
|
|
|
308,473
|
|
|
|
1,838
|
|
|
|
91,535
|
|
|
|
4,266
|
|
|
|
-
|
|
|
|
2,858,770
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING LOSS
|
|
|
(40,648
|
)
|
|
|
(32,602
|
)
|
|
|
37,465
|
|
|
|
-
|
|
|
|
(1,838
|
)
|
|
|
(91,535
|
)
|
|
|
(3,574
|
)
|
|
|
-
|
|
|
|
(132,732
|
)
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
4,842
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,842
|
|
Interest expense
|
|
|
(7,624
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(7,604
|
)
|
Foreign exchange gain, net
|
|
|
1,155
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,696
|
|
|
|
-
|
|
|
|
2,851
|
|
Other (expense) income, net
|
|
|
(3,892
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,032
|
|
|
|
-
|
|
|
|
(2,860
|
)
|
|
|
|
|
|
TOTAL OTHER INCOME (EXPENSES)
|
|
|
(5,519
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20
|
|
|
|
2,728
|
|
|
|
-
|
|
|
|
(2,771
|
)
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
|
|
|
(46,167
|
)
|
|
|
(32,602
|
)
|
|
|
37,465
|
|
|
|
-
|
|
|
|
(1,838
|
)
|
|
|
(91,515
|
)
|
|
|
(846
|
)
|
|
|
-
|
|
|
|
(135,503
|
)
|
Income tax provision (benefit)
|
|
|
(11,896
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,927
|
|
|
|
(18,492
|
)
|
|
|
(24,461
|
)
|
|
|
|
|
|
LOSS FROM CONTINUING OPERATIONS
|
|
|
(34,271
|
)
|
|
|
(32,602
|
)
|
|
|
37,465
|
|
|
|
-
|
|
|
|
(1,838
|
)
|
|
|
(91,515
|
)
|
|
|
(6,773
|
)
|
|
|
18,492
|
|
|
|
(111,042
|
)
|
Income from discontinued operations, net of taxes
|
|
|
98,485
|
|
|
|
-
|
|
|
|
(544
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,999
|
)
|
|
|
3,383
|
|
|
|
99,325
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
64,214
|
|
|
$
|
(32,602
|
)
|
|
$
|
36,921
|
|
|
$
|
-
|
|
|
$
|
(1,838
|
)
|
|
$
|
(91,515
|
)
|
|
$
|
(8,772
|
)
|
|
$
|
21,875
|
|
|
$
|
(11,717
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER SHARE DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(1.56
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(5.05
|
)
|
Income from discontinued operations
|
|
$
|
4.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
2.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.53
|
)
|
Weighted average number of shares
|
|
|
21,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,982
|
|
(1)
|
Reflects certain reclassifications to amounts originally reported in the Companys historical 2008 financial statements, as discussed in Reclassification of
Previously Reported Amounts later in this note.
|
F-9
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
The table below summarizes the effects of the Restatement adjustments on the Consolidated Balance Sheet
at November 2, 2008 (in thousands, except share amounts).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments
|
|
|
|
|
|
|
|
|
|
Revenue recognition & related
customer costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported (2)
|
|
|
Software
systems
revenue
|
|
|
Service
and other
revenue
|
|
|
Services
gross - net
presentation
|
|
|
Employment
taxes and
benefits
|
|
|
Intangible
assets
|
|
|
Income
taxes and
other
|
|
|
Restatement
tax impacts
|
|
|
As
restated
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
120,929
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
120,929
|
|
Restricted cash
|
|
|
48,581
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
48,581
|
|
Short-term investments
|
|
|
4,178
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,178
|
|
Trade accounts receivable, net of allowances
|
|
|
488,482
|
|
|
|
(2,195
|
)
|
|
|
(13,940
|
)
|
|
|
(83,834
|
)
|
|
|
221
|
|
|
|
-
|
|
|
|
(1,587
|
)
|
|
|
-
|
|
|
|
387,148
|
|
Recoverable income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,399
|
|
|
|
38
|
|
|
|
2,437
|
|
Prepaid insurance
|
|
|
25,419
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
590
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
26,009
|
|
Other current assets
|
|
|
41,050
|
|
|
|
(3,245
|
)
|
|
|
(1,063
|
)
|
|
|
-
|
|
|
|
663
|
|
|
|
-
|
|
|
|
3,703
|
|
|
|
20,866
|
|
|
|
61,974
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS
|
|
|
728,639
|
|
|
|
(5,440
|
)
|
|
|
(15,003
|
)
|
|
|
(83,834
|
)
|
|
|
1,474
|
|
|
|
-
|
|
|
|
4,515
|
|
|
|
20,904
|
|
|
|
651,256
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid insurance and other assets, excluding current portion
|
|
|
10,201
|
|
|
|
153
|
|
|
|
780
|
|
|
|
-
|
|
|
|
28,789
|
|
|
|
-
|
|
|
|
(778
|
)
|
|
|
-
|
|
|
|
39,145
|
|
Deferred income taxes
|
|
|
17,081
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(32
|
)
|
|
|
165
|
|
|
|
26,142
|
|
|
|
43,356
|
|
Property, equipment and software, net
|
|
|
68,173
|
|
|
|
(1,110
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(203
|
)
|
|
|
-
|
|
|
|
66,860
|
|
Purchased intangible assets, net and goodwill
|
|
|
101,685
|
|
|
|
(913
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(83,621
|
)
|
|
|
-
|
|
|
|
(963
|
)
|
|
|
16,188
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
925,779
|
|
|
$
|
(7,310
|
)
|
|
$
|
(14,223
|
)
|
|
$
|
(83,834
|
)
|
|
$
|
30,263
|
|
|
$
|
(83,653
|
)
|
|
$
|
3,699
|
|
|
$
|
46,083
|
|
|
$
|
816,805
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued compensation
|
|
$
|
50,918
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
12,200
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
63,118
|
|
Accounts payable
|
|
|
215,265
|
|
|
|
168
|
|
|
|
1,066
|
|
|
|
(83,834
|
)
|
|
|
(135
|
)
|
|
|
199
|
|
|
|
531
|
|
|
|
-
|
|
|
|
133,261
|
|
Accrued taxes other than income taxes
|
|
|
22,227
|
|
|
|
-
|
|
|
|
(1,820
|
)
|
|
|
-
|
|
|
|
3,563
|
|
|
|
-
|
|
|
|
108
|
|
|
|
-
|
|
|
|
24,078
|
|
Accrued insurance and other
|
|
|
36,674
|
|
|
|
(340
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
8,679
|
|
|
|
9
|
|
|
|
1,853
|
|
|
|
(1,627
|
)
|
|
|
45,248
|
|
Deferred revenue, net, current portion
|
|
|
12,846
|
|
|
|
11,245
|
|
|
|
1,631
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25,722
|
|
Income taxes payable, current portion
|
|
|
55,569
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,783
|
)
|
|
|
12,401
|
|
|
|
(8,971
|
)
|
|
|
56,216
|
|
Short-term borrowings, including current portion of long-term debt
|
|
|
108,216
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(129
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
108,087
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
501,715
|
|
|
|
11,073
|
|
|
|
877
|
|
|
|
(83,834
|
)
|
|
|
24,307
|
|
|
|
(2,704
|
)
|
|
|
14,893
|
|
|
|
(10,598
|
)
|
|
|
455,730
|
|
|
|
|
|
|
|
|
|
|
|
Accrued insurance, excluding current portion
|
|
|
929
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
19,784
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,713
|
|
Deferred revenue, net, excluding current portion
|
|
|
2,431
|
|
|
|
50,660
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
53,091
|
|
Income taxes payable, excluding current portion
|
|
|
937
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,215
|
|
|
|
-
|
|
|
|
7,152
|
|
Deferred income taxes
|
|
|
14,551
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
850
|
|
|
|
2,967
|
|
|
|
(11,864
|
)
|
|
|
6,504
|
|
Long-term debt, excluding current portion
|
|
|
12,082
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(320
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
11,762
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
532,645
|
|
|
|
61,733
|
|
|
|
877
|
|
|
|
(83,834
|
)
|
|
|
44,091
|
|
|
|
(2,174
|
)
|
|
|
24,075
|
|
|
|
(22,462
|
)
|
|
|
554,952
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, par value $1.00; Authorized - 500,000 shares; Issued - none
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Common stock, par value $0.10; Authorized - 120,000,000 shares; Issued - 23,498,103 shares
|
|
|
2,350
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,350
|
|
Paid-in capital
|
|
|
51,006
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,160
|
|
|
|
-
|
|
|
|
98
|
|
|
|
69,264
|
|
Retained earnings
|
|
|
381,832
|
|
|
|
(68,281
|
)
|
|
|
(14,741
|
)
|
|
|
-
|
|
|
|
(13,769
|
)
|
|
|
(101,037
|
)
|
|
|
(19,626
|
)
|
|
|
69,978
|
|
|
|
234,356
|
|
Accumulated other comprehensive income (loss)
|
|
|
(400
|
)
|
|
|
(762
|
)
|
|
|
(359
|
)
|
|
|
-
|
|
|
|
(59
|
)
|
|
|
1,398
|
|
|
|
(750
|
)
|
|
|
(1,531
|
)
|
|
|
(2,463
|
)
|
Treasury stock, at cost; 2,655,297 shares
|
|
|
(41,654
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(41,654
|
)
|
|
|
|
|
|
TOTAL STOCKHOLDERS EQUITY
|
|
|
393,134
|
|
|
|
(69,043
|
)
|
|
|
(15,100
|
)
|
|
|
-
|
|
|
|
(13,828
|
)
|
|
|
(81,479
|
)
|
|
|
(20,376
|
)
|
|
|
68,545
|
|
|
|
261,853
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
|
$
|
925,779
|
|
|
$
|
(7,310
|
)
|
|
$
|
(14,223
|
)
|
|
$
|
(83,834
|
)
|
|
$
|
30,263
|
|
|
$
|
(83,653
|
)
|
|
$
|
3,699
|
|
|
$
|
46,083
|
|
|
$
|
816,805
|
|
|
|
|
|
|
(2)
|
Reflects certain reclassifications to amounts originally reported in the Companys historical 2008 financial statements, as discussed in Reclassification of
Previously Reported Amounts later in this note.
|
F-10
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
The table below summarizes the effects of the Restatement adjustments on total comprehensive income
(loss) for the year ended November 2, 2008 (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported
|
|
|
Total Adjustments
|
|
|
As restated
|
|
|
|
|
|
|
Consolidated net income (loss)
|
|
$
|
64,214
|
|
|
$
|
(75,931
|
)
|
|
$
|
(11,717
|
)
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
(2,948
|
)
|
|
|
(7,102
|
)
|
|
|
(10,050
|
)
|
Unrealized loss on marketable securities
|
|
|
(112
|
)
|
|
|
-
|
|
|
|
(112
|
)
|
|
|
|
|
|
Total other comprehensive loss
|
|
|
(3,060
|
)
|
|
|
(7,102
|
)
|
|
|
(10,162
|
)
|
|
|
|
|
|
Total consolidated comprehensive income (loss)
|
|
$
|
61,154
|
|
|
$
|
(83,033
|
)
|
|
$
|
(21,879
|
)
|
|
|
|
|
|
The table below summarizes the effects of the restatement adjustments on the major subtotals for the Consolidated
Statement of Cash Flows for the year ended November 2, 2008 (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported
|
|
|
Total Adjustments
|
|
|
As restated
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
64,214
|
|
|
$
|
(75,931
|
)
|
|
$
|
(11,717
|
)
|
Discontinued operations, net of taxes
|
|
|
(98,485
|
)
|
|
|
(840
|
)
|
|
|
(99,325
|
)
|
|
|
|
|
|
Net loss from continuing operations
|
|
|
(34,271
|
)
|
|
|
(76,771
|
)
|
|
|
(111,042
|
)
|
|
|
|
|
Adjustments to reconcile net loss to cash provided by operating activities
|
|
|
77,819
|
|
|
|
72,193
|
|
|
|
150,012
|
|
Changes in operating assets and liabilities, net of assets acquired
|
|
|
(112,728
|
)
|
|
|
1,729
|
|
|
|
(110,999
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(69,180
|
)
|
|
|
(2,849
|
)
|
|
|
(72,029
|
)
|
Net cash provided by (used in) investing activities
|
|
|
(28,558
|
)
|
|
|
1,586
|
|
|
|
(26,972
|
)
|
Net cash provided by financing activities
|
|
|
4,236
|
|
|
|
-
|
|
|
|
4,236
|
|
|
|
|
|
Cash flows from discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities from discontinued operations
|
|
|
7,044
|
|
|
|
-
|
|
|
|
7,044
|
|
Investing activities from discontinued operations
|
|
|
171,298
|
|
|
|
1,263
|
|
|
|
172,561
|
|
|
|
|
|
|
Cash provided by discontinued operations
|
|
|
178,342
|
|
|
|
1,263
|
|
|
|
179,605
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
(4,254
|
)
|
|
|
-
|
|
|
|
(4,254
|
)
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
80,586
|
|
|
|
-
|
|
|
|
80,586
|
|
Cash and cash equivalents, beginning of year
|
|
|
40,343
|
|
|
|
-
|
|
|
|
40,343
|
|
|
|
|
|
|
Cash and cash equivalents, end of year
|
|
$
|
120,929
|
|
|
$
|
-
|
|
|
$
|
120,929
|
|
|
|
|
|
|
The Restatement adjustments had no impact on the cash and cash equivalents balance as of November 2, 2008. The
restatement adjustments impacting the consolidated statement of cash flows for the fiscal year ending November 2, 2008 are predominantly included in the Companys net loss from continuing operations, offset by non-cash adjustments within
net cash used in operating activities. The significant non-cash adjustments include increases to the impairment of purchased intangibles and goodwill and increases to the deferred income tax benefit attributable to the increase to deferred
revenue which are disclosed in more detail later in this footnote. The decrease in cash used in investing activities primarily relates to the correction of recording certain software costs, which were
F-11
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
previously capitalized and presented as cash used in investing activities and now presented as cash used in operating activities. The adjustment to discontinued operations relates to the
allocation of taxes associated with the discontinued operations.
The table below summarizes the effects of the cumulative restatement
adjustments recorded to all periods prior to October 28, 2007 on previously reported beginning equity balances, with the adjustments categorized by the nature of the error (in thousands).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid-In Capital
|
|
|
Retained Earnings
|
|
|
Accumulated
Other
Comprehensive
Income
|
|
|
|
|
|
|
As reported, October 28, 2007
|
|
$
|
50,740
|
|
|
$
|
319,688
|
|
|
$
|
2,660
|
|
|
|
|
|
Restatement adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Software systems revenue
|
|
|
-
|
|
|
|
(38,174
|
)
|
|
|
-
|
|
Service and other revenue
|
|
|
-
|
|
|
|
(51,698
|
)
|
|
|
-
|
|
Employment taxes and benefits
|
|
|
-
|
|
|
|
(11,957
|
)
|
|
|
-
|
|
Intangible assets
|
|
|
-
|
|
|
|
(2,602
|
)
|
|
|
-
|
|
Income taxes and other
|
|
|
-
|
|
|
|
(17,631
|
)
|
|
|
5,039
|
|
Restatement tax impacts
|
|
|
-
|
|
|
|
51,339
|
|
|
|
-
|
|
Increase in paid-in capital
|
|
|
18,256
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,256
|
|
|
|
(70,723
|
)
|
|
|
5,039
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As restated, October 28, 2007
|
|
$
|
68,996
|
|
|
$
|
248,965
|
|
|
$
|
7,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following is a discussion of the significant adjustments that were identified during the Restatement.
Revenue Recognition and Related Customer Costs
Software Systems Revenue
|
·
|
|
Net Revenue
The Company has revised the timing of revenue recognition for sales arrangements that include software, resulting in such
revenue generally being recognized later than previously reported within the Computer Systems segment. The Companys arrangements to sell telephone operator services-related systems, and enhancements to existing systems, generally contain
multiple elements including the sale of software licenses and computer hardware, installation, implementation and integration services, as well as post-contract customer support (PCS). Revenue recognized under these arrangements is
subject to the requirements of the Revenue Recognition Topic of the Financial Accounting Standards Board (FASB) Accounting Statements Codification (ASC), including guidance on software transactions, construction contracts and
multiple element arrangements. Under these requirements, the aggregate arrangement fee for multiple element arrangements is required to be allocated to each of the elements in an amount equal to its fair value, based upon vendor-specific objective
evidence. Fees allocated to each element of the arrangement are then to be recognized as revenue when the following criteria have been met: a) persuasive evidence of the sales arrangement
|
F-12
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
|
exists, b) delivery has occurred or services are rendered, c) the arrangement fee is fixed or determinable, and d) collectability of the resulting receivable is deemed probable. Historically, the
Company recognized revenue as each element was delivered. However, the Company did not establish sufficient vendor-specific objective evidence of fair value for the undelivered elements of these arrangements (including PCS and installation
services). Accordingly, the Company has revised its accounting to defer all revenue for these arrangements until customer acceptance of delivered elements is received and the only undelivered elements are services that are not essential to the
functionality of the software solution. At that time, revenue recognition commences and the total arrangement fee is recognized ratably over the remaining period of performance of the arrangement, which is typically the PCS period.
|
|
·
|
|
Costs of Other Revenues
The Company has revised the timing of costs incurred in fulfillment of arrangements that include software to
correspond with the timing of the recognition of the related revenue, as required under the guidance described above. Additionally, the Company has also revised the timing of the recognition of certain contract fulfillment costs that were previously
deferred but that the Company determined should have been expensed as incurred.
|
|
·
|
|
Deferred Revenue, Net
The adjustments to net revenue and cost of other revenues, as discussed above, resulted in revenue and costs being
deferred. As a result, the Company increased Deferred Revenue, Net.
|
|
·
|
|
Selling, Administrative and Other Operating Costs
The Company purchases and retains title to hardware used in providing services under
some of its computer software systems sales arrangements. The Company reclassified depreciation and amortization associated with this hardware from Selling, Administrative and Other Operating Costs to Cost of Other Revenue.
|
Services and Other Revenue
The Company has revised the timing of revenue recognized under staffing services arrangements where it did not have, at the time the revenue was originally recognized, persuasive evidence of an
arrangement. In addition, certain customer arrangements included guarantee or refund provisions and the Company has concluded it was not able to reliably estimate expected guarantees or refunds. These revisions have resulted in such revenue being
recognized later than previously reported.
Additionally, the Company has revised the accounting for certain telecommunications
construction-type contracts to exclude revenue in excess of costs incurred related to claims under certain contracts that were not probable of realization and reliably estimable, and to recognize expected losses in the period they became apparent
for contracts under which losses were anticipated but had not yet been realized. These revisions resulted in losses being recognized earlier than previously reported.
F-13
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
Services Gross-Net Presentation
The Company has revised the presentation of certain receivables, payables, revenue and direct cost of staffing services revenue related to
managed service program (MSP) and subcontracting arrangements resulting in lower amounts of reported receivables and payables and higher amounts of reported revenue and direct cost of staffing services revenue.
Under the Companys MSP arrangements, customers are provided with various services including administration of multiple vendors,
centralized order processing for the customers contingent staffing providers (commonly referred to as associate vendors), processing of associate vendor billings into single, combined customer billings, distribution of payments to
associate vendors on behalf of customers, detailed and customized management cost approval, and reporting on contingent staffing usage and costs.
In these MSP arrangements the customer contracts for contingent staff directly with the associate vendors and the Company provides MSP services as an agent of the customer. The Company is not the primary
obligor for the contingent staffing services and does not have a right to the amount collectible for these services from the customer, as these amounts must be disbursed by the Company acting as an agent for its customers to the associate vendors.
The Company previously reported the consolidated associate vendor billings as customer receivables with an offsetting associate vendor liability. The Company has revised its presentation of such billings to exclude amounts billed on behalf of
associate vendors prior to the receipt of payments from customers and to reduce related payables as the Company has no obligation for the associate vendor billings prior to the receipt of funds from customers. For these arrangements, the Company
historically presented the revenues and related expenses correctly on a net basis, and therefore there is no change to the consolidated statement of operations.
The Company also has staffing services arrangements under which it provides contingent workers to customers and obtains some of those workers from other vendors under subcontracting arrangements between
the Company and the vendor. The Company is the principal in these transactions and is the primary obligor to the vendors. The Company previously recognized revenue for certain of these arrangements net of the related vendor costs despite being the
primary obligor. For these situations, the Company has revised its presentation to include these amounts in revenue with the related expense as direct cost of staffing services revenue. For these arrangements, the Company historically presented the
related receivables and payables correctly on a gross basis, and therefore there is no change to the consolidated balance sheet presentation.
Employment Taxes and Benefits
The Company has revised the timing of
recognizing costs for its length-of-service based award program in its Staffing Services segment under which certain contingent workers are eligible for payments after meeting specified time-based criteria. These expenses were previously recognized
upon payment and have been revised to accrue the expense, net of expected forfeitures, over the period the award is earned. As a result, the program expenses are now being recognized earlier than previously reported with a corresponding adjustment
to Accrued Compensation.
F-14
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
The Company has revised the costs recognized under its self-insured medical insurance
program to reflect estimates for claims incurred but not reported to the program administrator, claims paid by the program administrator but not yet funded and an accrual for legal and other costs incurred when settling liabilities. Additionally,
the presentation of the prepaid insurance and claim liabilities associated with the casualty insurance program, which were previously presented on a net basis, have been revised to report the gross assets in Prepaid Insurance and Other Assets and
the gross liabilities in Accrued Insurance.
The Company has also revised the recognition of certain employment taxes, including
penalties and interest, associated with certain employee expense reimbursements which were paid in excess of allowable limits under applicable tax regulations.
Intangible Assets
|
·
|
|
Goodwill Impairment
In its Computer Systems, Staffing Services and Other segments, the Company revised the amount of its goodwill
impairment charge originally recorded in fiscal year 2008. Goodwill is required to be assessed at the reporting unit level by comparing the reporting unit fair value to its carrying value. Reporting units are sometimes the same as operating
segments, but generally multiple reporting units comprise an operating segment. The Company has revised the calculation of its fiscal year 2008 goodwill impairment to be at the reporting unit level, instead of the operating segment level, resulting
in a higher impairment charge than previously reported.
|
|
·
|
|
Intangible Asset Impairment
In its Computer Systems segment, the Company revised the carrying amount of its finite and indefinite lived
intangible assets to record impairment in fiscal year 2008. The Company has revised the calculation of its impairment assessment to be at the asset group level, instead of the operating segment level, resulting in an impairment charge.
|
|
·
|
|
Acquisition of Nortel Directory Operator Services
The Company has revised the amounts originally recorded in 2004 for the acquisition of
the Nortel Directory Operator Services business (Nortel DOS) in exchange for a 24% minority ownership of the Companys subsidiary, Volt Delta Resources, LLC (VDR), to recognize a gain in Paid-In-Capital and an increase
in Purchased Intangibles, Net in the consolidated balance sheet. The acquisition occurred on August 2, 2004, and principally consisted of a customer base and contracts, intellectual property and inventory and the assumption of certain specified
liabilities of the Nortel DOS business in exchange for a 24% minority equity interest in VDR. The acquisition was accounted for as a business combination in accordance with the Business Combination Topic of the ASC. The transfer of VDR stock in
exchange for Nortel DOS caused a reduction in the Companys ownership percentage in VDR. The Company should have recorded a gain through Paid-In-Capital of $18.3 million in August 2004 resulting from the excess of the value of the proceeds
received from Nortel over the carrying value of the proportionate interest in VDR sold to Nortel. Additionally, the Company has reassessed its fair value determination and the remaining useful lives of the customer backlog acquired and the customer
contract obligation assumed with Nortel DOS.
|
F-15
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
|
·
|
|
Reacquisition of 24% Minority Interest in VDR
In December 2005, VDR repurchased its 24% minority interest from Nortel Networks. The
reacquisition was accounted for as a step acquisition which required an adjustment to the carrying value attributable to VDRs identifiable net assets. The Company has identified accounting errors related to the step acquisition, the correction
of which resulted in an increase in certain intangible assets subject to amortization, including its customer relationships and existing technology intangible assets, with a corresponding reduction in goodwill.
|
Income taxes and other
|
·
|
|
The Company has revised the provisions recognized for certain tax matters. Based on a review of the Companys tax return positions, certain tax
matters were identified that should have been recorded in periods earlier than originally reported. These adjustments primarily relate to the deductibility of certain employee benefits, the correction of tax basis errors in prior US Federal tax
filings, and various state income tax matters, inclusive of estimated interest and related penalties, offset by the correction of income and depreciation expense in prior US Federal tax filings. The Company has also revised its accounting for taxes
on undistributed earnings of its foreign subsidiaries which are no longer considered permanently reinvested.
|
|
·
|
|
The Company has revised the timing of recognition of certain accruals and other items, primarily to correct certain revenues and expenses previously
reported on a calendar-month basis to instead reflect the fiscal-month period, to record certain software license expenses ratably over the license period rather than in the period paid and to correct the timing of the recognition of costs incurred
in the development of internal use software, resulting in the costs being recognized as expenses earlier than previously reported. The Company has also revised the timing of the recognition of changes in foreign exchange rates on intercompany
balances and the recognition of hedging gains and losses, both of which also had a corresponding impact to Accumulated Other Comprehensive Income.
|
Restatement Tax Impacts
The revision to reflect the tax impacts of the
restatement adjustments resulted in a cumulative increase in net deferred tax assets of $42.9 million through October 28, 2007 primarily attributable to the increase in deferred revenue.
Reclassification of Previously Reported Amounts
In connection with the Restatement, the Company has also reclassified certain of its operating expenses in its historical financial statements in order to provide more insight into direct costs of
F-16
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
revenue for its staffing service business, which is the Companys most significant source of revenue. These reclassifications are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originally
reported
|
|
|
Reclassification
|
|
|
As reported
above
|
|
Cost of services
|
|
$
|
2,290,183
|
|
|
$
|
(2,290,183
|
)
|
|
$
|
-
|
|
Direct cost of staffing services revenue
|
|
|
-
|
|
|
|
1,704,841
|
|
|
|
1,704,841
|
|
Cost of other revenue
|
|
|
-
|
|
|
|
347,043
|
|
|
|
347,043
|
|
Selling, administrative and other operating costs
|
|
|
91,243
|
|
|
|
269,055
|
|
|
|
360,298
|
|
Depreciation and amortization
|
|
|
38,636
|
|
|
|
(38,636
|
)
|
|
|
-
|
|
Amortization of purchased intangible assets
|
|
|
-
|
|
|
|
7,880
|
|
|
|
7,880
|
|
The purpose of these reclassifications was primarily to:
|
·
|
|
Segregate the previously reported total Cost of services between cost of staffing service revenue and costs of all other revenues of the
Company. Cost of staffing services revenue is further broken down to report all Direct Costs of Staffing Services Revenue on a separate line, with indirect costs of staffing services revenue being reclassified to Selling, Administrative and Other
Operating Costs.
|
|
·
|
|
Reclassify depreciation and amortization expense for all assets other than purchased intangible assets into Cost of Other Revenue and Selling,
Administrative and Other Operating Costs.
|
These expense reclassifications are further discussed in Note
3(e).
|
|
In connection with the Restatement, the Company has also reclassified certain of its assets in its historical financial statements to conform with the
current year classification as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Originally
reported
|
|
|
Reclassification
|
|
|
As reported
above
|
|
Inventory
|
|
$
|
29,025
|
|
|
$
|
(29,025
|
)
|
|
$
|
-
|
|
Deferred income taxes
|
|
|
9,685
|
|
|
|
(9,685
|
)
|
|
|
-
|
|
Other current assets
|
|
|
11,265
|
|
|
|
29,785
|
|
|
|
41,050
|
|
Prepaid insurance and other assets, excluding current portion
|
|
|
1,276
|
|
|
|
8,925
|
|
|
|
10,201
|
|
The Company has reclassified deferred contract costs, previously reported in inventory, to Other Current
Assets and reclassified the Companys spare parts inventory, previously reported in inventory, to Prepaid Insurance and Other Assets, excluding current portion. Additionally, the current deferred income tax asset has been reclassified to Other
Current Assets.
Adjustment to Segment Composition
As part of the Restatement, the composition of the Computer Systems segment has been revised to exclude a reporting unit that does not
meet the criteria for inclusion in the reportable segment. That reporting unit is now included in the Other segment category.
F-17
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
NOTE 3: Summary of Significant Accounting Policies
The Companys
fiscal year ends on the Sunday nearest October 31st. The 2010 and 2009 fiscal years each consisted of 52 weeks and the 2008 fiscal year consisted of 53 weeks.
The consolidated
financial statements include the accounts of the Company and all of the majority-owned subsidiaries over which the Company exercises control. All intercompany balances and transactions have been eliminated in consolidation. The Company accounts for
investments over which it has significant influence but not a controlling financial interest using the equity method of accounting.
The preparation
of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying
notes. On an ongoing basis, the Company evaluates its estimates, assumptions and judgments, including those related to revenue recognition, allowance for doubtful accounts, contract costing and reserves, valuation of goodwill, intangible assets and
other long-lived assets, business combinations, stock compensation, employee benefit plans, restructuring accruals, income taxes and related valuation allowances and loss contingencies. Actual results could differ from those estimates and changes in
estimates are reflected in the period in which they become known.
Revenue is
generally recognized when persuasive evidence of an arrangement exists, products have been delivered or services have been rendered, the fee is fixed or determinable, and collectability is reasonably assured. The following revenue recognition
policies define the manner in which the Company accounts for specific transaction types:
Staffing Services
Revenue is primarily derived from supplying contingent staff to the Companys customers or providing other services on a time and material basis.
Contingent staff primarily consist of temporary employees working under a contract for a fixed period of time or on a specific customer project. Revenue is also derived from permanent placement services, which is generally recognized after
placements are made and when the fees are not contingent upon any future event.
Reimbursable costs, including those related to travel and
out-of-pocket expenses, are also included in net revenue, and equivalent amounts of reimbursable costs are included in direct cost of staffing services revenue.
Under certain of the Companys service arrangements, contingent staff are provided to customers through contracts involving other vendors or contractors. When the Company is the principal in the
transaction and therefore the primary obligor for the contingent staff, it records the gross amount of the
F-18
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
revenue and expense from the service arrangement. When the Company acts only as an agent for the customer and is not the primary obligor for the contingent staff, it records revenue net of vendor
or contractor costs.
The Company is generally the primary obligor when it is responsible for the fulfillment of the services under the
contract, even if the contingent workers are neither employees of the Company nor directly contracted by the Company. Usually in these situations the contractual relationship with the vendors and contractors is exclusively with the Company and the
Company bears customer credit risk and generally has latitude in establishing vendor pricing and has discretion in vendor or contractor selection.
The Company is generally not the primary obligor when it provides comprehensive administration of multiple vendors for customers that operate significant contingent workforces, referred to as Managed
Service Programs. The Company is considered an agent in these transactions if it does not have responsibility for the fulfillment of the services by the vendors or contractors (referred to as associate vendors). In such arrangements the
Company is typically designated by its customers to be a facilitator of consolidated associate vendor billing and a processor of the payments to be made to the associate vendors on behalf of the customer. Usually in these situations the
contractual relationship is between the customer, the associate vendor and the Company, with the associate vendors being the primary obligor and assuming the customer credit risk and the Company generally earning negotiated fixed mark-ups and not
having discretion in supplier selection.
Software Systems
Revenue primarily relates to sales of telephone operator services-related software systems and enhancements to existing systems. These arrangements generally contain multiple elements including the
software development and customization, sale of software licenses and computer hardware, installation, implementation and integration services, as well as post-contract customer support (PCS). Revenues are recognized under these
arrangements following the FASBs revenue recognition requirements, including guidance on software transactions, construction contracts and multiple element arrangements. Under these requirements, the aggregate arrangement fee for multiple
element arrangements is required to be allocated to each of the elements in an amount equal to its fair value, generally based upon vendor-specific objective evidence (VSOE) of fair value. Fees allocated to each element of the
arrangement are then recognized as revenue when all other revenue recognition criteria have been met. As the Company has not established VSOE of fair value for the elements of these arrangements (including PCS and installation services), all revenue
for these arrangements is deferred until customer acceptance of the delivered elements is received and the only undelivered elements are services that are not essential to the functionality of the software solution. At that time, revenue recognition
commences and the arrangement fee is recognized ratably over the element with the longest remaining period of performance of the arrangement, which is typically the PCS period. The customer is generally invoiced upon delivery of the individual
elements which typically results in cash being collected prior to revenue being recognized.
Database Access Services
Revenue from stand-alone arrangements to access the Companys proprietary telephone listing databases by telephone companies,
inter-exchange carriers and non-telco customers is recognized over
F-19
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
the period access is provided, based on a fixed minimum fee or variable fees based on the volume of activity, provided that all other revenue recognition criteria are met.
Maintenance Services
Revenue from stand-alone PCS, hardware maintenance, and computer and network operations support services under fixed-price contracts is generally
recognized ratably over the contract period, provided that all other revenue recognition criteria are met, and the cost associated with these contracts is recognized as incurred. For hardware maintenance or support time and material contracts, the
Company recognizes revenue and costs as services are rendered, provided that all other revenue recognition criteria are met.
Engineering and Construction Services
Revenue from performing engineering and construction services is recognized either on the completed contract method for those contracts that are of a short-term nature, or on the percentage-of-completion
method, measuring progress using the cost-to-cost method, provided that all other revenue recognition criteria are met. Known or anticipated losses on contracts are provided for in the period they become evident. Claims and change orders that are in
the process of being negotiated with customers for additional work or changes in the scope of work are included in the estimated contract value when it is deemed probable that the claim or change order will result in additional contract revenue and
such amount can be reliably estimated.
Direct Cost of Staffing Services Revenue
Direct Cost of Staffing Services Revenue consists primarily of contingent employee payroll, related employment taxes and benefits, and the cost of facilities used by contingent employees in fulfilling
assignments and projects for staffing services customers, including reimbursable costs. Indirect cost of staffing services revenue is included in Selling, Administrative and Other Operating Costs. The direct costs differ from the selling,
administrative and other operating costs in that they arise specifically and directly from the actions of providing services to customers.
Cost of Other Revenue
Cost of Other Revenue consists of the direct and indirect cost of
providing non-staffing services, which include payroll and related employment taxes, benefits, materials, data costs, and equipment rental costs.
Selling, Administrative and Other Operating Costs
Selling, Administrative and Other
Operating Costs primarily relate to the Companys selling and administrative efforts as well as the indirect costs associated with providing staffing services.
|
(f)
|
Research and Development
|
Research
and development costs include certain expenditures on research, development and engineering for products that will be sold or licensed, as well as internal use software. Software development costs related to software that will be sold or licensed
externally to third parties and that
F-20
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
qualify for capitalization are not material and, accordingly are expensed as incurred. Costs for software that will be used for internal purposes and are incurred during the preliminary project
activities and post-implementation activities are recorded as research and development expense as incurred. Research and development costs are included in Selling, Administrative and Other Operating Costs.
|
(g)
|
Comprehensive Income (Loss)
|
Comprehensive income (loss) is the net income (loss) of the Company combined with other changes in stockholders equity not involving ownership
interest changes. For the Company, such other changes include foreign currency translation, and mark-to-market adjustments related to available-for-sale securities.
|
(h)
|
Cash and Cash Equivalents
|
The
Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
|
(i)
|
Short-Term Investments and Related Deferred Compensation
|
The Company has a nonqualified deferred compensation and supplemental savings plan that permits eligible employees to defer a portion of their salary. The employee salary deferral is invested in
short-term investments corresponding to the employees investment selections, primarily mutual funds, which are held in a trust and are reported at current market prices. The liability associated with the nonqualified deferred compensation and
supplemental savings plan consists of participant deferrals and earnings thereon, and is reflected as a current liability within accrued compensation in an amount equal to the fair value of the underlying short-term investments held in the
plan. Changes in asset values result in offsetting changes in the liability as the employees realize the rewards and bear the risks of their investment selections.
|
(j)
|
Property, Equipment and Software
|
Property and equipment are stated at cost and depreciation is calculated on the straight-line method over the estimated useful lives of the assets. Costs
for software that will be used for internal purposes and incurred during the application development stage are capitalized and amortized to expense over the estimated useful life of the underlying software. Training and maintenance costs are
expensed as incurred.
The major classifications of property, equipment and software, including their respective expected useful lives,
consisted of the following:
|
|
|
Buildings
|
|
25 to 32 years
|
Machinery and equipment
|
|
3 to 15 years
|
Leasehold improvements
|
|
Shorter of length of lease or life of the asset
|
Software
|
|
3 to 7 years
|
Property, equipment and software are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable or it is no longer probable that software development will be completed. If circumstances require a long-lived asset or asset group be reviewed for possible impairment, the Company first compares
undiscounted cash flows
F-21
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
expected to be generated by each asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an
impairment is recognized to the extent that the carrying value exceeds the fair value.
|
(k)
|
Purchased Intangible Assets, Net and Goodwill
|
Intangible Assets
Intangible assets with finite useful lives consist of customer
relationships which are amortized on a straight line basis over 5 to 8 years.
Intangible assets with finite useful lives are reviewed for
impairment and the useful lives are reassessed whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible
impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow
basis, an impairment is recognized to the extent that the carrying value exceeds its fair value.
Goodwill
Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and
separately recognized. Goodwill is reviewed for impairment at least annually using a two-step test. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the
reporting unit exceeds its carrying value, step two does not need to be performed. If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and the entity must
perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting units goodwill over the implied fair value of that goodwill. The implied fair value
of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of
the reporting unit is determined by using various valuation techniques including income (discounted cash flow), market and/or consideration of recent and similar purchase acquisition transactions.
The Company performs its annual impairment review of goodwill in its second fiscal quarter and when a triggering event occurs between annual impairment
tests.
Income taxes are
accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using current tax laws and rates in effect for the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company must then assess
F-22
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
the likelihood that its deferred tax assets will be realized. If the Company does not believe that it is more likely than not that its deferred tax assets will be realized, a valuation allowance
is established. When a valuation allowance is increased or decreased, a corresponding tax expense or benefit is recorded.
Accounting for
income taxes involves uncertainty and judgment in how to interpret and apply tax laws and regulations within the Companys annual tax filings. Such uncertainties may result in tax positions that may be challenged and overturned by a tax
authority in the future which would result in additional tax liability, interest charges and possible penalties. Interest and penalties are classified as a component of income tax expense.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is
greater than 50% likely of being realized upon ultimate settlement. Changes in recognition or measurement are reflected in the period in which the change in estimate occurs.
|
(m)
|
Share-Based Compensation
|
The
Company recognizes all employee share-based compensation as a cost in the financial statements. Equity awards are measured at the grant date fair value of the award. The Company determines grant date fair value of stock option awards using the
Black-Scholes option-pricing model. The fair value of restricted stock awards are determined using the closing price of the Companys common stock on the grant date. Expense is recognized over the requisite service period based on the
number of options or shares expected to ultimately vest. Forfeitures are estimated at the date of grant and revised when actual or expected forfeiture activity differs materially from original estimates.
Excess tax benefits of awards that are recognized in equity related to stock option exercises are reflected as financing cash inflows in the consolidated
statement of cash flows.
|
(n)
|
Foreign Currency Translation
|
Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where that local currency is the functional currency,
are translated to U.S. dollars at exchange rates in effect at the balance sheet date. Income and expense accounts are translated at average exchange rates during the year which approximate the rates in effect at the transaction dates. The
resulting translation adjustments are directly recorded to a separate component of accumulated other comprehensive income (loss). Gains and losses arising from intercompany foreign currency transactions that are of a long-term nature are reported in
the same manner as translation adjustments. Gains and losses arising from intercompany foreign currency transactions that are not of a long-term nature and certain transactions of the Companys subsidiaries which are denominated in currencies
other than the subsidiaries functional currency are recognized as incurred in Foreign Exchange Gain (Loss), Net.
|
(o)
|
Fair Value Measurement
|
On
November 3, 2008 the Company adopted Fair Value Measurements (ASC 820), with no impact to its consolidated results and financial position. The Company utilizes valuation techniques that maximize the use of observable inputs and
minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use
F-23
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
in pricing an asset or liability in the principal or most advantageous market. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which
are categorized in one of the following levels:
Level 1: Quoted market prices in active markets for identical assets or
liabilities.
Level 2: Quoted prices in active markets for similar assets and liabilities, quoted prices for identically
similar assets or liabilities in markets that are not active and models for which all significant inputs are observable either directly or indirectly.
Level 3: Unobservable inputs reflecting the reporting entitys own assumptions or external inputs for inactive markets.
The Company uses this framework for measuring fair value and disclosures about fair value measurement. The Company uses fair value measurements in areas that include: the allocation of purchase price
consideration to tangible and identifiable intangible assets; impairment testing for goodwill and long-lived assets; share-based compensation arrangements and financial instruments. The carrying amounts of the Companys financial instruments,
which include cash, cash equivalents, restricted cash, accounts receivable, accounts payable, short-term borrowings under the Companys credit facilities and its long-term debt, approximated their fair values, due to the short-term nature of
these instruments, and for the long-term debt, based on the interest rates the Company believes it could obtain for borrowings with similar terms.
The Company recognizes transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer.
|
(p)
|
Legal and Other Contingencies
|
The
Company is subject to certain legal proceedings as well as demands, claims and threatened litigation that arise in the normal course of the Companys business. If the potential loss from any claim or legal proceeding is considered probable and
the amount can be reasonably estimated, a liability and an expense are recorded for the estimated loss. Significant judgment is required in both the determination of probability and the determination of whether an exposure is reasonably estimable.
Actual expenses could differ from these estimates. The Company will change these estimates in subsequent periods as additional information becomes known.
|
(q)
|
Concentrations of Credit Risk
|
Cash and cash equivalents are maintained with several financial institutions and deposits held with banks may exceed the amount of insurance provided on
such deposits. Generally, these deposits may be redeemed upon demand and the Company mitigates its credit risk by spreading its deposits across multiple financial institutions and monitoring their respective risk profiles.
On a limited
basis, the Company enters into derivative and nonderivative (short-term foreign denominated debt) instruments as an economic hedge of its net investment in certain foreign
F-24
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
subsidiaries. All derivative instruments are recognized as either assets or liabilities at their respective fair values. For the nonderivative instruments, the Company measures the foreign
denominated short-term borrowings based on period-end exchange rates. The Company does not designate and document these instruments as hedges under ASC 815 Derivatives and Hedging. As a result, gains and losses associated with these
instruments are recognized in Foreign Exchange Gain (Loss), net in our consolidated statements of operations.
|
(s)
|
Earnings (Loss) Per Share
|
Basic
earnings per share is calculated by dividing net earnings by the weighted-average number of common shares outstanding during the period. The diluted earnings per share computation includes the effect, if any, of shares that would be issuable upon
the exercise of outstanding stock options and restricted stock units, reduced by the number of shares which are assumed to be purchased by the Company from the resulting proceeds at the average market price during the year, when such amounts are
dilutive to the earnings per share calculation.
The Company
records treasury stock at the cost to acquire it and includes treasury stock as a component of stockholders equity.
|
(u)
|
New Accounting Pronouncements
|
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Unless otherwise discussed, the Company believes
that the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption.
Recently Adopted Accounting Standards
Effective October 29, 2007, the Company adopted Accounting for Uncertainty in Income Taxes (ASC 740). The effect of adoption was a cumulative decrease to Retained Earnings of $2.5 million
included in Other in the consolidated statement of stockhoders equity.
Effective November 3, 2008 the Company adopted
Fair Value Measurements (ASC 820), with no impact to its consolidated results and financial position as discussed earlier in this note.
In June 2011, the FASB issued Accounting Standards Update (ASU) 2011-05,
Comprehensive Income (Topic 220): Presentation of Comprehensive Income
, which increases the prominence of items
reported in other comprehensive income. The Company elected to early adopt the provisions of this standard. The adoption impacts the presentation of comprehensive income only and had no effect on the Companys financial position, results
of operations or cash flows. It requires that the components of comprehensive income be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company elected to
retroactively present two separate statements - the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income (Loss). In addition, as permitted by ASU 2011-05, the Company also
retroactively adjusted the Consolidated Statements of Stockholders Equity to summarize the total net components of other comprehensive income (loss) and included a reconciliation of the changes in accumulated other comprehensive income (loss).
F-25
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
New Accounting Standards Not Yet Adopted by the Company
In October 2009, the FASB issued ASU 2009-13,
Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements
. This standard amends FASB
ASC Subtopic 605-25,
Revenue Recognition Multiple-Element Arrangements
, to eliminate the requirement that all undelivered elements have vendor specific objective evidence of selling price (VSOE) or third party evidence of selling price
(TPE) before an entity can recognize the portion of an overall arrangement fee that is attributable to items that already have been delivered. In the absence of VSOE and TPE for one or more delivered or undelivered elements in a multiple-element
arrangement, entities will be required to estimate the selling prices of those elements. The overall arrangement fee will then be allocated to each element (both delivered and undelivered items) based on their relative selling prices, regardless of
whether those selling prices are evidenced by VSOE, TPE or the entitys estimated selling price. Additionally, the new guidance will require entities to disclose additional information about their multiple-element revenue arrangements. ASU
2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Companys adoption of this standard, effective the first day of fiscal 2011, will not
have a material impact on its consolidated financial statements.
In October 2009, the FASB issued ASU 2009-14,
Software (Topic 985):
Certain Revenue Arrangements That Include Software Elements
. This standard applies to multiple-element arrangements that contain both software and hardware elements. Specifically, it excludes tangible products containing software and
non-software components that together function to deliver the products essential functionality from the scope of the requirements of ASC 985-605
Software Revenue Recognition
. This standard is to be applied prospectively to all revenue
transactions entered into, or materially modified, in fiscal years beginning on or after June 15, 2010. The Companys adoption of this standard, effective the first day of fiscal 2011, will not have an impact on its consolidated financial
statements.
NOTE 4: Restricted Cash
Restricted cash includes amounts related to requirements under certain contracts with managed service program customers for whom the Company manages the customers contingent staffing requirements,
including processing of associate vendor billings into single, combined customer billings and distribution of payments to associate vendors on behalf of customers, as well as minimum cash deposits required to be maintained as collateral associated
with the Companys Short-Term Credit Facility. Distribution of payments to associate vendors are generally made shortly after receipt of payment from customers, with undistributed amounts included in restricted cash and accounts payable between
receipt and distribution of these amounts. Changes in restricted cash collateral for credit facilities is reflected in financing activities while changes in restricted cash under managed service programs is classified as an operating activity, as
this cash is directly related to the operations of this business.
At October 31, 2010, November 1, 2009 and November 2, 2008 restricted cash
included $41.0 million, $40.6 million and $48.6 million, respectively, restricted for payment to associate vendors and at October 31, 2010, $30.4 million restricted as collateral under the Short-Term Credit Facility.
F-26
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
NOTE 5: Financial Instruments Measured at Fair Value
The following table presents assets/(liabilities) measured at fair value (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
2010
|
|
|
November 1,
2009
|
|
|
November 2,
2008
|
|
|
Fair Value
Hierarchy
|
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
$
|
5,226
|
|
|
$
|
4,775
|
|
|
$
|
4,178
|
|
|
|
Level 1
|
|
|
|
|
|
|
|
|
|
|
Total financial assets
|
|
$
|
5,226
|
|
|
$
|
4,775
|
|
|
$
|
4,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred compensation plan liabilities
|
|
$
|
5,226
|
|
|
$
|
4,775
|
|
|
$
|
4,178
|
|
|
|
Level 1
|
|
|
|
|
|
|
|
|
|
|
Total financial liabilities
|
|
$
|
5,226
|
|
|
$
|
4,775
|
|
|
$
|
4,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair value of the deferred compensation plan liabilities is based on the fair value of the short-term investments
corresponding to the employees investment selections, primarily in mutual funds, based on quoted prices in active markets for identical assets. The deferred compensation plan liability is recorded in Accrued Compensation.
Available for sale securities of $0.2, million, $0.2 million and $0.1 million at October 31, 2010, November 1, 2009 and November 2,
2008, respectively, are classified within Other Current Assets.
NOTE 6: Trade Accounts Receivable
Trade accounts receivable includes both billed and unbilled amounts due from customers. Billed trade receivables are recorded at the invoiced amount less
allowances and do not bear interest. Unbilled receivables represent accrued revenue earned and recognized on contracts for which billings have not yet been presented to the customer. At October 31, 2010, November 1, 2009 and
November 2, 2008 trade accounts receivable included unbilled receivables of $23.6 million, $18.1 million and $34.7 million, respectively.
The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses
adjusted to take into account current market conditions, customers financial condition, and current receivables aging and payment patterns. Additions to the allowance for doubtful accounts are recorded to Selling, Administrative and Other
Operating Expense. The Company also maintains a sales allowance for specific customers related to billing disputes and potential billing rate adjustments. The amount of the allowances are determined based on historical credits issued and
additions to the sales allowance are recorded as a reduction to net revenue. Account balances are written off against the allowances when the Company believes it is probable the receivable will not be recovered.
F-27
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
For the years ended October 31, 2010, November 1, 2009 and November 2, 2008, the
activity in the allowance accounts is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
beginning of
year
|
|
|
Additions
charged to
expense
|
|
|
Deductions
|
|
|
Balance at end
of year
|
|
|
|
|
|
|
Year Ended October 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales allowance
|
|
$
|
2,475
|
|
|
$
|
302
|
|
|
$
|
(293
|
)
|
|
$
|
2,484
|
|
Allowance for doubtful accounts
|
|
|
765
|
|
|
|
663
|
|
|
|
(925
|
)
|
|
|
503
|
|
|
|
|
|
|
|
|
$
|
3,240
|
|
|
$
|
965
|
|
|
$
|
(1,218
|
)
|
|
$
|
2,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
beginning of
year
|
|
|
Additions
charged to
expense
|
|
|
Deductions
|
|
|
Balance at end
of year
|
|
|
|
|
|
|
Year Ended November 1, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales allowance
|
|
$
|
1,407
|
|
|
$
|
5,756
|
|
|
$
|
(4,688
|
)
|
|
$
|
2,475
|
|
Allowance for doubtful accounts
|
|
|
3,080
|
|
|
|
(740
|
)
|
|
|
(1,575
|
)
|
|
|
765
|
|
|
|
|
|
|
|
|
$
|
4,487
|
|
|
$
|
5,016
|
|
|
$
|
(6,263
|
)
|
|
$
|
3,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
beginning of
year
|
|
|
Additions
charged to
expense
|
|
|
Deductions
|
|
|
Balance at end
of year
|
|
|
|
|
|
|
Year Ended November 2, 2008: (As Restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales allowance
|
|
$
|
1,726
|
|
|
$
|
734
|
|
|
$
|
(1,053
|
)
|
|
$
|
1,407
|
|
Allowance for doubtful accounts
|
|
|
1,819
|
|
|
|
3,262
|
|
|
|
(2,001
|
)
|
|
|
3,080
|
|
|
|
|
|
|
|
|
$
|
3,545
|
|
|
$
|
3,996
|
|
|
$
|
(3,054
|
)
|
|
$
|
4,487
|
|
|
|
|
|
|
F-28
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
NOTE 7: Property, Equipment and Software
Property, equipment and software consisted of (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
2010
|
|
|
November 1,
2009
|
|
|
November 2,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
Land and buildings
|
|
$
|
24,779
|
|
|
$
|
24,681
|
|
|
$
|
24,126
|
|
Machinery and equipment
|
|
|
132,351
|
|
|
|
145,483
|
|
|
|
155,613
|
|
Leasehold improvements
|
|
|
12,271
|
|
|
|
11,519
|
|
|
|
14,665
|
|
Less: Accumulated depreciation and amortization
|
|
|
(132,895
|
)
|
|
|
(138,195
|
)
|
|
|
(142,690
|
)
|
|
|
|
|
|
Property and equipment
|
|
|
36,506
|
|
|
|
43,488
|
|
|
|
51,714
|
|
Software
|
|
|
94,844
|
|
|
|
92,102
|
|
|
|
86,990
|
|
Less: Accumulated amortization
|
|
|
(85,694
|
)
|
|
|
(79,433
|
)
|
|
|
(71,844
|
)
|
|
|
|
|
|
Property, equipment and software, net
|
|
$
|
45,656
|
|
|
$
|
56,157
|
|
|
$
|
66,860
|
|
|
|
|
|
|
Depreciation and amortization expense totaled $23.7 million, $27.6 million, and $40.9 million for the fiscal years ended
2010, 2009, and 2008, respectively. Depreciation and amortization is included in Cost of Other Revenue and Selling, Administrative and Other Operating Costs in the consolidated statements of operations.
NOTE 8: Purchased Intangible Assets, Net and Goodwill
Purchased intangible assets, excluding goodwill, as of October 31, 2010, November 1, 2009 and November 2, 2008 are summarized as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31, 2010
|
|
|
|
Gross Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net Carrying
Amount
|
|
|
Weighted Average
Remaining Life (Years)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finite-lived customer relationships
|
|
$
|
7,963
|
|
|
$
|
(2,977
|
)
|
|
|
4,986
|
|
|
|
3.5
|
|
Indefinite-lived tradename
|
|
|
495
|
|
|
|
-
|
|
|
|
495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
8,458
|
|
|
$
|
(2,977
|
)
|
|
$
|
5,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 1, 2009
|
|
|
|
Gross Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net Carrying
Amount
|
|
|
Weighted Average
Remaining Life (Years)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finite-lived customer relationships
|
|
$
|
7,963
|
|
|
$
|
(1,543
|
)
|
|
|
6,420
|
|
|
|
4.5
|
|
Indefinite-lived tradename
|
|
|
495
|
|
|
|
-
|
|
|
|
495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
8,458
|
|
|
$
|
(1,543
|
)
|
|
$
|
6,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-29
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 2, 2008 (As Restated)
|
|
|
|
Gross Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net Carrying
Amount
|
|
|
Weighted Average
Remaining Life (Years)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finite-lived customer relationships
|
|
$
|
7,963
|
|
|
$
|
(109
|
)
|
|
$
|
7,854
|
|
|
|
5.5
|
|
Indefinite-lived tradename
|
|
|
495
|
|
|
|
-
|
|
|
|
495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
8,458
|
|
|
$
|
(109
|
)
|
|
$
|
8,349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the fourth quarter of fiscal 2008, a contraction in the overall global economy, rising unemployment and a decline in
consumer spending accelerated a severe worldwide recession. As a result, the Company experienced reduced demand for temporary staffing, software systems and other services, a decline in recent and projected operating results and significant
decreases in its market capitalization. These conditions led to a negative business outlook and the significant adverse change in business conditions triggered an evaluation of goodwill and intangible asset impairment. In fiscal 2008, the Company
recorded an impairment of intangible assets and goodwill in the amount of $135.2 million of which $83.6 million related to goodwill for the Computer Systems segment, $39.2 million related to finite-lived intangible assets for the Computer Systems
segment, $8.2 million related to goodwill for the Other segment, $2.8 million related to goodwill for the Staffing Services segment, and $1.5 million related to indefinite-lived intangible assets for the Computer Systems segment.
The finite-lived intangible asset impairment charge was recorded to reduce the carrying values of these assets to their fair value. Revenue and the
resulting cash flows of the reporting unit are significant inputs in the calculation of the fair value of the intangible asset and the decline in recent and projected cash flows resulted in a decrease in the fair value of the Companys
finite-lived intangible assets in fiscal year 2008 and a corresponding impairment charge. These remaining assets continue to be amortized over their remaining useful lives. The impairment charge associated with an indefinite-lived trade name is
primarily due to a reduction in the forecasted net revenue associated with the trade name as well as a reduction in the estimated royalty rate used in determining its fair value.
The amount of amortization expense for purchased intangible assets in each of the succeeding years is estimated to be as follows (in millions):
|
|
|
|
|
Fiscal Year
|
|
Amount
|
|
2011
|
|
$
|
1,435
|
|
2012
|
|
|
1,426
|
|
2013
|
|
|
1,335
|
|
2014
|
|
|
790
|
|
|
|
|
|
|
Total
|
|
$
|
4,986
|
|
|
|
|
|
|
F-30
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
The following represents the change in the carrying amount of goodwill for each segment during each
fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staffing
Services
|
|
|
|
|
Computer
Systems
|
|
|
|
|
Other
|
|
October 28, 2007 (As Restated)
|
|
$
|
11,394
|
|
|
|
|
$
|
85,230
|
|
|
|
|
$
|
8,161
|
|
Goodwill acquired
|
|
|
1,050
|
|
|
|
|
|
832
|
|
|
|
|
|
-
|
|
Foreign currency translation adjustment
|
|
|
(1,849
|
)
|
|
|
|
|
(2,434
|
)
|
|
|
|
|
-
|
|
Impairment
|
|
|
(2,756
|
)
|
|
|
|
|
(83,628
|
)
|
|
|
|
|
(8,161
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 2, 2008 (As Restated)
|
|
$
|
7,839
|
|
|
|
|
$
|
-
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 1, 2009 and October 31, 2010
|
|
$
|
7,839
|
|
|
|
|
$
|
-
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As discussed above, the economic conditions in the fourth quarter of fiscal 2008 led to a negative business outlook and
the significant adverse change in business conditions triggered an evaluation of goodwill impairment prior to the annual review performed each second quarter. The Company performed an interim impairment test as of November 2, 2008 and as a
result of the completion of step one of the impairment analysis the Company concluded that, as of November 2, 2008, the fair value of certain reporting units were below their respective carrying values. In fiscal 2008, the Company recorded a
goodwill impairment charge in the amount of $94.5 million of which $83.6 million related to goodwill for the Computer Systems segment, $8.2 million related to goodwill for the Other segment and $2.8 million related to goodwill for the Staffing
Services segment.
The following is a summary of the impact of the goodwill and intangible asset impairment charge:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-
Impairment Net
Carrying Value
|
|
|
|
|
Impairment
Charge
|
|
|
|
|
Post-
Impairment Net
Carrying Value
|
|
Year Ended November 2, 2008: (As Restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
$
|
102,384
|
|
|
|
|
$
|
(94,545
|
)
|
|
|
|
$
|
7,839
|
|
Finite-lived intangible assets
|
|
|
47,020
|
|
|
|
|
|
(39,166
|
)
|
|
|
|
|
7,854
|
|
Indefinite-lived intangible assets
|
|
|
2,016
|
|
|
|
|
|
(1,521
|
)
|
|
|
|
|
495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
151,420
|
|
|
|
|
$
|
(135,232
|
)
|
|
|
|
$
|
16,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill is required to be assessed for impairment at the reporting unit level by comparing the reporting unit fair value
to its carrying value. Reporting units are sometimes the same as reportable segments, but are generally multiple reporting units comprise an operating segment.
The Company considered the income, market and recent and similar purchase acquisition transactions in arriving at its indicators of value. The Company used income and market approaches to arrive at its
valuation conclusion. The income approach was given greater weight than the market approach due to the lack of strongly comparable companies, the significant fluctuations in the financial markets and the lack of recently comparable transactions. The
material assumptions used for the income approach were the forecasted revenue growth by reporting unit as well as the discount rate and long-term growth rate, which were determined based on historical rates and current market conditions. For the
market
F-31
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
approach, the material assumptions were financial data for comparable companies, adjusted for differences in size, diversification and profitability. The Company also considered the control
premium and other qualitative factors including its low float, concentrated ownership and limited analyst coverage.
NOTE 9: Accrued
Insurance
|
(a)
|
Casualty Insurance Program
|
In
certain states, the Company purchases workers compensation insurance through mandated participation in state funds, and the experience-rated premiums in these state plans relieve the Company of any additional liability. Liability for
workers compensation in all other states as well as automobile and general liability is insured under a retrospective experience-rated insurance program for losses exceeding specified deductible levels and the Company is self-insured for
losses below the specified deductible limits.
The Company makes payments to the insurance carrier for premiums based upon the underlying
exposure, such as the amount and type of labor utilized. The premiums are subsequently adjusted based on actual claims experience. The experience modification process includes establishing loss development factors, based on the historical
claims experience of the Company as well as industry experience, and applying those factors to current claims information to derive an estimate of the Companys ultimate claims liability. Adjustments to final paid premiums are determined
as of a future date up to three years after the end of the respective policy year, using the level of claims paid and incurred. Under the insurance program, any additional losses incurred greater than the policy deductible limit arising from
claims associated with an insurance policy are absorbed by the insurer and not the Company.
The Company recognizes expense and establishes
accruals for amounts estimated to fund incurred amounts up to the policy deductible, both reported and not yet reported, and for related legal and other costs. The Company develops estimates for losses incurred but not yet reported using
actuarial principles and assumptions based on historical and projected claim incidence patterns, claim size and the length of time over which payments are expected to be made. Actuarial estimates are updated as loss experience develops,
additional claims are reported or settled and new information becomes available. Any changes in estimates are reflected in operating results in the period in which the estimates are changed. Expense recognized by the Company under its casualty
insurance program amounted to $16.3 million, $8.9 million and $13.6 million in fiscal years 2010, 2009, and 2008, respectively.
|
(b)
|
Medical Insurance Programs
|
The
Company is self-insured for a majority of its medical benefit programs for contingent and internal employees. Eligible contingent staff on assignment with customers are offered medical benefits through the program utilized for the Companys
internal staff in addition to a fully insured program administered through a third party. While the Company provides the majority of medical benefits for internal staff through a self-insured arrangement with a third-party administrator,
it also maintains
F-32
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
insurance coverage for a portion of that medical program (primarily through HMOs) as well as the entire dental program. Employees contribute a portion of the cost of these medical benefit
programs.
The liability for the self-insured medical benefits is limited on a per claimant basis through the purchase of stop-loss insurance.
The Companys retained liability for the self-insured medical benefits is determined utilizing actuarial estimates of expected losses based on statistical analyses of historical data. Amounts contributed by employees and additional amounts
necessary to fund the self-insured program administered by the third party are transferred to a 501(c)(9) employee welfare benefit trust. Accordingly, these amounts, other than the current liabilities for the employee contributions and expected loss
amounts not yet remitted to the trust, do not appear on the consolidated balance sheet of the Company. The Company records the expense associated with the expected losses, net of employee contributions, in Direct Cost of Staffing Services Revenue,
Cost of Other Revenue, or Selling, Administrative and Other Operating Costs, depending on the employees role. Expense recognized by the Company under its self-insured medical benefit programs amounted to $14.0 million, $14.7 million and
$15.5 million in fiscal years 2010, 2009, and 2008, respectively.
NOTE 10: Deferred Revenue, Net
Deferred revenue arises primarily related to certain software systems and staffing arrangements. Software systems revenue arises from software
development and customization, sale of software licenses and computer hardware, installation, implementation and integration services and PCS. Because the Company is not able to establish the fair value for these various elements, the Company defers
all revenue and related direct costs for these arrangements until customer acceptance of delivered elements is received and the only undelivered elements are services that are not essential to the functionality of the software solution. At that time
revenue and cost recognition commences and the total arrangement fee is recognized ratably over the remaining period of performance of the arrangement, which is typically the PCS period. Accordingly, cash is generally received in advance of revenue
recognition. As of October 31, 2010, November 1, 2009 and November 2, 2008, the Company had deferred revenue of $125.0 million, $123.0 million, and $90.4 million, which is presented net of related deferred costs of $23.8 million,
$23.9 million and $18.0 million, respectively, associated with software system sales.
Deferred revenue also arises from staffing services
arrangements when the Company does not yet have persuasive evidence of an arrangement, typically due to ongoing customer negotiations, yet services have been provided. Additionally, certain customer arrangements include performance guarantees and
cancellation provisions which result in deferred revenue until the amounts are not contingent upon future events and the service has been performed. In these instances the Company must defer recognition of revenue until the criteria for persuasive
evidence of an arrangement are met. As of October 31, 2010, November 1, 2009 and November 2, 2008, the Company had deferred revenue of $5.1 million, $0.8 million, and $2.0 million associated with staffing services arrangements.
Deferred revenue is classified as current or non-current based on the anticipated period in which the revenue is expected to be recognized.
F-33
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
NOTE 11: Income Taxes
Income (loss) before income taxes is derived from (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
|
|
|
|
|
October 31,
2010
|
|
|
November 1,
2009
|
|
|
November 2,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
US Domestic
|
|
$
|
(38,419
|
)
|
|
$
|
(32,819
|
)
|
|
$
|
(116,006
|
)
|
International, principally Europe
|
|
|
4,658
|
|
|
|
3,082
|
|
|
|
(19,497
|
)
|
|
|
|
|
|
Continuing operations
|
|
|
(33,761
|
)
|
|
|
(29,737
|
)
|
|
|
(135,503
|
)
|
Discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
165,030
|
|
|
|
|
|
|
|
|
$
|
(33,761
|
)
|
|
$
|
(29,737
|
)
|
|
$
|
29,527
|
|
|
|
|
|
|
Income tax expense (benefit) from continuing operations by taxing jurisdiction and discontinued operations consists of (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
|
|
|
|
|
October 31,
2010
|
|
|
November 1,
2009
|
|
|
November 2,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
US Federal
|
|
$
|
(8,728
|
)
|
|
$
|
(10,215
|
)
|
|
$
|
(1,639
|
)
|
US States
|
|
|
216
|
|
|
|
1,310
|
|
|
|
3,300
|
|
International, principally Europe
|
|
|
3,875
|
|
|
|
3,431
|
|
|
|
2,895
|
|
|
|
|
|
|
|
|
|
(4,637
|
)
|
|
|
(5,474
|
)
|
|
|
4,556
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
US Federal
|
|
|
54,904
|
|
|
|
(857
|
)
|
|
|
(19,419
|
)
|
US States
|
|
|
13,160
|
|
|
|
881
|
|
|
|
(6,925
|
)
|
International, principally Europe
|
|
|
(813
|
)
|
|
|
1,957
|
|
|
|
(2,673
|
)
|
|
|
|
|
|
|
|
|
67,251
|
|
|
|
1,981
|
|
|
|
(29,017
|
)
|
|
|
|
|
|
Continuing operations
|
|
|
62,614
|
|
|
|
(3,493
|
)
|
|
|
(24,461
|
)
|
Discontinued operations
|
|
|
-
|
|
|
|
-
|
|
|
|
65,705
|
|
|
|
|
|
|
|
|
$
|
62,614
|
|
|
$
|
(3,493
|
)
|
|
$
|
41,244
|
|
|
|
|
|
|
F-34
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
The difference between the income tax provision (benefit) on income from continuing operations and the
amount computed at the US federal statutory rate is due to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
|
|
|
|
|
October 31,
2010
|
|
|
November 1,
2009
|
|
|
November 2,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
U.S. federal statutory rate
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
35.0
|
|
State income tax, net of US federal tax benefits
|
|
|
(34.0
|
)
|
|
|
(15.7
|
)
|
|
|
6.5
|
|
Income from international sources
|
|
|
(8.4
|
)
|
|
|
(5.8
|
)
|
|
|
(5.9
|
)
|
International tax rate differentials
|
|
|
1.7
|
|
|
|
2.1
|
|
|
|
-
|
|
Foreign permanent differences
|
|
|
(3.7
|
)
|
|
|
(5.2
|
)
|
|
|
0.4
|
|
Meals and entertainment
|
|
|
(5.2
|
)
|
|
|
(5.8
|
)
|
|
|
(0.3
|
)
|
General business credits
|
|
|
3.8
|
|
|
|
4.9
|
|
|
|
0.9
|
|
Uncertain tax positions
|
|
|
(2.1
|
)
|
|
|
(1.5
|
)
|
|
|
(1.5
|
)
|
Foreign tax credit
|
|
|
10.9
|
|
|
|
4.1
|
|
|
|
3.1
|
|
Other, net
|
|
|
2.4
|
|
|
|
(0.9
|
)
|
|
|
(1.9
|
)
|
Non-deductible goodwill impairment
|
|
|
-
|
|
|
|
-
|
|
|
|
(14.8
|
)
|
Change in valuation allowance for deferred tax assets
|
|
|
(185.9
|
)
|
|
|
0.6
|
|
|
|
(3.4
|
)
|
|
|
|
|
|
|
|
|
(185.5
|
)%
|
|
|
11.8
|
%
|
|
|
18.1
|
|
|
|
|
|
|
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes, and also include operating loss carryforwards. The significant components of the Companys deferred tax assets and liabilities are as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
|
|
|
|
|
October 31,
2010
|
|
|
November 1,
2009
|
|
|
November 2,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income
|
|
$
|
39,026
|
|
|
$
|
35,881
|
|
|
$
|
29,135
|
|
Purchased intangible assets
|
|
|
15,016
|
|
|
|
15,993
|
|
|
|
16,486
|
|
Net operating loss carryforwards
|
|
|
10,544
|
|
|
|
9,112
|
|
|
|
7,399
|
|
Compensation accruals
|
|
|
9,784
|
|
|
|
11,421
|
|
|
|
11,969
|
|
Accruals and other reserves
|
|
|
4,325
|
|
|
|
4,659
|
|
|
|
4,555
|
|
US federal tax credits
|
|
|
5,673
|
|
|
|
-
|
|
|
|
-
|
|
Allowance for doubtful accounts
|
|
|
775
|
|
|
|
812
|
|
|
|
1,144
|
|
Accelerated tax depreciation and amortization
|
|
|
3,042
|
|
|
|
3,323
|
|
|
|
6,289
|
|
Other, net
|
|
|
3,755
|
|
|
|
4,053
|
|
|
|
3,749
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
91,940
|
|
|
|
85,254
|
|
|
|
80,726
|
|
Less valuation allowance
|
|
|
(84,880
|
)
|
|
|
(10,064
|
)
|
|
|
(4,525
|
)
|
|
|
|
|
|
Deferred tax assets, net
|
|
$
|
7,060
|
|
|
$
|
75,190
|
|
|
$
|
76,201
|
|
|
|
|
|
|
F-35
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
|
|
|
|
|
October 31,
2010
|
|
|
November 1,
2009
|
|
|
November 2,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unremitted earnings from foreign subsidiaries
|
|
$
|
7,443
|
|
|
$
|
5,960
|
|
|
$
|
3,786
|
|
Software development ocsts
|
|
|
600
|
|
|
|
1,641
|
|
|
|
2,790
|
|
Other, net
|
|
|
363
|
|
|
|
617
|
|
|
|
104
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
8,406
|
|
|
|
8,218
|
|
|
|
6,680
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset (liability)
|
|
$
|
(1,346
|
)
|
|
$
|
66,972
|
|
|
$
|
69,521
|
|
|
|
|
|
|
|
|
|
|
Balance sheet classification
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
7,170
|
|
|
$
|
32,792
|
|
|
$
|
32,848
|
|
Non-current assets
|
|
|
6,983
|
|
|
|
40,970
|
|
|
|
43,356
|
|
Current liabilities
|
|
|
(1,884
|
)
|
|
|
(146
|
)
|
|
|
(179
|
)
|
Non-current liabilities
|
|
|
(13,615
|
)
|
|
|
(6,644
|
)
|
|
|
(6,504
|
)
|
|
|
|
|
|
Net deferred tax asset (liability)
|
|
$
|
(1,346
|
)
|
|
$
|
66,972
|
|
|
$
|
69,521
|
|
|
|
|
|
|
Current deferred tax assets are included in Other Current Assets and current deferred tax liabilities are included in
Accrued Insurance and Other in the consolidated balance sheet.
At October 31, 2010 the Company has available unused US federal net
operating loss (NOL) carryforwards of $3.5 million, US state NOL carryforwards of $66.5 million, and international NOL carryforwards of $20.4 million. As of October 31, 2010, the US federal NOL carryforwards can be carried forward through
2017, the US state NOL carryforwards expire at various dates through 2030, and the international NOL carryforwards expire at various dates with some indefinite. Based on the expected timing of recognition of deferred income, the Company expects the
temporary differences associated with deferred income to result in additional NOL carryforwards that, along with the rest of the net deferred tax assets, will be primarily dependent upon future taxable income for realization.
A valuation allowance has been recognized due to the uncertainty of realization of the loss carryforwards and other deferred tax assets. Realization of
deferred tax assets is dependent upon reversals of existing taxable temporary differences, taxable income in prior carryback years, and future taxable income. Significant weight is given to positive and negative evidence that is objectively
verifiable. A companys three-year cumulative loss position is significant negative evidence in considering whether deferred tax assets are realizable and the accounting guidance restricts the amount of reliance the Company can place on
projected taxable income to support the recovery of the deferred tax assets. In the second quarter of fiscal year 2010, the Companys cumulative US domestic results for the three-year period then ended were a loss. Accordingly, the Company
recorded a $64.3 million valuation allowance against US domestic deferred tax assets as a non-cash charge to income tax expense, which increased the total valuation allowance to $84.9 million. In reaching this conclusion, the Company considered the
US domestic demand for temporary staffing, software systems and other
F-36
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
services and a decline in recent operating results which led to operating losses causing the Company to be in a three-year cumulative loss position
.
Management believes that the remaining
deferred tax assets, primarily related to international locations, are more likely than not to be realized based upon consideration of all positive and negative evidence, including scheduled reversal of deferred tax liabilities and tax planning
strategies determined on a jurisdiction by jurisdiction basis.
At October 31, 2010, the undistributed earnings of the Companys
non-U.S. subsidiaries are not intended to be permanently invested outside of the U.S. and U.S. taxes are therefore provided for.
The Company
recognizes income tax benefits for tax positions determined more likely than not to be sustained upon examination, based on the technical merits of the positions. Upon adoption of Accounting for Uncertainty in Income Taxes (ASC 740) in
fiscal 2008, the Company recorded a cumulative decrease to Retained Earnings of $2.5 million included in Other in the consolidated statement of stockholders equity. The Company does not currently anticipate that its existing
reserves related to uncertain tax positions as of October 31, 2010 will significantly increase or decrease in subsequent periods; however, various events could cause the Companys current expectations to change in the future.
The following table sets forth the change in the accrual for uncertain tax positions, excluding interest and penalties (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
Balance, beginning of year
|
|
$
|
8,070
|
|
|
$
|
7,571
|
|
|
$
|
4,299
|
|
Increase related to current year tax positions
|
|
|
418
|
|
|
|
516
|
|
|
|
3,272
|
|
Lapse of statute of limitations
|
|
|
(14
|
)
|
|
|
(17
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
$
|
8,474
|
|
|
$
|
8,070
|
|
|
$
|
7,571
|
|
|
|
|
|
|
Of the total unrecognized tax benefits, at October 31, 2010, November 1, 2009 and November 2, 2008,
approximately $3.2 million, $3.1 million and $2.9 million, respectively, would affect the Companys effective income tax rate, if and when recognized in future years. The amount accrued for interest and penalties at October 31,
2010, November 1, 2009 and November 2, 2008 was $2.6 million, $2.0 million, and $1.3 million, respectively. Approximately $0.3 million of the unrecognized tax benefits reversed in fiscal year 2011 as a result of a lapse of
statute of limitations.
The Company is subject to taxation at the federal, state and local level in the United States and in various
international jurisdictions. With few exceptions, the Company is generally no longer subject to examination by the United States federal, state, local or non-US income tax authorities for years before fiscal 2004.
F-37
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
The following describes the open tax years, by major tax jurisdiction, as of October 31, 2010:
|
|
|
|
|
United States-Federal
|
|
2004-present
|
|
|
United States-State
|
|
2004-present
|
|
|
Canada
|
|
2006-present
|
|
|
Germany
|
|
2006-present
|
|
|
United Kingdom
|
|
2006-present
|
NOTE 12: Debt
|
(a)
|
Short-Term Borrowings
|
At
October 31, 2010, the Company had various short-term credit facilities with various banks and financial conduits which provided for borrowings and issuance of letters of credit of up to an aggregate of $203.4 million, including the
Companys $150.0 million five-year accounts receivable securitization program (Short-Term Financing Program) and the $42.0 million five-year revolving credit agreement (Short-Term Credit Facility). Borrowings under the
Short-Term Credit Facility require full cash collateralization as discussed further below.
As of October 31, 2010, the Company had total
outstanding short-term borrowings of $72.4 million and was required to maintain $30.4 million in cash collateral for those outstanding short-term borrowings. At October 31, 2010, the available borrowings under the short-term borrowing
facilities included $100.0 million under the Short-Term Financing Program and $21.0 million under the Short-Term Credit Facility.
|
i)
|
Short-Term Financing Program
|
In
June 2008, the Company modified its previous Short-Term Financing Program to obtain secured loans under a multi-buyer agreement. Under this program the Company sells receivables related to its staffing services business to a wholly owned
bankruptcy-remote subsidiary of the Company, Volt Funding Corp (Volt Funding), which then enters into financing agreements, secured by these receivables, with certain third party lenders. Volt Funding is a separate entity, included in
these consolidated financial statements, whose assets are available first to satisfy the claims of its creditors. The Company retains the servicing responsibility for the receivables, and the borrowings under the Short-Term Financing Program and
related receivables remain on the consolidated balance sheet.
The Short-Term Financing Program is subject to termination under certain
circumstances including the default rate on receivables, as defined, exceeding a specified threshold or the rate of collections on receivables failing to meet a specified threshold. At October 31, 2010, the Company was in compliance with the
covenants, as amended to defer the timing of delivery of audited fiscal year 2009 and 2010 financial statements until April 30, 2013, fiscal year 2011 audited financial statements until May 31, 2013 and fiscal year 2012 audited financial
statements until September 30, 2013. The facility, as amended, expires on April 30, 2014, subject to certain restrictions which can accelerate that timing including the expiration of the liquidity arrangements between the administrator and the
third party lenders. The current liquidity agreement expires on April 30, 2013 and in accordance with the terms in the agreement the Company can request, from time to time, an extension to the liquidity agreement.
F-38
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
To reduce credit related facility fees, the Company reduced the credit available under the facility from
$200.0 million to $175.0 million in January 2009 and then further reduced it to $150.0 million in September 2009. At October 31, 2010, November 1, 2009 and November 2, 2008 the Company had borrowings of $50.0 million under the
program and the pledged receivables, in an equal amount, are included as Trade Accounts Receivable, Net in the consolidated balance sheets. These borrowings bore a weighted average interest rate of 3.4%, 3.4% and 5.4% respectively per annum, which
is inclusive of certain facility and program fees.
Prior to June 2008, the Companys securitization program involved the transfer of
receivables which were accounted for as sales and therefore the carrying value of receivables sold were removed from the Companys consolidated balance sheet. At October 31, 2010 there are no outstanding receivables that were sold prior to
the commencement of the modified Short-Term Financing Program in June 2008.
|
ii)
|
Short-Term Credit Facility
|
On
February 28, 2008, the Company entered into a $42.0 million credit agreement to replace its then-expiring $40.0 million secured credit agreement with an unsecured credit facility of which up to $15.0 million may be used for letters of credit
and up to $25.0 million for borrowing in alternative currencies. On May 11, 2010, the Short-Term Credit Facility was amended to require cash collateral covering 105% of certain baseline amounts covering both the Short-Term Credit Facility and
other unrelated facilities provided by the lender banks and suspend the previously required financial ratios and covenants. On January 25, 2013, the Short-Term Credit Facility was further amended primarily to extend the expiration date to
March 31, 2015, increase the borrowing amount available to $45 million, remove the financial ratio covenants, increase the amount that may be used for letters of credit to $25 million, and require minimum liquidity of $15 million in
unrestricted cash or Short-Term Financing Program borrowing availability. The amendment also removed certain limitations previously placed on incurring additional indebtedness, the level of annual capital expenditures, the amount of investments,
including business acquisitions and mergers, and the amount of loans that may be made by the Company to its subsidiaries.
The Short-Term
Credit Facility is subject to a facility fee and borrowings bear various interest rate options that are available to the Company. The interest rates are calculated using a combination of base rate measures plus a margin over those rates. The
base rates consist of LIBOR rates and prime rates and the margin over the base rate is based on the Companys leverage at the time of borrowing. At October 31, 2010, November 2, 2009 and November 1, 2008 borrowings bore a
weighted average interest rate of 3.5%, 3.0% and 5.9% respectively per annum, inclusive of the facility fee.
At October 31,
2010, November 1, 2009 and November 2, 2008, the Company had $18.0 million, $18.6 million and $8.3 million, respectively, drawn on this Short-Term Credit Facility which was used to hedge the Companys net investment in certain
foreign subsidiaries. At October 31, 2010 and November 1, 2009 the Company also had $3.0 million in letters of credit outstanding. There were no letters of credit outstanding at November 2, 2008.
|
iii)
|
Short-Term Delta Credit Facility
|
In December 2006, Volt Delta entered into a secured credit facility which was terminated in August 2009. The Delta Credit Facility allowed for the
issuance of revolving loans and letters of credit in the
F-39
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
aggregate of $100.0 million. In February 2009, at the request of the Company, the available credit facility was reduced from $100.0 million to $75.0 million to reduce credit related facility
fees. At November 2, 2008, $41.7 million was drawn on this facility, of which $6.7 million was used to hedge the Companys net investment in certain foreign subsidiaries, which was fully repaid in 2009 prior to the termination of the
agreement. The borrowings bore a weighted average interest rate of 5.6% per annum at November 2, 2008.
In September 2001,
a subsidiary of the Company borrowed $15.1 million under a loan agreement, of which $11.2 million was outstanding at October 31, 2010. The twenty-year loan, which bears interest at 8.2% per annum and requires principal and interest
payments of $0.4 million per quarter, is secured by a deed of trust on certain land and buildings and is guaranteed by the Company.
Long-term
debt consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
2010
|
|
|
November 1,
2009
|
|
|
November 2,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
8.2% term loan
|
|
$
|
11,161
|
|
|
$
|
11,762
|
|
|
$
|
12,315
|
|
Less amounts due within one year
|
|
|
652
|
|
|
|
601
|
|
|
|
553
|
|
|
|
|
|
|
Total long-term debt
|
|
$
|
10,509
|
|
|
$
|
11,161
|
|
|
$
|
11,762
|
|
|
|
|
|
|
Principal payment maturities on long-term debt outstanding at October 31, 2010 are:
|
|
|
|
|
Fiscal year
|
|
Amount
|
|
2011
|
|
$
|
652
|
|
2012
|
|
|
708
|
|
2013
|
|
|
768
|
|
2014
|
|
|
833
|
|
2015
|
|
|
905
|
|
Thereafter
|
|
|
7,295
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
11,161
|
|
|
|
|
|
|
NOTE 13: Derivatives and Hedging
The Company enters into derivative and non-derivative financial instruments to hedge its net investment in certain foreign subsidiaries. During fiscal years 2008 through 2010, the Company primarily used
short-term foreign currency borrowings to hedge its net investments in certain foreign operations. The Company also used derivative instruments, such as foreign currency options and exchange contracts, to hedge certain net investments in fiscal
2008.
F-40
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
At October 31, 2010, November 1, 2009 and November 2, 2008, the Company had
outstanding $18.0 million, $18.6 million and $15.0 million, respectively, of foreign currency denominated short-term borrowings used to hedge the Companys net investment in certain foreign subsidiaries. Additionally, during 2008, the Company
entered into and exercised two derivative instruments that were purchased to hedge the Companys net investment in Canada. The Company does not designate and document these instruments as hedges under ASC 815 Derivatives and
Hedging, and as a result gains and losses associated with these instruments are included in Foreign Exchange Gain (Loss), net in our consolidated statements of operations. For fiscal years 2010, 2009 and 2008, net gains/ (losses) on these
borrowings and instruments of $0.0 million, $(1.9) million and $2.5 million, respectively, were included in Foreign Exchange Gain (Loss), net. At October 31, 2010, November 1, 2009, and November 2, 2008 the Company had no
outstanding foreign currency derivative contracts.
NOTE 14: Stockholders Equity
Each outstanding
share of common stock is entitled to one vote per share on all matters submitted to a vote by shareholders. Subject to the rights of any preferred stock which may from time to time be outstanding, the holders of outstanding shares of common stock
are entitled to receive dividends and, upon liquidation or dissolution, are entitled to receive pro rata all assets legally available for distribution to stockholders. No dividends were declared or paid on the common stock during fiscal years 2010,
2009 or 2008. The holders of common stock have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares. There is no preferred stock outstanding.
On June 2,
2008, Volt Information Sciences, Inc.s Board of Directors approved a stock repurchase program whereby the Company is authorized to repurchase up to an additional 1,500,000 shares of the Companys common stock. Shares repurchased prior to
this authorization plan were purchased under a previous buy-back plan that was approved by the Board of Directors on September 6, 2006. The 2006 plan approved the repurchase of up to 1,500,000 of the Companys common stock. During fiscal
years 2008 and 2009 the Company repurchased 1.6 million and 32,010 shares of its common stock at an average price of $11.67 and $7.08 per share for approximately $18.8 million and $0.2 million, respectively. No shares were repurchased in 2010.
As of October 31, 2010 the Company may purchase up to 309,255 additional shares under the 2008 authorization, subject to limitations contained in the Companys debt agreements.
F-41
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
The
accumulated balances for each classification of other comprehensive income (loss) are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
gains / (losses)
|
|
|
Unrealized
gains / (losses)
on securities
|
|
|
Accumulated other
comprehensive
income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 28, 2007 (As Restated)
|
|
$
|
7,610
|
|
|
$
|
89
|
|
|
$
|
7,699
|
|
Current period other comprehensive loss
|
|
|
(10,050
|
)
|
|
|
(112
|
)
|
|
|
(10,162
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 2, 2008 (As Restated)
|
|
$
|
(2,440
|
)
|
|
$
|
(23
|
)
|
|
$
|
(2,463
|
)
|
|
|
|
|
Current period other comprehensive income
|
|
|
1,513
|
|
|
|
81
|
|
|
|
1,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 2, 2009
|
|
$
|
(927
|
)
|
|
$
|
58
|
|
|
$
|
(869
|
)
|
|
|
|
|
Current period other comprehensive loss
|
|
|
(1,646
|
)
|
|
|
(20
|
)
|
|
|
(1,666
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31, 2010
|
|
$
|
(2,573
|
)
|
|
$
|
38
|
|
|
$
|
(2,535
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 15: Stock Compensation Plans
As of October 31, 2010, the Company had two share-based compensation plans, the 2006 Plan and 1995 Plan, which are discussed below. At October 31, 2010, there were 556,075 shares available for
future grants.
2006 Plan
In April 2007, the shareholders of the Company approved the Volt Information Sciences, Inc. 2006 Incentive Stock Plan (2006 Plan). The 2006 Plan permits the grant of Incentive Stock Options, Non-Qualified
Stock Options, Restricted Stock and Restricted Stock Units related to the Companys common stock to employees and nonemployee directors of the Company through September 6, 2016. The aggregate number of shares that may be issued pursuant to
awards made under the 2006 Plan shall not exceed 1,500,000 shares and the options will be granted at a price of no less than 100% of the fair market value of the Companys common stock at the date of grant.
On December 18, 2007, the Company granted to employees (i) 233,000 restricted stock units with a weighted average grant date fair value of
$13.32 and (ii) nonqualified stock options to purchase 152,996 shares of the Companys common stock at a weighted average exercise price of $13.32 per share under the 2006 Plan. If certain net income targets are met in fiscal years
2007 through 2011, the restricted stock units begin to vest over a five-year period through 2016. Similarly, if certain net income targets are met in fiscal years 2008 through 2012, substantially all the stock options will vest over a four-year
period through 2016. There was no compensation expense recognized on the grants with net income targets for the fiscal years 2010, 2009, and 2008 because the achievement was not deemed probable.
F-42
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
During 2009, the Company granted employees and non-employee directors of the company non-qualified stock
options to purchase 678,750 shares of the Companys stock under the 2006 Plan. These options are time based and vest over a five year period.
The following table summarizes transactions involving outstanding stock options and non-vested restricted stock and restricted stock unit awards (stock awards) under the 2006 plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
Stock Awards
|
|
2006 Plan
|
|
Number of
shares
|
|
|
Weighted
average
exercise
price
|
|
|
Weighted
average
contractual
life
|
|
|
Aggregate
Intrinsic
Value
|
|
|
Number of
shares
|
|
|
Weighted
average
grant date
fair value
|
|
|
|
|
|
|
|
|
|
(in years)
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
Outstanding October 28, 2007
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
|
|
Awarded
|
|
|
152,996
|
|
|
|
13.32
|
|
|
|
|
|
|
|
|
|
|
|
233,000
|
|
|
|
13.32
|
|
Forfeited
|
|
|
(21,466
|
)
|
|
|
13.32
|
|
|
|
|
|
|
|
|
|
|
|
(35,250
|
)
|
|
|
13.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding November 2, 2008
|
|
|
131,530
|
|
|
|
13.32
|
|
|
|
9.12
|
|
|
$
|
-
|
|
|
|
197,750
|
|
|
$
|
13.32
|
|
Awarded
|
|
|
678,750
|
|
|
|
6.41
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited
|
|
|
(37,531
|
)
|
|
|
8.98
|
|
|
|
|
|
|
|
|
|
|
|
(5,580
|
)
|
|
|
13.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding November 1, 2009
|
|
|
772,749
|
|
|
|
7.48
|
|
|
|
9.13
|
|
|
|
1,112
|
|
|
|
192,170
|
|
|
|
13.32
|
|
Awarded
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
(2,000
|
)
|
|
|
6.39
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited
|
|
|
(20,966
|
)
|
|
|
7.34
|
|
|
|
|
|
|
|
|
|
|
|
(3,028
|
)
|
|
|
13.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding October 31, 2010
|
|
|
749,783
|
|
|
$
|
7.48
|
|
|
|
8.21
|
|
|
$
|
1,059
|
|
|
|
189,142
|
|
|
$
|
13.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested or expected to vest at October 31, 2010
|
|
|
623,527
|
|
|
$
|
6.41
|
|
|
|
8.41
|
|
|
$
|
1,044
|
|
|
|
0
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at October 31, 2010
|
|
|
129,150
|
|
|
$
|
6.41
|
|
|
|
8.34
|
|
|
$
|
216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average grant date fair value per share of options granted during the years ended November 1, 2009 and
November 1, 2008 was $4.41 and $8.38. No options were granted in 2010.
1995 Plan
In 1995, the Company adopted a Non-Qualified Stock Option Plan (1995 Plan) pursuant to which the Companys Board of Directors could grant stock
options to the key employees of the Company or of any subsidiary of the Company. The 1995 Plan terminated on May 16, 2005 pursuant to its terms. Options to purchase shares of common stock previously granted under the plan will remain
outstanding until exercised, cancelled, forfeited or expired.
F-43
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
The following table summarizes transactions involving outstanding stock options under the 1995 plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1995 Plan
|
|
Number of
shares
|
|
|
Weighted
average
exercise price
|
|
|
Weighted
average
contractual
life
|
|
|
Aggregate
Intrinsic
Value
|
|
|
|
|
|
|
|
|
|
(in years)
|
|
|
(in thousands)
|
|
Outstanding October 28, 2007
|
|
|
118,665
|
|
|
$
|
14.97
|
|
|
|
3.59
|
|
|
$
|
402
|
|
Exercised
|
|
|
(18,000
|
)
|
|
|
9.20
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
(26,550
|
)
|
|
|
24.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding November 2, 2008
|
|
|
74,115
|
|
|
|
12.86
|
|
|
|
2.94
|
|
|
|
7
|
|
Awarded
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
(12,585
|
)
|
|
|
13.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding November 1, 2009
|
|
|
61,530
|
|
|
|
12.81
|
|
|
|
2.20
|
|
|
|
13
|
|
Awarded
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
(15,480
|
)
|
|
|
14.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding October 31, 2010
|
|
|
46,050
|
|
|
$
|
12.14
|
|
|
|
1.90
|
|
|
$
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and exercisable at October 31, 2010
|
|
|
46,050
|
|
|
$
|
12.14
|
|
|
|
1.90
|
|
|
$
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The intrinsic value of 18,000 options exercised during the year ended November 2, 2008 was $0.1 million. The total
cash received from the exercise of stock options was $0.2 million in the period ended November 2, 2008 and is classified as cash flow from financing in the consolidated statement of cash flows. The tax benefit realized from the exercise of the
stock options was $0.1 million and is included in financing cash flows in the accompanying consolidated statements of cash flows.
In
calculating share-based compensation costs, the Company estimated the fair value of each stock option grant using the Black-Scholes option-pricing model. The assumptions used to estimate the fair value stock options were as follows for the fiscal
years 2009 and 2008. There were no grants in fiscal year 2010.
|
|
|
|
|
|
|
|
|
|
|
November 1,
2009
|
|
|
November 2,
2008
|
|
Weighted-average fair value of stock option granted
|
|
$
|
4.41
|
|
|
$
|
8.38
|
|
Expected volatility
|
|
|
58%
|
|
|
|
47%
|
|
Expected term (in years)
|
|
|
10
|
|
|
|
10
|
|
Risk-free interest rate
|
|
|
2.96
|
|
|
|
4.1
|
|
Expected dividend yield
|
|
|
0
|
|
|
|
0
|
|
F-44
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
Share based compensation expense was recognized in Selling, Administrative and Other Operating Expenses
in the Companys consolidated statements of operations for fiscal year 2010, 2009, and 2008, respectively. The following table details this information (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
|
|
October 31,
2010
|
|
|
|
|
November 1,
2009
|
|
|
|
|
November 2,
2008
|
|
2006 Stock Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, administrative and other operating
|
|
$
|
1,044
|
|
|
|
|
$
|
679
|
|
|
|
|
$
|
33
|
|
1995 Stock Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, administrative and other operating
|
|
|
-
|
|
|
|
|
|
1
|
|
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,044
|
|
|
|
|
$
|
680
|
|
|
|
|
$
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of October 31, 2010 there was $1.1 million of total unrecognized compensation cost related to non-vested
stock-based compensation arrangements to be recognized over a weighted average period of 3.43 years. All of the unrecognized compensation cost relates to the 2006 Plan.
NOTE 16: Earnings (Loss) Per Share
Basic and diluted net loss per share is calculated as
follows (in thousands, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31,
2010
|
|
|
|
|
November 1,
2009
|
|
|
|
|
November 2,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
$
|
(96,375
|
)
|
|
|
|
$
|
(26,244
|
)
|
|
|
|
$
|
(111,042
|
)
|
Income from discontinued operations
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
99,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(96,375
|
)
|
|
|
|
$
|
(26,244
|
)
|
|
|
|
$
|
(11,717
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
|
|
|
20,812
|
|
|
|
|
|
20,833
|
|
|
|
|
|
21,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share associated with continuing
operations - basic and diluted
|
|
$
|
(4.63
|
)
|
|
|
|
$
|
(1.26
|
)
|
|
|
|
$
|
(5.05
|
)
|
Income per share associated with discontinued operations - basic and diluted
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
4.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share - basic and diluted
|
|
$
|
(4.63
|
)
|
|
|
|
$
|
(1.26
|
)
|
|
|
|
$
|
(0.53
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options to purchase 795,833, 834,279 and 205,645 shares of the Companys common stock were outstanding at
October 31, 2010, November 1, 2009 and November 2, 2008, respectively. Additionally, 189,142, 192,170, and 197,750 restricted stock units were outstanding at October 31, 2010, November 1, 2009 and November 2,
2008, respectively. The options and restricted stock units were not included in the computation of diluted loss per share because the effect of their inclusion would have been antidilutive as a result of the Companys net loss position in
fiscal years 2010, 2009 and 2008.
F-45
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
NOTE 17: Related Party Transactions
During fiscal 2010, 2009, and 2008, the law firm of which Lloyd Frank, a member of the Companys Board of Directors, is of counsel, rendered services to the Company in the amount of $4.2 million,
$1.6 million, and $1.7 million, respectively. In addition, during fiscal 2010, 2009, and 2008 the Company paid $81,840, $47,000 and $34,200, respectively, to Michael Shaw, Ph.D., son of Jerry Shaw, Executive Officer, and brother of
Steven Shaw, the then Chief Executive Officer and a Director, for services rendered to the Company.
The Company was also party to an
employment agreement with the late William Shaw dated as of May 1, 1987, which required the Company to pay his beneficiary a death benefit equal to three times his annual base salary at the date of his death if his death occurred while he was
employed as an executive. Pursuant to that clause of the employment agreement, on March 9, 2006, upon the death of William Shaw, the Company owed a death benefit to his beneficiaries in the amount of $1.5 million, payable over 36 months. During
fiscal 2008 and 2009, the Company paid $0.5 million and $0.2 million under this agreement and the agreement was paid in full in February 2009. The beneficiaries of the Estate of William Shaw are Linda and Deborah Shaw. Linda Shaws husband
(Bruce G. Goodman) and Deborah Shaw are Directors of the Company.
NOTE 18: Sale of Businesses
On September 5, 2008, the Company sold the net assets of its directory systems and services and North American publishing operations for cash
proceeds of $179.3 million. The transaction included the net assets of Volt Directory Systems and DataNational but excluded the Uruguayan operations. The Company recorded a pre-tax gain of $155.8 million that is included in discontinued operations
in the consolidated statement of operations. The results of operations of Volt Directory Systems and DataNational have been classified as discontinued in the consolidated statement of operations.
The following summarizes the components of discontinued operations for the year ended November 2, 2008 (in thousands):
|
|
|
|
|
|
|
Year ended
|
|
|
|
November 2,
2008
|
|
|
|
Revenue
|
|
$
|
54,072
|
|
|
|
|
|
|
|
|
Income before items shown below
|
|
|
9,202
|
|
Gain on sale
|
|
|
155,828
|
|
|
|
|
|
|
Income before taxes
|
|
|
165,030
|
|
Income tax provision
|
|
|
(65,705
|
)
|
|
|
|
|
|
Income from discontinued operations
|
|
$
|
99,325
|
|
|
|
|
|
|
F-46
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
NOTE 19: Restructuring
The following table presents the restructuring charge and activity in the restructuring accrual for fiscal 2008 through 2010 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
Facilities
|
|
|
Impairment
charges
|
|
|
Total
|
|
|
|
|
|
|
Accrued as of October 28, 2007
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Restructuring charge 2008
|
|
|
1,504
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,504
|
|
Payments and disposals
|
|
|
(1,504
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,504
|
)
|
|
|
|
|
|
Accrued as of November 2, 2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Restructuring charge 2009
|
|
|
4,895
|
|
|
|
4,066
|
|
|
|
1,778
|
|
|
|
10,739
|
|
Payments and disposals
|
|
|
(4,666
|
)
|
|
|
(2,312
|
)
|
|
|
(1,778
|
)
|
|
|
(8,756
|
)
|
|
|
|
|
|
Accrued as of November 1, 2009
|
|
|
229
|
|
|
|
1,754
|
|
|
|
-
|
|
|
|
1,983
|
|
Restructuring charge 2010
|
|
|
2,159
|
|
|
|
915
|
|
|
|
75
|
|
|
|
3,149
|
|
Payments and disposals
|
|
|
(2,388
|
)
|
|
|
(1,830
|
)
|
|
|
(75
|
)
|
|
|
(4,293
|
)
|
|
|
|
|
|
Accrued as of October 31, 2010
|
|
$
|
-
|
|
|
$
|
839
|
|
|
$
|
-
|
|
|
$
|
839
|
|
|
|
|
|
|
During fiscal 2010, the Company recorded a pre-tax restructuring charge of approximately $3.1 million related to the
elimination of employee positions in the Staffing Services and Computer Systems segments which resulted from a series of cost cutting initiatives, office consolidations and the closing of a facility in the Staffing Services segment due to the early
termination of a contract. The restructuring charge included: (1) $2.2 million in severance which was all paid in fiscal 2010 and (2) an accrual of $1.0 million in rent for the remaining term of the leases at the closed facilities and the
impairment of related property and equipment.
During fiscal 2009, the Company recorded a pre-tax restructuring charge of approximately $10.7
million related to the elimination of employee positions in the Staffing Services and Computer Systems segments which resulted from a series of cost cutting initiatives, office consolidations and the closing of a facility in the Staffing Services
segment due to the early termination of a contract. The restructuring charge included: (1) $4.9 million in severance, of which $4.7 million was paid in fiscal 2009; (2) a $1.8 million noncash charge for the impairment of property and
equipment in the closed facilities; and (3) an accrual of $4.1 million in rent for the remaining term of the leases at the closed facilities.
During fiscal 2008, the Company recorded a pre-tax restructuring charge of approximately $1.5 million related to the elimination of Volt Delta employee positions in Europe and North America. The workforce
reduction at Volt Delta resulted from the integration of LSSi Data into the Computer Systems segments database access line of business. The restructuring charge consisted of severance and termination benefits for the affected employees and the
restructuring charge was paid in fiscal 2008.
F-47
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
NOTE 20: Commitments and Contingencies
The future minimum rental
commitments as of October 31, 2010 for all noncancelable operating leases were as follows (in thousands):
|
|
|
|
|
|
|
Leases
|
|
Fiscal year:
|
|
|
|
|
2011
|
|
$
|
19,139
|
|
2012
|
|
|
13,814
|
|
2013
|
|
|
8,784
|
|
2014
|
|
|
6,874
|
|
2015
|
|
|
5,404
|
|
Thereafter
|
|
|
3,309
|
|
Many of the leases also require the Company to pay and contribute to property taxes, insurance and ordinary repairs and
maintenance. The lease agreements, which expire at various dates through 2018, may be subject in some cases to renewal options, early termination options or escalation clauses.
Rental expense for all operating leases for fiscal years 2010, 2009, and 2008 was $22.3 million, $30.7 million, and $29.8 million, respectively.
The Company is
involved in various other claims and legal actions arising in the ordinary course of business. The Companys loss contingencies not discussed elsewhere consist primarily of claims and legal actions arising in the normal course of business
related to contingent worker employment matters in the Staffing Services segment. These matters are at varying stages of investigation, arbitration or adjudication. The Company has accrued for losses on individual matters that are both probable and
reasonably estimable.
Estimates are based on currently available information and assumptions. The Companys estimates may change in the
future due to new developments or changes in strategy in handling these matters. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these matters will not have a
material adverse effect on its business or consolidated financial position, results of operations, or cash flows.
The Company
indemnifies its officers, directors and certain employees for certain events or occurrences while the employee, officer or director is, or was, serving at the Companys request in such capacity, as permitted under Delaware law. The Company has
paid and continues to pay legal counsel fees incurred by the present and former directors, officers and employees who are involved with the SEC inquiry, the Restatement, and related review by the Board of Directors. Each of these individuals is
required to repay the Company for such fees if he or she if ultimately found not to be entitled to indemnification.
F-48
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
NOTE 21: Subsequent Events
Short-Term Borrowings
Subsequent to October 31, 2010, the Company has entered into various amendments to its Short-Term Financing Program and Short-Term Credit Facility. These amendments to the Short-Term Financing
Program extended the time for delivery of the Companys audited financial statements for the fiscal years ended November 1, 2009 and October 31, 2010 to no later than April 30, 2013, the fiscal year 2011 audited financial statements
to no later than May 31, 2013 and the fiscal year 2012 audited financial statements to no later than September 30, 2013. The current liquidity agreement between the administrator and the third party lenders expires on April 30, 2013 and in
accordance with the terms in the agreement the Company can request an extension to the liquidity agreement.
On January 25, 2013, the
Short-Term Credit Facility was amended primarily to extend the expiration date to March 31, 2015, increase the borrowing amount available to $45 million, remove the financial ratio covenants, increase the amount that may be used for letters of
credit to $25 million, and require minimum liquidity of $15 million in unrestricted cash or Short-Term Financing Program borrowing availability. The amendment also removed certain limitations previously placed on incurring additional indebtedness,
the level of annual capital expenditures, the amount of investments, including business acquisitions and mergers, and the amount of loans that may be made by the Company to its subsidiaries.
As of January 27, 2013, the amounts outstanding under the Short-Term Financing Program and Short-Term Credit Facility were $110.0 million and $21.9 million, respectively.
Legal Proceedings
In May 2011, the Company settled a class action lawsuit that was initiated in the State of Illinois related to the Companys length-of-service based
award program. The Company paid a net settlement amount of $2.6 million, inclusive of the Companys reimbursement of plaintiffs legal fees, settlement administrator fees and the employers portion of payroll taxes in fiscal 2012. As
part of the Restatement the settlement amount was recognized in the period the employees earned the benefit.
Settlement
of SEC Investigation
On January 10, 2013, the Company announced that it has reached an agreement with the SEC to settle issues
regarding the SECs investigation of certain accounting matters. The Company did not admit or deny the SECs allegations and consented to a judgment requiring compliance with federal securities laws. Under the terms of the settlement,
which was approved by the United States District Court for the Southern District of New York on January 18, 2013, the Company was not required to pay any monetary penalty.
Departure of Executive Officers
In February 2012, the employment of Jack Egan, the
Companys former Chief Financial Officer and then Senior Vice President-Global Planning and Budgeting, terminated. In connection with the termination, the Company and Mr. Egan entered into a severance agreement in which Mr. Egan
received $0.3 million and certain group health benefits.
F-49
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
In April 2012, Steven Shaw resigned as President and Chief Executive Officer of the Company. The Company
did not enter into a severance agreement with Mr. Shaw.
In May 2012, Howard Weinreich retired as Senior Vice President, General Counsel
and Assistant Secretary. The Company and Mr. Weinreich entered into a retirement agreement in which Mr. Weinreich received $0.3 million and a two month consulting agreement under which Mr. Weinreich received $0.1 million.
In December 2012, Thomas Daley, Senior Vice President of the Company, retired from his position. The Company and Mr. Daley entered into a
retirement agreement under which Mr. Daley received $0.3 million.
Sale of Asset
On July 31, 2012, the Company sold a building located in California for $5.1 million in cash, net of related expenses, realizing a gain of $4.4
million.
NOTE 22: Segment Disclosures
The Companys operating segments are determined in accordance with the Companys internal management structure, which is based on operating activities. The Companys previously reported
fiscal 2008 segment operating profit (loss) has been restated to correct the composition of the Computer Systems segment as discussed in Note 2 and recast to conform to the Companys current presentation, which has been revised for additional
allocation of certain previously unallocated corporate costs to the operating segments.
Segment operating profit is comprised of segment net
revenues less direct cost of staffing services revenue or cost of other revenue, selling, administrative and other operating costs, amortization of purchased intangible assets and restructuring costs. The Company allocates all costs except for the
corporate-wide general and administrative costs to the segments. These allocations are included in the calculation of each segments operating profit.
On September 5, 2008, the Company sold the net assets of Volt Directory Systems and DataNational (excluding its Uruguayan operations), whose operations have been reclassified to Discontinued
Operations (formerly included in the Printing and Other segment), with the remainder of the segment being included in Other.
F-50
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
Financial data concerning the Companys sales and segment operating profit (loss) by reportable
operating segment for the fiscal years ended October 31, 2010, November 1, 2009, and November 2, 2008, are summarized in the following table (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended October 31, 2010
|
|
|
|
|
|
|
|
|
Total
|
|
|
Staffing
Services
|
|
|
Computer
Systems
|
|
|
Telecommuni-
cations
|
|
|
Other
|
|
|
|
|
|
|
Net Revenue
|
|
$
|
1,956,412
|
|
|
$
|
1,732,348
|
|
|
$
|
101,814
|
|
|
$
|
47,114
|
|
|
$
|
75,136
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct cost of staffing services revenue
|
|
|
1,479,562
|
|
|
|
1,479,562
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cost of other revenue
|
|
|
191,730
|
|
|
|
-
|
|
|
|
76,656
|
|
|
|
52,774
|
|
|
|
62,300
|
|
Selling, administrative and other operating costs
|
|
|
271,065
|
|
|
|
232,701
|
|
|
|
21,493
|
|
|
|
2,842
|
|
|
|
14,029
|
|
Amortization of purchased intangible assets
|
|
|
1,434
|
|
|
|
100
|
|
|
|
857
|
|
|
|
-
|
|
|
|
477
|
|
Restructuring costs
|
|
|
3,149
|
|
|
|
1,336
|
|
|
|
1,813
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating profit (loss)
|
|
$
|
9,472
|
|
|
$
|
18,649
|
|
|
$
|
995
|
|
|
$
|
(8,502
|
)
|
|
$
|
(1,670
|
)
|
Corporate general and administrative
|
|
|
10,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees related to restatement and associated investigations
|
|
|
29,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
$
|
(29,723
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended November 1, 2009
|
|
|
|
|
|
|
|
|
Total
|
|
|
Staffing
Services
|
|
|
Computer
Systems
|
|
|
Telecommuni-
cations
|
|
|
Other
|
|
|
|
|
|
|
Net Revenue
|
|
$
|
1,964,009
|
|
|
$
|
1,717,255
|
|
|
$
|
89,962
|
|
|
$
|
82,505
|
|
|
$
|
74,287
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct cost of staffing services revenue
|
|
|
1,458,720
|
|
|
|
1,458,720
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cost of other revenue
|
|
|
230,031
|
|
|
|
-
|
|
|
|
87,910
|
|
|
|
85,416
|
|
|
|
56,705
|
|
Selling, administrative and other operating costs
|
|
|
279,889
|
|
|
|
241,522
|
|
|
|
22,490
|
|
|
|
3,457
|
|
|
|
12,420
|
|
Amortization of purchased intangible assets
|
|
|
1,435
|
|
|
|
100
|
|
|
|
858
|
|
|
|
-
|
|
|
|
477
|
|
Restructuring costs
|
|
|
10,739
|
|
|
|
8,594
|
|
|
|
2,145
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating profit (loss)
|
|
$
|
(16,805
|
)
|
|
$
|
8,319
|
|
|
$
|
(23,441
|
)
|
|
$
|
(6,368
|
)
|
|
$
|
4,685
|
|
Corporate general and administrative
|
|
|
8,515
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees related to restatement and associated investigations
|
|
|
924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
$
|
(26,244
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended November 2, 2008
(As Restated)
|
|
|
|
|
|
|
|
|
Total
|
|
|
Staffing
Services
|
|
|
Computer
Systems
|
|
|
Telecommuni
cations
|
|
|
Other
|
|
|
|
|
|
|
Net Revenue
|
|
$
|
2,726,038
|
|
|
$
|
2,376,396
|
|
|
$
|
103,292
|
|
|
$
|
170,735
|
|
|
$
|
75,615
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct cost of staffing services revenue
|
|
|
2,012,977
|
|
|
|
2,012,977
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cost of other revenue
|
|
|
340,131
|
|
|
|
-
|
|
|
|
95,447
|
|
|
|
187,102
|
|
|
|
57,582
|
|
Selling, administrative and other operating costs
|
|
|
348,861
|
|
|
|
307,658
|
|
|
|
25,032
|
|
|
|
4,046
|
|
|
|
12,125
|
|
Amortization of purchased intangible assets
|
|
|
10,520
|
|
|
|
101
|
|
|
|
9,942
|
|
|
|
-
|
|
|
|
477
|
|
Restructuring costs
|
|
|
1,504
|
|
|
|
-
|
|
|
|
1,504
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating profit (loss)
|
|
$
|
12,045
|
|
|
$
|
55,660
|
|
|
$
|
(28,633
|
)
|
|
$
|
(20,413
|
)
|
|
$
|
5,431
|
|
Impairment of purchased intangibles and goodwill
|
|
|
135,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate general and administrative
|
|
|
9,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
$
|
(132,732
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-51
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
|
|
|
|
|
October 31,
2010
|
|
|
November 1,
2009
|
|
|
November 2,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Staffing services
|
|
$
|
358,608
|
|
|
$
|
290,381
|
|
|
$
|
407,482
|
|
Computer systems
|
|
|
50,976
|
|
|
|
55,713
|
|
|
|
74,190
|
|
Telecommunications services
|
|
|
15,115
|
|
|
|
26,965
|
|
|
|
48,273
|
|
Other
|
|
|
35,758
|
|
|
|
35,109
|
|
|
|
36,130
|
|
|
|
|
|
|
|
|
|
460,457
|
|
|
|
408,168
|
|
|
|
566,075
|
|
Cash, investments and other corporate assets
|
|
|
138,667
|
|
|
|
250,175
|
|
|
|
250,730
|
|
|
|
|
|
|
Total assets
|
|
$
|
599,124
|
|
|
$
|
658,343
|
|
|
$
|
816,805
|
|
|
|
|
|
|
The Company had no single customer account for more than 10% of consolidated net revenue in the fiscal years 2009 and
2010. In fiscal year 2008, a single customer accounted for approximately 11% of consolidated net revenue.
Sales to external customers and
long-lived assets of the Company by geographic area are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
|
|
|
|
|
October 31,
2010
|
|
|
November 1,
2009
|
|
|
November 2,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
Net Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
1,802,385
|
|
|
$
|
1,815,596
|
|
|
$
|
2,530,366
|
|
International, principally Europe
|
|
|
154,027
|
|
|
|
148,413
|
|
|
|
195,672
|
|
|
|
|
|
|
|
|
$
|
1,956,412
|
|
|
$
|
1,964,009
|
|
|
$
|
2,726,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
|
|
|
|
|
October 31,
2010
|
|
|
November 1,
2009
|
|
|
November 2,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
Long-lived assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
37,166
|
|
|
$
|
47,530
|
|
|
$
|
56,111
|
|
International, principally Europe
|
|
|
8,490
|
|
|
|
8,627
|
|
|
|
10,749
|
|
|
|
|
|
|
|
|
$
|
45,656
|
|
|
$
|
56,157
|
|
|
$
|
66,860
|
|
|
|
|
|
|
F-52
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
Capital expenditures and depreciation and amortization by the Companys operating segments are as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
|
|
October 31,
2010
|
|
|
November 1,
2009
|
|
|
November 2,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(As Restated)
|
|
|
|
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Staffing services
|
|
$
|
9,261
|
|
|
$
|
9,182
|
|
|
$
|
9,100
|
|
Computer systems
|
|
|
2,395
|
|
|
|
7,469
|
|
|
|
8,875
|
|
Telecommunications services
|
|
|
134
|
|
|
|
746
|
|
|
|
5,849
|
|
Other
|
|
|
841
|
|
|
|
404
|
|
|
|
558
|
|
|
|
|
|
|
Total segments
|
|
|
12,631
|
|
|
|
17,801
|
|
|
|
24,382
|
|
Corporate
|
|
|
613
|
|
|
|
2,723
|
|
|
|
1,151
|
|
|
|
|
|
|
|
|
$
|
13,244
|
|
|
$
|
20,524
|
|
|
$
|
25,533
|
|
|
|
|
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
Staffing services
|
|
$
|
9,321
|
|
|
$
|
11,485
|
|
|
$
|
14,026
|
|
Computer systems
|
|
|
9,831
|
|
|
|
10,861
|
|
|
|
20,298
|
|
Telecommunications services
|
|
|
1,550
|
|
|
|
2,171
|
|
|
|
2,559
|
|
Other
|
|
|
1,251
|
|
|
|
1,404
|
|
|
|
1,604
|
|
|
|
|
|
|
Total segments
|
|
|
21,953
|
|
|
|
25,921
|
|
|
|
38,487
|
|
Corporate
|
|
|
1,740
|
|
|
|
1,681
|
|
|
|
2,370
|
|
|
|
|
|
|
|
|
$
|
23,693
|
|
|
$
|
27,602
|
|
|
$
|
40,857
|
|
|
|
|
|
|
F-53
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
NOTE 23: Quarterly Financial Information (unaudited)
The following tables present certain unaudited consolidated quarterly financial information for each quarter in the years ended October 31, 2010 and
November 1, 2009.
The following table presents selected Consolidated Statements of Operations data for each quarter for the year ended
October 31, 2010 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
2010
|
|
|
May 2,
2010
|
|
|
August 1,
2010
|
|
|
October 31,
2010
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
REVENUE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staffing services revenue
|
|
$
|
383,341
|
|
|
$
|
421,433
|
|
|
$
|
444,533
|
|
|
$
|
483,041
|
|
Other revenue
|
|
|
57,354
|
|
|
|
48,193
|
|
|
|
47,416
|
|
|
|
71,101
|
|
|
|
|
|
|
NET REVENUE
|
|
|
440,695
|
|
|
|
469,626
|
|
|
|
491,949
|
|
|
|
554,142
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct cost of staffing services revenue
|
|
|
334,723
|
|
|
|
363,457
|
|
|
|
382,548
|
|
|
|
398,834
|
|
Cost of other revenue
|
|
|
50,662
|
|
|
|
45,491
|
|
|
|
45,977
|
|
|
|
49,600
|
|
Selling, administrative and other operating costs
|
|
|
69,474
|
|
|
|
70,233
|
|
|
|
69,698
|
|
|
|
71,697
|
|
Amortization of purchased intangible assets
|
|
|
358
|
|
|
|
359
|
|
|
|
359
|
|
|
|
358
|
|
Restructuring costs
|
|
|
55
|
|
|
|
856
|
|
|
|
1,337
|
|
|
|
901
|
|
Fees related to restatement and associated investigations
|
|
|
3,880
|
|
|
|
7,714
|
|
|
|
7,508
|
|
|
|
10,056
|
|
|
|
|
|
|
TOTAL EXPENSES
|
|
|
459,152
|
|
|
|
488,110
|
|
|
|
507,427
|
|
|
|
531,446
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS)
|
|
|
(18,457
|
)
|
|
|
(18,484
|
)
|
|
|
(15,478
|
)
|
|
|
22,696
|
|
|
|
|
|
|
OTHER INCOME (EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
190
|
|
|
|
189
|
|
|
|
197
|
|
|
|
187
|
|
Interest expense
|
|
|
(674
|
)
|
|
|
(658
|
)
|
|
|
(640
|
)
|
|
|
(661
|
)
|
Foreign exchange gain (loss), net
|
|
|
1,022
|
|
|
|
1,235
|
|
|
|
(1,074
|
)
|
|
|
(1,017
|
)
|
Other expense, net
|
|
|
(482
|
)
|
|
|
(468
|
)
|
|
|
(486
|
)
|
|
|
(898
|
)
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES
|
|
|
(18,401
|
)
|
|
|
(18,186
|
)
|
|
|
(17,481
|
)
|
|
|
20,307
|
|
|
|
|
|
|
Income tax provision (benefit)
|
|
|
(345
|
)
|
|
|
61,997
|
|
|
|
(3,003
|
)
|
|
|
3,965
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
(18,056
|
)
|
|
$
|
(80,183
|
)
|
|
$
|
(14,478
|
)
|
|
$
|
16,342
|
|
|
|
|
|
|
|
|
|
|
|
PER SHARE DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(0.87
|
)
|
|
$
|
(3.85
|
)
|
|
$
|
(0.70
|
)
|
|
$
|
0.79
|
|
Weighted average number of shares
|
|
|
20,811
|
|
|
|
20,813
|
|
|
|
20,813
|
|
|
|
20,813
|
|
F-54
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
The following table presents selected Consolidated Statements of Operations data for each quarter for
the year ended November 1, 2009 (in thousands) including adjustments consistent with Note 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 1,
2009
|
|
|
February 1,
2009
|
|
|
February 1,
2009
|
|
|
May 3,
2009
|
|
|
May 3,
2009
|
|
|
May 3,
2009
|
|
|
August 2,
2009
|
|
|
November 1,
2009
|
|
|
|
|
|
|
|
|
(As Reported)
(Unaudited)
|
|
|
(Adjustments)
(Unaudited)
|
|
|
(As Restated)
(Unaudited)
|
|
|
(As Reported)
(Unaudited)
|
|
|
(Adjustments)
(Unaudited)
|
|
|
(As Restated)
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
REVENUE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staffing services revenue
|
|
$
|
423,869
|
|
|
$
|
60,992
|
|
|
$
|
484,861
|
|
|
$
|
382,841
|
|
|
$
|
43,940
|
|
|
$
|
426,781
|
|
|
$
|
403,831
|
|
|
$
|
401,782
|
|
Other revenue
|
|
|
75,830
|
|
|
|
(10,763
|
)
|
|
|
65,067
|
|
|
|
64,227
|
|
|
|
(7,064
|
)
|
|
|
57,163
|
|
|
|
60,968
|
|
|
|
63,556
|
|
|
|
|
|
|
NET REVENUE
|
|
|
499,699
|
|
|
|
50,229
|
|
|
|
549,928
|
|
|
|
447,068
|
|
|
|
36,876
|
|
|
|
483,944
|
|
|
|
464,799
|
|
|
|
465,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct cost of staffing services revenue
|
|
|
362,872
|
|
|
|
51,674
|
|
|
|
414,546
|
|
|
|
321,407
|
|
|
|
41,744
|
|
|
|
363,151
|
|
|
|
339,164
|
|
|
|
341,859
|
|
Cost of other revenue
|
|
|
63,051
|
|
|
|
(1,179
|
)
|
|
|
61,872
|
|
|
|
51,990
|
|
|
|
2,210
|
|
|
|
54,200
|
|
|
|
57,087
|
|
|
|
56,872
|
|
Selling, administrative and other operating costs
|
|
|
80,930
|
|
|
|
(1,233
|
)
|
|
|
79,697
|
|
|
|
76,470
|
|
|
|
(2,132
|
)
|
|
|
74,338
|
|
|
|
64,968
|
|
|
|
69,401
|
|
Amortization of purchased intangible assets
|
|
|
1,973
|
|
|
|
(1,614
|
)
|
|
|
359
|
|
|
|
1,956
|
|
|
|
(1,597
|
)
|
|
|
359
|
|
|
|
359
|
|
|
|
358
|
|
Restructuring costs
|
|
|
2,641
|
|
|
|
206
|
|
|
|
2,847
|
|
|
|
4,510
|
|
|
|
(220
|
)
|
|
|
4,290
|
|
|
|
2,439
|
|
|
|
1,163
|
|
Impairment of purchased intangibles and goodwill
|
|
|
6,039
|
|
|
|
(6,039
|
)
|
|
|
-
|
|
|
|
1,239
|
|
|
|
(1,239
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Fees related to restatement and associated investigations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
924
|
|
|
|
|
|
|
TOTAL EXPENSES
|
|
|
517,506
|
|
|
|
41,815
|
|
|
|
559,321
|
|
|
|
457,572
|
|
|
|
38,766
|
|
|
|
496,338
|
|
|
|
464,017
|
|
|
|
470,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS)
|
|
|
(17,807
|
)
|
|
|
8,414
|
|
|
|
(9,393
|
)
|
|
|
(10,504
|
)
|
|
|
(1,890
|
)
|
|
|
(12,394
|
)
|
|
|
782
|
|
|
|
(5,239
|
)
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
613
|
|
|
|
-
|
|
|
|
613
|
|
|
|
296
|
|
|
|
-
|
|
|
|
296
|
|
|
|
274
|
|
|
|
215
|
|
Interest expense
|
|
|
(1,613
|
)
|
|
|
7
|
|
|
|
(1,606
|
)
|
|
|
(875
|
)
|
|
|
7
|
|
|
|
(868
|
)
|
|
|
(839
|
)
|
|
|
(693
|
)
|
Foreign exchange gain (loss), net
|
|
|
282
|
|
|
|
1,943
|
|
|
|
2,225
|
|
|
|
(133
|
)
|
|
|
(1,030
|
)
|
|
|
(1,163
|
)
|
|
|
(3,168
|
)
|
|
|
869
|
|
Other income (expense), net
|
|
|
108
|
|
|
|
228
|
|
|
|
336
|
|
|
|
(748
|
)
|
|
|
232
|
|
|
|
(516
|
)
|
|
|
28
|
|
|
|
504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES
|
|
|
(18,417
|
)
|
|
|
10,592
|
|
|
|
(7,825
|
)
|
|
|
(11,964
|
)
|
|
|
(2,681
|
)
|
|
|
(14,645
|
)
|
|
|
(2,923
|
)
|
|
|
(4,344
|
)
|
Income tax provision (benefit)
|
|
|
(5,360
|
)
|
|
|
4,427
|
|
|
|
(933
|
)
|
|
|
(3,280
|
)
|
|
|
1,239
|
|
|
|
(2,041
|
)
|
|
|
(137
|
)
|
|
|
(382
|
)
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
(13,057
|
)
|
|
$
|
6,165
|
|
|
$
|
(6,892
|
)
|
|
$
|
(8,684
|
)
|
|
$
|
(3,920
|
)
|
|
$
|
(12,604
|
)
|
|
$
|
(2,786
|
)
|
|
$
|
(3,962
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER SHARE DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(0.63
|
)
|
|
$
|
0.30
|
|
|
$
|
(0.33
|
)
|
|
$
|
(0.42
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
(0.60
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.19
|
)
|
Weighted average number of shares
|
|
|
20,843
|
|
|
|
20,843
|
|
|
|
20,843
|
|
|
|
20,843
|
|
|
|
20,843
|
|
|
|
20,843
|
|
|
|
20,837
|
|
|
|
20,811
|
|
F-55
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
The table below summarizes the effects of the cumulative restatement adjustments on previously reported
net income recorded in the quarters that ended February 1, 2009 and May 3, 2009, with the adjustments categorized by the nature of the error (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 1,
2009
|
|
|
May 3,
2009
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
Net loss (as reported)
|
|
$
|
(13,057
|
)
|
|
$
|
(8,684
|
)
|
|
|
|
Restatement adjustments to net income (loss):
|
|
|
|
|
|
|
|
|
Software systems revenue
|
|
|
(9,305
|
)
|
|
|
(5,756
|
)
|
Service and Other revenue
|
|
|
9,547
|
|
|
|
2,092
|
|
Employment taxes and benefits
|
|
|
328
|
|
|
|
542
|
|
Intangible assets
|
|
|
7,564
|
|
|
|
2,748
|
|
Income taxes and other
|
|
|
2,458
|
|
|
|
(2,308
|
)
|
Restatement tax impacts
|
|
|
(4,427
|
)
|
|
|
(1,238
|
)
|
|
|
|
|
|
|
|
|
6,165
|
|
|
|
(3,920
|
)
|
|
|
|
|
|
Net loss (as restated)
|
|
$
|
(6,892
|
)
|
|
$
|
(12,604
|
)
|
|
|
|
|
|
F-56
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
The following table presents selected Consolidated Balance Sheet data for each quarter for the year
ended October 31, 2010 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31,
2010
|
|
|
May 2,
2010
|
|
|
August 1,
2010
|
|
|
October 31,
2010
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
136,553
|
|
|
$
|
111,106
|
|
|
$
|
45,097
|
|
|
$
|
51,084
|
|
Restricted cash
|
|
|
30,826
|
|
|
|
28,025
|
|
|
|
72,687
|
|
|
|
71,355
|
|
Short-term investments
|
|
|
4,789
|
|
|
|
5,123
|
|
|
|
5,132
|
|
|
|
5,226
|
|
Trade accounts receivable, net
|
|
|
246,433
|
|
|
|
275,075
|
|
|
|
290,972
|
|
|
|
329,134
|
|
Recoverable income taxes
|
|
|
13,944
|
|
|
|
18,402
|
|
|
|
21,573
|
|
|
|
12,244
|
|
Prepaid insurance
|
|
|
14,499
|
|
|
|
14,882
|
|
|
|
14,148
|
|
|
|
14,586
|
|
Other current assets
|
|
|
51,334
|
|
|
|
23,305
|
|
|
|
18,942
|
|
|
|
21,065
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS
|
|
|
498,378
|
|
|
|
475,918
|
|
|
|
468,551
|
|
|
|
504,694
|
|
|
|
|
|
|
Prepaid insurance and other assets, excluding current portion
|
|
|
29,550
|
|
|
|
27,785
|
|
|
|
26,913
|
|
|
|
28,471
|
|
Deferred income taxes
|
|
|
41,498
|
|
|
|
8,206
|
|
|
|
8,206
|
|
|
|
6,983
|
|
Property, equipment and software, net
|
|
|
52,866
|
|
|
|
49,829
|
|
|
|
47,728
|
|
|
|
45,656
|
|
Purchased intangible assets, net
|
|
|
14,395
|
|
|
|
14,036
|
|
|
|
13,677
|
|
|
|
13,320
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
636,687
|
|
|
$
|
575,774
|
|
|
$
|
565,075
|
|
|
$
|
599,124
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued compensation
|
|
$
|
50,853
|
|
|
$
|
54,019
|
|
|
$
|
50,197
|
|
|
$
|
61,745
|
|
Accounts payable
|
|
|
84,258
|
|
|
|
92,009
|
|
|
|
95,229
|
|
|
|
103,439
|
|
Accrued taxes other than income taxes
|
|
|
25,275
|
|
|
|
22,826
|
|
|
|
22,806
|
|
|
|
22,722
|
|
Accrued insurance and other
|
|
|
37,273
|
|
|
|
37,941
|
|
|
|
42,555
|
|
|
|
42,436
|
|
Deferred revenue, net, current portion
|
|
|
46,398
|
|
|
|
62,392
|
|
|
|
71,852
|
|
|
|
74,330
|
|
Short-term borrowings, including current portion of long-term debt
|
|
|
72,420
|
|
|
|
71,596
|
|
|
|
70,855
|
|
|
|
73,011
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
316,477
|
|
|
|
340,783
|
|
|
|
353,494
|
|
|
|
377,683
|
|
|
|
|
|
|
Accrued insurance, excluding current portion
|
|
|
13,107
|
|
|
|
13,720
|
|
|
|
11,765
|
|
|
|
11,812
|
|
Deferred revenue, net, excluding current portion
|
|
|
62,898
|
|
|
|
57,857
|
|
|
|
50,771
|
|
|
|
36,756
|
|
Income taxes payable, excluding current portion
|
|
|
7,971
|
|
|
|
7,971
|
|
|
|
7,971
|
|
|
|
8,612
|
|
Deferred income taxes
|
|
|
6,106
|
|
|
|
6,281
|
|
|
|
6,157
|
|
|
|
13,615
|
|
Long-term debt, excluding current portion
|
|
|
11,003
|
|
|
|
10,787
|
|
|
|
10,677
|
|
|
|
10,509
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
417,562
|
|
|
|
437,399
|
|
|
|
440,835
|
|
|
|
458,987
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Common stock
|
|
|
2,350
|
|
|
|
2,350
|
|
|
|
2,350
|
|
|
|
2,350
|
|
Paid-in capital
|
|
|
70,371
|
|
|
|
70,660
|
|
|
|
70,828
|
|
|
|
71,004
|
|
Retained earnings
|
|
|
189,619
|
|
|
|
109,313
|
|
|
|
94,795
|
|
|
|
111,198
|
|
Accumulated other comprehensive income (loss)
|
|
|
(1,335
|
)
|
|
|
(2,068
|
)
|
|
|
(1,853
|
)
|
|
|
(2,535
|
)
|
Treasury stock, at cost
|
|
|
(41,880
|
)
|
|
|
(41,880
|
)
|
|
|
(41,880
|
)
|
|
|
(41,880
|
)
|
|
|
|
|
|
TOTAL STOCKHOLDERS EQUITY
|
|
|
219,125
|
|
|
|
138,375
|
|
|
|
124,240
|
|
|
|
140,137
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
|
$
|
636,687
|
|
|
$
|
575,774
|
|
|
$
|
565,075
|
|
|
$
|
599,124
|
|
|
|
|
|
|
F-57
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 31, 2010
The following table presents selected Consolidated Balance Sheet data for each quarter for the year
ended November 1, 2009 (in thousands) including adjustments consistent with Note 2:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 1,
2009
|
|
|
February 1,
2009
|
|
|
February 1,
2009
|
|
|
May 3,
2009
|
|
|
May 3,
2009
|
|
|
May 3,
2009
|
|
|
August 2,
2009
|
|
|
November 1,
2009
|
|
|
|
|
|
|
|
|
(As Reported)
(Unaudited)
|
|
|
(Adjustments)
(Unaudited)
|
|
|
(As Restated)
(Unaudited)
|
|
|
(As Reported)
(Unaudited)
|
|
|
(Adjustments)
(Unaudited)
|
|
|
(As Restated)
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
134,708
|
|
|
$
|
19
|
|
|
$
|
134,727
|
|
|
$
|
141,492
|
|
|
$
|
280
|
|
|
$
|
141,772
|
|
|
$
|
110,769
|
|
|
$
|
118,765
|
|
Restricted cash
|
|
|
28,160
|
|
|
|
-
|
|
|
|
28,160
|
|
|
|
27,838
|
|
|
|
-
|
|
|
|
27,838
|
|
|
|
20,295
|
|
|
|
40,553
|
|
Short-term investments
|
|
|
3,830
|
|
|
|
-
|
|
|
|
3,830
|
|
|
|
4,125
|
|
|
|
-
|
|
|
|
4,125
|
|
|
|
4,556
|
|
|
|
4,775
|
|
Trade accounts receivable, net
|
|
|
399,301
|
|
|
|
(95,989
|
)
|
|
|
303,312
|
|
|
|
382,132
|
|
|
|
(112,267
|
)
|
|
|
269,865
|
|
|
|
258,072
|
|
|
|
265,005
|
|
Recoverable income taxes
|
|
|
8,222
|
|
|
|
(2,637
|
)
|
|
|
5,585
|
|
|
|
10,838
|
|
|
|
(3,876
|
)
|
|
|
6,962
|
|
|
|
9,029
|
|
|
|
13,371
|
|
Prepaid insurance
|
|
|
17,721
|
|
|
|
8,649
|
|
|
|
26,370
|
|
|
|
18,879
|
|
|
|
7,715
|
|
|
|
26,594
|
|
|
|
20,316
|
|
|
|
19,679
|
|
Other current assets
|
|
|
33,423
|
|
|
|
22,842
|
|
|
|
56,265
|
|
|
|
36,214
|
|
|
|
21,072
|
|
|
|
57,286
|
|
|
|
50,690
|
|
|
|
51,525
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS
|
|
|
625,365
|
|
|
|
(67,116
|
)
|
|
|
558,249
|
|
|
|
621,518
|
|
|
|
(87,076
|
)
|
|
|
534,442
|
|
|
|
473,727
|
|
|
|
513,673
|
|
|
|
|
|
|
|
|
|
|
Prepaid insurance and other assets, excluding current portion
|
|
|
9,632
|
|
|
|
21,686
|
|
|
|
31,318
|
|
|
|
8,586
|
|
|
|
22,931
|
|
|
|
31,517
|
|
|
|
30,668
|
|
|
|
32,789
|
|
Deferred income taxes
|
|
|
17,491
|
|
|
|
26,276
|
|
|
|
43,767
|
|
|
|
19,111
|
|
|
|
26,276
|
|
|
|
45,387
|
|
|
|
44,678
|
|
|
|
40,970
|
|
Property, equipment and software, net
|
|
|
66,799
|
|
|
|
(1,383
|
)
|
|
|
65,416
|
|
|
|
61,177
|
|
|
|
(1,103
|
)
|
|
|
60,074
|
|
|
|
58,968
|
|
|
|
56,157
|
|
Purchased intangible assets, net
|
|
|
93,673
|
|
|
|
(77,844
|
)
|
|
|
15,829
|
|
|
|
90,478
|
|
|
|
(75,008
|
)
|
|
|
15,470
|
|
|
|
15,111
|
|
|
|
14,754
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
812,960
|
|
|
$
|
(98,381
|
)
|
|
$
|
714,579
|
|
|
$
|
800,870
|
|
|
$
|
(113,980
|
)
|
|
$
|
686,890
|
|
|
$
|
623,152
|
|
|
$
|
658,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued compensation
|
|
$
|
41,533
|
|
|
$
|
11,573
|
|
|
$
|
53,106
|
|
|
$
|
40,235
|
|
|
$
|
11,090
|
|
|
$
|
51,325
|
|
|
$
|
51,132
|
|
|
$
|
52,567
|
|
Accounts payable
|
|
|
171,400
|
|
|
|
(85,933
|
)
|
|
|
85,467
|
|
|
|
190,488
|
|
|
|
(104,730
|
)
|
|
|
85,758
|
|
|
|
67,577
|
|
|
|
91,066
|
|
Accrued taxes other than income taxes
|
|
|
22,870
|
|
|
|
2,295
|
|
|
|
25,165
|
|
|
|
15,889
|
|
|
|
2,450
|
|
|
|
18,339
|
|
|
|
18,213
|
|
|
|
19,014
|
|
Accrued insurance and other
|
|
|
37,486
|
|
|
|
15,461
|
|
|
|
52,947
|
|
|
|
33,727
|
|
|
|
16,581
|
|
|
|
50,308
|
|
|
|
35,317
|
|
|
|
41,118
|
|
Deferred revenue, net, current portion
|
|
|
11,365
|
|
|
|
12,834
|
|
|
|
24,199
|
|
|
|
13,979
|
|
|
|
9,706
|
|
|
|
23,685
|
|
|
|
26,401
|
|
|
|
34,259
|
|
Income taxes payable, current portion
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Short-term borrowings, including current portion of long-term debt
|
|
|
117,364
|
|
|
|
(129
|
)
|
|
|
117,235
|
|
|
|
105,756
|
|
|
|
(129
|
)
|
|
|
105,627
|
|
|
|
71,186
|
|
|
|
74,200
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
402,018
|
|
|
|
(43,899
|
)
|
|
|
358,119
|
|
|
|
400,074
|
|
|
|
(65,032
|
)
|
|
|
335,042
|
|
|
|
269,826
|
|
|
|
312,224
|
|
|
|
|
|
|
|
|
|
|
Accrued insurance, excluding current portion
|
|
|
1,154
|
|
|
|
13,628
|
|
|
|
14,782
|
|
|
|
661
|
|
|
|
14,258
|
|
|
|
14,919
|
|
|
|
12,441
|
|
|
|
13,140
|
|
Deferred revenue, net, excluding current portion
|
|
|
2,343
|
|
|
|
61,407
|
|
|
|
63,750
|
|
|
|
2,046
|
|
|
|
69,777
|
|
|
|
71,823
|
|
|
|
75,965
|
|
|
|
69,918
|
|
Income taxes payable, excluding current portion
|
|
|
937
|
|
|
|
6,215
|
|
|
|
7,152
|
|
|
|
937
|
|
|
|
6,215
|
|
|
|
7,152
|
|
|
|
7,152
|
|
|
|
7,971
|
|
Deferred income taxes
|
|
|
13,780
|
|
|
|
(8,047
|
)
|
|
|
5,733
|
|
|
|
13,169
|
|
|
|
(8,047
|
)
|
|
|
5,122
|
|
|
|
4,860
|
|
|
|
6,644
|
|
Long-term debt, excluding current portion
|
|
|
11,912
|
|
|
|
(296
|
)
|
|
|
11,616
|
|
|
|
11,737
|
|
|
|
(269
|
)
|
|
|
11,468
|
|
|
|
11,265
|
|
|
|
11,161
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
432,144
|
|
|
|
29,008
|
|
|
|
461,152
|
|
|
|
428,624
|
|
|
|
16,902
|
|
|
|
445,526
|
|
|
|
381,509
|
|
|
|
421,058
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Common stock
|
|
|
2,350
|
|
|
|
-
|
|
|
|
2,350
|
|
|
|
2,350
|
|
|
|
-
|
|
|
|
2,350
|
|
|
|
2,350
|
|
|
|
2,350
|
|
Paid-in capital
|
|
|
51,016
|
|
|
|
18,258
|
|
|
|
69,274
|
|
|
|
51,064
|
|
|
|
18,258
|
|
|
|
69,322
|
|
|
|
69,687
|
|
|
|
69,944
|
|
Retained earnings
|
|
|
369,432
|
|
|
|
(142,387
|
)
|
|
|
227,045
|
|
|
|
361,148
|
|
|
|
(146,738
|
)
|
|
|
214,410
|
|
|
|
211,548
|
|
|
|
207,740
|
|
Accumulated other comprehensive income (loss)
|
|
|
(328
|
)
|
|
|
(3,260
|
)
|
|
|
(3,588
|
)
|
|
|
(662
|
)
|
|
|
(2,402
|
)
|
|
|
(3,064
|
)
|
|
|
(62
|
)
|
|
|
(869
|
)
|
Treasury stock, at cost
|
|
|
(41,654
|
)
|
|
|
-
|
|
|
|
(41,654
|
)
|
|
|
(41,654
|
)
|
|
|
-
|
|
|
|
(41,654
|
)
|
|
|
(41,880
|
)
|
|
|
(41,880
|
)
|
|
|
|
|
|
TOTAL STOCKHOLDERS EQUITY
|
|
|
380,816
|
|
|
|
(127,389
|
)
|
|
|
253,427
|
|
|
|
372,246
|
|
|
|
(130,882
|
)
|
|
|
241,364
|
|
|
|
241,643
|
|
|
|
237,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
|
$
|
812,960
|
|
|
$
|
(98,381
|
)
|
|
$
|
714,579
|
|
|
$
|
800,870
|
|
|
$
|
(113,980
|
)
|
|
$
|
686,890
|
|
|
|
623,152
|
|
|
$
|
658,343
|
|
|
|
|
|
|
F-58