VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
October 29, 2017
|
|
October 30, 2016
|
|
November 1, 2015
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
Decrease in cash restricted as collateral for borrowings
|
—
|
|
|
—
|
|
|
10,436
|
|
Repayment of borrowings
|
(77,050
|
)
|
|
(22,150
|
)
|
|
(58,506
|
)
|
Draw-down on borrowings
|
30,000
|
|
|
19,200
|
|
|
30,000
|
|
Repayment of long-term debt
|
—
|
|
|
(7,295
|
)
|
|
(832
|
)
|
Debt issuance costs
|
(1,190
|
)
|
|
(1,093
|
)
|
|
(1,426
|
)
|
Proceeds from exercise of stock options
|
2
|
|
|
74
|
|
|
531
|
|
Purchases of common stock under repurchase program
|
—
|
|
|
—
|
|
|
(4,262
|
)
|
Withholding tax payment on vesting of restricted stock awards
|
(52
|
)
|
|
(122
|
)
|
|
—
|
|
Net cash used in financing activities
|
(48,290
|
)
|
|
(11,386
|
)
|
|
(24,059
|
)
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
1,746
|
|
|
(3,645
|
)
|
|
(924
|
)
|
|
|
|
|
|
|
CASH FLOWS FROM DISCONTINUED OPERATIONS:
|
|
|
|
|
|
Cash flow from operating activities
|
—
|
|
|
—
|
|
|
(3,237
|
)
|
Cash flow from investing activities
|
—
|
|
|
—
|
|
|
(4,000
|
)
|
Net cash used in discontinued operations
|
—
|
|
|
—
|
|
|
(7,237
|
)
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
30,691
|
|
|
(3,802
|
)
|
|
3,676
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of year
|
6,386
|
|
|
10,188
|
|
|
6,723
|
|
Change in cash from discontinued operations
|
—
|
|
|
—
|
|
|
(211
|
)
|
Cash and cash equivalents, end of year
|
$
|
37,077
|
|
|
$
|
6,386
|
|
|
$
|
10,188
|
|
|
|
|
|
|
|
Cash paid during the year:
|
|
|
|
|
|
Interest
|
$
|
3,840
|
|
|
$
|
3,305
|
|
|
$
|
3,196
|
|
Income taxes
|
$
|
3,521
|
|
|
$
|
4,316
|
|
|
$
|
3,315
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing activity:
|
|
|
|
|
|
Note receivable in exchange for Computer Systems segment net assets sold
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,363
|
|
The accompanying notes are an integral part of these consolidated financial statements.
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 29, 2017
NOTE 1: Summary of Business and Significant Accounting Policies
We are a global provider of staffing services (traditional time and materials-based as well as project-based). Our staffing services consist of workforce solutions that include providing contingent workers, personnel recruitment services, and managed staffing services programs supporting primarily administrative and light industrial (“commercial”) as well as technical, information technology and engineering (“professional”) positions. Our managed service programs (“MSP”) involves managing the procurement and on-boarding of contingent workers from multiple providers. Our technology outsourcing services consisted primarily of customer care call centers and quality assurance services; however, only the call center services remain following the sale of the quality assurance business on October 27, 2017. Also, through the date of the sale of Maintech, Incorporated (“Maintech”) in March 2017, we provided information technology infrastructure services. Our information technology infrastructure services provided server, storage, network and desktop IT hardware maintenance, data center and network monitoring and operations.
Our complementary businesses offer customized talent and supplier management solutions to a diverse client base. Volt services global industries including aerospace, automotive, banking and finance, consumer electronics, information technology, insurance, life sciences, manufacturing, media and entertainment, pharmaceutical, software, telecommunications, transportation, and utilities. The Company was incorporated in New York in 1957. The Company's stock is traded on the NYSE AMERICAN under the symbol “VISI”.
The Company’s fiscal year ends on the Sunday nearest October 31st. The fiscal years 2017, 2016 and 2015 consisted of 52 weeks.
The consolidated financial statements include the accounts of the Company and all 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, casualty reserves, valuation of goodwill, intangible assets and other long-lived assets, stock compensation, employee benefit plans, restructuring and severance 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. For arrangements within the scope of the multiple-deliverable guidance, a deliverable constitutes a separate unit of accounting when it has stand-alone value and there are no customer-negotiated refunds or return rights for the delivered elements.
Services are sometimes provided despite a customer arrangement not yet being finalized. In these cases, revenue is deferred until arrangements are finalized or in some cases until cash is received. The cumulative revenue deferred for each arrangement is recognized in the period the revenue recognition criteria are met. The following revenue recognition policies define the manner in which the Company accounts for specific transaction types:
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 29, 2017
Staffing Services
Revenue is primarily derived from supplying contingent staff to the Company’s customers or providing other services on a time and material basis. Contingent staff primarily consist of contingent workers 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. Our technology outsourcing services provided pre- and post- production development support, testing, and customer support to companies in the mobile, gaming, and technology devices industries.
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 Cost of services.
Under certain of the Company’s 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, we record the gross amount of the 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, we record revenue net of vendor or contractor costs.
The Company is generally the primary obligor when responsible for the fulfillment of 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 we provide 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 customers, the associate vendors 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.
Information Technology Infrastructure Services
Revenue from hardware maintenance, computer and network operations infrastructure services under fixed-price contracts and stand-alone post-contract support was generally recognized ratably over the contract period, provided that all other revenue recognition criteria are met, and the cost associated with these contracts were recognized as incurred. For time and material contracts, the Company recognized revenue and costs as services are rendered, provided that all other revenue recognition criteria are met.
Cost of services within staffing services consists primarily of contingent worker payroll, related employment taxes and benefits, and the cost of facilities used by contingent workers in fulfilling assignments and projects for staffing services customers, including reimbursable costs. Indirect cost of staffing services is included in Selling, administrative and other operating costs in the Consolidated Statements of Operations. The Cost of services differ from the cost included within Selling, administrative and other operating costs in that they arise specifically and directly from the actions of providing staffing services to customers.
Cost of information technology infrastructure services and telecommunication infrastructure and security services consisted of the direct and indirect cost of providing non-staffing services, which include payroll and related employment taxes, benefits, materials, and equipment costs.
Gross margin is calculated as revenue less direct costs for staffing services and revenue less direct and indirect costs for non-staffing services.
Selling, Administrative and Other Operating Costs
Selling, administrative and other operating costs primarily relate to the Company’s selling and administrative efforts, as well as the indirect costs associated with providing staffing services.
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 29, 2017
|
|
(f)
|
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.
|
|
(g)
|
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.
|
|
(h)
|
Short-Term Investments and Related Deferred Compensation, Net
|
The Company has a nonqualified deferred compensation and supplemental savings plan that permits eligible employees to defer a portion of their compensation. The employee compensation 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.
|
|
(i)
|
Property, Equipment and Software, Net
|
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 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.
Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. The Company applies the method of assessing goodwill for possible impairment permitted by Accounting Standards Update (“ASU”) No. 2017-04,
Intangibles – Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment.
The Company first assesses the qualitative factors for reporting units that carry goodwill. If the qualitative assessment results in a conclusion that it is more likely than not that the fair value of a reporting unit exceeds the carrying value, then no further testing is performed for that reporting unit.
When a qualitative assessment is not used, or if the qualitative assessment is not conclusive and it is necessary to calculate fair value of a reporting unit, then the impairment analysis for goodwill is performed at the reporting unit level using a two-step approach. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill utilizing an enterprise-value based premise approach. If the fair value of the reporting unit exceeds its carrying value, step two does not need to be performed.
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 29, 2017
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 unit’s goodwill over the implied fair value of that goodwill.
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 within income in the period that includes the enactment date. The Company must then assess 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 Company’s 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.
|
|
(l)
|
Share-Based Compensation
|
The Company recognizes 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 and a Monte Carlo simulation. The fair value of restricted stock awards is determined using the closing price of the Company’s 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. If there are any modifications or cancellations of the underlying unvested awards, the Company may be required to accelerate any remaining unearned stock-based compensation cost or incur incremental cost.
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.
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 Company’s subsidiaries which are denominated in currencies other than the subsidiaries’ functional currency is recognized as incurred in Foreign exchange gain (loss), net in the Consolidated Statements of Operations.
|
|
(n)
|
Fair Value Measurement
|
In accordance with Accounting Standards Codification (“ASC”) 820,
Fair Value Measurements
, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 29, 2017
Company determines fair value based on assumptions that market participants would use 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 entity’s 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 Company’s financial instruments, which include cash, cash equivalents, restricted cash, accounts receivable, accounts payable, and short-term borrowings under the Company’s credit facilities, approximated their fair values, due to the short-term nature of these instruments, and the fair value of the long-term debt is 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.
|
|
(o)
|
Legal and Other Contingencies
|
The Company is involved in various demands, claims and actual and threatened litigation that arise in the normal course of 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 in subsequent periods as additional information becomes known.
|
|
(p)
|
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.
|
|
(q)
|
Restructuring and Severance Charges
|
The Company accounts for restructuring activities in accordance with ASC 420,
Exit or Disposal Cost Obligations.
Under the guidance, for the cost of restructuring activities that do not constitute a discontinued operation, the liability for the current fair value of expected future costs associated with such restructuring activity is recognized in the period in which the liability is incurred. The costs of restructuring activities taken pursuant to a management approved restructuring plan are segregated.
|
|
(r)
|
Earnings (Loss) Per Share
|
Basic earnings per share are 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 unvested restricted stock shares, 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. In determining the cost of the treasury shares when either sold or issued, the Company uses the FIFO (first-in, first-out)
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 29, 2017
method. If the proceeds from the sale of the treasury shares are greater than the cost of the shares sold, the excess proceeds are recorded as additional paid-in capital. If the proceeds from the sale of the treasury shares are less than the original cost of the shares sold, the excess cost first reduces any additional paid-in capital arising from previous sales of treasury shares for that class of stock, and any additional excess is recorded as a reduction of retained earnings.
|
|
(t)
|
Assets and Liabilities Held for Sale
|
The Company classifies long-lived assets (disposal group) to be sold as held for sale in accordance with ASU 2014-08,
Presentation Of Financial Statements (Topic 205) And Property, Plant, And Equipment (Topic 360): Reporting Discontinued Operations And Disclosures Of Disposals Of Components Of An Entity
(“ASU 2014-08”), in the period in which all of the following criteria are met: management, having the authority to approve the action, commits to a plan to sell the asset (disposal group); the asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal group); an active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated; the sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale within
one year
, except if events or circumstances beyond our control extend the period of time required to sell the asset (disposal group) beyond one year; the asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
A long-lived asset (disposal group) that is classified as held for sale is initially measured at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset (disposal group) until the date of sale.
The fair value of a long-lived asset (disposal group) less any costs to sell is assessed each reporting period it remains classified as held for sale and any subsequent changes are reported as an adjustment to the carrying value of the asset (disposal group), as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held for sale. Upon determining that a long-lived asset (disposal group) meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group for all periods presented, if material, in the line items Assets held for sale and Liabilities held for sale, respectively, in the Consolidated Balance Sheets.
|
|
(u)
|
Discontinued Operations
|
The results of operations of a component or a group of components of the Company that either has been disposed of or is classified as held for sale is reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on the Company’s operations and financial results. For any transaction expected to be structured as a sale of shares of an entity and not a sale of assets, the Company classifies the deferred taxes as part of Assets or Liabilities held for sale.
Certain reclassifications have been made to the prior year financial statements in order to conform to the current year’s presentation.
|
|
(w)
|
New Accounting Pronouncements
|
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“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.
New Accounting Standards Not Yet Adopted by the Company
In May 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. An entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The amendments are effective for annual periods beginning after December 15, 2017, which for the Company will be the first quarter of fiscal 2019. The Company does not anticipate a significant impact upon adoption
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 29, 2017
based on the historical and current trend of the Company’s modifications for share-based awards but the impact could be affected by the types of modifications, if any, at that time.
In February 2017, the FASB issued ASU 2017-05,
Other Income - Gains and Losses from the Derecognition of Non-financial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Non-financial Assets.
This ASU clarifies the scope and application of ASC 610-20 on the sale or transfer of non-financial assets and in substance non-financial assets to non-customers, including partial sales. The amendments are effective for annual reporting periods beginning after December 15, 2017, which for the Company will be the first quarter of fiscal 2019. The Company does not anticipate a significant impact upon adoption.
In August 2016, the FASB issued ASU 2016-15,
Statement of Cash Flows (Topic 230)
-
Classification of Certain Cash Receipts and Cash Payments: A Consensus of the FASB Emerging Issues Task Force
. The amendments provide guidance on eight specific cash flow classification issues: debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, corporate and bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. The amendments are effective for fiscal years beginning after December 15, 2017, which for the Company will be the first quarter of fiscal 2019. The Company does not anticipate a significant impact upon adoption.
In June 2016, the FASB issued ASU 2016-13,
Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
. This ASU provides guidance for recognizing credit losses on financial instruments based on an estimate of current expected credit losses model. The amendments are effective for fiscal years beginning after December 15, 2019, which for the Company will be the first quarter of fiscal 2021. Although the impact upon adoption will depend on the financial instruments held by the Company at that time, the Company does not anticipate a significant impact on its consolidated financial statements based on the instruments currently held and its historical trend of bad debt expense relating to trade accounts receivable.
In March 2016, the FASB issued ASU 2016-09,
Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
. This ASU simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments are effective for annual periods beginning after December 15, 2016, which for the Company will be the first quarter of fiscal 2018. The Company does not anticipate a significant impact upon adoption.
In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842)
. This ASU requires that lessees recognize assets and liabilities for leases with lease terms greater than twelve months in the statement of financial position and also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The amendments are effective for fiscal years beginning after December 15, 2018, which for the Company will be the first quarter of fiscal 2020. The Company has preliminarily evaluated the impact of our pending adoption of ASU 2016-02 on our consolidated financial statements on a modified retrospective basis, and currently expects that most of our operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon our adoption, which will increase the Company’s total assets and total liabilities that the Company reports relative to such amounts prior to adoption.
In May 2014, the FASB issued ASU No. 2014-09,
Revenue from Contracts with Customers (Topic 606)
. The core principle of this amendment is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The FASB issued subsequent amendments to improve and clarify the implementation guidance of Topic 606. This standard is effective for annual reporting periods beginning after December 15, 2017, which for the Company will be the first quarter of fiscal 2019. After the preliminary assessment, the Company does not anticipate that the new guidance will have a material impact on our revenue recognition policies, practices or systems. As the Company continues to evaluate the impacts of our pending adoption of Topic 606, our preliminary assessments are subject to change.
Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on the Company’s consolidated financial statements and related disclosures.
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 29, 2017
Recently Adopted Accounting Standards
In August 2014, the FASB issued ASU 2014-15,
Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.
This update provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern within one year after the financial statements are issued. The Company adopted this ASU in the fourth quarter of fiscal 2017 and implemented the required procedures for management to evaluate whether there is substantial doubt about the Company’s ability to continue as a going concern. The results of the Company's fiscal fourth quarter evaluation is included within NOTE 14: Debt.
In January 2017, the FASB issued ASU 2017-04,
Intangibles - Goodwill and other (Topic 350)
. This ASU simplifies the accounting for goodwill impairment and removes Step 2 of the goodwill impairment test. Goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value limited to the total amount of goodwill allocated to that reporting unit. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. This ASU was early adopted by the Company on a prospective basis in the second quarter of fiscal 2017 for its annual impairment test resulting in no impact on its consolidated financial statements. It was determined that no adjustment to the carrying value of goodwill was required as our Step 1 analysis resulted in the fair value of the reporting unit exceeding its carrying value. No triggering event has occurred since the annual impairment test.
In April 2015, the FASB issued ASU No. 2015-05,
Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):
Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement
, which provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract and expense the cost as the services are received. This ASU was adopted by the Company in the first quarter of fiscal 2017 on a prospective basis. The Company does not currently have any projects that meet the criteria to be in scope of the internal-use software guidance and it did not have any impact on its consolidated financial statements.
In April 2015, the FASB issued ASU No. 2015-03,
Simplifying the Presentation of Debt Issuance Costs
. The ASU requires that debt issuance costs related to a recognized liability be presented on the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. In August 2015, the FASB issued ASU 2015-15,
Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements
. ASU 2015-15 clarifies the guidance in ASU 2015-03 regarding presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. The SEC Staff announced they would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. These ASUs were adopted by the Company in the first quarter of fiscal 2017. The Company has continued to defer and present debt issuance costs as an asset and to amortize the deferred issuance costs ratably over the term of the line-of-credit arrangement resulting in no impact on its consolidated financial statements.
All other ASUs that became effective for Volt in fiscal 2017 were not applicable to the Company at this time and therefore did not have any impact during the period.
NOTE 2: Sale of Quality Assurance Business
On October 27, 2017, the Company completed the sale of its quality assurance business within the Technology Outsourcing Services and Solutions segment to Keywords International Limited and Keywords Studios plc for a purchase price of
$66.4 million
, subject to a customary working capital adjustment. The gain on sale of
$48.0 million
was recorded in continuing operations in the Consolidated Statements of Operations for the year ended October 29, 2017. The divestiture did not meet the criteria to be presented as discontinued operations in accordance with ASU 2014-08,
Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360)
. However, the disposition did represent an individually significant component of the Company’s business. The following table presents the pretax income of the quality assurance business included in the Company’s Consolidated Statements of Operations prior to the disposition (in thousands):
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 29, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
October 29, 2017
|
|
October 30, 2016
|
|
November 1, 2015
|
Income before provision for income taxes
|
$
|
4,487
|
|
|
$
|
9,822
|
|
|
$
|
15,767
|
|
|
|
|
|
|
|
Concurrently with the sale, the Company entered into a Transition Services and Asset Transfer Agreement (the “Transition Services Agreement”) under which the Company will continue to provide certain accounting and operational support services to the buyer, on a monthly fee-for-service basis for a period of up to six months post-closing. Also, under the terms of the Transition Services Agreement, the buyer will provide certain office space to the Company for a monthly fee until a formal agreement is executed.
NOTE 3: Discontinued Operations
On December 1, 2014, the Company completed the sale of its Computer Systems segment to NewNet Communication Technologies, LLC (“NewNet”), a Skyview Capital, LLC, portfolio company. The Company met all of the criteria to classify that segment's assets and liabilities as held for sale in the fourth quarter of fiscal 2014. The results of the Computer Systems segment are presented as discontinued operations and excluded from continuing operations and from segment results for all periods presented.
The proceeds of the transaction were a
$10.0 million
note bearing interest at one half percent (
0.5
percent) per year due in
four years
and convertible into a capital interest of up to
20%
in NewNet. The Company may convert the note at any time and is entitled to receive early repayment in the event of certain events such as a change in control of NewNet. The proceeds were in exchange for the ownership of Volt Delta Resources, LLC and its operating subsidiaries, which comprised the Company's Computer Systems segment, and payment of
$4.0 million
by the Company during the first
45 days
following the transaction. The transaction was subject to
an additional payment to be made between the parties based on the comparison of the actual transaction date working capital amount to an expected working capital amount of
$6.0 million
(the contractually agreed upon working capital). The note was valued at
$8.4 million
on the transaction date which approximated fair value.
For the year ended November 1, 2015, the Company recognized a loss on disposal of
$1.5 million
. The total related costs associated with this transaction were
$2.2 million
comprised of
$0.9 million
in severance costs,
$0.9 million
of professional fees and
$0.4 million
of lease obligation costs. These costs are recorded in Discontinued operations in the Consolidated Statements of Operations and were fully paid through fiscal 2016. The unamortized discount for the note was
$1.1 million
as of October 30, 2016 and remained unchanged through the settlement date.
On October 27, 2017, the Company and NewNet entered into a Settlement Agreement and Mutual General Release (the “Settlement Agreement”). Pursuant to the terms of the Settlement Agreement, NewNet agreed to early payment of the note for
$7.5 million
, comprised of a
$6.5 million
cash payment due to the Company (the “Cash Payment”) and a
$1.0 million
promissory note in favor of the Company, maturing no later than January 31, 2018. The Cash Payment was offset by a
$1.5 million
deduction to settle the outstanding working capital adjustment and minor indemnity claims under the Membership Interest Purchase Agreement dated as of December 1, 2014 (the “Purchase Agreement”), and receivables under the transition services agreement related to the Purchase Agreement. As a result, the Company received
$5.0 million
in cash and the promissory note for a total of
$6.0 million
on a net basis.
The early payment of the note resulted in a settlement charge of
$1.4 million
which was recorded in the Consolidated Statements of Operations for the year ended October 29, 2017. The Company also incurred a working capital adjustment of
$1.7 million
which was recorded as a loss on disposal in Discontinued operations in the Consolidated Statements of Operations for the year ended October 29, 2017.
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 29, 2017
The following table reconciles the major line items in the Company’s Consolidated Statements of Operations for discontinued operations (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
October 29, 2017
|
|
October 30, 2016
|
|
November 1, 2015
|
Loss from discontinued operations
|
|
|
|
|
|
Net revenue
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,708
|
|
Cost of services
|
—
|
|
|
—
|
|
|
5,730
|
|
Selling, administrative and other operating costs
|
—
|
|
|
—
|
|
|
1,388
|
|
Other (income) expense, net
|
—
|
|
|
—
|
|
|
731
|
|
Loss from discontinued operations
|
—
|
|
|
—
|
|
|
(3,141
|
)
|
Loss on disposal of discontinued operations
|
(1,693
|
)
|
|
—
|
|
|
(1,502
|
)
|
Loss from discontinued operations before income taxes
|
(1,693
|
)
|
|
—
|
|
|
(4,643
|
)
|
Income tax provision
|
—
|
|
|
—
|
|
|
191
|
|
Loss from discontinued operations that is presented in the Consolidated Statements of Operations
|
$
|
(1,693
|
)
|
|
$
|
—
|
|
|
$
|
(4,834
|
)
|
NOTE 4: Assets and Liabilities Held for Sale
In October 2015, the Company’s Board of Directors approved a plan to sell the Company’s information technology infrastructure services business, Maintech. Maintech met all of the criteria to classify its assets and liabilities as held for sale in the fourth quarter of fiscal 2015. The disposal of Maintech did not represent a strategic shift that would have a major effect on the Company’s operations and financial results and was, therefore, not classified as discontinued operations in accordance with ASU 2014-08,
Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360)
. As part of the required evaluation under the held for sale guidance, the Company determined that the approximate fair value less costs to sell the operations exceeded the carrying value of the net assets and no impairment charge was recorded. Maintech’s financial results were reported within the Corporate and Other category in our segment data.
In March 2017, the Company completed the sale of Maintech to Maintech Holdings, LLC, a newly-formed holding company and affiliate of Oak Lane Partners, LLC (“Buyer”). Under the terms of the Stock Purchase Agreement, the Company received proceeds of
$18.3 million
, subject to a
$0.1 million
holdback and certain adjustments including a customary working capital adjustment that was finalized within
60
days of the sale. Net proceeds from the transaction amounted to
$13.1 million
after certain transaction-related fees, expenses and repayment of an outstanding Bank of America, N.A. (“BofA”) loan balance. The Company recognized a gain on disposal of
$3.9 million
from the sale transaction in the second quarter of fiscal 2017.
Concurrently with the sale, the Company entered into a Transition Services and Asset Transfer Agreement (the “Transition Services Agreement”). Given that the Buyer had not yet formed legal entities in certain international jurisdictions, the Company still held legal title to approximately
$0.4 million
, net, of certain of Maintech’s international assets and liabilities. Pursuant to the Transition Services Agreement, the Buyer was entitled to all of the economic benefit and burden of such international assets and liabilities commencing on the sale date, March 6, 2017, as if legal title had transferred. Following the sale, both parties worked in good faith to enter into definitive documentation for the conveyance of these assets and liabilities. As of October 29, 2017, these net assets are no longer presented in the Company’s Consolidated Balance Sheets. Also under the terms of the Transition Services Agreement, the Company continued to provide certain accounting and operational support services to the Buyer, on a monthly fee-for-service basis for a period of up to
six
months post-closing.
The Company and Maintech have also executed a
three
-year IT as a service agreement, whereby Maintech will continue to provide helpdesk and network monitoring services to the Company, similar to the services that were provided before the transaction.
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 29, 2017
The following table reconciles the major classes of assets and liabilities classified as held for sale as part of continuing operations in fiscal 2016 in the Consolidated Balance Sheets (in thousands):
|
|
|
|
|
|
October 30, 2016
|
|
Assets included as part of continuing operations
|
|
Trade accounts receivable, net
|
$
|
13,553
|
|
Recoverable income taxes
|
15
|
|
Prepaid insurance and other assets
|
3,339
|
|
Property, equipment and software, net
|
178
|
|
Purchased intangible assets
|
495
|
|
Total major classes of assets as part of continuing operations
|
$
|
17,580
|
|
|
|
Liabilities included as part of continuing operations
|
|
Accrued compensation
|
$
|
2,432
|
|
Accounts payable
|
921
|
|
Accrued taxes other than income taxes
|
833
|
|
Accrued insurance and other
|
1,574
|
|
Total major classes of liabilities as part of continuing operations
|
$
|
5,760
|
|
NOTE 5: Restricted Cash and Short-Term Investments
Restricted cash primarily 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. 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 are classified as an operating activity, as this cash is directly related to the operations of this business. At October 29, 2017 and October 30, 2016 restricted cash included
$15.1 million
and
$8.4 million
, respectively, restricted for payment to associate vendors and
$1.9 million
and
$1.9 million
, respectively, restricted for other collaterized accounts.
At October 29, 2017 and October 30, 2016, short-term investments were
$3.5 million
and
$3.6 million
, respectively. These short-term investments consisted primarily of the fair value of deferred compensation investments corresponding to employees’ selections, primarily in mutual funds, based on quoted prices in active markets.
NOTE 6: Fair Value of Financial Instruments
The following table presents assets and liabilities measured at fair value (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
October 29,
2017
|
|
October 30,
2016
|
|
Fair Value
Hierarchy
|
Short-term investments
|
$
|
3,524
|
|
|
$
|
3,601
|
|
|
Level 1
|
Total financial assets
|
$
|
3,524
|
|
|
$
|
3,601
|
|
|
|
Deferred compensation plan liabilities
|
$
|
3,524
|
|
|
$
|
3,601
|
|
|
Level 1
|
Total financial liabilities
|
$
|
3,524
|
|
|
$
|
3,601
|
|
|
|
The fair value of the deferred compensation plan liabilities is based on the fair value of the 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 in the Consolidated Balance Sheets.
There have been no changes in the methodology used to fair value the financial instruments as well as
no
transfers between levels during the fiscal years ended October 29, 2017 and October 30, 2016.
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 29, 2017
NOTE 7: Trade Accounts Receivable
Trade accounts receivable includes both billed and unbilled amounts due from customers. Billed trade receivables generally do not bear interest and are recorded at the amount invoiced less amounts for which revenue has been deferred because customer arrangements are not finalized. Unbilled receivables represent accrued revenue earned and recognized on contracts for which billings have not yet been presented to the customer. At October 29, 2017 and October 30, 2016, trade accounts receivable included unbilled receivables of
$12.9 million
and
$17.8 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 receivable aging and payment patterns. Additions to the allowance for doubtful accounts are recorded to Selling, administrative and other operating costs. The Company also maintains a sales allowance for specific customers related to volume discounts and billing disputes. The amount of the sales allowance is determined based on discount estimates and 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 amount will not be received.
For the years ended October 29, 2017 and October 30, 2016, the activity in the allowance accounts were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
beginning of year
|
|
Provision / (Release)
|
|
Deductions
|
|
Balance at end
of year
|
Year Ended October 29, 2017:
|
|
|
|
|
|
|
|
Sales allowance
|
$
|
213
|
|
|
$
|
682
|
|
|
$
|
—
|
|
|
$
|
895
|
|
Allowance for doubtful accounts
|
588
|
|
|
357
|
|
|
(591
|
)
|
|
354
|
|
Total
|
$
|
801
|
|
|
$
|
1,039
|
|
|
$
|
(591
|
)
|
|
$
|
1,249
|
|
|
|
|
|
|
|
|
|
|
Balance at
beginning of year
|
|
Provision / (Release)
|
|
Deductions
|
|
Balance at end
of year
|
Year Ended October 30, 2016:
|
|
|
|
|
|
|
|
Sales allowance
|
$
|
482
|
|
|
$
|
(269
|
)
|
|
$
|
—
|
|
|
$
|
213
|
|
Allowance for doubtful accounts
|
478
|
|
|
115
|
|
|
(5
|
)
|
|
588
|
|
Total
|
$
|
960
|
|
|
$
|
(154
|
)
|
|
$
|
(5
|
)
|
|
$
|
801
|
|
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 29, 2017
NOTE 8: Property, Equipment and Software
Property, equipment and software consisted of (in thousands):
|
|
|
|
|
|
|
|
|
|
October 29,
2017
|
|
October 30,
2016
|
Land and buildings
|
$
|
406
|
|
|
$
|
395
|
|
Machinery and equipment
|
32,250
|
|
|
40,288
|
|
Leasehold improvements
|
4,775
|
|
|
9,520
|
|
Less: Accumulated depreciation and amortization
|
(32,264
|
)
|
|
(42,503
|
)
|
Property and equipment
|
5,167
|
|
|
7,700
|
|
Software
|
94,032
|
|
|
90,871
|
|
Less: Accumulated amortization
|
(70,078
|
)
|
|
(68,438
|
)
|
Property, equipment, and software, net
|
$
|
29,121
|
|
|
$
|
30,133
|
|
Depreciation and amortization expense totaled
$8.0 million
,
$6.0 million
and
$6.8 million
for the fiscal years ended 2017, 2016 and 2015, respectively. Depreciation and amortization is included in Cost of services and Selling, administrative and other operating costs in the Consolidated Statements of Operations.
NOTE 9: Impairment Charges
Impairment of Net Assets
During fiscal 2015, in conjunction with the initiative to exit certain non-core operations, the telephone directory publishing and printing business in Uruguay met the criteria to be classified as held for sale. As part of the required evaluation under the held for sale guidance, the Company determined that the approximate fair value less costs to sell the operations was significantly lower than the carrying value of the net assets. Consequently, the net assets of the business of
$2.8 million
were fully impaired and were recorded as an impairment charge. On July 31, 2015, the Company completed the sale of our telephone directory publishing and printing business in Uruguay to affiliates of FCR Media Group.
An impairment charge of
$0.7 million
in fiscal 2015 was recognized as a result of the required evaluation under the held for sale guidance related to the staffing reporting unit in Uruguay (“Lakyfor, S.A.”).
Impairment of Property, Equipment and Software
In an effort to reduce operating costs, the Company evaluated the efficiency of its current business delivery model, supply chain and back office support functions in light of existing and ongoing business requirements. The implementation of additional technology tools is expected to provide operating leverage and efficiencies. As a result of a system-wide upgrade to its operational and financial systems, the Company identified previously purchased software modules that will no longer be used and incurred impairment charges of
$0.3 million
and
$0.4 million
during the second quarter of fiscal 2017 and the fourth quarter of fiscal 2016, respectively.
During the third quarter of fiscal 2015, it was determined that
$1.9 million
of previously capitalized internally developed software within the North American Staffing segment was impaired as it was no longer expected to provide future value in light of the anticipated technology upgrade.
Impairment of Goodwill
The Company performs its annual impairment test for goodwill during the second quarter of the fiscal year and when a triggering event occurs between annual impairment tests. For the fiscal 2017 test performed in the second quarter, the Company elected to bypass the qualitative assessment and prepared a Step 1 analysis. Our Step 1 analysis used significant assumptions including expected revenue and expense growth rates, forecasted capital expenditures, working capital levels and a discount rate of 13%. Under the market-based approach significant assumptions included relevant comparable company earnings multiples including the determination of whether a premium or discount should be applied to those comparables. During the second quarter of fiscal 2017, it was determined that no adjustment to the carrying value of goodwill was required as our Step 1 analysis resulted in the fair value of the reporting unit exceeding its carrying value. There were no triggering events or changes
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
As of October 29, 2017
in circumstances since the annual goodwill impairment assessment that caused the Company to perform an interim impairment assessment.
During fiscal 2017 and 2016, no adjustment to the carrying value of goodwill was required. Impairment charges in fiscal 2015 resulted from our goodwill related to our staffing reporting unit in Uruguay.
The following represents the change in the carrying amount of goodwill during each fiscal year (in thousands):
|
|
|
|
|
|
|
|
|
|
International Staffing
|
|
October 29, 2017
|
|
October 30, 2016
|
Aggregate goodwill acquired
|
$
|
10,483
|
|
|
$
|
10,483
|
|
Accumulated impairment losses
|
(3,733
|
)
|
|
(3,733
|
)
|
Foreign currency translation adjustment
|
(1,274
|
)
|
|
(1,667
|
)
|
Goodwill, net of impairment losses
|
$
|
5,476
|
|
|
$
|
5,083
|
|
NOTE 10: Restructuring and Severance Charges
During fiscal 2016, the Company implemented a cost reduction plan and incurred restructuring and severance costs primarily resulting from a reduction in workforce, facility consolidation and lease termination costs. The total costs since inception through fiscal 2017 are approximately
$7.1 million
consisting of
$1.5 million
in North American Staffing,
$0.7 million
in International Staffing,
$0.4 million
in Technology Outsourcing Services and Solutions and
$4.5 million
in Corporate and Other.
The Company incurred total restructuring and severance costs of approximately
$1.4 million
,
$5.8 million
and
$3.6 million
for fiscal 2017, 2016 and 2015, respectively.
The following table presents the restructuring and severance costs for the twelve months ended October 29, 2017 and October 30, 2016 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended October 29, 2017
|
|
Total
|
North American Staffing
|
International Staffing
|
Technology Outsourcing Services and Solutions
|
Corporate & Other
|
Severance and benefit costs
|
$
|
1,301
|
|
$
|
294
|
|
$
|
24
|
|
$
|
39
|
|
$
|
944
|
|
Other
|
78
|
|
88
|
|
(10
|
)
|
—
|
|
—
|
|
Total
|
$
|
1,379
|
|
$
|
382
|
|
$
|
14
|
|
$
|
39
|
|
$
|
944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended October 30, 2016
|
|
Total
|
North American Staffing
|
International Staffing
|
Technology Outsourcing Services and Solutions
|
Corporate & Other
|
Severance and benefit costs
|
$
|
5,373
|
|
$
|
995
|
|
$
|
445
|
|
$
|
327
|
|
$
|
3,606
|
|
Other
|
379
|
|
122
|
|
257
|
|
—
|
|
—
|
|
Total
|
$
|
5,752
|
|
$
|
1,117
|
|
$
|
702
|
|
$
|
327
|
|
$
|
3,606
|
|