Non-GAAP Proforma Measures - Unrecognized Revenue - Volt sometimes provides services despite a customer arrangement not yet being finalized, or continues to provide services under an expired arrangement while a renewal arrangement is being finalized. Generally Accepted Accounting Principles ("GAAP") usually requires that services revenue be deferred until arrangements are finalized or in some cases until cash is received, which causes some periods to include the expense of providing services although the related revenue is not recognized until a subsequent period ("Unrecognized Revenue"). The discussion herein refers to financial data determined both using GAAP as well as on a non-GAAP proforma basis. The non-GAAP proforma basis includes adjustments for Unrecognized Revenue so that revenue is shown in the same period as the related services are provided. This non-GAAP financial information is used by management and provided herein primarily to provide a more complete understanding of the company's business results and trends. In addition, the company believes that lenders, analysts and others in the investment community use this non-GAAP financial information to assess the company's historical results, and that failure to report this non-GAAP measure could result in a potentially misplaced perception that the company's results have either met, exceeded or underperformed expectations. This non-GAAP information should not be considered an alternative for, or in isolation from, the financial information prepared and presented in accordance with GAAP. In addition, this measure may not be comparable to similarly titled measures used by other companies.
First Quarter Results By Segment
The company's Staffing Services segment net revenue in the first quarter of fiscal 2014 decreased $82.1 million to $392.3 million from $474.4 million in fiscal 2013, and proforma net revenue decreased by $78.4 million, or 16.6%, to $393.4 million from $471.8 million in fiscal 2013. This decrease is primarily due to fewer contingent workers on assignment at a few large customers whose current demand levels are lower than in the prior year, lower revenues resulting from our exit of certain customers as part of our continued focus on exiting or reducing business levels with customers where profitability or business terms are unfavorable, slightly lower managed services revenue, and $3.7 million higher net staffing Unrecognized Revenue.
Direct cost of Staffing Services revenue in the first quarter of fiscal 2014 decreased $70.5 million, or 17.1%, to $341.5 million from $412.0 million in fiscal 2013. This decrease was primarily the result of fewer contingent staff on assignment, although at higher proforma margins, and lower managed service program costs consistent with the related decrease in revenues. Direct margin of Staffing Services revenue as a percent of staffing revenue and proforma staffing revenue in 2014 was 13.0% and 13.2% from 13.1% and 12.7% in 2013, respectively. The direct margin and proforma direct margin increased by 0.5% primarily due to higher traditional staffing margins. This increase was offset by a 0.6% decrease in the GAAP direct margin due to higher net staffing Unrecognized Revenue in the first quarter of fiscal 2014 from 2013.
Staffing Services segment operating results in the first quarter of 2014 decreased by $8.2 million to a loss of $4.1 million from income of $4.1 million in fiscal 2013, and proforma operating results decreased $4.6 million to a loss of $3.0 million from income of $1.6 million in fiscal 2013. The decrease in operating results is primarily due to lower direct margins of $7.9 million and 2013 including a $3.0 million indirect tax recovery, partially offset by a decrease in selling administrative and other operating costs of $6.6 million in response to the decline in staffing revenues and the reorganization of our North American staffing operations.
The company's Computer Systems segment net revenue in the first quarter of fiscal 2014 decreased $4.7 million, or 23.3%, to $15.5 million from $20.2 million in fiscal 2013. This decrease was primarily the result of several large directory assistance implementations reaching the end of the maintenance periods over which the projects were being amortized, lower transaction volumes, and lower pricing and maintenance levels.
Computer Systems segment operating loss in the first quarter of fiscal 2014 and 2013 remained consistent at $3.8 million primarily from the impact of the segment's restructuring activities and lower revenues offset by lower costs, offset by our continued investment in developing our directory assistance software platform into full-featured call center software and our related sales efforts.
The company's Other reportable segment net revenue in the first quarter of fiscal 2014 increased $3.8 million, or 14.6%, to $29.4 million from $25.6 million in fiscal 2013. The increase is primarily due to higher information technology infrastructure services revenue driven primarily by new customers and to a lesser extent from net expanded business with existing customers, at billing rates that remained relatively consistent between the periods, and a $1.2 million deferral of revenue in the first quarter of 2013.
Other reportable segment operating results in the first quarter of fiscal 2014 increased $1.5 million to income of $0.5 million from a loss of $1.0 million in fiscal 2013, primarily due to a $1.2 million deferral of revenue in 2013 and higher revenue and margins in 2014.
During the first quarter of fiscal 2014, the company disbursed $1.6 million in connection with the restatement, investigations and remediation costs and provided cash from all other operating activities of $24.3 million. The company received $3.0 million from the sale of software related assets, used $1.5 million for capital expenditures and received $0.4 million for the sale of investments net of purchases. Borrowing under the accounts receivable securitization program and other short-term borrowings decreased by $22.3 million.
Condensed Consolidated Statements of Cash Flows
Unaudited (in Thousands)
Cash used in connection with restatement, investigations and
On February 2, 2014, the company had cash and cash equivalents of $13.4 million and an additional $31.8 million of cash restricted as collateral for foreign currency credit lines and banking facilities. The company also had approximately $20.4 million available from its short-term financing program. Excluding $9.6 million of long-term debt, the company's consolidated borrowings were $145.0 million at February 2, 2014, which included $22.2 million of foreign currency borrowings used primarily to hedge net investments in foreign subsidiaries that are fully collateralized by restricted cash, and $120.0 million drawn under the $200.0 million short-term financing program.
Condensed Consolidated Balance Sheets
Unaudited (in Thousands, except share amounts)
Issued - 23,536,769; Outstanding - 20,849,462;
About Volt Information Sciences, Inc.
Volt Information Sciences, Inc. is an international provider of staffing services (traditional time and materials based as well as project based), contact center computer systems, information technology and telecommunications infrastructure services, and telephone directory publishing and printing in Uruguay. Our staffing services include a suite of workforce solutions that include providing contingent personnel, personnel recruitment services, and managed staffing services programs supporting primarily professional administration, technical, information technology and engineering positions. Our contact center computer systems provide the functionality for telecommunications company directory assistance services and for corporate and government call centers, operator services, and database management. Our information technology infrastructure services provide a single-source alternative to original equipment manufacturer and other independent IT service providers for server, storage, network and desktop IT hardware maintenance, data center and network monitoring and operations, and designing, deploying and supporting corporate technology upgrade and refresh programs, as well as design, engineering, construction, installation and maintenance of voice, data, video and utility infrastructure. Visit www.volt.com.
This press release contains forward-looking statements that are subject to a number of known and unknown risks, including, among others, general economic, competitive and other business conditions, the degree and timing of customer utilization and rate of renewals of contracts with the company, and the degree of success of business improvement initiatives that could cause actual results, performance and achievements to differ materially from those described or implied in the forward-looking statements. Information concerning these and other factors that could cause actual results to differ materially from those in the forward-looking statements are contained in company reports filed with the Securities and Exchange Commission. Copies of the company's latest Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, as filed with the Securities and Exchange Commission, are available without charge upon request to Volt Information Sciences, Inc., 1065 Avenue of the Americas, New York, New York 10018, Attention: Shareholder Relations, 212-704-7921. These and other SEC filings by the company are also available to the public over the Internet at the SEC's website at http://www.sec.gov and at the company's website at http://www.volt.com in the Investor & Governance section.