Annual report pursuant to Section 13 and 15(d)

Segment Disclosures

v3.8.0.1
Segment Disclosures
12 Months Ended
Oct. 29, 2017
Segment Reporting [Abstract]  
Segment Disclosures
Segment Disclosures

Our current reportable segments are (i) North American Staffing, (ii) International Staffing and (iii) Technology Outsourcing Services and Solutions. The non-reportable businesses are combined and disclosed with corporate services under the category Corporate and Other. Accordingly, all prior periods have been recast to reflect the current segment presentation. The change in reportable segments did not have any impact on previously reported consolidated financial results.

Segment operating income (loss) is comprised of segment net revenue less cost of services, selling, administrative and other operating costs, restructuring and severance costs, gain from divestitures and settlement and impairment charges. The Company allocates to the segments all operating costs except for costs not directly related to the operating activities such as corporate-wide general and administrative costs. These costs are not allocated because doing so would not enhance the understanding of segment operating performance and are not used by management to measure segment performance.

Effective in the first quarter of fiscal 2017, in an effort to simplify and refine its internal reporting, the Company modified its intersegment sales structure between North American Staffing and Technology Outsourcing Services and Solutions segments. The resulting changes were as follows:

Intersegment revenue for North American Staffing from Technology Outsourcing Services and Solutions is based on a set percentage of direct labor dollars for recruiting and administrative services; and

The direct labor costs associated with the contingent employees placed by North American Staffing on behalf of Technology Outsourcing Services and Solutions’ customers are directly borne by the Technology Outsourcing Services and Solutions segment instead of by North American Staffing.

To provide period over period comparability, the Company has reclassified the prior period segment data to conform to the current presentation. This change did not have any impact on the consolidated financial results for any period presented.

We report our segment information in accordance with the provisions of FASB ASC Topic 280. The Company is currently assessing potential changes to its reportable segments after the sale of the quality assurance business on October 27, 2017, and expects to complete this assessment in the first quarter of fiscal 2018. 

Financial data concerning the Company’s segment revenue and operating income (loss) as well as results from Corporate and Other are summarized in the following tables (in thousands):
 
Year Ended October 29, 2017
 
Total
 
North American Staffing
 
 International Staffing
 
Technology Outsourcing Services and Solutions
 
Corporate and Other (1)
 
Eliminations (2)
Net revenue
$
1,194,436

 
$
919,260

 
$
119,762

 
$
100,847

 
$
61,025

 
$
(6,458
)
Cost of services
1,007,041

 
782,405

 
101,064

 
80,358

 
49,672

 
(6,458
)
Gross margin
187,395

 
136,855

 
18,698

 
20,489

 
11,353

 

 


 
 
 
 
 
 
 
 
 
 
Selling, administrative and other operating costs
197,130

 
119,320

 
15,836

 
14,496

 
47,478

 

Restructuring and severance costs
1,379

 
382

 
14

 
39

 
944

 

Gain from divestitures

(51,971
)
 

 

 

 
(51,971
)
 

Settlement and impairment charges

1,694

 

 

 

 
1,694

 

Operating income
39,163

 
17,153

 
2,848

 
5,954

 
13,208

 

Other income (expense), net
(6,950
)
 
 
 
 
 
 
 
 
 
 
Income tax provision
3,388

 
 
 
 
 
 
 
 
 
 
Net income from continuing operations
28,825

 
 
 
 
 
 
 
 
 
 
Loss from discontinued operations, net of income taxes
(1,693
)
 
 
 
 
 
 
 
 
 
 
Net income
$
27,132

 
 
 
 
 
 
 
 
 
 


 
Year Ended October 30, 2016
 
Total
 
North American Staffing
 
 International Staffing
 
Technology Outsourcing Services and Solutions
 
Corporate and Other (1)
 
Eliminations (2)
Net revenue
$
1,334,747

 
$
994,346

 
$
131,496

 
$
106,585

 
$
114,772

 
$
(12,452
)
Cost of services
1,132,253

 
847,483

 
112,035

 
87,731

 
97,456

 
(12,452
)
Gross margin
202,494

 
146,863

 
19,461

 
18,854

 
17,316

 

 


 
 
 
 
 
 
 
 
 
 
Selling, administrative and other operating costs
203,930

 
122,576

 
16,402

 
13,029

 
51,923

 

Restructuring and severance costs
5,752

 
1,117

 
702

 
327

 
3,606

 

Gain from divestitures
(1,663
)
 

 

 

 
(1,663
)
 

Settlement and impairment charges

364

 

 

 

 
364

 

Operating income (loss)
(5,889
)
 
23,170

 
2,357

 
5,498

 
(36,914
)
 

Other income (expense), net
(6,506
)
 
 
 
 
 
 
 
 
 
 
Income tax provision
2,175

 
 
 
 
 
 
 
 
 
 
Net loss
$
(14,570
)
 
 
 
 
 
 
 
 
 
 

 
Year Ended November 1, 2015
 
Total
 
North American Staffing
 
 International Staffing
 
Technology Outsourcing Services and Solutions
 
Corporate and Other (1)
 
Eliminations (2)
Net revenue
$
1,496,897

 
$
1,059,847

 
$
147,649

 
$
135,886

 
$
168,422

 
$
(14,907
)
Cost of services
1,268,363

 
907,422

 
127,699

 
108,309

 
139,840

 
(14,907
)
Gross margin
228,534

 
152,425

 
19,950

 
27,577

 
28,582

 

 


 
 
 
 
 
 
 
 
 
 
Selling, administrative and other operating costs
231,033

 
131,277

 
18,990

 
15,545

 
65,221

 

Restructuring and severance costs
3,635

 
705

 
357

 
 
 
2,573

 

Settlement and impairment charges

6,626

 
1,900

 

 

 
4,726

 

Operating income (loss)
(12,760
)
 
18,543

 
603

 
12,032

 
(43,938
)
 

Other income (expense), net
(2,380
)
 
 
 
 
 
 
 
 
 
 
Income tax provision
4,646

 
 
 
 
 
 
 
 
 
 
Net loss from continuing operations
(19,786
)
 
 
 
 
 
 
 
 
 
 
Loss from discontinued operations, net of income taxes
(4,834
)
 
 
 
 
 
 
 
 
 
 
Net loss
$
(24,620
)
 
 
 
 
 
 
 
 
 
 

(1) Revenues are primarily derived from managed service programs and information technology infrastructure services.
(2) The majority of intersegment sales results from North American Staffing providing resources to Technology Outsourcing Services and Solutions. 
 



Assets of the Company by reportable operating segment are summarized in the following table (in thousands):
 
October 29,
2017
 
October 30,
2016
Assets:
 
 
 
North American Staffing
$
128,695

 
$
135,620

International Staffing
36,773

 
36,279

Technology Outsourcing Services and Solutions (a)
12,095

 
34,038

Corporate & Other
107,246

 
92,948

Total segments
284,809

 
298,885

Held for sale

 
17,580

Total Assets
$
284,809

 
$
316,465

 
 
 
 
(a) As of October 29, 2017, excludes the assets sold with the quality assurance business.
 
 
 


Sales to external customers and long-lived assets of the Company by geographic area are as follows (in thousands):
 
Year Ended
 
October 29,
2017
 
October 30,
2016
 
November 1,
2015
Net Revenue:
 
 
 
 
 
Domestic
$
1,036,567

 
$
1,148,254

 
$
1,273,971

International, principally Europe
157,869

 
186,493

 
222,926

Total Net Revenue
$
1,194,436

 
$
1,334,747

 
$
1,496,897

 
October 29,
2017
 
October 30,
2016
Long-Lived Assets:
 
 
 
Domestic
$
27,777

 
$
27,113

International
1,344

 
3,020

Total Long-Lived Assets
$
29,121

 
$
30,133



Capital expenditures and depreciation and amortization by the Company’s operating segments are as follows (in thousands):
 
Year Ended
 
October 29,
2017
 
October 30,
2016
 
November 1,
2015
Capital Expenditures:
 
 
 
 
 
North American Staffing
$
279

 
$
480

 
$
422

International Staffing
144

 
893

 
324

Technology Outsourcing Services and Solutions
899

 
1,339

 
2,265

Corporate & Other
7,990

 
14,838

 
5,541

Total Capital Expenditures
$
9,312

 
$
17,550

 
$
8,552

 
 
 
 
 
 
Depreciation and Amortization:
 
 
 
 
 
North American Staffing
$
543

 
$
517

 
$
619

International Staffing
374

 
345

 
332

Technology Outsourcing Services and Solutions
1,659

 
1,728

 
1,172

Corporate & Other
5,449

 
3,379

 
4,688

Total Depreciation and Amortization
$
8,025

 
$
5,969

 
$
6,811