The following discussion and analysis should be read in conjunction with the
Company's consolidated financial statements and notes thereto presented
elsewhere in this report.
Results of Operations The following table sets forth for the periods indicated certain financial information derived from the Company's consolidated statements of operations. There can be no assurance that historical trends in operating results will continue in the future: Year Ended May 31, (Dollar Amounts in Thousands) 2014 2013 % of % of Amount Revenue Amount Revenue Revenue, Net
$ 49,530100.0 % $ 44,914100.0 % Cost of Sales 41,252 83.3 37,549 83.6 Gross Profit 8,278 16.7 7,365 16.4 Selling, General and Administrative Expenses 8,253 16.7 8,081 18.0 Income (Loss) from Operations 25 0.0 (716 ) (1.6 ) Other Income, Net 9 0.0 13 0.0 Income (Loss) Before Income Taxes 34 0.0 (703 ) (1.6 ) Provision (Benefit) for Income Taxes 17 0.0 (214 ) 0.5 Consolidated Net Income (Loss) 17 0.0 (489 ) (1.1 ) Net Income Attributable to Noncontrollong Interest 103 0.2 31 0.1
Net Loss Attributable to
Revenue consists primarily of revenue from computer programming consulting services. Revenue for the fiscal year ended
Cost of Sales
Cost of sales increased by
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of expenses relating to account executives, technical recruiters, facilities costs, management and corporate overhead. These expenses increased
Fiscal 2014 other income resulted primarily from interest and dividend income of
The effective income tax rate was 50.0% in fiscal 2014. The rate was higher than expected due to state minimum or alternative taxes. The effective income tax benefit rate was 30.4% in fiscal 2013. The expected federal tax benefit rate of 34% was reduced due to state minimum or alternative taxes being payable despite the Company's net loss for fiscal 2013.
Net Loss Attributable to TSR
Net loss attributable to TSR improved
Liquidity, Capital Resources and Changes in Financial Condition
The Company expects that its available cash and marketable securities will be sufficient to provide the Company with adequate resources to meet its liquidity requirements for the next 12 months.
Net cash flow of
Net cash provided by investing activities amounted to
Net cash used in financing activities of
The Company's capital resource commitments at
The Company's cash and marketable securities were sufficient to enable it to meet its liquidity requirements during fiscal 2014.
Impact of New Accounting Standards
The Company is not aware of any new accounting pronouncements that would have a material impact on its consolidated financial statements.
Critical Accounting Policies
The Company's significant accounting policies are described in Note 1 to its consolidated financial statements, contained elsewhere in this report. The Company believes that the following accounting policies require the application of management's most difficult, subjective or complex judgments:
Estimating Allowances for Doubtful Accounts Receivable
We perform ongoing credit evaluations of our customers and adjust credit limits based upon payment history and the customer's current creditworthiness, as determined by our review of their current credit information. We continuously monitor collections and payments from our customers and maintain a provision for estimated credit losses based on our historical experience, customer types, creditworthiness, economic trends and any specific customer collection issues that we have identified. While such credit losses have historically been within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same credit loss rates that we have in the past. A significant change in the liquidity or financial position of any of our significant customers, or in their willingness to pay, could have a material adverse effect on the collectibility of our accounts receivable and our future operating results.
The Company classifies its marketable securities at acquisition as either (i) held-to-maturity, (ii) trading or (iii) available-for-sale. Based upon the Company's intent and ability to hold its certificates of deposit to maturity (which maturities range up to 24 months), such securities have been classified as held-to-maturity and are carried at amortized cost, which approximates fair value. The Company's equity securities are classified as trading securities, which are carried at fair value, as determined by quoted market price, which is Level 1 input, as established by the fair value hierarchy. The related unrealized gains and losses are included in earnings.
Valuation of Deferred Tax Assets
We regularly evaluate our ability to recover the reported amount of our deferred income tax assets considering several factors, including our estimate of the likelihood of the Company generating sufficient taxable income in future years during the period over which temporary differences reverse. Presently, the Company believes that it is more likely than not that it will realize the benefits of its deferred tax assets based primarily on the Company's history of and projections for taxable income in the future. In the event that actual results differ from our estimates or we adjust these estimates in future periods, we may need to establish a valuation allowance against a portion or all of our deferred tax assets, which could materially impact our financial position or results of operations.