UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	For the quarterly period ended July ~~29, 2018~~ 28, 2019


¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	For the transition period from to .

Commission File Number: 001-09232

VOLT INFORMATION SCIENCES, INC.

(Exact name of registrant as specified in its charter)



New York	13-5658129
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
~~1133 Avenue of Americas, New York,~~50 Charles Lindbergh Boulevard, Uniondale, New York	~~10036~~11553
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:

~~(212) 704-2400~~(516) 228-6700

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.10	VISI	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer ¨	Accelerated filer x¨	Non-accelerated filer ¨x	Smaller reporting company ¨x	Emerging growth company ¨

	~~(Do not check if a smaller reporting company)~~

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

As of August ~~31, 2018,~~30, 2019, there were ~~21,178,515~~21,366,111 shares of common stock outstanding.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(unaudited)

Three Months Ended Nine Months Ended
July 29, 2018 July 30, 2017 July 29, 2018 July 30, 2017

NET REVENUE $ 257,808
$ 289,924
$ 774,365
$ 905,953
Cost of services 221,448
244,205
664,695
766,225
GROSS MARGIN 36,360
45,719
109,670
139,728
EXPENSES
Selling, administrative and other operating costs 42,222
46,931
132,076
146,992
Restructuring and severance costs 3,108
249
3,730
1,072
Impairment charge —
—
155
290
Gain from divestitures —
—
—
(3,938 )
TOTAL EXPENSES 45,330
47,180
135,961
144,416
OPERATING LOSS (8,970 ) (1,461 ) (26,291 ) (4,688 )
OTHER INCOME (EXPENSE), NET
Interest income (expense), net (552 ) (976 ) (1,965 ) (2,725 )
Foreign exchange gain (loss), net (294 ) (1,730 ) (88 ) (1,419 )
Other income (expense), net (296 ) (277 ) (879 ) (1,187 )
TOTAL OTHER INCOME (EXPENSE), NET (1,142 ) (2,983 ) (2,932 ) (5,331 )
LOSS BEFORE INCOME TAXES (10,112 ) (4,444 ) (29,223 ) (10,019 )
Income tax provision 1,306
1,074
576
930
NET LOSS $ (11,418 ) $ (5,518 ) $ (29,799 ) $ (10,949 )

PER SHARE DATA:
Basic:
Net loss $ (0.54 ) $ (0.26 ) $ (1.42 ) $ (0.52 )
Weighted average number of shares 21,071
20,963
21,044
20,934
Diluted:
Net loss $ (0.54 ) $ (0.26 ) $ (1.42 ) $ (0.52 )
Weighted average number of shares 21,071
20,963
21,044
20,934



	Three Months Ended						Nine Months Ended
	July 28, 2019			July 29, 2018			July 28, 2019			July 29, 2018

NET REVENUE	$	233,176		$	257,808		$	738,682		$	774,365
Cost of services	197,528			221,448			629,078			664,695
GROSS MARGIN	35,648			36,360			109,604			109,670

EXPENSES
Selling, administrative and other operating costs	38,395			42,222			117,144			132,076
Restructuring and severance costs	2,017			3,108			2,800			3,730
Impairment charges	79			—			426			155
OPERATING LOSS	(4,843		)	(8,970		)	(10,766		)	(26,291		)

OTHER INCOME (EXPENSE), NET
Interest income (expense), net	(714		)	(552		)	(2,159		)	(1,965		)
Foreign exchange gain (loss), net	(151		)	(294		)	(252		)	(88		)
Other income (expense), net	(184		)	(296		)	(589		)	(879		)
TOTAL OTHER INCOME (EXPENSE), NET	(1,049		)	(1,142		)	(3,000		)	(2,932		)

LOSS BEFORE INCOME TAXES	(5,892		)	(10,112		)	(13,766		)	(29,223		)
Income tax provision	165			1,306			671			576
NET LOSS	$	(6,057	)	$	(11,418	)	$	(14,437	)	$	(29,799	)

PER SHARE DATA:
Basic:
Net loss	$	(0.29	)	$	(0.54	)	$	(0.68	)	$	(1.42	)
Weighted average number of shares	21,157			21,071			21,106			21,044
Diluted:
Net loss	$	(0.29	)	$	(0.54	)	$	(0.68	)	$	(1.42	)
Weighted average number of shares	21,157			21,071			21,106			21,044

See accompanying Notes to Condensed Consolidated Financial Statements.

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(unaudited)

Three Months Ended Nine Months Ended
July 29, 2018 July 30, 2017 July 29, 2018 July 30, 2017

NET LOSS $ (11,418 ) $ (5,518 ) $ (29,799 ) $ (10,949 )
Other comprehensive loss:
Foreign currency translation adjustments, net of taxes of $0 and $0, respectively (921 ) 3,625
(464 ) 4,722
COMPREHENSIVE LOSS $ (12,339 ) $ (1,893 ) $ (30,263 ) $ (6,227 )



	Three Months Ended						Nine Months Ended
	July 28, 2019			July 29, 2018			July 28, 2019			July 29, 2018
	July 28, 2019			July 29, 2018			July 28, 2019			July 29, 2018
NET LOSS	$	(6,057	)	$	(11,418	)	$	(14,437	)	$	(29,799	)
Other comprehensive income (loss):
Foreign currency translation adjustments net of taxes of $0 and $0, respectively	(565		)	(921		)	(586		)	(464		)
COMPREHENSIVE LOSS	$	(6,622	)	$	(12,339	)	$	(15,023	)	$	(30,263	)

See accompanying Notes to Condensed Consolidated Financial Statements.

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)


	July 29, 2018			October 29, 2017			July 28, 2019			October 28, 2018
	(unaudited)						(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	29,929		$	37,077		$	36,031		$	24,763
Restricted cash and short-term investments	12,993			20,544			11,000			14,844
Trade accounts receivable, net of allowances of $810 and $1,249, respectively	152,794			173,818
Recoverable income taxes	53			1,643
Trade accounts receivable, net of allowances of $132 and $759, respectively							135,838			157,445
Other current assets	8,484			11,755			6,706			7,444
TOTAL CURRENT ASSETS	204,253			244,837			189,575			204,496
Other assets, excluding current portion	10,739			10,851			7,579			7,808
Property, equipment and software, net	25,523			29,121			25,209			24,392
TOTAL ASSETS	$	240,515		$	284,809		$	222,363		$	236,696
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accrued compensation	$	27,086		$	24,504		$	22,675		$	27,120
Accounts payable	28,684			36,895			34,521			33,498
Accrued taxes other than income taxes	18,399			20,467			13,854			15,275
Accrued insurance and other	25,236			30,282			27,472			23,335
Short-term borrowings	—			50,000
Income taxes payable	1,535			808			692			1,097
TOTAL CURRENT LIABILITIES	100,940			162,956			99,214			100,325
Accrued insurance and other, excluding current portion	12,128			10,828			11,750			13,478
Deferred gain on sale of real estate, excluding current portion	22,702			24,162			20,758			22,216
Income taxes payable, excluding current portion	619			1,663			612			600
Deferred income taxes	1,208			1,206			508			510
Long-term debt, excluding current portion, net	48,939			—
Long-term debt							53,848			49,068
TOTAL LIABILITIES	186,536			200,815			186,690			186,197
Commitments and contingencies

STOCKHOLDERS’ EQUITY:
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 - 23,738,003 shares; Outstanding - 21,178,515 and 21,026,253 shares, respectively	2,374			2,374
Common stock, par value $0.10; Authorized - 120,000,000 shares; Issued - 23,738,003 shares; Outstanding - 21,366,111 shares and 21,179,068 shares, respectively							2,374			2,374
Paid-in capital	78,308			78,645			77,283			79,057
Retained earnings	12,636			45,843
(Accumulated deficit) retained earnings							(10,126		)	9,738
Accumulated other comprehensive loss	(5,725		)	(5,261		)	(7,656		)	(7,070		)
Treasury stock, at cost; 2,559,488 and 2,711,750 shares, respectively	(33,614		)	(37,607		)
TOTAL STOCKHOLDERS’ EQUITY	53,979			83,994
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	240,515		$	284,809
Treasury stock, at cost; 2,371,892 and 2,558,935 shares, respectively							(26,202		)	(33,600		)
TOTAL STOCKHOLDERS’ EQUITY							35,673			50,499
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY							$	222,363		$	236,696

See accompanying Notes to Condensed Consolidated Financial Statements.

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except number of share data)

(unaudited)



	Nine Months Ended July 28, 2019
	Common Stock $0.10 Par Value			Paid-in Capital			(Accumulated Deficit) Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Stockholders’ Equity
	Shares	Amount		Paid-in Capital			(Accumulated Deficit) Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Stockholders’ Equity
BALANCE AT OCTOBER 28, 2018	23,738,003	$	2,374	$	79,057		$	9,738		$	(7,070	)	$	(33,600	)	$	50,499
Net loss	—	—		—			(3,215		)	—			—			(3,215		)
Share-based compensation	—	—		(113		)	—			—			—			(113		)
Issuance of common stock	—	—		(35		)	(206		)	—			241			—
Effect of new accounting principle	—	—		—			426			—			—			426
Other comprehensive income	—	—		—			—			158			—			158
BALANCE AT JANUARY 27, 2019	23,738,003	$	2,374	$	78,909		$	6,743		$	(6,912	)	$	(33,359	)	$	47,755
Net loss	—	—		—			(5,165		)	—			—			(5,165		)
Share-based compensation	—	—		(95		)	—			—			—			(95		)
Issuance of common stock	—	—		(883		)	(2,234		)	—			3,077			(40		)
Other comprehensive loss	—	—		—			—			(179		)	—			(179		)
BALANCE AT APRIL 28, 2019	23,738,003	$	2,374	$	77,931		$	(656	)	$	(7,091	)	$	(30,282	)	$	42,276
Net loss	—	—		—			(6,057		)	—			—			(6,057		)
Share-based compensation	—	—		294			—			—			—			294
Issuance of common stock	—	—		(942		)	(3,413		)	—			4,080			(275		)
Other comprehensive loss	—	—		—			—			(565		)	—			(565		)
BALANCE AT JULY 28, 2019	23,738,003	$	2,374	$	77,283		$	(10,126	)	$	(7,656	)	$	(26,202	)	$	35,673

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except number of share data)

(unaudited)



	Nine Months Ended July 29, 2018
	Common Stock $0.10 Par Value			Paid-in Capital			(Accumulated Deficit) Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Stockholders’ Equity
	Shares	Amount		Paid-in Capital			(Accumulated Deficit) Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Stockholders’ Equity
BALANCE AT OCTOBER 29, 2017	23,738,003	$	2,374	$	78,645		$	45,843		$	(5,261	)	$	(37,607	)	$	83,994
Net loss	—	—		—			(10,694		)	—			—			(10,694		)
Share-based compensation	—	—		435			—			—			—			435
Issuance of common stock	—	—		(10		)	(40		)	—			50			—
Other comprehensive income	—	—		—			—			1,404			—			1,404
BALANCE AT JANUARY 28, 2018	23,738,003	$	2,374	$	79,070		$	35,109		$	(3,857	)	$	(37,557	)	$	75,139
Net loss	—	—		—			(7,687		)	—			—			(7,687		)
Share-based compensation	—	—		557			—			—			—			557
Issuance of common stock	—	—		(80		)	(119		)	—			139			(60		)
Other comprehensive loss	—	—		—			—			(947		)	—			(947		)
BALANCE AT APRIL 29, 2018	23,738,003	$	2,374	$	79,547		$	27,303		$	(4,804	)	$	(37,418	)	$	67,002
Net loss	—	—		—			(11,418		)	—			—			(11,418		)
Share-based compensation	—	—		(475		)	—			—			—			(475		)
Issuance of common stock	—	—		(764		)	(3,249		)	—			3,804			(209		)
Other comprehensive loss	—	—		—			—			(921		)	—			(921		)
BALANCE AT JULY 29, 2018	23,738,003	$	2,374	$	78,308		$	12,636		$	(5,725	)	$	(33,614	)	$	53,979

See accompanying Notes to Condensed Consolidated Financial Statements.

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)


	Nine Months Ended						Nine Months Ended
	July 29, 2018			July 30, 2017			July 28, 2019			July 29, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(29,799	)	$	(10,949	)	$	(14,437	)	$	(29,799	)
Adjustment to reconcile net loss to cash used in operating activities:
Adjustment to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization	5,515			5,618			5,127			5,515
Provision (release) of doubtful accounts and sales allowances	(181		)	573
Unrealized foreign currency exchange loss	194			1,130
Release of doubtful accounts and sales allowances							(185		)	(181		)
Unrealized foreign currency exchange (gain) loss							(133		)	194
Impairment charges	155			290			426			155
Amortization of gain on sale leaseback of property	(1,458		)	(1,459		)	(1,458		)	(1,458		)
Loss on dispositions of property, equipment and software	—			12
Gain from divestitures	—			(3,938		)
Share-based compensation expense	517			2,111
Loss (gain) on dispositions of property, equipment and software							13			—
Share-based compensation							86			517
Change in operating assets and liabilities:
Trade accounts receivable	21,218			(2,199		)	22,624			21,218
Restricted cash	7,477			(7,072		)
Other assets	3,956			1,470			895			3,956
Net assets held for sale	—			158
Accounts payable	(8,330		)	8,038			1,104			(8,330		)
Accrued expenses and other liabilities	(3,086		)	(9,025		)	(3,583		)	(3,086		)
Income taxes	1,274			12,204			(318		)	1,274
Net cash used in operating activities	(2,548		)	(3,038		)
Net cash provided by (used in) operating activities							10,161			(10,025		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of investments	608			716			213			608
Purchases of investments	(375		)	(231		)	(178		)	(375		)
Proceeds from divestitures	—			15,224
Proceeds from sale of property, equipment, and software	—			297			43			—
Purchases of property, equipment, and software	(2,332		)	(7,753		)	(6,305		)	(2,332		)
Net cash provided by (used in) investing activities	(2,099		)	8,253
Net cash used in investing activities							(6,227		)	(2,099		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of borrowings	(119,696		)	(27,050		)	(20,000		)	(119,696		)
Draw-down on borrowings	119,696			30,000			25,000			119,696
Debt issuance costs	(1,415		)	(751		)	(621		)	(1,415		)
Proceeds from exercise of options	—			2
Withholding tax payment on vesting of restricted stock awards	(269		)	(46		)
Withholding tax payment on vesting of stock awards							(316		)	(269		)
Net cash provided by (used in) financing activities	(1,684		)	2,155			4,063			(1,684		)
Effect of exchange rate changes on cash and cash equivalents	(817		)	2,601
Net increase (decrease) in cash and cash equivalents	(7,148		)	9,971
Cash and cash equivalents, beginning of period	37,077			6,386
Cash and cash equivalents, end of period	$	29,929		$	16,357
Effect of exchange rate changes on cash, cash equivalents and restricted cash							(633		)	(817		)
Net increase (decrease) in cash, cash equivalents and restricted cash							7,364			(14,625		)
Cash, cash equivalents and restricted cash, beginning of period							36,544			54,097
Cash, cash equivalents and restricted cash, end of period							$	43,908		$	39,472

Cash paid during the period:
Interest	$	2,084		$	2,815		$	2,367		$	2,084
Income taxes	$	2,483		$	2,256		$	1,174		$	2,483

Reconciliation of cash, cash equivalents, and restricted cash:
Current assets:
Cash and cash equivalents							$	36,031		$	29,929
Restricted cash included in Restricted cash and short-term investments							7,877			9,543
Cash, cash equivalents and restricted cash, end of period							$	43,908		$	39,472

See accompanying Notes to Condensed Consolidated Financial Statements.

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Fiscal Periods Ended July ~~29, 2018~~28, 2019 and July ~~30, 2017~~29, 2018

(Unaudited)

NOTE 1: Basis of Presentation

Basis of Presentation

The accompanying interim condensed consolidated financial statements of Volt Information Sciences, Inc. (“Volt” or the “Company”) have been prepared in conformity with generally accepted accounting principles, consistent in all material respects with those applied in the Annual Report on Form 10-K for the year ended October ~~29, 2017.~~28, 2018. The Company makes estimates and assumptions that affect the amounts reported. Actual results could differ from those estimates and changes in estimates are reflected in the period in which they become known. Accounting for certain expenses, including income taxes, ~~are~~is based on full year assumptions, and the financial statements reflect all normal adjustments that, in the opinion of management, are necessary for fair presentation of the interim periods presented. The interim information is unaudited and is prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”), which provides for omission of certain information and footnote disclosures. This interim financial information should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended October ~~29, 2017.~~28, 2018.

Certain reclassifications have been made to the prior year financial statements in order to conform to the current year’s presentation.

NOTE 2: Recently Issued Accounting Pronouncements

New Accounting Standards Not Yet Adopted by the Company

In ~~June~~August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which changes the fair value measurement disclosure requirements of Accounting Standards Codification (“ASC”) 820. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted for any eliminated or modified disclosures upon issuance of ASU 2018-13. ASU 2018-13 is effective for the Company in the first quarter of fiscal 2021. The Company does not anticipate a significant impact upon adoption.

In June 2018, the FASB issued ASU 2018-07, C~~ompensation-Stock~~ompensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting(“ASU 2018-07”). ASU 2018-07 expands the guidance in Topic 718 to include share-based payments for goods and services to non-employees and generally aligns it with the guidance for share-based payments to employees. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year, which for the Company will be the first quarter of fiscal 2020. 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 (“ASU 2016-13”). This ASU provides guidance for recognizing credit losses on financial instruments based on an estimate of current expected credit losses model. In April 2019, ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, was issued to clarify and address certain items related to the amendments in ASU 2016-13. In May 2019, ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, was issued to provide entities that have certain instruments within the scope of ASC 326 with an option to irrevocably elect the fair value option under ASC 825-10, Financial Instruments - Overall, applied on an instrument-by-instrument basis for eligible instruments. 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 February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). 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 the pending adoption of ASU 2016-02 on its consolidated financial statements on a modified retrospective basis, and currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption, which will increase the Company’s total assets and total liabilities that the Company reports relative to such amounts prior to adoption. In addition, the Company’s deferred gain on the sale of real estate in the amount of $22.0 million will be recognized as a cumulative-

effect adjustment to equity upon adoption. This gain is currently being amortized at approximately $0.5 million a quarter as an offset to rent expense in the Condensed Consolidated Statements of Operations and is included as an adjustment to reconcile net loss to cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows.

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.

Recently Adopted by the Company

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (“ASU 2018-15”), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). ASU 2018-15 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption of the amendments is permitted including adoption in any interim period. The amendments in ASU 2018-15 should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company early adopted this standard on a prospective basis in the second quarter of fiscal 2019. Adoption of this standard did not have a significant impact on the Company’s consolidated financial statements.

In May 2017, the 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~~adopted this ASU in the first quarter of fiscal ~~2019. The Company does not anticipate a~~2019, resulting in no significant impact ~~upon adoption 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.~~consolidated financial statements.

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 Subtopic 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~~adopted this ASU in the first quarter of fiscal ~~2019.~~2019, resulting in no significant impact on the Company’s consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This ASU clarifies how entities should present restricted cash and restricted cash equivalents in the statement of cash flows and requires the entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The Company ~~does not anticipate a~~adopted this ASU retrospectively in the first quarter of fiscal 2019, resulting in no significant impact ~~upon adoption.~~on the Company’s consolidated financial statements besides a change in the presentation of restricted cash on the Condensed Consolidated Statements of Cash Flows.

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~~adopted this ASU in 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~~resulting in no significant impact on ~~its~~the Company’s consolidated financial ~~statements based on the instruments currently held and its historical trend of bad debt expense relating to trade accounts receivable.~~

~~In February 2016, the FASB issued ASU 2016-02,~~ statements.~~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. ~~In July 2018, ASU 2018-11,~~ ~~Leases (Topic 842): Targeted Improvements~~ was issued to provide an option to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented in its financial statements as well as a practical expedient permitting lessors to not separate non-lease components from the associated lease component if certain conditions are met. ~~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 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~~was adopted by the Company ~~will be~~in the first quarter of fiscal 2019. ~~As we continue~~Please refer to perform our assessment, the Company still does not anticipate that the new guidance will have a material impact on our revenue recognition policies, practices or systems. We plan to use the modified retrospective method upon adoption and will evaluate any active contracts as of the adoption date to determine whether a cumulative adjustment is necessary. The adjustment would primarily relate to deferred revenue from contracts pending execution, if any. The guidance also requiresNote 3. Revenue Recognition for additional ~~quantitative and qualitative~~ disclosures. ~~As the Company continues to make progress in its evaluation of the impacts of our pending adoption of Topic 606, our preliminary assessments are subject to change.~~

~~Recently Adopted Accounting Standards~~

~~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 Company adopted this ASU in the first quarter of fiscal 2018. Upon adoption, the excess tax benefits and deficiencies are recognized as income tax expense or benefit in the income statement in the reporting period incurred. The ASU transition guidance requires that this election be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption, net of any valuation allowance required on the deferred tax assets. Because the Company has provided a full valuation allowance against its net deferred tax assets, this adoption has no impact to the opening balance of total stockholder’s equity. The Company has elected to present the changes for excess tax benefits in the statement of cash flows prospectively and to account for forfeitures as they occur. There was no impact to the change in presentation in the statement of cash flows related to statutory tax withholding requirements since the Company has historically classified the cash paid for tax withholding as a financing activity.

All other ASUs that became effective for Volt in the first nine months of fiscal ~~2018~~2019 were not applicable to the Company at this time and therefore, did not have any impact during the period.

NOTE 3: Revenue Recognition

Adoption of ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”)

As of October 29, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers, using the modified retrospective method applied to those contracts which were not completed as of October 29, 2018. Results for reporting periods

beginning on October 29, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with historic accounting guidance.

The cumulative impact of adopting ASC 606 resulted in an increase of $0.4 million to opening retained earnings. The impact is primarily driven by an adjustment to deferred revenue due to a change in the required criteria for defining customer contracts under the new guidance. As of and for the three and nine months ended July 28, 2019, the consolidated financial statements were not materially impacted by the implementation of ASC 606.

Revenue Recognition

All of the Company’s revenue and trade receivables are generated from contracts with customers. Revenue is recognized when control of the promised services is transferred to the Company's customers at an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company's revenue is recorded net of any sales or other similar taxes collected from its customers.

A performance obligation is a promise in a contract to transfer a distinct service to the customer. The majority of the Company's contracts contain single performance obligations. For performance obligations that the Company satisfies over time, revenue is recognized by consistently applying a method of measuring progress toward satisfaction of that performance obligation. The Company will generally utilize an input measure of time (e.g., hours, weeks, months) of service provided, which depicts the progress toward completion of each performance obligation.

Volt generally determines the standalone selling prices based on the prices included in the customer contracts. The price as specified in its customer contracts is typically considered the standalone selling price as it is an observable input that depicts the price as if sold to a similar customer. Certain customer contracts have variable consideration, including rebates, guarantees, credits, or other similar items that reduce the transaction price. The Company will generally estimate the variable consideration using the expected value method to predict the amount of consideration to which it will become entitled, based on the circumstances of each customer contract and historical evidence. Revenue is recognized net of variable consideration to the extent that it is probable that a significant future reversal will not occur. The Company's estimated amounts of variable consideration are not material and it does not believe that there will be significant changes to its estimates.

In certain scenarios where a third-party vendor is involved in the Company's revenue transactions with its customers, the Company will evaluate whether it is the principal or the agent in the transaction. When Volt acts as the principal, it controls the performance obligation prior to transfer of the service to the customer and reports the related consideration as gross revenues and the costs as cost of services. When Volt acts as an agent, it does not control the performance obligation prior to transfer of the service to the customer and it reports the related amounts as revenue on a net basis. The Company generally demonstrates control over the service when it is responsible for the fulfillment of services under the contract, responsible for the workers performing the service and when it has latitude in establishing pricing. Volt generally acts as an agent in its transactions within its MSP programs where the Company provides comprehensive management of its customer’s contingent workforce and receive fees based on the volume of services managed within each program. The Company is the agent in these transactions since it does not have the responsibility for the fulfillment of the services by the vendors or contractors (referred to as associate vendors). In these transactions, the Company does not control the third-party providers’ staffing services provided to the customers prior to those services being transferred to the customer.

Revenue Service Types

Staffing Services

Volt’s primary service is providing contingent (temporary) workers to its customers. These services are primarily provided through direct agreements with customers, and Volt provides these services using its employees and, in some cases, by subcontracting with other vendors of contingent workers. Volt’s costs in providing these services consist of the wages and benefits provided to the contingent workers as well as the recruiting costs, payroll department costs and other administrative costs. The Company recognizes revenue for its contingent staffing services over time as services are performed in an amount that reflects the consideration it expects to be entitled to in exchange for its services, which is generally calculated as hours worked multiplied by the agreed-upon hourly bill rate. The customer simultaneously receives and consumes the benefits of the services as they are provided. The Company applies the practical expedient to recognize revenue for these services over the term of the agreement commensurate to the amount it has the right to invoice the customer.

Direct Placement Services

Direct placement services include providing qualified candidates to the Company's customers to hire on a permanent basis. These services are primarily recognized at a point in time when the qualified candidate is placed and begins permanent employment which is the point when control has transferred to the customer and the Company has the right to payment for the service. Each placement is a single performance obligation under the Company’s contracts and the related consideration is typically based upon a percentage of the

candidates' base salary. Direct placement revenue is recognized net of a reserve for permanent placement candidates that do not remain with the customer through the contingency period, which is typically 60 days or less. This contingency is estimated based on historical data and recorded as a refund liability.

Managed Service Programs ("MSP")

The Company's MSP programs provide comprehensive solutions for delivery of contingent labor for assignment to customers, including supplier and worker sourcing, selecting, qualifying, on/off-boarding, time and expense recordation, reporting and approved invoicing and payment processing procedures. Since the individual activities are not distinct, the Company accounts for these activities as a single performance obligation. The Company’s fee for these MSP services is a fixed percentage of the staffing services spend that is managed through the program. The Company recognizes revenue over time for each month of MSP services provided as the customer simultaneously receives and consumes the services it provides. The Company applies the practical expedient to recognize revenue for these services over the term of the agreement commensurate to the amount it has the right to invoice the customer.

Call Center Services

The customer care solutions business specializes in serving as an extension of its customers' relationships and processes, from help desk inquiries to advanced technical support. The Company earns a fee based upon the type, volume and level of services provided as part of the call center operations. Since the individual activities are not distinct, the Company accounts for them as a single performance obligation. The Company recognizes revenue over time as the customer simultaneously receives and consumes the services it provides. The Company applies the practical expedient to recognize revenue for these services over the term of the agreement commensurate to the amount it has the right to invoice the customer.

Disaggregation of Revenues

The following table presents our segment revenues disaggregated by service type (in thousands):



	Three Months Ended July 28, 2019
Segment	Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations
Service Revenues:
Staffing Services	$	223,754	$	191,575	$	26,704	$	5,664	$	194	$	(383	)
Direct Placement Services	3,679		2,066		1,137		697		—		(221		)
Managed Service Programs	4,081		—		887		3,194		—		—
Call Center Services	1,662		—		—		—		1,662		—
	$	233,176	$	193,641	$	28,728	$	9,555	$	1,856	$	(604	)

Geographical Markets:
Domestic	$	203,266	$	192,704	$	—	$	9,478	$	1,662	$	(578	)
International, principally Europe	29,910		937		28,728		77		194		(26		)
	$	233,176	$	193,641	$	28,728	$	9,555	$	1,856	$	(604	)



	Nine Months Ended July 28, 2019
Segment	Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations
Service Revenues:
Staffing Services	$	701,893	$	607,980	$	78,290	$	16,049	$	540	$	(966	)
Direct Placement Services	10,633		6,380		3,179		2,073		—		(999		)
Managed Service Programs	11,563		—		2,334		9,229		—		—
Call Center Services	14,593		—		—		—		14,593		—
	$	738,682	$	614,360	$	83,803	$	27,351	$	15,133	$	(1,965	)

Geographical Markets:
Domestic	$	651,566	$	611,861	$	—	$	27,009	$	14,593	$	(1,897	)
International, principally Europe	87,116		2,499		83,803		342		540		(68		)
	$	738,682	$	614,360	$	83,803	$	27,351	$	15,133	$	(1,965	)

Payment Terms

Customer payment terms vary by arrangement although payments are typically due within 15 - 45 days of invoicing. The timing between the satisfaction of the performance obligations and the payment is not significant and the Company currently does not have any significant financing components or significant payment terms.

Unsatisfied Performance Obligations

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which they will recognize revenue at the amount to which it has the right to invoice for services performed. Unsatisfied performance obligations for contracts not meeting the aforementioned criteria are immaterial.

Accounts Receivable, Contract Assets and Contract Liabilities

The Company records accounts receivable when its right to consideration becomes unconditional. As required under Topic 606, the Company changed its presentation to show this allowance as a liability, whereas under Topic 605, these accounts receivables were recorded net of an allowance. As of July 28, 2019, April 28, 2019, and January 27, 2019, the reserve balance was $0.4 million, $0.4 million, and $0.7 million respectively. Contract assets primarily relate to the Company's rights to consideration for services provided that are conditional on satisfaction of future performance obligations. The Company records contract liabilities when payments are made or due prior to the related performance obligations being satisfied. The current portion of contract liabilities is included in Accrued insurance and other in our Consolidated Balance Sheets. The Company does not have any material contract assets or long-term contract liabilities as of July 28, 2019 and October 28, 2018.

The Company may incur fulfillment costs after obtaining a contract to generate a resource that will be used to provide the MSP services. These costs are related to the set up and implementation of customer specific MSP programs and are considered incremental and recoverable costs to fulfill the Company's contract with the customer. These costs are deferred and amortized over the expected period of benefit of the MSP services provided to the customer, determined by taking into consideration its customer contracts and other relevant factors. Amortization expense is included in Selling, administrative and other operating costs on the Consolidated Statements of Operations. Deferred fulfillment costs were immaterial as of July 28, 2019.

NOTE 3:4: Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss for the three and nine months ended July 29, 2018 were (in thousands):

Three Months Ended Nine Months Ended
July 29, 2018
Foreign Currency Translation
Accumulated other comprehensive loss at the beginning of the period $ (4,804 ) $ (5,261 )
Other comprehensive loss (921 ) (464 )
Accumulated other comprehensive loss at July 29, 2018 $ (5,725 ) $ (5,725 )

The changes in accumulated other comprehensive loss for the three and nine months ended July 28, 2019 were (in thousands):

Reclassifications from accumulated other comprehensive loss for the three and nine months ended July 29, 2018 and July 30, 2017 were (in thousands):
Three Months Ended Nine Months Ended
July 29, 2018 July 30, 2017 July 29, 2018 July 30, 2017
Foreign currency translation
Sale of foreign subsidiaries $ —
$ —
$ —
$ (612 )

Details about Accumulated Other Comprehensive Loss Components Fiscal Year Amount Reclassified Affected Line Item in the Statement Where Net Loss is Presented
Foreign currency translation
Sale of foreign subsidiaries 2017 $ (612 ) Foreign exchange gain (loss), net




	Three Months Ended			Nine Months Ended
	July 28, 2019
	Foreign Currency Translation
Accumulated other comprehensive loss at beginning of the period	$	(7,091	)	$	(7,070	)
Other comprehensive loss	(565		)	(586		)
Accumulated other comprehensive loss at July 28, 2019	$	(7,656	)	$	(7,656	)

There were no reclassifications from accumulated other comprehensive loss for the three and nine months ended July 28, 2019 and July 29, 2018.

NOTE 4:5: 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~~is 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 in the statement of cash flows, as this cash is directly related to the operations of this business.~~amounts, where contractually required. At July ~~29, 2018~~28, 2019 and October ~~29, 2017,~~28, 2018, restricted cash included ~~$8.9~~$7.4 million and ~~$15.1~~$11.3 million, respectively, restricted for payment to associate vendors, and ~~$0.6~~$0.5 million ~~and $1.9 million,~~in both periods, respectively, restricted for other collateral accounts.

Short-term investments were ~~$3.5~~$3.1 million at both July ~~29, 2018~~28, 2019 and October ~~29, 2017.~~28, 2018. 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 5:6: Income Taxes

The income tax provision reflects the geographic mix of earnings in various federal, state and foreign tax jurisdictions and their applicable rates resulting in a composite effective tax rate. The Company’s cumulative results for substantially all United States ("U.S.") and certain ~~non-United States~~non-U.S. jurisdictions for the most recent three-year period is a loss. Accordingly, a valuation allowance has been established for substantially all loss carryforwards and other net deferred tax assets for these jurisdictions, resulting in an effective tax rate that is significantly different than the statutory rate.

The Company adjusts its effective tax rate for each quarter to be consistent with the estimated annual effective tax rate, consistent with ~~Accounting Standards Codification (“ASC”)~~ASC 270, Interim Reporting, and ASC 740-270, Income Taxes – Intra Period Tax Allocation. Jurisdictions with a projected loss for the full year where no tax benefit can be recognized are excluded from the calculation of the

estimated annual effective tax rate. The Company’s future effective tax rates could be affected by earnings being different than anticipated in countries with differing statutory rates, increases in recorded valuation allowances of tax assets, or changes in tax laws.

The Company’s provision (benefit) for income taxes primarily includes foreign jurisdictions and state taxes. InThe income tax provision in the third quarter of fiscal 2019 and 2018 of $0.2 million and ~~fiscal 2017, income taxes were a provision of~~ $1.3 million, ~~and $1.1 million, respectively.~~respectively, were primarily related to locations outside of the United States. For the nine months ended July 28, 2019 and July 29, 2018, ~~and July 30, 2017,~~the income ~~taxes were a~~tax provision of $0.7 million and $0.6 million, ~~and $0.9 million, respectively. The~~respectively, were primarily related to locations outside of the United States. In addition, the income tax provision in the first nine months ended July 29, 2018 ~~and July 30, 2017~~ included athe reversal of reserves on uncertain tax provisions ~~of $1.1 million and $1.3 million, respectively.~~that expired. The Company’s quarterly provision (benefit) for income taxes is measured using an estimated annual effective tax rate, adjusted for discrete items that occur within the periods presented.

On December 22, 2017, the U.S. President signed the Tax Cuts and Jobs Act (“Tax Act”) into law. The Tax Act includes a number of provisions, including the lowering of the U.S. corporate tax rate from 35.0% to 21.0%, and the establishment of a territorial-style system for taxing foreign-source income of domestic multinational corporations.

The Tax Act ~~reduces~~reduced the U.S. statutory tax rate from 35.0% to 21.0% effective January 1, 2018. U.S. tax law ~~requires~~required that taxpayers with a fiscal year that begins before and ends after the effective date of a rate change calculate a blended tax rate based on the pro-rata number of days in the fiscal year before and after the effective date. As a result, for the fiscal year ending October 28, 2018, the Company’s statutory income tax rate ~~will be approximately~~was 23.4%.

The ~~SEC staff issued Staff Accounting Bulletin ("SAB") 118, which provides guidance on accounting~~Company's statutory rate is 21.0% for the ~~tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one~~fiscal year ~~from~~ended November 3, 2019. Other provisions now effective under the Tax Act ~~enactment date for companies~~include limitations on deductibility of executive compensation and interest, as well as a new minimum tax on Global Intangible Low-Taxed Income (“GILTI”). The Company has analyzed these provisions and there will be no material impact due to ~~complete~~ the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.Company's net operating loss carry-forward and valuation allowance.

The Company ~~does~~did not ~~anticipate~~record any ~~material impact on recorded~~change to its U.S. net deferred tax balances as of the ~~remeasurement of our~~enactment date since its U.S. net deferred tax assets isare fully offset by a ~~corresponding change in~~full valuation allowance. ~~In connection with our continued analysis of the impact of the Tax Act, the~~The Company ~~does not have any change to its net deferred tax assets and corresponding valuation allowance for the three months ended July 29, 2018 and~~ reduced its net deferred tax assets and corresponding valuation allowance by ~~$25.4~~approximately $26.8 million for the ~~nine months~~fiscal year ended ~~July 29,~~October 28, 2018.

~~The~~Under the Tax Act, ~~also imposes~~the Company may be subject to a transition tax on the untaxed foreign earnings of its foreign subsidiaries ~~of U.S. companies~~ by deeming those earnings to be ~~repatriated. The Company is currently evaluating the effect of the transition tax on our non-U.S. earnings.~~repatriated (“Transition Tax”). Foreign earnings held in the form of cash and cash equivalents are taxed at a 15.5% rate and the remaining earnings are taxed at an 8.0% rate. In calculating the ~~transition tax,~~Transition Tax, the Company must calculate the cumulative earnings and profits of each of the non-U.S. subsidiaries back to 1987. The ~~Company expects to complete this calculation and record any tax due by~~Transition Tax did not have a material impact on the ~~end of fiscal 2018. Based on a preliminary analysis, and as a result of the Company’s significant tax attributes, the Company does not expect to have any amount due related to the transition tax.~~

The Company will continue to analyze the effects of the Tax Act on its financial statements and operations. Any additional impacts of the Tax Act will be recorded as they are identified during the measurement period in accordance with SAB 118.Company.

NOTE 6:7: Debt

The Company’s primary sources of liquidity are cash flows from operations and proceeds from ~~our~~its financing arrangements. Both operating cash flows and borrowing capacity under the Company’s financing arrangements are directly related to the levels of accounts receivable generated by its businesses. The Company’s operating cash flows consist primarily of collections of customer receivables offset by payments for payroll and related items for the Company’s contingent staff and in-house employees; federal, foreign, state and local taxes; and trade payables. The Company’s level of borrowing capacity under its financing arrangements increases or decreases in tandem with any change in accounts receivable based on revenue fluctuations.

The Company manages its cash flow and related liquidity on a global basis. The weekly payroll payments inclusive of employment-related taxes and payments to vendors are approximately $20.0 million. The Company generally targets minimum global liquidity to be approximately 1.5 ~~to 2.0~~ times its average weekly requirements. The Company also maintains minimum effective cash balances in foreign operations and uses a multi-currency netting and overdraft facility for its European entities to further minimize overseas cash requirements.

On ~~January 25, 2018,~~July 19, 2019, the Company ~~entered into a~~amended and restated its long-term $115.0 million accounts receivable securitization program (“DZ Financing Program”) with DZ Bank AG Deutsche ~~Zentral-Genossenschafsbank~~Zentral Genossenschafsbank (“DZ Bank”), which was originally executed on January 25, 2018. The restated agreement allows for the inclusion of certain accounts receivable from originators in the United Kingdom, which adds an additional $5.0 - $7.0 million in borrowing availability. All other material terms and ~~exited its financing relationship with PNC Bank (“PNC Financing Program”). While~~conditions of the ~~borrowing capacity was reduced from $160.0 million under the PNC Financing Program, the new~~original agreement increases available liquidity and provides greater financial flexibility with less restrictive financial covenants and fewer restrictions on use of proceeds, as well as reduces overall borrowing costs. remain substantially unchanged.

The ~~size of the~~ DZ Financing Program ~~may be increased with the approval of DZ Bank.~~

~~Under the DZ Financing Program,~~is fully collateralized by certain receivables of the Company that are sold to a wholly-owned, consolidated, bankruptcy-remote subsidiary. To finance the purchase of such receivables, ~~the Company~~that subsidiary may request that DZ Bank make loans from ~~time~~time-to-time to ~~time to the Company~~ that subsidiary which are secured by liens on those receivables.

On June 4, 2019, the Company entered into an amendment with DZ Bank to temporarily exclude the receivables due from a specific customer from the securitization pool under our DZ Financing Program for three subsequent reporting periods as of May 2019 through July 2019. This customer experienced internal processing issues related to specific Volt purchase orders resulting in significant payment delays, which negatively impacted the 90-Day Delinquency Rate, as defined in the DZ Financing Program. Although this change improved the delinquency rate, it temporarily decreased the Company's borrowing availability under the DZ Financing Program by approximately $2.0 - $3.0 million. These payment delays were not credit related and the Company collected a significant portion of the past due amounts in late June 2019. The issue was resolved and the receivables from this customer were added back to the securitization pool under the original terms of the agreement, as permitted under a provision in the amendment.

Loan advances may be made under the DZ Financing Program through January 25, ~~2020~~2021 and all loans will mature no later than July 25, ~~2020.~~2021. Loans will accrue interest (i) with respect to loans that are funded through the issuance of commercial paper notes, at the commercial paper (“CP”) rate, and (ii) otherwise, at a rate per annum equal to adjusted LIBOR. The CP rate will be based on the rates paid by the applicable lender on notes it issues to fund related loans. Adjusted LIBOR is based on LIBOR for the applicable interest period and the rate prescribed by the Board of Governors of the Federal Reserve System for determining the reserve requirements with respect to Eurocurrency funding. If an event of default occurs, all loans shall bear interest at a rate per annum equal to the prime rate (the federal funds rate plus 3%) plus 2.5%.

The DZ Financing Program also includes a letter of credit sub-facility with a sub-limit of $35.0 million. As of July ~~29, 2018,~~28, 2019, the letter of credit participation was ~~$25.4~~$24.2 million inclusive of ~~$23.5~~$22.8 million for the Company’s casualty insurance program, ~~$1.1~~$1.2 million for the security deposit required under certain real estate lease agreements and ~~$0.8~~$0.2 million for the Company's corporate credit card program. ~~The~~In the first quarter of fiscal 2018, the Company used $30.0 million of funds available under the DZ Financing Program to temporarily collateralize the letters of credit, until the letters of credit were established with DZ Bank on January 31, 2018.

The DZ Financing Program contains customary representations and warranties as well as affirmative and negative covenants, with such covenants being less restrictive than those under the PNC Financing Program. The agreement also contains customary default, indemnification and termination provisions. The DZ Financing Program is not an off-balance sheet arrangement, as the bankruptcy-remote subsidiary is a 100%-owned consolidated subsidiary of the Company.

The Company is subject to certain financial and portfolio performance covenants under ~~our~~the DZ Financing Program, including (1) a minimum ~~tangible net worth~~Tangible Net Worth (as defined under the DZ Financing Program) of at least $30.0 million through fiscal 2019, which will increase to $40.0 million in fiscal 2020; (2) positive net income in any fiscal year ~~2019,~~ending after 2019; (3) maximum debt to tangible net worth ratio of 3:11; and (4) a minimum of $15.0 million in liquid assets ~~as defined.~~(as defined under the DZ Financing Program). At July ~~29, 2018,~~28, 2019, the Company was in compliance with all debt covenants. At July 28, 2019, there was $16.4 million of borrowing availability, as defined under the DZ Financing Program.

~~On June 8, 2018~~The Company had entered into the ~~Company amended~~original agreement with DZ Bank when it exited its DZfinancing relationship with PNC Bank (“PNC Financing Program to modify a provision in the calculation of eligible receivables, as defined. This amendment permits the Company to exclude the receivables of a single large, high-quality customer from its threshold limitation, resulting in additional borrowing capacity of approximately $10.0 million.

Program”). The Company used funds made available by the DZ Financing Program to repay all amounts outstanding under the PNC Financing Program, which terminated in accordance with its ~~terms, and expects to use remaining~~terms. The Company uses the availability from the DZ Financing Program from ~~time to time~~time-to-time for working capital and other general corporate purposes.

~~Until~~At July 28, 2019, the ~~termination date,~~Company had outstanding borrowings under the ~~PNC~~DZ Financing Program ~~was secured by receivables from certain staffing services businesses in~~of $55.0 million with a weighted average annual interest rate of 4.2% during both the ~~United States~~third quarter and ~~Europe that were sold to a wholly-owned, consolidated, bankruptcy-remote subsidiary. The bankruptcy-remote subsidiary’s sole business consisted~~the first nine months of the purchase of the receivables and subsequent granting of a security interest to PNC under the program, and its assets were available first to satisfy obligations to PNC and were not available to pay creditors of the Company’s other legal entities. Borrowing capacity under the PNC Financing Program was directly impacted by the level of accounts receivable.

In addition to customary representations, warranties and affirmative and negative covenants, the PNC Financing Program was subject to termination under standard events of default including change of control, failure to pay principal or interest, breach of the liquidity or performance covenants, triggering of portfolio ratio limits, or other material adverse events, as defined.

On January 11, 2018, the Company entered into Amendment No. 10 to the PNC Financing Program, which gave the Company the option to extend the termination date of the program from January 31, 2018 to March 2, 2018, and amended the financial covenant requiring the Company to meet the minimum earnings before interest and taxes levels for the fiscal ~~quarter ended October 29, 2017. All other material terms and conditions remained substantially unchanged, including interest rates.~~

2019. At July 29, 2018, the Company had outstanding borrowings under the DZ Financing ~~Program~~program of $50.0 million, with a weighted average annual ~~interest~~ rate of 3.6% during the third quarter of fiscal 2018 and 3.5% ~~during~~in the first nine months of fiscal 2018. At October 29, 2017, the Company had outstanding borrowings under the PNC Financing Program of $50.0 million with a weighted average annual interest rate of 3.1% during the third quarter of fiscal 2017 and 2.9% during the first nine months of 2017, which is inclusive of certain facility fees. The Company had outstanding borrowings under the PNC Financing until its termination in January 2018 with a weighted average interest rate of 4.0%. At July 29, 2018, there was $30.3 million of borrowing availability under the DZ Financing Program.

Long-term debt consists of the following (in thousands):


	July 29, 2018		October 29, 2017		July 28, 2019		October 28, 2018
Financing programs	$	50,000	$	50,000	$	55,000	$	50,000
Less:
Current portion	—		50,000
Deferred financing fees	1,061		—		1,152		932
Total long-term debt, net	$	48,939	$	—	$	53,848	$	49,068

NOTE 7:8: Earnings (Loss) Per Share

Basic and diluted net loss per share isare calculated as follows (in thousands, except per share amounts):


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	July 29, 2018			July 30, 2017			July 29, 2018			July 30, 2017			July 28, 2019			July 29, 2018			July 28, 2019			July 29, 2018
Numerator
Net loss	$	(11,418	)	$	(5,518	)	$	(29,799	)	$	(10,949	)	$	(6,057	)	$	(11,418	)	$	(14,437	)	$	(29,799	)

Denominator
Basic weighted average number of shares	21,071			20,963			21,044			20,934			21,157			21,071			21,106			21,044
Diluted weighted average number of shares	21,071			20,963			21,044			20,934			21,157			21,071			21,106			21,044

Net loss per share:
Basic	$	(0.54	)	$	(0.26	)	$	(1.42	)	$	(0.52	)	$	(0.29	)	$	(0.54	)	$	(0.68	)	$	(1.42	)
Diluted	$	(0.54	)	$	(0.26	)	$	(1.42	)	$	(0.52	)	$	(0.29	)	$	(0.54	)	$	(0.68	)	$	(1.42	)

Options to purchase ~~1,608,492~~636,664 and ~~2,572,091~~1,608,492 shares of the Company’s common stock were outstanding at July ~~29, 2018~~28, 2019 and July ~~30, 2017,~~29, 2018, respectively. Additionally, there were ~~466,929~~632,240 unvested restricted units and 466,929 outstanding at July 28, 2019 and July 29,

2018, respectively, and 355,318 and 276,396 unvested performance share units outstanding at July 28, 2019 and July 29, 2018, ~~and 324,277 unvested restricted units outstanding at July 30, 2017.~~respectively. These ~~securities~~awards were not included in the computation of diluted loss per share in ~~the~~ fiscal ~~2018~~2019 and ~~2017~~2018 because the effect of their inclusion would have been anti-dilutive as a result of the Company’s net loss position in those periods.

NOTE ~~8: Stock~~9: Share-Based Compensation ~~Plan~~ Plans

For the three and nine months ended July 28, 2019, the Company recognized share-based compensation expense of $0.6 million and $1.3 million, respectively. For the three and nine months ended July 29, 2018, the Company recognized share-based compensation expense of $(0.3) million and $0.7 million, respectively. These expenses are included in Selling, administrative and other operating costs in the Company’s Consolidated Statements of Operations.

2019 Equity Incentive Plan

On May 1, 2019, the stockholders of the Company approved the Company’s 2019 Equity Incentive Plan (the “2019 Plan”). The 2019 Plan permits the granting of (1) stock options, including incentive stock options, (2) stock appreciation rights, (3) restricted stock, (4) restricted stock units, (5) performance awards, and (6) other awards valued in whole or in part by reference to or otherwise based on our common stock (as defined in the 2019 Plan, “other stock-based awards”). Subject to adjustment as provided in the 2019 Plan, up to an aggregate of 2,500,000 shares of the Company’s common stock will be available for awards under the 2019 Plan, plus any shares granted under the Company’s 2015 Equity Incentive Plan that become available for awards under such plan.

Equity Awards

During the third quarter of fiscal ~~2018, pursuant to the terms of the Company’s 2015 Equity Incentive Plan (the “2015 Plan”),~~2019, the Company granted long-term incentive awards in the aggregate of ~~276,396~~237,325 performance stock units (“PSUs”) to executive management and ~~343,596~~338,710 restricted stock units (“RSUs”) to certain employees including executive management. Additionally, an annual equity grant totaling 86,405 RSUs was made to the Board of Directors of the Company (“Board of Directors”).

The PSUs are eligible to vest in three equal tranches at the end of each performance period. Vesting of the PSUs is dependent on the achievement of the adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) margin percentage goals based on adjusted revenues at the end of each fiscal year end of the one-year, two-year and three-year performance periods and provided that the employees remain employed with the Company on each of those vesting dates. The payout percentages can range from 0% to 150%. The RSUs for the employees vest in equal annual tranches over three years, provided the employees remain employed with the Company on each of those vesting dates. The RSUs for the Board of Directors vest in one year from the grant date provided that the director provides continued service through the vesting date. The grant date fair value for the PSUs and RSUs is measured using the closing stock price on the grant date. The total fair value of the PSUs and RSUs granted during the third quarter of fiscal 2019 was approximately $1.0 million and $1.9 million, respectively.

For stock options granted in the prior fiscal years, the fair value of the option grants was estimated using the Black-Scholes option-pricing model. For RSUs granted in the prior fiscal years that are classified as equity awards, the grant date fair value is measured using the closing stock price on the grant date. These awards vest in equal annual tranches over three years, provided the employees remain employed with the Company on each of those vesting dates.

Liability Awards

During fiscal 2018, the Company granted PSUs and RSUs that are classified as a liability at fair value, which is computed using a Monte Carlo simulation and re-measured periodically based on the effect that the market condition has on these awards. The liability and corresponding expense is adjusted accordingly until the awards are settled. As of the third quarter ended July 28, 2019, the total fair value of the remaining PSUs and RSUs was approximately $0.6 million and $0.9 million, respectively.

Vesting of the PSUs is dependent on the achievement of target stock prices at the end of each of the one-year, two-year and three-year performance periods. The ~~target~~ending stock price ~~will be based on~~is the average ~~stock~~ price of the last 20 trading days ofprior to and including the ~~applicable measurement period. The PSUs will be eligible to vest in three equal tranches at the end~~final day of each performance period subject to meeting the target stock price goals, including a minimum threshold which must be reached for any vesting to occur and also subject to the employee’s continued employment with the Company on each of the vesting dates.period. The payout percentages can range from 0% to 200%.

The RSUs ~~will~~ vest in equal ~~installments on~~annual tranches over three years, provided the ~~first three anniversaries of the grant date subject to the employee’s continued employment~~employees remain employed with the Company on each of ~~the~~those vesting dates.

Upon vesting, the PSUs and RSUs may be settled in either cash or stock at the Company’s election, with any stock settlement being subject to the Company having a sufficient number of shares then available under its equity incentive plan to satisfy such awards. Any ~~PSUs or RSUs~~awards settled in cash will be capped at two times the Company’s closing stock price on the grant date, multiplied by the number of awards vesting. During the third quarter of fiscal 2019, the first tranches of the PSUs orand RSUs ~~vesting.~~that vested were settled in stock.

In fiscal 2017, the Company granted phantom units in the form of cash-settled RSUs to certain senior management level employees. The total fair value at the grant date ~~of these PSUs and RSUs~~ was approximately ~~$0.9~~$0.3 million ~~and $1.1 million, respectively. The grant date fair values were determined through~~with a Monte Carlo simulation using the following assumptions: the closing stock price on the grant date of June 14, 2018, an expected volatility of 58.3%, a risk-free interest rate of 2.67% and an expected term of three years.

~~These awards are classified as a liability at~~weighted average fair value ~~and re-measured periodically based on the effect that the market condition has on these awards.~~per unit of $4.35. The ~~liability and corresponding expense are adjusted accordingly until the awards are settled. The stock compensation cost is recognized over the related service or performance periods.~~

Additionally, on June 29, 2018, the Company's former chief executive officer entered into a separation agreement that included terms related to his stock-based awards. Pursuant to its terms, an aggregate of 721,731 stock options were cancelled and 159,443 restricted stock units ~~and 424,710 stock options became fully vested. The options remain exercisable for 12 months following his separation from the Company on June 6, 2018.~~

During the third quarter of fiscal 2017, pursuant to the terms of the 2015 Plan, the Company granted an aggregate of 809,554 stock options, 240,428 RSUs and 71,311 phantom units in the form of cash-settled RSUs. This was comprised of: (i) 809,554 stock options and 166,658 RSUs granted to certain employees including executive management as long-term incentive awards, (ii) 73,770 RSUs granted to independent members of the Board as part of their annual compensation and (iii) 71,311 phantom units granted to certain senior management level employees.

~~The total fair value at the grant date of these stock options and RSUs were approximately $2.5 million in fiscal 2017. The grants will~~ vest in equal annual tranches ~~ratably~~ over three years, provided the employees remain employed on each of those vesting dates. The weighted average fair value per unit for the RSUs in fiscal 2017 was $4.35. Compensation expense for the vested RSUs was recognized on the grant date. The stock options expire 10 years from the initial grant date and have a weighted average exercise price of $4.36 in fiscal 2017. Compensation expense for the stock options and RSUs is recognized over the vesting period.

The fair value of the stock option grant was estimated using the Black-Scholes option pricing model, which requires estimates of key assumptions based on both historical information and management judgment regarding market factors and trends. We developed the expected volatility by using the historical volatilities of the Company for a period equal to the expected life of the option. We derived our expected term assumption based on the simplified method due to a lack of historical exercise data, which results in an expected term based on the midpoint between the graded vesting dates and contractual term of an option. The risk-free interest rate is based on the average yield of a U.S. Treasury bond, with a term that was consistent with the expected life of the stock options. The expected dividend yield was assumed to be zero. The weighted average assumptions used to estimate the fair value of stock options for the three months ended July 30, 2017 were as follows: fair value of stock option granted of $1.79, expected volatility of 40%, expected term of 6 years and a risk-free interest rate of 1.91%.

The total fair value at the grant date of the phantom units was approximately $0.3 million. The units vest in tranches ratably over three years provided the employees remain employed on each of those vesting dates. The weighted average fair value per unit was $4.35. These ~~cash-settled~~ awards are classified as a liability and ~~remeasured~~re-measured at the end of each reporting period based on the change in fair value of one share of the

Company’s common stock. ~~Compensation expense is recognized over~~As of the ~~vesting period. The liability~~third quarter ended July 28, 2019, the total fair value was less than $0.1 million and ~~corresponding expense are adjusted accordingly until the awards are settled.~~6,012 phantom units were outstanding.

Summary of Equity and Liability Awards

The ~~total stock compensation expense~~following tables summarize the activities related to the Company’s share-based equity and liability awards for the ~~three and~~ nine months ended July 29, 2018 was $(0.3) million and $0.7 million, respectively, and for the three and nine months ended July 30, 2017 was $0.9 million and $2.1 million, respectively. Stock compensation expense was recognized in Selling, administrative and other operating costs in the Company’s Condensed Consolidated Statements of Operations. 28, 2019:



Performance Share Units	Number of		Weighted Average
	Shares		Grant Date Fair Value
Outstanding at October 28, 2018	276,396		$3.38
Granted (a)	275,591		$4.25
Forfeited	(99,407	)	$3.38
Vested	(97,262	)	$3.82
Outstanding at July 28, 2019	355,318		$4.01
(a) Includes the incremental issuance of shares related to the Fiscal 2018 PSU grant.



Restricted Stock Units	Number of		Weighted Average
	Shares		Grant Date Fair Value
Outstanding at October 28, 2018	582,831		$3.53
Granted	425,115		$4.32
Forfeited	(146,938	)	$3.66
Vested	(157,321	)	$3.56
Deferred	21,368		$3.20
Outstanding at July 28, 2019	725,055		$3.97



Stock Options	Number of Shares		Weighted Average Exercise Price	Weighted Average Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)
	Number of Shares		Weighted Average Exercise Price	Weighted Average Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at October 28, 2018	1,600,040		$5.25	7.27	$—
Exercised	(200,000	)	$4.35	—	—
Forfeited	(302,792	)	$5.54	—	—
Expired	(460,584	)	$5.36	—	—
Outstanding at July 28, 2019	636,664		$6.18	7.12	$108

As of July ~~29, 2018,~~28, 2019, total unrecognized compensation expense of ~~$2.8~~$3.5 million related to PSUs, stock options, RSUs and phantom units will be recognized over the remaining weighted average vesting period of ~~1.5~~2.2 years, of which ~~$0.5~~$0.6 million, ~~$1.5~~$2.0 million, ~~$0.6~~$0.7 million and $0.2 million isare expected to be recognized in fiscal ~~2018,~~ 2019, 2020, 2021 and ~~2021,~~2022, respectively.

NOTE 9:10: Restructuring and Severance ~~Costs~~Charges

~~For~~The Company incurred total restructuring and severance costs of $2.0 million and $3.1 million in the ~~three~~third quarter of fiscal 2019 and 2018, respectively, and $2.8 million and $3.7 million for the nine months ended July 28, 2019 and July 29, 2018, respectively.

2018 Restructuring Plan

On October 16, 2018, the Company approved a restructuring plan (the “2018 Plan”) based on an organizational and process redesign intended to optimize the Company’s strategic growth initiatives and overall business performance. In connection with the 2018 Plan, the Company incurred restructuring charges comprised of severance and benefit costs and facility and lease termination costs. The 2018 Plan is expected to be completed by the Company's fiscal year end on November 3, 2019. The Company incurred restructuring and severance costs of ~~$3.1~~$0.5 million for the third quarter 2019. The total costs since inception through the third quarter of fiscal 2019 are approximately $5.3 million, consisting of $1.1 million in North American Staffing, $0.4 million in International Staffing and $3.8 million in Corporate and Other. As of July 28, 2019, the Company anticipates payments of $0.9 million and ~~$3.7~~$0.6 million will be made in fiscal 2019 and 2020, respectively. The remaining $1.3 million related to facility and lease termination costs will be paid through December 2025.

Change in Executive Management

Effective June 6, 2018, ~~Mr.~~Michael Dean departed from ~~the Company in~~ his role as President and Chief Executive Officer of the Company and is no longer a member of the Board of Directors. The Company and Mr. Dean subsequently executed a separation agreement, effective June 29, ~~2018.~~2018 (the "Dean Separation Agreement"). The Company ~~recorded~~incurred related severance costs of $2.6 million in the third quarter of fiscal 2018, which is payable over a period of 24 months.

~~Other Severance~~

Exit of Customer Care Solutions Business

In the third quarter of fiscal ~~2018,~~2019, the Company ~~recorded~~exited its customer care solutions business, which is currently reported as a part of the Corporate and Other category. This exit will enable the Company to further strengthen its focus on its core staffing business and align its resources to streamline operations, improve cost competitiveness and increase profitability. As a result of this exit, the Company incurred restructuring and severance costs of ~~$0.5~~$1.4 million ~~primarily resulting from~~and $1.7 million during the ~~elimination~~third quarter and the first nine months of ~~certain positions~~fiscal 2019, respectively.

Other Restructuring Costs

During fiscal 2019 and 2018, there were other restructuring actions taken by the Company as part of its continued efforts to reduce costs and achieve operational efficiency. ~~These~~The Company recorded severance costs of $0.1 million and $0.5 million in the third quarter of fiscal 2019 and 2018, respectively, primarily resulting from the elimination of certain positions.

Accrued restructuring and severance costs are included in ~~Restructuring~~Accrued compensation and ~~severance costs on~~Accrued insurance and other in the ~~Condensed~~ Consolidated ~~Statements of Operations. For~~Balance Sheets. Activity for the ~~three and~~first nine months ~~ended~~of fiscal 2019 is summarized as follows (in thousands):



	July 28, 2019
Balance, beginning of year	$	5,702
Charged to expense	2,800
Cash payments	(4,326		)
Ending Balance	$	4,176

The remaining balance at July ~~30, 2017,~~28, 2019 of $4.2 million, primarily related to Corporate and Other, includes $2.3 million related to the ~~Company incurred restructuring and severance costs of $0.2 million and $1.1 million, respectively, resulting primarily from a reduction in workforce under a~~ cost reduction plan implemented in fiscal ~~2016.~~

2018, $1.1 million related to the change in executive management and $0.8 million related to the exit of the customer care solutions business.

NOTE ~~10:~~11: Commitments and Contingencies

(a) Legal Proceedings

The Company is involved in various claims and legal actions arising in the ordinary course of business. The Company’s 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.~~segments. 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. Significant judgment is required in both the determination of probability and the determination of whether a matter is reasonably estimable. The Company’s estimates may change and actual expenses could differ in the future as additional information becomes available.

(b) Other Matters

As previously disclosed in the Annual Report on Form 10-K for the year ended October ~~29, 2017,~~28, 2018, certain qualification failures related to ~~non-discrimination~~nondiscrimination testing for the Company’s 401(k) plans consisting of the (1) Volt Technical Services Savings Plan and the (2) Volt Information Sciences, Inc. Savings Plan occurred during plan years prior to 2016. The Company has accrued approximately $0.9 million as its current estimate of what it will need to contribute to the plans to correct the failures. The Company does not expect to contribute any amounts to the plans to correct the failures until the Company has obtained the approval offrom the Internal Revenue Service regarding the method for curing the failures and ~~the amount~~made a contribution of ~~the contribution.~~$0.8 million in early fourth quarter of 2019.

NOTE ~~11:~~12: Segment Data

We report our segment information in accordance with the provisions of ASC 280, Segment Reporting.

~~Our current reportable segments are (i)~~

During the fourth quarter of fiscal 2018, in accordance with ASC 280, the Company determined that its North American ~~Staffing and (ii) International Staffing. The non-reportable businesses are combined and disclosed with corporate services under the category Corporate and Other.~~

The Company sold the quality assurance business from within the Technology Outsourcing Services and Solutions segment on October 27, 2017 leaving the Company's call center services as the remaining activity within that segment. The Company has renamed the operating segment Volt Customer Care Solutions and its results are now reported as part of the Corporate and Other category, as it does not meetManaged Service Program (“MSP”) met the criteria ~~for~~to be presented as a reportable ~~segment under ASC 280,~~ ~~Segment Reporting~~.segment. To provide period over period comparability, the Company has recast the prior period ~~Technology Outsourcing Services and Solutions~~North American MSP segment data to conform to the current presentation ~~within the Corporate and Other category~~ in the prior period. This change did not have any impact on the consolidated financial results for any period presented. Our current reportable segments are (i) North American Staffing, (ii) International Staffing and (iii) North American MSP. The non-reportable businesses are combined and disclosed with corporate services under the category Corporate and Other.

In ~~addition,~~the third quarter of fiscal 2019, the Company exited its customer care solutions business, which is currently reported as a part of the Corporate and Other ~~also included our previously owned Maintech, Incorporated (“Maintech”)~~category. This exit will enable the Company to further strengthen its focus on its core staffing business inand align its resources to streamline operations, improve cost competitiveness and increase profitability. The Company’s other non-reportable businesses will continue to be combined and disclosed with corporate services under the ~~first six months of fiscal 2017.~~category Corporate and Other.

Segment operating income (loss) is comprised of segment net revenue less cost of services, selling, administrative and other operating costs, ~~and~~ restructuring and severance ~~costs.~~costs, 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.

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):


	Three Months Ended July 29, 2018													Three Months Ended July 28, 2019
	Total			North American Staffing		International Staffing		Corporate and Other (1)			Eliminations (2)			Total			North American Staffing		International Staffing		North American MSP		Corporate and Other (1)			Eliminations (2)
Net revenue	$	257,808		$	215,679	$	28,579	$	14,415		$	(865	)	$	233,176		$	193,641	$	28,728	$	9,555	$	1,856		$	(604	)
Cost of services	221,448			184,724		23,917		13,672			(865		)	197,528			164,809		24,181		7,053		2,089			(604		)
Gross margin	36,360			30,955		4,662		743			—			35,648			28,832		4,547		2,502		(233		)	—

Selling, administrative and other operating costs	42,222			27,971		3,944		10,307			—			38,395			24,346		4,023		1,382		8,644			—
Restructuring and severance costs	3,108			23		41		3,044			—			2,017			121		182		—		1,714			—
Impairment charge														79			—		—		—		79			—
Operating income (loss)	(8,970		)	2,961		677		(12,608		)	—			(4,843		)	4,365		342		1,120		(10,670		)	—
Other income (expense), net	(1,142		)											(1,049		)
Income tax provision	1,306													165
Net loss	$	(11,418	)											$	(6,057	)


	Three Months Ended July 30, 2017													Three Months Ended July 29, 2018
	Total			North American Staffing		International Staffing		Corporate and Other (1)			Eliminations (2)			Total			North American Staffing		International Staffing		North American MSP		Corporate and Other (1)			Eliminations (2)
Net revenue	$	289,924		$	229,372	$	29,018	$	33,365		$	(1,831	)	$	257,808		$	215,679	$	28,579	$	6,959	$	7,456		$	(865	)
Cost of services	244,205			194,594		24,459		26,983			(1,831		)	221,448			184,724		23,917		5,400		8,272			(865		)
Gross margin	45,719			34,778		4,559		6,382			—			36,360			30,955		4,662		1,559		(816		)	—

Selling, administrative and other operating costs	46,931			28,962		3,824		14,145			—			42,222			27,971		3,944		1,414		8,893			—
Restructuring and severance costs	249			75		4		170			—			3,108			23		41		38		3,006			—
Operating income (loss)	(1,461		)	5,741		731		(7,933		)	—			(8,970		)	2,961		677		107		(12,715		)	—
Other income (expense), net	(2,983		)											(1,142		)
Income tax provision	1,074													1,306
Net loss	$	(5,518	)											$	(11,418	)


	Nine Months Ended July 29, 2018													Nine Months Ended July 28, 2019
	Total			North American Staffing		International Staffing		Corporate and Other (1)			Eliminations (2)			Total			North American Staffing		International Staffing		North American MSP		Corporate and Other (1)			Eliminations (2)
Net revenue	$	774,365		$	640,004	$	90,062	$	47,298		$	(2,999	)	$	738,682		$	614,360	$	83,803	$	27,351	$	15,133		$	(1,965	)
Cost of services	664,695			551,011		76,094		40,589			(2,999		)	629,078			526,172		70,414		20,157		14,300			(1,965		)
Gross margin	109,670			88,993		13,968		6,709			—			109,604			88,188		13,389		7,194		833			—

Selling, administrative and other operating costs	132,076			85,055		12,231		34,790			—			117,144			77,063		11,659		3,941		24,481			—
Restructuring and severance costs	3,730			32		340		3,358			—			2,800			329		456		68		1,947			—
Impairment charge	155			—		—		155			—			426			—		—		—		426			—
Operating income (loss)	(26,291		)	3,906		1,397		(31,594		)	—			(10,766		)	10,796		1,274		3,185		(26,021		)	—
Other income (expense), net	(2,932		)											(3,000		)
Income tax provision	576													671
Net loss	$	(29,799	)											$	(14,437	)


	Nine Months Ended July 30, 2017													Nine Months Ended July 29, 2018
	Total			North American Staffing		International Staffing		Corporate and Other (1)			Eliminations (2)			Total			North American Staffing		International Staffing		North American MSP		Corporate and Other (1)			Eliminations (2)
Net revenue	$	905,953		$	695,041	$	89,599	$	125,864		$	(4,551	)	$	774,365		$	640,004	$	90,062	$	21,778	$	25,520		$	(2,999	)
Cost of services	766,225			592,504		75,786		102,486			(4,551		)	664,695			551,011		76,094		16,659		23,930			(2,999		)
Gross margin	139,728			102,537		13,813		23,378			—			109,670			88,993		13,968		5,119		1,590			—

Selling, administrative and other operating costs	146,992			90,695		11,895		44,402			—			132,076			85,055		12,231		4,213		30,577			—
Restructuring and severance costs	1,072			215		14		843			—			3,730			32		340		117		3,241			—
Impairment charge	290			—		—		290			—			155			—		—		—		155			—
Gain from divestitures	(3,938		)	—		—		(3,938		)	—
Operating income (loss)	(4,688		)	11,627		1,904		(18,219		)	—			(26,291		)	3,906		1,397		789		(32,383		)	—
Other income (expense), net	(5,331		)											(2,932		)
Income tax provision	930													576
Net loss	$	(10,949	)											$	(29,799	)

(1) Revenues are primarily derived from ~~managed service programs and~~ Volt Customer Care ~~Solutions. In addition, the first nine months of fiscal 2017 included our previously owned Maintech and quality assurance businesses~~Solutions through ~~the date of sale.~~June 7, 2019.

(2) The majority of intersegment sales results from North American Staffing providing resources to Volt Customer Care ~~Solutions~~Solutions.

NOTE 13: Subsequent Events

On August 12, 2019, Paul Tomkins stepped down from his role as Senior Vice President and ~~our previously owned quality assurance business.~~Chief Financial Officer of the Company effective August 23, 2019. In connection with Mr. Tomkins’ departure, the Board of Directors appointed Herbert M. Mueller as Senior Vice President and Chief Financial Officer of the Company, effective August 24, 2019.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis (“MD&A”) of financial condition and results of operations is provided as a supplement to and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes to enhance the understanding of our results of operations, financial condition and cash flows. This MD&A should be read in conjunction with the MD&A included in our Form 10-K for the fiscal year ended October ~~29, 2017,~~28, 2018, as filed with the SEC on January ~~12, 2018~~9, 2019 (the ~~“2017~~“2018 Form 10-K”). References in this document to “Volt,” “Company,” “we,” “us” and “our” mean Volt Information Sciences, Inc. and our consolidated subsidiaries, unless the context requires otherwise. The statements below should also be read in conjunction with the description of the risks and uncertainties set forth from time to time in our reports and other filings made with the SEC, including under Part I, “Item 1A. Risk Factors” of the ~~2017~~2018 Form 10-K.

Note Regarding the Use of Non-GAAP Financial Measures

We have provided certain Non-GAAP financial information, which includes adjustments for special items and ~~the impact of foreign currency fluctuations on~~ certain line items on a constant currency basis, as additional information for segment revenue, our consolidated net income (loss) and segment operating income (loss). These measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles (“GAAP”) and may be different from Non-GAAP measures reported by other companies. We believe that the presentation of Non-GAAP measures ~~eliminating the impact of foreign~~on a constant currency ~~fluctuations,~~basis and eliminating special items ~~and the impact of businesses sold~~ provides useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations because they permit evaluation of the results of our operations without the effect of ~~foreign~~ currency fluctuations ~~the impact of businesses sold~~ or special items that management believes make it more difficult to understand and evaluate our ~~financial performance.~~results of operations. Special items generally include impairments, restructuring and severance costs, as well as certain income or expenses which the Company does not consider indicative of ~~our~~the current orand future period performance.

Segments

We report our segment information in accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 280, Segment Reporting.

~~Our current reportable segments are (i)~~During the fourth quarter of fiscal 2018, in accordance with ASC 280, the Company determined that its North American ~~Staffing and (ii) International Staffing. The non-reportable businesses are combined and disclosed with corporate services under the category Corporate and Other.~~

The Company sold the quality assurance business from within the Technology Outsourcing Services and Solutions segment on October 27, 2017 leaving the Company's call center services as the remaining activity within that segment. The Company renamed the operating segment Volt Customer Care Solutions and its results are now reported as part of the Corporate and Other category, as it does not meetManaged Service Program (“MSP”) met the criteria ~~for~~to be presented as a reportable ~~segment under ASC 280,~~ ~~Segment Reporting~~.segment. To provide period over period comparability, the Company has recast the prior period ~~Technology Outsourcing Services and Solutions~~North American MSP segment data to conform to the current presentation ~~within the Corporate and Other category~~ in the prior period. This change did not have any impact on the consolidated financial results for any period presented. Our current reportable segments are (i) North American Staffing, (ii) International Staffing and (iii) North American MSP. The non-reportable businesses are combined and disclosed with corporate services under the category Corporate and Other.

In ~~addition,~~the third quarter of fiscal 2019, the Company exited its customer care solutions business, which is currently reported as a part of the Corporate and Other ~~also included our previously owned Maintech, Incorporated (“Maintech”)~~category. This exit will enable the Company to further strengthen its focus on its core staffing business ~~through~~and align its resources to streamline operations, improve cost competitiveness and increase profitability. The Company’s other non-reportable businesses will continue to be combined and disclosed with corporate services under the ~~date of sale in March 2017.~~category Corporate and Other.

Overview

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 customer care solutions ~~specialize~~specializes in serving as an extension of our customers' consumer relationships and processes including collaborating with customers, from help desk inquiries to advanced technical support. We also provided quality assurance services through the date of sale of this business in October 2017. In addition, through the date of the sale of 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.

As of July ~~29, 2018,~~28, 2019, we employed approximately ~~20,000~~17,300 people, including ~~18,500~~16,100 contingent workers. Contingent workers are on our payroll for the length of their assignment. We operate from ~~100~~approximately 85 locations worldwide with approximately ~~87%~~88% of our revenues generated in the United States. Our principal international markets include Europe, Canada and several Asia Pacific locations. The industry is highly fragmented and very competitive in all of the markets we serve.

Recent Developments

On August 12, 2019, Paul Tomkins stepped down from his role as Senior Vice President and Chief Financial Officer of the Company effective August 23, 2019. In connection with Mr. Tomkins’ departure, the Board of Directors appointed Herbert M. Mueller as Senior Vice President and Chief Financial Officer of the Company, effective August 24, 2019.

Consolidated Results by Segment


	Three Months Ended July 29, 2018													Three Months Ended July 28, 2019
(in thousands)	Total			North American Staffing		International Staffing		Corporate and Other (1)			Eliminations (2)			Total			North American Staffing		International Staffing		North American MSP		Corporate and Other (1)			Eliminations (2)
Net revenue	$	257,808		$	215,679	$	28,579	$	14,415		$	(865	)	$	233,176		$	193,641	$	28,728	$	9,555	$	1,856		$	(604	)
Cost of services	221,448			184,724		23,917		13,672			(865		)	197,528			164,809		24,181		7,053		2,089			(604		)
Gross margin	36,360			30,955		4,662		743			—			35,648			28,832		4,547		2,502		(233		)	—

Selling, administrative and other operating costs	42,222			27,971		3,944		10,307			—			38,395			24,346		4,023		1,382		8,644			—
Restructuring and severance costs	3,108			23		41		3,044			—			2,017			121		182		—		1,714			—
Impairment charge														79			—		—		—		79			—
Operating income (loss)	(8,970		)	2,961		677		(12,608		)	—			(4,843		)	4,365		342		1,120		(10,670		)	—
Other income (expense), net	(1,142		)											(1,049		)
Income tax provision	1,306													165
Net loss	$	(11,418	)											$	(6,057	)


	Three Months Ended July 30, 2017													Three Months Ended July 29, 2018
(in thousands)	Total			North American Staffing		International Staffing		Corporate and Other (1)			Eliminations (2)			Total			North American Staffing		International Staffing		North American MSP		Corporate and Other (1)			Eliminations (2)
Net revenue	$	289,924		$	229,372	$	29,018	$	33,365		$	(1,831	)	$	257,808		$	215,679	$	28,579	$	6,959	$	7,456		$	(865	)
Cost of services	244,205			194,594		24,459		26,983			(1,831		)	221,448			184,724		23,917		5,400		8,272			(865		)
Gross margin	45,719			34,778		4,559		6,382			—			36,360			30,955		4,662		1,559		(816		)	—

Selling, administrative and other operating costs	46,931			28,962		3,824		14,145			—			42,222			27,971		3,944		1,414		8,893			—
Restructuring and severance costs	249			75		4		170			—			3,108			23		41		38		3,006			—
Operating income (loss)	(1,461		)	5,741		731		(7,933		)	—			(8,970		)	2,961		677		107		(12,715		)	—
Other income (expense), net	(2,983		)											(1,142		)
Income tax provision	1,074													1,306
Net loss	$	(5,518	)											$	(11,418	)

(1) Revenues are primarily derived from ~~managed service programs and~~ Volt Customer Care ~~Solutions. In addition, the third quarter of fiscal 2017 included our previously owned quality assurance business.~~Solutions through June 7, 2019.

(2) The majority of intersegment sales results from North American Staffing providing resources to Volt Customer Care ~~Solutions and our previously owned quality assurance business.~~

Solutions.

Results of Operations Consolidated (Q3 ~~2018~~2019 vs. Q3 ~~2017)~~2018)

Net revenue in the third quarter of fiscal ~~2018~~2019 decreased ~~$32.1~~$24.6 million, ~~or 11.1%,~~ to ~~$257.8~~$233.2 million from ~~$289.9~~$257.8 million in the third quarter of fiscal ~~2017. Excluding the revenue from our quality assurance business sold during fiscal 2017 and business exited in Taiwan in fiscal 2018,~~2018. The net revenue decrease was primarily due to a decrease in the third quarter of fiscal 2018 decreased $17.2 million, or 6.2%, from $275.0 million in the third quarter of fiscal 2017. Corporate and Other revenue, in the third quarter of fiscal 2017, included $14.1 million in revenue for the quality assurance business. In addition,our North American Staffing segment of $22.1 million and a decrease in the Corporate and Other category of $5.6 million (related to the exit from our customer care solutions business in June 2019), partially offset by an increase in our North American MSP segment of $2.6 million. Excluding the negative impact of foreign currency fluctuations of $1.3 million and a $5.6 million revenue decline from a business exited during the period, net revenue decreased ~~$13.7~~$17.7 million, or ~~6.0%~~7.1%.

Operating loss in the third quarter of fiscal ~~2018 increased $7.5~~2019 decreased $4.2 million, to ~~$9.0~~$4.8 million from ~~$1.5~~$9.0 million in the third quarter of fiscal ~~2017.~~2018. Excluding ~~$0.5 million in operating income reported by~~a business exited during the ~~businesses sold or exited and the increase in~~period as well as restructuring and severance costs ~~of $2.9 million,~~and impairment charges, operating loss ~~in the third quarter of fiscal 2018 increased $4.1 million.~~decreased $2.3 million, or 45.4%. This ~~increase~~decrease in operating loss of $2.3 million was primarily the result of ~~a decline~~improvements in our North American Staffing ~~operating income~~segment of $1.5 million and ~~lower operating results from our Volt Customer Care Solution business offset by reductions in Corporate support costs.~~

North American MSP segment of $1.0 million.

Results of Operations by Segment (Q3 ~~2018~~2019 vs. Q3 ~~2017)~~2018)

Net Revenue

The North American Staffing segment revenue decreased ~~$13.7~~$22.1 million, or ~~6.0%~~10.2%, in the third quarter of fiscal 2019. The segment's revenue was impacted by lower demand from certain large customers and changes in other customers' staffing models, partially offset by growth from new and existing customers. This decrease was primarily driven by lower demand from customers in ~~both~~ our ~~professional~~light industrial as well as administrative and office job ~~categories, partially offset by growth in light industrial and engineering job~~ categories. ~~Year-over-year decrease in~~

International Staffing segment revenue increased $0.1 million, or 0.5%, in the third quarter of fiscal ~~2018 improved from a decline of 8.2% in the third quarter of fiscal 2017 compared to fiscal 2016.~~

~~International Staffing segment revenue decreased $0.4 million, or 1.5%.~~2019. However, excluding the negative impact of foreign exchange rate fluctuations of ~~$0.9 million offset by businesses exited of $0.8~~$1.3 million, revenue ~~declined $0.5~~increased $1.4 million, or ~~1.8%. The decline was~~5.4%, primarily ~~driven by an economic downturn and lower~~due to growth in demand in ~~the United Kingdom offset by strong growth~~Belgium and France.

The North American MSP segment revenue increased $2.6 million, or 37.3%, as a result of increased demand in ~~Belgium.~~both payroll service and managed service businesses.

The Corporate and Other category revenue decreased ~~by $19.0~~$5.6 million, or 75.1%, primarily ~~attributable to~~as a result of our exit from the ~~absence of $14.1 million in revenue~~customer care solutions business in the ~~third quarter~~beginning of fiscal 2018 from the sale of our quality assurance business. In addition, our Volt Customer Care Solution revenue declined $3.0 million due to normal fluctuations in call center activity and our North American MSP revenue declined $1.8 million due to winding down of certain customer programs.June 2019.

Cost of Services and Gross Margin

Cost of services in the third quarter of fiscal ~~2018~~2019 decreased ~~$22.8~~$23.9 million, or ~~9.3%,~~10.8% to ~~$221.4~~$197.5 million from ~~$244.2~~$221.4 million in the third quarter of fiscal ~~2017. This decrease was primarily the result of fewer staff on assignment, consistent with the related decrease in revenue. The total Company's gross~~2018. Gross margin as a percent of revenue in the third quarter of fiscal ~~2018 decreased~~2019 increased to ~~14.1%~~15.3% from 15.8% in the third quarter of fiscal 2017. Our North American Staffing segment margins declined due to competitive pricing pressure and a higher mix of larger price-competitive customers, as well as higher workers' compensation expenses as a percentage of direct labor. Our Volt Customer Care Solutions margins declined as a result of higher non-billable training costs. In addition, the decrease in gross margin as a percent of revenue was due in part to the sale of non-core businesses in fiscal 2017 and the exit of business in Taiwan in fiscal 2018. Excluding these businesses, gross margin decreased to 14.1% in the third quarter of fiscal ~~2018~~2018. Our North American Staffing segment margin as a percent of revenue improved as a result of lower payroll tax rates primarily from ~~15.6%~~a reduction in California unemployment tax rates, partially offset by a decline in higher-margin direct hire and administrative fee revenue. Our North American MSP segment margin increased as a result of the increase in revenue for both managed service and payroll service businesses as well as improved margin as a percent of revenue in this segments' managed service revenue. In addition, gross margin was impacted by our customer care solutions business which we exited in June 2019. Excluding this business, gross margin in the third quarter of fiscal ~~2017. These declines were partially offset by improved margins~~2019 increased to 15.5% from ~~our North American MSP business.~~14.9% in the third quarter of fiscal 2018.

Selling, Administrative and Other Operating Costs

Selling, administrative and other operating costs in the third quarter of fiscal ~~2018~~2019 decreased ~~$4.7~~$3.8 million, or ~~10.0%~~9.1%, to ~~$42.2~~$38.4 million from ~~$46.9~~$42.2 million in the third quarter of fiscal ~~2017. This~~2018. The decrease was primarily due to on-going cost reductions in all areas of the business, including ~~a $2.9~~$3.3 million ~~reduction~~ in labor and related costs due to lower headcount and ~~a $1.2 million reduction in share-based compensation expense,~~revised incentive plans as well as ~~costs attributed to the previously-owned quality assurance business of $2.3 million. The third quarter of fiscal 2017 also included the release of a reserve~~$0.7 million in facility related ~~to the dissolution of the Employee Welfare Benefit Trust of $1.4 million.~~costs. As a percent of revenue, ~~these~~selling, administrative and other operating costs were ~~16.4%~~16.5% and ~~16.2%~~16.4% in the third quarter of fiscal 2019 and 2018, ~~and 2017,~~ respectively. ~~Excluding the $2.3 million from the sale of non-core businesses, selling, administrative and other operating costs decreased $2.4 million, or 5.4%.~~

Restructuring and Severance Costs

Restructuring and severance costs in the third quarter of fiscal ~~2018 increased $2.9~~2019 decreased $1.1 million, to ~~$3.1~~$2.0 million from ~~$0.2~~$3.1 million in the third quarter of fiscal ~~2017. This increase was primarily due to~~2018. The costs ~~accrued~~ in the third quarter of fiscal 2019 were primarily due to lease termination costs in connection with exiting our customer care solutions business in the third quarter of fiscal 2019. In the third quarter of fiscal 2018, costs were incurred in accordance with the ~~former chief executive officer's separation agreement.~~Dean Separation Agreement.

Other Income (Expense), net

Other expense in the third quarter of fiscal ~~2018~~2019 decreased ~~$1.9~~$0.1 million, ~~or 61.7%,~~ to ~~$1.1~~$1.0 million from ~~$3.0~~$1.1 million in the third quarter of fiscal ~~2017, primarily related~~2018 due to a decrease in non-cash ~~net~~ foreign exchange ~~loss~~losses primarily on intercompany balances and lower amortization of deferred financing fees. These improvements were partially offset by increased interest expense as a result of ~~lower borrowings.~~higher rates and an increase in borrowings under our financing program.

Income Tax Provision

~~Income taxes amounted to a provision~~The income tax provisions of $0.2 million and $1.3 million in the third quarter of fiscal 2019 and 2018, ~~and $1.1 million in the third quarter of fiscal 2017. The provision in the third quarter of fiscal 2018 and 2017~~respectively, were primarily related to locations outside of the United States.

Consolidated Results by Segment


	Nine Months Ended July 29, 2018													Nine Months Ended July 28, 2019
(in thousands)	Total			North American Staffing		International Staffing		Corporate and Other (1)			Eliminations (2)			Total			North American Staffing		International Staffing		North American MSP		Corporate and Other (1)			Eliminations (2)
Net revenue	$	774,365		$	640,004	$	90,062	$	47,298		$	(2,999	)	$	738,682		$	614,360	$	83,803	$	27,351	$	15,133		$	(1,965	)
Cost of services	664,695			551,011		76,094		40,589			(2,999		)	629,078			526,172		70,414		20,157		14,300			(1,965		)
Gross margin	109,670			88,993		13,968		6,709			—			109,604			88,188		13,389		7,194		833			—

Selling, administrative and other operating costs	132,076			85,055		12,231		34,790			—			117,144			77,063		11,659		3,941		24,481			—
Restructuring and severance costs	3,730			32		340		3,358			—			2,800			329		456		68		1,947			—
Impairment charge	155			—		—		155			—			426			—		—		—		426			—
Operating income (loss)	(26,291		)	3,906		1,397		(31,594		)	—			(10,766		)	10,796		1,274		3,185		(26,021		)	—
Other income (expense), net	(2,932		)											(3,000		)
Income tax provision	576													671
Net loss	$	(29,799	)											$	(14,437	)


	Nine Months Ended July 30, 2017													Nine Months Ended July 29, 2018
(in thousands)	Total			North American Staffing		International Staffing		Corporate and Other (1)			Eliminations (2)			Total			North American Staffing		International Staffing		North American MSP		Corporate and Other (1)			Eliminations (2)
Net revenue	$	905,953		$	695,041	$	89,599	$	125,864		$	(4,551	)	$	774,365		$	640,004	$	90,062	$	21,778	$	25,520		$	(2,999	)
Cost of services	766,225			592,504		75,786		102,486			(4,551		)	664,695			551,011		76,094		16,659		23,930			(2,999		)
Gross margin	139,728			102,537		13,813		23,378			—			109,670			88,993		13,968		5,119		1,590			—

Selling, administrative and other operating costs	146,992			90,695		11,895		44,402			—			132,076			85,055		12,231		4,213		30,577			—
Restructuring and severance costs	1,072			215		14		843			—			3,730			32		340		117		3,241			—
Impairment charge	290			—		—		290			—			155			—		—		—		155			—
Gain from divestitures	(3,938		)	—		—		(3,938		)	—
Operating income (loss)	(4,688		)	11,627		1,904		(18,219		)	—			(26,291		)	3,906		1,397		789		(32,383		)	—
Other income (expense), net	(5,331		)											(2,932		)
Income tax provision	930													576
Net loss	$	(10,949	)											$	(29,799	)

(1) Revenues are primarily derived from ~~managed service programs and~~ Volt Customer Care ~~Solutions. In addition, the first half of fiscal 2017 included our previously owned Maintech and quality assurance businesses.~~Solutions through June 7, 2019.

(2) The majority of intersegment sales results from North American Staffing providing resources to Volt Customer Care ~~Solutions and our previously owned quality assurance business.~~

Solutions.

Results of Operations Consolidated (Q3 ~~2018~~2019 YTD vs. Q3 ~~2017~~2018 YTD)

Net revenue in the first nine months of fiscal ~~2018~~2019 decreased ~~$131.6~~$35.7 million, ~~or 14.5%,~~ to ~~$774.4~~$738.7 million from ~~$906.0~~$774.4 million in the first nine months of fiscal ~~2017. Excluding the revenue from our quality assurance and Maintech businesses sold during fiscal 2017 and business exited in Taiwan in fiscal 2018,~~2018. The net revenue decrease was primarily due to decreases in ~~the first nine months~~our North American Staffing segment of ~~fiscal 2018 decreased $62.3~~$25.6 million, ~~or 7.4%, from $835.9 million in~~ the ~~first nine months of fiscal 2017.~~ Corporate and Other ~~revenue,~~category of $10.4 million and our International Staffing segment of $0.8 million, as well as the negative impact of foreign currency fluctuations of $4.8 million. These decreases were partially offset by an increase of $5.6 million in our North American MSP segment. Excluding the ~~first nine months~~impact of ~~fiscal 2017, included $67.2~~foreign currency fluctuations and $11.0 million in revenue from ~~these non-core businesses. In addition, North American Staffing segment~~businesses exited during the period, net revenue decreased ~~$55.0~~$19.9 million, or ~~7.9%~~2.7%.

Operating loss in the first nine months of fiscal ~~2018 increased $21.6~~2019 decreased $15.5 million, to ~~$26.3~~$10.8 million from ~~$4.7~~$26.3 million in the first nine months of fiscal ~~2017.~~2018. Excluding businesses exited during the ~~gain on the sale on Maintech of $3.9~~period as well as restructuring and severance costs and impairment charges, operating loss decreased $14.9 million, ~~in the first nine months of fiscal 2017 and $5.3 million~~or 62.4%. This decrease in operating ~~income reported by the non-core businesses sold, operating~~ loss ~~in the first nine months~~ of ~~fiscal 2018 increased $12.3~~$14.9 million ~~from $13.8 million in the first nine months of fiscal 2017. This increase in operating loss~~ was primarily the result of ~~a $7.7 million decrease~~improvements in our North American Staffing ~~segment's operating income~~segment of $7.2 million and ~~increased restructuring~~North American MSP segment of $2.3 million. In addition, the Corporate and ~~severance~~Other category improved by $5.4 million primarily as a result of reductions in corporate support costs.

Results of Operations by Segment (Q3 ~~2018~~2019 YTD vs. Q3 ~~2017~~2018 YTD)

Net Revenue

The North American Staffing segment revenue decreased ~~$55.0~~$25.6 million, or 4.0%, in the first nine months of fiscal 2019. The year over year decrease in revenue improved from a decline of 7.9%, in the first nine months of fiscal 2018 compared to the first nine months of fiscal 2017. This decrease was driven by ~~lower~~decreases from customers in our professional and administrative and office job categories partially offset by increased demand from customers in ~~both~~ our ~~professional and commercial~~light industrial job categories, as well as a significant change in a transportation manufacturing customer’s contingent labor strategy in the latter part of fiscal 2017. The segment's revenue was also impacted by other customers either having decreased demand for our services or changes in their staffing models, partially offset by revenue growth from new and existing customers.category.

International Staffing segment revenue ~~increased $0.5~~decreased $6.3 million, or ~~0.5%~~6.9%, ~~driven by~~in the first nine months of fiscal 2019. Excluding the negative impact of foreign ~~currency~~exchange rate fluctuations of ~~$7.0~~$4.8 million ~~partially offset by $2.0~~and $0.7 million in revenue from ~~businesses exited. Excluding~~a business exited during the ~~impact of foreign currency fluctuations and excluding businesses exited, International Staffing~~period, revenue ~~decreased by $4.5~~declined $0.8 million, or ~~4.8%~~1.0%, primarily due to ~~an economic downturn and~~ lower demand in the United Kingdom ~~partially~~ offset by ~~strong~~ growth in Belgium and ~~Singapore.~~France.

The North American MSP segment revenue increased $5.6 million, or 25.6%, as a result of growth in both payroll service and managed service businesses. The loss of several programs in early fiscal 2018 was offset by new contracts and program expansions in the latter half of the year.

The Corporate and Other category revenue decreased ~~$78.6~~$10.4 million, or 40.7%, primarily ~~attributable to~~as a result of our exit from the ~~absence of revenue~~customer care solutions business in the ~~first nine months~~beginning of ~~fiscal 2018~~June 2019. This business experienced lower headcount from ~~non-core businesses which were sold~~reduced client demand earlier in March and October of fiscal 2017. These non-core businesses included our quality assurance and Maintech businesses which reported revenue of $44.0 million and $23.3 million, respectively. In addition, our North American MSP revenue declined $5.6 million due to winding down of certain customer programs and our Volt Customer Care Solutions revenue declined $5.6 million due to normal fluctuations in call center activity.the year.

Cost of Services and Gross Margin

Cost of services in the first nine months of fiscal ~~2018~~2019 decreased ~~$101.5~~$35.6 million, or ~~13.3%~~5.4%, to ~~$664.7~~$629.1 million from ~~$766.2~~$664.7 million in the first nine months of fiscal ~~2017. This decrease was primarily the result of fewer staff on assignment, consistent with the related decrease in revenue. The total Company's gross~~2018. Gross margin as a percent of revenue in the first nine months of fiscal ~~2018 decreased~~2019 increased to ~~14.2%~~14.8% from ~~15.4%~~14.2% in the first nine months of fiscal ~~2017.~~2018. Our North American Staffing segment ~~margins declined due to competitive pricing pressure and~~margin as a percent of revenue improved as a result of lower payroll tax rates primarily from a reduction in California unemployment tax rates, partially offset by a higher mix of larger price-competitive ~~customers as well as higher workers' compensation expenses as a percentage of direct labor. Our Volt Customer Care Solutions margins declined as a result of higher non-billable training costs.~~customers. In addition, ~~the decrease in gross~~our North American MSP segment margin as a percent of revenue ~~was in part~~increased due to increases in both payroll and managed service businesses. This improvement was partially offset by lower margins from our customer care solutions business which we exited in June 2019 and experienced lower headcount from reduced client demand earlier in the ~~sale of non-core businesses in fiscal 2017.~~year. Excluding ~~these businesses,~~this business, gross margin increased to 15.1% in the first nine months of fiscal ~~2018 decreased to 14.2%~~2019 from ~~15.0%~~14.5% in the first nine months of fiscal ~~2017. These declines were partially offset by improved margins from our North American MSP business.~~2018.

Selling, Administrative and Other Operating Costs

Selling, administrative and other operating costs in the first nine months of fiscal ~~2018~~2019 decreased ~~$14.9~~$15.0 million, or ~~10.1%~~11.3%, to ~~$132.1~~$117.1 million from ~~$147.0~~$132.1 million in the first nine months of fiscal ~~2017. This~~2018. The decrease was primarily due to on-going cost reductions in all areas of the business, including ~~$11.3~~$9.9 million in labor and related costs due to lower headcount and ~~$8.6~~revised incentive plans, $1.9 million in facility related costs ~~attributed~~and $0.7 million in travel expenses. In addition, legal and consulting fees were $3.2 million lower primarily related to corporate and cost-efficiency initiatives in the ~~previously-owned quality assurance and Maintech businesses.~~first quarter of fiscal 2018. These ~~decreases~~improvements were ~~partially~~ offset by ~~$1.6~~$1.4 million in higher legal fees as well as higher depreciation and software license expenses related to completion of the first phase of the upgrade of our back-office financial suite and information technology tools of $1.3 million. In addition,medical claims experience in the first nine months of fiscal ~~2017 included the release of a reserve related to the dissolution of the Employee Welfare Benefit Trust of $1.4 million.~~2019. As a percent of revenue, these costs were ~~17.1%~~15.9% and ~~16.2%~~17.1% in the first nine months of fiscal 2019 and 2018, ~~and 2017,~~ respectively. ~~Excluding the $8.8 million from the sale of non-core businesses and businesses exited, selling, administrative and other operating costs decreased $6.1 million, or 4.4%.~~

Restructuring and Severance Costs

Restructuring and severance costs in the first nine months of fiscal ~~2018 increased $2.6~~2019 decreased $0.9 million to ~~$3.7~~$2.8 million from ~~$1.1~~$3.7 million in the ~~third quarter~~first nine months of fiscal ~~2017. This increase was~~2018. The costs in the first nine months of fiscal 2019 are primarily due to severance and lease termination costs ~~accrued~~ in ~~the third quarter of fiscal 2018 in accordance~~connection with ~~the former chief executive officer's separation agreement.~~

~~Impairment Charge~~

exiting our customer care solutions business. In the first nine months of fiscal 2018, costs were incurred in accordance with the ~~Company~~Dean Separation Agreement.

Impairment Charges

Impairment charges in the first nine months of fiscal 2019 increased $0.2 million, to $0.4 million from $0.2 million in the first nine months of fiscal 2018. In the first nine months of fiscal 2019, we recorded an impairment charge of $0.3 million on equipment used in our customer care solutions business. In the first nine months of fiscal 2018, we made the decision to forgo future use of a previously purchased ~~reporting~~ software tool, which resulted in an impairment charge of $0.2 million. In the first nine months of fiscal 2017, the Company determined that a previously purchased software module would not be used as part of the new back-office financial suite, which resulted in an impairment charge of $0.3 million.

~~Gain from Divestitures~~

In the second quarter of fiscal 2017, we completed the sale of Maintech to Maintech Holdings LLC, a newly formed holding company and affiliate of Oak Lane Partners, LLC and recognized a gain on the sale of $3.9 million.

Other Income (Expense), net

Other expense in the first nine months of fiscal ~~2018 decreased $2.4~~2019 increased $0.1 million, or ~~45.0%~~2.3%, to ~~$2.9~~$3.0 million from ~~$5.3~~$2.9 million in the first nine months of fiscal ~~2017,~~2018, primarily ~~related to non-cash net foreign exchange loss on intercompany balances and lower~~as a result of increased interest expense as a result of higher rates and an increase in borrowings under our financing program as well as an increase in non-cash foreign exchange losses primarily on intercompany balances. These increases were partially offset by lower ~~borrowings.~~amortization of deferred financing fees.

Income Tax Provision (Benefit)

~~Income~~The income tax ~~amounted~~provision of $0.7 million in the first nine months of fiscal 2019 was primarily related to alocations outside of the United States. The income tax provision of $0.6 million in the first nine months of fiscal 2018 ~~and $0.9 million in the first nine months of fiscal 2017. The provision in the first nine months of fiscal 2018 primarily related to locations outside the United States partially~~was offset by a $1.1 million reversal of ~~reserves on~~ uncertain tax ~~provisions. The~~provisions partially offset by a provision ~~in the first nine months of fiscal 2017~~primarily related to locations outside of the United ~~States and included the release of $1.3 million in uncertain tax positions related to the closure of the IRS audit and associated state audits.~~States.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are cash flows from operations and proceeds from our financing arrangements with DZ Bank AG Deutsche ~~Zentral-Genossenschafsbank~~Zentral Genossenschafsbank (“DZ Bank”) and with PNC Bank, National Association (“PNC Bank”) until the termination of the PNC Financing Program in January 2018. Borrowing capacity under these arrangements is directly impacted by the level of accounts receivable, which fluctuates during the year due to seasonality and other factors. Our business is subject to seasonality with our fiscal first quarter billings typically the lowest due to the holiday season and generally increasing in the fiscal third and fourth quarters when our customers increase the use of contingent labor. Generally, the first and fourth quarters of our fiscal year are the strongest for operating cash flows. Our operating cash flows consist primarily of collections of customer receivables offset by payments for payroll and related items for our contingent staff and in-house employees; federal, foreign, state and local taxes; and trade payables. We generally provide customers with 3015 - 45 day credit terms, with few extenuating exceptions, ~~to 60 days,~~ while our payroll and certain taxes are paid weekly.

We manage our cash flow and related liquidity on a global basis. We fund payroll, taxes and other working capital requirements using cash supplemented as needed from our borrowings. Our weekly payroll payments inclusive of employment-related taxes and payments to vendors are approximately $20.0 million. We generally target minimum global liquidity to be approximately 1.5 ~~to 2.0~~ times our average weekly requirements. We also maintain minimum effective cash balances in foreign operations and use a multi-currency netting and overdraft facility for our European entities to further minimize overseas cash requirements. We believe our cash flow from operations and planned liquidity will be sufficient to meet our cash needs for the next twelve months.

Capital Allocation

We have prioritized our capital allocation strategy to strengthen our balance sheet and increase our competitiveness in the marketplace. The timing of these capital allocation priorities is highly dependent upon attaining the profitability objectives outlined in our plan and the generation of positive cash flow. We also see this as an opportunity to demonstrate our ongoing commitment to Volt shareholders as we continue to execute on our plan and return to sustainable profitability. Our capital allocation strategy includes the following elements:

Maintaining appropriate levels of working capital. Our business requires a certain level of cash resources to efficiently execute operations. Consistent with similar companies in our industry and operational capabilities, we estimate this amount to be approximately 1.5 ~~to 2.0~~ times our weekly cash distributions on a global basis and must accommodate seasonality and cyclical trends;

Reinvesting in our business. We continue to execute on our company-wide initiative of disciplined reinvestment in our business including new information technology systems, which will support our front-end recruitment and placement capabilities as well as increase efficiencies in our back-office financial suite. We are also investing in our sales and recruiting process and resources, which isare critical to drive profitable revenue growth;

Deleveraging our balance sheet. By lowering our debt level, we will strengthen our balance sheet, reduce interest costs and reduce risk going forward;

~~Acquiring value-added businesses.~~ In the longer-term, and when circumstances permit, identifying and acquiring companies which would be accretive to our operating income and that could leverage Volt’s scale, infrastructure and capabilities. Strategic acquisitions could potentially strengthen Volt in certain industry verticals or in specific geographic locations; and

~~Returning capital to shareholders.~~ ~~In the longer-term, part of our strategy is to return capital to our shareholders when circumstances permit in connection with share buybacks.~~

Recent Initiatives to Improve Operating Income, Cash Flows and Liquidity

We continue to make progress on several initiatives undertaken to enhance our liquidity position and shareholder value.

On ~~January 25, 2018,~~July 19, 2019, we ~~entered into a~~amended and restated our long-term $115.0 million accounts receivable securitization program with DZ Bank, ~~and exited our financing relationship with PNC Bank.~~which was originally executed on January 25, 2018. The ~~new~~restated agreement ~~better aligns our current financing requirements with our strategic initiatives and reduces our overall~~allows for the inclusion of certain accounts receivable

from originators in the United Kingdom, which adds an additional $5.0 - $7.0 million in borrowing ~~costs. In addition to better pricing, the new facility has less restrictive financial covenants and fewer restrictions on use of proceeds, which~~availability. This will improve available liquidity ~~and allow~~allowing us to continue to

advance our capital allocation ~~plan. Overall, the new financing program greatly enhances our financial flexibility~~plan and ~~debt maturity profile, while providing~~will provide us with additional resources to execute our business strategy.

In October 2017, we completed the sale of the quality assurance business within the Technology Outsourcing Services and Solutions segment and received net proceeds of $66.8 million after certain transaction related fees and expenses which were used to reduce outstanding debt by $50.0 million.

Entering fiscal ~~2018,~~2019, we have significant tax benefits including federal net operating loss carryforwards of ~~$155.7~~$187.5 million and U.S. state net operating loss carryforwards of ~~$195.2~~$224.1 million as well as federal tax credits of ~~$48.2~~$51.3 million, which are fully reserved with a valuation ~~allowance, which we will be able to utilize~~allowance. Such loss carryforwards and credits are available for utilization against ~~future~~ corporate income tax ~~resulting from our strategic initiatives.~~that may result in the future. We also have capital loss carryforwards of ~~$13.5~~$12.9 million, which we will be able to utilize against potential future capital gains that may arise in the near future.

As previously ~~discussed,~~noted, we continue to add functionality to our underlying ITinformation technology systems and to improve our competitiveness in the marketplace. Through our strategy of improving efficiency in all aspects of our operations, we believe we can realize organic growth opportunities, reduce costs and increase profitability. During ~~the third quarter of~~ fiscal 2018, we also took certain restructuring actions ~~which~~that will improve selling, general and administrative costs by approximately ~~$7.0~~$13.5 million in annualized ~~savings on a go-forward basis.~~savings. This is due in part ~~from~~to efficiencies gained from our ITinformation technology investment, ~~last year.~~as well as additional headcount reduction and lease termination initiatives taken under our 2018 Plan. Consistent with our ongoing strategic efforts, cost savings will be used to strengthen our operations.

Liquidity Outlook and Further Considerations

As previously noted, our primary sources of liquidity are cash flows from operations and proceeds from our financing arrangements. Both operating cash flows and borrowing capacity under our financing arrangements are directly related to the levels of accounts receivable generated by our businesses. Our level of borrowing capacity under the long-term accounts receivable securitization program (“DZ Financing Program”) increases or decreases in tandem with any increases or decreases in accounts receivable based on revenue fluctuations.

On June 4, 2019, we entered into an amendment with DZ Bank to temporarily exclude the receivables due from a specific customer from the securitization pool under our DZ Financing Program for three subsequent reporting periods as of May 2019 through July 2019. This customer experienced internal processing issues related to specific Volt purchase orders resulting in significant payment delays, which negatively impacted the 90-Day Delinquency Rate, as defined in the DZ Financing Program. Although, this change improved the delinquency rate, it also temporarily decreased our borrowing availability under the DZ Financing Program by approximately $2.0 - $3.0 million. These payment delays were not credit related and the Company collected a significant portion of the past due amounts in late June 2019. The issue was resolved and the receivables from this customer were added back to the securitization pool under the original terms of the agreement, as permitted under a provision in the amendment.

In the third quarter of fiscal 2019, we exited our customer care solutions business. This business previously contributed accounts receivable as collateral under the DZ Financing Program and its exit had a diminishing effect on our borrowing base under the DZ Financing Program.

At July ~~29, 2018,~~28, 2019, the Company had outstanding borrowings under the DZ Financing Program of ~~$50.0 million, borrowing~~$55.0 million. Borrowing availability, as defined under the DZ Financing Program, ~~of $30.3~~was $16.4 million and global liquidity ~~of $52.7 million.~~

~~We are subject to certain financial and portfolio performance covenants under our DZ Financing Program, including a minimum tangible net worth of $40.0~~was $40.6 million ~~positive net income in fiscal year 2019, maximum debt to tangible net worth ratio of 3:1 and a minimum of $15.0 million in liquid assets, as defined.~~at July 28, 2019.

Our DZ Financing Program is subject to termination under certain events of default such as breach of covenants, including the ~~aforementioned~~ financial covenants. At July ~~29, 2018,~~28, 2019, we were in compliance with all debt covenants. We believe, based on our ~~2018 plan,~~current outlook, we will continue to be able to meet our financial covenants.

~~Strategic Alternatives Review~~

While we are dedicated to executing on all of our key operational initiatives to return Volt to profitable growth, we remain involved in a process to evaluate alternatives and assess all options to maximize shareholder value.

The following table sets forth our cash and global liquidity ~~available~~ levels at the end of our last five quarters ~~and our most recent week ended~~ (in thousands): .


Global Liquidity
	July 30, 2017		October 29, 2017		January 28, 2018		April 29, 2018		July 29, 2018		August 31, 2018		July 29, 2018		October 28, 2018		January 27, 2019		April 28, 2019		July 28, 2019
Cash and cash equivalents (a)	$	16,357	$	37,077	$	53,868	$	34,177	$	29,929			$	29,929	$	24,763	$	32,925	$	39,689	$	36,031

Total outstanding debt	$	100,000	$	50,000	$	80,000	$	50,000	$	50,000	$	55,000	$	50,000	$	50,000	$	55,000	$	55,000	$	55,000

Cash in banks (b) (c)	$	18,981	$	40,685	$	57,262	$	26,443	$	22,454	$	25,059
PNC Financing Program	14,445		54,129		—		—		—		—
DZ Financing Program (d)	—		—		21,528		32,943		30,280		29,042
Cash in banks (b)(c)													$	22,454	$	17,685	$	23,646	$	29,946	$	24,224
DZ Financing Program (d)													30,280		38,302		31,072		22,222		16,416
Global liquidity	33,426		94,814		78,790		59,386		52,734		54,101		52,734		55,987		54,718		52,168		40,640
Minimum liquidity threshold (e)	25,000		40,000		15,000		15,000		15,000		15,000
Minimum liquidity threshold													15,000		15,000		15,000		15,000		15,000
Available liquidity	$	8,426	$	54,814	$	63,790	$	44,386	$	37,734	$	39,101	$	37,734	$	40,987	$	39,718	$	37,168	$	25,640


a.	Per financial statements.


b.	~~Balance~~Amount generally includes outstanding checks.


c.	~~As of July 29, 2018, amounts~~Amounts in the USB collections account are excluded from cash in banks as the balance is included in the borrowing availability under the DZ Financing Program. As of July ~~29, 2018,~~28, 2019, the balance in the USB collections account included in the DZ Financing Program availability was ~~$6.1~~$6.8 million.


d.	The ~~DZ Financing Program excluded accounts receivable~~borrowing base included the receivables from the United ~~Kingdom.~~


e.	~~At October 29, 2017,~~Kingdom effective July 19, 2019 and excluded the ~~minimum liquidity threshold included a borrowing base block of $35.0 million.~~receivables from the customer care solutions business which we exited in June 2019.

Cash flows from operating, investing and financing activities, as reflected in our Condensed Consolidated Statements of Cash Flows, are summarized in the following table (in thousands):

Nine Months Ended
July 29, 2018 July 30, 2017
Net cash used in operating activities $ (2,548 ) $ (3,038 )
Net cash provided by (used in) investing activities (2,099 ) 8,253
Net cash provided by (used in) financing activities (1,684 ) 2,155
Effect of exchange rate changes on cash and cash equivalents (817 ) 2,601
Net increase (decrease) in cash and cash equivalents $ (7,148 ) $ 9,971



	Nine Months Ended
	July 28, 2019			July 29, 2018
Net cash provided by (used in) operating activities	$	10,161		$	(10,025	)
Net cash used in investing activities	(6,227		)	(2,099		)
Net cash provided by (used in) financing activities	4,063			(1,684		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(633		)	(817		)
Net increase (decrease) in cash, cash equivalents and restricted cash	$	7,364		$	(14,625	)

Cash Flows - Operating Activities

The net cash ~~used in~~provided by operating activities in the nine months ended July ~~29, 2018~~28, 2019 was ~~$2.5~~$10.2 million, ~~a decrease~~an increase of ~~$0.5~~$20.2 million from net cash used in operating activities of $10.0 million in the ~~same period in fiscal 2017.~~nine months ended July 29, 2018. This ~~decrease~~increase resulted primarily from ~~an increase~~a decrease in net loss of $15.4 million and a ~~decrease in income taxes due to a receipt~~higher amount of ~~an IRS refund in 2017, partially offset~~cash provided by ~~an increase in cash used in~~ operating assets and liabilities, primarily from accounts ~~receivable, restricted cash,~~payable and ~~accrued expenses and other liabilities, partially~~accounts receivable offset by ~~accounts payable.~~other assets and income taxes.

Cash Flows - Investing Activities

The net cash used in investing activities in the nine months ended July 28, 2019 was $6.2 million, principally for purchases of property, equipment and software of $6.3 million. The net cash used in investing activities in the nine months ended July 29, 2018 was $2.1 million, principally ~~from~~for the purchases of property, equipment and software of $2.3 million primarily relating to our investment in updating our business processes, back-office financial suite and information technology tools. The net cash provided by investing activities in the nine months ended July 30, 2017 was $8.3 million, principally from proceeds from the sale of Maintech of $15.2 million, partially offset by the purchase of property, equipment and software of $7.8 million relating to our investment in updating our business processes, back-office financial suite and information technology tools.million.

Cash Flows - Financing Activities

The net cash provided by financing activities in the nine months ended July 28, 2019 was $4.1 million as a result of a $5.0 million net draw down of borrowings under the DZ Financing Program partially offset by debt issuance costs of $0.6 million. The net cash used in financing activities in the nine months ended July 29, 2018 was $1.7 million mainly due to debt issuance costs of $1.4 million. ~~The net cash provided by financing activities in the nine months ended July 30, 2017 was $2.2 million, mainly from the net draw down of borrowings of $3.0 million.~~

Financing Program

On ~~January 25, 2018,~~July 19, 2019, we ~~entered into the~~amended and restated our DZ Financing Program, a long-term $115.0 million accounts receivable securitization program with DZ Bank which was originally executed on January 25, 2018. The restated agreement allows for the inclusion of certain accounts receivable from originators in the United Kingdom, which adds an additional $5.0 - $7.0 million in borrowing availability. All other material terms and exited our financing relationship (“PNC Financing Program”) with PNC Bank. While the borrowing capacity was reduced from $160.0 million under the PNC Financing Program, the new agreement increases available liquidity and provides greater financial flexibility with less restrictive financial covenants and fewer restrictions on use of proceeds, as well as reduces overall borrowing costs. The sizeconditions of the original agreement remain substantially unchanged.

The DZ Financing Program ~~may be increased with the approval of DZ Bank.~~

~~Under the DZ Financing Program,~~is fully collateralized by certain receivables of the Company that are sold to a wholly-owned, consolidated, bankruptcy-remote subsidiary. To finance the purchase of such receivables, wethat subsidiary may request that DZ Bank make loans from ~~time~~time-to-time to ~~time to the Company~~ that subsidiary which are secured by liens on those receivables.

On June 4, 2019, we entered into an amendment with DZ Bank to temporarily exclude the receivables due from a specific customer from the securitization pool under our DZ Financing Program for three subsequent reporting periods as of May 2019 through July 2019. This customer experienced internal processing issues related to specific Volt purchase orders resulting in significant payment delays, which negatively impacted the 90-Day Delinquency Rate, as defined in the DZ Financing Program. Although this change improved the delinquency rate, it temporarily decreased our borrowing availability under the DZ Financing Program by approximately $2.0 - $3.0 million. These payment delays were not credit related and the Company collected a significant portion of the past due amounts in late June 2019. The issue was resolved and the receivables from this customer were added back to the securitization pool under the original terms of the agreement, as permitted under a provision in the amendment.

Loan advances may be made under the DZ Financing Program through January 25, ~~2020~~2021 and all loans will mature no later than July 25, ~~2020.~~2021. Loans will accrue interest (i) with respect to loans that are funded through the issuance of commercial paper notes, at the CP rate, and (ii) otherwise, at a rate per annum equal to adjusted LIBOR. The CP rate will be based on the rates paid by the applicable lender on notes it issues to fund related loans. Adjusted LIBOR is based on LIBOR for the applicable interest period and the rate prescribed by the Board of Governors of the Federal Reserve System for determining the reserve requirements with respect to Eurocurrency funding. If an event of default occurs, all loans shall bear interest at a rate per annum equal to the prime rate (the federal funds rate plus 3%) plus 2.5%.

The DZ Financing Program also includes a letter of credit sub-facility with a sub-limit of $35.0 million. As of July ~~29, 2018,~~28, 2019, the letter of credit participation was ~~$25.4~~$24.2 million inclusive of ~~$23.5~~$22.8 million for the Company’s casualty insurance program, ~~$1.1~~$1.2 million for the security deposit required under certain real estate lease agreements and ~~$0.8~~$0.2 million for the Company's corporate credit card program. The Company used $30.0 million of funds available under the DZ Financing Program to temporarily collateralize the letters of credit, until the letters of credit were established with DZ Bank on January 31, 2018.

~~We are~~The Company is subject to certain financial and portfolio performance covenants under ~~our~~the DZ Financing Program, including (1) a minimum ~~tangible net worth~~Tangible Net Worth (as defined under the DZ Financing Program) of at least $30.0 million through fiscal 2019, which will increase to $40.0 million in fiscal 2020; (2) positive net income in any fiscal year ~~2019,~~ending after 2019; (3) maximum debt to tangible net worth ratio of 3:11; and (4) a minimum of $15.0 million in liquid assets ~~as defined.~~(as defined under the DZ Financing Program). At July ~~29, 2018, we were~~28, 2019, the Company was in compliance with all debt covenants. At July 28, 2019, there was $16.4 million of borrowing availability, as defined under the DZ Financing Program.

~~On June 8, 2018~~We had entered into the ~~Company amended~~original agreement with DZ Bank when it exited its DZfinancing relationship with PNC Bank (“PNC Financing Program to modify a provision in the calculation of eligible receivables, as defined. This amendment permits the Company to exclude the receivables of a single large, high-quality customer from its threshold limitation, resulting in additional borrowing capacity of approximately $10.0 million.

Program”). We used funds made available by the DZ Financing Program to repay all amounts outstanding under the PNC Financing Program, which terminated in accordance with its ~~terms, and expect to~~terms. We use ~~remaining~~the availability from the DZ Financing Program from ~~time to time~~time-to-time for working capital and other general corporate purposes.

Until the termination date, the PNC Financing Program was secured by receivables from certain staffing services businesses in the United States and Europe that are sold to a wholly-owned, consolidated, bankruptcy-remote subsidiary. The bankruptcy-remote subsidiary’s sole business consisted of the purchase of the receivables and subsequent granting of a security interest to PNC Bank under the program, and its assets were available first to satisfy obligations to PNC Bank and were not available to pay creditors of the Company’s other legal entities. Borrowing capacity under the PNC Financing Program was directly impacted by the level of accounts receivable.

On January 11, 2018, we entered into Amendment No. 10 to the PNC Financing Program, which gave us the option to extend the termination date of the program from January 31, 2018 to March 2, 2018, and amended the financial covenant requiring the Company to meet the minimum earnings before interest and taxes levels for the fiscal quarter ended October 29, 2017. All other material terms and conditions remained substantially unchanged, including interest rates.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information in this section should be read in conjunction with the information on financial market risk related to non-U.S. currency exchange rates, changes in interest rates and other financial market risks in Part II, Item 7A., “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the year ended October ~~29, 2017.~~28, 2018.

Market risk is the potential economic gain or loss that may result from changes in market rates and prices. In the normal course of business, the Company’s earnings, cash flows and financial position are exposed to market risks relating to the impact of interest rate changes and foreign currency exchange rate ~~fluctuations and changes in the market value of financial instruments.~~fluctuations. We limit these risks through risk management policies and procedures.

Interest Rate Risk

We centrally manage our debt and investment portfolios considering investment opportunities and risks, tax consequences and overall financing strategies. At July ~~29, 2018,~~28, 2019, we had cash and cash equivalents on which interest income is earned at variable rates. At July ~~29, 2018,~~28, 2019, we had a long-term $115.0 million accounts receivable securitization program, which can be increased subject to credit approval from DZ Bank, to provide additional liquidity to meet our short-term financing needs.

The interest rates on these borrowings and financings are variable and, therefore, interest and other expense and interest income are affected by the general level of U.S. and foreign interest rates. ~~We consider the use of derivative instruments to hedge interest rate risk; however, as of July 29, 2018, we did not utilize any of these instruments as they were not considered to be cost effective.~~ Based upon the current levels of cash invested ~~notes payable to banks~~ and utilization of the securitization program, on a short-term basis, a hypothetical 1-percentage-point increase in interest rates would have increased net interest expense by $0.1 million orand a hypothetical 1-percentage-point decrease in interest rates would have decreased net interest expense by $0.1 million in the ~~third quarter~~first nine months of fiscal ~~2018.~~2019.

Foreign Currency Risk

We have operations in several foreign countries and conduct business in the local currency in these countries. As a result, we have risk associated with currency fluctuations as the value of foreign currencies fluctuates against the dollar, in particular the British Pound, Euro, Canadian Dollar and Indian Rupee. These fluctuations impact reported earnings.

Fluctuations in currency exchange rates also impact the U.S. dollar amount of our net investment in foreign operations. The assets and liabilities of our foreign subsidiaries are translated into U.S. dollars at the exchange rates in effect aton the fiscal period balance sheet date. Income and ~~expense~~expenses accounts are translated at an average exchange rate during the year which approximates the rates in effect aton the transaction dates. The resulting translation adjustments are recorded in stockholders’ equity as a component of Accumulated other comprehensive loss. The U.S. dollar strengthened relative to many foreign currencies as of July ~~29, 2018~~28, 2019 compared to October ~~29, 2017.~~28, 2018. Consequently, stockholders’ equity decreased ~~by $0.5~~$0.6 million as a result of the foreign currency translation as of July ~~29, 2018.~~28, 2019.

Based upon the current levels of net foreign assets, a hypothetical 10% devaluation of the U.S. dollar as compared to these currencies as of July ~~29, 2018~~28, 2019 would result in an approximate ~~$2.3~~$1.1 million positive translation adjustment recorded in Accumulated other comprehensive loss within stockholders’ equity. Conversely, a hypothetical 10% appreciation of the U.S. dollar as compared to these currencies as of July ~~29, 2018~~28, 2019 would result in an approximate ~~$2.3~~$1.1 million negative translation adjustment recorded in Accumulated other comprehensive loss within stockholders’ equity. We do not use derivative instruments for trading or other speculative purposes.

~~Equity Risk~~

Our investments are exposed to market risk as it relates to changes in the market value. We hold investments in mutual funds for the benefit of participants in our non-qualified deferred compensation plan, and changes in the market value of these investments result in offsetting changes in our liability under the non-qualified deferred compensation plans as the employees realize the rewards and bear the risks of their investment selections. At July 29, 2018, the total market value of these investments was $3.5 million.

ITEM 4. CONTROLS AND PROCEDURES

Volt maintains “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), which are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our ~~Interim~~ Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, Volt’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and Volt’s management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Volt has carried out an evaluation, as of the end of the period covered by this report, under the supervision and with the participation of Volt’s management, including its ~~Interim~~ Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Volt’s disclosure controls and procedures. Based upon their evaluation and subject to the foregoing, the ~~Interim~~ Chief Executive Officer and Chief Financial Officer concluded that Volt’s disclosure controls and procedures were effective.

There have been no significant changes in Volt’s internal controls over financial reporting that occurred during the fiscal quarter ended July ~~29, 2018~~28, 2019 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company is subject to claims inand legal proceedings arising in the ordinary course of its business, including payroll-related and various employment-related matters. All litigation currently pending against the Company relates to matters that have arisen in the ordinary course of business and the Company believes that such matters will not have a material adverse effect on its consolidated financial condition, results of operations or cash flows.

Since our ~~2017~~2018 Form 10-K, there have been no material developments in the material legal proceedings in which we are involved.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in the ~~2017~~2018 Form 10-K, which could materially affect the Company’s business, financial position and results of operations. There are no material changes from the risk factors set forth in Part I, “Item 1A. Risk Factors” in the ~~2017~~2018 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

The following exhibits are filed as part of, or incorporated by reference into, this report:



Exhibits		Description

3.1		Restated Certificate of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended May 3, 2015 filed June 10, 2015; File No. ~~001-9232)~~001-09232)

3.2		Amended and Restated By-Laws of the Company, as amended through September 7, 2017 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed September 12, 2017; File No. 001-9232)

10.1*10.1		~~Amendment~~2019 Equity Incentive Plan (incorporated by reference to Appendix A to the Company's Proxy Statement filed February 22, 2019; File No. 1,001-9232)

10.2		Volt Information Sciences, Inc. Form of Performance Stock Unit Award Agreement

10.3		Volt Information Sciences, Inc. Form of Restricted Stock Unit Award Agreement

10.4		Volt Information Sciences, Inc. Form of Director Restricted Stock Unit Award Agreement

10.5		Volt Information Sciences, Inc. Form of Director Deferred Restricted Stock Unit Award Agreement

10.6		Amended and Restated Employment Agreement by and between Volt Information Sciences, Inc. and Lori M. Schultz, dated as of June ~~8, 2018,~~25, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 27, 2019; File No. 001-9232)



Exhibits		Description
10.7		Amended and Restated Receivables Loan and Security Agreement, dated as of ~~January 25, 2018,~~July 19, 2019, by and among Volt Funding II, LLC, as borrower, Volt Information Sciences, Inc., as servicer, ~~Autobahn Funding Company LLC, as conduit lender,~~ the ~~other~~ lenders and letter of credit participants party thereto from time to time, DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt Am Main, New York Branch, as agent, and Autobahn Funding Company LLC and DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt Am Main, New York Branch, as letter of credit issuers

~~10.2~~		~~Separation Agreement by and between Volt Information Sciences, Inc. and Michael D. Dean, dated as of June 29, 2018~~ (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July ~~3, 2018;~~24, 2019; File No. 001-9232)

~~10.3~~10.8		Amended and Restated Receivables Purchase and Sale Agreement, dated as of July 19, 2019, among Volt Management Corp. and P/S Partner Solutions, Ltd., as originators, Volt Information Sciences, Inc. and Volt Funding II, LLC, as buyer (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed July 24, 2019; File No. 001-9232)

10.9		Receivables Purchase and Sale Agreement, dated as of ~~Performance Stock Unit Award~~July 19, 2019, among Volt Consulting Group Limited and Volt Europe Limited, as originators, Volt Information Sciences, Inc. and Volt Funding II, LLC, as buyer (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed July 24, 2019; File No. 001-9232)

10.10		Amended and Restated Limited Guaranty, dated as of July 19, 2019, by Volt Information Sciences, Inc. in favor of DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt Am Main, New York Branch, as agent (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed July 24, 2019; File No. 001-9232)

10.11		Employment Agreement by and between Volt Information Sciences, Inc. and Herbert M. Mueller, effective as of August 24, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed ~~June 19, 2018; File No. 001-9232)~~

~~10.4~~		~~Volt Information Sciences, Inc. Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed June 19, 2018;~~August 14, 2019; File No. 001-9232)

31.1		Certification of ~~Interim~~ Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

32.1		Certification of ~~Interim~~ Chief Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350

32.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

* Confidential treatment has been requested with respect to certain portions of this exhibit

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.



	VOLT INFORMATION SCIENCES, INC.

Date: September ~~6, 2018~~5, 2019	By:		/s/	Linda Perneau
		Linda Perneau
		~~Interim~~President and Chief Executive Officer (Principal Executive Officer)

Date: September ~~6, 2018~~5, 2019	By:		/s/	~~Paul Tomkins~~ Herbert M. Mueller
		~~Paul Tomkins~~Herbert M. Mueller
		Senior Vice President and Chief Financial Officer (Principal Financial Officer)

Date: September ~~6, 2018~~5, 2019	By:		/s/	Leonard Naujokas
		Leonard Naujokas
		Controller and Chief Accounting Officer (Principal Accounting Officer)

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