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 28, 2019~~May 3, 2020


¨	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.)
50 Charles Lindbergh Boulevard, Uniondale, New York	11553
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:

(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~~VOLT	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 every Interactive Data File required to be submitted 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 such files). x Yes ¨ No

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



Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company x	Emerging growth 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 30, 2019,~~June 12, 2020, there were ~~21,366,111~~21,408,659 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 28, 2019			July 29, 2018			July 28, 2019			July 29, 2018			Three Months Ended						Six Months Ended
													May 3, 2020			April 28, 2020			May 3, 2020			April 28, 2019
NET REVENUE	$	233,176		$	257,808		$	738,682		$	774,365		$	207,275		$	252,070		$	425,041		$	505,506
Cost of services	197,528			221,448			629,078			664,695			175,038			215,813			361,377			431,550
GROSS MARGIN	35,648			36,360			109,604			109,670			32,237			36,257			63,664			73,956

EXPENSES
Selling, administrative and other operating costs	38,395			42,222			117,144			132,076			36,189			38,939			75,686			78,749
Restructuring and severance costs	2,017			3,108			2,800			3,730			411			724			1,657			783
Impairment charges	79			—			426			155
Impairment charge													—			347			11			347
OPERATING LOSS	(4,843		)	(8,970		)	(10,766		)	(26,291		)	(4,363		)	(3,753		)	(13,690		)	(5,923		)

OTHER INCOME (EXPENSE), NET
Interest income (expense), net	(714		)	(552		)	(2,159		)	(1,965		)	(621		)	(699		)	(1,321		)	(1,445		)
Foreign exchange gain (loss), net	(151		)	(294		)	(252		)	(88		)	(266		)	(314		)	(594		)	(101		)
Other income (expense), net	(184		)	(296		)	(589		)	(879		)	(152		)	(166		)	(410		)	(405		)
TOTAL OTHER INCOME (EXPENSE), NET	(1,049		)	(1,142		)	(3,000		)	(2,932		)	(1,039		)	(1,179		)	(2,325		)	(1,951		)

LOSS BEFORE INCOME TAXES	(5,892		)	(10,112		)	(13,766		)	(29,223		)	(5,402		)	(4,932		)	(16,015		)	(7,874		)
Income tax provision	165			1,306			671			576			23			233			218			506
NET LOSS	$	(6,057	)	$	(11,418	)	$	(14,437	)	$	(29,799	)	$	(5,425	)	$	(5,165	)	$	(16,233	)	$	(8,380	)

PER SHARE DATA:
Basic:
Basic and Diluted:
Net loss	$	(0.29	)	$	(0.54	)	$	(0.68	)	$	(1.42	)	$	(0.25	)	$	(0.24	)	$	(0.76	)	$	(0.40	)
Weighted average number of shares	21,157			21,071			21,106			21,044			21,416			21,082			21,416			21,081
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 28, 2019			July 29, 2018			July 28, 2019			July 29, 2018			Three Months Ended						Six Months Ended
	July 28, 2019			July 29, 2018			July 28, 2019			July 29, 2018			May 3, 2020			April 28, 2019			May 3, 2020			April 28, 2019
NET LOSS	$	(6,057	)	$	(11,418	)	$	(14,437	)	$	(29,799	)	$	(5,425	)	$	(5,165	)	$	(16,233	)	$	(8,380	)
Other comprehensive income (loss):
Foreign currency translation adjustments net of taxes of $0 and $0, respectively	(565		)	(921		)	(586		)	(464		)	(602		)	(179		)	(238		)	(21		)
COMPREHENSIVE LOSS	$	(6,622	)	$	(12,339	)	$	(15,023	)	$	(30,263	)	$	(6,027	)	$	(5,344	)	$	(16,471	)	$	(8,401	)

See accompanying Notes to Condensed Consolidated Financial Statements.

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)


	July 28, 2019			October 28, 2018			May 3, 2020			November 3, 2019
	(unaudited)						(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	36,031		$	24,763		$	26,223		$	28,672
Restricted cash and short-term investments	11,000			14,844			19,445			12,794
Trade accounts receivable, net of allowances of $132 and $759, respectively	135,838			157,445
Trade accounts receivable, net of allowances of $150 and $117, respectively							116,373			135,950
Other current assets	6,706			7,444			8,480			7,252
TOTAL CURRENT ASSETS	189,575			204,496			170,521			184,668
Property, equipment and software, net							24,792			25,890
Right of use assets - operating leases							43,495			—
Other assets, excluding current portion	7,579			7,808			6,538			7,446
Property, equipment and software, net	25,209			24,392
TOTAL ASSETS	$	222,363		$	236,696		$	245,346		$	218,004
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accrued compensation	$	22,675		$	27,120		$	16,644		$	21,507
Accounts payable	34,521			33,498			29,668			36,341
Accrued taxes other than income taxes	13,854			15,275			13,360			11,244
Accrued insurance and other	27,472			23,335			21,008			24,654
Operating lease liabilities							7,807			—
Income taxes payable	692			1,097			1,651			1,570
TOTAL CURRENT LIABILITIES	99,214			100,325			90,138			95,316
Accrued insurance and other, excluding current portion	11,750			13,478			12,733			12,029
Operating lease liabilities, excluding current portion							40,312			—
Deferred gain on sale of real estate, excluding current portion	20,758			22,216			—			20,270
Income taxes payable, excluding current portion	612			600			289			289
Deferred income taxes	508			510			12			17
Long-term debt	53,848			49,068
Long-term debt, net							58,916			53,894
TOTAL LIABILITIES	186,690			186,197			202,400			181,815
Commitments and contingencies

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 - 21,366,111 shares and 21,179,068 shares, respectively	2,374			2,374
Common stock, par value $0.10; Authorized - 120,000,000 shares; Issued - 23,738,003 shares; Outstanding - 21,408,659 shares and 21,367,821 shares, respectively							2,374			2,374
Paid-in capital	77,283			79,057			78,593			77,688
(Accumulated deficit) retained earnings	(10,126		)	9,738
Accumulated deficit							(5,673		)	(10,917		)
Accumulated other comprehensive loss	(7,656		)	(7,070		)	(7,039		)	(6,801		)
Treasury stock, at cost; 2,371,892 and 2,558,935 shares, respectively	(26,202		)	(33,600		)
Treasury stock, at cost; 2,329,344 and 2,370,182 shares, respectively							(25,309		)	(26,155		)
TOTAL STOCKHOLDERS’ EQUITY	35,673			50,499			42,946			36,189
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	222,363		$	236,696		$	245,346		$	218,004

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
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)~~



	Six Months Ended May 3, 2020
	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 NOVEMBER 3, 2019	23,738,003	$	2,374	$	77,688		$	(10,917	)	$	(6,801	)	$	(26,155	)	$	36,189
Effect of new accounting principle	—	—		—			22,216			—			—			22,216
Net loss	—	—		—			(10,808		)	—			—			(10,808		)
Share-based compensation	—	—		511			—			—			—			511
Issuance of common stock	—	—		(114		)	(739		)	—			846			(7		)
Other comprehensive income	—	—		—			—			364			—			364
BALANCE AT FEBRUARY 2, 2020	23,738,003	$	2,374	$	78,085		$	(248	)	$	(6,437	)	$	(25,309	)	$	48,465
Net loss	—	—		—			(5,425		)	—			—			(5,425		)
Share-based compensation	—	—		508			—			—			—			508
Other comprehensive loss	—	—		—			—			(602		)	—			(602		)
BALANCE AT MAY 3, 2020	23,738,003	$	2,374	$	78,593		$	(5,673	)	$	(7,039	)	$	(25,309	)	$	42,946


	Nine Months Ended July 29, 2018																				Six Months Ended April 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			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						Shares				Treasury Stock			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		(Accumulated Deficit) Retained Earnings			$	Accumulated Other Comprehensive Income (Loss)	45,843		$	(5,261	)		Total Stockholders’ Equity		$	(37,607	)	$	83,994
BALANCE AT OCTOBER 28, 2018																					23,738,003		$	2,374	$	79,057		$	9,738		$	(7,070	)	$	(33,600	)	$	50,499
Effect of new accounting principle																					—		—		—			426			—			—			426
Net loss	—	—		—			(10,694		)		—			—				(10,694		)	—		—		—			(3,215		)	—			—			(3,215		)
Share-based compensation	—	—		435			—				—			—				435			—		—		(113		)	—			—			—			(113		)
Issuance of common stock	—	—		(10		)	(40		)		—			50				—			—		—		(35		)	(206		)	—			241			—
Other comprehensive income	—	—		—			—				1,404			—				1,404			—		—		—			—			158			—			158
BALANCE AT JANUARY 28, 2018	23,738,003	$	2,374	$	79,070		$	35,109			$	(3,857	)	$	(37,557	)		$	75,139
BALANCE AT JANUARY 27, 2019																					23,738,003		$	2,374	$	78,909		$	6,743		$	(6,912	)	$	(33,359	)	$	47,755
Net loss	—	—		—			(7,687		)		—			—				(7,687		)	—		—		—			(5,165		)	—			—			(5,165		)
Share-based compensation	—	—		557			—				—			—				557			—		—		(95		)	—			—			—			(95		)
Issuance of common stock	—	—		(80		)	(119		)		—			139				(60		)	—		—		(883		)	(2,234		)	—			3,077			(40		)
Other comprehensive loss	—	—		—			—				(947		)	—				(947		)	—		—		—			—			(179		)	—			(179		)
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
BALANCE AT APRIL 28, 2019																					23,738,003		$	2,374	$	77,931		$	(656	)	$	(7,091	)	$	(30,282	)	$	42,276

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						Six Months Ended
	July 28, 2019			July 29, 2018			May 3, 2020			April 28, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(14,437	)	$	(29,799	)	$	(16,233	)	$	(8,380	)
Adjustment to reconcile net loss to cash provided by (used in) operating activities:
Adjustment to reconcile net loss to cash provided by operating activities:
Depreciation and amortization	5,127			5,515			4,000			3,358
Release of doubtful accounts and sales allowances	(185		)	(181		)
Operating lease asset amortization							4,043			—
Allowance (release) of doubtful accounts and sales allowances							(7		)	(281		)
Unrealized foreign currency exchange (gain) loss	(133		)	194			293			(109		)
Impairment charges	426			155
Impairment charge							11			347
Amortization of gain on sale leaseback of property	(1,458		)	(1,458		)	—			(972		)
Loss (gain) on dispositions of property, equipment and software	13			—			(287		)	6
Share-based compensation	86			517			1,019			(208		)
Change in operating assets and liabilities:
Trade accounts receivable	22,624			21,218			19,407			19,316
Other assets	895			3,956			(283		)	1,323
Accounts payable	1,104			(8,330		)	(6,611		)	(7,310		)
Accrued expenses and other liabilities	(3,583		)	(3,086		)	(2,531		)	1,978
Income taxes	(318		)	1,274			89			390
Net cash provided by (used in) operating activities	10,161			(10,025		)
Net cash provided by operating activities							2,910			9,458
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of investments	213			608			547			97
Purchases of investments	(178		)	(375		)	(284		)	(118		)
Proceeds from sale of property, equipment, and software	43			—			352			—
Purchases of property, equipment, and software	(6,305		)	(2,332		)	(3,092		)	(4,058		)
Net cash used in investing activities	(6,227		)	(2,099		)	(2,477		)	(4,079		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of borrowings	(20,000		)	(119,696		)	(15,000		)	(15,000		)
Draw-down on borrowings	25,000			119,696			20,000			20,000
Debt issuance costs	(621		)	(1,415		)	(243		)	(177		)
Withholding tax payment on vesting of stock awards	(316		)	(269		)	(6		)	(40		)
Net cash provided by (used in) financing activities	4,063			(1,684		)
Net cash provided by financing activities							4,751			4,783
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(633		)	(817		)	(521		)	(249		)
Net increase (decrease) in cash, cash equivalents and restricted cash	7,364			(14,625		)
Net increase in cash, cash equivalents and restricted cash							4,663			9,913
Cash, cash equivalents and restricted cash, beginning of period	36,544			54,097			38,444			36,544
Cash, cash equivalents and restricted cash, end of period	$	43,908		$	39,472		$	43,107		$	46,457

Cash paid during the period:
Interest	$	2,367		$	2,084		$	1,382		$	1,560
Income taxes	$	1,174		$	2,483		$	258		$	216

Reconciliation of cash, cash equivalents, and restricted cash:
Current assets:
Cash and cash equivalents	$	36,031		$	29,929		$	26,223		$	39,689
Restricted cash included in Restricted cash and short-term investments	7,877			9,543			16,884			6,768
Cash, cash equivalents and restricted cash, end of period	$	43,908		$	39,472		$	43,107		$	46,457

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~~May 3, 2020 and April 28, 2019 ~~and July 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 ("GAAP"), consistent in all material respects with those applied in the Annual Report on Form 10-K for the year ended ~~October 28, 2018.~~November 3, 2019. 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, 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 28, 2018.~~

~~Certain reclassifications have been made to the prior year financial statements in order to conform to the current year’s presentation.~~November 3, 2019.

NOTE 2: Recently Issued Accounting Pronouncements

New Accounting Standards Not Yet Adopted by the Company

In ~~August 2018,~~March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The Company intends to apply ASU 2020-04 in the first quarter of fiscal 2021 and does not anticipate a significant impact on its consolidated financial statements upon adoption.

In August 2018, the FASB issued 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 on the consolidated financial statements upon adoption.

In June 2016, the FASB issued ASU 2016-13 (ASC Topic 326), as clarified in ASU 2019-04, ASU 2019-05, ASU 2019-11, ASU 2018-19 and ASU 2019-05, amending how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance requires the application of a current expected credit loss model, which is a new impairment model based on expected losses. Under this model, an entity recognizes an allowance for expected credit losses based on historical experience, current conditions and forecasted information rather than the current methodology of delaying recognition of credit losses until it is probable a loss has been incurred. The amendments are effective for fiscal years beginning after December 15, 2022, which for the Company will be the first quarter of fiscal 2024. 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.

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 June 2018, the FASB issued ASU 2018-07, Compensation - 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~~ASU 2018-07 was effective ~~for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year, which~~ for the Company ~~will be~~in the first quarter of fiscal ~~2020. The Company does not anticipate a significant impact upon adoption.~~

~~In June 2016,~~2020 and the ~~FASB issued ASU 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement~~adoption of ~~Credit Losses on Financial Instruments~~ ~~(“ASU 2016-13”). This ASU provides~~this 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 significanthad no impact on ~~its~~our consolidated financial ~~statements based on the instruments currently held and its historical trend of bad debt expense relating to trade accounts receivable.~~statements.

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~~This ASU was effective ~~for fiscal years beginning after December 15, 2018, which for the Company will be~~in the first quarter of fiscal ~~2020. The~~2020 resulting in 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,~~recording right-of-use (“ROU”) assets 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. Earlybalance sheet. The 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~~material impact on the ~~Company’s~~ consolidated financial ~~statements.~~

~~In May 2017,~~statements of operations and consolidated statements of cash flows. For 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 Company adopted this ASU in the first quarter of fiscal 2019, resulting in no significant impact on the ~~Company’s 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 Company adopted this ASU in the first quarter of fiscal 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 adopted this ASU retrospectively in the first quarter of fiscal 2019, resulting in no significant impact on the Company’sCompany'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 Company adopted this ASU in the first quarter of fiscal 2019, resulting in no significant impact on the Company’s consolidated financial statements.

~~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 was adopted by the Company in the first quarter of fiscal 2019. Please refer to Note ~~3. Revenue Recognition for additional disclosures.~~3 - Leases.

All other ASUs that became effective for Volt in the first ~~nine~~six months of fiscal ~~2019~~2020 were not applicable to the Company at this time and therefore, did not have any impact during the period.

NOTE 3: Leases

The Company adopted ASC 842, Leases on November 4, 2019 using the modified transition method without retrospective application to comparative periods. The Company elected the package of three practical expedients allowed for under the transition guidance. Accordingly, the Company did not reassess: (1) whether any expired or existing contracts are/or contain leases; (2) the lease classification for any expired or existing leases; or (3) initial direct costs for any existing leases. The Company has also elected not to recognize ROU assets and lease liabilities for short-term leases that have a term of 12 months or less.

The Company’s material operating leases consist of branch locations, as well as corporate office space. Our leases have remaining terms of 1 - 12 years. Generally, the lease term is the minimum of the non-cancelable period of the lease or the lease term inclusive of reasonably certain renewal option periods. Volt determines if an arrangement meets the criteria of a lease at inception, at which time it also performs an analysis to determine whether the lease qualifies as operating or financing. The Company does not currently have any finance leases.

Upon adoption, the Company recorded approximately $47.2 million of ROU assets and $52.0 million of lease liabilities related to operating leases on the Condensed Consolidated Balance Sheet. At transition, the ROU asset was measured at the initial amount of the lease liability adjusted for any deferred rent and cease-use liabilities. The Company also recognized a $22.2 million cumulative-effect adjustment to retained earnings related to the deferred gain on the sale and leaseback of real estate. This gain was previously being amortized at approximately $0.5 million per quarter as an offset to rent expense in the Condensed Consolidated Statements of Operations. Since the Company has a full valuation allowance against its deferred tax assets, the impact is a reduction to our deferred tax assets and related valuation allowance, which resulted in no tax impact to the net change to equity.

Operating lease liabilities represent the present value of lease payments not yet paid. ROU assets represent Volt's right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepaid or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. As the rate implicit in the lease is not readily determinable, the Company used its incremental borrowing rates based on the information available at the lease commencement date in determining the present value of lease payments. To determine the present value of lease payments not yet paid, the Company estimates incremental secured borrowing rates corresponding to the maturities of the leases.

The Company has elected the practical expedient to not separate non-lease components from the lease components to which they relate, and instead account for each as a single lease component, for all underlying asset classes. Some leasing arrangements require variable payments that are dependent on usage or may vary for other reasons, such as payments for insurance, tax payments and other miscellaneous costs. The variable portion of lease payments is not included in the ROU assets or lease liabilities. Rather, variable payments, other than those dependent upon an index or rate, are expensed when the obligation for those payments is incurred and are included in lease expenses. Accordingly, all expenses associated with a lease contract are accounted for as lease expenses.

Operating leases are included in Right of use assets - operating leases and Operating lease liabilities, current and long-term, on the Condensed Consolidated Balance Sheet. Lease expense for operating leases is recognized on a straight-line basis over the lease term, and is included in Selling, administrative and other operating costs on the Condensed Consolidated Statement of Operations. During the six months ended May 3, 2020, cash paid for the amount that was included in the measurement of operating lease liabilities was $5.9 million and the ROU assets obtained in exchange for operating lease liabilities was $52.7 million.

The components of lease expense were as follows (in thousands):



	Three Months Ended			Six Months Ended
	May 3, 2020
Operating lease expense	$	3,003		$	5,924
Sublease income	(394		)	(788		)
Total (1)	$	2,609		$	5,136

(1) The Company's short term and variable lease expenses were minimal.

Weighted average remaining lease terms and discount rates were as follows:



	Six Months Ended May 3, 2020
	Six Months Ended May 3, 2020
Weighted average remaining lease term (years)	8.2
Weighted average discount rate	6.3	%

Maturities of operating lease liabilities as of May 3, 2020 were as follows (in thousands):



Fiscal Year:	Amount
Remainder of 2020	$	5,625
2021	9,063
2022	7,505
2023	6,523
2024	5,586
Thereafter	28,150
Total future lease payments	$	62,452
Less: Imputed interest	14,333
Total operating lease liabilities	$	48,119

Maturities of operating leases accounted for under ASC 840 as of fiscal year-end 2019 were as follows (in thousands):



Fiscal Year:	Amount
2020	$	11,782
2021	9,287
2022	7,457
2023	6,328
2024	5,486
Thereafter	28,422
Total future lease payments	$	68,762

NOTE 3:4: 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 May 3, 2020
Segment	Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations
Service Revenues:
Staffing Services	$	199,443	$	171,966	$	21,499	$	6,137	$	187	$	(346	)
Direct Placement Services	3,151		1,420		875		856		—		—
Managed Service Programs	4,681		—		1,929		2,752		—		—
	$	207,275	$	173,386	$	24,303	$	9,745	$	187	$	(346	)

Geographical Markets:
Domestic	$	181,870	$	172,548	$	—	$	9,648	$	—	$	(326	)
International	25,405		838		24,303		97		187		(20		)
	$	207,275	$	173,386	$	24,303	$	9,745	$	187	$	(346	)



	Three Months Ended April 28, 2019
Segment	Total		North American Staffing		International Staffing		North American MSP		Corporate and Other (1)		Eliminations
Service Revenues:
Staffing Services	$	239,406	$	206,771	$	26,953	$	5,776	$	174	$	(268	)
Direct Placement Services	3,601		2,100		1,179		674		—		(352		)
Managed Service Programs	3,806		—		677		3,129		—		—
Call Center Services	5,257		—		—		—		5,257		—
	$	252,070	$	208,871	$	28,809	$	9,579	$	5,431	$	(620	)

Geographical Markets:
Domestic	$	222,146	$	208,049	$	—	$	9,439	$	5,257	$	(599	)
International	29,924		822		28,809		140		174		(21		)
	$	252,070	$	208,871	$	28,809	$	9,579	$	5,431	$	(620	)

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													Six Months Ended May 3, 2020
Segment	Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations			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	)	$	409,486	$	352,829	$	45,106	$	11,931	$	390	$	(770	)
Direct Placement Services	10,633		6,380		3,179		2,073		—		(999		)	6,368		2,952		1,883		1,533		—		—
Managed Service Programs	11,563		—		2,334		9,229		—		—			9,187		—		3,537		5,650		—		—
Call Center Services	14,593		—		—		—		14,593		—
	$	738,682	$	614,360	$	83,803	$	27,351	$	15,133	$	(1,965	)	$	425,041	$	355,781	$	50,526	$	19,114	$	390	$	(770	)

Geographical Markets:
Domestic	$	651,566	$	611,861	$	—	$	27,009	$	14,593	$	(1,897	)	$	372,553	$	354,316	$	—	$	18,966	$	—	$	(729	)
International, principally Europe	87,116		2,499		83,803		342		540		(68		)
International														52,488		1,465		50,526		148		390		(41		)
	$	738,682	$	614,360	$	83,803	$	27,351	$	15,133	$	(1,965	)	$	425,041	$	355,781	$	50,526	$	19,114	$	390	$	(770	)

~~Payment Terms~~



	Six Months Ended April 28, 2019
Segment	Total		North American Staffing		International Staffing		North American MSP		Corporate and Other (1)		Eliminations
Service Revenues:
Staffing Services	$	478,139	$	416,405	$	51,586	$	10,385	$	346	$	(583	)
Direct Placement Services	6,954		4,314		2,042		1,376		—		(778		)
Managed Service Programs	7,482		—		1,447		6,035		—		—
Call Center Services	12,931		—		—		—		12,931		—
	$	505,506	$	420,719	$	55,075	$	17,796	$	13,277	$	(1,361	)

Geographical Markets:
Domestic	$	448,300	$	419,157	$	—	$	17,531	$	12,931	$	(1,319	)
International	57,206		1,562		55,075		265		346		(42		)
	$	505,506	$	420,719	$	55,075	$	17,796	$	13,277	$	(1,361	)

(1) Includes the revenues from Volt's Customer ~~payment terms vary by arrangement although payments are typically due within 15 - 45 days~~Care Solutions business through the time 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.exit in June 2019

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~~unconditional and records a sales allowance as a ~~liability, whereas under Topic 605, these accounts receivables were recorded net of an allowance.~~liability. As of ~~July 28, 2019, April 28, 2019, and January 27, 2019,~~May 3, 2020, the change in the reserve balance from November 3, 2019 was ~~$0.4 million, $0.4 million, and $0.7 million respectively.~~minimal. 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~~the Condensed Consolidated Balance Sheets. The Company does not have any material contract assets or long-term contract liabilities as of ~~July 28, 2019~~May 3, 2020 and ~~October 28, 2018.~~November 3, 2019.

Economic Factors

The Company's operations are subject to variations in the economic condition and regulatory environment in their jurisdictions of operations. Adverse economic conditions may severely reduce the demand for the Company’s services and directly impact the revenue. In addition, the Company faces risks in complying with various legal requirements and unpredictable changes in both U.S. and foreign regulations which may ~~incur fulfillment costs after obtaining~~have 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 costsfinancial impact on the ~~Consolidated Statements of Operations. Deferred fulfillment costs were immaterial as of July 28, 2019.~~business and operations.

The global spread of COVID-19, or coronavirus, has created significant volatility, uncertainty and global macroeconomic disruption. This was due to related government actions, non-governmental agency recommendations and public perceptions, and disruption in global economic and labor market conditions. Our business, results of operations and financial condition have been and may continue to be adversely impacted by the coronavirus pandemic, and future adverse impacts could be material and are difficult to predict.

NOTE 4:5: Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss for the three and ~~nine~~six months ended ~~July 28, 2019~~May 3, 2020 were (in thousands):

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 )



	Three Months Ended			Six Months Ended
	May 3, 2020
	Foreign Currency Translation
Accumulated other comprehensive loss at beginning of the period	$	(6,437	)	$	(6,801	)
Other comprehensive income	(602		)	(238		)
Accumulated other comprehensive loss at May 3, 2020	$	(7,039	)	$	(7,039	)

There were no reclassifications from accumulated other comprehensive loss for the three and ~~nine~~six months ended ~~July~~May 3, 2020 and April 28, ~~2019 and July 29, 2018.~~2019.

NOTE 5:6: 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 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, where contractually required. At ~~July 28,~~May 3, 2020 and November 3, 2019, ~~and October 28, 2018,~~ restricted cash included ~~$7.4~~$7.1 million and ~~$11.3~~$9.3 million, respectively, restricted for payment to associate vendors, and $0.5 million in both periods, ~~respectively,~~ restricted for other collateral accounts.

At May 3, 2020, restricted cash also included $9.3 million restricted under the Company’s long-term accounts receivable securitization program (“DZ Financing Program”) with DZ Bank AG Deutsche Zentral-Genossenschafsbank (“DZ Bank”). This cash was restricted as it supplemented collateral provided by accounts receivable towards the Company’s aggregate borrowing base usage of $84.8 million, inclusive of $60.0 million outstanding and $24.8 million in issued letters of credit as of May 3, 2020. Although the Company had sufficient unrestricted cash as of May 3, 2020 to reduce the outstanding balance and eliminate the cash restriction, the Company chose to preserve unrestricted cash as a conservative measure during the COVID-19 pandemic.

Short-term investments were ~~$3.1~~$2.5 million and $3.0 million at ~~both July 28,~~May 3, 2020 and November 3, 2019, ~~and October 28, 2018.~~respectively. These short-term investments consisted primarily of the fair value of deferred compensation investments corresponding to employees’ selections, primarily in mutual funds, based on quoted prices in active markets.

NOTE 6:7: 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-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 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. The income tax provision in the ~~third~~second quarter of fiscal 2020 was minimal and for the second quarter of fiscal 2019 ~~and 2018 of~~was $0.2 million, ~~and $1.3 million, respectively, were~~ primarily related to locations outside of the United States. For the ~~nine~~first six months ended ~~July~~May 3, 2020 and April 28, 2019, ~~and July 29, 2018,~~ the income tax provision ~~of $0.7~~was $0.2 million and ~~$0.6~~$0.5 million, 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 included the reversal of reserves on uncertain tax provisions 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 reduced the U.S. statutory tax rate from 35.0% to 21.0% effective January 1, 2018. U.S. tax law 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 was 23.4%. The Company's statutory rate is 21.0% for the fiscal year ended November 3, 2019. Other provisions now effective under the Tax Act 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~~ the ~~Company's net operating loss carry-forward and valuation allowance.~~

~~The Company did not record any change to its U.S. net deferred~~income tax ~~balances as~~impacts of the ~~enactment date since its U.S. net deferred tax assets are fully offset by a full valuation allowance. The Company reduced its net deferred tax assets~~Coronavirus Aid, Relief, and ~~corresponding valuation allowance by approximately $26.8 million for the fiscal year ended October 28, 2018.~~

~~Under the Tax~~Economic Security Act ~~the Company may be subject to a transition tax on the untaxed foreign earnings of its foreign subsidiaries by deeming those earnings to be repatriated~~ (“~~Transition Tax”~~CARES Act”)~~. 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, the Company must calculate the cumulative earnings and profits of each of the non-U.S. subsidiaries back to 1987. The Transition Tax didhas determined that it will not have a material impact onto the Company.

NOTE 7:8: Debt

The Company’s primary sources of liquidity are cash flows from operations and proceeds from 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~~$16.0 million. The Company generally targets minimum global liquidity to be approximately 1.5 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 March 27, 2020, the U.S. government enacted the CARES Act which, among other things, permits the deferral of the employer’s portion of social security tax payments between March 27, 2020 and December 31, 2020. Further as a result of the economic repercussions of the COVID-19 pandemic, the Company experienced a reduction in both weekly payroll and related tax payments of approximately $2.0 million per week.

On July 19, 2019, the Company amended and restated its ~~long-term $115.0 million accounts receivable securitization program (“~~DZ Financing ~~Program”) with DZ Bank AG Deutsche Zentral Genossenschafsbank (“DZ Bank”),~~Program, 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 conditions of the original agreement remain substantially unchanged.

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, that subsidiary may request that DZ Bank make loans from time-to-time to that subsidiary which are secured by liens on those receivables.

On ~~June 4, 2019,~~January 14, 2020, the Company ~~entered into~~executed 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 modifications to the ~~delinquency rate, it temporarily decreased~~agreement were to (1) extend the ~~Company's borrowing availability~~Amortization Date, as defined under the DZ Financing Program, ~~by approximately $2.0 - $3.0 million. These payment delays were not credit related~~from January 25, 2021 to January 25, 2023; (2) extend the Facility Maturity Date, as defined under the DZ Financing Program, from July 25, 2021 to July 25, 2023; and (3) revise an existing covenant to maintain positive net income in any fiscal year ending after 2020. All other terms and conditions remain unchanged.

On March 12, 2020, 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~~executed an amendment to the ~~securitization pool under the original terms of~~DZ Financing Program. The modifications to the agreement were to revise an existing covenant to maintain a Tangible Net Worth, as ~~permitted under a provision~~defined, from $40.0 million to $35.0 million through the Company’s fiscal quarter ending on or about July 31, 2020 and at least $40.0 million in ~~the amendment.~~each quarter thereafter. All other terms and conditions remain unchanged.

Loan advances may be made under the DZ Financing Program through January 25, ~~2021~~2023 and all loans will mature no later than July 25, ~~2021.~~2023. 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 28, 2019,~~May 3, 2020, the letter of credit participation was ~~$24.2~~$24.8 million inclusive of ~~$22.8~~$23.3 million for the Company’s casualty insurance program, $1.2 million for the security deposit required under certain real estate lease agreements and ~~$0.2~~$0.3 million for the Company's corporate credit card program. 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.~~covenants. 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 the DZ Financing Program, including (1) a minimum Tangible Net Worth, ~~(as~~as defined under the DZ Financing ~~Program)~~Program, of at least ~~$30.0~~$35.0 million through the Company's fiscal ~~2019, which will increase to~~quarter ending on or about July 31, 2020 and at least $40.0 million ~~in fiscal 2020;~~for each quarter thereafter; (2) positive net income in any fiscal year ending after ~~2019;~~2020; (3) maximum debt to tangible net worth ratio of 3:1; and (4) a minimum of $15.0 million in liquid assets, ~~(as~~as defined under the DZ Financing ~~Program).~~Program. At ~~July 28, 2019,~~May 3, 2020, the Company was in compliance with all debt covenants. At ~~July 28, 2019,~~May 3, 2020, there was ~~$16.4~~$4.2 million of borrowing availability, as defined under the DZ Financing Program.

~~The~~At May 3, 2020, the Company had ~~entered into the original agreement with DZ Bank when it exited its financing relationship with PNC Bank (“PNC Financing Program”). The Company used funds made available by~~outstanding borrowings under the DZ Financing Program ~~to repay all amounts outstanding under~~of $60.0 million with a weighted average annual interest rate of 3.3% during the ~~PNC Financing Program, which terminated in accordance with its terms. The Company uses~~second quarter of fiscal 2020 and 3.2% for the ~~availability from the DZ Financing Program from time-to-time for working capital and other general corporate purposes.~~

first six months of fiscal 2020. At ~~July~~April 28, 2019, the Company had outstanding borrowings under the DZ Financing ~~Program~~program of $55.0 million, with a weighted average annual ~~interest~~ rate of 4.3% during the second quarter of fiscal 2019 and 4.2% ~~during both the third quarter and~~for the first ~~nine~~six months of fiscal 2019. At July 29, 2018, the Company had outstanding borrowings under the DZ Financing program of $50.0 million, with a weighted average annual rate of 3.6% during the third quarter of fiscal 2018 and 3.5% in the first nine months of fiscal 2018.

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


	July 28, 2019		October 28, 2018		May 3, 2020		November 3, 2019
Financing programs	$	55,000	$	50,000	$	60,000	$	55,000
Less:
Deferred financing fees	1,152		932		1,084		1,106
Total long-term debt, net	$	53,848	$	49,068	$	58,916	$	53,894

On June 11, 2020 the Company amended the DZ Financing Program. The modifications to the agreement were to (1) replace an existing Tangible Net Worth (“TNW”) covenant requirement, as defined, to a minimum TNW of $20.0 million through the Company's fiscal quarter ending on or about July 31, 2021 and $40.0 million in each quarter thereafter, and (2) reduce the Maximum Facility Amount, as defined, from $115.0 million to $100.0 million. All other terms and conditions remain unchanged.

NOTE 8:9: Earnings (Loss) Per Share

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


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	July 28, 2019			July 29, 2018			July 28, 2019			July 29, 2018			May 3, 2020			April 28, 2019			May 3, 2020			April 28, 2019
Numerator
Net loss	$	(6,057	)	$	(11,418	)	$	(14,437	)	$	(29,799	)	$	(5,425	)	$	(5,165	)	$	(16,233	)	$	(8,380	)

Denominator
Basic weighted average number of shares	21,157			21,071			21,106			21,044			21,416			21,082			21,416			21,081
Diluted weighted average number of shares	21,157			21,071			21,106			21,044			21,416			21,082			21,416			21,081

Net loss per share:
Basic	$	(0.29	)	$	(0.54	)	$	(0.68	)	$	(1.42	)	$	(0.25	)	$	(0.24	)	$	(0.76	)	$	(0.40	)
Diluted	$	(0.29	)	$	(0.54	)	$	(0.68	)	$	(1.42	)	$	(0.25	)	$	(0.24	)	$	(0.76	)	$	(0.40	)

~~Options to purchase 636,664~~The diluted earnings per share for the six months ended May 3, 2020 did not include the effect of potentially dilutive outstanding shares comprised of 653,210 RSUs (defined below), 401,053 stock options and ~~1,608,492 shares of~~376,986 PSUs (defined below) because the ~~Company’s common stock were outstanding at July~~effect would have been anti-dilutive. The diluted earnings per share for the six months ended April 28, 2019 did not include the effect of potentially dilutive outstanding shares comprised of 383,962 RSUs, 922,193 stock options and ~~July 29, 2018, respectively. Additionally, there were 632,240 unvested restricted units and 466,929 outstanding at July 28, 2019 and July 29,~~176,989 PSUs because the effect would have been anti-dilutive.

2018, respectively, and 355,318 and 276,396 unvested performance share units outstanding at July 28, 2019 and July 29, 2018, respectively. These awards were not included in the computation of diluted loss per share in fiscal 2019 and 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 9:10: Share-Based Compensation Plans

For the three and ~~nine~~six months ended ~~July~~May 3, 2020, the Company recognized share-based compensation expense of $0.2 million and $0.7 million, respectively. For the three and six months ended April 28, 2019, the Company recognized share-based compensation expense of $0.6 million and ~~$1.3~~$0.7 million, ~~resp~~respectively.~~ectively. 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 Condensed 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 2019, the Company granted ~~long-term incentive awards in the aggregate of 237,325~~ performance stock units (“PSUs”) to executive management, ~~and 338,710~~ restricted stock units (“RSUs”) to certain employees including executive ~~management. Additionally, an~~management and its annual equity grant ~~totaling 86,405~~of 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 PSUs and RSUs had a total grant date fair value of ~~the PSUs and RSUs granted during the third quarter of fiscal 2019 was~~ approximately ~~$1.0~~$1.2 million and ~~$1.9~~$2.1 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.~~model, which requires estimates of key assumptions based on both historical information and management judgment regarding market factors and trends. For RSUs granted in the prior fiscal ~~years~~year 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~~second quarter ended ~~July 28, 2019,~~May 3, 2020, the total fair value of the remaining PSUs was less than $0.1 million and the remaining RSUs was approximately ~~$0.6 million and $0.9 million, respectively.~~$0.1 million.

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 ending stock price is the average price of the last 20 trading days prior to and including the final day of each performance period. The payout percentages can range from 0% to 200%. The RSUs vest in equal annual tranches over three years, provided the employees remain employed with the Company on each of 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 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 and RSUs that vested were settled in stock.~~

In ~~fiscal 2017,~~prior years, 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 was approximately $0.3 million with a weighted average fair value per unit of $4.35. The units vest in equal annual tranches over three years, provided the employees remain employed on each of those vesting dates. These awards are classified as a liability and 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. As of the ~~third~~second quarter ended ~~July 28, 2019,~~May 3, 2020, the total fair value was less than $0.1 million and ~~6,012~~5,465 phantom units were outstanding.

Summary of Equity and Liability Awards

The following tables summarize the activities related to the Company’s share-based equity and liability awards for the ~~nine~~six months ended ~~July 28, 2019:~~May 3, 2020:

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.



Performance Share Units	Number of	Weighted Average
Performance Share Units	Shares	Grant Date Fair Value
Outstanding at November 3, 2019 and May 3, 2020	376,986	$3.90

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



Restricted Stock Units	Number of		Weighted Average
Restricted Stock Units	Shares		Grant Date Fair Value
Outstanding at November 3, 2019	667,082		$3.86
Forfeited	(4,387	)	$3.80
Vested	(9,485	)	$4.10
Outstanding at May 3, 2020	653,210		$3.86

Stock Options
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



Stock Options	Number of Shares		Weighted Average Exercise Price	Weighted Average Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)
Stock Options	Number of Shares		Weighted Average Exercise Price	Weighted Average Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at November 3, 2019	603,484		$6.28	6.81	$—
Forfeited	(60,615	)	$8.22	—	$—
Expired	(141,816	)	$7.65	—	$—
Outstanding at May 3, 2020	401,053		$5.50	7.28	$—
Unvested at May 3, 2020	64,302		$4.18	7.94	$—
Exercisable at May 3, 2020	336,751		$5.75	7.15	$—

For the six months ended May 3, 2020, there was no issuance of any share-based payment awards or any exercise of stock options. As of ~~July 28, 2019,~~May 3, 2020, total unrecognized compensation expense of ~~$3.5~~$1.4 million related to PSUs, stock options, RSUs and phantom units will be recognized over the remaining weighted average vesting period of ~~2.2~~1.6 years of which $0.6 million, ~~$2.0 million, $0.7~~$0.6 million and $0.2 million are expected to be recognized in fiscal ~~2019,~~ 2020, 2021 and 2022, respectively.

NOTE ~~10:~~11: Restructuring and Severance Charges

The Company incurred total restructuring and severance costs of ~~$2.0~~$0.4 million and ~~$3.1~~$0.7 million in the ~~third~~second quarter of fiscal ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~$2.8~~$1.7 million and ~~$3.7~~$0.8 million for the ~~nine~~six months ended ~~July~~May 3, 2020 and April 28, 2019, respectively.

2020 Restructuring Plan

In the first quarter of fiscal 2020, the Company approved a restructuring plan (the “2020 Plan”) as part of its strategic initiative to optimize the Company’s cost infrastructure. The 2020 Plan will leverage the global capabilities of the Company's staffing operations based in Bangalore, India and ~~July 29, 2018, respectively.~~offshore a significant number of strategically identified roles to this location. The total costs incurred in the first six months of fiscal 2020 in connection with the 2020 Plan were $1.2 million, consisting of $0.1 million in North American Staffing, $0.1 million in International Staffing and $1.0 million in the Corporate and Other category. As of May 3, 2020, the Company anticipates payments of $0.6 million will be made through the remainder of fiscal 2020.

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~~was completed by the ~~Company's~~end of fiscal ~~year end on November 3, 2019. The Company incurred restructuring and severance costs of $0.5 million for the third quarter~~ 2019. The total costs since inception through ~~the third quarter of fiscal 2019 are~~May 3, 2020 were approximately ~~$5.3~~$5.5 million, consisting of $1.1 million in North American Staffing, $0.4 million in International Staffing and ~~$3.8~~$4.0 million in Corporate and Other. As of July 28, 2019, the Company anticipates payments of $0.9 million and $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, Michael Dean departed from 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 (the "Dean Separation Agreement").~~2018. The Company incurred related severance costs of $2.6 million in the third quarter of fiscal 2018, which is payable over a period of 24 months.

Effective August 23, 2019, Paul Tomkins stepped down from his role as Senior Vice President and Chief Financial Officer of the Company. The Company and Mr. Tomkins subsequently executed a separation agreement, effective September 11, 2019. The Company incurred related severance costs of $0.9 million in the fourth quarter of fiscal 2019, which is payable over a period of 12 months beginning November 2019.

Exit of Customer Care Solutions Business

In ~~the third quarter of fiscal~~June 2019, the Company exited its customer care solutions business, which ~~is currently~~was reported as a part of the Corporate and Other category. This exit ~~will enable~~allows 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 ~~$1.4 million and $1.7~~$2.1 million during the ~~third quarter and the first nine months~~second half of fiscal ~~2019, respectively.~~2019.

Other Restructuring Costs

During the second quarter of fiscal ~~2019 and 2018,~~2020, there were other restructuring actions taken by the Company as part of its continued efforts to reduce costs and ~~achieve operational efficiency.~~to offset COVID-19 related revenue losses. The Company recorded severance costs of ~~$0.1~~$0.4 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 Accrued compensation, Operating lease liabilities (upon adoption of ASC 842, Leases)and Accrued insurance and other in the Condensed Consolidated Balance Sheets. Activity for the first ~~nine~~six months of fiscal ~~2019~~2020 is summarized as follows (in thousands):


	July 28, 2019			May 3, 2020
Balance, beginning of year	$	5,702		$	3,845
Cease use liabilities transferred to ROU assets				(1,964		)
Liability at November 4, 2019				1,881
Charged to expense	2,800			1,657
Cash payments	(4,326		)	(2,397		)
Ending Balance	$	4,176		$	1,141

Upon adoption of ASC 842 Leases, $2.0 million of accrued restructuring related to the exit of leased real estate was reclassified as a reduction to the related ROU asset, per the accounting guidance. The remaining balance at ~~July 28, 2019~~May 3, 2020 of ~~$4.2~~$1.1 million, primarily related to Corporate and Other, includes ~~$2.3~~$0.6 million related to the ~~cost reduction plan implemented in fiscal 2018, $1.1~~2020 Plan and $0.5 million related to the change in executive ~~management and $0.8 million related to the exit of the customer care solutions business.~~management.

NOTE ~~11:~~12: 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 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 28, 2018, certain qualification failures related to 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 obtained the approval from the Internal Revenue Service regarding the method for curing the failures and made a contribution of $0.8 million in early fourth quarter of 2019.

NOTE ~~12:~~13: Segment Data

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

~~During~~, aligning with the ~~fourth quarter of fiscal 2018, in accordance with ASC 280,~~way the Company ~~determined that~~evaluates its North American Managed Service Program (“MSP”) met the criteria to be presented as a reportable segment. To provide period over period comparability, the Company has recast the prior period North American MSP segment data to conform to the current presentation in the prior period. This change did not have any impact on the consolidated financial results for any period presented.business performance and manages its operations. 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 ~~the third quarter of fiscal~~June 2019, the Company exited its customer care solutions business, which ~~is currently~~was reported as a part of the Corporate and Other category. This exit ~~will enable~~allows 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. The Company’s other non-reportable businesses will continue to be combined and disclosed with corporate services under the category Corporate and Other.

Segment operating income (loss) is comprised of segment net revenue less cost of services, selling, administrative and other operating costs, restructuring and severance 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 28, 2019															Three Months Ended May 3, 2020
	Total			North American Staffing		International Staffing		North American MSP		Corporate and Other (1)			Eliminations (2)			Total			North American Staffing		International Staffing		North American MSP		Corporate and Other			Eliminations
Net revenue	$	233,176		$	193,641	$	28,728	$	9,555	$	1,856		$	(604	)	$	207,275		$	173,386	$	24,303	$	9,745	$	187		$	(346	)
Cost of services	197,528			164,809		24,181		7,053		2,089			(604		)	175,038			147,423		20,282		7,582		97			(346		)
Gross margin	35,648			28,832		4,547		2,502		(233		)	—			32,237			25,963		4,021		2,163		90			—

Selling, administrative and other operating costs	38,395			24,346		4,023		1,382		8,644			—			36,189			23,043		3,714		1,672		7,760			—
Restructuring and severance costs	2,017			121		182		—		1,714			—			411			344		111		—		(44		)	—
Impairment charge	79			—		—		—		79			—
Operating income (loss)	(4,843		)	4,365		342		1,120		(10,670		)	—			(4,363		)	2,576		196		491		(7,626		)	—
Other income (expense), net	(1,049		)													(1,039		)
Income tax provision	165															23
Net loss	$	(6,057	)													$	(5,425	)


	Three Months Ended July 29, 2018															Three Months Ended April 28, 2019
	Total			North American Staffing		International Staffing		North American MSP		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	$	6,959	$	7,456		$	(865	)	$	252,070		$	208,871	$	28,809	$	9,579	$	5,431		$	(620	)
Cost of services	221,448			184,724		23,917		5,400		8,272			(865		)	215,813			179,678		24,095		7,186		5,474			(620		)
Gross margin	36,360			30,955		4,662		1,559		(816		)	—			36,257			29,193		4,714		2,393		(43		)	—

Selling, administrative and other operating costs	42,222			27,971		3,944		1,414		8,893			—			38,939			26,439		3,894		1,252		7,354			—
Restructuring and severance costs	3,108			23		41		38		3,006			—			724			210		192		41		281			—
Impairment charge																347			—		—		—		347			—
Operating income (loss)	(8,970		)	2,961		677		107		(12,715		)	—			(3,753		)	2,544		628		1,100		(8,025		)	—
Other income (expense), net	(1,142		)													(1,179		)
Income tax provision	1,306															233
Net loss	$	(11,418	)													$	(5,165	)


	Nine Months Ended July 28, 2019															Six Months Ended May 3, 2020
	Total			North American Staffing		International Staffing		North American MSP		Corporate and Other (1)			Eliminations (2)			Total			North American Staffing		International Staffing		North American MSP		Corporate and Other			Eliminations
Net revenue	$	738,682		$	614,360	$	83,803	$	27,351	$	15,133		$	(1,965	)	$	425,041		$	355,781	$	50,526	$	19,114	$	390		$	(770	)
Cost of services	629,078			526,172		70,414		20,157		14,300			(1,965		)	361,377			304,817		42,312		14,837		181			(770		)
Gross margin	109,604			88,188		13,389		7,194		833			—			63,664			50,964		8,214		4,277		209			—

Selling, administrative and other operating costs	117,144			77,063		11,659		3,941		24,481			—			75,686			47,852		7,533		3,032		17,269			—
Restructuring and severance costs	2,800			329		456		68		1,947			—			1,657			426		111		—		1,120			—
Impairment charge	426			—		—		—		426			—			11			11		—		—		—			—
Operating income (loss)	(10,766		)	10,796		1,274		3,185		(26,021		)	—			(13,690		)	2,675		570		1,245		(18,180		)	—
Other income (expense), net	(3,000		)													(2,325		)
Income tax provision	671															218
Net loss	$	(14,437	)													$	(16,233	)


	Nine Months Ended July 29, 2018															Six Months Ended April 28, 2019
	Total			North American Staffing		International Staffing		North American MSP		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	$	21,778	$	25,520		$	(2,999	)	$	505,506		$	420,719	$	55,075	$	17,796	$	13,277		$	(1,361	)
Cost of services	664,695			551,011		76,094		16,659		23,930			(2,999		)	431,550			361,363		46,233		13,104		12,211			(1,361		)
Gross margin	109,670			88,993		13,968		5,119		1,590			—			73,956			59,356		8,842		4,692		1,066			—

Selling, administrative and other operating costs	132,076			85,055		12,231		4,213		30,577			—			78,749			52,717		7,636		2,559		15,837			—
Restructuring and severance costs	3,730			32		340		117		3,241			—			783			208		274		68		233			—
Impairment charge	155			—		—		—		155			—			347			—		—		—		347			—
Operating income (loss)	(26,291		)	3,906		1,397		789		(32,383		)	—			(5,923		)	6,431		932		2,065		(15,351		)	—
Other income (expense), net	(2,932		)													(1,951		)
Income tax provision	576															506
Net loss	$	(29,799	)													$	(8,380	)

(1) Revenues are primarily derived from Volt Customer Care Solutions business through June 7, 2019.

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

NOTE ~~13:~~14: Subsequent Events

On ~~August 12, 2019, Paul Tomkins stepped down from his role as Senior Vice President and Chief Financial Officer of~~June 11, 2020 the Company ~~effective August 23, 2019. In connection with Mr. Tomkins’ departure,~~amended the ~~Board~~DZ Financing Program. The modifications to the agreement were to (1) replace an existing Tangible Net Worth (“TNW”) covenant requirement, as defined, to a minimum TNW of ~~Directors appointed Herbert M. Mueller~~$20.0 million through the Company's fiscal quarter ending on or about July 31, 2021 and $40.0 million in each quarter thereafter, and (2) reduce the Maximum Facility Amount, as ~~Senior Vice President~~defined, from $115.0 million to $100.0 million. All other terms and ~~Chief Financial Officer of the Company, effective August 24, 2019.~~

conditions remain unchanged.

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 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that involve expectations, plans or intentions (such as those relating to future business, future results of operations or financial condition, including with respect to the anticipated effects of COVID-19). You can identify these forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan” and other similar expressions. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. This MD&A should be read in conjunction with the MD&A included in our Form 10-K for the fiscal year ended ~~October 28, 2018,~~November 3, 2019, as filed with the SEC on January ~~9, 2019~~15, 2020 (the ~~“2018~~“2019 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 ~~2018~~2019 Form ~~10-K.~~10-K and Part II, “Item 1A. Risk Factors” of this report. We do not intend, and undertake no obligation except as required by law, to update any of our forward-looking statements after the date of this report to reflect actual results or future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Note Regarding the Use of Non-GAAP Financial Measures

We have provided certain Non-GAAP financial information, which includes adjustments for special items and 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~~Our Non-GAAP measures are generally presented on a constant currency basis, exclude the impact of businesses sold or exited, the impact from the migration of certain clients from a traditional staffing model to a managed service model (“MSP transitions”) as the difference in revenue recognition accounting under each model could be misleading on a comparative period basis, and ~~eliminating~~the elimination of special items. Special items ~~provides~~generally include impairments, restructuring and severance costs, as well as certain income or expenses which the Company does not consider indicative of the current and future period performance. We believe that the use of Non-GAAP measures provide 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 currency fluctuations or special items that management believes make it more difficult to understand and evaluate our 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 the current and future period performance.operation.

Segments

Our reportable segments are (i) North American Staffing, (ii) International Staffing and (iii) North American MSP. All other business activities that do not meet the criteria to be reportable segments are aggregated with corporate services under the category Corporate and Other. Our reportable segments have been determined in accordance with our internal management structure, which is based on operating activities. We evaluate business performance based upon several metrics, primarily using revenue and segment operating income as the relevant financial measures. We believe segment operating income provides management and investors a measure to analyze operating performance of each business segment against historical and competitors’ data, although historical results, including operating income, may not be indicative of future results as operating income is highly contingent on many factors including the state of the economy, competitive conditions and customer preferences.

We allocate all support-related costs to the operating segments except for costs not directly relating to our operating activities such as corporate-wide general and administrative costs. These costs are not allocated to individual operating segments because doing so would not enhance the understanding of segment operating performance and such costs are not used by management to measure segment performance.

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

~~During~~(“ASC 280”), which aligns with the ~~fourth quarter of fiscal 2018, in accordance with ASC 280,~~way the Company ~~determined that~~evaluates its North American Managed Service Program (“MSP”) met the criteria to be presented as a reportable segment. To provide period over period comparability, the Company has recast the prior period North American MSP segment data to conform to the current presentation 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 Staffingbusiness performance and ~~(iii) North American MSP. The non-reportable businesses are combined and disclosed with corporate services under the category Corporate and Other.~~manages its operations.

In ~~the third quarter of fiscal~~June 2019, the Company exited its customer care solutions business, which ~~is currently~~was reported as a part of the Corporate and Other category. This exit ~~will enable~~allows 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. The Company’s other non-reportable businesses will continue to be combined and disclosed with corporate services under the 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”)~~(commercial) as well as technical, information technology and engineering ~~(“professional”)~~(professional) positions. Our managed service programs (“MSP”) involves managing the procurement and on-boarding of contingent workers from multiple providers. ~~Our~~Until our exit from this business in June 2019, our customer care solutions ~~specializes~~business specialized in serving as an extension of our ~~customers'~~customers’ consumer relationships and processes including collaborating with customers, from help desk inquiries to advanced technical support.

As of ~~July 28, 2019,~~May 3, 2020, we employed approximately ~~17,300~~12,500 people, including ~~16,100~~11,400 contingent workers. Contingent workers are on our payroll for the length of their assignment. We operate ~~from~~in approximately 8570 of our own locations ~~worldwide with approximately~~and have an on-site presence in over 50 customer locations. Approximately 88% of our ~~revenues~~revenue is 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.

COVID-19

The global spread of COVID-19, which was declared a global pandemic by the World Health Organization ("WHO") on March 11, 2020, has created significant volatility, uncertainty and global macroeconomic disruption. Our business experienced significant changes in revenue trends at the mid-point of our second quarter of fiscal 2020 as market conditions rapidly deteriorated.

Beginning in mid-March 2020, a number of countries and U.S. federal, state, and local governments issued stay-at-home orders requiring persons who were not engaged in essential activities and businesses as defined in those specific orders to remain at home. Many other countries and jurisdictions without stay-at-home orders required nonessential businesses to close or otherwise reduce operations. Our first priority, with regard to the COVID-19 pandemic, was to ensure the health and safety of our employees, clients, suppliers and others with whom we partner in our business activities to continue our business operations in this unprecedented business environment. Our business was largely converted to a remote in-house workforce and remained open as we provided key services to essential businesses, both remotely and onsite at our customers’ locations.

In late January, we created a COVID-19 Incident Response Team, comprised of key senior leaders in the organization, to track and manage our COVID-19 activities, including monitoring the most up-to-date developments and safety standards from the Centers for Disease Control and Prevention, WHO, Occupational Safety and Health Administration and other key authorities. All internal and external information and communications relating to our COVID-19 safety protocols, FAQs, and reporting on COVID-19 incidents are managed by this central team. In addition to updating our external website, we actively shared information with clients and employees on how companies and workers can protect themselves via regular emails, conference and video calls and other digital communications. This same team is now responsible for the planning of our Return to the Workplace activities, which we intend to begin implementing for our Volt locations over the next several months subject to federal, state and local regulations as well as guidance from the key authorities described above.

The impact on sales has and will vary for each segment based on different levels of COVID-19 related measures enacted across geographies, the varied customer industries we serve, as well as, the quality and capability of the talent provided to successfully work remotely to support the customers’ needs. In our largest segment, North American Staffing, essential businesses represented approximately 80% of the segment's portfolio of business and in our International segment most of our contractors were able to work from home during the lockdown.

We shifted our sales approach to include a response to the pandemic and secured new business wins in opportunities that arose as a direct result of COVID-19. These work orders included making face shields and masks to help protect our healthcare professionals, requests to meet the needs of additional cleaning requirements and safety protocols, as well as expanding into other COVID-19 impacted industries. Our focus on sales and recruitment has shifted to be centered around businesses that are actively hiring in the current environment, and these COVID-19 specific opportunities are likely to remain available throughout 2020 and may remain in some form into 2021 until a vaccine is available and widely distributed.

Prior to the outbreak of COVID-19, we were focused on reducing our operating expenses and as the impact of the pandemic began to unfold, we took additional measures to manage our costs, including:

•Reduced compensation for the CEO, CFO and members of the Board of Directors

•Managing our cost base through a combination of headcount reductions, furloughs, and reduced hours

•Implementing an early halt on all domestic and international travel

•Eliminating most discretionary spending

•Continuing to negotiate reductions of committed spend

•Assessing our real estate footprint

•Temporary suspension of the matching contributions under the Volt Information Sciences, Inc. Savings Plan

In addition, we continue to actively pursue further options to increase financial flexibility.

While our global business environment is and will continue to be in various stages of economic reopening based on local government restrictions, advice from healthcare authorities and public perceptions, we have started to see a gradual increase in order activity and demand throughout the Company, including certain positive impacts of customers beginning to reopen previously shut down site operations within these early phases. Although there is still significant uncertainty related to COVID-19, our ability to continue successfully serving our existing customers during this pandemic as well as our agility in responding to immediate and critical demands in new areas has allowed us to mitigate the more significant adverse impacts of this global environment to date.

Goodwill

We perform our annual impairment test for goodwill during the second quarter of the fiscal year and when a triggering event occurs between annual impairment tests. When testing goodwill, the Company has the option to first assess qualitative factors for reporting units that carry goodwill. International Staffing is the only segment which carries goodwill. The qualitative assessment includes assessing the totality of relevant events and circumstances that affect the fair value or carrying value of the reporting unit. These events and circumstances include macroeconomic conditions, industry and competitive environment conditions, overall financial performance, reporting unit specific events and market considerations. We may also consider recent valuations of the reporting unit, including the magnitude of the difference between the most recent fair value estimate and the carrying value, as well as both positive and adverse events and circumstances, and the extent to which each of the events and circumstances identified may affect the comparison of a reporting unit’s fair value with its carrying value. If the qualitative assessment results in a conclusion that it is more likelythan not that the fair value of a reporting unit exceeds the carrying value, then no further testing is performed for that reporting unit.

When a qualitative assessment is not used, or if the qualitative assessment is not conclusive and it is necessary to calculate fair value of a reporting unit, then the impairment analysis for goodwill is performed at the reporting unit level using a one-step approach (“Step 1”) under Accounting Standards Update 2017-04, Intangibles - Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment. In conducting our goodwill impairment testing, we compare the fair value of the reporting unit with goodwill to the carrying value, using various valuation techniques including income (discounted cash flow) and market approaches. The Company believes the blended use of both approaches compensates for the inherent risk associated with using either one on a standalone basis, and this combination is indicative of the factors a market participant would consider when performing a similar valuation.

Our fiscal 2020 annual test performed in the second quarter used significant assumptions including expected revenue and expense growth rates, forecasted capital expenditures, working capital levels and a discount rate of 15.0%. Under the market-based approach, significant assumptions included relevant comparable company earnings multiples including the determination of whether a premium or discount should be applied to those comparables. During the second quarter of fiscal 2020, it was determined that no adjustment to the carrying value of goodwill of $5.2 million was required, as our Step 1 analysis resulted in the fair value of the reporting unit exceeding its carrying value.

Long-lived Assets

Long-lived assets consist of right-of-use assets, capitalized software costs, leasehold improvements and office equipment. We review these assets for impairment under ASC 360 Property, Plant and Equipment (“ASC 360”), whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Factors that could trigger an impairment review include a current period operating or cash flow loss combined with a history of operating or cash flow losses and a projection or forecast that demonstrates continuing losses or insufficient income associated with the use of a long-lived asset or asset group. Other factors include a significant change in the manner of the use of the asset or a significant negative industry or economic trend. If circumstances require a long-lived asset or asset group be reviewed for possible impairment, the Company first compares undiscounted cash flows expected to be generated by each asset or asset group to its carrying value. An impairment loss is recognized when the estimated undiscounted cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset (if any) are less than the carrying value of the asset. When an impairment loss is recognized, the carrying amount of the asset is reduced to its estimated fair value based on discounted cash flow analysis or other valuation techniques.

Due to the economic impact and continued uncertainty related to the COVID-19 pandemic and declines in our common stock price over recent quarters, we reviewed our long-lived assets for impairment. We determined the undiscounted cash flows of each asset group based on management’s current estimates and projections using information available as of the balance sheet date. The cash flows for each of the assets groups were compared to the current carrying values which concluded that there was no impairment necessary for the quarter ended May 3, 2020.

The adverse impact COVID-19 will continue to have on our business, operating results, cash flows and overall financial condition is uncertain. In response, we will consider real estate rationalization initiatives which may result in impairment changes if we exit and/or consolidate certain locations.

Recent Developments

On ~~August 12, 2019, Paul Tomkins stepped down from his role as Senior Vice President and Chief Financial Officer of~~June 11, 2020 the Company ~~effective August 23, 2019.~~amended the DZ Financing Program to replace the existing Tangible Net Worth (“TNW”) covenant requirement, as defined, to a minimum TNW of $20.0 million through the Company’s fiscal quarter ending on or about July 31, 2021 and $40.0 million in each quarter thereafter. In ~~connection with Mr. Tomkins’ departure, the Board of Directors appointed Herbert M. Mueller as Senior Vice President and Chief Financial Officer of~~addition to this change, the Company ~~effective August 24, 2019.~~elected to reduce the Maximum Facility Amount, as defined, from $115.0 million to $100.0 million to better reflect our asset base level and reduce borrowings costs going forward. All other terms and conditions remain unchanged.

Consolidated Results by Segment


	Three Months Ended July 28, 2019															Three Months Ended May 3, 2020
(in thousands)	Total			North American Staffing		International Staffing		North American MSP		Corporate and Other (1)			Eliminations (2)			Total			North American Staffing		International Staffing		North American MSP		Corporate and Other			Eliminations
Net revenue	$	233,176		$	193,641	$	28,728	$	9,555	$	1,856		$	(604	)	$	207,275		$	173,386	$	24,303	$	9,745	$	187		$	(346	)
Cost of services	197,528			164,809		24,181		7,053		2,089			(604		)	175,038			147,423		20,282		7,582		97			(346		)
Gross margin	35,648			28,832		4,547		2,502		(233		)	—			32,237			25,963		4,021		2,163		90			—

Selling, administrative and other operating costs	38,395			24,346		4,023		1,382		8,644			—			36,189			23,043		3,714		1,672		7,760			—
Restructuring and severance costs	2,017			121		182		—		1,714			—			411			344		111		—		(44		)	—
Impairment charge	79			—		—		—		79			—
Operating income (loss)	(4,843		)	4,365		342		1,120		(10,670		)	—			(4,363		)	2,576		196		491		(7,626		)	—
Other income (expense), net	(1,049		)													(1,039		)
Income tax provision	165															23
Net loss	$	(6,057	)													$	(5,425	)


	Three Months Ended July 29, 2018															Three Months Ended April 28, 2019
(in thousands)	Total			North American Staffing		International Staffing		North American MSP		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	$	6,959	$	7,456		$	(865	)	$	252,070		$	208,871	$	28,809	$	9,579	$	5,431		$	(620	)
Cost of services	221,448			184,724		23,917		5,400		8,272			(865		)	215,813			179,678		24,095		7,186		5,474			(620		)
Gross margin	36,360			30,955		4,662		1,559		(816		)	—			36,257			29,193		4,714		2,393		(43		)	—

Selling, administrative and other operating costs	42,222			27,971		3,944		1,414		8,893			—			38,939			26,439		3,894		1,252		7,354			—
Restructuring and severance costs	3,108			23		41		38		3,006			—			724			210		192		41		281			—
Impairment charge																347			—		—		—		347			—
Operating income (loss)	(8,970		)	2,961		677		107		(12,715		)	—			(3,753		)	2,544		628		1,100		(8,025		)	—
Other income (expense), net	(1,142		)													(1,179		)
Income tax provision	1,306															233
Net loss	$	(11,418	)													$	(5,165	)

(1) Revenues are primarily derived from Volt Customer Care Solutions business through June 7, 2019.

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

Results of Operations Consolidated ~~(Q3 2019~~(Q2 2020 vs. ~~Q3 2018)~~Q2 2019)

Net revenue in the ~~third~~second quarter of fiscal ~~2019~~2020 decreased ~~$24.6~~$44.8 million, to ~~$233.2~~$207.3 million from ~~$257.8~~$252.1 million in the ~~third~~second quarter of fiscal ~~2018.~~2019. The net revenue decrease was primarily due to a decrease in our North American Staffing segment of ~~$22.1~~$35.5 million, ~~and~~ a decrease in the Corporate and Other category of ~~$5.6~~$5.2 million (related to the exit from our customer care solutions business in June 2019)~~, partially offset by an increase~~ and a decrease in our ~~North American MSP~~International Staffing segment of ~~$2.6~~$4.5 million. Excluding $5.3 million of revenue from the customer care solutions business exited during fiscal 2019, $4.7 million related to MSP transitions and the negative impact of foreign currency fluctuations of ~~$1.3~~$0.8 million, ~~and a $5.6 million revenue decline from a business exited during the period,~~ net revenue decreased ~~$17.7~~$34.0 million, or ~~7.1%~~14.1%.

Operating loss in the ~~third~~second quarter of fiscal ~~2019 decreased $4.2~~2020 increased $0.6 million, to ~~$4.8~~$4.4 million from ~~$9.0~~$3.8 million in the ~~third~~second quarter of fiscal ~~2018.~~2019. Excluding athe customer care solutions business exited during ~~the period~~fiscal 2019, as well as restructuring and severance costs and impairment charges, operating loss ~~decreased $2.3 million, or 45.4%.~~increased $1.5 million. This ~~decrease~~increase in operating loss of ~~$2.3~~$1.5 million was primarily the result of ~~improvements~~increases in our ~~North American Staffing segment of $1.5 million and~~ North American MSP segment of ~~$1.0~~$0.7 million, our International Staffing segment of $0.5 million and the Corporate and Other category of $0.5 million.

Results of Operations by Segment ~~(Q3 2019~~(Q2 2020 vs. ~~Q3 2018)~~Q2 2019)

Net Revenue

The North American Staffing segment revenue decreased ~~$22.1~~$35.5 million, or ~~10.2%~~17.0%, in the ~~third~~second quarter of fiscal ~~2019. The segment's~~2020. Excluding $4.8 million in revenue ~~was impacted by lower demand~~ from ~~certain large~~MSP transitions and $0.3 million in revenue to our customer care solutions business exited in June 2019, adjusted revenue decreased $30.4 million, or 14.9%. While difficult to estimate an exact amount, approximately $16.0 million to $20.0 million of this decline is attributable to the impact of COVID-19 in the form of business shutdowns or reduced hours from some of our customers and ~~changes in other customers' staffing models, partially offset by growth~~remain at home orders from ~~new~~various states and ~~existing customers. This~~municipalities. The decrease was primarily ~~driven by lower demand from customers~~experienced in our light industrial as well as administrative and office job categories.

The International Staffing segment revenue ~~increased $0.1~~decreased $4.5 million, or ~~0.5%,~~15.6% in the ~~third~~second quarter of fiscal ~~2019. However, excluding~~2020, primarily due to adjustments of work orders related to pending statutory legislation changes in the United Kingdom partially offset by improvements in Belgium and Singapore. Excluding the negative impact of foreign exchange rate fluctuations of ~~$1.3~~$0.8 million, revenue ~~increased $1.4~~decreased $3.7 million, or ~~5.4%, primarily due to growth in demand in Belgium and France.~~13.2%. In this segment the most significant impact from COVID-19 was on the direct hire business which was down approximately 45% from pre-COVID expectations.

The North American MSP segment revenue increased ~~$2.6~~$0.2 million, or ~~37.3%~~1.7%, in the second quarter of fiscal 2020 as a result of new business and increased demand in ~~both~~its payroll service ~~and managed service businesses.~~business, partially offset by COVID-19 headcount reductions in a small number of clients.

The Corporate and Other category revenue decreased ~~$5.6~~$5.2 million, or ~~75.1%~~96.6%, in the second quarter of fiscal 2020 primarily as a result of our exit from the customer care solutions business in the beginning of June 2019.

Cost of Services and Gross Margin

Cost of services in the ~~third~~second quarter of fiscal ~~2019~~2020 decreased ~~$23.9~~$40.8 million, or ~~10.8%~~18.9%, to ~~$197.5~~$175.0 million from ~~$221.4~~$215.8 million in the ~~third~~second quarter of fiscal ~~2018.~~2019. Gross margin as a percent of revenue in the ~~third~~second quarter of fiscal ~~2019~~2020 increased to ~~15.3%~~15.6% from ~~14.1%~~14.4% in the ~~third~~second quarter of fiscal ~~2018.~~2019. Our North American Staffing segment margin as a percent of revenue ~~improved as~~increased primarily due to a ~~result~~$1.1 million positive workers compensation adjustment in the second quarter of fiscal 2020 and lower payroll tax ~~rates primarily from a reduction in California unemployment tax rates, partially offset by a decline in higher-margin direct hire and administrative fee revenue.~~rates. Our North American MSP segment margin ~~increased~~decreased as a result of ~~the increase~~a higher mix of payroll service revenue and lower margins in ~~revenue for both~~the 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 2019 increased to 15.5% from 14.9% in the third quarter of fiscal 2018.business.

Selling, Administrative and Other Operating Costs

Selling, administrative and other operating costs in the ~~third~~second quarter of fiscal ~~2019~~2020 decreased ~~$3.8~~$2.7 million, or ~~9.1%~~7.1%, to ~~$38.4~~$36.2 million from ~~$42.2~~$38.9 million in the ~~third~~second quarter of fiscal ~~2018.~~2019. The decrease was primarily due to ~~on-going~~ cost reductions in all areas of the business, including $3.3 million in labor and related costs due to lower headcount, lower incentives and ~~revised incentive plans~~a decrease in the valuation of share-based compensation as ~~well as $0.7 million~~a result of a decline in ~~facility related costs.~~market value. In addition, the second quarter of fiscal 2019 included the amortization of a deferred gain on the sale of real estate of $0.5 million. As a percent of revenue, selling, administrative and other operating costs were ~~16.5%~~17.5% and ~~16.4%~~15.4% in the ~~third~~second quarter of fiscal ~~2019~~2020 and ~~2018,~~2019, respectively.

Restructuring and Severance Costs

Restructuring and severance costs in the ~~third~~second quarter of fiscal 2020 decreased $0.3 million, to $0.4 million from $0.7 million in the second quarter of fiscal 2019. These cost reductions were primarily due to actions taken by the Company as part of its continued efforts to reduce costs and achieve operational efficiency. Restructuring and severance costs accrued in the second quarter of fiscal 2019 ~~decreased $1.1 million, to $2.0 million from $3.1 million in the third quarter of fiscal 2018. The~~also included costs ~~in the third quarter of fiscal 2019 were primarily due to lease termination costs~~incurred in connection with exiting our customer care solutions business in the third quarter of fiscal 2019.

Impairment Charges

In the ~~third~~second quarter of fiscal ~~2018, costs were incurred~~2019, there was a $0.3 million impairment of equipment used in ~~accordance with the Dean Separation Agreement.~~our customer care solutions business.

Other Income (Expense), net

Other expense in the ~~third~~second quarter of fiscal ~~2019~~2020 decreased ~~$0.1~~$0.2 million, to $1.0 million from ~~$1.1~~$1.2 million in the ~~third~~second quarter of fiscal ~~2018~~2019 due to a decrease in interest expense and non-cash foreign exchange 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 higher rates and an increase in borrowings under our financing program.balances.

Income Tax Provision

The income tax provisions of ~~$0.2~~less than $0.1 million and ~~$1.3~~$0.2 million in the ~~third~~second quarter of fiscal ~~2019~~2020 and ~~2018,~~2019, respectively, were primarily related to locations outside of the United States.

Consolidated Results by Segment



	Six Months Ended May 3, 2020
(in thousands)	Total			North American Staffing		International Staffing		North American MSP		Corporate and Other			Eliminations
Net revenue	$	425,041		$	355,781	$	50,526	$	19,114	$	390		$	(770	)
Cost of services	361,377			304,817		42,312		14,837		181			(770		)
Gross margin	63,664			50,964		8,214		4,277		209			—

Selling, administrative and other operating costs	75,686			47,852		7,533		3,032		17,269			—
Restructuring and severance costs	1,657			426		111		—		1,120			—
Impairment charge	11			11		—		—		—			—
Operating income (loss)	(13,690		)	2,675		570		1,245		(18,180		)	—
Other income (expense), net	(2,325		)
Income tax provision	218
Net loss	$	(16,233	)

Nine Months Ended July 28, 2019
(in thousands) Total North American Staffing International Staffing North American MSP Corporate and Other (1) Eliminations (2)
Net revenue $ 738,682
$ 614,360
$ 83,803
$ 27,351
$ 15,133
$ (1,965 )
Cost of services 629,078
526,172
70,414
20,157
14,300
(1,965 )
Gross margin 109,604
88,188
13,389
7,194
833
—

Selling, administrative and other operating costs 117,144
77,063
11,659
3,941
24,481
—
Restructuring and severance costs 2,800
329
456
68
1,947
—
Impairment charge 426
—
—
—
426
—
Operating income (loss) (10,766 ) 10,796
1,274
3,185
(26,021 ) —
Other income (expense), net (3,000 )
Income tax provision 671

Net loss $ (14,437 )


	Nine Months Ended July 29, 2018															Six Months Ended April 28, 2019
(in thousands)	Total			North American Staffing		International Staffing		North American MSP		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	$	21,778	$	25,520		$	(2,999	)	$	505,506		$	420,719	$	55,075	$	17,796	$	13,277		$	(1,361	)
Cost of services	664,695			551,011		76,094		16,659		23,930			(2,999		)	431,550			361,363		46,233		13,104		12,211			(1,361		)
Gross margin	109,670			88,993		13,968		5,119		1,590			—			73,956			59,356		8,842		4,692		1,066			—

Selling, administrative and other operating costs	132,076			85,055		12,231		4,213		30,577			—			78,749			52,717		7,636		2,559		15,837			—
Restructuring and severance costs	3,730			32		340		117		3,241			—			783			208		274		68		233			—
Impairment charge	155			—		—		—		155			—			347			—		—		—		347			—
Operating income (loss)	(26,291		)	3,906		1,397		789		(32,383		)	—			(5,923		)	6,431		932		2,065		(15,351		)	—
Other income (expense), net	(2,932		)													(1,951		)
Income tax provision	576															506
Net loss	$	(29,799	)													$	(8,380	)

(1) Revenues are primarily derived from Volt Customer Care Solutions business through June 7, 2019.

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

Results of Operations Consolidated ~~(Q3 2019~~(Q2 2020 YTD vs. ~~Q3 2018~~Q2 2019 YTD)

Net revenue in the first ~~nine~~six months of fiscal ~~2019~~2020 decreased ~~$35.7~~$80.5 million, to ~~$738.7~~$425.0 million from ~~$774.4~~$505.5 million in the first ~~nine~~six months of fiscal ~~2018.~~2019. The net revenue decrease was primarily due to decreases in our North American Staffing segment of ~~$25.6~~$64.9 million, a decrease in the Corporate and Other category of ~~$10.4~~$13.0 million (related to the exit from our customer care solutions business in June 2019) and a decrease in our International Staffing segment of ~~$0.8~~$4.5 million. Excluding a $13.0 million ~~as well as~~revenue decline from the customer care solutions business exited during fiscal 2019, a $7.2 million decrease related to MSP transitions and the negative impact of foreign currency fluctuations of ~~$4.8 million. These decreases were partially offset by an increase of $5.6~~$0.9 million, ~~in our North American MSP segment. Excluding the impact of foreign currency fluctuations and $11.0 million in revenue from businesses exited during the period,~~ net revenue decreased ~~$19.9~~$59.4 million, or ~~2.7%~~12.3%.

Operating loss in the first ~~nine~~six months of fiscal ~~2019 decreased $15.5~~2020 increased $7.8 million, to ~~$10.8~~$13.7 million from ~~$26.3~~$5.9 million in the first ~~nine~~six months of fiscal ~~2018.~~2019. Excluding ~~businesses~~the customer care solutions business exited during ~~the period~~fiscal 2019, as well as restructuring and severance costs and impairment charges, operating loss ~~decreased $14.9 million, or 62.4%.~~increased $6.8 million. This ~~decrease~~increase in operating loss of ~~$14.9~~$6.8 million was primarily the result of ~~improvements~~declines in our North American Staffing segment of ~~$7.2~~$3.5 million and ~~North American MSP segment of $2.3 million. In addition,~~in the Corporate and Other category ~~improved by $5.4 million primarily as a result~~ of ~~reductions in corporate support costs.~~$1.8 million.

Results of Operations by Segment ~~(Q3 2019~~(Q2 2020 YTD vs. ~~Q3 2018~~Q2 2019 YTD)

Net Revenue

The North American Staffing segment revenue decreased ~~$25.6~~$64.9 million, or ~~4.0%~~15.4%, in the first ~~nine~~six months of fiscal ~~2019. The year over year decrease~~2020. Excluding $7.4 million in revenue ~~improved~~ from aMSP transitions and $0.6 million in revenue to our customer care solutions business exited in June 2019, adjusted revenue decreased $56.9 million, or 13.8%. While difficult to estimate an exact amount, approximately $16.0 million to $20.0 million of this decline is attributable to the impact of ~~7.9%~~COVID-19 in the ~~first nine months~~form of ~~fiscal 2018 compared to~~business shutdowns or reduced hours from some of our customers and remain at home orders from various states and municipalities. In addition, the ~~first nine months of fiscal 2017. This~~segment's revenue was impacted by lower demand from certain large customers, partially offset by growth from new and existing customers. The decrease was ~~driven by decreases from customers~~primarily experienced in our ~~professional and~~light industrial as well as administrative and office job ~~categories partially offset by increased demand from customers in our light industrial job category.~~categories.

The International Staffing segment revenue decreased ~~$6.3~~$4.5 million ~~or 6.9%,~~ in the first ~~nine~~six months of fiscal ~~2019.~~2020 primarily due to adjustments of work orders related to pending statutory legislation changes in the United Kingdom partially offset by improvements in Belgium and Singapore. Excluding the negative impact of foreign exchange rate fluctuations of ~~$4.8~~$0.9 million, ~~and $0.7 million in~~ revenue ~~from a business exited during the period, revenue declined $0.8~~decreased $3.6 million, or ~~1.0%, primarily due to lower demand in the United Kingdom offset by growth in Belgium and France.~~6.7%.

The North American MSP segment revenue increased ~~$5.6~~$1.3 million, or ~~25.6%~~7.4%, in the first six months of fiscal 2020 as a result of ~~growth~~new business and increased demand in ~~both~~its 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.~~business.

The Corporate and Other category revenue decreased ~~$10.4~~$12.9 million, or ~~40.7%~~97.1%, in the first six months of fiscal 2020 primarily as a result of our exit from the customer care solutions business in the beginning of June 2019. ~~This business experienced lower headcount from reduced client demand earlier in the year.~~

Cost of Services and Gross Margin

Cost of services in the first ~~nine~~six months of fiscal ~~2019~~2020 decreased ~~$35.6~~$70.2 million, or ~~5.4%~~16.3%, to ~~$629.1~~$361.4 million from ~~$664.7~~$431.6 million in the first ~~nine~~six months of fiscal ~~2018.~~2019. Gross margin as a percent of revenue in the first ~~nine~~six months of fiscal ~~2019~~2020 increased to ~~14.8%~~15.0% from ~~14.2%~~14.6% in the first ~~nine~~six months of fiscal ~~2018.~~2019. Excluding the customer care solutions business which we exited in June 2019, gross margin as a percent of revenue in the first six months of fiscal 2020 increased to 15.0% from 14.8% in the first six months of fiscal 2019. Our North American Staffing segment margin as a percent of revenue ~~improved~~increased primarily due to a positive workers compensation adjustment and payroll tax expense as a percent of direct labor offset by other state-mandated benefit costs as a percent of revenue. This was partially offset by a decrease in direct hire revenue in the first six months of fiscal 2020 and a decline in administrative fee revenue as a result of ~~lower payroll tax rates primarily~~the exit from ~~a reduction in California unemployment tax rates, partially offset by a higher mix of larger price-competitive customers. In addition,~~ our customer care solutions business. Our North American MSP segment margin decreased as a ~~percent~~result of a higher mix of payroll service revenue ~~increased due to increases~~and lower margins in both payroll service 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 year. Excluding this business, gross margin increased to 15.1% in the first nine months of fiscal 2019 from 14.5% in the first nine months of fiscal 2018.

Selling, Administrative and Other Operating Costs

Selling, administrative and other operating costs in the first ~~nine~~six months of fiscal ~~2019~~2020 decreased ~~$15.0~~$3.0 million, or ~~11.3%~~3.9%, to ~~$117.1~~$75.7 million from ~~$132.1~~$78.7 million in the first ~~nine~~six months of fiscal ~~2018.~~2019. The decrease was primarily due to ~~on-going~~ cost reductions in all areas of the business, including ~~$9.9~~$3.5 million in labor and related costs due to lower headcount, ~~and revised incentive plans, $1.9~~$1.0 million in consulting fees, $0.3 million in facility related costs, ~~and~~partially offset by an increase in depreciation expense of $0.7 ~~million in travel expenses.~~million. In addition, ~~legal and consulting fees were $3.2 million lower primarily related to corporate and cost-efficiency initiatives in~~ the first ~~quarter of fiscal 2018. These improvements were offset by $1.4 million in higher medical claims experience in the first nine~~six months of fiscal ~~2019.~~2019 included amortization of a deferred gain on the sale of real estate of $1.0 million and a positive medical claims true-up of $0.3 million compared to a negative medical claims true-up of $0.3 million in fiscal 2020. As a percent of revenue, ~~these~~selling, administrative and other operating costs were ~~15.9%~~17.8% and ~~17.1%~~15.6% in the first ~~nine~~six months of fiscal ~~2019~~2020 and ~~2018,~~2019, respectively.

Restructuring and Severance Costs

Restructuring and severance costs in the first ~~nine~~six months of fiscal ~~2019 decreased~~2020 increased $0.9 million, to ~~$2.8~~$1.7 million from ~~$3.7~~$0.8 million in the first ~~nine~~six months of fiscal ~~2018.~~2019. The costs in the first ~~nine~~six months of fiscal ~~2019 are~~2020 were primarily due to our plan to leverage the global capabilities of our staffing operations based in Bangalore, India and offshore a significant number of strategically identified roles to this location. In the second quarter of fiscal 2019, restructuring and severance ~~and lease termination~~ costs included costs incurred in connection with exiting our customer care solutions ~~business. In~~business in the ~~first nine months~~third quarter of fiscal ~~2018, costs were incurred in accordance with the Dean Separation Agreement.~~2019.

Impairment Charges

~~Impairment charges in~~In the first ~~nine~~six 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~~there was a $0.3 million onimpairment of 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 software tool, which resulted in an impairment charge of $0.2 million.~~

Other Income (Expense), net

Other expense in the first ~~nine~~six months of fiscal 2020 increased $0.3 million, to $2.3 million from $2.0 million in the first six months of fiscal 2019 ~~increased $0.1 million, or 2.3%,~~due to $3.0 million from $2.9 million in the first nine months of fiscal 2018, primarily 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 amortization of deferred financing fees.~~

Income Tax Provision ~~(Benefit)~~

The income tax ~~provision~~provisions of ~~$0.7~~$0.2 million and $0.5 million in the first ~~nine~~six months of fiscal 2020 and 2019, was primarily related to locations outside of the United States. The income tax provision of $0.6 million in the first nine months of fiscal 2018 was offset by a $1.1 million reversal of uncertain tax provisions partially offset by a provisionrespectively, were primarily related to locations outside of the United 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~~this arrangement 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 15 - 45 day credit terms, with few extenuating exceptions, 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~~$16.0 million. We generally target minimum global liquidity to be approximately 1.5 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.

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act which, among other things, permits the deferral of the employer’s portion of social security tax payments between March 27, 2020 and December 31, 2020. The Company estimates approximately $22.0 million to $24.0 million of employer payroll taxes otherwise due in 2020 will be delayed with 50% due by December 31, 2021 and the remaining 50% by December 31, 2022. In addition, certain state governments have delayed payment of various state payroll taxes for a shorter period of time. The Company’s payment of approximately $5.5 million in state payroll taxes will be deferred from the second quarter of fiscal 2020 with payments scheduled to begin in the third quarter of fiscal 2020.

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 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 are 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;

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 July 19, 2019, we amended and restated ~~our long-term $115.0 million accounts receivable securitization program with~~the DZ ~~Bank,~~Financing Program, 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. This will improve available liquidity allowing us to continue to advance our capital allocation plan and will provide us with additional resources to execute our business strategy.

On January 14, 2020, the Company executed an amendment to the DZ Financing Program. The modifications to the agreement were to (1) extend the Amortization Date, as defined under the DZ Financing Program, from January 25, 2021 to January 25, 2023; (2) extend the Facility Maturity Date, as defined under the DZ Financing Program, from July 25, 2021 to July 25, 2023; and (3) revise an existing covenant to maintain positive net income in any fiscal year ending after 2020. All other terms and conditions remain unchanged.

On March 12, 2020, the Company executed an amendment to the DZ Financing Program. The modifications to the agreement were to revise an existing covenant to maintain a Tangible Net Worth, as defined, from $40.0 million to $35.0 million through the Company’s fiscal quarter ending on or about July 31, 2020 and at least $40.0 million in each quarter thereafter. All other terms and conditions remain unchanged.

On June 11, 2020 the Company amended the DZ Financing Program to replace the existing Tangible Net Worth (“TNW”) covenant requirement, as defined, to a minimum TNW of $20.0 million through the Company’s fiscal quarter ending on or about July 31, 2021 and $40.0 million in each quarter thereafter. In addition to this change, the Company elected to reduce the Maximum Facility Amount, as defined, from $115.0 million to $100.0 million to better reflect our asset base level and reduce borrowings costs going forward. All other terms and conditions remain unchanged.

Entering fiscal ~~2019,~~2020, we have significant tax benefits including federal net operating loss carryforwards of ~~$187.5~~$207.2 million and U.S. state net operating loss carryforwards of ~~$224.1~~$239.3 million, ~~as well as~~international NOL carryforwards of $9.3 million and federal tax credits of ~~$51.3~~$53.5 million, which are fully reserved with a valuation ~~allowance. Such loss carryforwards~~allowance, and ~~credits are available for utilization~~can be utilized against ~~corporate income tax that may result in the future.~~future profits. We also have capital loss carryforwards of $12.9 million, which we will be able to utilize against potential future capital gains that may arise in the near future. As of November 3, 2019, our U.S. federal NOL carryforwards will expire at various dates between 2031 and 2038 (with some indefinite), our U.S. state NOL carryforwards will expire at various dates between 2020 and 2038, our international NOL carryforwards will expire at various dates beginning in 2020 (with some indefinite), capital loss carryforwards will expire between 2020 and 2022 and federal tax credits will expire between 2020 and 2037.

As previously ~~noted,~~discussed, we ~~continue~~approved a restructuring plan during the first quarter of fiscal 2020 (the "2020 Plan") as part of our strategic initiative to ~~add functionality~~optimize cost infrastructure. The 2020 Plan will leverage the global capabilities of our staffing operations based in Bangalore, India and offshore a significant number of strategically identified roles to ~~our underlying information technology systems~~this location. The 2020 Plan affects approximately 125 employees. To date, we incurred a total pre-tax restructuring charge of approximately $1.2 million of severance and ~~to improve our competitiveness~~benefit costs in the ~~marketplace. Through our strategy~~first half of ~~improving efficiency in all aspects~~fiscal year ending November 1, 2020. As a result of our operations, we believe we can realize organic growth opportunities, reduce costs and increase profitability. During fiscal 2018, we also took certain restructuring actions that will improve selling, general and administrative costs by approximately $13.5 million in annualized savings. This is due in part to efficiencies gained from our information technology investment, as well asthe offshoring under the 2020 Plan, along with executing on additional ~~headcount reduction and lease termination initiatives taken under our 2018 Plan. Consistent with our ongoing strategic efforts,~~organizational cost savings initiatives during fiscal 2020, we estimate we will ~~be used to strengthen our operations.~~realize annualized net savings of approximately $10.0 million.

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,~~As the demand for our services decline, as we ~~entered into an amendment with DZ Bank~~saw in the second half of March 2020 due to ~~temporarily exclude~~ the ~~receivables due from~~impact of the COVID-19 crisis, we generally see a ~~specific customer from~~decrease in our working capital needs as 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 ordersexisting accounts receivable are collected and not replaced at the same level, resulting in ~~significant payment delays, which negatively impacted~~a decline of our accounts receivable balance with less of an effect on current liabilities due to the ~~90-Day Delinquency Rate, as defined~~shorter cycle time of the payroll related items. This may result in an increase in our operating cash flows; however, any such increase would not be sustainable in the ~~DZ Financing Program. Although, this change improved~~event that an economic downturn continued for an extended period. We do expect a similar underlying trend of increased operating cash flows through 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 portionbeginning 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~~2020, if we experience consistent client payment patterns. In May 2020, we have not experienced a significant decrease in cash collections from clients. We will continue to monitor default risks and we intend to focus our collection teams to diligently pursue payments consistent with original payment terms. Many governments in countries and territories in which we do business have announced that certain payroll, income, and other tax payments may be deferred without penalty for a certain period of time as well as providing other cash flow related relief packages. We have determined that we will qualify for the payroll tax deferral which allows us to delay payment of the employer portion of payroll taxes and we are in the process of determining if we qualify for certain employment tax credits. If we qualify for such credits, the credits will be treated as government subsidies which will offset related operating expenses. At this time, we do not anticipate this to be material. As part of our working capital strategy to improve our cash flow needs in the short-term, especially in the next three to six months, we continue to actively monitor these relief packages to take advantage of all of those which are available to us.

In June 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 28, 2019,~~May 3, 2020, the Company had outstanding borrowings under the DZ Financing Program of ~~$55.0~~$60.0 million. Borrowing availability, as defined under the DZ Financing Program, was ~~$16.4~~$4.2 million and global liquidity was ~~$40.6~~$27.1 million at ~~July 28, 2019.~~May 3, 2020.

Our DZ Financing Program is subject to termination under certain events of default such as breach of covenants, including the financial covenants. At ~~July 28, 2019,~~May 3, 2020, we were in compliance with all debt covenants. We believe, based on our current outlook, we will continue to be able to meet our financial ~~covenants.~~

covenants, as amended.

The following table sets forth our cash and global liquidity levels at the end of our last five quarters (in thousands):


Global Liquidity
	July 29, 2018		October 28, 2018		January 27, 2019		April 28, 2019		July 28, 2019		April 28, 2019		July 28, 2019		November 3, 2019		February 2, 2020		May 3, 2020
Cash and cash equivalents (a)	$	29,929	$	24,763	$	32,925	$	39,689	$	36,031	$	39,689	$	36,031	$	28,672	$	30,876	$	26,223

Total outstanding debt	$	50,000	$	50,000	$	55,000	$	55,000	$	55,000	$	55,000	$	55,000	$	55,000	$	55,000	$	60,000

Cash in banks (b)(c)	$	22,454	$	17,685	$	23,646	$	29,946	$	24,224	$	29,946	$	24,224	$	19,945	$	21,287	$	22,876
DZ Financing Program (d)	30,280		38,302		31,072		22,222		16,416		22,222		16,416		22,271		11,302		4,202
Global liquidity	52,734		55,987		54,718		52,168		40,640		52,168		40,640		42,216		32,589		27,078
Minimum liquidity threshold	15,000		15,000		15,000		15,000		15,000		15,000		15,000		15,000		15,000		15,000
Available liquidity	$	37,734	$	40,987	$	39,718	$	37,168	$	25,640	$	37,168	$	25,640	$	27,216	$	17,589	$	12,078


a.	Per financial statements.


b.	Amount generally includes outstanding checks.


c.	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 28, 2019,~~May 3, 2020, the balance in the USB collections account included in the DZ Financing Program availability was ~~$6.8~~$13.5 million.


d.	The borrowing base included the receivables from the United Kingdom effective July 19, 2019 and excluded the 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						Six Months Ended
	July 28, 2019			July 29, 2018			May 3, 2020			April 28, 2019
Net cash provided by (used in) operating activities	$	10,161		$	(10,025	)
Net cash provided by operating activities							$	2,910		$	9,458
Net cash used in investing activities	(6,227		)	(2,099		)	(2,477		)	(4,079		)
Net cash provided by (used in) financing activities	4,063			(1,684		)
Net cash provided by financing activities							4,751			4,783
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(633		)	(817		)	(521		)	(249		)
Net increase (decrease) in cash, cash equivalents and restricted cash	$	7,364		$	(14,625	)	$	4,663		$	9,913

Cash Flows - Operating Activities

The net cash provided by operating activities in the ~~nine~~six months ended ~~July 28, 2019 was $10.2 million, an increase of $20.2~~May 3, 2020 decreased $6.6 million from ~~net cash used in operating activities of $10.0~~$9.5 million in the ~~nine~~six months ended ~~July 29, 2018.~~April 28, 2019. This ~~increase~~decrease resulted primarily from ~~a decrease~~an increase in net loss of ~~$15.4~~$7.9 million partially offset by an increase in depreciation and amortization of $4.7 million, higher equity compensation of $1.2 million and the absence of the amortization of a ~~higher amount~~$1.0 million gain on sale of leaseback property in the first six months of fiscal 2020. In addition, there was a $5.6 million decrease in cash provided by operating assets and liabilities, primarily from ~~accounts payable and accounts receivable offset by other assets and income taxes.~~payment of accrued expenses.

Cash Flows - Investing Activities

The net cash used in investing activities in the ~~nine~~six months ended ~~July 28, 2019~~May 3, 2020 was ~~$6.2~~$2.5 million, principally for purchases of property, equipment and software of ~~$6.3 million.~~$3.1 million, partially offset by proceeds of $0.4 million from the sale of property, equipment and software. The net cash used in investing activities in the ~~nine~~six months ended ~~July 29, 2018~~April 28, 2019 was ~~$2.1~~$4.1 million, principally for the purchases of property, equipment and software of ~~$2.3~~$4.1 million.

Cash Flows - Financing Activities

The net cash ~~provided by~~used in financing activities in the ~~nine~~six months ended ~~July 28, 2019~~May 3, 2020 was ~~$4.1~~$4.8 million as a result of a $5.0 million net ~~draw down~~drawdown of borrowing under the DZ Financing Program. The net cash provided by financing activities in the six months ended April 28, 2019 was $4.8 million primarily due to a $5.0 million net drawdown 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.Program.

Financing Program

On July 19, 2019, we 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 -~~$5.0- $7.0 million in borrowing availability. All other material terms and conditions of the original agreement remain substantially unchanged.

On ~~June 4, 2019, we entered into~~January 14, 2020, the Company executed 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 modifications to the ~~delinquency rate, it temporarily decreased our borrowing availability~~agreement were to (1) extend the Amortization Date, as defined under the DZ Financing Program, ~~by approximately $2.0 - $3.0 million. These payment delays were not credit related~~from January 25, 2021 to January 25, 2023; (2) extend the Facility Maturity Date, as defined under the DZ Financing Program, from July 25, 2021 to July 25, 2023; and (3) revise an existing covenant to maintain positive net income in any fiscal year ending after 2020. All other terms and conditions remain unchanged.

On March 12, 2020, 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~~executed an amendment to the ~~securitization pool under the original terms of~~DZ Financing Program. The modifications to the agreement were to revise an existing covenant to maintain a Tangible Net Worth, as ~~permitted under~~defined, from $40.0 million to $35.0 million through the Company’s fiscal quarter ending on or about July 31, 2020 and at least $40.0 million in each quarter thereafter. All other terms and conditions remain unchanged.

On June 11, 2020 the Company amended the DZ Financing Program to replace the existing Tangible Net Worth (“TNW”) covenant requirement, as defined, to a ~~provision~~minimum TNW of $20.0 million through the Company’s fiscal quarter ending on or about July 31, 2021 and $40.0 million in each quarter thereafter. In addition to this change, the ~~amendment.~~Company elected to reduce the Maximum Facility Amount, as defined, from $115.0 million to $100.0 million to better reflect our asset base level and reduce borrowings costs going forward. All other terms and conditions remain unchanged.

Loan advances may be made under the DZ Financing Program through January 25, ~~2021~~2023 and all loans will mature no later than July 25, ~~2021.~~2023. 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 28, 2019,~~May 3, 2020, the letter of credit participation was ~~$24.2~~$24.8 million inclusive of ~~$22.8~~$23.3 million for the Company’s casualty insurance program, $1.2 million for the security deposit required under certain real estate lease agreements and ~~$0.2~~$0.3 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.

The Company is subject to certain financial and portfolio performance covenants under the DZ Financing Program, including (1) a minimum Tangible Net Worth, ~~(as~~as defined under the DZ Financing ~~Program)~~Program, of at least ~~$30.0~~$35.0 million through the Company's fiscal ~~2019, which will increase to~~quarter ending on or about July 31, 2020 and at least $40.0 million in ~~fiscal 2020;~~each quarter thereafter; (2) positive net income in any fiscal year ending after ~~2019;~~2020; (3) maximum debt to tangible net worth ratio of 3:1; and (4) a minimum of $15.0 million in liquid ~~assets (as~~assets. as defined under the DZ Financing ~~Program).~~Program. At ~~July 28, 2019,~~May 3, 2020, the Company was in compliance with all debt covenants. At ~~July 28, 2019,~~May 3, 2020, there was ~~$16.4~~$4.2 million of borrowing availability, as defined under the DZ Financing Program.

Off-Balance Sheet Arrangements

As of May 3, 2020, we had ~~entered into the original agreement with DZ Bank when it exited its financing relationship with PNC Bank (“PNC Financing Program”). We used funds made available by the DZ Financing Program~~no off-balance sheet arrangements that have, or are reasonably likely to ~~repay all amounts outstanding under the PNC Financing Program, which terminated in accordance with its terms. We use the availability from the DZ Financing Program from time-to-time for working~~have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital ~~and other general corporate purposes.~~expenditures, or capital resources.

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 28, 2018.~~November 3, 2019.

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. 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 28, 2019,~~May 3, 2020, we had cash and cash equivalents on which interest income is earned at variable rates. At ~~July 28, 2019,~~May 3, 2020, 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, net interest expense and other expense ~~and interest income~~ are affected by the general level of U.S. and foreign interest rates. Based upon the current levels of cash invested 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~~$0.2 million and a hypothetical 1-percentage-point decrease in interest rates would have decreased net interest expense by ~~$0.1~~$0.2 million in the first ~~nine~~six months of fiscal ~~2019.~~2020.

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 on the fiscal period balance sheet date. Income and expenses accounts are translated at an average exchange rate during the year which approximates the rates in effect on 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~~weakened relative to many foreign currencies as of ~~July 28, 2019~~May 3, 2020 compared to ~~October 28, 2018.~~November 3, 2019. Consequently, stockholders’ equity decreased ~~$0.6~~$0.2 million as a result of the foreign currency translation as of ~~July 28, 2019.~~May 3, 2020.

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 28, 2019~~May 3, 2020 would result in an approximate ~~$1.1~~$1.6 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 28, 2019~~May 3, 2020 would result in an approximate ~~$1.1~~$1.6 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.

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 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 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 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 28, 2019~~May 3, 2020 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 and legal proceedings arising in the ordinary course of its business, including payroll-related and various employment-related matters. ~~All litigation~~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 ~~2018~~2019 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 ~~2018~~2019 Form 10-K, which could materially affect the Company’s business, financial position and results of operations.

Our business, results of operations and financial condition has been and may continue to be adversely impacted by global public health epidemics, including the strain of coronavirus known as COVID-19, and future adverse impacts could be material and difficult to predict.

The global spread of the coronavirus (“COVID-19”), which was declared a global pandemic by the World Health Organization on March 11, 2020, has created significant volatility, uncertainty and global macroeconomic disruption due to related government actions (including declared states of emergency and quarantine, “shelter in place” or similar orders), non-governmental agency recommendations and public perceptions, and disruption in global economic and labor market conditions. These effects have had an adverse impact on our business, including reduced demand for our services, worker absences, client shutdowns and reduced operations, a reduction in bill rates and a shift of a majority of our workforce to remote operations. Other impacts of the spread of COVID-19 include continued or expanded closures of our clients’ facilities, the possibility our clients will not be able to pay for our services and solutions, or that they will attempt to defer payments owed to us, either of which could materially impact our liquidity. Further, we may continue to experience adverse financial impacts if we cannot offset revenue declines with cost savings through expense-related initiatives, human capital management initiatives or otherwise. Additionally, the economic environment may have an adverse effect on the fair market rent of real estate properties which could impact our lease right of use assets, especially if market values decline. Although no impairment charges were recorded during the second quarter May 3, 2020, we may be required to record impairment charges on our assets as a result of adverse economic conditions in future periods.

We currently expect to see a measured increase in demand as the economy reopens over the next months, however the extent of this increase and the potential for subsequent and future decline in business demand from macro economics, shelter-in-place orders or other government actions is difficult to predict. As a result of these observed and potential developments, we expect our business, operations and financial results to continue to be negatively affected.

There are no other material changes from the risk factors set forth in Part I, “Item 1A. Risk Factors” in the ~~2018~~2019 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~~

On June 11, 2020 the Company amended the DZ Financing Program to rereplace the existing Tangible Net Worth (“TNW”) covenant requirement, as defined, to a minimum TNW of $20.0 million through the Company’s fiscal quarter ending on or about July 31, 2021 and $40.0 million in each quarter thereafter. In addition to this change, the Company elected to reduce the Maximum Facility Amount, as defined, from $115.0 million to $100.0 million to better reflect our asset base level and reduce borrowings costs going forward. All other terms and conditions remain unchanged.

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. 001-09232)

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		~~2019 Equity Incentive Plan (incorporated by reference to Appendix A~~Amendment No. 3 dated June 11, 2020 to the ~~Company's Proxy Statement filed February 22, 2019; File No. 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 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~~Agreementdated as of July 19, 2019, ~~by and~~ among Volt Funding II, LLC, as borrower, Volt Information Sciences, Inc., as servicer, ~~the lenders~~thelenders 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~~DZBANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt Am Main, New York Branch, as letter of credit issuers ~~(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 24, 2019; File No. 001-9232)~~

~~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 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 August 14, 2019; File No. 001-9232)

31.1		Certification of 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 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

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 5, 2019~~June 16, 2020	By:		/s/ Linda Perneau
		Linda Perneau
		President and Chief Executive Officer (Principal Executive Officer)

Date: ~~September 5, 2019~~June 16, 2020	By:		/s/ Herbert M. Mueller
		Herbert M. Mueller
		Senior Vice President and Chief Financial Officer (Principal Financial Officer)

Date: ~~September 5, 2019~~June 16, 2020	By:		/s/ Leonard Naujokas
		Leonard Naujokas
		Controller and Chief Accounting Officer (Principal Accounting Officer)

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