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 ~~April 28, 2019~~February 2, 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 ~~May 31, 2019,~~March 6, 2020, there were ~~21,211,828~~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						Six Months Ended
	April 28, 2019			April 29, 2018			April 28, 2019			April 29, 2018			Three Months Ended
													February 2, 2020			January 27, 2019
NET REVENUE	$	252,070		$	263,219		$	505,506		$	516,557		$	217,766		$	253,436
Cost of services	215,813			225,918			431,550			443,247			186,339			215,737
GROSS MARGIN	36,257			37,301			73,956			73,310			31,427			37,699

EXPENSES
Selling, administrative and other operating costs	38,939			42,916			78,749			89,854			39,497			39,810
Restructuring and severance costs	724			104			783			622			1,246			59
Impairment charge	347			155			347			155			11			—
OPERATING LOSS	(3,753		)	(5,874		)	(5,923		)	(17,321		)	(9,327		)	(2,170		)

OTHER INCOME (EXPENSE), NET
Interest income (expense), net	(699		)	(631		)	(1,445		)	(1,413		)	(700		)	(746		)
Foreign exchange gain (loss), net	(314		)	(497		)	(101		)	206			(328		)	213
Other income (expense), net	(166		)	(55		)	(405		)	(583		)	(258		)	(239		)
TOTAL OTHER INCOME (EXPENSE), NET	(1,179		)	(1,183		)	(1,951		)	(1,790		)	(1,286		)	(772		)

LOSS BEFORE INCOME TAXES	(4,932		)	(7,057		)	(7,874		)	(19,111		)	(10,613		)	(2,942		)
Income tax provision (benefit)	233			630			506			(730		)
Income tax provision													195			273
NET LOSS	$	(5,165	)	$	(7,687	)	$	(8,380	)	$	(18,381	)	$	(10,808	)	$	(3,215	)

PER SHARE DATA:
Basic:
Basic and Diluted:
Net loss	$	(0.24	)	$	(0.37	)	$	(0.40	)	$	(0.87	)	$	(0.50	)	$	(0.15	)
Weighted average number of shares	21,082			21,032			21,081			21,030			21,416			21,080
Diluted:
Net loss	$	(0.24	)	$	(0.37	)	$	(0.40	)	$	(0.87	)
Weighted average number of shares	21,082			21,032			21,081			21,030

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						Six Months Ended
	April 28, 2019			April 29, 2018			April 28, 2019			April 29, 2018			Three Months Ended
	April 28, 2019			April 29, 2018			April 28, 2019			April 29, 2018			February 2, 2020			January 27, 2019
NET LOSS	$	(5,165	)	$	(7,687	)	$	(8,380	)	$	(18,381	)	$	(10,808	)	$	(3,215	)
Other comprehensive income (loss):
Foreign currency translation adjustments net of taxes of $0 and $0, respectively	(179		)	(947		)	(21		)	457			364			158
COMPREHENSIVE LOSS	$	(5,344	)	$	(8,634	)	$	(8,401	)	$	(17,924	)	$	(10,444	)	$	(3,057	)

See accompanying Notes to Condensed Consolidated Financial Statements.

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)


	April 28, 2019			October 28, 2018			February 2, 2020			November 3, 2019
	(unaudited)						(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	39,689		$	24,763		$	30,876		$	28,672
Restricted cash and short-term investments	9,925			14,844			8,484			12,794
Trade accounts receivable, net of allowances of $104 and $759, respectively	139,213			157,445
Trade accounts receivable, net of allowances of $95 and $117, respectively							125,113			135,950
Other current assets	5,659			7,444			7,595			7,252
TOTAL CURRENT ASSETS	194,486			204,496			172,068			184,668
Property, equipment and software, net							25,274			25,890
Right of use assets - operating leases							45,158			—
Other assets, excluding current portion	7,779			7,808			6,781			7,446
Property, equipment and software, net	24,880			24,392
TOTAL ASSETS	$	227,145		$	236,696		$	249,281		$	218,004
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accrued compensation	$	23,403		$	27,120		$	20,713		$	21,507
Accounts payable	26,183			33,498			29,939			36,341
Accrued taxes other than income taxes	18,316			15,275			13,062			11,244
Accrued insurance and other	28,217			23,335			22,841			24,654
Operating lease liabilities							8,123			—
Income taxes payable	1,404			1,097			1,741			1,570
TOTAL CURRENT LIABILITIES	97,523			100,325			96,419			95,316
Accrued insurance and other, excluding current portion	10,816			13,478			8,579			12,029
Operating lease liabilities, excluding current portion							41,693			—
Deferred gain on sale of real estate, excluding current portion	21,244			22,216			—			20,270
Income taxes payable, excluding current portion	608			600			289			289
Deferred income taxes	509			510			5			17
Long-term debt, excluding current portion, net	54,169			49,068
Long-term debt, net							53,831			53,894
TOTAL LIABILITIES	184,869			186,197			200,816			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 - 21,211,828 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	77,931			79,057			78,085			77,688
(Accumulated deficit) retained earnings	(656		)	9,738
Accumulated deficit							(248		)	(10,917		)
Accumulated other comprehensive loss	(7,091		)	(7,070		)	(6,437		)	(6,801		)
Treasury stock, at cost; 2,526,175 and 2,558,935 shares, respectively	(30,282		)	(33,600		)
Treasury stock, at cost; 2,329,344 and 2,370,182 shares, respectively							(25,309		)	(26,155		)
TOTAL STOCKHOLDERS’ EQUITY	42,276			50,499			48,465			36,189
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	227,145		$	236,696		$	249,281		$	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)


	Six Months Ended April 28, 2019																				Three Months Ended February 2, 2020
	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 28, 2018	23,738,003	$	2,374	$	79,057		(Accumulated Deficit) Retained Earnings			$	Accumulated Other Comprehensive Income (Loss)	9,738		$	(7,070	)		Total Stockholders’ Equity		$	(33,600	)	$	50,499
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	—	—		—			(3,215		)		—			—				(3,215		)	—		—		—			(10,808		)	—			—			(10,808		)
Share-based compensation	—	—		(113		)	—				—			—				(113		)	—		—		511			—			—			—			511
Issuance of common stock	—	—		(35		)	(206		)		—			241				—			—		—		(114		)	(739		)	—			846			(7		)
Effect of new accounting principle	—	—		—			426				—			—				426
Other comprehensive income	—	—		—			—				158			—				158			—		—		—			—			364			—			364
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
BALANCE AT FEBRUARY 2, 2020																					23,738,003		$	2,374	$	78,085		$	(248	)	$	(6,437	)	$	(25,309	)	$	48,465


	Six Months Ended April 29, 2018																				Three Months Ended January 27, 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
Net loss	—	—		—			(7,687		)		—			—				(7,687		)
Share-based compensation	—	—		557			—				—			—				557
Issuance of common stock	—	—		(80		)	(119		)		—			139				(60		)
Other comprehensive loss	—	—		—			—				(947		)	—				(947		)
BALANCE AT APRIL 29, 2018	23,738,003	$	2,374	$	79,547		$	27,303			$	(4,804	)	$	(37,418	)		$	67,002
BALANCE AT JANUARY 27, 2019																					23,738,003		$	2,374	$	78,909		$	6,743		$	(6,912	)	$	(33,359	)	$	47,755

See accompanying Notes to Condensed Consolidated Financial Statements.

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)


	Six Months Ended						Three Months Ended
	April 28, 2019			April 29, 2018			February 2, 2020			January 27, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(8,380	)	$	(18,381	)	$	(10,808	)	$	(3,215	)
Adjustment to reconcile net loss to cash provided by operating activities:
Adjustment to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization	3,358			3,726			1,973			1,603
Release of doubtful accounts and sales allowances	(281		)	(220		)
Operating lease asset amortization							2,082			—
Allowance (release) of doubtful accounts and sales allowances							5			(22		)
Unrealized foreign currency exchange (gain) loss	(109		)	386			472			39
Impairment charges	347			155
Impairment charge							11			—
Amortization of gain on sale leaseback of property	(972		)	(972		)	—			(486		)
Loss (gain) on dispositions of property, equipment and software	6			—			(327		)	6
Share-based compensation	(208		)	992			511			(113		)
Change in operating assets and liabilities:
Trade accounts receivable	19,316			7,855			10,957			8,393
Other assets	1,323			4,980			248			768
Accounts payable	(7,310		)	3,227			(6,468		)	(7,123		)
Accrued expenses and other liabilities	1,978			(2,159		)	1,205			1,936
Income taxes	390			889			172			174
Net cash provided by operating activities	9,458			478			33			1,960
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of investments	97			460			—			(11		)
Purchases of investments	(118		)	(297		)	(16		)	(58		)
Proceeds from sale of property, equipment, and software	—			1			352			—
Purchases of property, equipment, and software	(4,058		)	(1,298		)	(1,370		)	(1,698		)
Net cash used in investing activities	(4,079		)	(1,134		)	(1,034		)	(1,767		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of borrowings	(15,000		)	(109,696		)	(10,000		)	(10,000		)
Draw-down on borrowings	20,000			109,696			10,000			15,000
Debt issuance costs	(177		)	(1,411		)	(230		)	(140		)
Withholding tax payment on vesting of restricted stock awards	(40		)	(60		)
Withholding tax payment on vesting of stock awards							(6		)	—
Net cash provided by (used in) financing activities	4,783			(1,471		)	(236		)	4,860
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(249		)	(571		)	(565		)	(429		)
Net increase (decrease) in cash, cash equivalents and restricted cash	9,913			(2,698		)	(1,802		)	4,624
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	$	46,457		$	51,399		$	36,642		$	41,168

Cash paid during the period:
Interest	$	1,560		$	1,482		$	730		$	801
Income taxes	$	216		$	1,132		$	4		$	146

Reconciliation of cash, cash equivalents, and restricted cash:
Current assets:
Cash and cash equivalents	$	39,689		$	34,177		$	30,876		$	32,925
Restricted cash included in Restricted cash and short-term investments	6,768			17,222			5,766			8,243
Cash, cash equivalents and restricted cash, end of period	$	46,457		$	51,399		$	36,642		$	41,168

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 ~~April 28,~~February 2, 2020 and January 27, 2019 ~~and April 29, 2018~~

(Unaudited)

NOTE 1: Basis of Presentation

Basis of Presentation

The accompanying interim condensed consolidated financial statements of Volt Information Sciences, Inc. (“Volt” or the “Company”) have been prepared in conformity with generally accepted accounting principles, consistent in all material respects with those applied in the Annual Report on Form 10-K for the year ended ~~October 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, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement: Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which changes the fair value measurement disclosure requirements of Accounting Standards Codification (“ASC”) 820. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted for any eliminated or modified disclosures upon issuance of ASU 2018-13. ASU 2018-13 is effective for the Company in the first quarter of fiscal 2021. The Company does not anticipate a significant impact upon adoption.

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

~~In June~~ 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU provides guidance for recognizing credit losses on financial instruments based on an estimate of current expected credit losses model. In April 2019, ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, was issued to clarify and address certain items related to the amendments in ASU 2016-13. In May 2019, ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, was issued to provide entities that have certain instruments within the scope of ASC 326 with an option to irrevocably elect the fair value option under ASC 825-10, Financial Instruments - Overall, applied on an instrument-by-instrument basis for eligible instruments. The amendments are effective for fiscal years beginning after December 15, 2019, which for the Company will be the first quarter of fiscal 2021. Although the impact upon adoption will depend on the financial instruments held by the Company at that time, the Company does not anticipate a significant impact on its consolidated financial statements based on the instruments currently held and its historical trend of bad debt expense relating to trade accounts receivable.

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 Company adopted this ASU in the first quarter of fiscal 2020 resulting in no significant impact on the Company's consolidated financial 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 effective for fiscal years beginning after December 15, 2018, which for the Company will be the first quarter of fiscal 2020. The Company has preliminarily evaluated the impact of the pending adoption of ASU 2016-02 on its consolidated financial statements on a modified retrospective basis, and currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption, which will increase the Company’s total assets and total liabilities that the Company reports relative to such amounts prior to adoption. In addition, the Company’s deferred gain on real estate will be recognized as a cumulative-effect adjustment to equity upon adoption.

~~Recently Adopted by the Company~~

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

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting~~. This ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. An entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The Company adopted this ASU in the first quarter of fiscal ~~2019,~~2020 resulting in noa significant impact on the ~~Company’s~~Company's consolidated financial statements.

~~In February 2017,~~ For 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’s consolidated financial statements, ~~besides a change in the presentation of restricted cash on the 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 ~~half~~three 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 right-of-use assets (“ROU”) 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 will result 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 three months ended February 2, 2020, cash paid for the amount that was included in the measurement of operating lease liabilities was $2.9 million and the ROU assets obtained in exchange for operating lease liabilities was $52.0 million.

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



	Three Months Ended February 2, 2020
	Three Months Ended February 2, 2020
Operating lease expense	$	2,921
Sublease income	(394		)
Total (1)	$	2,527

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

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



	Three Months Ended February 2, 2020
	Three Months Ended February 2, 2020
Weighted average remaining lease term (years)	8.3
Weighted average discount rate	6.3	%

Maturities of operating lease liabilities as of February 2, 2020 were as follows (in thousands):



Fiscal Year:	Amount
Remainder of 2020	$	8,434
2021	8,922
2022	7,363
2023	6,411
2024	5,572
2025	5,255
Thereafter	22,894
Total future lease payments	$	64,851
Less: Imputed interest	15,035
Total operating lease liabilities	$	49,816

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	$	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 six months ended April 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 April 28, 2019
Segment Total North American Staffing International Staffing
North American
MSP
Corporate and Other 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, principally Europe 29,924
822
28,809
140
174
(21 )
$ 252,070
$ 208,871
$ 28,809
$ 9,579
$ 5,431
$ (620 )



	Three Months Ended February 2, 2020
Segment	Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations
Service Revenues:
Staffing Services	$	210,043	$	180,863	$	23,607	$	5,794	$	203	$	(424	)
Direct Placement Services	3,217		1,532		1,008		677		—		—
Managed Service Programs	4,506		—		1,608		2,898		—		—
	$	217,766	$	182,395	$	26,223	$	9,369	$	203	$	(424	)

Geographical Markets:
Domestic	$	190,683	$	181,768	$	—	$	9,318	$	—	$	(403	)
International	27,083		627		26,223		51		203		(21		)
	$	217,766	$	182,395	$	26,223	$	9,369	$	203	$	(424	)


	Six Months Ended April 28, 2019													Three Months Ended January 27, 2019
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 (1)		Eliminations
Service Revenues:
Staffing Services	$	478,139	$	416,405	$	51,586	$	10,385	$	346	$	(583	)	$	238,733	$	209,634	$	24,633	$	4,609	$	172	$	(315	)
Direct Placement Services	6,954		4,314		2,042		1,376		—		(778		)	3,353		2,214		863		702		—		(426		)
Managed Service Programs	7,482		—		1,447		6,035		—		—			3,676		—		770		2,906		—		—
Call Center Services	12,931		—		—		—		12,931		—			7,674		—		—		—		7,674		—
	$	505,506	$	420,719	$	55,075	$	17,796	$	13,277	$	(1,361	)	$	253,436	$	211,848	$	26,266	$	8,217	$	7,846	$	(741	)

Geographical Markets:
Domestic	$	448,300	$	419,157	$	—	$	17,531	$	12,931	$	(1,319	)	$	226,154	$	211,108	$	—	$	8,092	$	7,674	$	(720	)
International, principally Europe	57,206		1,562		55,075		265		346		(42		)
International														27,282		740		26,266		125		172		(21		)
	$	505,506	$	420,719	$	55,075	$	17,796	$	13,277	$	(1,361	)	$	253,436	$	211,848	$	26,266	$	8,217	$	7,846	$	(741	)

~~Payment Terms~~

(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 ~~January 27, 2019 and April 28, 2019,~~February 2, 2020, the change in the reserve balance from November 3, 2019 was ~~$0.7 million and $0.4 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 ~~April 28, 2019~~February 2, 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. This 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 April 28, 2019.~~business and operations.

NOTE 4:5: Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss for the three ~~and six~~ months ended ~~April 28, 2019~~February 2, 2020 were (in thousands):

Three Months Ended Six Months Ended
April 28, 2019
Foreign Currency Translation
Accumulated other comprehensive loss at beginning of the period $ (6,912 ) $ (7,070 )
Other comprehensive loss (179 ) (21 )
Accumulated other comprehensive loss at April 28, 2019 $ (7,091 ) $ (7,091 )



	Foreign Currency Translation
Accumulated other comprehensive loss at beginning of the period	$	(6,801	)
Other comprehensive income	364
Accumulated other comprehensive loss at February 2, 2020	$	(6,437	)

There were no reclassifications from accumulated other comprehensive loss for the three ~~and six~~ months ended ~~April 28, 2019~~February 2, 2020 and ~~April 29, 2018.~~January 27, 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 ~~April 28,~~February 2, 2020 and November 3, 2019, ~~and October 28, 2018,~~ restricted cash included ~~$6.2~~$5.2 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.

Short-term investments were ~~$3.2~~$2.7 million and ~~$3.1~~$3.0 million at ~~April 28,~~February 2, 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-United States~~non-U.S. jurisdictions for the most recent three-year period is a loss. Accordingly, a valuation allowance has been established for substantially all loss carryforwards and other net deferred tax assets for these jurisdictions, resulting in an effective tax rate that is significantly different than the statutory rate.

The Company adjusts its effective tax rate for each quarter to be consistent with the estimated annual effective tax rate, consistent with 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 ~~second~~first quarter of fiscal ~~2019~~2020 and ~~fiscal 2018~~2019 of $0.2 million and ~~$0.6~~$0.3 million, respectively, were primarily related to locations outside of the United States. For the six months ended April 28, 2019, the income tax provision of $0.5 million was primarily related to locations outside of the United States. The income tax benefit in the first six months ended April 29, 2018 of $0.7 million 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 tax balances as 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 and corresponding valuation allowance by approximately $26.8 million for the fiscal year ended October 28, 2018.

Under the Tax 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”). 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 did not have a material impact on 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~~$18.0 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 ~~January 25, 2018,~~July 19, 2019, the Company ~~entered into a~~amended and restated its long-term $115.0 million accounts receivable securitization program (“DZ Financing Program”) with DZ Bank AG Deutsche ~~Zentral Genossenschafsbank~~Zentral-Genossenschafsbank (“DZ Bank”), which was originally executed on January 25, 2018. The restated agreement allows for the inclusion of certain accounts receivable from originators in the United Kingdom, which adds an additional $5.0 - $7.0 million in borrowing availability. All other material terms and exited its financing relationship with PNC Bank (“PNC Financing Program”). The new agreement increases available liquidity and provides greater financial flexibility with less restrictive financial covenants and fewer restrictions on use of proceeds, as well as reduces overall borrowing costs compared to the PNC Financing Program. The sizeconditions of the ~~DZ Financing Program may be increased with the approval of DZ Bank.~~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, ~~the Company~~that subsidiary may request that DZ Bank make loans from ~~time~~time-to-time to ~~time to the Company~~ that subsidiary which are secured by liens on those receivables.

On ~~June 11, 2018,~~January 14, 2020, the Company ~~amended its DZ Financing Program~~executed an amendment to modify a provision in the calculation of any eligible receivable, as defined. This amendment permits the Company to exclude the receivables of a single large, high-quality customer from its threshold limitation, resulting in additional borrowing capacity of approximately $10.0 million.

~~On January 4, 2019, the Company amended~~ the DZ Financing Program. ~~Key changes of~~The modifications to the ~~program~~agreement were ~~to:~~to (1) extend the ~~term of the DZ Financing Program to January 25, 2021; (2) revise an existing financial covenant to maintain Tangible Net Worth (as~~Amortization Date, as defined under the DZ Financing ~~Program) of at least $30.0 million through fiscal 2019, which will revert back~~Program, from January 25, 2021 to ~~$40.0 million in fiscal 2020;~~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 ~~2019; and (4) increase the eligibility threshold for obligors with payment terms in excess of 60 days from 2.5% to 10.0%, which will add flexibility and borrowing capacity for the Company.~~2020. All other ~~material~~ terms and conditions remain ~~substantially~~ unchanged. ~~At April 28, 2019, the Company was in compliance with all debt covenants. At April 28, 2019, there was $22.2 million of borrowing availability, as defined under the DZ Financing Program.~~

On February 15, 2019, the Company amended the DZ Financing Program to modify certain provisions related to the calculation of reserves used to determine the Company's borrowing capacity from time to time under the DZ Financing Program. Under these new reserve calculations, the Company anticipates additional daily borrowing capacity, which will enhance overall global liquidity for the Company. This amendment took effect retroactively on January 25, 2019 and does not otherwise modify or eliminate any relevant receivables from the terms of the DZ Financing Program.

On June 4, 2019, the Company entered into an amendment with DZ Bank to temporarily exclude the receivables due from a specific customer from the securitization pool under our DZ Financing Program for three subsequent reporting periods as of May 2019 through July 2019. This customer has experienced internal processing issues related to specific Volt purchase orders resulting in significant payment delays, which have negatively impacted the 90-Day Delinquency Rate, as defined in the DZ Financing Program. Although, this change will improve the delinquency rate, it will also temporarily decrease the Company's borrowing availability under the DZ Financing Program by approximately $2.0 - $3.0 million. These payment delays are not credit related and the Company anticipates a resolution and collection of these past due amounts no later than July 26, 2019, at which time the receivables from this customer will be added back to the securitization pool under the original terms of the agreement.

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 ~~April 28, 2019,~~February 2, 2020, the letter of credit participation was $24.2 million inclusive of $22.8 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 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 ~~used funds made available by~~is subject to certain financial and portfolio performance covenants under the DZ Financing Program, ~~to repay all amounts outstanding~~including (1) a minimum Tangible Net Worth, as defined under ~~the PNC Financing Program, which terminated in accordance with its terms, and expects to use remaining availability from~~ the DZ Financing Program, ~~from time~~of at least $30.0 million through fiscal 2019, which increased to ~~time for working capital~~$40.0 million in fiscal 2020; (2) positive net income in any fiscal year ending after 2020; (3) maximum debt to tangible net worth ratio of 3:1; and ~~other general corporate purposes.~~

~~Until the termination date, the PNC Financing Program was secured by receivables from certain staffing services businesses~~(4) a minimum of $15.0 million in the United States and Europe that were sold to a wholly-owned, consolidated, bankruptcy-remote subsidiary. The bankruptcy-remote subsidiary’s sole business consisted of the purchase of the receivables and subsequent granting of a security interest to PNCliquid assets, as defined under the ~~program, and its assets were available first to satisfy obligations to PNC and were not available to pay creditors~~DZ Financing Program. At February 2, 2020, the Company was in compliance with all debt covenants. At February 2, 2020, there was $11.3 million of ~~the Company’s other legal entities. Borrowing capacity~~borrowing availability, as defined under the PNC Financing Program was directly impacted by the level of accounts receivable. In addition to customary representations, warranties and affirmative and negative covenants, the PNC Financing Program was subject to termination under standard events of default including change of control, failure to pay principal or interest, breach of the liquidity or performance covenants, triggering of portfolio ratio limits, or other material adverse events, as defined in the PNCDZ Financing Program.

At ~~April 28, 2019,~~February 2, 2020, the Company had outstanding borrowings under the DZ Financing Program of $55.0 million with a weighted average annual interest rate of ~~4.3%~~3.5% during the ~~second~~first quarter of fiscal ~~2019 and 4.2% for the first six months of fiscal 2019.~~2020. At ~~April 29, 2018,~~January 27, 2019, the Company had outstanding borrowings under the DZ Financing program of ~~$50.0~~$55.0 million, with a weighted average annual rate of ~~3.4%~~4.1% during ~~both~~ the ~~second~~first quarter of fiscal ~~2018~~2019.

Subsequent to the end of the quarter, 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 ~~the first six months of fiscal 2018.~~at least $40.0 million in each quarter thereafter. All other terms and conditions remain unchanged.

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


	April 28, 2019		October 28, 2018		February 2, 2020		November 3, 2019
Financing programs	$	55,000	$	50,000	$	55,000	$	55,000
Less:
Deferred financing fees	831		932		1,169		1,106
Total long-term debt, net	$	54,169	$	49,068	$	53,831	$	53,894

NOTE 8:9: Earnings (Loss) Per Share

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


	Three Months Ended						Six Months Ended						Three Months Ended
	April 28, 2019			April 29, 2018			April 28, 2019			April 29, 2018			February 2, 2020			January 27, 2019
Numerator
Net loss	$	(5,165	)	$	(7,687	)	$	(8,380	)	$	(18,381	)	$	(10,808	)	$	(3,215	)

Denominator
Basic weighted average number of shares	21,082			21,032			21,081			21,030			21,416			21,080
Diluted weighted average number of shares	21,082			21,032			21,081			21,030			21,416			21,080

Net loss per share:
Basic	$	(0.24	)	$	(0.37	)	$	(0.40	)	$	(0.87	)	$	(0.50	)	$	(0.15	)
Diluted	$	(0.24	)	$	(0.37	)	$	(0.40	)	$	(0.87	)	$	(0.50	)	$	(0.15	)

Options to purchase 922,193 and 2,360,174 shares of the Company’s common stock were outstanding at April 28, 2019 and April 29, 2018, respectively. Additionally, there were 383,962 unvested restricted units and 300,928 outstanding at April 28, 2019 and April 29, 2018, respectively, and 176,989 ~~unvested performance share units outstanding at April 28, 2019. These awards were not included in the computation of~~The diluted ~~loss~~earnings per share ~~in fiscal 2019~~for the three months ended February 2, 2020 did not include the effect of potentially dilutive outstanding shares comprised of 653,210 RSUs (defined below), 530,135 stock options and ~~2018~~376,986 PSUs (defined below) because the effect ~~of their inclusion~~ would have been ~~anti-dilutive as a result~~anti-dilutive. The diluted earnings per share for the three months ended January 27, 2019 did not include the effect of potentially dilutive outstanding shares comprised of 445,389 RSUs, 1,371,856 stock options and 218,097 PSUs because the ~~Company’s net loss position in those periods.~~effect would have been anti-dilutive.

NOTE 9:10: Share-Based Compensation Plans

For the three ~~and six~~ months ended ~~April 28,~~February 2, 2020 and January 27, 2019, the Company recognized share-based compensation expense of ~~$0.6~~$0.5 million ~~and $0.7 million, respectively. For the three~~ and ~~six months ended April 29, 2018, the Company recognized share-based compensation expense of~~ $~~0.5 million~~ ~~and $1.0~~0.1 million, respectively. These expenses are included in Selling, administrative and other operating costs in the Company’s Condensed Consolidated Statements of Operations.

Equity Awards

During fiscal 2019, the Company granted performance stock units (“PSUs”) to executive management, restricted stock units (“RSUs”) to certain employees including executive management and its annual equity grant of RSUs 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 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 approximately $1.2 million and $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, 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 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 ~~performance share units (“PSUs”)~~PSUs and ~~restricted stock units (“RSUs”)~~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 ~~are~~is adjusted accordingly until the awards are settled. As of the ~~second~~first quarter ended ~~April 28, 2019,~~February 2, 2020, the total fair value of ~~these~~the remaining PSUs and RSUs was approximately ~~$1.0~~$0.1 million and ~~$1.4~~$0.5 million, respectively.

Vesting of the PSUs is dependent on the achievement of target stock prices at the end of each of the one-year, two-year and three-year performance periods. The 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.

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 ~~second~~first quarter ended ~~April 28, 2019,~~February 2, 2020, the total fair value was less than $0.1 million and ~~12,022~~5,465 phantom units were outstanding.

~~Equity Awards~~

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

Summary of Equity and Liability Awards

The following tables summarize the activities related to the Company’s share-based ~~liability~~equity and ~~equity~~liability awards for the ~~six~~three months ended ~~April 28, 2019:~~February 2, 2020:

Performance Share Units Number of Weighted Average
Shares Grant Date Fair Value
Outstanding at October 28, 2018 276,396
$3.38
Forfeited (99,407 ) $3.38
Outstanding at April 28, 2019 176,989
$3.38



Performance Share Units	Number of	Weighted Average
Performance Share Units	Shares	Grant Date Fair Value
Outstanding at November 3, 2019 and February 2, 2020	376,986	$3.90


Restricted Stock Units	Number of		Weighted Average	Number of			Weighted Average
	Shares		Grant Date Fair Value
Outstanding at October 28, 2018	582,831		$3.53
Restricted Stock Units				Shares				Grant Date Fair Value
Restricted Stock Units				667,082		$3.86
Forfeited	(146,938	)	$3.66	(4,387	)		$3.80
Vested	(15,048	)	$5.13	(9,485	)		$4.10
Outstanding at April 28, 2019	420,845		$3.43
Outstanding at February 2, 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 (175,055 ) $6.36 — —
Outstanding at April 28, 2019 922,193
$5.74 7.51 $343



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	$—
Expired	(73,350	)	$9.28	—	$—
Outstanding at February 2, 2020	530,134		$5.86	6.97	$—
Unvested at February 2, 2020	64,302		$4.18	7.94	$—
Exercisable at February 2, 2020	465,832		$6.10	6.83	$—

For the ~~six~~three months ended ~~April 28, 2019,~~February 2, 2020, there was no issuance of any share-based payment ~~awards.~~awards or any exercise of stock options. As of ~~April 28, 2019,~~February 2, 2020, total unrecognized compensation expense of ~~$1.2~~$2.0 million related to PSUs, stock options, RSUs and

phantom units will be recognized over the remaining weighted average vesting period of ~~1.7~~1.9 years of which ~~$0.4~~$1.2 million, $0.6 million and $0.2 million are expected to be recognized in fiscal ~~2019,~~ 2020, 2021 and ~~2021,~~2022, respectively.

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

The Company incurred total restructuring and severance costs of ~~$0.7~~$1.2 million and $0.1 million ~~for~~in the ~~second~~first quarter of fiscal 2020 and 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 ~~2018, respectively,~~offshore a significant number of strategically identified roles to this location. The total costs incurred in the first three months of fiscal 2020 in connection with the 2020 Plan were $1.1 million, consisting of $0.1 million in North American Staffing and ~~$0.8~~$1.0 million in the Corporate and ~~$0.6~~Other category. As of February 2, 2020, the Company anticipates payments of $1.1 million ~~for~~will be made through the ~~six months ended April 28, 2019 and April 29, 2018, respectively.~~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 second quarter~~ 2019. The total costs since inception through ~~the second quarter of fiscal 2019 are~~February 2, 2020 were approximately ~~$4.8~~$5.5 million, consisting of ~~$1.0~~$1.1 million in North American Staffing, ~~$0.3~~$0.4 million in International Staffing and ~~$3.5~~$4.0 million in Corporate and Other. As of ~~April 28, 2019,~~February 2, 2020, the Company anticipates payments of ~~$1.1 million and $0.6~~$0.1 million will be made inthrough fiscal ~~2019 and 2020, respectively. The remaining $1.3 million related to facility and lease termination costs will be paid through December 2025.~~

2020.

Change in Executive Management

Effective June 6, 2018, ~~Mr.~~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 of the Company.~~Directors. The Company and Mr. Dean subsequently executed a separation agreement, effective June 29, 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 ~~will exit~~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 ~~$0.2~~$2.1 million during the second ~~quarter~~half of fiscal 2019.

~~Other Restructuring Costs~~

During the second quarter of fiscal 2018, there were other restructuring actions taken by the Company as part of its continued efforts to reduce costs and achieve operational efficiency. The Company recorded severance costs of $0.1 million in the second quarter of fiscal 2018 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 ~~six~~three months of fiscal ~~2019~~2020 is summarized as follows (in thousands):


	April 28, 2019			February 2, 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	783			1,215
Cash payments	(2,295		)	(919		)
Ending Balance	$	4,190		$	2,177

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 ~~April 28, 2019~~February 2, 2020 of ~~$4.2~~$2.2 million, primarily related to Corporate and Other, includes ~~$2.5~~$1.1 million related to the ~~cost reduction plan implemented in fiscal 2018 and $1.4~~2020 Plan, $1.0 million related to the change in executive ~~management.~~management and $0.1 million related to the 2018 Plan.

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 currently estimates that it will need to contribute approximately $0.9 million to the plans to correct the failures. The Company has obtained the approval from the Internal Revenue Service regarding the method for curing the failures and anticipates making the contribution in the second half 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 ~~will exit~~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, ~~and~~ restructuring and severance ~~costs.~~costs, and impairment charges. The Company allocates to the segments all operating costs except for costs not directly related to the operating activities such as corporate-wide general and administrative costs. These costs are not allocated because doing so would not enhance the understanding of segment operating performance and are not used by management to measure segment performance.

Financial data concerning the Company’s segment revenue and operating income (loss) as well as results from Corporate and Other are summarized in the following tables (in thousands):

Three Months Ended April 28, 2019
Total North American Staffing International Staffing North American MSP Corporate and Other (1) Eliminations (2)
Net revenue $ 252,070
$ 208,871
$ 28,809
$ 9,579
$ 5,431
$ (620 )
Cost of services 215,813
179,678
24,095
7,186
5,474
(620 )
Gross margin 36,257
29,193
4,714
2,393
(43 ) —

Selling, administrative and other operating costs 38,939
26,439
3,894
1,252
7,354
—
Restructuring and severance costs 724
210
192
41
281
—
Impairment charge 347
—
—
—
347
—
Operating income (loss) (3,753 )
2,544

628
1,100
(8,025 ) —
Other income (expense), net (1,179 )
Income tax provision 233

Net loss $ (5,165 )

Three Months Ended April 29, 2018
Total North American Staffing International Staffing North American MSP Corporate and Other (1) Eliminations (2)
Net revenue $ 263,219
$ 218,090
$ 31,904
$ 6,339
$ 7,817
$ (931 )
Cost of services 225,918
187,929
27,100
4,498
7,322
(931 )
Gross margin 37,301
30,161
4,804
1,841
495
—

Selling, administrative and other operating costs 42,916
28,586
3,915
1,397
9,018
—
Restructuring and severance costs 104
4
71
27
2
—
Impairment charge 155
—
—
—
155
—
Operating income (loss) (5,874 ) 1,571
818
417
(8,680 ) —
Other income (expense), net (1,183 )
Income tax provision 630

Net loss $ (7,687 )



	Three Months Ended February 2, 2020
	Total			North American Staffing		International Staffing		North American MSP		Corporate and Other			Eliminations
Net revenue	$	217,766		$	182,395	$	26,223	$	9,369	$	203		$	(424	)
Cost of services	186,339			157,394		22,030		7,255		84			(424		)
Gross margin	31,427			25,001		4,193		2,114		119			—

Selling, administrative and other operating costs	39,497			24,809		3,819		1,360		9,509			—
Restructuring and severance costs	1,246			82		—		—		1,164			—
Impairment charge	11			11		—		—		—			—
Operating income (loss)	(9,327		)	99		374		754		(10,554		)	—
Other income (expense), net	(1,286		)
Income tax provision	195
Net loss	$	(10,808	)

Six Months Ended April 28, 2019
Total North American Staffing International Staffing North American MSP Corporate and Other (1) Eliminations (2)
Net revenue $ 505,506
$ 420,719
$ 55,075
$ 17,796
$ 13,277
$ (1,361 )
Cost of services 431,550
361,363
46,233
13,104
12,211
(1,361 )
Gross margin 73,956
59,356
8,842
4,692
1,066
—

Selling, administrative and other operating costs 78,749
52,717
7,636
2,559
15,837
—
Restructuring and severance costs 783
208
274
68
233
—
Impairment charge 347
—
—
—
347
—
Operating income (loss) (5,923 ) 6,431
932
2,065
(15,351 ) —
Other income (expense), net (1,951 )
Income tax provision 506

Net loss $ (8,380 )


	Six Months Ended April 29, 2018															Three Months Ended January 27, 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	$	516,557		$	424,325	$	61,483	$	14,819	$	18,064		$	(2,134	)	$	253,436		$	211,848		$	26,266	$	8,217	$	7,846		$	(741	)
Cost of services	443,247			366,287		52,177		11,259		15,658			(2,134		)	215,737			181,685			22,138		5,918		6,737			(741		)
Gross margin	73,310			58,038		9,306		3,560		2,406			—			37,699			30,163			4,128		2,299		1,109			—

Selling, administrative and other operating costs	89,854			57,084		8,287		2,799		21,684			—			39,810			26,278			3,742		1,307		8,483			—
Restructuring and severance costs	622			9		299		79		235			—			59			(2		)	82		27		(48		)	—
Impairment charge	155			—		—		—		155			—
Operating income (loss)	(17,321		)	945		720		682		(19,668		)	—			(2,170		)	3,887			304		965		(7,326		)	—
Other income (expense), net	(1,790		)													(772		)
Income tax benefit	(730		)
Income tax provision																273
Net loss	$	(18,381	)													$	(3,215	)

(1) Revenues are primarily derived from Volt Customer Care ~~Solutions.~~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 ~~June 4, 2019,~~March 12, 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 has experienced internal processing issues related to specific Volt purchase orders resulting in significant payment delays, which have negatively impacted the 90-Day Delinquency Rate, as defined in the DZ Financing Program. Although this change will improve the delinquency rate, it will also temporarily decrease the Company's borrowing availability under the DZ Financing Program by approximately $2.0 - $3.0 million. These payment delays are not credit related and the Company anticipates a resolution and collection of these past due amounts no later than July 26, 2019, at which time the receivables from this customer will be added backThe modifications to the ~~securitization pool under~~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 ~~original~~Company’s fiscal quarter ending on or about July 31, 2020 and at least $40.0 million in each quarter thereafter. All other terms ~~of the agreement.~~and 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 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.

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 Non-GAAP measures on a constant currency basis, the impact of businesses sold or exited and ~~eliminating~~the elimination of special items provides useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations because they permit evaluation of the results of our operations without the effect of 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 ~~our~~the current orand future period performance. In addition, as a result of our Company’s strategic reorganization, which included changes to executive management and the Board of Directors, as well as the ongoing execution of new strategic initiatives, certain charges were identified as “special items” which were not historically common operational expenditures for us. Such charges included professional search fees, certain board compensation and other professional service fees. While we believe that the inclusion of these charges as special items is useful in the evaluation of our results compared to prior periods, we do not anticipate that these items will be included in our Non-GAAP measures in the future.

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 ~~will exit~~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 ~~April 28, 2019,~~February 2, 2020, we employed approximately ~~17,400~~15,800 people, including ~~16,000~~14,600 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.

~~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 likely~~than 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.

For the fiscal 2019 test performed in the second quarter, we elected to bypass the qualitative assessment and prepared a Step 1 analysis. Our Step 1 analysis used significant assumptions including expected revenue and expense growth rates, forecasted capital expenditures, working capital levels and a discount rate of 15%. 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 2019, it was determined that no adjustment to the carrying value of goodwill of $5.4 million was required as our Step 1 analysis resulted in the fair value of the reporting unit exceeding its carrying value.

Recent Developments

On ~~June 4, 2019, we entered into~~March 12, 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 has experienced internal processing issues related to specific Volt purchase orders resulting in significant payment delays, which have negatively impacted the 90-Day Delinquency Rate, as defined in the DZ Financing Program. Although, this change will improve the delinquency rate, it will also temporarily decrease our borrowing availability under the DZ Financing Program by approximately $2.0 - $3.0 million. These payment delays are not credit related and we anticipate a resolution and collection of these past due amounts no later than July 26, 2019, at which time the receivables from this customer will be added backThe modifications to the ~~securitization pool under~~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 ~~original~~Company’s fiscal quarter ending on or about July 31, 2020 and at least $40.0 million in each quarter thereafter. All other terms ~~of the agreement.~~ and conditions remain unchanged.

Consolidated Results by Segment


	Three Months Ended April 28, 2019															Three Months Ended February 2, 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	$	252,070		$	208,871	$	28,809	$	9,579	$	5,431		$	(620	)	$	217,766		$	182,395	$	26,223	$	9,369	$	203		$	(424	)
Cost of services	215,813			179,678		24,095		7,186		5,474			(620		)	186,339			157,394		22,030		7,255		84			(424		)
Gross margin	36,257			29,193		4,714		2,393		(43		)	—			31,427			25,001		4,193		2,114		119			—

Selling, administrative and other operating costs	38,939			26,439		3,894		1,252		7,354			—			39,497			24,809		3,819		1,360		9,509			—
Restructuring and severance costs	724			210		192		41		281			—			1,246			82		—		—		1,164			—
Impairment charge	347			—		—		—		347			—			11			11		—		—		—			—
Operating income (loss)	(3,753		)	2,544		628		1,100		(8,025		)	—			(9,327		)	99		374		754		(10,554		)	—
Other income (expense), net	(1,179		)													(1,286		)
Income tax provision	233															195
Net loss	$	(5,165	)													$	(10,808	)


	Three Months Ended April 29, 2018															Three Months Ended January 27, 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	$	263,219		$	218,090	$	31,904	$	6,339	$	7,817		$	(931	)	$	253,436		$	211,848		$	26,266	$	8,217	$	7,846		$	(741	)
Cost of services	225,918			187,929		27,100		4,498		7,322			(931		)	215,737			181,685			22,138		5,918		6,737			(741		)
Gross margin	37,301			30,161		4,804		1,841		495			—			37,699			30,163			4,128		2,299		1,109			—

Selling, administrative and other operating costs	42,916			28,586		3,915		1,397		9,018			—			39,810			26,278			3,742		1,307		8,483			—
Restructuring and severance costs	104			4		71		27		2			—			59			(2		)	82		27		(48		)	—
Impairment charge	155			—		—		—		155			—
Operating income (loss)	(5,874		)	1,571		818		417		(8,680		)	—			(2,170		)	3,887			304		965		(7,326		)	—
Other income (expense), net	(1,183		)													(772		)
Income tax provision	630															273
Net loss	$	(7,687	)													$	(3,215	)

(1) Revenues are primarily derived from Volt Customer Care ~~Solutions.~~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 ~~(Q2 2019~~(Q1 2020 vs. ~~Q2 2018)~~Q1 2019)

Net revenue in the ~~second~~first quarter of fiscal ~~2019~~2020 decreased ~~$11.1~~$35.6 million, to ~~$252.1~~$217.8 million from ~~$263.2~~$253.4 million in the ~~second~~first quarter of fiscal ~~2018.~~2019. The net revenue decrease was primarily due to a decrease in our North American Staffing segment of ~~$9.2~~$29.4 million and a decrease in the Corporate and Other category of ~~$2.4~~$7.6 million ~~and~~(related to the exit from our customer care solutions business in June 2019), partially offset by an increase of $1.2 million in our North American MSP segment. Excluding the negative impact of foreign currency fluctuations of ~~$2.2~~$0.1 million ~~partially offset by an increase in our North American MSP segment of $3.2 million. Excluding the impact of foreign currency fluctuations~~ and ~~$0.2~~a $7.7 million in revenue decline from a business exited during ~~the period,~~fiscal 2019, net revenue decreased ~~$8.7~~$27.9 million, or ~~3.3%~~11.4%.

Operating loss in the ~~second~~first quarter of fiscal ~~2019 decreased $2.1~~2020 increased $7.1 million, to ~~$3.8~~$9.3 million from ~~$5.9~~$2.2 million in the ~~second~~first quarter of fiscal ~~2018.~~2019. Excluding a business exited during fiscal 2019, as well as restructuring and severance costs and impairment charges, operating loss ~~decreased $2.9 million, or 48.0%.~~increased $5.3 million. This ~~decrease~~increase in operating loss of ~~$2.9~~$5.3 million was primarily the result of ~~improvements~~declines in our North American Staffing segment of ~~$1.2~~$3.7 million and ~~North American MSP segment of $0.7 million. In addition,~~an increase in the Corporate and Other category ~~improved $1.1 million primarily as a result~~ of ~~reductions in corporate support costs.~~$1.3 million.

Results of Operations by Segment ~~(Q2 2019~~(Q1 2020 vs. ~~Q2 2018)~~Q1 2019)

Net Revenue

The North American Staffing segment revenue decreased ~~$9.2~~$29.4 million, or ~~4.2%~~13.9%, in the ~~second~~first quarter of fiscal ~~2019.~~2020. The ~~year over year decrease~~segment's revenue was impacted by lower demand from certain large customers and changes in ~~revenue improved~~other customers' staffing models, partially offset by growth from ~~a decline of 6.7% in the second quarter of fiscal 2018 compared to the second quarter of fiscal 2017.~~new and existing customers. This decrease was primarily driven by ~~decreased~~lower demand from customers in our ~~professional and~~light industrial as well as administrative and office job categories.

International Staffing segment revenue ~~decreased $3.1 million, or 9.7%,~~was relatively flat in the ~~second~~first quarter of fiscal ~~2019.~~2020. Excluding the negative impact of foreign exchange rate fluctuations of ~~$2.2~~$0.1 million, ~~and $0.2 million in~~ revenue ~~from a business exited during the period, revenue declined $0.7~~increased $0.1 million, or ~~2.3%~~0.2%, primarily due to ~~lower~~growth in demand in Belgium offset by a decline in the United ~~Kingdom offset by growth in Belgium and France.~~Kingdom.

The North American MSP segment revenue increased ~~$3.2~~$1.2 million, or ~~51.1%~~14.0%, ~~due to~~in the first quarter of fiscal 2020 as a result of new business and increased demand in ~~both~~its payroll ~~services and MSP managed services revenue.~~service business.

The Corporate and Other category revenue ~~decrease of $2.4~~decreased $7.6 million, or ~~30.5%~~97.4%, ~~was~~in the first quarter of fiscal 2020 primarily ~~attributable to~~as a result of our exit from the customer care solutions ~~revenue decline due to lower demand at our call center.~~business in the beginning of June 2019.

Cost of Services and Gross Margin

Cost of services in the ~~second~~first quarter of fiscal ~~2019~~2020 decreased ~~$10.1~~$29.4 million, or ~~4.5%~~13.6%, to ~~$215.8~~$186.3 million from ~~$225.9~~$215.7 million in the ~~second~~first quarter of fiscal ~~2018.~~2019. Gross margin as a percent of revenue in the ~~second~~first quarter of fiscal ~~2019 increased~~2020 decreased to 14.4% from ~~14.2%~~14.9% in the ~~second~~first quarter of fiscal ~~2018.~~2019. Our North American Staffing segment margin as a percent of revenue ~~improved as a result of lower payroll tax rates~~decreased primarily ~~from a reduction in California unemployment tax rates, partially offset by~~due to higher workers compensation ~~costs.~~and other state-mandated benefit costs as a percent of revenue as well as the absence of administrative fee revenue to our customer care solutions business, which we exited in June 2019. Our North American MSP segment margin ~~increased~~decreased as a result of ~~the increase in~~a higher mix of payroll service revenue and ~~gross margin percent for~~lower margins in both managed service and payroll service business. However, total North American MSP margin as a percent of revenue declined primarily due to a higher mix of payroll service revenue. These gross margin improvements were partially offset by lower margins from our customer care solutions business driven by lower headcount from reduced client demand.

~~Selling, Administrative and Other Operating Costs~~

Selling, administrative and other operating costs in the second quarter of fiscal 2019 decreased $4.0 million, or 9.3%, to $38.9 million from $42.9 million in the second quarter of fiscal 2018. The decrease was primarily due to on-going cost reductions in all areas of the business, including $3.3 million in labor costs due to lower headcount, increase in net capitalized costs of $0.7 million as we continue to add functionality to our underlying information technology systems, $0.8 million in professional fees and $0.6 million in facility related costs. These improvements were offset by $1.3 million in higher medical claims experience in the second quarter of fiscal 2019. As a percent of revenue, selling, administrative and other operating costs were 15.4% and 16.3% in the second quarter of fiscal 2019 and 2018, respectively.

~~Restructuring and Severance Costs~~

Restructuring and severance costs in the second quarter of fiscal 2019 increased $0.6 million, to $0.7 million from $0.1 million in the second quarter of fiscal 2018. This increase was primarily due to severance costs accrued in the second quarter of fiscal 2019 in connection with exiting our customer care solutions business in the third quarter of fiscal 2019, as well as additional severance and lease terminations costs under our 2018 Plan.

~~Impairment Charges~~

Impairment charges in the second quarter of fiscal 2019 increased $0.1 million, to $0.3 million from $0.2 million in the second quarter of fiscal 2018. In the second quarter of fiscal 2019, there was a $0.3 million impairment of equipment used in our customer care solutions business. In the second quarter 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 second quarter of fiscal 2019 remained at $1.2 million, as a slight decrease in non-cash foreign exchange losses primarily on intercompany balances was partially offset by an increase in miscellaneous other expenses.

~~Income Tax Provision~~

~~The income tax provisions of $0.2 million and $0.6 million in the second quarter of fiscal 2019 and fiscal 2018, respectively, were primarily related to locations outside of the United States.~~

~~Consolidated Results by Segment~~

Six Months Ended April 28, 2019
(in thousands) Total North American Staffing International Staffing North American MSP Corporate and Other (1) Eliminations (2)
Net revenue $ 505,506
$ 420,719
$ 55,075
$ 17,796
$ 13,277
$ (1,361 )
Cost of services 431,550
361,363
46,233
13,104
12,211
(1,361 )
Gross margin 73,956
59,356
8,842
4,692
1,066
—

Selling, administrative and other operating costs 78,749
52,717
7,636
2,559
15,837
—
Restructuring and severance costs 783
208
274
68
233
—
Impairment charge 347
—
—
—
347
—
Operating income (loss) (5,923 ) 6,431
932
2,065
(15,351 ) —
Other income (expense), net (1,951 )
Income tax provision 506

Net loss $ (8,380 )

Six Months Ended April 29, 2018
(in thousands) Total North American Staffing International Staffing North American MSP Corporate and Other (1) Eliminations (2)
Net revenue $ 516,557
$ 424,325
$ 61,483
$ 14,819
$ 18,064
$ (2,134 )
Cost of services 443,247
366,287
52,177
11,259
15,658
(2,134 )
Gross margin 73,310
58,038
9,306
3,560
2,406
—

Selling, administrative and other operating costs 89,854
57,084
8,287
2,799
21,684
—
Restructuring and severance costs 622
9
299
79
235
—
Impairment charge 155
—
—
—
155
—
Operating income (loss) (17,321 ) 945
720
682
(19,668 ) —
Other income (expense), net (1,790 )
Income tax benefit (730 )
Net loss $ (18,381 )

~~(1) Revenues are primarily derived from Volt Customer Care Solutions.~~

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

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

Net revenue in the first six months of fiscal 2019 decreased $11.1 million, to $505.5 million from $516.6 million in the first six months of fiscal 2018. The net revenue decrease was primarily due to decreases in the Corporate and Other category of $4.8 million, North American Staffing segment of $3.6 million, and International Staffing segment of $3.0 million, as well the negative impact of foreign currency fluctuations of $3.4 million. These decreases were partially offset by an increase of $3.0 million in our North American MSP segment. Excluding the impact of foreign currency fluctuations and $0.7 million in revenue from a business exited during the period, net revenue decreased $7.0 million, or 1.4%.

Operating loss in the first six months of fiscal 2019 decreased $11.4 million, to $5.9 million from $17.3 million in the first six months of fiscal 2018. Excluding restructuring and severance costs and impairment charges, operating loss decreased $11.7 million, or 67.0%. This decrease in operating loss of $11.7 million was primarily the result of improvements in our North American Staffing segment of $5.7 million and North American MSP segment of $1.4 million. In addition, the Corporate and Other category improved by $4.5 million primarily as a result of reductions in corporate support costs.

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

~~Net Revenue~~

The North American Staffing segment revenue decreased $3.6 million, or 0.8%, in the first six months of fiscal 2019. The year over year decrease in revenue improved from a decline of 8.9% in the first six months of fiscal 2018 compared to the first six months of fiscal 2017. This decrease was driven by decreases from customers in our professional and administrative and office job categories partially offset by increased demand from customers in our light industrial job category.

International Staffing segment revenue decreased $6.4 million, or 10.4%, in the first six months of fiscal 2019. Excluding the impact of foreign exchange rate fluctuations of $3.4 million and $0.7 million in revenue from a business exited during the period, revenue declined $2.3 million, or 4.0%, primarily due to lower demand in the United Kingdom and Singapore offset by growth in Belgium and France.

The North American MSP segment revenue increased $3.0 million, or 20.1%, due to the loss of several programs in early fiscal 2018 offset by new contracts and program expansions in the latter half of the year.

~~The Corporate and Other category revenue decrease of $4.8 million, or 26.5%, was primarily attributable to our customer care solutions revenue decline due to lower demand at our call center.~~

~~Cost of Services and Gross Margin~~

Cost of services in the first six months of fiscal 2019 decreased $11.6 million, or 2.6%, to $431.6 million from $443.2 million in the first six months of fiscal 2018. Gross margin as a percent of revenue in the first six months of fiscal 2019 increased to 14.6% from 14.2% in the first six months of fiscal 2018. Our North American Staffing segment margin as a percent of revenue improved as a result of lower payroll tax rates primarily from a reduction in California unemployment tax rates, partially offset by a higher mix of larger price-competitive customers. In addition, our North American MSP segment margin as a percent of revenue increased primarily due to increases in both payroll and managed service businesses. ~~This improvement was partially offset by lower margins from our customer care solutions business driven by lower headcount from reduced client demand.~~

Selling, Administrative and Other Operating Costs

Selling, administrative and other operating costs in the first ~~six months~~quarter of fiscal ~~2019~~2020 decreased ~~$11.2~~$0.3 million, or ~~12.4%~~0.8%, to ~~$78.7~~$39.5 million from ~~$89.9~~$39.8 million in the first ~~six months~~quarter of fiscal ~~2018.~~2019. The decrease was primarily due to ~~on-going~~ cost reductions in all areas of the business, including ~~$6.4~~$0.9 million in lower consulting fees, $0.7 million in labor and related costs due to lower headcount ~~increase in net capitalized costs of $1.3 million as we continue to add functionality to our underlying information technology systems, $1.2~~and $0.2 million in facility related costs, ~~and $0.8 million~~partially offset by an increase in ~~travel expenses.~~depreciation expense of $0.4 million. In addition, ~~legal~~the first quarter of fiscal 2019 included a positive medical claims true-up of $0.6 million, forfeitures of equity compensation of $0.3 million from the departure of two executives and ~~consulting fees~~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 ~~$2.4 million lower primarily related to corporate~~18.1% and ~~cost-efficiency initiatives~~15.7% in the first quarter of fiscal ~~2018. These improvements were offset by $1.2 million in higher medical claims experience in the first six months of fiscal 2019. As a percent of revenue, these costs were 15.6%~~2020 and ~~17.4% in the first six months of fiscal~~ 2019, ~~and 2018,~~ respectively.

Restructuring and Severance Costs

Restructuring and severance costs in the first ~~six months~~quarter of fiscal ~~2019~~2020 increased ~~$0.2~~$1.1 million, to ~~$0.8~~$1.2 million from ~~$0.6~~$0.1 million in the first ~~six months~~quarter of fiscal ~~2018. This increase was~~2019. The costs in the first quarter of fiscal 2020 were primarily due to ~~costs accrued~~our plan to leverage the global capabilities of our staffing operations based in ~~the second quarter~~Bangalore, India and offshore a significant number of ~~fiscal 2019 in connection with exiting the Company's customer care solutions business in the third quarter of fiscal 2019.~~

~~Impairment Charges~~

~~Impairment charges in the first six months of fiscal 2019 increased $0.1 million,~~strategically identified roles to $0.3 million from $0.2 million in the first six months of fiscal 2018. In the second quarter of fiscal 2019, we recorded an impairment charge of $0.3 million of equipment used in our customer care solutions business. In the second quarter 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.this location.

Other Income (Expense), net

Other expense in the first ~~six months~~quarter of fiscal ~~2019~~2020 increased ~~$0.2~~$0.5 million, ~~or 9.0%,~~ to ~~$2.0~~$1.3 million from ~~$1.8~~$0.8 million in the first ~~six months~~quarter of fiscal ~~2018, primarily as a result of~~2019 due to an increase in non-cash foreign exchange losses primarily on intercompany ~~balances partially offset by lower amortization of deferred financing fees.~~

balances.

Income Tax Provision ~~(Benefit)~~

The income tax ~~provision~~provisions of ~~$0.5~~$0.2 million and $0.3 million in the first ~~six months~~quarter of fiscal 2020 and 2019, was primarily related to locations outside of the United States. The income tax benefit of $0.7 million in the first six months of fiscal 2018 was primarily due to 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 (“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~~$18.0 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.

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 ~~January 25, 2018,~~July 19, 2019, we ~~entered into a~~amended and restated our long-term $115.0 million accounts receivable securitization program with DZ Bank, ~~and exited our financing relationship with PNC Bank.~~which was originally executed on January 25, 2018. The ~~new~~restated agreement ~~better aligns our current financing requirements with our strategic initiatives and reduces our overall~~allows for the inclusion of certain accounts receivable from originators in the United Kingdom, which adds an additional $5.0 - $7.0 million in borrowing ~~costs. In addition to better pricing, the new facility has less restrictive financial covenants and fewer restrictions on use of proceeds, which~~availability. This will improve available liquidity ~~and allow~~allowing us to continue to advance our capital allocation ~~plan. Overall, the new financing program greatly enhances our financial flexibility~~plan and ~~debt maturity profile, while providing~~will provide us with additional resources to execute our business strategy.

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.

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 future ~~corporate income tax that may result in the 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 will affect approximately 125 employees. To date, we incurred a total pre-tax restructuring charge of approximately $1.1 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.

OnIn June 11, 2018, we amended the DZ Financing Program to modify a provision in the calculation of any eligible receivable, as defined. This amendment permits the Company to exclude the receivables of a single large, high-quality customer from its threshold limitation, resulting in additional borrowing capacity of approximately $10.0 million.

~~On January 4,~~ 2019, we amended the DZ Financing Program. Key changes to the program were to: (1) extend the term of the program to January 25, 2021; (2) revise an existing financial covenant to maintain Tangible Net Worth (as defined under the DZ Financing Program) of at least $30.0 million through fiscal 2019, which will revert back to $40.0 million in fiscal 2020; (3) revise an existing covenant to maintain positive net income in any fiscal year ending after 2019; and (4) increase the eligibility threshold for obligors with payment terms in excess of 60 days from 2.5% to 10.0%, which will add flexibility and borrowing capacity for the Company. All other material terms and conditions remain substantially unchanged.

On February 15, 2019, we amended the DZ Financing Program to modify certain provisions related to the calculation of reserves used to determine our borrowing capacity from time to time under the DZ Financing Program. Under these new reserve calculations, we anticipate additional daily borrowing capacity, which will enhance overall global liquidity for the Company. This amendment took effect retroactively on January 25, 2019 and does not otherwise modify or eliminate any relevant receivables from the terms of the DZ Financing Program.

On June 4, 2019, we entered into an amendment with DZ Bank to temporarily exclude the receivables due from a specific customer from the securitization pool under our DZ Financing Program for three subsequent reporting periods as of May 2019 through July 2019. This customer has experienced internal processing issues related to specific Volt purchase orders resulting in significant payment delays, which have negatively impacted the 90-Day Delinquency Rate, as defined in the DZ Financing Program. Although, this change will improve the delinquency rate, it will also temporarily decrease our borrowing availability under the DZ Financing Program by approximately $2.0 - $3.0 million. These payment delays are not credit related and we anticipate a resolution and collection of these past due amounts no later than July 26, 2019, at which time the receivables from this customer will be added back to the securitization pool under the original terms of the agreement.

~~In the third quarter of fiscal 2019, we will exit~~exited our customer care solutions business. This business previously contributed accounts receivable as collateral under the DZ Financing Program and its exit ~~will have~~had a diminishing effect on our borrowing base under the DZ Financing ~~Program during the third quarter. We expect an overall decrease in borrowing capacity and associated liquidity of approximately $9.0 - $10.0 million.~~ Program.

At ~~April 28, 2019,~~February 2, 2020, the Company had outstanding borrowings under the DZ Financing Program of $55.0 ~~million, borrowing~~million. Borrowing availability, as defined under the DZ Financing Program, ~~of $22.2~~was $11.3 million and global liquidity ~~of $52.2 million.~~was $32.6 million at February 2, 2020.

Our DZ Financing Program is subject to termination under certain events of default such as breach of covenants, including the ~~aforementioned~~ financial covenants. At ~~April 28, 2019,~~February 2, 2020, we were in compliance with all debt covenants. We believe, based on our ~~2019 plan,~~current outlook, we will continue to be able to meet our financial covenants.

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


Global Liquidity															��
	April 29, 2018		July 29, 2018		October 28, 2018		January 27, 2019		April 28, 2019		January 27, 2019		April 28, 2019		July 28, 2019		November 3, 2019		February 2, 2020
Cash and cash equivalents (a)	$	34,177	$	29,929	$	24,763	$	32,925	$	39,689	$	32,925	$	39,689	$	36,031	$	28,672	$	30,876

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

Cash in banks (b)(c)	$	26,443	$	22,454	$	17,685	$	23,646	$	29,946	$	23,646	$	29,946	$	24,224	$	19,945	$	21,287
DZ Financing Program(d)	32,943		30,280		38,302		31,072		22,222		31,072		22,222		16,416		22,271		11,302
Global liquidity	59,386		52,734		55,987		54,718		52,168		54,718		52,168		40,640		42,216		32,589
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	$	44,386	$	37,734	$	40,987	$	39,718	$	37,168	$	39,718	$	37,168	$	25,640	$	27,216	$	17,589


a.	Per financial statements.


b.	~~Per financial statements.~~ 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 ~~April 28, 2019,~~February 2,2020, the balance in the USB collections account included in the DZ Financing Program availability was ~~$4.5~~$9.8 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):


	Six Months Ended						Three Months Ended
	April 28, 2019			April 29, 2018			February 2, 2020			January 27, 2019
Net cash provided by operating activities	$	9,458		$	478		$	33		$	1,960
Net cash used in investing activities	(4,079		)	(1,134		)	(1,034		)	(1,767		)
Net cash provided by (used in) financing activities	4,783			(1,471		)	(236		)	4,860
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(249		)	(571		)	(565		)	(429		)
Net increase (decrease) in cash, cash equivalents and restricted cash	$	9,913		$	(2,698	)	$	(1,802	)	$	4,624

Cash Flows - Operating Activities

The net cash provided by operating activities in the ~~six~~three months ended ~~April 28, 2019 was $9.5 million, an increase of $9.0~~February 2, 2020 decreased $2.0 million from ~~net cash provided by operating activities of $0.5~~$2.0 million in the ~~six~~three months ended ~~April 29, 2018.~~January 27, 2019. This ~~increase~~decrease resulted primarily from ~~a decrease~~an increase in net loss of ~~$10.0~~$7.6 million partially offset by an increase in depreciation and amortization of $2.5 million, higher equity compensation of $0.6 million and the absence of the amortization of a ~~higher amount~~gain on sale of leaseback property in the first quarter of fiscal 2020. In addition, there was a $2.0 million increase in cash provided by operating assets and liabilities, primarily from accounts receivable and ~~accrued expenses offset by accounts payable and other assets.~~payable.

Cash Flows - Investing Activities

The net cash used in investing activities in the ~~six~~three months ended ~~April 28, 2019~~February 2, 2020 was ~~$4.1~~$1.0 million, principally for purchases of property, equipment and software of ~~$4.1 million.~~$1.4 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 ~~six~~three months ended ~~April 29, 2018~~January 27, 2019 was ~~$1.1~~$1.8 million, principally for the purchases of property, equipment and software of ~~$1.3~~$1.7 million.

Cash Flows - Financing Activities

The net cash used in financing activities in the three months ended February 2, 2020 was $0.2 million as a result of debt issuance costs of $0.2 million. The net cash provided by financing activities in the ~~six~~three months ended ~~April 28,~~January 27, 2019 was ~~$4.8~~$4.9 million ~~as a result of~~primarily due to a $5.0 million net ~~draw down~~drawdown of borrowings under the DZ Financing Program. ~~The net cash used in financing activities in the six months ended April 29, 2018 was $1.5 million mainly due to debt issuance costs of $1.4 million.~~

Financing Program

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

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

On ~~June 11, 2018, we amended the DZ Financing Program to modify a provision in the calculation of any eligible receivable, as defined. This amendment permits~~January 14, 2020, the Company executed an amendment to ~~exclude the receivables of a single large, high-quality customer from its threshold limitation, resulting in additional borrowing capacity of approximately $10.0 million.~~

~~On January 4, 2019, we amended~~ the DZ Financing Program. ~~Key changes~~The modifications to the ~~program~~agreement were ~~to:~~to (1) extend the ~~term of the program to January 25, 2021; (2) revise an existing financial covenant to maintain Tangible Net Worth (as~~Amortization Date, as defined under the DZ Financing ~~Program) of at least $30.0 million through fiscal 2019, which will revert back~~Program, from January 25, 2021 to ~~$40.0 million in fiscal 2020;~~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 ~~2019; and (4) increase the eligibility threshold for obligors with payment terms in excess of 60 days from 2.5% to 10.0%, which will add flexibility and borrowing capacity for the Company.~~2020. All other ~~material~~ terms and conditions remain ~~substantially~~ 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%.

for the security deposit required under certain real estate lease agreements and $0.2 million for the Company's corporate credit card program. The Company used $30.0 million of funds available under the DZ Financing Program to temporarily collateralize the letters of credit, until the letters of credit were established with DZ Bank on January 31, 2018.

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

~~We used funds made available by~~ At February 2, 2020, there was $11.3 million of borrowing availability, as defined under the DZ Financing Program to repay all amounts outstanding under the PNC Financing Program, which terminated in accordance with its terms, and expect to use remaining availability from the DZ Financing Program from time to time for working capital and other general corporate purposes.

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

~~Company’s other legal entities. Borrowing capacity under the PNC Financing Program was directly impacted by the level of accounts receivable.~~

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

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 ~~April 28, 2019,~~February 2, 2020, we had cash and cash equivalents on which interest income is earned at variable rates. At ~~April 28, 2019,~~February 2, 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 ~~six~~three 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 ~~April 28, 2019~~February 2, 2020 compared to ~~October 28, 2018.~~November 3, 2019. Consequently, stockholders’ equity ~~decreased slightly~~increased $0.4 million as a result of the foreign currency translation as of ~~April 28, 2019.~~February 2, 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 ~~April 28, 2019~~February 2, 2020 would result in an approximate ~~$2.1~~$1.5 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 ~~April 28, 2019~~February 2, 2020 would result in an approximate ~~$2.1~~$1.5 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 ~~April 28, 2019~~February 2, 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 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 may be adversely affected by global public health epidemics, including the strain of coronavirus known as COVID-19.

Outbreaks of epidemic, pandemic, or contagious diseases, such as the recent 2019 Novel Coronavirus (COVID-19), could have an adverse effect on our business, financial condition, results of operations or liquidity. A global public health epidemic could impact our customers’ business operations, including temporary closures of facilities, thereby decreasing demand for our staffing services. Additionally, our employees, contingent workers and contractors may be impacted by an outbreak which could impact our ability to serve our clients or respond timely to their needs. The extent to which the coronavirus impacts our results will depend on future developments, which are uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others.

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

On ~~June 4, 2019,~~March 12, 2020, the Company entered into an amendment No. 2 to the Amended and Restated Receivables Loan and Security Agreement dated as of ~~January 25, 2018 with DZ Bank~~July 19, 2019. The modification to ~~temporarily exclude~~ the ~~receivables due from~~agreement was to revise an existing covenant to maintain 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 has experienced internal processing issues related to specific Volt purchase orders resulting in significant payment delays, which have negatively impacted the 90-Day Delinquency Rate,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 the DZ Financing Program. Although this change will improve the delinquency rate, it will also temporarily decrease the Company's borrowing availability under the DZ Financing Program by approximately $2.0 - $3.0 million. These payment delays are not credit relatedeach quarter thereafter. All other terms and the Company anticipates a resolution and collection of these past due amounts no later than July 26, 2019, at which time the receivables from this customer will be added back to the securitization pool under the original terms of the agreement.conditions remain unchanged.

A copy of Amendment No. 42 is attached to this Quarterly Report as Exhibit ~~10.2,~~10.1, and this summary is qualified in its entirety by

reference to such exhibit.

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		Amendment No. 32 dated ~~February 15, 2019~~March 12, 2020 to the Amended and Restated Receivables Loan and Security Agreement dated as of ~~January 25, 2018,~~July 19, 2019, among Volt Funding II, LLC, as borrower, Volt Information Sciences, Inc., as servicer, the lenders and letter of credit participants party thereto from time to time, DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt Am Main, New York Branch, as agent, and Autobahn Funding Company LLC and DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt Am Main, New York Branch, as letter of credit issuers ~~(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed February 20, 2019; File No. 001-9232)~~

~~10.2~~		Amendment No. 4 dated June 4, 2019 to the Receivables Loan and Security Agreement dated as of January 25, 2018, among Volt Funding II, LLC, as borrower, Volt Information Sciences, Inc., as servicer, the lenders and letter of credit participants party thereto from time to time, DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt Am Main, New York Branch, as agent, and Autobahn Funding Company LLC and DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt Am Main, New York Branch, as letter of credit issuers

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: ~~June 5, 2019~~March 12, 2020	By:		/s/ Linda Perneau
		Linda Perneau
		President and Chief Executive Officer (Principal Executive Officer)

Date: ~~June 5, 2019~~March 12, 2020	By:		/s/ ~~Paul Tomkins~~Herbert M. Mueller
		~~Paul Tomkins~~Herbert M. Mueller
		Senior Vice President and Chief Financial Officer (Principal Financial Officer)

Date: ~~June 5, 2019~~March 12, 2020	By:		/s/ Leonard Naujokas
		Leonard Naujokas
		Controller and Chief Accounting Officer (Principal Accounting Officer)

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