UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~May 2, 2021~~January 30, 2022

☐ 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.)
2401 N. Glassell Street, Orange, California			92865
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code:

(714) 921-8800

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	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. ☒ 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). ☒ 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,” “non-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

☒

Smaller reporting company

☒

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 ☒

As of ~~June~~March 11, ~~2021,~~2022, there were ~~21,736,575~~22,099,246 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					Three Months Ended
		May 2, 2021		May 3, 2020		May 2, 2021		May 3, 2020			January 30, 2022		January 31, 2021
NET REVENUE	NET REVENUE	$	222,092	$	207,275	$	440,050	$	425,041	NET REVENUE	$	226,928	$	217,958
Cost of services	Cost of services	185,613		175,038		370,889		361,377		Cost of services	191,835		185,276
GROSS MARGIN	GROSS MARGIN	36,479		32,237		69,161		63,664		GROSS MARGIN	35,093		32,682

EXPENSES	EXPENSES									EXPENSES
Selling, administrative and other operating costs	Selling, administrative and other operating costs	32,950		36,189		66,697		75,686		Selling, administrative and other operating costs	34,976		33,747
Restructuring and severance costs	Restructuring and severance costs	595		411		1,227		1,657		Restructuring and severance costs	591		632
Impairment charges	Impairment charges	261		0		292		11		Impairment charges	23		31
OPERATING INCOME (LOSS)		2,673		(4,363)		945		(13,690)
OPERATING LOSS										OPERATING LOSS	(497)		(1,728)

OTHER INCOME (EXPENSE), NET	OTHER INCOME (EXPENSE), NET									OTHER INCOME (EXPENSE), NET
Interest income (expense), net	Interest income (expense), net	(430)		(621)		(907)		(1,321)		Interest income (expense), net	(414)		(477)
Foreign exchange gain (loss), net	Foreign exchange gain (loss), net	71		(266)		313		(594)		Foreign exchange gain (loss), net	(12)		242
Other income (expense), net	Other income (expense), net	(147)		(152)		(303)		(410)		Other income (expense), net	(143)		(156)
TOTAL OTHER INCOME (EXPENSE), NET	TOTAL OTHER INCOME (EXPENSE), NET	(506)		(1,039)		(897)		(2,325)		TOTAL OTHER INCOME (EXPENSE), NET	(569)		(391)

INCOME (LOSS) BEFORE INCOME TAXES		2,167		(5,402)		48		(16,015)
LOSS BEFORE INCOME TAXES										LOSS BEFORE INCOME TAXES	(1,066)		(2,119)
Income tax provision	Income tax provision	288		23		615		218		Income tax provision	153		327
NET INCOME (LOSS)		$	1,879	$	(5,425)	$	(567)	$	(16,233)
NET LOSS										NET LOSS	$	(1,219)	$	(2,446)

PER SHARE DATA:	PER SHARE DATA:									PER SHARE DATA:
Basic:
Net income (loss)		$	0.09	$	(0.25)	$	(0.03)	$	(0.76)
Basic and Diluted:										Basic and Diluted:
Net loss										Net loss	$	(0.06)	$	(0.11)
Weighted average number of shares	Weighted average number of shares	21,793		21,416		21,793		21,416		Weighted average number of shares	22,158		21,793

Diluted:
Net income (loss)		$	0.08	$	(0.25)	$	(0.03)	$	(0.76)
Weighted average number of shares		22,588		21,416		21,793		21,416

See accompanying Notes to Condensed Consolidated Financial Statements.

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss

(In thousands)

(unaudited)

Three Months Ended Six Months Ended
May 2, 2021 May 3, 2020 May 2, 2021 May 3, 2020
NET INCOME (LOSS) $ 1,879 $ (5,425) $ (567) $ (16,233)
Other comprehensive income (loss):
Foreign currency translation adjustments net of taxes of $0 and $0, respectively 160 (602) 1,091 (238)
COMPREHENSIVE INCOME (LOSS) $ 2,039 $ (6,027) $ 524 $ (16,471)


	Three Months Ended
	January 30, 2022		January 31, 2021
NET LOSS	$	(1,219)	$	(2,446)
Other comprehensive income (loss):
Foreign currency translation adjustments, net of taxes	(862)		931
COMPREHENSIVE LOSS	$	(2,081)	$	(1,515)

See accompanying Notes to Condensed Consolidated Financial Statements.

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)


		May 2, 2021		November 1, 2020			January 30, 2022		October 31, 2021
		(unaudited)					(unaudited)
ASSETS	ASSETS					ASSETS
CURRENT ASSETS:	CURRENT ASSETS:					CURRENT ASSETS:
Cash and cash equivalents	Cash and cash equivalents	$	47,231	$	38,550	Cash and cash equivalents	$	54,864	$	71,373
Restricted cash and short-term investments	Restricted cash and short-term investments	12,788		20,736		Restricted cash and short-term investments	11,587		8,729
Trade accounts receivable, net of allowances of $156 and $219, respectively		127,435		121,916
Trade accounts receivable, net of allowances of $148 and $137, respectively						Trade accounts receivable, net of allowances of $148 and $137, respectively	129,303		127,211
Other current assets	Other current assets	7,567		7,058		Other current assets	6,486		6,229
TOTAL CURRENT ASSETS	TOTAL CURRENT ASSETS	195,021		188,260		TOTAL CURRENT ASSETS	202,240		213,542
Property, equipment and software, net	Property, equipment and software, net	20,180		22,167		Property, equipment and software, net	16,253		17,482
Right of use assets - operating leases		23,513		25,107
Right-of-use assets - operating leases, net						Right-of-use assets - operating leases, net	22,025		22,496
Other assets, excluding current portion	Other assets, excluding current portion	6,633		6,311		Other assets, excluding current portion	6,537		6,584
TOTAL ASSETS	TOTAL ASSETS	$	245,347	$	241,845	TOTAL ASSETS	$	247,055	$	260,104
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:	CURRENT LIABILITIES:					CURRENT LIABILITIES:
Accrued compensation	Accrued compensation	$	18,630	$	18,357	Accrued compensation	$	21,811	$	22,629
Accounts payable	Accounts payable	24,793		31,221		Accounts payable	36,649		36,544
Accrued taxes other than income taxes	Accrued taxes other than income taxes	31,828		12,983		Accrued taxes other than income taxes	32,486		31,112
Accrued insurance and other	Accrued insurance and other	17,710		15,908		Accrued insurance and other	17,573		16,298
Operating lease liabilities	Operating lease liabilities	6,817		7,144		Operating lease liabilities	7,052		6,775
Income taxes payable	Income taxes payable	515		891		Income taxes payable	1,012		956
TOTAL CURRENT LIABILITIES	TOTAL CURRENT LIABILITIES	100,293		86,504		TOTAL CURRENT LIABILITIES	116,583		114,314
Accrued payroll taxes and other, excluding current portion	Accrued payroll taxes and other, excluding current portion	21,237		29,988		Accrued payroll taxes and other, excluding current portion	8,877		21,832
Operating lease liabilities, excluding current portion	Operating lease liabilities, excluding current portion	35,424		38,232		Operating lease liabilities, excluding current portion	32,434		33,558
Income taxes payable, excluding current portion		90		90
Deferred income taxes		0		3

Long-term debt, net	Long-term debt, net	59,153		59,154		Long-term debt, net	59,384		59,307
TOTAL LIABILITIES	TOTAL LIABILITIES	216,197		213,971		TOTAL LIABILITIES	217,278		229,011
Commitments and contingencies		0		0

STOCKHOLDERS’ EQUITY:	STOCKHOLDERS’ EQUITY:					STOCKHOLDERS’ EQUITY:
Preferred stock, par value $1.00; Authorized - 500,000 shares; Issued - 0ne		0		0
Common stock, par value $0.10; Authorized - 120,000,000 shares; Issued - 23,738,003 shares; Outstanding - 21,736,575 shares and 21,729,400 shares, respectively		2,374		2,374
Preferred stock, par value $1.00; Authorized - 500,000 shares; Issued - none						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 - 22,099,246 shares						Common stock, par value $0.10; Authorized - 120,000,000 shares; Issued - 23,738,003 shares; Outstanding - 22,099,246 shares	2,374		2,374
Paid-in capital	Paid-in capital	80,673		79,937		Paid-in capital	80,827		80,062
Accumulated deficit	Accumulated deficit	(30,505)		(29,793)		Accumulated deficit	(33,427)		(32,208)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(5,367)		(6,458)		Accumulated other comprehensive loss	(7,111)		(6,249)
Treasury stock, at cost; 2,001,428 and 2,008,603 shares, respectively		(18,025)		(18,186)
Treasury stock, at cost; 1,638,757 shares						Treasury stock, at cost; 1,638,757 shares	(12,886)		(12,886)
TOTAL STOCKHOLDERS’ EQUITY	TOTAL STOCKHOLDERS’ EQUITY	29,150		27,874		TOTAL STOCKHOLDERS’ EQUITY	29,777		31,093
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	245,347	$	241,845	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	247,055	$	260,104

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 May 2, 2021
Common Stock
$0.10 Par Value
Paid-in
Capital Accumulated Deficit Accumulated
Other
Comprehensive
Income (Loss) Treasury
Stock Total
Stockholders’
Equity
Shares Amount
BALANCE AT NOVEMBER 1, 2020 23,738,003 $ 2,374 $ 79,937 $ (29,793) $ (6,458) $ (18,186) $ 27,874
Net loss — — — (2,446) — — (2,446)
Share-based compensation — — 226 — — — 226
Issuance of common stock — — (21) (145) — 161 (5)
Other comprehensive income — — — — 931 — 931
BALANCE AT JANUARY 31, 2021 23,738,003 $ 2,374 $ 80,142 $ (32,384) $ (5,527) $ (18,025) $ 26,580
Net income — — — 1,879 — — 1,879
Share-based compensation — — 531 — — — 531
Other comprehensive income — — — — 160 — 160
BALANCE AT MAY 2, 2021 23,738,003 $ 2,374 $ 80,673 $ (30,505) $ (5,367) $ (18,025) $ 29,150


	Three Months Ended January 30, 2022
	Common Stock $0.10 Par Value			Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock		Total Stockholders’ Equity
	Shares	Amount
BALANCE AT OCTOBER 31, 2021	23,738,003	$	2,374	$	80,062	$	(32,208)	$	(6,249)	$	(12,886)	$	31,093
Net loss	—	—		—		(1,219)		—		—		(1,219)
Share-based compensation	—	—		765		—		—		—		765

Other comprehensive loss	—	—		—		—		(862)		—		(862)
BALANCE AT JANUARY 30, 2022	23,738,003	$	2,374	$	80,827	$	(33,427)	$	(7,111)	$	(12,886)	$	29,777


		Six Months Ended May 3, 2020																				Three Months Ended January 31, 2021
		Common Stock $0.10 Par Value			Paid-in Capital		Accumulated Deficit				Accumulated Other Comprehensive Income (Loss)			Treasury Stock				Total Stockholders’ Equity				Common Stock $0.10 Par Value					Paid-in Capital				Accumulated Deficit				Accumulated Other Comprehensive Income (Loss)				Treasury Stock				Total Stockholders’ Equity
		Shares	Amount										Shares								Amount
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
BALANCE AT NOVEMBER 1, 2020																					BALANCE AT NOVEMBER 1, 2020	23,738,003			$	2,374			$	79,937			$	(29,793)			$	(6,458)			$	(18,186)			$	27,874
Net loss	Net loss	—	—		—		(10,808)				—			—				(10,808)			Net loss	—			—		—				(2,446)				—				—				(2,446)
Share-based compensation	Share-based compensation	—	—		511		—				—			—				511			Share-based compensation	—			—		226				—				—				—				226
Issuance of common stock	Issuance of common stock	—	—		(114)		(739)				—			846				(7)			Issuance of common stock	—			—		(21)				(145)				—				161				(5)
Other comprehensive income	Other comprehensive income	—	—		—		—				364			—				364			Other comprehensive income	—			—		—				—				931				—				931
BALANCE AT FEBRUARY 2, 2020		23,738,003	$	2,374	$	78,085	$	(248)			$	(6,437)		$	(25,309)			$	48,465
Net loss		—	—		—		(5,425)				—			—				(5,425)
Share-based compensation		—	—		508		—				—			—				508
Other comprehensive loss		—	—		—		—				(602)			—				(602)
BALANCE AT MAY 3, 2020		23,738,003	$	2,374	$	78,593	$	(5,673)			$	(7,039)		$	(25,309)			$	42,946
BALANCE AT JANUARY 31, 2021																					BALANCE AT JANUARY 31, 2021	23,738,003			$	2,374	$	80,142			$	(32,384)			$	(5,527)			$	(18,025)			$	26,580

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
		May 2, 2021		May 3, 2020			January 30, 2022		January 31, 2021
CASH FLOWS (USED IN) PROVIDED BY OPERATING ACTIVITIES:
CASH FLOWS USED IN OPERATING ACTIVITIES:						CASH FLOWS USED IN OPERATING ACTIVITIES:
Net loss	Net loss	$	(567)	$	(16,233)	Net loss	$	(1,219)	$	(2,446)
Adjustment to reconcile net loss to cash (used in) provided by operating activities:
Adjustment to reconcile net loss to cash used in operating activities:						Adjustment to reconcile net loss to cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	3,656		4,000		Depreciation and amortization	2,032		1,705
Non-cash operating lease expense	Non-cash operating lease expense	4,521		4,043		Non-cash operating lease expense	2,128		2,269
Release of doubtful accounts and sales allowances		(9)		(7)
Unrealized foreign currency exchange loss		511		293
Provision (release) of doubtful accounts and sales allowances						Provision (release) of doubtful accounts and sales allowances	92		(22)
Unrealized foreign currency exchange (gain) loss						Unrealized foreign currency exchange (gain) loss	(240)		629
Impairment charges	Impairment charges	292		11		Impairment charges	23		31
Gain on dispositions of property, equipment and software		0		(287)

Share-based compensation	Share-based compensation	757		1,019		Share-based compensation	765		226
Change in operating assets and liabilities:	Change in operating assets and liabilities:					Change in operating assets and liabilities:
Trade accounts receivable	Trade accounts receivable	(5,479)		19,407		Trade accounts receivable	(2,143)		(7,888)
Other assets	Other assets	(431)		(283)		Other assets	(434)		651
Accounts payable	Accounts payable	(6,439)		(6,611)		Accounts payable	113		(5,519)
Accrued expenses and other liabilities	Accrued expenses and other liabilities	5,432		(2,531)		Accrued expenses and other liabilities	(13,089)		4,148
Income taxes	Income taxes	(432)		89		Income taxes	56		(283)
Net cash provided by operating activities		1,812		2,910
CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES:
Net cash used in operating activities						Net cash used in operating activities	(11,916)		(6,499)
CASH FLOWS USED IN INVESTING ACTIVITIES:						CASH FLOWS USED IN INVESTING ACTIVITIES:
Sales of investments	Sales of investments	207		547		Sales of investments	428		115
Purchases of investments	Purchases of investments	(263)		(284)		Purchases of investments	(272)		(125)
Proceeds from sale of property, equipment and software	Proceeds from sale of property, equipment and software	16		352		Proceeds from sale of property, equipment and software	—		6
Purchases of property, equipment and software	Purchases of property, equipment and software	(1,755)		(3,092)		Purchases of property, equipment and software	(797)		(959)
Net cash used in investing activities	Net cash used in investing activities	(1,795)		(2,477)		Net cash used in investing activities	(641)		(963)
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES:
Repayment of borrowings		0		(15,000)
Draw-down on borrowings		0		20,000
CASH FLOWS USED IN FINANCING ACTIVITIES:						CASH FLOWS USED IN FINANCING ACTIVITIES:

Debt issuance costs	Debt issuance costs	(166)		(243)		Debt issuance costs	—		(161)
Other	Other	23		(6)		Other	(16)		(5)
Net cash (used in) provided by financing activities		(143)		4,751
Net cash used in financing activities						Net cash used in financing activities	(16)		(166)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	281		(521)		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(597)		(13)
Net increase in cash, cash equivalents and restricted cash		155		4,663
Net decrease in cash, cash equivalents and restricted cash						Net decrease in cash, cash equivalents and restricted cash	(13,170)		(7,641)
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	56,433		38,444		Cash, cash equivalents and restricted cash, beginning of period	76,609		56,433
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	56,588	$	43,107	Cash, cash equivalents and restricted cash, end of period	$	63,439	$	48,792

Cash paid during the period:	Cash paid during the period:					Cash paid during the period:
Interest	Interest	$	917	$	1,382	Interest	$	422	$	484
Income taxes	Income taxes	$	142	$	258	Income taxes	$	85	$	8

Reconciliation of cash, cash equivalents, and restricted cash:	Reconciliation of cash, cash equivalents, and restricted cash:					Reconciliation of cash, cash equivalents, and restricted cash:
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	47,231	$	26,223	Cash and cash equivalents	$	54,864	$	40,062
Restricted cash included in Restricted cash and short-term investments	Restricted cash included in Restricted cash and short-term investments	9,357		16,884		Restricted cash included in Restricted cash and short-term investments	8,575		8,730
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	56,588	$	43,107	Cash, cash equivalents and restricted cash, end of period	$	63,439	$	48,792

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 ~~May 2,~~January 30, 2022 and January 31, 2021 ~~and May 3, 2020~~

(Unaudited)

NOTE 1: Basis of Presentation

Basis of Presentation

The accompanying interim condensed consolidated financial statements of Volt Information Sciences, Inc. (“Volt” or the “Company”) have been prepared in conformity with generally accepted accounting principles (“GAAP”), consistent in all material respects with those applied in the Annual Report on Form 10-K for the year ended ~~November 1, 2020.~~October 31, 2021. 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 ~~November 1, 2020.~~October 31, 2021.

NOTE 2: Recently Issued Accounting Pronouncements

New Accounting Standards Not Yet Adopted by the Company

In ~~June 2016,~~November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This standard is effective for annual periods beginning after December 15, 2021. Early adoption is permitted. The amendments should be applied either (1) prospectively to all transactions within the scope of the amendments that are reflected in financial statements at the date of initial application and new transactions that are entered into after the date of initial application or (2) retrospectively to those transactions. The Company is required to adopt the guidance in the first quarter of fiscal 2023. The Company does not anticipate a significant impact of these amendments on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Accounting Standards Codification (“ASC”) Topic 326), as clarified in ASU 2019-04, ASU 2019-05, ASU 2019-11 and ASU 2018-19, amending how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance requires the application of a current expected credit loss model, which is a new impairment model based on expected losses. Under this model, an entity recognizes an allowance for expected credit losses based on historical experience, current conditions and forecasted information rather than the current methodology of delaying recognition of credit losses until it is probable a loss has been incurred. The amendments for Smaller Reporting Companies are effective for fiscal years beginning after December 15, 2022, which for the Company will be the first quarter of fiscal 2024. The Company expects to early adopt this ASU in the first quarter of fiscal 2023. 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 ~~March~~October 2020, the FASB issued ASU ~~2020-04,~~2020-10, ~~Reference Rate Reform (Topic 848)~~Codification Improvements ~~- Facilitation~~(“ASU 2020-10”). The amendments improve the ASC by ensuring that all guidance that requires or provides an option for an entity to provide information in the notes to financial statements is codified in the Disclosure Section of the ~~Effects of Reference Rate Reform on Financial Reporting~~ (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.ASC. The amendments also clarify various provisions in ~~this update apply only to contracts, hedging relationships and other transactions~~the ASC so that ~~reference LIBOR or another reference rate expected to~~the guidance can be ~~discontinued because of reference rate reform.~~applied more consistently. ASU ~~2020-04~~2020-10 was effective for the Company in the first quarter of fiscal ~~2021. The Company’s securitization program references the LIBOR rate but only as a secondary rate to be used under specific circumstances.~~2022. The adoption of this guidance had no significant impact on the Company’s consolidated financial statements.

In ~~August 2018,~~December 2019, the FASB issued ASU ~~2018-13,~~2019-12, ~~Fair Value Measurement: Disclosure Framework - Changes to~~Simplifying the ~~Disclosure Requirements~~Accounting for ~~Fair Value Measurement~~Income Taxes (Topic 740) (“ASU ~~2018-13”~~2019-12”), which ~~changes~~simplifies the ~~fair value measurement disclosure requirements~~accounting for income taxes. The ASU removes exceptions to the general principles for intraperiod tax allocation, the recognition of ~~ASC 820.~~a deferred tax liability for equity method investments and the methodology for calculating income taxes in an interim period. It also improves consistent application of and simplification for other areas of Topic 740 by clarifying and amending existing guidance. ASU ~~2018-13~~2019-12 is effective for all entities for fiscal years beginning after December 15, ~~2019,~~2020, including interim

periods therein. ~~Early adoption is permitted for any eliminated or modified disclosures upon issuance of~~This ASU ~~2018-13. ASU 2018-13~~ was effective for the Company in the first quarter of fiscal ~~2021.~~2022. The adoption of this guidance had no significant impact on the Company’s consolidated financial statements.

All other ASUs that became effective for Volt induring the first ~~six months~~quarter of fiscal ~~2021~~2022 were not applicable to the Company at this time and therefore, did not have any impact during the period.

NOTE 3: Leases

The Company 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’s ~~material~~leases are primarily classified as operating ~~leases~~and consist of branch locations, as well as corporate office space. ~~Our~~The Company’s finance lease arrangements are immaterial. The leases have remaining terms of 1 - 9 years. 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.~~

Operating leases are included in ~~Right of use~~Right-of-use assets (“ROU”) - operating leases and Operating lease liabilities, current and long-term, in the Condensed Consolidated Balance Sheets. 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 in the Condensed Consolidated Statements of Operations. ~~The Company’s finance lease arrangements are immaterial.~~


Components of Lease Expense (in thousands)	Components of Lease Expense (in thousands)	Three Months Ended				Six Months Ended				Components of Lease Expense (in thousands)	Three Months Ended
		May 2, 2021		May 3, 2020		May 2, 2021		May 3, 2020			January 30, 2022		January 31, 2021
Operating lease expense	Operating lease expense	$	2,225	$	3,003	$	4,494	$	5,924	Operating lease expense	$	2,089	$	2,269
Sublease income	Sublease income	(408)		(394)		(810)		(788)		Sublease income	(461)		(402)
Variable lease expense	Variable lease expense	362		126		743		327		Variable lease expense	370		314
Total (1)(2)	Total (1)(2)	$	2,179	$	2,735	$	4,427	$	5,463	Total (1)(2)	$	1,998	$	2,181

(1) The Company ~~has minimal~~’s short-term lease ~~expense.~~expense is immaterial.

(2) Lease expense included in restructuring is approximately $0.5 million and ~~$1.1~~$0.6 million for the three ~~and six~~ months ended ~~May 2,~~January 30, 2022 and January 31, 2021, ~~and $0.1 million and $0.1 million for the three and six months ended May 3, 2020.~~respectively.


		Six Months Ended					Three Months Ended
Supplemental Cash Flows Information (in thousands)	Supplemental Cash Flows Information (in thousands)	May 2, 2021		May 3, 2020		Supplemental Cash Flows Information (in thousands)	January 30, 2022		January 31, 2021
Cash paid for amounts included in the measurement of operating lease liabilities	Cash paid for amounts included in the measurement of operating lease liabilities	$	5,656	$	5,868	Cash paid for amounts included in the measurement of operating lease liabilities	$	2,428	$	2,925
Operating ROU assets obtained in exchange for operating lease liabilities	Operating ROU assets obtained in exchange for operating lease liabilities	$	1,138	$	680	Operating ROU assets obtained in exchange for operating lease liabilities	$	1,001	$	737


		Six Months Ended					Three Months Ended
Weighted Average Remaining Lease Term and Discount Rate	Weighted Average Remaining Lease Term and Discount Rate	May 2, 2021		May 3, 2020		Weighted Average Remaining Lease Term and Discount Rate	January 30, 2022		January 31, 2021
Weighted average remaining lease term (years)	Weighted average remaining lease term (years)	7.7		8.2		Weighted average remaining lease term (years)	7.2		7.8
Weighted average discount rate	Weighted average discount rate	6.3	%	6.3	%	Weighted average discount rate	6.3	%	6.3	%


Maturities of Lease Liabilities (in thousands)	Maturities of Lease Liabilities (in thousands)	As of May 2, 2021		Maturities of Lease Liabilities (in thousands)	As of January 30, 2022
Fiscal Year:	Fiscal Year:	Amount		Fiscal Year:	Amount
Remainder of 2021		$	4,878
2022		8,350
Remainder of 2022				Remainder of 2022	$	7,037
2023	2023	7,042		2023	7,881
2024	2024	5,676		2024	6,259
2025	2025	5,275		2025	5,536
2026				2026	4,281
Thereafter	Thereafter	22,901		Thereafter	18,704
Total future lease payments	Total future lease payments	$	54,122	Total future lease payments	$	49,698
Less: Imputed interest	Less: Imputed interest	11,735		Less: Imputed interest	10,075
Total lease liabilities	Total lease liabilities	$	42,387	Total lease liabilities	$	39,623

NOTE 4: Revenue Recognition

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.

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.

Direct Placement Services

Direct placement services include providing qualified candidates to the Company’s customers to hire on a permanent basis. 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. The Company’s fee for these MSP services is a fixed percentage of the staffing services spend that is managed through the program.

Disaggregation of Revenues

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


		Three Months Ended May 2, 2021													Three Months Ended January 30, 2022
Segment	Segment	Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations		Segment	Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations
Service Revenues:	Service Revenues:													Service Revenues:
Staffing Services	Staffing Services	$	211,907	$	182,353	$	22,535	$	6,934	$	117	$	(32)	Staffing Services	$	216,082	$	188,666	$	20,682	$	6,729	$	78	$	(73)
Direct Placement Services	Direct Placement Services	3,749		1,942		1,276		531		0		0		Direct Placement Services	4,868		2,530		1,876		462		—		—
Managed Service Programs	Managed Service Programs	6,436		0		4,069		2,367		0		0		Managed Service Programs	5,978		—		3,460		2,518		—		—
		$	222,092	$	184,295	$	27,880	$	9,832	$	117	$	(32)		$	226,928	$	191,196	$	26,018	$	9,709	$	78	$	(73)

Geographical Markets:	Geographical Markets:													Geographical Markets:
Domestic	Domestic	$	193,043	$	183,323	$	0	$	9,745	$	0	$	(25)	Domestic	$	199,856	$	190,292	$	—	$	9,637	$	—	$	(73)
International	International	29,049		972		27,880		87		117		(7)		International	27,072		904		26,018		72		78		—
		$	222,092	$	184,295	$	27,880	$	9,832	$	117	$	(32)		$	226,928	$	191,196	$	26,018	$	9,709	$	78	$	(73)

Three Months Ended May 3, 2020
Segment Total North American Staffing International Staffing North American
MSP Corporate and Other Eliminations
Service Revenues:
Staffing Services $ 199,443 $ 171,966 $ 21,499 $ 6,137 $ 187 $ (346)
Direct Placement Services 3,151 1,420 875 856 0 0
Managed Service Programs 4,681 0 1,929 2,752 0 0
$ 207,275 $ 173,386 $ 24,303 $ 9,745 $ 187 $ (346)
Geographical Markets:
Domestic $ 181,870 $ 172,548 $ 0 $ 9,648 $ 0 $ (326)
International 25,405 838 24,303 97 187 (20)
$ 207,275 $ 173,386 $ 24,303 $ 9,745 $ 187 $ (346)

Six Months Ended May 2, 2021
Segment Total North American Staffing International Staffing North American
MSP Corporate and Other Eliminations
Service Revenues:
Staffing Services $ 421,175 $ 364,919 $ 42,530 $ 13,581 $ 236 $ (91)
Direct Placement Services 6,814 3,592 2,155 1,067 0 0
Managed Service Programs 12,061 0 7,208 4,853 0 0
$ 440,050 $ 368,511 $ 51,893 $ 19,501 $ 236 $ (91)
Geographical Markets:
Domestic $ 385,875 $ 366,619 $ 0 $ 19,317 $ 0 $ (61)
International 54,175 1,892 51,893 184 236 (30)
$ 440,050 $ 368,511 $ 51,893 $ 19,501 $ 236 $ (91)


		Six Months Ended May 3, 2020													Three Months Ended January 31, 2021
Segment	Segment	Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations		Segment	Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations
Service Revenues:	Service Revenues:													Service Revenues:
Staffing Services	Staffing Services	$	409,486	$	352,829	$	45,106	$	11,931	$	390	$	(770)	Staffing Services	$	209,269	$	182,567	$	19,995	$	6,647	$	119	$	(59)
Direct Placement Services	Direct Placement Services	6,368		2,952		1,883		1,533		0		0		Direct Placement Services	3,064		1,649		879		536		—		—
Managed Service Programs	Managed Service Programs	9,187		0		3,537		5,650		0		0		Managed Service Programs	5,625		—		3,139		2,486		—		—
		$	425,041	$	355,781	$	50,526	$	19,114	$	390	$	(770)		$	217,958	$	184,216	$	24,013	$	9,669	$	119	$	(59)

Geographical Markets:	Geographical Markets:													Geographical Markets:
Domestic	Domestic	$	372,553	$	354,316	$	0	$	18,966	$	0	$	(729)	Domestic	$	192,832	$	183,297	$	—	$	9,572	$	—	$	(37)
International	International	52,488		1,465		50,526		148		390		(41)		International	25,126		919		24,013		97		119		(22)
		$	425,041	$	355,781	$	50,526	$	19,114	$	390	$	(770)		$	217,958	$	184,216	$	24,013	$	9,669	$	119	$	(59)

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 and ~~records~~maintains a sales allowance ~~as a liability.~~for any potential billing errors and service-related adjustments to the customer. As of ~~May 2, 2021,~~January 30, 2022, the change in the reserve balance from ~~November 1, 2020~~October 31, 2021 was immaterial.

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~~Contract liabilities ~~when~~relate to payments that are ~~made~~received or due prior to the related performance obligations being satisfied. The ~~current portion of contract liabilities is included in Accrued insurance and other in the Condensed Consolidated Balance Sheets. The~~ Company does 0tnot have any material contract assets or long-term contract liabilities as of ~~May 2, 2021~~January 30, 2022 and ~~November 1, 2020.~~October 31, 2021.

The Company may incur fulfillment costs after obtaining a contract related to the set up and implementation of customer-specific MSP programs. These costs are deferred and amortized over the expected period of benefit of the MSP services provided to the customer. Deferred fulfillment costs were immaterial as of January 30, 2022 and October 31, 2021.

Economic Factors

The Company’s operations are subject to variations in the economic condition and regulatory environment in their jurisdictions of operations. Adverse economic conditions may severely reduce the demand for the Company’s services and directly impact the revenue. In addition, the Company faces risks in complying with various legal requirements and unpredictable changes in both U.S. and foreign regulations which may have a financial impact on the business and operations.

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

NOTE 5: Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss for the three ~~and six~~ months ended ~~May 2, 2021~~January 30, 2022 were (in thousands):

Three Months Ended Six Months Ended
May 2, 2021
Foreign Currency Translation
Accumulated other comprehensive loss at beginning of the period $ (5,527) $ (6,458)
Other comprehensive income 160 1,091
Accumulated other comprehensive loss at May 2, 2021 $ (5,367) $ (5,367)


	Foreign Currency Translation
Accumulated other comprehensive loss at beginning of the period	$	(6,249)
Other comprehensive loss	(862)
Accumulated other comprehensive loss at January 30, 2022	$	(7,111)

There were 0no taxes allocated to the components of Other comprehensive loss and no reclassifications from accumulated other comprehensive loss for the three ~~and six~~ months ended ~~May 2, 2021~~January 30, 2022 and ~~May 3, 2020.~~January 31, 2021.

NOTE 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 ~~May 2,~~January 30, 2022 and October 31, 2021, ~~and November 1, 2020,~~ restricted cash included ~~$4.6~~$3.3 million and ~~$9.2~~$3.8 million, respectively, restricted for payment to associate vendors, and ~~$0.6 million and~~ $0.5 million, ~~respectively,~~in both periods, restricted for other collateral accounts.

At ~~May 2,~~January 30, 2022 and October 31, 2021, ~~and November 1, 2020,~~ restricted cash also included ~~$4.2~~$4.8 million and ~~$8.2~~$0.9 million, respectively, restricted under the Company’s long-term accounts receivable securitization program (“DZ Financing Program”) with DZ Bank AG Deutsche Zentral-Genossenschaftsbank (“DZ Bank”). At ~~May 2,~~January 30, 2022 and October 31, 2021, this cash was restricted as it supplemented collateral provided by accounts receivable towards the Company’s aggregate borrowing base usage of $82.1 million, inclusive of $60.0 million outstanding and $22.1 million in issued letters of credit. At November 1, 2020, this cash was restricted as it supplemented collateral provided by accounts receivable towards the Company’s aggregate borrowing base usage of $84.5 million, inclusive of $60.0 million outstanding and $24.5 million in issued letters of credit.

Short-term investments were ~~$3.4~~$3.0 million and ~~$2.9~~$3.5 million at ~~May 2,~~January 30, 2022 and October 31, 2021, ~~and November 1, 2020,~~ 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 7: Fair Value ~~Measurements~~of Financial Instruments

~~Assets~~In accordance with ASC 820, Fair Value Measurements, assets and liabilities recorded at fair value are measured and classified ~~in accordance with~~using a three-tier fair value hierarchy based on the observability of the inputs available in the market to measure fair value, as described below:

a.Level 1 measurements consist of unadjusted quoted prices in active markets for identical assets or liabilities.

b.Level 2 measurements include quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.

c.Level 3 measurements include significant unobservable inputs.

The carrying amounts of the Company’s financial instruments, which include cash, cash equivalents, restricted cash, accounts receivable and accounts payable, approximated their fair values due to the short-term nature of these instruments.

The Company holds mutual funds to satisfy its obligations under its employee deferred compensation plan, which is carried at fair value based on quoted market prices in active markets for identical assets (Level 1). These short-term investments were ~~$3.4~~$3.0 million and ~~$2.9~~$3.5 million at ~~May 2,~~January 30, 2022 and October 31, 2021, ~~and November 1, 2020,~~ respectively. The carrying amounts of long-term debt recorded in the Company’s Condensed Consolidated Balance Sheets ~~was $59.2~~were $59.4 million and $59.3 million at ~~May 2,~~January 30, 2022 and October 31, 2021 ~~and November 1, 2020. This amount was~~respectively. These amounts were net of deferred financing fees and approximated its fair value, which is determinable based on the interest rates the Company believes it could obtain for borrowings with similar terms (Level 2).

Certain assets, such as goodwill, are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Upon a triggering event or evidence of impairment, the Company determines the fair value of these assets using Level 3 inputs, typically within a discounted cash flow model.

There have been no changes in the methodology used to measure fair value of the financial instruments as well as any transfer of Level 3 assets or liabilities during the three ~~and six~~ months ended ~~May 2, 2021.~~January 30, 2022.

NOTE 8: Income Taxes

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

The Company adjusts its effective tax rate for each quarter to be consistent with the estimated annual effective tax rate, consistent with ASC 270, Interim Reporting, and ASC 740-270, Income Taxes – Intra Period Tax Allocation. Jurisdictions with a projected loss for the full year where no tax benefit can be recognized are excluded from the calculation of the estimated annual effective tax rate. The Company’s future effective tax rates could be affected by earnings being different than anticipated in countries with differing statutory rates, increases in recorded valuation allowances of tax assets, or changes in tax laws.

The Company’s provision for income taxes primarily includes foreign jurisdictions and state taxes. The income tax provision in the ~~second~~first quarter of fiscal 2022 and 2021 ~~and 2020~~ were ~~$0.3~~$0.2 million and less than $0.1 million, respectively, primarily related to locations outside of the United States. For the first six months ended May 2, 2021 and May 3, 2020, the income tax provision was $0.6 million and $0.2$0.3 million, respectively, primarily related to locations outside of the United States. The Company’s quarterly provision for income taxes is measured using an estimated annual effective tax rate, adjusted for discrete items that occur within the periods presented.

~~The Company has analyzed the income tax impacts of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and has determined that it will not have a material impact to the Company.~~

NOTE 9: Debt

The Company’s primary sources of liquidity are cash flows generated from operations and proceeds from ~~its financing arrangements.~~the DZ Financing Program. Both operating cash flows and borrowing capacity under ~~the Company’s~~this financing ~~arrangements~~arrangement are directly related to the levels of accounts receivable generated by ~~its businesses.~~our business. 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~~the DZ Financing Program 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 $16.0 - $17.0 million. The Company generally targets minimum global liquidity to be approximately 1.5 times its average weekly requirements. The Company also maintains minimum effective cash balances in foreign operations and uses a multi-currency netting and overdraft facility for its European entities to further minimize overseas cash requirements.

On March 27, 2020, the U.S. government enacted the ~~CARES~~Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) which, among other things, permits the deferral of the employer’s portion of social security tax payments between March 27, 2020 and December 31, 2020. As a result, as of ~~May 2,~~October 31, 2021, $26.2 million of employer payroll tax payments were deferred with ~~50% due by December 31, 2021~~$13.2 million paid on January 3, 2022 and the remaining ~~50% by~~payable with the December 31, ~~2022.~~2022 tax payment in January 2023.

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

~~In July 2019, the Company amended and restated its long-term DZ Financing Program, which was originally executed on January 25, 2018.~~ The restated agreement allows for the inclusion of certain accounts receivable from originators in the United Kingdom, which added an additional $5.0 - $7.0 million in borrowing availability. In June 2020, the Maximum Facility Amount, as defined in the DZ Financing Program ~~was reduced from $115.0 million to~~is $100.0 million.

In December 2020, the Company amended the DZ Financing ~~Program.~~Program, which was originally executed on January 25, 2018. The modifications to the agreement were to (1) extend the Amortization Date, as defined in the DZ Financing Program, from January 25, 2023 to January 25, 2024; (2) extend the Facility Maturity Date, as defined in the DZ Financing Program, from July 25, 2023 to July 25, 2024; (3) revise an existing covenant to maintain positive net income in any fiscal year ending after 2020 to any fiscal year ending after 2021; (4) replace the existing Tangible Net Worth (“TNW”) covenant requirement, as defined in the DZ Financing Program, to a minimum TNW of $20.0 million through the Company’s fiscal quarter ending on or about July 31, 2021 and $25.0 million in each quarter thereafter; and (5) revise the eligibility threshold for the receivables of a large North American Staffing customer from 5% of eligible receivables to 8%, which increased our overall availability under the Program by $1.0 - $3.0 million. All other terms and conditions of the DZ Financing Program remain substantially unchanged.

Loan advances may be made under the DZ Financing Program through January 25, 2024 and all loans will mature no later than July 25, 2024. 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 ~~May 2, 2021,~~January 30, 2022, the letter of credit participation was $22.1 million inclusive of $20.9 million for the Company’s casualty insurance program and $1.2 million for the security deposit required under certain real estate lease agreements.

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

The Company is subject to certain financial and portfolio performance covenants under the DZ Financing Program, including (1) a minimum TNW, as defined under the DZ Financing Program, of at least ~~$20.0 million through the Company's fiscal quarter ending on or about July 31, 2021 and~~ $25.0 million in each ~~quarter thereafter;~~quarter; (2) positive net income in any fiscal year ending after 2021; (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 ~~May 2, 2021,~~January 30, 2022, the Company was in compliance with all debt covenants. At ~~May 2, 2021,~~January 30, 2022, there was ~~$2.9~~$2.7 million of borrowing availability, as defined under the DZ Financing Program.

At ~~May 2,~~January 30, 2022 and January 31, 2021, the Company had outstanding borrowings under the DZ Financing Program of $60.0 million, with a weighted average annual interest rate of 1.9% during ~~both~~ the ~~second~~first quarter of both fiscal ~~2021~~2022 and ~~for the first six months of~~ fiscal 2021. At May 3, 2020, the Company had outstanding borrowings under the DZ Financing Program of $60.0 million, with a weighted average annual rate of 3.3% during the second quarter of fiscal 2020 and 3.2% during the first six months of fiscal 2020.

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


		May 2, 2021		November 1, 2020			January 30, 2022		October 31, 2021
Financing programs	Financing programs	$	60,000	$	60,000	Financing programs	$	60,000	$	60,000
Less:	Less:					Less:
Deferred financing fees	Deferred financing fees	847		846		Deferred financing fees	616		693
Total long-term debt, net	Total long-term debt, net	$	59,153	$	59,154	Total long-term debt, net	$	59,384	$	59,307

NOTE 10: Earnings (Loss) Per Share

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


		Three Months Ended				Six Months Ended					Three Months Ended
		May 2, 2021		May 3, 2020		May 2, 2021		May 3, 2020			January 30, 2022		January 31, 2021
Numerator	Numerator									Numerator
Net income (loss)		$	1,879	$	(5,425)	$	(567)	$	(16,233)
Net loss										Net loss	$	(1,219)	$	(2,446)

Denominator	Denominator									Denominator
Basic weighted average number of shares	Basic weighted average number of shares	21,793		21,416��		21,793		21,416		Basic weighted average number of shares	22,158		21,793
Diluted weighted average number of shares	Diluted weighted average number of shares	22,588		21,416		21,793		21,416		Diluted weighted average number of shares	22,158		21,793

Net income (loss) per share:
Net loss per share:										Net loss per share:
Basic	Basic	$	0.09	$	(0.25)	$	(0.03)	$	(0.76)	Basic	$	(0.06)	$	(0.11)
Diluted	Diluted	$	0.08	$	(0.25)	$	(0.03)	$	(0.76)	Diluted	$	(0.06)	$	(0.11)

The diluted earnings per share for the three months ended ~~May 2,~~January 30, 2022 did not include the effect of potentially dilutive outstanding shares comprised of 1,101,790 restricted stock units (“RSUs”), 318,204 stock options and 493,604 performance stock units (“PSUs”) because the effect would have been anti-dilutive.

The diluted earnings per share for the three months ended January 31, 2021 did not include the effect of potentially dilutive outstanding shares comprised of 212,170 RSUs (defined below), 331,944 stock options and 124,987 PSUs (defined below) because the effect would have been anti-dilutive. The diluted earnings per share for the six months ended May 2, 2021 did not include the effect of potentially dilutive outstanding shares comprised of 937,662958,961 RSUs, 331,944 stock options and 194,417 PSUs because the effect would have been anti-dilutive.

The diluted earnings per share for the three and six months ended May 3, 2020 did not include the effect of potentially dilutive outstanding shares comprised of 653,210 RSUs, 401,053 stock options and 376,986 PSUs because the effect would have been anti-dilutive.

NOTE 11: Share-Based Compensation Plans

For the three ~~and six~~ months ended ~~May 2,~~January 30, 2022 and January 31, 2021, the Company recognized share-based compensation expense of ~~$0.5~~$0.8 million and ~~$0.7 million, respectively. For the three and six months ended May 3, 2020, the Company recognized share-based compensation expense of~~ $0.2 ~~million and $0.7~~ million, respectively. These expenses are included in Selling, administrative and other operating costs in the Company’s Condensed Consolidated Statements of Operations.

2021 Equity Incentive Plan

On April 20, 2021, the stockholders of the Company approved the Company’s 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan permits the granting of (1) stock options, including incentive stock options, (2) stock appreciation rights, (3) restricted stock, (4) restricted stock units, (5) performance awards and (6) other awards valued in whole or in part by reference to or otherwise based on our common stock (as defined in the 2021 ~~Plan, “other share-based awards”)~~Plan). Subject to adjustment as provided in the 2021 Plan, up to an aggregate of 3,700,000 shares of the Company’s common stock will be available for awards under the 2021 Plan, plus any shares ~~granted~~ under the Company’s 2019 and 2015 Equity Incentive Plans that rollover, are forfeited or otherwise become available for awards under ~~such plans.~~the 2021 Plan.

Fiscal ~~2020~~2021 Awards

During the third quarter of fiscal ~~2020,~~2021, the Company granted ~~restricted stock units (“RSUs”) to executive management and, due to limited share availability under its long-term incentive plan, issued deferred cash awards~~PSUs to certain employees including executive management. The RSUs and cash awards vest in equal annual tranches over three years, provided the employees remain employed with the Company on the applicable vesting date. The grant date fair value for the RSUs is measured using the closing stock price on the grant date and the total grant date fair value was $0.7 million. The deferred cash awards totaled $2.2 million. In addition, due to limited share availability, cash payments in the aggregate amount of $0.4 million were made in lieu of equity awards to non-executive directors of the Company.

~~Fiscal 2019 Awards~~

~~During fiscal 2019, the Company granted performance stock units (“PSUs”) to executive management,~~executives, RSUs to certain employees including executive management and ~~its annual equity grant of~~ RSUs to the Board of Directors.

The PSUs are eligible to vest in 3 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 of the one-year, two-year and three-year performance periods and provided that the employees remain employed with the Company on the applicable vesting date. The payout percentages can range from 0% to 150%. The employee RSUs ~~for the employees~~are time-vested and vest in equal annual tranches over three years, provided that the employees remain employed with the Company on the applicable vesting date. The ~~RSUs for the~~ Board of ~~Directors vested~~Director RSUs vest 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~~$1.6 million and ~~$2.1~~$2.4 million, respectively.

Summary of Equity ~~and Liability~~ Awards

The following tables summarize the activities related to the Company’s share-based equity ~~and liability~~ awards for the ~~six~~three months ended ~~May 2, 2021:~~January 30, 2022:

Performance Share Units

Number of

Weighted Average

Performance Share Units

Number of

Weighted Average

Grant Date Fair Value

Outstanding at November 1, 2020

209,662

$3.91

Outstanding at October 31, 2021

499,447

$4.17

Forfeited

(15,245)

$4.04

Forfeited

(5,843)

$4.04

Outstanding at May 2, 2021

194,417

$3.90

Outstanding at January 30, 2022

493,604

$4.17

Restricted Stock Units Number of Weighted Average
Shares Grant Date Fair Value
Outstanding at November 1, 2020 976,180 $2.08
Forfeited (29,033) $3.33
Vested (9,485) $4.10
Outstanding at May 2, 2021 937,662 $2.02

Restricted Stock Units

Number of

Weighted Average

Grant Date Fair Value

Outstanding at October 31, 2021 and January 30, 2022

1,101,790

$3.01

Stock Options Number of
Shares Weighted Average Exercise Price Weighted Average Contractual Life (in years) Aggregate Intrinsic Value (in thousands)
Outstanding at November 1, 2020 331,944 $5.73 6.22 $0
Outstanding and Exercisable at May 2, 2021 331,944 $5.73 5.72 $0


Stock Options	Number of Shares	Weighted Average Exercise Price	Weighted Average Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)

Outstanding at October 31, 2021	318,204	$5.71	5.25	$—

Outstanding and Exercisable at January 30, 2022	318,204	$5.71	5.00	$—

For the ~~six~~three months ended ~~May 2, 2021,~~January 30, 2022, there was 0no exercise of stock options. As of ~~May 2, 2021,~~January 30, 2022, total unrecognized compensation expense of ~~$0.7~~$2.7 million related to PSUs ~~stock options~~ and RSUs will be recognized over the remaining weighted average vesting period of ~~1.6~~1.8 years of which ~~$0.3~~$1.6 million, ~~$0.3~~$0.8 million and ~~$0.1~~$0.3 million are expected to be recognized in fiscal ~~2021,~~ 2022, 2023 and ~~2023~~2024, respectively.

NOTE 12: Restructuring and Severance Charges

The Company incurred total restructuring and severance costs of $0.6 million ~~and $0.4 million~~ in ~~the second quarter of fiscal 2021 and 2020, respectively, and $1.2 million and $1.7 million for the six months ended May 2, 2021 and May 3, 2020, respectively.~~

~~2020 Restructuring Plan~~

Inboth 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 leveraged the global capabilities of the Company's staffing operations based in Bangalore, India2022 and off-shored a significant number of strategically identified roles to this location. The total costs incurred in connection with the 2020 Plan were $1.2 million, consisting of $0.1 million in North American Staffing, $0.1 million in International Staffing and $1.0 million in the Corporate and Other category.

~~Other Restructuring Costs~~2021.

As part of its continued efforts to reduce costs, in the first quarter of fiscal 2022, the Company recorded ~~other~~$0.5 million of restructuring costs related to ongoing costs of facilities exited in fiscal 2020 and $0.1 million in severance costs. In the ~~second~~first quarter of fiscal 2021, the Company recorded severance costs of ~~$0.1~~$0.3 million primarily resulting from the elimination of certain positions and ~~$0.5~~$0.6 million related to ~~ongoing~~on-going costs of facilities ~~impaired~~exited in ~~the second half of fiscal 2020. In the second quarter of~~ fiscal 2020, ~~the Company recorded severance costs of $0.4~~partially offset by a $0.3 million ~~primarily resulting from the elimination of certain positions.~~lease termination gain.

Accrued restructuring and severance costs are included in Accrued compensation and Accrued insurance and other in the Condensed Consolidated Balance Sheets. Activity for the first ~~six~~three months of fiscal ~~2021~~2022 is summarized as follows (in thousands):


	~~May 2, 2021~~January 30, 2022
Balance, beginning of year	$	~~212~~549
Charged to expense	~~1,227~~591
Cash payments	~~(1,219)~~(904)
Ending Balance	$	~~220~~236

The remaining balance as of ~~May 2, 2021 was~~January 30, 2022 of $0.2 million, was primarily related to ~~other restructuring~~severance costs in the ~~Corporate~~International Staffing and ~~Other category.~~North American MSP segments.

NOTE 13: Commitments and Contingencies

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.

NOTE 14: ~~Related Party Transactions~~

For the six months ended May 2, 2021 and May 3, 2020, the Company provided staffing services in the aggregate amount of $91,000 and $86,000, respectively, to a company where Volt’s Chairman of the Board, William J. Grubbs, serves as President.

~~NOTE 15:~~ Segment Data

~~We report our~~The Company reports segment data in accordance with the provisions of ASC 280, Segment Reporting, aligning with the way the Company evaluates its business performance and manages its operations. ~~Our~~The 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.

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

1514

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 May 2, 2021													Three Months Ended January 30, 2022
		Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations			Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations
Net revenue	Net revenue	$	222,092	$	184,295	$	27,880	$	9,832	$	117	$	(32)	Net revenue	$	226,928	$	191,196	$	26,018	$	9,709	$	78	$	(73)
Cost of services	Cost of services	185,613		154,871		22,688		8,018		68		(32)		Cost of services	191,835		163,145		20,800		7,921		42		(73)
Gross margin	Gross margin	36,479		29,424		5,192		1,814		49		0		Gross margin	35,093		28,051		5,218		1,788		36		—

Selling, administrative and other operating costs	Selling, administrative and other operating costs	32,950		19,870		4,086		1,497		7,497		0		Selling, administrative and other operating costs	34,976		21,409		4,280		815		8,472		—
Restructuring and severance costs	Restructuring and severance costs	595		83		9		8		495		0		Restructuring and severance costs	591		67		70		—		454		—
Impairment charges		261		0		0		0		261		0
Impairment charge														Impairment charge	23		—		—		—		23		—
Operating income (loss)	Operating income (loss)	2,673		9,471		1,097		309		(8,204)		0		Operating income (loss)	(497)		6,575		868		973		(8,913)		—
Other income (expense), net	Other income (expense), net	(506)												Other income (expense), net	(569)
Income tax provision	Income tax provision	288												Income tax provision	153
Net income		$	1,879
Net loss														Net loss	$	(1,219)

Three Months Ended May 3, 2020
Total North American Staffing International Staffing North American MSP Corporate and Other Eliminations
Net revenue $ 207,275 $ 173,386 $ 24,303 $ 9,745 $ 187 $ (346)
Cost of services 175,038 147,423 20,282 7,582 97 (346)
Gross margin 32,237 25,963 4,021 2,163 90 0
Selling, administrative and other operating costs 36,189 23,043 3,714 1,672 7,760 0
Restructuring and severance costs 411 344 111 0 (44) 0
Operating income (loss) (4,363) 2,576 196 491 (7,626) 0
Other income (expense), net (1,039)
Income tax provision 23
Net loss $ (5,425)


		Six Months Ended May 2, 2021													Three Months Ended January 31, 2021
		Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations			Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations
Net revenue	Net revenue	$	440,050	$	368,511	$	51,893	$	19,501	$	236	$	(91)	Net revenue	$	217,958	$	184,216	$	24,013	$	9,669	$	119	$	(59)
Cost of services	Cost of services	370,889		312,507		42,539		15,802		132		(91)		Cost of services	185,276		157,636		19,851		7,784		64		(59)
Gross margin	Gross margin	69,161		56,004		9,354		3,699		104		0		Gross margin	32,682		26,580		4,162		1,885		55		—

Selling, administrative and other operating costs	Selling, administrative and other operating costs	66,697		40,516		7,874		2,850		15,457		0		Selling, administrative and other operating costs	33,747		20,646		3,788		1,353		7,960		—
Restructuring and severance costs	Restructuring and severance costs	1,227		(158)		1		8		1,376		0		Restructuring and severance costs	632		(241)		(8)		—		881		—
Impairment charges		292		0		0		0		292		0
Impairment charge														Impairment charge	31		—		—		—		31		—
Operating income (loss)	Operating income (loss)	945		15,646		1,479		841		(17,021)		0		Operating income (loss)	(1,728)		6,175		382		532		(8,817)		—
Other income (expense), net	Other income (expense), net	(897)												Other income (expense), net	(391)
Income tax provision	Income tax provision	615												Income tax provision	327
Net loss	Net loss	$	(567)											Net loss	$	(2,446)

Six Months Ended May 3, 2020
Total North American Staffing International Staffing North American MSP Corporate and Other Eliminations
Net revenue $ 425,041 $ 355,781 $ 50,526 $ 19,114 $ 390 $ (770)
Cost of services 361,377 304,817 42,312 14,837 181 (770)
Gross margin 63,664 50,964 8,214 4,277 209 0
Selling, administrative and other operating costs 75,686 47,852 7,533 3,032 17,269 0
Restructuring and severance costs 1,657 426 111 0 1,120 0
Impairment charge 11 11 0 0 0 0
Operating income (loss) (13,690) 2,675 570 1,245 (18,180) 0
Other income (expense), net (2,325)
Income tax provision 218
Net loss $ (16,233)

NOTE 15: Subsequent Events

On February 4, 2022, the Company reported that its Chief Financial Officer, Herbert Mueller, is currently unable to perform his duties due to a medical illness and will temporarily step away from his role as Chief Financial Officer. In Mr. Mueller’s absence, the Company’s former Chief Financial Officer, Paul Tomkins, will serve as Interim Chief Financial Officer, effective February 4, 2022, and will assume the day-to-day responsibilities of such role until further notice.

The Company and Vega Consulting, Inc. (“Vega”), an affiliate of ACS Solutions, a global provider of information technology solutions and services, announced on March 14, 2022, that Volt and Vega entered into a definitive merger agreement under which Volt will be acquired for $6.00 per share in cash. This per share purchase price represents a premium of 99% to the Company’s closing stock price on March 11, 2022. Vega will commence a tender offer no later than March 25, 2022, to acquire all outstanding shares of Volt for $6.00 per share in cash. The merger agreement was approved by Volt’s board of directors, which recommends that Volt stockholders tender their shares in the tender offer. Additional information related to the Merger Agreement can be found within the Form 8-K filed by the Company on March 14, 2022.

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

Management’s discussion and analysis (“MD&A”) of financial condition and results of operations is provided as a supplement to and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes to enhance the understanding of our results of operations, financial condition and cash flows. This MD&A contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements that involve expectations, plans or intentions (such as those relating to future business, future results of operations or financial condition, including with respect to the anticipated effects of COVID-19 and related government actions). You can identify these forward-looking statements by words such as “may,” “will,” “would,” “should,” “could,” “expect,” “anticipate,” “believe,” “estimate,” “intend,” “plan” and other similar expressions. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. This MD&A should be read in conjunction with the MD&A included in our Annual Report on Form 10-K for the fiscal year ended ~~November 1, 2020,~~October 31, 2021, as filed with the SEC on January ~~14, 2021~~12, 2022 (the ~~“2020~~“2021 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 ~~2020~~2021 Form 10-K and Part II, “Item 1A. Risk Factors” of this report. We do not intend, and undertake no obligation except as required by law, to update any of our forward-looking statements after the date of this report to reflect actual results or future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Note Regarding the Use of Non-GAAP Financial Measures

We have provided certain Non-GAAP financial information, which includes adjustments for special items and certain line items on a constant currency basis, as additional information for segment revenue, our consolidated net income (loss) and segment operating income (loss). These measures are not in accordance with, or an alternative for, measures prepared in accordance with generally accepted accounting principles (“GAAP”) and may be different from Non-GAAP measures reported by other companies. Our Non-GAAP measures are generally presented on a constant currency basis, and exclude (i) the impact of businesses sold or exited, (ii) the impact from the migration of certain clients from a traditional staffing model to a managed service model (“MSP transitions”) as we believe that the difference in revenue recognition accounting under each model of the MSP transitions could be misleading on a comparative period basis and (iii) the elimination of special items. Special items generally include impairments, restructuring and severance costs, as well as certain income or expenses which the Company does not consider indicative of the current and future period performance. We believe that the use of Non-GAAP measures 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 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.

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 primary 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 we believe that 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 280, Segment Reporting (“ASC 280”), aligning with the way the Company evaluates its business performance and manages its operations.

1816

Overview

We are a global provider of staffing services (traditional time and materials-based as well as project-based). Our staffing services consist of workforce solutions that include providing contingent workers, personnel recruitment services and managed staffing services programs supporting primarily administrative and light industrial (commercial) as well as technical, information technology and engineering (professional) positions. Our managed service programs (“MSP”) involves managing the procurement and on-boarding of contingent workers from multiple providers.

We operate in approximately 6065 of our own locations and have an on-site presence in over 5060 customer locations. Approximately 88% of our revenue is generated in the United States. Our principal international markets include Europe, Asia Pacific and Canada locations. The industry is highly fragmented and very competitive in all of the markets we serve.

~~Employees~~Environmental, Social and Governance (“ESG”) Matters

The Company recognizes the importance of ESG matters, with a specific focus on Human Capital ~~Resource~~Management, as integral to creating a sustainable foundation for our long-term business strategy. While the Nominating and Corporate Governance Committee of the Board of Directors holds primary responsibility for ESG oversight and guidance, our entire Board of Directors, composed of independent directors, is fully engaged in these efforts.

Human Capital Management

Volt operates on the fundamental philosophy that people are our most valuable asset as every person who works for us has the potential to impact our success as well as the success of our clients. As a staffing company, identifying quality talent is at the core of everything we do and our success is dependent upon our ability to attract, develop and retain highly qualified employees, both in-house and for our clients. The Company’s core values of integrity, customer centric, ownership, innovation, empowerment, collaborative change and teamwork establish the foundation on which the culture is built and represent the key expectations we have of our employees. We believe our culture and commitment to our employees attract and retain our qualified talent, while simultaneously providing significant value to our Company and its shareholders.

Demographics

As of ~~May 2, 2021,~~January 30, 2022, we employed approximately ~~14,200~~14,600 people, including ~~13,100~~approximately 13,500 who were on contingent staffing assignments with our clients, and the remainder as full-time in-house employees. Approximately 70% of the full-time in-house employees are located in North America and the remaining are within Asia Pacific and Europe. The workers on contingent staffing assignments are on our payroll for the length of their assignment with the client.

Diversity and Inclusion

Volt values building diverse teams, embracing different perspectives and fostering an inclusive, empowering work environment for our employees and clients. We have a long-standing commitment to equal employment opportunity as evidenced by the Company’s ~~EEO~~Equal Employment Opportunity policy. Of our North American in-house employee population, approximately ~~70%~~71% are women and approximately ~~40%~~48% have self-identified as Hispanic or Latino, Native American, Pacific Islander, Asian, Black or African American, or of two or more races. As part of Volt’s commitment to continued enhancements in this area, we launched our Expert Momentum Diversity and Inclusion Program. This program involved the creation of a task force made up of a group of employees from across the organization. The program has established initiatives to strengthen the promotion of workplace diversity for our employees and clients, to create a collaborative environment that promotes authenticity and a culture that celebrates our differences, and embraces a collaborative environment with unique experiences and diverse perspectives. The program’s task force will enhance company-wide engagement on diversity and inclusion, provide education opportunities for our employees, help identify areas for improvement and monitor progress ~~in achieving~~against these initiatives.

Compensation and Benefits

Critical to our success is identifying, recruiting, retaining, and incentivizing our existing and future employees. We strive to attract and retain the most talented employees in the staffing industry by offering competitive compensation and benefits. Our pay-for-performance compensation philosophy is based on rewarding each employee’s individual contributions and striving to achieve equal pay for equal work regardless of gender, race or ethnicity. We use a combination of fixed and variable pay including base salary, bonus, commissions and merit increases which vary across the business. In addition, as part of our long-term incentive plan for executives and certain employees, we provide share-based compensation to foster our pay-for-performance culture and to attract, retain and motivate our key leaders.

As the success of our business is fundamentally connected to the well-being of our people, we offer benefits that support their physical, financial and emotional well-being. We provide our employees with access to flexible and convenient medical programs intended to meet their needs and the needs of their families. In addition to standard medical coverage, we offer eligible employees dental and vision coverage, health savings and flexible spending accounts, paid time off, employee assistance programs, voluntary short-term and long-term disability insurance and term life insurance. Additionally, we offer a 401(k) Savings Plan and Deferred Compensation Plan to certain employees. Our benefits vary by location and are designed to meet or exceed local laws and to be competitive in the marketplace.

In response to the COVID-19 pandemic, government legislation and key authorities, we implemented changes that we determined were in the best interest of our employees, as well as the communities in which we operate. This included having the majority of our employees work from home for several months, while implementing additional safety measures for employees continuing critical on-site work. We continue to embrace a flexible working arrangement for a majority of our in-house employees, as well as a portion of our contingent workforce where we continue to provide key services to customers remotely.

~~Commitment to Values and Ethics~~

Along with our core values, we act in accordance with our Code of Business Conduct and Ethics (“Code of Conduct”), which sets forth expectations and guidance for employees to make appropriate decisions. Our Code of Conduct covers topics such as anti-corruption, discrimination, harassment, privacy, appropriate use of company assets, protecting confidential information, and reporting Code of Conduct violations. The Code of Conduct reflects our commitment to operating in a fair, honest, responsible and ethical manner and also provides direction for reporting complaints in the event of alleged violations of our policies (including through an anonymous hotline). Our executive officers and supervisors maintain “open door” policies and any form of retaliation is strictly prohibited.

Professional Development and Training

We believe a key factor in employee retention is training and professional development for our talent. We have training programs across all levels of the Company to meet the needs of various roles, specialized skill sets and departments across the Company. All field associates receive Volt’s General Safety Orientation prior to assignment and site-specific job task training from our clients. Volt offers the Federal Ten Hour and other specialty safety programs to key employees and clients as a value-add feature of our services. Volt is committed to the security and confidentiality of our employees’ personal information and employs software tools and periodic employee training programs to promote security and information protection at all levels. Additionally, in the second quarter of fiscal 2021, we invested in an online educational platform to upskill our field associates across North America. This platform provides significant benefit and support to our employees in furthering their education and achieving their personal and professional goals, while at the same time cultivating a better-skilled pool of talent for our clients.

We utilize certain employee turnover rates and productivity metrics in assessing our employee programs to ensure that they are structured to instill high levels of in-house employee tenure, low levels of voluntary turnover and the optimization of productivity and performance across our entire workforce. Additionally, we have implemented a new performance evaluation program which adopts a modern approach to valuing and strengthening individual performance through on-going interactive progress assessments related to established goals and objectives.

Communication and Engagement

We strongly believe that Volt’s success depends on employees understanding how their work contributes to the Company’s overall strategy. To this end, we communicate with our workforce through a variety of channels and encourage open and direct communication, including: (i) quarterly company-wide CEO update calls; (ii) regular company-wide calls with executives; (iii) frequent ~~Corporate~~corporate email ~~communications~~communications; and (iv) employee engagement surveys.

Commitment to Values and Ethics through Governance

Along with our core values, we act in accordance with our Code of Business Conduct and Ethics (“Code of Conduct”), which sets forth expectations and guidance for employees to make appropriate decisions. Our Code of Conduct covers topics such as anti-corruption, discrimination, harassment, privacy, appropriate use of company assets, protecting confidential information and reporting Code of Conduct violations. The Code of Conduct reflects our commitment to operating in a fair, honest, responsible and ethical manner and also provides direction for reporting complaints in the event of alleged violations of our policies (including through an anonymous hotline). Our executive officers and supervisors maintain “open door” policies and any form of retaliation is strictly prohibited. We take all reports of suspected violations of the Code of Conduct and unethical behavior seriously and will take appropriate actions to correct the situation.

Environmental

As a global provider of staffing services, Volt does not produce or manufacture any products or materials and therefore our environmental impact has been relatively small. Nevertheless, we understand that certain areas of our business and operations have an impact on the environment and we are dedicated to promoting internal sustainability initiatives and keeping our ecological footprint to a minimum. In addition to certain on-going internal initiatives, including office waste reduction practices such as printing less and recycling furniture and electronics, we were able to take advantage of more impactful opportunities using actions implemented during the COVID-19 pandemic. During fiscal 2020, we were able to quickly shift to a fully remote in-house workforce and we continue to have the majority of our in-house employees work remotely thereby reducing the environmental impact of commuting and office energy consumption. This work model has allowed us to further decrease our carbon footprint by exiting and consolidating certain

offices. We have also been able to reduce certain business travel by using virtual and collaborative tools whenever possible, further limiting our ecological impact. Volt is committed to enhancing its environmental protection measures and continuing to promote an eco-friendly culture both internally and in the communities it serves.

COVID-19 and Our Response

The global spread of the COVID-19 ~~which was declared a global~~ pandemic ~~by the World Health Organization (“WHO”) on March 11, 2020,~~ created significant volatility, uncertainty and global macroeconomic disruption. Our business experienced significant changes in revenue trends at the mid-point of our second quarter of fiscal 2020 ~~as market conditions rapidly deteriorated and continued to decline~~ through the beginning of our third quarter of fiscal ~~2020. Beginning in the second half of fiscal~~ 2020, ~~however, revenue increased sequentially~~ as ~~a result of a combination of existing customers returning to work, expanding business with existing customers and winning new customers.~~

~~Beginning in mid-March 2020,~~ a number of countries and U.S. federal, state and local governments issued varying levels of stay-at-home orders ~~requiring persons who were not engaged in essential activities~~ and ~~businesses as defined in those specific orders to remain at home or requiring reduced operations~~other restrictions and capacity to comply with social distancing. Our first priority, with regard to the COVID-19 pandemic, was to ensure the health and safety of our employees, clients, suppliers and others with whom we partner in our business activities to continue our business operations in this unprecedented business environment.mandates. Our business was largely converted to a remote in-house workforce and remained open as we provided key services to essential businesses, both remotely and onsite at our customers’ locations. Beginning in the second half of fiscal 2020, revenue steadily increased as a result of a combination of existing customers returning to work, expanding business with existing customers and winning new customers.

We continue to operate on a hybrid-model with certain locations fully staffed and others opening on a limited voluntary basis. Our COVID-19 Incident Response Team ~~comprised of key senior leaders in the organization,~~ continues to monitor the most up-to-date developments and safety ~~standard~~standards from the Centers for Disease Control and Prevention, ~~WHO,~~World Health Organization, Occupational Safety and Health Administration and other key authorities to determine an appropriate response for our employees and clients. While this team is

~~currently monitoring~~ continuing to monitor COVID-19 developments globally, we remain focused on the regulations and vaccine requirements in the U.S. to ensure we are complying with all relevant regulations. We are also monitoring developments related to vaccine mandates from certain customers.

~~While our~~We expect the global business environment ~~is and~~ will continue to operate in various stages of economic ~~turbulence, we~~turbulence. We are encouraged by the increase in order activity and demand throughout the Company, ~~including~~however, the ~~efficacy and availability~~pace of ~~vaccines and the positive impacts~~such increase may be impacted if a resurgence in COVID-19 infections leads to additional disruptions, government mandates or increased lack of ~~customers reopening previously shut down site operations or increasing capacity.~~available talent to match our customers’ demands.

~~Goodwill~~For additional discussion on the uncertainties and business risks associated with COVID-19, refer to Part I, “Item 1A. Risk Factors” in the 2021 Form 10-K.

Critical Accounting Estimates

Casualty Insurance Program

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 estimatepurchase workers’ compensation insurance through mandated participation in certain state funds and the ~~carrying value,~~experience-rated premiums in these state plans relieve us of any additional liability. Liability for workers’ compensation in all other states as well as ~~both positive~~automobile and ~~adverse events~~general liability is insured under a paid loss deductible casualty insurance program for losses exceeding specified deductible levels and ~~circumstances, and~~we are financially responsible for losses below the ~~extent to which each~~specified deductible limits. The casualty program is secured by a letter of ~~the events and circumstances identified may affect the comparison~~credit against our financing arrangement (“DZ Financing Program”) with DZ Bank AG Deutsche Zentral-Genossenschaftsbank (“DZ Bank”) 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~~$20.9 million as of ~~a reporting unit exceeds the carrying value, then no further testing is performed for that reporting unit.~~January 30, 2022.

~~When a qualitative assessment is~~We recognize expenses and establish accruals for amounts estimated to be incurred, both reported and not ~~used, or if~~yet reported, policy premiums and related legal and other claims administration costs. We develop estimates for claims as well as claims incurred but not yet reported using actuarial principles and assumptions based on historical and projected claim incidence patterns, claim size and the ~~qualitative assessment is not conclusive and it is necessary to calculate fair value~~length of ~~a reporting unit, then the impairment analysis for goodwill is performed at the reporting unit level using a one-step approach (“Step 1”) under Accounting Standards Update 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment~~. In conducting our goodwill impairment testing, we compare the fair value of the reporting unit with goodwill to the carrying value, using various valuation techniques including income (discounted cash flow) and market approaches. The Company believes the blended use of both approaches compensates for the inherent risk associated with using either one on a standalone basis, and this combination is indicative of the factors a market participant would consider when performing a similar valuation.

Our fiscal 2021 annual test performed in the second quarter used significant assumptions, including expected revenue and expense growth rates, forecasted capital expenditures, working capital levels and a discount rate of 13.0%. Under the market-based approach, significant assumptions included relevant comparable company earnings multiples including the determination of whether a premium or discount should be applied to those comparables. It was determined that the fair value of the reporting unit exceeded its carrying value, therefore no adjustment to the carrying value of goodwill of $5.8 million was required as of the end of the second quarter of fiscal 2021.

~~Long-lived Assets~~

Long-lived assets primarily consist of right-of-use assets, capitalized software costs, leasehold improvements and office equipment. We review these assets for impairment under Accounting Standards Codification 360 ~~Property, Plant and Equipment~~ whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Factors that could trigger an impairment review include a current period operating or cash flow loss combined with a history of operating or cash flow losses and a projection or forecast that demonstrates continuing losses or insufficient income associated with the use of a long-lived asset or asset group. Other factors include a significant change in the manner of the use of the asset or a significant negative industry or economic trend. If circumstances require a long-lived asset or asset group be reviewed for possible impairment, the Company first compares undiscounted cash flowstime over which payments are expected to be ~~generated by each asset~~made. Actuarial estimates are updated as loss experience develops, additional claims are reported or ~~asset group~~settled and new information becomes available. Any changes in estimates are reflected in operating results in the period in which the estimates are changed. Depending on the policy year, adjustments to ~~its carrying value. An impairment loss is recognized when~~final expected paid amounts are determined through the ~~estimated undiscounted cash flows expected to result from the use~~ultimate life of the ~~asset plus net proceeds expected from disposition of~~claim. At January 30, 2022 and October 31, 2021, the asset (if any) are less than the carrying value of the asset. When an impairment loss is recognized, the carrying amount of the asset is reduced to its estimated fair value based on discounted cash flow analysis or other valuation techniques. In the second quarter of fiscal 2021, we recorded an impairment charge of $0.3casualty insurance liability was $14.2 million ~~of capitalized software costs related to a change in the expected use of certain assets.~~

~~Due to the economic impact~~ and continued uncertainty related to the COVID-19 pandemic, we continue to assess our real estate footprint to evaluate potential opportunities for consolidation and downscaling. During the second half of fiscal 2020, the Company made decisions that impacted several leased office locations throughout North America, triggering impairment reviews which resulted in impairment charges of $16.1$13.9 million, ~~to reduce the carrying value of these assets to their estimated fair value.~~respectively.

Recent Developments

~~None~~On February 4, 2022, we reported that our Chief Financial Officer, Herbert Mueller, is currently unable to perform his duties due to a medical illness and will temporarily step away from his role as Chief Financial Officer. In Mr. Mueller’s absence, the Company’s former Chief Financial Officer, Paul Tomkins, will serve as Interim Chief Financial Officer, effective February 4, 2022, and will assume the day-to-day responsibilities of such role until further notice.

2119

Consolidated Results by Segment


		Three Months Ended May 2, 2021													Three Months Ended January 30, 2022
(in thousands)	(in thousands)	Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations		(in thousands)	Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations
Net revenue	Net revenue	$	222,092	$	184,295	$	27,880	$	9,832	$	117	$	(32)	Net revenue	$	226,928	$	191,196	$	26,018	$	9,709	$	78	$	(73)
Cost of services	Cost of services	185,613		154,871		22,688		8,018		68		(32)		Cost of services	191,835		163,145		20,800		7,921		42		(73)
Gross margin	Gross margin	36,479		29,424		5,192		1,814		49		—		Gross margin	35,093		28,051		5,218		1,788		36		—

Selling, administrative and other operating costs	Selling, administrative and other operating costs	32,950		19,870		4,086		1,497		7,497		—		Selling, administrative and other operating costs	34,976		21,409		4,280		815		8,472		—
Restructuring and severance costs	Restructuring and severance costs	595		83		9		8		495		—		Restructuring and severance costs	591		67		70		—		454		—
Impairment charges		261		—		—		—		261		—
Impairment charge														Impairment charge	23		—		—		—		23		—
Operating income (loss)	Operating income (loss)	2,673		9,471		1,097		309		(8,204)		—		Operating income (loss)	(497)		6,575		868		973		(8,913)		—
Other income (expense), net	Other income (expense), net	(506)												Other income (expense), net	(569)
Income tax provision	Income tax provision	288												Income tax provision	153
Net income		$	1,879
Net loss														Net loss	$	(1,219)


		Three Months Ended May 3, 2020													Three Months Ended January 31, 2021
(in thousands)	(in thousands)	Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations		(in thousands)	Total		North American Staffing		International Staffing		North American MSP		Corporate and Other		Eliminations
Net revenue	Net revenue	$	207,275	$	173,386	$	24,303	$	9,745	$	187	$	(346)	Net revenue	$	217,958	$	184,216	$	24,013	$	9,669	$	119	$	(59)
Cost of services	Cost of services	175,038		147,423		20,282		7,582		97		(346)		Cost of services	185,276		157,636		19,851		7,784		64		(59)
Gross margin	Gross margin	32,237		25,963		4,021		2,163		90		—		Gross margin	32,682		26,580		4,162		1,885		55		—

Selling, administrative and other operating costs	Selling, administrative and other operating costs	36,189		23,043		3,714		1,672		7,760		—		Selling, administrative and other operating costs	33,747		20,646		3,788		1,353		7,960		—
Restructuring and severance costs	Restructuring and severance costs	411		344		111		—		(44)		—		Restructuring and severance costs	632		(241)		(8)		—		881		—

Impairment charge														Impairment charge	31		—		—		—		31		—
Operating income (loss)	Operating income (loss)	(4,363)		2,576		196		491		(7,626)		—		Operating income (loss)	(1,728)		6,175		382		532		(8,817)		—
Other income (expense), net	Other income (expense), net	(1,039)												Other income (expense), net	(391)
Income tax provision	Income tax provision	23												Income tax provision	327
Net loss	Net loss	$	(5,425)											Net loss	$	(2,446)

Results of Operations Consolidated ~~(Q2 2021~~(Q1 2022 vs. ~~Q2 2020)~~Q1 2021)

Net revenue in the ~~second~~first quarter of fiscal ~~2021~~2022 increased ~~$14.8~~$8.9 million, or 4.1%, to ~~$222.1~~$226.9 million from ~~$207.3~~$218.0 million in the ~~second~~first quarter of fiscal ~~2020.~~2021. The net revenue increase was primarily due to an increase in our North American Staffing segment ~~net~~ of ~~eliminations, of $11.2~~$7.0 million and an increase in our International Staffing segment of ~~$3.6~~$2.0 million. Excluding the ~~positive~~negative impact of foreign currency fluctuations of ~~$2.4~~$0.8 million, net revenue increased ~~$12.4~~$9.8 million, or ~~5.9%~~4.5%.

Operating results in the ~~second~~first quarter of fiscal ~~2021~~2022 improved ~~$7.1~~$1.2 million, to ~~operating income of $2.7 million from~~ an operating loss of ~~$4.4~~$0.5 million from $1.7 million in the ~~second~~first quarter of fiscal ~~2020.~~2021. Excluding the restructuring and severance costs and impairment charges, operating ~~loss decreased $7.5~~results improved $1.2 million to operating income of ~~$3.5~~$0.1 million. This increase in operating results of ~~$7.5~~$1.2 million was primarily the result of improvements in our North American Staffing segment of ~~$6.6~~$0.7 million, ~~and~~ our International Staffing segment of ~~$0.8 million.~~$0.6 million and our North American MSP segment of $0.4 million, partially offset by a $0.5 million increase in operating loss in the Corporate and Other category.

Results of Operations by Segment ~~(Q2 2021~~(Q1 2022 vs. ~~Q2 2020)~~Q1 2021)

Net Revenue

The North American Staffing segment revenue in the ~~second~~first quarter of fiscal ~~2021~~2022 increased ~~$10.9~~$7.0 million, or ~~6.3%~~3.8%, to ~~$184.3~~$191.2 million from ~~$173.4~~$184.2 million in the ~~second~~first quarter of fiscal ~~2020.~~2021. The increase is attributable to new business wins in a combination of retail and mid-market clients, combined with the expansion of business within existing ~~clients. In addition, revenue was negatively impacted at the mid-point of our second quarter of fiscal 2020 with the outbreak of COVID-19.~~clients and improvements in direct hire revenue.

The International Staffing segment revenue in the ~~second~~first quarter of fiscal 2022 increased $2.0 million, or 8.3%, to $26.0 million from $24.0 million in the first quarter of fiscal 2021, ~~increased $3.6 million, or 14.7%, to $27.9 million from $24.3 million in the second quarter of fiscal 2020,~~ primarily due to ~~increase managed service business and~~increased direct hire revenue in

the United Kingdom and ~~increased~~Singapore, as well as increases in other staffing ~~revenue~~business in France, ~~partially offset by lower staffing revenue in~~Belgium and the United Kingdom. Excluding the ~~positive~~negative impact of foreign exchange rate fluctuations of ~~$2.4~~$0.8 million, revenue increased ~~$1.2~~$2.8 million, or ~~4.3%~~12.3%.

The North American MSP segment revenue in the ~~second~~first quarter of fiscal ~~2021 increased $0.1 million, or 0.9%, to $9.8 million from $9.7 million in~~2022 remained consistent with the ~~second~~first quarter of fiscal ~~2020.~~2021. The ~~increase~~slight improvement is primarily attributable to increased demand in its payroll service business, partially offset by ~~declines~~a decline in its managed service business.

Cost of ~~Services and Gross Margin~~

~~Cost of~~ services in the ~~second~~first quarter of fiscal ~~2021~~2022 increased ~~$10.6~~$6.5 million, or ~~6.0%~~3.5%, to ~~$185.6~~$191.8 million from ~~$175.0~~$185.3 million in the ~~second~~first quarter of fiscal ~~2020.~~2021. This increase is primarily due to a ~~$7.4~~$5.5 million increase in ~~the~~our North American Staffing segment related to the ~~6.3%~~3.8% increase in revenue and slightly unfavorable workers’ compensation development in the current period partially offset by ~~a $1.3~~an increase of $0.3 million ~~benefit from~~in government wage subsidies. In addition, our International Staffing segment increased ~~$2.4~~$0.9 million ~~related to~~primarily as a result of the ~~14.7%~~8.3% increase in revenue.

Gross margin as a percent of revenue in the ~~second~~first quarter of fiscal ~~2021~~2022 increased to ~~16.4%~~15.5% from ~~15.6%~~15.0% in the ~~second~~first quarter of fiscal ~~2020.~~2021. Our North American Staffing segment gross margin as a percent of revenue increased primarily due to ~~lower employee-related costs and~~ a mix of higher margin ~~business.~~business, partially offset by slightly unfavorable workers’ compensation development in the current quarter. Our International Staffing segment gross margin as a percent of revenue primarily increased due to ~~higher margin business~~an increase in ~~the United Kingdom.~~direct hire revenue. Our North American MSP segment gross margin as a percent of revenue decreased primarily due to ~~an increase in lower-margin payroll service~~the mix of business. Government wage subsidies accounted for 6040 basis points of the increase in the ~~second~~first quarter of fiscal 2022 compared to 30 basis points in the first quarter of fiscal 2021.

Selling, Administrative and Other Operating Costs

Selling, administrative and other operating costs in the ~~second~~first quarter of fiscal ~~2021 decreased $3.2~~2022 increased $1.3 million, or ~~9.0%~~3.6%, to ~~$33.0~~$35.0 million from ~~$36.2~~$33.7 million in the ~~second~~first quarter of fiscal ~~2020.~~2021. The ~~decrease~~increase was primarily due to ~~certain cost reductions, including $3.3~~$0.7 million in labor ~~and related costs due to lower~~as a result of changes in headcount ~~a government wage subsidy in the current quarter and higher medical claims in the prior year as well as $1.3 million in lower facility related costs due to consolidating our real estate footprint~~ and $0.5 million in ~~lower consulting fees. These decreases were~~equity compensation, partially offset by ~~$2.0 million~~an increase in ~~incentives on the higher sales volume.~~government wage subsidies of $1.4 million. In addition, there was an increase in professional fees of $0.8 million and depreciation expense of $0.3 million. As a percent of revenue, selling, administrative and other operating costs were ~~14.8%~~15.4% and ~~17.5%~~15.5% in the ~~second~~first quarter of fiscal ~~2021~~2022 and ~~2020,~~2021, respectively.

Restructuring and Severance Costs

Restructuring and severance costs remained consistent at $0.6 million in both the ~~second~~first quarter of fiscal ~~2021 increased $0.2 million,~~2022 and 2021. Restructuring and severance costs in the first quarter of fiscal 2022 were primarily due to ~~$0.6 million from $0.4~~$0.5 million in ~~the second quarter~~ongoing costs of facilities exited in fiscal 2020. Restructuring and severance costs in the ~~second~~first quarter of fiscal 2021 primarily included ~~$0.1~~$0.3 million of severance costs resulting from the elimination of certain positions as part of our continued efforts to reduce costs and ~~$0.5~~$0.6 million related to the ongoing costs of facilities ~~impaired~~exited in ~~the second half of fiscal 2020. The restructuring and severance costs in the second quarter of~~ fiscal 2020 ~~were primarily due to actions taken~~partially offset by ~~the Company as part of its continued efforts to reduce costs and achieve operational efficiency.~~

~~Impairment Charges~~

~~In the second quarter of fiscal 2021, we recorded an impairment charge of~~a $0.3 million ~~of capitalized software costs.~~lease termination gain.

Other Income (Expense), net

Other expense in the ~~second~~first quarter of fiscal 2022 increased $0.2 million, to $0.6 million from $0.4 million in the first quarter of fiscal 2021 ~~decreased $0.5 million, to $0.5 million from $1.0 million in the second quarter of fiscal 2020~~ due to ~~a decrease~~an increase in non-cash foreign exchange losses primarily on intercompany ~~balances and lower interest expense due to lower rates.~~balances.

Income Tax Provision

The income tax ~~provisions~~provision of ~~$0.3~~$0.2 million and ~~less than $0.1~~$0.3 million in the ~~second~~first quarter of fiscal ~~2021~~2022 and ~~2020,~~2021, respectively, were primarily related to locations outside of the United States.

~~Consolidated Results by Segment~~

Six Months Ended May 2, 2021
(in thousands) Total North American Staffing International Staffing North American MSP Corporate and Other Eliminations
Net revenue $ 440,050 $ 368,511 $ 51,893 $ 19,501 $ 236 $ (91)
Cost of services 370,889 312,507 42,539 15,802 132 (91)
Gross margin 69,161 56,004 9,354 3,699 104 —
Selling, administrative and other operating costs 66,697 40,516 7,874 2,850 15,457 —
Restructuring and severance costs 1,227 (158) 1 8 1,376 —
Impairment charges 292 — — — 292 —
Operating income (loss) 945 15,646 1,479 841 (17,021) —
Other income (expense), net (897)
Income tax provision 615
Net loss $ (567)

Six Months Ended May 3, 2020
(in thousands) Total North American Staffing International Staffing North American MSP Corporate and Other Eliminations
Net revenue $ 425,041 $ 355,781 $ 50,526 $ 19,114 $ 390 $ (770)
Cost of services 361,377 304,817 42,312 14,837 181 (770)
Gross margin 63,664 50,964 8,214 4,277 209 —
Selling, administrative and other operating costs 75,686 47,852 7,533 3,032 17,269 —
Restructuring and severance costs 1,657 426 111 — 1,120 —
Impairment charges 11 11 — — — —
Operating income (loss) (13,690) 2,675 570 1,245 (18,180) —
Other income (expense), net (2,325)
Income tax provision 218
Net loss $ (16,233)

~~Results of Operations Consolidated (Q2 2021 YTD vs. Q2 2020 YTD)~~

Net revenue in the first six months of fiscal 2021 increased $15.1 million, to $440.1 million from $425.0 million in the first six months of fiscal 2020. The net revenue increase was primarily due to increases in our North American Staffing segment, net of eliminations, of $13.4 million, International Staffing segment of $1.4 million and North American MSP segment of $0.4 million. Excluding $2.0 million related to MSP transitions and the positive impact of foreign currency fluctuations of $3.8 million, net revenue increased $13.2 million, or 3.1%.

Operating results in the first six months of fiscal 2021 improved $14.6 million, to operating income of $0.9 million from an operating loss of $13.7 million in the first six months of fiscal 2020. Excluding the restructuring and severance costs and impairment charges, operating loss decreased $14.5 million to operating income of $2.5 million. This decrease in operating loss of $14.5 million was primarily the result of improvements in our North American Staffing segment of $12.4 million and our International Staffing segment of $0.8 million partially offset by a $0.4 million decrease in the North American MSP segment. In addition, the Corporate and Other category improved $1.7 million primarily as a result of reductions in corporate support costs.

~~Results of Operations by Segment (Q2 2021 YTD vs. Q2 2020 YTD)~~

~~Net Revenue~~

The North American Staffing segment revenue in the first six months of fiscal 2021 increased $12.7 million, or 3.6%, to $368.5 million from $355.8 million in the first six months of fiscal 2020. Excluding $2.1 million in revenue from MSP transitions, adjusted revenue increased $14.8 million, or 4.2%. The increase is attributable to new business wins in a combination of retail and mid-market clients, combined with the expansion of business within existing clients. In addition, revenue was negatively impacted with the outbreak of COVID-19 in the last month of the prior year period.

The International Staffing segment revenue in the first six months of fiscal 2021 increased $1.4 million, or 2.7%, to $51.9 million from $50.5 million in the first six months of fiscal 2020, primarily due to the positive impact of foreign exchange rate fluctuations as well as increases in managed service business and direct hire revenue. In addition, staffing business in France and Singapore increased partially offset by decreases in United Kingdom and Belgium. Excluding the impact of foreign exchange rate fluctuations of $3.8 million, revenue decreased $2.4 million, or 4.5%.

The North American MSP segment revenue in the first six months of fiscal 2021 increased $0.4 million, or 2.0%, to $19.5 million from $19.1 million in the first six months of fiscal 2020. The increase is primarily attributable to increased demand in its payroll service business, partially offset by declines in managed service business.

~~Cost of Services and Gross Margin~~

Cost of services in the first six months of fiscal 2021 increased $9.5 million, or 2.6%, to $370.9 million from $361.4 million in the first six months of fiscal 2020. This increase is primarily due to a $7.7 million increase in the North American Staffing segment related to the 3.6% increase in revenue, partially offset by a $1.8 million benefit from government wage subsidies. In addition, the North American MSP segment increased $1.0 million related to the 2.0% increase in revenue.

Gross margin as a percent of revenue in the first six months of fiscal 2021 increased to 15.7% from 15.0% in the first six months of fiscal 2020. Our North American Staffing segment margin as a percent of revenue increased primarily due to lower employee-related costs and a mix of higher margin business. Our International Staffing segment margin as a percent of revenue increased primarily due to higher margin business in the United Kingdom, including an increase in direct hire revenue. Our North American MSP segment margin as a percent of revenue decreased primarily due to an increase in lower-margin payroll service business. Government wage subsidies accounted for 40 basis points of the increase in the first six months of fiscal 2021.

~~Selling, Administrative and Other Operating Costs~~

Selling, administrative and other operating costs in the first six months of fiscal 2021 decreased $9.0 million, or 11.9%, to $66.7 million from $75.7 million in the first six months of fiscal 2020. The decrease was primarily due to certain cost reductions, including $7.1 million in labor and related costs due to lower headcount and a government wage subsidy in the current year as well as $2.6 million in lower facility related costs due to consolidating our real estate footprint and $1.0 million in lower consulting fees. These decreases were partially offset by a $2.7 million increase in incentives on the higher sales volume. As a percent of revenue, selling, administrative and other operating costs were 15.2% and 17.8% in the first six months of fiscal 2021 and 2020, respectively.

~~Restructuring and Severance Costs~~

Restructuring and severance costs in the first six months of fiscal 2021 decreased $0.4 million, to $1.2 million from $1.6 million in the first six months of fiscal 2020. Restructuring and severance costs in the first six months of fiscal 2021 primarily included $0.4 million of severance costs resulting from the elimination of certain positions as part of our continued efforts to reduce costs and $1.1 million related to the ongoing costs of facilities impaired in the second half of fiscal 2020 offset by a $0.3 million lease termination gain. The restructuring and severance costs in the first six months of fiscal 2020 were primarily due to our plan to leverage the global capabilities of our staffing operations based in Bangalore, India and offshore a significant number of strategically identified roles to this location.

~~Other Income (Expense), net~~

Other expense in the first six months of fiscal 2021 decreased $1.4 million, to $0.9 million from $2.3 million in the first six months of fiscal 2020 due to a decrease in non-cash foreign exchange losses primarily on intercompany balances and lower interest expense resulting from lower rates.

~~Income Tax Provision~~

~~The income tax provisions of $0.6 million and $0.2 million in the first six months of fiscal 2021 and 2020, respectively, were primarily related to locations outside of the United States.~~

2521

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are cash flows generated from operations and proceeds from the DZ Financing Program. Both operating cash flows and borrowing capacity under our financing arrangement ~~(“DZ Financing Program”) with DZ Bank AG Deutsche Zentral-Genossenschaftsbank (“DZ Bank”). Borrowing capacity under this arrangement is~~are directly ~~impacted by~~related to the ~~level~~levels of accounts receivable generated by our business. Our primary capital requirements include funding working capital, operating lease obligations and software-related expenditures.

We define our working capital as cash plus trade accounts receivable minus current liabilities. Our working capital requirements consist primarily of payroll, employee-related benefits and employment-related tax payments for our contingent staff and in-house employees and trade payables, offset by collections of customer receivables. Our most significant current asset is trade accounts receivable, which ~~fluctuates during~~are generally on 15 - 45 day credit terms, and our most significant current liabilities are payroll related costs, which are generally paid weekly. Consequently, as the ~~year due~~demand for our services increases, we generally see an increase in our working capital requirements, as we continue to ~~seasonality~~pay our contingent employees on a weekly basis while the related accounts receivable is outstanding for much longer, which may result in a decline in operating cash flows. Conversely, as the demand for our services declines, we generally see a decrease in our working capital needs, as the existing accounts receivable are collected and ~~other factors.~~ not replaced at the same level. This may result in an increase in our operating cash flows; however, any such increase would not be expected to be sustained in the event that an economic downturn continued for an extended period.

Our business is subject to seasonality with our first fiscal ~~first~~ quarter billings typically the lowest due to the holiday season and generally increasing in the ~~fiscal~~ third and fourth fiscal quarters when our customers increase the use of contingent labor. ~~Generally,~~Accordingly, the first and fourth quarters of our fiscal year are generally 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. WeAs mentioned, we fund payroll, taxes and other working capital requirements using cash generated by operating activities supplemented as needed from our borrowings. Our weekly payroll payments inclusive of employment-related taxes and payments to vendors are approximately $16.0 - $17.0 million. We generally target minimum global liquidity to be ~~approximately~~ 1.5 times our average weekly ~~requirements.~~requirements taking into account seasonality and cyclical trends. 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~~as well as our borrowing availability under our financing program, will be sufficient to meet our cash needs for the next twelve ~~months.~~months based on current business plans.

~~On March 27, 2020,~~Our capital allocation strategy is focused on strengthening our balance sheet and financial flexibility, as well as continuing to invest in our growth and profitability initiatives. This strategy includes effectively managing working capital to maximize operational efficiency, re-investing in our core growth initiatives, in both technology enhancements and sales and recruiting talent. These priorities demonstrate our ongoing commitment to Volt shareholders as we continue to execute on our overall strategic plan and return to sustainable profitability.

First Fiscal Quarter Ended January 30, 2022 compared to the ~~U.S. government enacted~~First Fiscal Quarter Ended January 31, 2021

Our liquidity and available capital resources are impacted by four key components: cash, including cash equivalents and restricted cash, operating activities, investing activities and financing activities, as shown below compared to the ~~Coronavirus Aid, Relief,~~prior fiscal year.

As of January 30, 2022, our cash, cash equivalents and ~~Economic Security~~restricted cash totaled $63.4 million compared to $76.6 million as of October 31, 2021.

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):


	Three Months Ended
	January 30, 2022		January 31, 2021
Net cash used in operating activities	$	(11,916)	$	(6,499)
Net cash used in investing activities	(641)		(963)
Net cash used in financing activities	(16)		(166)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(597)		(13)
Net decrease in cash, cash equivalents and restricted cash	$	(13,170)	$	(7,641)

Cash Flows - Operating Activities

The net cash used in operating activities in the three months ended January 30, 2022 increased $5.4 million from the cash used in operating activities in the three months ended January 31, 2021. This increase resulted primarily from a $6.6 million increase in cash used in operating assets and liabilities, primarily from a $13.1 million payment made towards deferred tax payments (discussed below), partially offset by an increase related to customer receipts and vendor payments. This increase in cash used in operating activities was partially offset by a decrease in net loss of $1.2 million.

Cash generated from operations was supplemented by the enactment of laws providing COVID-19 relief, most notably the CARES Act ~~(the “CARES Act”)~~ which ~~among other things, permits~~allowed for the deferral of payments of the ~~employer’s portion of~~Company’s U.S. social security ~~tax payments~~taxes between March 27, 2020 and December 31, 2020. As a result, $26.2 million of employer payroll tax payments were deferred with ~~50% due by December 31, 2021~~$13.1 million paid on January 3, 2022 and the remaining ~~50% by~~amounts payable with the December 31, ~~2022.~~2022 tax payment in January 2023. In addition, certain state governments have delayed payment of various state payroll taxes for a shorter period of time. State payroll taxes of approximately ~~$5.2~~$4.4 million deferred from the ~~first~~fourth quarter of fiscal 2021 were paid beginning in the ~~second~~first quarter of fiscal ~~2021.~~2022. The Company’s payment of approximately ~~$6.8~~$5.1 million of state payroll taxes will be deferred from the ~~second~~first quarter of fiscal ~~2021~~2022 with payments scheduled to begin in the ~~third~~second quarter of fiscal ~~2021. We also benefited from certain government wage subsidies during~~2022.

Additionally in fiscal 2021, we determined that we were eligible for the ~~first six months of fiscal 2021. We are in the process of assessing our benefit and further potential credits as well as other impacts of~~employee retention tax credit (“ERTC”) under the CARES Act onfor certain wages paid through September 30, 2021, as our ~~business.~~operations were fully or partially suspended due to government orders enacted in response to the COVID-19 pandemic. These credits reduced our payroll tax payments during fiscal 2021 through the first half of fiscal 2022 by $12.2 million and were treated as government wage subsidies.

~~Capital Allocation~~Cash Flows - Investing Activities

~~We have prioritized our capital allocation strategy to strengthen our balance sheet and increase our competitiveness~~The net cash used in investing activities in the ~~marketplace.~~three months ended January 30, 2022 was $0.6 million, as a result of purchases of property, equipment and software primarily relating to our investment in updating our business processes, back-office financial suite and information technology tools. The ~~timing~~net cash used in investing activities in the three months ended January 31, 2021 was $1.0 million, principally for the purchases of ~~these capital allocation priorities is highly dependent upon attaining the profitability objectives outlined in our plan~~property, equipment 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:software.

•~~Maintaining appropriate levels of working capital~~. Our business requires a certain level of cash resources to efficiently execute operations. We estimate the amount to be 1.5 times our weekly cash distributions on a global basis and must accommodate seasonality and cyclical trends;Cash Flows - Financing Activities

•~~Reinvesting~~The net cash used in ~~our business.~~ ~~We continue to execute on our company-wide initiative~~financing activities was minimal in the three months ended January 30, 2022. The net cash used in financing activities in the three months ended January 31, 2021 was $0.2 million as a result 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;debt issuance costs.

Financing Program

•~~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.~~

~~In July 2019, the Company amended and restated its long-term~~The DZ Financing Program is fully collateralized by certain receivables of the Company that are sold to a wholly-owned, consolidated, bankruptcy-remote subsidiary. To finance the purchase of such receivables, that subsidiary may request that DZ Bank make loans from time-to-time to that subsidiary which ~~was originally executed~~are secured by liens on ~~January 25, 2018.~~those receivables. The restated agreement allows for the inclusion of certain accounts receivable from originators in the United Kingdom, which added an additional $5.0 - $7.0 million in borrowing availability. In June 2020, the Maximum Facility Amount, as defined in the DZ Financing Program ~~was reduced from $115.0 million to~~is $100.0 million.

Maturity Date, as defined in the DZ Financing Program, from July 25, 2023 to July 25, 2024; (3) revise an existing covenant to maintain positive net income in any fiscal year ending after 2020 to any fiscal year ending after 2021; (4) replace the existing Tangible Net Worth (“TNW”) covenant requirement, as defined in the DZ Financing Program, to a minimum TNW of $20.0 million through the Company’s fiscal quarter ending on or about July 31, 2021 and $25.0 million in each quarter thereafter; and (5) revise the eligibility threshold for the receivables of a large North American Staffing customer from 5% of eligible receivables to 8%, which increased our overall availability under the Program by $1.0 - $3.0 million. All other terms and conditions ~~of the DZ Financing Program remain~~remained substantially unchanged.

Entering fiscal 2021, we have significant tax benefits including federal net operating loss carryforwards of $212.0 million, U.S. state net operating loss carryforwards of $230.0 million, international NOL carryforwards of $10.3 million and federal tax credits of $54.7 million, which are fully reserved with a valuation allowance which we will be able to utilize against future profits. As of November 1, 2020, the U.S. federal NOL carryforwards will expire at various dates beginning in 2031 (with some indefinite), the U.S. state NOL carryforwards will expire at various dates beginning in 2021 (with some indefinite), the international NOL carryforwards will expire at various dates beginning in 2021 (with some indefinite) and federal tax credits will expire between 2021 and 2040.

~~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 DZ Financing Program increases or decreases in tandem with any increases or decreases in accounts receivable based on revenue fluctuations.

We experienced a decline in the demand for our services in fiscal 2020 due to the impact of the COVID-19 pandemic. As a result, our operating cash flow increased and accounts receivable balances decreased as customer collections outpaced sales. This pattern is not sustainable in the event the pandemic continues at resurgence levels or an economic downturn continues for an extended period. However, we experienced improved client payment patterns beginning in the second half of fiscal 2020 and we expect this trend to continue through fiscal 2021. We will continue to monitor default risks and diligently pursue payments from our customers consistent with original payment terms.

Many governments in countries and territories in which we do business have announced that certain payroll, income and other tax payments may be deferred without penalty for a certain period of time as well as providing other cash flow related relief packages. We determined that we qualify for the payroll tax deferral which allows us to delay payment of the employer portion of payroll taxes and we are evaluating whether we qualify for certain employment tax credits. If we qualify for such credits, the credits will be treated as government wage subsidies which will offset related operating expenses. We continue to actively monitor these relief packages to take advantage of all of those which are available to us.

At May 2, 2021, the Company had outstanding borrowings under the DZ Financing Program of $60.0 million. Borrowing availability, as defined under the DZ Financing Program, was $2.9 million and global liquidity was $42.2 million at May 2, 2021.

Our DZ Financing Program is subject to termination under certain events of default such as breach of covenants, including the financial covenants. At May 2, 2021, we were in compliance with all debt covenants. We believe, based on our current outlook, we will continue to be able to meet our financial covenants.

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

Global Liquidity
May 3, 2020 August 2, 2020 November 1, 2020 January 31, 2021 May 2, 2021
Cash and cash equivalents (a)
$ 26,223 $ 30,928 $ 38,550 $ 40,062 $ 47,231
Total outstanding debt $ 60,000 $ 60,000 $ 60,000 $ 60,000 $ 60,000
Cash in banks (b)(c)
$ 22,876 $ 26,126 $ 36,218 $ 36,962 $ 39,288
DZ Financing Program 4,202 5,122 2,828 2,225 2,868
Global liquidity 27,078 31,248 39,046 39,187 42,156
Minimum liquidity threshold 15,000 15,000 15,000 15,000 15,000
Available liquidity $ 12,078 $ 16,248 $ 24,046 $ 24,187 $ 27,156

a.~~Per financial statements.~~

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

c.Amounts in the USB collections account are excluded from cash in banks as the balance is included in the borrowing availability under the DZ Financing Program. As of May 2, 2021, the balance in the USB collections account included in the DZ Financing Program availability was $7.1 million.

~~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
May 2, 2021 May 3, 2020
Net cash provided by operating activities $ 1,812 $ 2,910
Net cash used in investing activities (1,795) (2,477)
Net cash (used in) provided by financing activities (143) 4,751
Effect of exchange rate changes on cash, cash equivalents and restricted cash 281 (521)
Net increase in cash, cash equivalents and restricted cash $ 155 $ 4,663

~~Cash Flows - Operating Activities~~

The net cash provided by operating activities in the six months ended May 2, 2021 decreased $1.1 million from the cash provided by operating activities in the six months ended May 3, 2020. This decrease resulted primarily from a $17.4 million decrease in cash provided by operating assets and liabilities, primarily from an increase in accounts receivable due to increased sales volume partially offset by an increase in accrued expenses. This decrease in cash used in operating activities was partially offset by a decrease in net loss of $15.7 million.

~~Cash Flows - Investing Activities~~

The net cash used in investing activities in the six months ended May 2, 2021 was $1.8 million, as a result of purchases of property, equipment and software. The net cash used in investing activities in the six months ended May 3, 2020 was $2.5 million, principally for the purchases of property, equipment and software of $3.1 million, partially offset by proceeds of $0.4 million from the sale of property, equipment and software.

~~Cash Flows - Financing Activities~~

The net cash used in financing activities was $0.1 million in the six months ended May 2, 2021 as a result of debt issuance costs. The net cash provided by financing activities in the six months ended May 3, 2020 was $4.8 million as a result of a $5.0 million net drawdown of borrowing under the DZ Financing Program.

~~Financing Program~~

Loan advances may be made under the DZ Financing Program through January 25, 2024 and all loans will mature no later than July 25, 2024. Loans will accrue interest (i) with respect to loans that are funded through the issuance of commercial paper notes, at the CP rate, and (ii) otherwise, at a rate per annum equal to adjusted LIBOR. The CP rate will be based on the rates paid by the applicable lender on notes it issues to fund related loans. Adjusted LIBOR is based on LIBOR for the applicable interest period and the rate prescribed by the Board of Governors of the Federal Reserve System for determining the reserve requirements with respect to Eurocurrency funding. If an event of default occurs, all loans shall bear interest at a rate per annum equal to the prime rate (the federal funds rate plus 3%) plus 2.5%.

The Company is subject to certain financial and portfolio performance covenants under the DZ Financing Program, including (1) a minimum TNW, as defined in the DZ Financing Program, of $20.0 million through the ~~Company's~~Company’s fiscal quarter ending on or about July 31, 2021 and $25.0 million in each quarter thereafter; (2) positive net income in any fiscal year ending after 2021; (3) maximum debt to TNW ratio of 3:1; and (4) a minimum of $15.0 million in liquid assets, as defined in the DZ Financing Program.

At ~~May 2, 2021, there~~January 30, 2022, the Company had outstanding borrowings under the DZ Financing Program of $60.0 million. Borrowing availability, as defined under the DZ Financing Program, was ~~$2.9~~$2.7 million and global liquidity was $49.6 million at January 30, 2022.

Our DZ Financing Program is subject to termination under certain events of default such as breach of covenants, including the financial covenants. At January 30, 2022, we were in compliance with all debt covenants. We believe, based on our 2022 plan, we will continue to be able to meet our financial covenants under the DZ Financing Program.

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


Global Liquidity
	January 31, 2021		May 2, 2021		August 21, 2021		October 31, 2021		January 30, 2022
Cash and cash equivalents (a)	$	40,062	$	47,231	$	49,595	$	71,373	$	54,864

Total outstanding debt	$	60,000	$	60,000	$	60,000	$	60,000	$	60,000

Cash in banks (b)(c)	$	36,962	$	39,288	$	43,076	$	52,938	$	46,930
DZ Financing Program	2,225		2,868		3,990		6,046		2,657
Global liquidity	39,187		42,156		47,066		58,984		49,587
Minimum liquidity threshold	15,000		15,000		15,000		15,000		15,000
Available liquidity	$	24,187	$	27,156	$	32,066	$	43,984	$	34,587

a.Per financial statements.

b.Amount generally includes outstanding checks.

c.Amounts in the USB collections account are excluded from cash in banks as the balance is included in the borrowing availability ~~as defined~~under the DZ Financing Program. As of January 30, 2022, the balance in the USB collections account included in the DZ Financing Program availability was $7.5 million.

Liquidity Outlook

While we believe our cash provided by operating activities and borrowing availability under the DZ Financing Program will be sufficient to meet our operating working capital and capital expenditure requirements at a minimum for the next twelve months, the extent to which any on-going or resurgence of COVID-19 related impacts could affect our business, financial condition, results of operations and cash flows in the short- and medium-term cannot be predicted with certainty. We may also face unexpected costs or an adverse impact on our business operations in connection with government mandated COVID-19 vaccine-related policies and procedures. Any of the above could have a material adverse effect on our business, financial condition, results of operations and cash flows and require us to seek additional sources of liquidity and capital resources.

Many governments in countries and territories in which we do business have announced that certain payroll, income and other tax payments may be deferred without penalty for a certain period of time as well as providing other cash flow related relief packages. As noted above, we determined that we qualify for the payroll tax deferral under the CARES Act which allows us to delay payment of the employer portion of payroll taxes and we are evaluating whether we qualify for certain employment tax credits. If we qualify for such

credits, the credits will be treated as government wage subsidies which will offset related operating expenses. We continue to monitor these relief packages to take advantage of all of those which are available to us.

Entering fiscal 2022, we have significant tax benefits including federal net operating loss ("NOL") carryforwards of $210.0 million, U.S. state NOL carryforwards of $226.3 million, international NOL carryforwards of $8.3 million and federal tax credits of $53.3 million, which are fully reserved with a valuation allowance which we will be able to utilize against future profits. As of October 31, 2021, the U.S. federal NOL carryforwards will expire at various dates between 2031 and 2038 (with some indefinite), the U.S. state NOL carryforwards will expire at various dates beginning in 2022 (with some indefinite), the international NOL carryforwards will expire at various dates beginning in 2022 (with some indefinite) and federal tax credits will expire between 2022 and 2040.

In addition to our discussion and analysis surrounding our liquidity and capital resources, our significant contractual obligations and commitments as of January 30, 2022, include:

•Debt Obligations and Interest Payments - As of January 30, 2022, our outstanding debt balance was $60.0 million. See Note 9, “Debt” within our consolidated financial statements for further detail of our debt and the ~~Company~~timing of expected future principal and interest payments.

•Lease Liabilities – As of January 30, 2022, our remaining contractual commitment for leases was $39.6 million. See Note 3, “Leases,” within our consolidated financial statements for further detail of our obligations and the timing of expected future payments, including a five-year maturity schedule.

•Software-Related Expenditures – As of January 30, 2022, we had contractual commitments for software-related expenditures of $3.7 million. We anticipate capital expenditures in ~~compliance with all debt covenants,~~fiscal 2022 of approximately $4.0 - $5.0 million as ~~amended.~~we continue to support our strategic initiatives through improved technology, as necessary. While the majority of our software-related contractual obligations does not currently extend beyond fiscal 2022, we anticipate annual payments of approximately $5.5 million for the on-going use of our core technology.

•Casualty Insurance - As of January 30, 2022, we had accrued casualty claims of $14.2 million under our Casualty Insurance Program. While we cannot accurately predict future insurance claim liability, we estimate our related expenditures in fiscal 2022 to be in the range of $8.0 - $11.0 million, based on historical data.

Off-Balance Sheet Arrangements

As of ~~May 2, 2021,~~January 30, 2022, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information in this section should be read in conjunction with the information on financial market risk related to non-U.S. currency exchange rates, changes in interest rates and other financial market risks in Part II, ~~Item~~“Item 7A.~~, “Quantitative~~ Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the year ended ~~November 1, 2020.~~October 31, 2021.

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 ~~May 2, 2021,~~January 30, 2022, we had cash and cash equivalents on which interest income is earned at variable rates. At ~~May 2, 2021,~~January 30, 2022, we had a long-term $100.0 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 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 less than $0.1 million and a hypothetical 1-percentage-point decrease in interest rates would have decreased net interest expense by ~~$0.3~~$0.2 million in the first ~~six~~three months of fiscal ~~2021.~~2022.

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~~expense 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.~~income (loss). The U.S. dollar ~~weakened~~strengthened relative to many foreign currencies as of ~~May 2, 2021~~January 30, 2022 compared to ~~November 1, 2020.~~October 31, 2021. Consequently, stockholders’ equity ~~increased $1.1~~decreased $0.9 million as a result of the foreign currency translation as of ~~May 2, 2021.~~January 30, 2022.

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 ~~May 2, 2021~~January 30, 2022 would result in an approximate ~~$1.8~~$1.5 million positive translation adjustment recorded in Accumulated other comprehensive ~~loss~~income (loss) within stockholders’ equity. Conversely, a hypothetical 10% appreciation of the U.S. dollar as compared to these currencies as of ~~May 2, 2021~~January 30, 2022 would result in an approximate ~~$1.8~~$1.5 million negative translation adjustment recorded in Accumulated other comprehensive ~~loss~~income (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 ~~May 2, 2021~~January 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

3026

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. 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 ~~2020~~2021 Form 10-K, there have been no material developments in the material legal proceedings in which we are involved.

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors set forth in Part I, “Item 1A. Risk Factors” in the ~~2020~~2021 Form 10-K.

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

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable

ITEM 5. OTHER INFORMATION

None

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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)~~001-0 9232)

10.1						Employment Agreement by and between Volt Information Sciences, Inc. and Craig R. Lewis, dated as of January 24, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 27, 2022; File No. 001-09232)

10.2						Consulting Agreement by and between Volt Information Sciences, Inc. and PRT Consulting LLC, dated as of February 4, 2022

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

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

3228

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~~March 15, ~~2021~~2022

By:

/s/ Linda Perneau

Linda Perneau

President and Chief Executive Officer
(Principal Executive Officer)

Date: ~~June~~March 15, ~~2021~~2022

By:

/s/ ~~Herbert M. Mueller~~Paul Tomkins

~~Herbert M. Mueller~~Paul Tomkins

~~Senior Vice President and~~Interim Chief Financial Officer
(Principal Financial Officer)

Date: ~~June~~March 15, ~~2021~~2022

By:

/s/ Leonard Naujokas

Leonard Naujokas

Controller, Chief Accounting Officer and Treasurer
(Principal Accounting Officer)

3329


Global Liquidity
	May 3, 2020		August 2, 2020		November 1, 2020		January 31, 2021		May 2, 2021
Cash and cash equivalents (a)	$	26,223	$	30,928	$	38,550	$	40,062	$	47,231

Total outstanding debt	$	60,000	$	60,000	$	60,000	$	60,000	$	60,000

Cash in banks (b)(c)	$	22,876	$	26,126	$	36,218	$	36,962	$	39,288
DZ Financing Program	4,202		5,122		2,828		2,225		2,868
Global liquidity	27,078		31,248		39,046		39,187		42,156
Minimum liquidity threshold	15,000		15,000		15,000		15,000		15,000
Available liquidity	$	12,078	$	16,248	$	24,046	$	24,187	$	27,156