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 October 31, 2021, as filed with the SEC on January 12,
2022 (the "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 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.


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.



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 65 of our own locations and have an on-site presence
in over 60 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.

Environmental, Social and Governance (“ESG”) Matters

The Company recognizes the importance of ESG matters, with a specific focus on
Human Capital 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.


As of January 30, 2022, we employed approximately 14,600 people, including
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

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 Equal Employment Opportunity policy. Of our North
American in-house employee population, approximately 71% are women and
approximately 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 against these initiatives.

Benefits and Compensation

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.

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
email 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.


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 pandemic 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 through the beginning of our third quarter of fiscal 2020, as a
number of countries and U.S. federal, state and local governments issued varying
levels of stay-at-home orders and other restrictions and 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 continues to monitor the most up-to-date developments and safety standards
from the Centers for Disease Control and Prevention, 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 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.

We expect the global business environment will continue to operate in various
stages of economic turbulence. We are encouraged by the increase in order
activity and demand throughout the Company, however, the pace of such increase
may be impacted if a resurgence in COVID-19 infections leads to additional
disruptions, government mandates or increased lack of available talent to match
our customers' demands.

For additional discussion of the uncertainties and business risks associated with COVID-19, see Part I, “Item 1A. Risk Factors” of the 2021 Form 10-K.

Critical Accounting Estimates

Casualty Insurance Program

We purchase workers' compensation insurance through mandated participation in
certain state funds and the experience-rated premiums in these state plans
relieve us of any additional liability. Liability for workers' compensation in
all other states as well as automobile and general liability is insured under a
paid loss deductible casualty insurance program for losses exceeding specified
deductible levels and we are financially responsible for losses below the
specified deductible limits. The casualty program is secured by a letter of
credit against our financing arrangement ("DZ Financing Program") with DZ Bank
AG Deutsche Zentral-Genossenschaftsbank ("DZ Bank") of $20.9 million as of
January 30, 2022.

We recognize expenses and establish accruals for amounts estimated to be
incurred, both reported and not 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 length of time over which payments are expected to be made.
Actuarial estimates are updated as loss experience develops, additional claims
are reported or 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 final
expected paid amounts are determined through the ultimate life of the claim. At
January 30, 2022 and October 31, 2021, the casualty insurance liability was
$14.2 million and $13.9 million, respectively.


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.

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.

Consolidated results by segment

Three months completed January 30, 2022

                                                    North American          International             North            Corporate and
(in thousands)                      Total              Staffing               Staffing             American MSP            Other              Eliminations
Net revenue                      $ 226,928          $   191,196          $         26,018          $   9,709          $         78          $         (73)
Cost of services                   191,835              163,145                    20,800              7,921                    42                    (73)
Gross margin                        35,093               28,051                     5,218              1,788                    36                      -

Selling, administrative and
other operating costs               34,976               21,409                     4,280                815                 8,472                      -
Restructuring and severance
costs                                  591                   67                        70                  -                   454                      -
Impairment charge                       23                    -                         -                  -                    23                      -
Operating income (loss)               (497)               6,575                       868                973                (8,913)                     -
Other income (expense), net           (569)
Income tax provision                   153
Net loss                         $  (1,219)


Three months completed January 31, 2021

                                                    North American          International             North            Corporate and
(in thousands)                      Total              Staffing               Staffing             American MSP            Other              Eliminations
Net revenue                      $ 217,958          $   184,216          $         24,013          $   9,669          $        119          $         (59)
Cost of services                   185,276              157,636                    19,851              7,784                    64                    (59)
Gross margin                        32,682               26,580                     4,162              1,885                    55                      -

Selling, administrative and
other operating costs               33,747               20,646                     3,788              1,353                 7,960                      -
Restructuring and severance
costs                                  632                 (241)                       (8)                 -                   881                      -
Impairment charge                       31                    -                         -                  -                    31                      -
Operating income (loss)             (1,728)               6,175                       382                532                (8,817)                     -
Other income (expense), net           (391)
Income tax provision                   327
Net loss                         $  (2,446)

Consolidated operating results (Q1 2022 vs. Q1 2021)

Net revenue in the first quarter of fiscal 2022 increased $8.9 million, or 4.1%,
to $226.9 million from $218.0 million in the first quarter of fiscal 2021. The
net revenue increase was primarily due to an increase in our North American
Staffing segment of $7.0 million and an increase in our International Staffing
segment of $2.0 million. Excluding the negative impact of foreign currency
fluctuations of $0.8 million, net revenue increased $9.8 million, or 4.5%.

Operating results in the first quarter of fiscal 2022 improved $1.2 million, to
an operating loss of $0.5 million from $1.7 million in the first quarter of
fiscal 2021. Excluding the restructuring and severance costs and impairment
charges, operating results improved $1.2 million to operating income of
$0.1 million. This increase in operating results of $1.2 million was primarily
the result of improvements in our North American Staffing segment of $0.7
million, our International Staffing segment of $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.


Operating results by segment (Q1 2022 vs. Q1 2021)

Net revenue

The North American Staffing segment revenue in the first quarter of fiscal 2022
increased $7.0 million, or 3.8%, to $191.2 million from $184.2 million in the
first quarter of fiscal 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 and improvements in direct hire revenue.

The International Staffing segment revenue in the 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, primarily due to increased direct hire revenue in
the United Kingdom and Singapore, as well as increases in other staffing
business in France, Belgium and the United Kingdom. Excluding the negative
impact of foreign exchange rate fluctuations of $0.8 million, revenue increased
$2.8 million, or 12.3%.

Revenues from the North American MSP segment in the first quarter of fiscal 2022 were flat compared to the first quarter of fiscal 2021. The slight improvement was mainly due to increased demand in its payroll services business , partially offset by a decline in its managed services business.

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

Gross margin as a percent of revenue in the first quarter of fiscal 2022
increased to 15.5% from 15.0% in the first quarter of fiscal 2021. Our North
American Staffing segment gross margin as a percent of revenue increased
primarily due to a mix of higher margin 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 an increase in direct hire revenue. Our North American MSP
segment gross margin as a percent of revenue decreased primarily due to the mix
of business. Government wage subsidies accounted for 40 basis points of the
increase in the first quarter of fiscal 2022 compared to 30 basis points in the
first quarter of fiscal 2021.

Selling, administrative and other operating expenses

Selling, administrative and other operating costs in the first quarter of fiscal
2022 increased $1.3 million, or 3.6%, to $35.0 million from $33.7 million in the
first quarter of fiscal 2021. The increase was primarily due to $0.7 million in
labor as a result of changes in headcount and $0.5 million in equity
compensation, partially offset by an increase in 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 15.4% and 15.5% in the
first quarter of fiscal 2022 and 2021, respectively.

Restructuring and redundancy costs

Restructuring and severance costs remained consistent at $0.6 million in both
the first quarter of fiscal 2022 and 2021. Restructuring and severance costs in
the first quarter of fiscal 2022 were primarily due to $0.5 million in ongoing
costs of facilities exited in fiscal 2020. Restructuring and severance costs in
the first quarter of fiscal 2021 primarily included $0.3 million of severance
costs resulting from the elimination of certain positions as part of our
continued efforts to reduce costs and $0.6 million related to the ongoing costs
of facilities exited in fiscal 2020 partially offset by a $0.3 million lease
termination gain.

Other Income (Expense), net

Other expense in the first quarter of fiscal 2022 increased $0.2 million, to
$0.6 million from $0.4 million in the first quarter of fiscal 2021 due to an
increase in non-cash foreign exchange losses primarily on intercompany balances.

Provision for income tax

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



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 are directly related to the 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 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 demand for our services increases,
we generally see an increase in our working capital requirements, as we continue
to 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 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 quarter billings
typically the lowest due to the holiday season and generally increasing in the
third and fourth fiscal quarters when our customers increase the use of
contingent labor. Accordingly, the first and fourth quarters of our fiscal year
are generally the strongest for operating cash flows.

We manage our cash flow and related liquidity on a global basis. As 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 1.5 times our average weekly 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, as well as our borrowing
availability under our financing program, will be sufficient to meet our cash
needs for the next twelve months based on current business plans.

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

End of the first financial quarter January 30, 2022 compared to the first financial quarter ended January 31, 2021

Our available liquidity and capital resources are influenced by four key elements: cash, including cash equivalents and restricted cash, operating activities, investing activities and financing activities, as shown below. below compared to the previous year.

From January 30, 2022our cash, cash equivalents and restricted cash totaled
$63.4 million compared to $76.6 million from 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 


                                                    January 30, 2022      January 31, 2021
Net cash used in operating activities              $         (11,916)     $ 


Net cash used in investing activities                           (641)       


Net cash used in financing activities                            (16)       


Effect of exchange rate changes on cash, cash
equivalents and restricted cash                                 (597)       


Net decrease in cash, cash equivalents and
restricted cash                                    $         (13,170)     $        (7,641)


Cash Flow – 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 which allowed for the
deferral of payments of the Company's U.S. social security taxes between March
27, 2020 and December 31, 2020. As a result, $26.2 million of employer payroll
tax payments were deferred with $13.1 million paid on January 3, 2022 and the
remaining amounts payable with the December 31, 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 $4.4 million deferred from the fourth quarter of fiscal 2021 were
paid beginning in the first quarter of fiscal 2022. The Company's payment of
approximately $5.1 million of state payroll taxes will be deferred from the
first quarter of fiscal 2022 with payments scheduled to begin in the second
quarter of fiscal 2022.

Additionally in fiscal 2021, we determined that we were eligible for the
employee retention tax credit ("ERTC") under the CARES Act for certain wages
paid through September 30, 2021, as our 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

Cash Flow – Investing Activities

The net cash used in investing activities in the 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 net
cash used in investing activities in the three months ended January 31, 2021 was
$1.0 million, principally for the purchases of property, equipment and software.

Cash flow – Financing activities

The net cash used in 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 debt issuance costs.

Funding program

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. The Maximum Facility Amount, as defined
in the DZ Financing Program is $100.0 million.

In December 2020, the Company amended the DZ Financing 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 remained 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 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 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 in the
DZ Financing Program, 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;
(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 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 $2.7 million and global liquidity was $49.6 million at
January 30, 2022.

Our DZ financing program is subject to termination upon certain events of default, such as breach of covenants, including financial covenants. AT
January 30, 2022, we complied with all covenants. We believe, based on our 2022 plan, that we will continue to be able to meet our financial commitments under the DZ funding program.

The following table shows our global cash and 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 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

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.

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

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 securities and interest payments – From January 30, 2022our outstanding debt was $60.0 million. See Note 9, “Debt,” to our consolidated financial statements, for more details on our debt and the timing of expected future principal and interest payments.

• Lease obligations – From January 30, 2022our remaining contractual commitment for the leases was $39.6 million. See Note 3, “Leases,” to our consolidated financial statements for more details on our obligations and the timing of expected future payments, including a five-year maturity.

•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 fiscal 2022 of approximately $4.0 - $5.0 million as 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

Off-balance sheet arrangements

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

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