Impairment and Restructuring Charges

Impairment of Net Assets

During fiscal 2015, in conjunction with the initiative to exit certain non-core operations, the telephone directory publishing and printing business in Uruguay met the criteria to be classified as held for sale. As part of the required evaluation under the held for sale guidance, the Company determined that the approximate fair value less costs to sell the operations was significantly lower than the carrying value of the net assets. Consequently, the net assets of the business of $2.8 million were fully impaired and were recorded as an impairment charge. On July 31, 2015, the Company completed the sale of our telephone directory publishing and printing business in Uruguay to affiliates of FCR Media Group.

As previously disclosed in Footnote 3, an impairment charge of $0.7 million was recognized as a result of the required evaluation under the held for sale guidance related to the staffing reporting unit in Uruguay ("Lakyfor, S.A.").

Impairment of Property, Equipment and Software

In an effort to reduce operating costs, the Company is evaluating the efficiency of our current business delivery model, supply chain and back office support functions in light of existing and ongoing business requirements. The implementation of additional technology tools is expected to provide operating leverage and efficiencies. During the third quarter of fiscal year 2015, as a result of this evaluation, it was determined that $1.9 million of previously capitalized internally developed software within the Staffing segment was impaired as it was no longer expected to provide future value in light of the anticipated technology upgrade. The remaining book value of this asset was $0.7 million as of November 1, 2015 and is expected to be recovered from existing and future technology projects.

Impairment of Goodwill

The Company performs its annual impairment test for goodwill during the second quarter of the fiscal year and when a triggering event occurs between annual impairment tests. Goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is to identify potential impairment by comparing the fair value of a reporting unit with its net book value (or carrying amount), including goodwill. The second step of the goodwill impairment test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

Based on the result of the first step of the goodwill impairment analysis, the Company determined that the fair value of Lakyfor, S.A. was less than its carrying value as of May 3, 2015 and, as such, the Company applied the second step of the goodwill impairment test to this reporting unit. The fair value of the reporting unit was determined using an income approach. The income approach uses projections of estimated operating results and cash flows discounted using a weighted-average cost of capital. The approach uses management’s best estimates of economic and market conditions over the projected period, including growth rates in sales, costs, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, future estimates of capital expenditures and changes in future working capital requirements. The Company determined that the ongoing value of the business based on historical and future levels would not support the carrying value of goodwill. Based on the result of the second step of the goodwill impairment analysis, the Company recorded a $1.0 million non-cash charge to reduce the entire carrying value of goodwill during the second quarter of fiscal year 2015.

As a result of changes in executive management and the establishment of significant strategic initiatives impacting Volt Europe’s operations, the Company performed a Step 1 analysis of the goodwill impairment test in the fourth quarter of fiscal year 2015 to provide assurance that the unit’s balance sheet reflects the current expectations for the unit. The Company utilized a combination of the Income and Market Approaches to estimate the Total Enterprise Value (“TEV”) of Volt Europe. A discounted cashflow (“DCF”) analysis was used for the income approach while the market approach consisted of a calculation of the fair value of the business enterprise of the reporting unit based on market multiples, as appropriate. Determining fair value requires significant judgment concerning the assumptions used in the valuation model, including discount rates, the amount and timing of expected future cash flows and, growth rates, as well as relevant comparable company earnings multiples for the market-based approach including the determination of whether a premium or discount should be applied to those comparables. The cash flows employed in the DCF analysis are based on management’s most recent budgets and business plans and when applicable, various growth rates have been assumed for years beyond the current business plan periods. Any forecast contains a degree of uncertainty and modifications to these cash flows could significantly increase or decrease the fair value of a reporting unit. In determining which discount rate to utilize, management determines the appropriate weighted average cost of capital (“WACC”). Management considers many factors in selecting a WACC, including the market view of risk for each individual reporting unit, the appropriate capital structure and the appropriate borrowing rates for each reporting unit. The selection of a WACC is subjective and modification to this rate could significantly increase or decrease the fair value of a reporting unit. As a result of this Step 1 analysis of Volt Europe’s goodwill, the TEV exceeded the carrying value indicating no impairment.

The following represents the change in the carrying amount of goodwill during each fiscal year (in thousands):



	Staffing Services
	2015			2014
Aggregate goodwill acquired	$	10,483		$	10,469
Accumulated impairment losses	(3,733		)	(2,756		)
Foreign currency translation adjustment	(315		)	14
Reclassified as held for sale¹	—			(1,054		)
Goodwill, net of impairment losses	$	6,435		$	6,673

^{1 Goodwill related to Lakyfor, SA was impaired in the second quarter of fiscal year 2015 prior to the determination as held for sale in the fourth quarter of fiscal year 2015.}

Restructuring

From time to time, the Company has undertaken operational restructuring and other cost reduction actions to streamline processes and manage costs throughout various departments within the Company. For the years ended November 1, 2015, November 2, 2014 and November 3, 2013, restructuring charges were $3.6 million, $2.5 million and $0.8 million, respectively, related primarily to severance payments to executive management in fiscal 2015 and reductions in workforce in fiscal years 2015, 2014 and 2013.