Segment Data

The Company’s strategic reorganization during fiscal 2016 and 2015 included the exit of non-core operations and significant changes in the management structure. The Company changed its operating and reportable segments during the fourth quarter of fiscal 2016 in connection with its new business strategies, aligning with the way the Company evaluates its business performance and manages its operations. Our current reportable segments are (i) North American Staffing, (ii) International Staffing and (iii) Technology Outsourcing Services and Solutions. The non-reportable businesses are combined and disclosed with corporate services under the category Corporate and Other. Accordingly, all prior periods have been recast to reflect the current segment presentation. The change in reportable segments did not have any impact on previously reported consolidated financial results.

Segment operating income (loss) is comprised of segment net revenue less cost of services, selling, administrative and other operating costs, impairment charges and restructuring and severance costs. The Company allocates to the segments all operating costs except for costs not directly related to our 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.

Effective in the first quarter of fiscal 2017, in an effort to simplify and refine its internal reporting, the Company modified its intersegment sales structure between North American Staffing and Technology, Outsourcing Services and Solutions segments. The resulting changes are as follows:


•	Intersegment revenue for North American Staffing from Technology, Outsourcing Services and Solutions is now based on a set percentage of direct labor dollars for recruiting and administrative services; and


•	The direct labor costs associated with the contingent employees placed by North American Staffing on behalf of Technology, Outsourcing Services and Solutions’ customers are now directly borne by the Technology, Outsourcing Services and Solutions segment instead of by North American Staffing.

To provide period over period comparability, the Company has reclassified the prior period segment data to conform to the current presentation. This change does not have any impact on the consolidated financial results for any period presented.

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 January 29, 2017
	Total			North American Staffing		International Staffing		Technology Outsourcing Services and Solutions		Corporate and Other (1)			Eliminations (2)
Net revenue	$	313,024		$	231,865	$	30,350	$	25,671	$	26,296		$	(1,158	)
Cost of services	266,134			198,842		25,657		20,774		22,019			(1,158		)
Gross margin	46,890			33,023		4,693		4,897		4,277			—

Selling, administrative and other operating costs	48,890			30,099		4,041		3,258		11,492			—
Restructuring and severance costs	624			96		10		53		465			—
Operating income (loss)	(2,624		)	2,828		642		1,586		(7,680		)	—
Other income (expense), net	(1,330		)
Income tax provision	623
Net loss	$	(4,577	)



	Three Months Ended January 31, 2016
	Total			North American Staffing			International Staffing			Technology Outsourcing Services and Solutions		Corporate and Other (1)			Eliminations (2)
Net revenue	$	326,968		$	238,575		$	33,951		$	27,214	$	30,405		$	(3,177	)
Cost of services	281,400			207,440			29,171			21,626		26,340			(3,177		)
Gross margin	45,568			31,135			4,780			5,588		4,065			—

Selling, administrative and other operating costs	52,623			30,738			4,347			3,366		14,172			—
Restructuring and severance costs	2,761			558			477			225		1,501			—
Operating income (loss)	(9,816		)	(161		)	(44		)	1,997		(11,608		)	—
Other income (expense), net	(593		)
Income tax provision	553
Net loss	$	(10,962	)

(1) Revenues are primarily derived from managed service programs and information technology infrastructure services.

(2) The majority of intersegment sales results from North American Staffing providing resources to Technology Outsourcing Services and Solutions.