Segment Data

The Company’s strategic reorganization, which began in fiscal 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 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.

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 pertaining to the Company’s segment revenue and operating income (loss) as well as results from Corporate and Other for the three and six months ended April 30, 2017 and May 1, 2016 are summarized in the following tables (in thousands):



	Three Months Ended April 30, 2017
	Total			North American Staffing		International Staffing		Technology Outsourcing Services and Solutions			Corporate and Other (1)			Eliminations (2)
Net revenue	$	303,005		$	233,804	$	30,231	$	24,499		$	16,033		$	(1,562	)
Cost of services	255,886			199,068		25,670		19,634			13,076			(1,562		)
Gross margin	47,119			34,736		4,561		4,865			2,957			—

Selling, administrative and other operating costs	51,171			31,634		4,030		3,806			11,701			—
Restructuring and severance costs	199			44		—		(16		)	171			—
Impairment charge	290			—		—		—			290			—
Gain from divestitures	(3,938		)	—		—		—			(3,938		)	—
Operating income (loss)	(603		)	3,058		531		1,075			(5,267		)	—
Other income (expense), net	(1,018		)
Income tax benefit	(767		)
Net loss	$	(854	)



	Three Months Ended May 1, 2016
	Total			North American Staffing		International Staffing			Technology Outsourcing Services and Solutions		Corporate and Other (1)			Eliminations (2)
Net revenue	$	335,576		$	250,881	$	33,250		$	24,981	$	29,590		$	(3,126	)
Cost of services	284,104			213,893		28,290			20,137		24,910			(3,126		)
Gross margin	51,472			36,988		4,960			4,844		4,680			—

Selling, administrative and other operating costs	51,128			30,923		4,218			3,538		12,449			—
Restructuring and severance costs	840			34		(7		)	—		813			—
Gain from divestitures	(1,663		)	—		—			—		(1,663		)	—
Operating income (loss)	1,167			6,031		749			1,306		(6,919		)	—
Other income (expense), net	(1,861		)
Income tax provision	1,091
Net loss	$	(1,785	)



	Six Months Ended April 30, 2017
	Total			North American Staffing			International Staffing		Technology Outsourcing Services and Solutions		Corporate and Other (1)			Eliminations (2)
Net revenue	$	616,029		$	465,669		$	60,581	$	50,170	$	42,329		$	(2,720	)
Cost of services	522,020			397,910			51,327		40,408		35,095			(2,720		)
Gross margin	94,009			67,759			9,254		9,762		7,234			—

Selling, administrative and other operating costs	100,061			61,733			8,071		7,064		23,193			—
Restructuring and severance costs	823			140			10		37		636			—
Impairment charge	290			—		—	—		—		290			—
Gain from divestitures	(3,938		)	—			—		—		(3,938		)	—
Operating income (loss)	(3,227		)	5,886			1,173		2,661		(12,947		)	—
Other income (expense), net	(2,348		)
Income tax benefit	(144		)
Net loss	$	(5,431	)



	Six Months Ended May 1, 2016
	Total			North American Staffing		International Staffing		Technology Outsourcing Services and Solutions		Corporate and Other (1)			Eliminations (2)
Net revenue	$	662,544		$	489,456	$	67,201	$	52,195	$	59,995		$	(6,303	)
Cost of services	565,504			421,333		57,461		41,763		51,250			(6,303		)
Gross margin	97,040			68,123		9,740		10,432		8,745			—

Selling, administrative and other operating costs	103,751			61,661		8,565		6,904		26,621			—
Restructuring and severance costs	3,601			592		470		225		2,314			—
Gain from divestitures	(1,663		)	—		—		—		(1,663		)	—
Operating income (loss)	(8,649		)	5,870		705		3,303		(18,527		)	—
Other income (expense), net	(2,454		)
Income tax provision	1,644
Net loss	$	(12,747	)

(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.