Segment Data

The Company changed its operating and reportable segments during the fourth quarter of fiscal 2016. 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 nine months ended July 30, 2017 and July 31, 2016 are summarized in the following tables (in thousands):



	Three Months Ended July 30, 2017
	Total			North American Staffing		International Staffing		Technology Outsourcing Services and Solutions		Corporate and Other (1)			Eliminations (2)
Net revenue	$	289,924		$	229,372	$	29,018	$	24,323	$	9,042		$	(1,831	)
Cost of services	244,205			194,594		24,459		19,788		7,195			(1,831		)
Gross margin	45,719			34,778		4,559		4,535		1,847			—

Selling, administrative and other operating costs	46,931			28,962		3,824		3,561		10,584			—
Restructuring and severance costs	249			75		4		2		168			—
Operating income (loss)	(1,461		)	5,741		731		972		(8,905		)	—
Other income (expense), net	(2,983		)
Income tax provision	1,074
Net loss	$	(5,518	)



	Three Months Ended July 31, 2016
	Total			North American Staffing		International Staffing		Technology Outsourcing Services and Solutions			Corporate and Other (1)			Eliminations (2)
Net revenue	$	330,625		$	249,730	$	32,565	$	23,857		$	27,206		$	(2,733	)
Cost of services	282,098			211,806		27,672		21,820			23,533			(2,733		)
Gross margin	48,527			37,924		4,893		2,037			3,673			—

Selling, administrative and other operating costs	49,543			30,757		3,888		2,929			11,969			—
Restructuring and severance costs	970			482		138		—			350			—
Operating income (loss)	(1,986		)	6,685		867		(892		)	(8,646		)	—
Other income (expense), net	(2,231		)
Income tax provision	393
Net loss	$	(4,610	)



	Nine Months Ended July 30, 2017
	Total			North American Staffing			International Staffing		Technology Outsourcing Services and Solutions		Corporate and Other (1)			Eliminations (2)
Net revenue	$	905,953		$	695,041		$	89,599	$	74,493	$	51,371		$	(4,551	)
Cost of services	766,225			592,504			75,786		60,196		42,290			(4,551		)
Gross margin	139,728			102,537			13,813		14,297		9,081			—

Selling, administrative and other operating costs	146,992			90,695			11,895		10,625		33,777			—
Restructuring and severance costs	1,072			215			14		39		804			—
Impairment charge	290			—		—	—		—		290			—
Gain from divestitures	(3,938		)	—			—		—		(3,938		)	—
Operating income (loss)	(4,688		)	11,627			1,904		3,633		(21,852		)	—
Other income (expense), net	(5,331		)
Income tax provision	930
Net loss	$	(10,949	)



	Nine Months Ended July 31, 2016
	Total			North American Staffing		International Staffing		Technology Outsourcing Services and Solutions		Corporate and Other (1)			Eliminations (2)
Net revenue	$	993,169		$	739,186	$	99,766	$	76,052	$	87,201		$	(9,036	)
Cost of services	847,602			633,139		85,133		63,583		74,783			(9,036		)
Gross margin	145,567			106,047		14,633		12,469		12,418			—

Selling, administrative and other operating costs	153,294			92,418		12,453		9,833		38,590			—
Restructuring and severance costs	4,571			1,074		608		225		2,664			—
Gain from divestitures	(1,663		)	—		—		—		(1,663		)	—
Operating income (loss)	(10,635		)	12,555		1,572		2,411		(27,173		)	—
Other income (expense), net	(4,685		)
Income tax provision	2,037
Net loss	$	(17,357	)

(1) Revenues are primarily derived from managed service programs and information technology infrastructure services through the date of the sale of Maintech.

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