Washington, D.C. 20549

Commission File Number: 001-09232

Registrant's telephone number, including area code:

(212) 704-2400

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    x   Yes     ¨   No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     x   Yes    ¨   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes   ¨     No x

As of September 1, 2015, there were 20,799,716 shares of common stock outstanding.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

See accompanying Notes to Condensed Consolidated Financial Statements.

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(unaudited)

See accompanying Notes to Condensed Consolidated Financial Statements.

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share amounts)

See accompanying Notes to Condensed Consolidated Financial Statements.

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

See accompanying Notes to Condensed Consolidated Financial Statements.

VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

For the Fiscal Periods Ended August 2, 2015 and August 3, 2014

(Unaudited)

NOTE 1: Basis of Presentation

Basis of Presentation

The accompanying interim condensed consolidated financial statements of Volt Information Sciences, Inc. ("Volt" or the "Company") have been prepared in conformity with generally accepted accounting principles in the United States, consistent in all material respects with those applied in the Annual Report on Form 10-K for the year ended November 2, 2014. The Company makes estimates and assumptions that affect the amounts reported. Actual results could differ from those estimates and changes in estimates are reflected in the period in which they become known. Accounting for certain expenses, including income taxes, are based on full year assumptions, and the financial statements reflect all normal adjustments that, in the opinion of management, are necessary for fair presentation of the interim periods presented. The interim information is unaudited and is prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"), which provides for omission of certain information and footnote disclosures. This interim financial information should be read in conjunction with the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended November 2, 2014.

Restatement, investigations and remediation costs are discussed further in the Company's Form 10-K for the fiscal year ended November 2, 2014, and are comprised of financial and legal consulting, audit and related costs incurred for the completion of delayed filings required under SEC regulations.

Certain reclassifications have been made to the prior year financial statements in order to conform to the current year's presentation.

NOTE 2: Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption.

Recently Adopted Accounting Standards

In May 2015, the FASB issued Accounting Standards Update ("ASU") No. 2015-08, Business Combinations (Topic 805): Pushdown Accounting - Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115 (SEC Update) . This ASU supersedes several paragraphs in Accounting Standards Codification ("ASC") 805-50. The amendments remove references to Staff Accounting Bulletin Topic 5.J and are effective immediately. The adoption of this ASU did not have a material impact on our consolidated financial statements.

New Accounting Standards Not Yet Adopted by the Company

In August 2015, FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements .   ASU 2015-15 clarifies the guidance in ASU 2015-03 regarding presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. The SEC Staff announced they would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This ASU requires an entity to measure inventory at the lower of cost or net realizable value ("NRV"). NRV is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The ASU excludes inventory measured using the last-in, first-out and retail inventory methods. This ASU is effective for reporting periods beginning after December 15, 2016, including interim periods within those fiscal years. The amendments should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period.

In June 2015, the FASB issued ASU No. 2015-10, Technical Corrections and Improvements. This ASU covers a wide range of Topics in the Codification. The amendments in this ASU represent changes to clarify the Codification, correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost on most entities. The amendments that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. All other amendments will be effective upon the issuance of this ASU.

In April 2015, the FASB issued ASU No. 2015-05, Customers' Accounting for Fees Paid in a Cloud Computing Arrangement . The ASU provides guidance in evaluating whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the software license element of the arrangement should be accounted for as an acquisition of a software license. If the arrangement does not contain a software license, it should be accounted for as a service contract. This ASU is effective for reporting periods beginning after December 15, 2015 and may be adopted either retrospectively or prospectively.

In April 2015, the FASB issued ASU No. 2015-03 , Simplifying the Presentation of Debt Issuance Costs. The ASU requires that debt issuance costs related to a recognized liability be presented on the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. This ASU is effective for reporting periods beginning after December 15, 2015.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new consolidation standard changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a variable interest entity ("VIE"), and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is allowed, including early adoption in an interim period. A reporting entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively.

In January 2015, the FASB issued ASU No. 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. The new guidance eliminates the separate presentation of extraordinary items, net of tax and the related earnings per share, but does not affect the requirement to disclose material items that are unusual in nature or infrequently occurring. The ASU applies to all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Entities have the option to apply the new guidance prospectively or retrospectively, and can choose early adoption.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) . Upon the effective date, the ASU replaces almost all existing revenue recognition guidance, including industry specific guidance, in generally accepted accounting principles. This standard is effective for fiscal years and interim reporting periods beginning after December 15, 2016. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date.  The amendments in this update deferred the effective date for implementation of ASU 2014-09 by one year and is now effective for annual reporting periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2016 including interim reporting periods within that period.  The Company is currently assessing the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures upon implementation in the first quarter of fiscal year 2019.

NOTE 3: Discontinued Operations

On December 1, 2014, the Company completed the sale of its Computer Systems segment to NewNet Communication Technologies, LLC ("NewNet"), a Skyview Capital, LLC, portfolio company. The Company met all of the criteria to classify that segment's assets and liabilities as held for sale in the fourth quarter of fiscal year 2014. The results of the Computer Systems segment are presented as discontinued operations and excluded from continuing operations and from segment results for all periods presented. 

The proceeds of the transaction are a $10.0 million note bearing interest at one half percent ( 0.5 percent) per year due in four years and convertible into a capital interest of up to 20% in NewNet. The Company may convert the note at any time and is entitled to receive early repayment in the event of certain events such as a change in control of NewNet. The proceeds are in exchange for the ownership of Volt Delta Resources, LLC and its operating subsidiaries, which comprised the Company's Computer Systems segment, and payment of $4.0 million by the Company during the first 45 days following the transaction. An additional payment is anticipated to be made between the parties based on the difference between the actual transaction date working capital amount and $6.0 million (the contractually agreed upon working capital amount). The note was valued at $8.4 million on the transaction date which approximates its fair value. The resulting discount will be amortized over four years with an effective interest rate of 5.1% .

As of August 2, 2015 the unamortized discount for the note is $1.4 million and the interest income resulting from the amortization for the three and nine months ended August 2, 2015 is $0.1 million and $0.3 million , respectively.

The Company recognized a loss on disposal of $1.2 million from the sale transaction in the first quarter of 2015. The total related costs associated with this transaction were $2.2 million comprised of $0.9 million in severance costs, $0.9 million of professional fees and $0.4 million of lease obligation costs. These costs are recorded in discontinued operations in the Condensed Consolidated Statements

of Operations. As of August 2, 2015, $1.9 million has been paid and $0.3 million remains payable and is included in accrued insurance and other in the Condensed Consolidated Balance Sheets.

The following table reconciles the major classes of net assets and liabilities classified as held for sale in the Condensed Consolidated Balance Sheet (in thousands):

Deferred tax assets of $6,842 are included above in prepaid insurance and other assets as of November 2, 2014. Deferred tax liabilities of $3,834 are included above in accrued insurance and other as of November 2, 2014.

The following table reconciles the major line items in the Condensed Consolidated Statements of Operations for discontinued operations (in thousands):

NOTE 5: Restricted Cash and Short-Term Investments

Restricted cash and short-term investments include amounts related to requirements under certain contracts with managed service program customers for whom the Company manages the customers' contingent staffing requirements. This includes processing of associate vendor billings into single, combined customer billings and distribution of payments to associate vendors on behalf of customers, as well as minimum cash deposits required to be maintained as collateral associated with the Company's Short-Term Credit Facility. Distribution of payments to associate vendors are generally made shortly after receipt of payment from customers, with undistributed amounts included in restricted cash and accounts payable between receipt and distribution of these amounts. Changes in restricted cash collateral for credit facilities are reflected in financing activities while changes in restricted cash under managed service programs are classified as an operating activity, as this cash is directly related to the operations of this business.

At August 2, 2015 and November 2, 2014, restricted cash included $6.1 million and $16.4 million , respectively, restricted for payment to associate vendors and $0.9 million and $0.1 million , respectively, restricted for other collateralized accounts. In addition, $10.4 million was restricted as collateral under the Short-Term Credit Facility at November 2, 2014. Short-term investments consisted of the fair value of deferred compensation investments corresponding to employees' selections, primarily in mutual funds, based on quoted prices in active markets and amounted to $5.2 million and $5.5 million at August 2, 2015 and November 2, 2014, respectively.

NOTE 6: Income Taxes

The income tax provision reflects the geographic mix of earnings in various federal, state and foreign tax jurisdictions and their applicable rates resulting in a composite effective tax rate. The Company's cumulative results for substantially all United States and certain non-United States jurisdictions for the most recent three-year period is a loss. Accordingly, a valuation allowance has been established for substantially all loss carryforwards and other net deferred tax assets for these jurisdictions, resulting in an effective tax rate that is significantly different than the statutory rate.

The Company's provision for income taxes primarily includes foreign jurisdictions and state taxes. The provision for income taxes in the third quarter of fiscal 2015 and 2014 was $1.4 million and $0.7 million , respectively, and for the nine months ended August 2, 2015 and August 3, 2014 was $ 3.3 million and $4.1 million , respectively. The Company's quarterly provision for income taxes is measured using an estimated annual effective tax rate, adjusted for discrete items that occur within the periods presented.

The Company adjusts its effective tax rate for each quarter to be consistent with the estimated annual effective tax rate, consistent with ASC 270, " Interim Reporting ," and ASC 740-270, " Income Taxes – Intra Period Tax Allocation ." Jurisdictions with a projected loss for the full year where no tax benefit can be recognized are excluded from the calculation of the estimated annual effective tax rate. The Company's future effective tax rates could be affected by earnings being different than anticipated in countries with differing statutory rates, increases in recorded valuation allowances of tax assets, or changes in tax laws.

NOTE 7: Debt

On August 1, 2015, the Company entered into a one -year, $150.0 million Short-Term Financing Program with PNC Bank, National Association ("PNC") under a credit agreement secured by receivables from certain Staffing Services businesses in the United States, United Kingdom and Canada that are sold to a wholly-owned, consolidated, bankruptcy remote subsidiary. The bankruptcy remote subsidiary's sole business consists of the purchase of the receivables and subsequent granting of a security interest to PNC under the program, and the assets are available first to satisfy PNC and are not available to pay creditors of the Company's other legal entities. Borrowing capacity of the Short-Term Financing Program is directly impacted by certain Staffing Services businesses level of accounts receivable. The new Short-Term Financing Program expires on July 28, 2016 and replaced our previous short-term financing program with PNC. The financing fees incurred will be amortized through July 2016. Proceeds from the new program were used to satisfy the outstanding balance under the previous program.

The Short-Term Financing Program contains a revolving credit provision under which proceeds can be drawn for a definitive period of 30, 60, 90 or 180 days based on an adjusted Libor indexed rate in effect for that period. In addition to available funds in United States dollars, drawings can be denominated in Canadian dollars, subject to a Canadian dollar $30.0 million limit, and British Pounds Sterling, subject to a £20.0 million limit. The new program also includes a letter of credit sublimit of $50.0 million . As of August 2, 2015, there were no foreign currency denominated borrowings or letters of credit issued under these sublimits.

In addition to customary representations, warranties and affirmative and negative covenants, the program is subject to interest coverage and minimum liquidity covenants. Covenant requirements under the new program begin in the fourth quarter of 2015.

At August 2, 2015 and November 2, 2014, the Company had outstanding borrowings under these programs of $125.0 million and $120.0 million , respectively, which carried weighted average annual interest rates of 1.7% during the third quarter of fiscal 2015 and

2014, and 1.7% and 1.6% during the first nine months of 2015 and 2014, respectively, which is inclusive of certain facility and program fees. At August 2, 2015, there was $8.9 million available under the Short-Term Financing Program.

The Company terminated its $45.0 million Short-Term Credit Facility with Bank of America, N.A., as Administrative Agent, effective June 8, 2015. At November 2, 2014, the Company had the equivalent of $8.5 million outstanding, used primarily to hedge the Company's net investment in certain foreign subsidiaries. The Company does not designate and document these instruments as hedges under ASC 815 "Derivatives and Hedges," and as a result gains and losses associated with these instruments are included in Foreign exchange gain (loss), net in the Condensed Consolidated Statements of Operations. During both the third quarter and the first nine months of fiscal 2014, borrowings under the Short-Term Facility carried a weighted average annual interest rate of 1.9% , which is inclusive of the facility fee.

At August 2, 2015 and November 2, 2014, the Company had $7.5 million and $8.1 million of long-term debt, respectively, of which $1.0 million and $0.9 million was current, respectively.

NOTE 8: Earnings (Loss) Per Share

Basic and diluted net income (loss) per share is calculated as follows (in thousands, except per share amounts):

Options to purchase 1,007,911 and 789,850 shares of the Company's common stock were outstanding at August 2, 2015 and August 3, 2014, respectively. Additionally, there were 42,000 and 50,001 restricted shares outstanding at August 2, 2015 and August 3, 2014, respectively. The options and restricted shares were not included in the computation of diluted earnings (loss) per share in the three and nine months of fiscal 2015 and in the nine months of fiscal 2014 because the effect of their inclusion would have been anti-dilutive as a result of the Company's net loss position in those periods.

On June 25, 2015, the Company approved compensation arrangements for its non-executive directors and interim President and Chief Executive Officer. Pursuant to the compensation arrangements, 356,725 stock options and 122,819 restricted shares were granted.   All amounts vested on the date of grant with the exception of 42,000 restricted shares and 100,000 stock options that vest through December 25, 2015. Total compensation expense incurred for these grants during the third quarter of 2015 approximated $1.6 million .

Share Repurchase Plan

On January 14, 2015, the Board of Directors approved a new 36-month share repurchase program of up to 1,500,000 shares of the Company's common stock to begin on January 19, 2015, replacing a prior program. Such repurchases will be made through open market or private transactions. Share repurchases under the program will be subject to specified parameters and certain price and volume restraints and any repurchased shares will be held in treasury. The exact number and timing of share repurchases will depend upon market conditions and other factors.  

The Company repurchased 340,800 shares of common stock at an average purchase price of $12.50 per share for an aggregate amount of $4.3 million . As of August 2, 2015, the Company had 1,159,200 shares available for repurchase.

NOTE 9: Impairment Charges

Impairment of Net Assets

During the second quarter of 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 $4.4 million were fully impaired during the second quarter of 2015 and were recorded as an impairment charge. During the third quarter of 2015, the Company recorded an adjustment of $1.6 million to the impairment of the net assets primarily related to valuation allowances on the impaired deferred tax assets.  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 and recognized a nominal amount of loss on sale in the third quarter of 2015 which is included in other income (expense) in the Condensed Consolidated Statements of Operations. 

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 2015, as a result of this evaluation, it was determined that $1.9 million of previously capitalized internally developed software 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 August 2, 2015 and is expected to be recovered from existing and future technology projects.

Impairment of Goodwill

The Company performed its annual impairment test for goodwill during the second quarter of 2015.  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 the staffing reporting unit in Uruguay 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 2015.

The Company performs its annual impairment review of goodwill in its second fiscal quarter and when a triggering event occurs between annual impairment tests.

NOTE 10: Commitments and Contingencies

The Company is involved in various claims and legal actions arising in the ordinary course of business in both our Staffing and Other segments. The Company's loss contingencies not discussed elsewhere consist primarily of contingent worker employment matters in the Staffing Services segment. The Company has accrued for losses on individual matters that are both probable and reasonably estimable.

In July 2013, Oracle Corporation brought suit against the Company alleging copyright infringement and related claims. The complaint alleged that the Company's information technology infrastructure business provided customer installation services of software updates for Oracle's computer operating system software and system firmware without appropriate authorization or license.

On May 6, 2015, the Company settled the lawsuit with Oracle on monetary and non-monetary terms.  The net amount paid by the Company to Oracle, after amounts covered by the Company's insurance policies, was $400,000 . This amount is included within the Other segment's selling, administrative and other operating costs.

Estimates are based on currently available information and assumptions. Significant judgment is required in both the determination of probability and the determination of whether a matter is reasonably estimable. The Company's estimates may change and actual expenses could differ in the future as additional information becomes available.

Except for states that require participation in state-operated workers' compensation insurance funds, liability for workers' compensation as well as automobile and general liability is insured under a retrospective experience-rated insurance program for losses exceeding specified deductible levels. The Company is self-insured for losses below the specified deductible limits. The Company has deposited approximately $26.5 million , representing numerous open plan years, with the insurance company to satisfy the carrier's collateral requirements and fund potential future claims. Adjustments to the collateral amount are determined periodically up to three or four years after the end of the respective policy year, using the level of claims paid and incurred. This balance is included within prepaid insurance and other current assets as well as prepaid insurance and other assets, excluding the current portion in the Condensed Consolidated Balance Sheets.

The Company indemnifies its officers, directors and certain employees for certain events or occurrences while the employee, officer or director is, or was, serving at the Company's request in such capacity, as permitted under New York law.

NOTE 11: Segment Data

The Company's operating segments are determined in accordance with the Company's internal management structure, which is based on operating activities.

Segment operating income (loss) is comprised of segment net revenues less direct cost of staffing services revenue or cost of other revenue, selling, administrative and other operating costs, impairment charges and restructuring costs. The Company allocates all operating costs to the segments except for costs not directly relating to operating activities such as corporate-wide general and administrative costs and fees related to restatement, investigations and remediation. These costs are not allocated as they do not enhance the understanding of segment operating performance and they are not used by management to measure segment performance.

NOTE 12: Subsequent Events

On August 31, 2015, the Company completed the sale of certain working capital assets of its telecommunication infrastructure and security services business for nominal proceeds.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 should be read in conjunction with the MD&A included in our Form 10-K for the fiscal year ended November 2, 2014, as filed with the SEC on January 20, 2015 (the "2014 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 2014 Form 10-K.

Note Regarding the Use of Non-GAAP Financial Measures

We have provided certain Non-GAAP financial information, which includes adjustments for special items, as additional information for our consolidated income (loss) from continuing operations and segment operating income (loss). These measures are not in accordance with, or an alternative for, generally accepted accounting principles ("GAAP") and may be different from Non-GAAP measures reported by other companies. We believe that the presentation 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 it permits evaluation of the results of our continuing operations without the effect of special items that management believes make it more difficult to understand and evaluate our results of operations.

Overview

We are an international provider of staffing services (traditional time and materials-based as well as project-based), information technology infrastructure services and telecommunication infrastructure and security services. Our staffing services consist of workforce solutions that include providing contingent workers, personnel recruitment services, and managed staffing services programs supporting primarily light industrial, professional administration, technical, information technology and engineering positions. Our project-based staffing assists with individual customer assignments as well as customer care call centers and gaming industry quality assurance testing services, and our managed service programs consist of managing the procurement and on-boarding of contingent workers from multiple providers. Our information technology infrastructure services provide server, storage, network and desktop IT hardware maintenance, data center and network monitoring and operations.

As of August 2, 2015, we employed approximately 28,000 people including 25,300 contingent workers. Contingent workers are on our payroll for the length of their assignment. We operate from 150 locations worldwide with approximately 90% of our revenues generated in the United States. Our principal international markets include Canada and the United Kingdom and we have a presence in continental Europe and Asia. The industry is highly fragmented and very competitive in all of the markets we serve.

Our strengths are our strong brand, the technical capabilities of our contingent workforce and our longstanding relationships with our customers. We continued to make progress towards our primary goal of making Volt a more highly focused and profitable business which is committed to margin improvement.  We believe our focus on improved profitability and ongoing improvements in the delivery of our staffing services will ultimately drive higher revenues at improved margins. We will continue to focus on expanding our revenue from skill sets in more profitable vertical sectors in addition to increasing our share of customer engagements. We remain focused on strengthening our traditional time and material staffing services, improving our direct margin on new and existing customer contracts, disposing non-core assets not aligned with our overall portfolio, as evidenced by the sale of our publishing and printing business in Uruguay during the third quarter of 2015, investing in areas of growth and evaluating opportunities to reduce costs and drive process efficiencies. We remain committed to delivering superior client service at a reasonable cost. In an effort to reduce our operating costs, we are evaluating the efficiency of our current business delivery model, supply chain and back office support functions. The implementation of additional technology tools will provide operating leverage and efficiencies. We expect that these activities will reduce costs of service through either the consolidation and or elimination of certain systems and processes along with other reductions in discretionary spending. Through our strategy of improving efficiency in all aspects of our operations, we believe we can realize organic growth opportunities, reduce costs and increase profitability.

The loss in the third quarter of fiscal 2015 from continuing operations of $4.1 million was driven primarily by a number of special items. These special items comprise of $1.9 million of severance and related costs primarily related to the departure of our former Chief Executive Officer in addition to increased stock-based compensation expense of $1.5 million for grants provided to our new Board of Directors, $0.6 million of impairments and $0.4 million of legal and other items. Additionally, we operate several businesses in a wide range of countries, and our foreign exchange exposure is in part related to these businesses. For each of the assets and liabilities we hold in foreign currencies, we are required to record the change in market value of these assets and liabilities within our statements of operations. During the third quarter, the non-cash foreign exchange translation gain on our intercompany balances amounted to approximately $1.0 million. Excluding the impact of the aforementioned special items of $3.4 million, loss from

continuing operations for the third quarter of 2015 would have been $0.7 million on a Non-GAAP basis. The income from continuing operations in the third quarter of fiscal 2014 of $3.4 million included restructuring charges of $0.1 million and foreign exchange translation loss of $0.1 million. Excluding the impact of the aforementioned special items of $0.2 million, income from continuing operations for the third quarter of 2014 would have been $3.6 million on a Non-GAAP basis.

The following discussion and analysis of operating results is presented at the reporting segment level. Since this discussion would be substantially the same at the consolidated level, we have therefore not included a redundant discussion from a consolidated view.  

RESULTS OF CONTINUING OPERATIONS

Results of Operations (Q3 2015 vs. Q3 2014)

Staffing Services Segment

Net revenue : The segment's net revenue in the third quarter of fiscal 2015 decreased $55.6 million , or 14.0% , to $341.4 million from $397.0 million in fiscal 2014. The revenue decline is primarily driven by lower demand from our customers in both our technical and non-technical administrative and light industrial ("A&I") skill-sets as well as a change in overall mix from technical to A&I skill-sets. Declines were most prevalent in the Manufacturing, Utilities and Oil & Gas industries as they continued to experience a slowdown in demand.

Direct cost of staffing services revenue : Direct cost of staffing services revenue in the third quarter of 2015 decreased $48.6 million , or 14.4% , to $288.7 million from $337.3 million in 2014. This decrease was primarily the result of fewer contingent staff on assignment consistent with the decrease in revenues. Direct margin of staffing services revenue as a percent of staffing revenue was 15.4% compared to 15.0% in 2014. The direct margin increased primarily due to improvements in our project-based and managed service programs.

Selling, administrative and other operating costs : The segment's selling, administrative and other operating costs in the third quarter of 2015 decreased $3.6 million , or 7.2% , to $46.8 million from $50.4 million in 2014, primarily due to lower recruiting and delivery costs, as well as lower discretionary costs as part of our cost reduction initiatives. As a percent of staffing revenue, these costs were 13.7% in the third quarter of 2015 from 12.7% in the third quarter of 2014.

Impairment charges : The $2.1 million charge is primarily related to an impairment of previously capitalized internally developed software as it was no longer expected to provide future value in light of an anticipated technology upgrade.

Segment operating income : The segment's operating income in the third quarter of 2015 decreased $5.8 million to $3.4 million from $9.2 million in 2014. The decrease is primarily due to the decline in revenue as well as the impairment of internally developed software. These decreases to operating income were partially offset by an increase in the direct margin percentage as well as a decrease in selling, administrative and other operating costs. Segment operating income of $3.4 million included $2.5 million of special items related to impairment and restructuring costs. Excluding the impact of these special items, segment operating income would have been $5.9 million on a Non-GAAP basis. Operating income in 2014 of $9.2 million included a special item related to restructuring costs which had an immaterial impact on our Non-GAAP operating income.

Other Segment

Net revenue : The segment's net revenue in the third quarter of fiscal 2015 decreased $2.4 million , or 9.3% , to $23.3 million from $25.7 million in fiscal 2014. This decline is primarily due to lower telecommunications infrastructure and security services revenue as we exited the government solutions business during 2014, lower information technology infrastructure services revenue primarily in our sub-contractor revenue solution as the prime contractors were not awarded contract renewals as well as a large project that occurred in the third quarter of 2014, partially offset by increased revenue from publishing and printing in Uruguay.

Cost of other revenue : The segment's cost of other revenue in the third quarter of 2015 decreased $2.6 million , or 11.8% , to $19.7 million from $22.3 million in 2014. This decrease was primarily a result of lower costs in our information technology infrastructure services primarily from reduced headcount and other cost reductions related to the decrease in revenue, as well as in our telecommunications infrastructure and security services resulting from our exit of the telecommunications government solutions business, partially offset by increased costs from publishing and printing in Uruguay.

Selling, administrative and other operating costs : The segment's selling, administrative and other operating costs decreased $0.2 million , or 4.6% , to $4.2 million in the third quarter of 2015 from $4.4 million in 2014, primarily from reductions in our telecommunications infrastructure and security services resulting from our exit of the telecommunications government solutions business.

Impairment charges : In the third quarter of 2015, an adjustment of $1.6 million was recorded to the impairment charge recorded in the second quarter of 2015 related to valuation allowances on impaired deferred tax assets.  

Segment operating income (loss) : The segment's operating results in the third quarter of 2015 increased $2.0 million to operating income of $0.9 million from an operating loss of $1.1 million in 2014 primarily due to the adjustment of the impairment charge recorded in the second quarter of 2015 related to valuation allowances on impaired deferred tax assets.

Corporate and Other Expenses

Corporate general and administrative costs: Corporate general and administrative costs increased $2.9 million , or 96.4% , to $5.9 million from $3.0 million in 2014 primarily from increased stock-based compensation provided to our new Board of Directors and professional fees.

Corporate restructuring costs: Corporate restructuring costs of $1.5 million included severance charges associated with the departure of our former Chief Executive Officer.

Operating income (loss) : Operating results in the third quarter of 2015 decreased to an operating loss of $3.1 million from operating income of $5.1 million in 2014. This decrease was primarily from decreased operating results within our Staffing Services segment as well as an increase in our Corporate costs in connection with severance and related costs incurred with the departure of our former Chief Executive Officer as well as increased stock-based compensation.

Other income (expense), net : Other expense in the third quarter of 2015 decreased $1.2 million to income of $0.3 million from an expense of $0.9 million in 2014, primarily related to non-cash foreign exchange net gain/losses on intercompany balances.

Income tax provision : Income tax provision was $1.4 million compared to $0.7 million in the third quarter of 2015 and 2014, respectively. The provision in both periods primarily related to locations outside of the United States.