EXHIBIT 99.1
FOR IMMEDIATE RELEASE
INVESTOR CONTACT: INVESTOR CONTACT: MEDIA CONTACT:
Peggy Jo Toth Todd A. Fromer Kerri Budde
248-644-0500 ext. 42873 KCSA 248-554-6532
vsih@vsi-hq.com 212-682-6300 kbudde@vsi-hq.com
tfromer@kcsa.com
VSI HOLDINGS, INC. ANNOUNCES PRELIMINARY 2001
FISCAL YEAR-END RESULTS
LOSSES DRIVEN BY AUTO INDUSTRY CUTBACKS & FOCUS ON BUYER
INCENTIVES
BLOOMFIELD HILLS, MICH. DECEMBER 21, 2001 -- VSI HOLDINGS, INC. (AMEX:VIS) today
announced that preliminary unaudited results for the fiscal year ending
September 30, 2001, reflect a 33% downturn in revenues and a per share loss of
$0.64, basic and diluted. In the prior fiscal year, VSI Holdings reported
revenues of $187 million and earnings per share of $0.17.
Commenting on the preliminary results, Steve Toth Jr., Chairman and
Chief Executive Officer of VSI Holdings, said, "Our business was impacted by an
unanticipated economic slowdown that began in the spring of 2001. This downturn
accelerated, becoming severe, causing our automotive clients to make large
cutbacks in spending which resulted in a number of cancellations and delays of
scheduled projects and engagements, many of which were slated for the third and
fourth quarters of our fiscal year. After taking into account the need to
preserve human capital and our core competencies to provide viable resources, we
took aggressive steps to right-size our operations. While the extent of the
impact from the current industry-wide reversal remains difficult to gauge, we
expect the effects of our restructuring actions to yield in excess of $17
million in operational savings in our upcoming 2002 fiscal year."
The Company noted that during the third and fourth fiscal quarters of
2001, the profit scoreboards of their automotive clients caused further
industry-wide pressures. The automotive companies reacted by demanding
give-backs and contract renegotiations, several of which were retroactive to the
beginning of fiscal 2001 and diverted an unprecedented volume of funds to buyer
incentive programs such as zero percent financing, which negated brand support
initiatives and
training budgets. These renegotiations compounded the negative impact on VSI's
2001 fiscal year revenue and earnings results.
Our Venture Capital Group was also affected by the poor economic environment.
"We incurred $5.3 million in write-downs associated with our investments in
technology and entertainment, specifically, a $2.0 million charge for the
write-down of our investment in an online automotive transaction system and a
$3.3 million write-down associated with our investment in a planned theme park
based on the AOL TimeWarner property, The Wizard of Oz," stated Toth.
"We anticipate our net loss for fiscal year 2001 will be approximately $21.2
million, representing the collective effect of an industry-wide drought in new
business opportunities coupled with restructuring costs, technology cost
overruns, additional one-time lay-off charges and costs related to our
unresolved merger with SPX Corporation, which is currently in litigation.
"Given the uncertain outlook for the economy, we are exploring alternatives to
maximize shareholder value including selling of certain lines of the business
and identifying suitable investment partnerships that could provide capital and
counsel for appropriate acquisitions or mergers. The objective of this effort is
to better utilize our capacity and to enter into new markets that will diversify
our products and services. We believe companies in the communications and
education industries have been severely impacted by the downturn. There seem to
be numerous cost saving applications and possible combinations with a variety of
related businesses which could provide an opportunity for us to consolidate the
fragmented industries we serve. There are no assurances that our efforts will be
successful," concluded Toth.
ABOUT VSI HOLDINGS, INC.
The VSI Networks provide customer relationship management services,
Internet/Intranet communications, education and training, and
edutainment/entertainment. The Company employs approximately 1,000 professionals
through its networks and offers integrated marketing services using a wide range
of technology-driven alternatives.
The spectrum of services of the Networks include concept development through
implementation of Web-based offerings including seamless CRM/e-commerce
integration, customer interaction center and back-end fulfillment; long-form
cable programming; interactive satellite-driven and Web-based education and
e-learning; integrated logistics and distribution; database management;
site-based
marketing and touring events. Information about VSI Holdings is available on
their Web site at www.vsiholdings.com.
VSINETWORKS ... PEOPLE WHO GET IT!
- MORE -
Year Ended September 30
-----------------------------------
Unaudited Audited
2001 2000
- -------------------------------------------------------------------------------------------------
Revenue $124,581,000 $187,255,000
Expenses
Cost of revenue 54,401,000 82,471,000
Operating expenses 91,667,000 90,737,000
---------------- ---------------
Total expenses 146,068,000 173,208,000
--------------- ---------------
Operating Income (Loss) (21,487,000) 14,047,000
Other Income (Expenses)
Permanent impairment on investments (5,318,000) -
Equity in losses of unconsolidated investee (23,000) (1,515,000)
Interest income and other income (expense) 521,000 69,000
Gain (loss) on sale of assets (300,000) 168,000
Interest expense (3,663,000) (3,708,000)
----------------- ----------------
Total other expenses (8,783,000) (4,986,000)
----------------- ----------------
Income (Loss) - Before income taxes (30,270,000) 9,061,000
Provision for (Benefit from) Income Taxes (9,061,000) 3,511,000
----------------- ----------------
Net Income (Loss) (21,209,000) 5,550,000
Other Comprehensive Income (Expense) - Net of tax
Foreign currency translation adjustment (49,000) (17,000)
Unrealized gain (loss) on securities (2,154,000) (1,108,000)
----------------- ----------------
Total other comprehensive income
(expense) (2,203,000) (1,125,000)
----------------- ----------------
Comprehensive Income (Loss) $ (23,412,000) $ 4,425,000
=============== ===============
Certain statements included in this press release are forward looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended, and are subject
to the safe harbor created thereby. These statements involve a number of risks,
uncertainties, and other factors including potential changes in market
conditions that could cause actual results to differ materially. Please refer to
the Company's filings with the Securities and Exchange Commission for a
discussion of certain important factors that relate to forward looking
statements contained herein. Although the Company believes that the expectations
reflected in any such forward looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct.
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