EXHIBIT 99.1
Volt Information Sciences Reports Fourth Quarter and Fiscal Year
Earnings
NEW YORK--(BUSINESS WIRE)--Jan. 11, 2005--Volt Information
Sciences, Inc. (NYSE:VOL) today reported financial results for the
Company's fourth quarter and fiscal year ended October 31, 2004.
Volt will conduct a conference call webcast at 11:00 A.M. (EST)
today to discuss fourth quarter and 2004 fiscal year results. The
conference call dial-in number is 1-888-664-9852 (domestic) or
1-517-319-9392 (international), passcode: Fourth Quarter. The
conference call will be broadcast live over the Internet and can be
accessed for the next 30 days at
http://www.volt.com/investor/press_release.cfm.
Attached is a summary of the Company's results of operations and
the notes thereto. The notes are an integral part of the summary.
FOURTH QUARTER - FISCAL 2004 RESULTS
For the fourth quarter ended October 31, 2004, the Company
reported net income of $11.5 million, or $0.75 per share, on net sales
of $531.6 million, compared to net income of $6.2 million, or $0.40
per share, for the comparable quarter of the previous year, on net
sales of $436.2 million as restated. (See Restatement below and Note A
as to the restatement of the results of its directory operations in
Uruguay, which resulted in moving $2.5 million in net sales and $0.7
million in net income from the fourth quarter of fiscal 2003 to the
first half of fiscal 2004.)
Income from continuing operations for the 2004 fiscal fourth
quarter included a gain from the sale of real estate of $3.3 million
($2.0 million, net of taxes, or $0.13 per share).
FISCAL YEAR 2004 RESULTS
For the twelve months of fiscal 2004, the Company reported net
income of $33.7 million, or $2.20 per share, on net sales of $1.9
billion, compared to net income of $4.2 million, or $0.28 per share,
on net sales of $1.6 billion for the previous year as restated. (See
Restatement below and Note A.)
The Company reported income from continuing operations of $24.2
million, or $1.58 per share, in fiscal 2004 compared with $4.2
million, or $0.28 per share, in fiscal 2003 as restated. Income from
continuing operations for the fiscal year 2004 included the fourth
quarter gain from the sale of real estate of $3.3 million ($2.0
million, net of taxes, or $0.13 per share).
The results of fiscal 2004 also included income from discontinued
operations of $14.1 million ($9.5 million net of taxes, or $0.62 per
share) from the second quarter gain on the sale of real estate
previously leased to the Company's formerly 59% owned subsidiary,
Autologic Information International, Inc. The Company's interest in
the subsidiary was sold in November 2001.
William Shaw, President and Chairman stated, "The improvement in
results for each of our segments, not only for the year, but also
continuing into the fourth quarter against comparable fiscal 2003 year
and quarter comparison, is a strong signal of the continuing growth of
all of our major business units. While increased profitability of a
fiscal year that has now passed is always satisfying, it is the raised
platform of business in many areas that provides optimism for the
coming year."
Mr. Shaw also commented, "Of particular note is the strong
performance of the Computer Systems segment, both for the year and the
fourth quarter, and its successful integration of the Operator
Services business of Nortel, acquired in August of this year."
RESTATEMENT
The Company will restate its previously issued financial
statements for fiscal years 2000 through 2003 and the first two
quarters of fiscal year 2004 as a result of inappropriate application
of accounting principles for revenue recognition by its telephone
directory publishing operation in Uruguay. The operations in Uruguay
are not a significant part of the Company's business. Uruguay reported
for fiscal year 2004 net sales of $6.2 million, compared to the
Company's net sales of $1.9 billion, and reported a net loss of $2.1
million, compared to the Company's net income of $33.7 million. For
fiscal year 2003 Uruguay reported net sales of $6.8 million, compared
to the Company's net sales of $1.6 billion, and reported a net loss of
$1.6 million compared to the Company's net income of $4.2 million. The
operation in Uruguay printed and distributed its Montevideo directory
each year during the October - November time frame, and the Company
has determined that revenue recognition should have been taken in the
first six months of each year instead of in the fourth quarter of the
prior fiscal year. Thus, the restatement involves only the timing of
when certain advertising revenue and related costs and expenses are
recognized. The revised results will include reduced revenue and
earnings in some periods and increased amounts in others. In
connection with such restatement, the Company will file an amended
Annual Report on Form 10-K for the fiscal year ended November 2, 2003.
(See Note A.)
The Company recently became aware of deficiencies in internal
controls which gave rise to the restatement of revenue of its
Uruguayan directory unit. Mr. Shaw stated, "The Company has instituted
a review of its internal controls to address any deficiencies and
remediate them as soon as possible."
STAFFING SERVICES
The domestic Technical Placement traditional staffing business
continued its growth in both revenue and profitability, with a 21
percent increase in revenue and a 52 percent increase in operating
profit over the comparable fiscal 2003 quarter. Technical staffing
placement continues to be strong for these divisions, producing 45
percent of the segment's revenue in the fourth quarter. VMC Consulting
also increased operating profit by 14 percent, with annual revenue
crossing the $100 million mark for the first time. However, a $0.9
million decrease in ProcureStaff operating profit and a $2.0 million
loss by Volt Europe negatively offset these gains, with operating
profit of the segment increasing by 13 percent over the 2003 fourth
quarter. The loss in Volt Europe resulted primarily from accruals for
management and employee separation charges and costs incurred for a
software development unit of the division recently incorporated into
VMC Consulting. Revenue for the Administrative and Industrial division
increased by 21 percent from fourth quarter 2003, but increases in
employee taxes, as well as increased overhead necessary to handle the
increased revenue, flattened operating profit to slightly above a
break even.
COMPUTER SYSTEMS
Strengthened by the acquisition in August of the Nortel operator
services business, this segment produced excellent results in both the
Information Systems and Maintech divisions. Of particular significance
is the continued increase in transaction revenue for the operator
service outsourcing. Transactions for this fourth quarter increased to
303 million, compared to 173 million in the fourth quarter of 2003.
This increase, along with revenue from the contracts acquired from
Nortel, were the primary reasons for the $11.4 million segment
operating profit, a 106 percent increase from the fiscal 2003 quarter.
TELEPHONE DIRECTORY
The 54 percent increase in operating profit for this segment,
compared to the comparable 2003 quarter, resulted from increases in
operating profit for the combined DataNational directory publishing
division and its directory production unit. The increase for
DataNational resulted from both an increase in revenue and an increase
in operating margins, the latter primarily because of the tighter
control of the credit process. With Uruguay remaining in a depressed
economic condition, our printing and directory publishing operations
in that country reported operating losses of $0.6 million for the 2004
fourth quarter as well as the 2003 fourth quarter. (See Note A.)
Ongoing strategy for DataNational calls for continued development
of paperless directories on the internet. The directory production
unit will concentrate on cost control, both from improvement in
productivity and overhead control, as well as aggressive marketing to
existing and new customers.
TELECOMMUNICATIONS SERVICES
This segment continues to feel the effects of the reduced spending
and problems existing in the telecommunications industry. While the
Business Systems division remains profitable and the Construction and
Engineering division almost broke even in fourth quarter, substantial
losses in the Central Office division resulted in a loss for the
segment in the quarter. Strategy for the next fiscal year calls for
implementation of the design, engineering and installation and
services for Voice over IP equipment and continuing marketing and
sales efforts to create even greater brand capability awareness with
large regional, national and global private sector companies, as well
as federal and state governmental agencies.
LIQUIDITY
Cash and cash equivalents, excluding restricted cash, increased to
$44.3 million at October 31, 2004 from $43.2 million at November 2,
2003. At October 31, 2004, the Company had sold a continuing
participating interest in accounts receivable of $70.0 million under
its securitization program, and had the ability to finance up to an
additional $80.0 million under the facility.
The Company may also borrow under its $30.0 million revolving
secured credit facility. At October 31, 2004, the Company had borrowed
2.0 million British pounds ($3.7 million), under this facility.
Volt Information Sciences, Inc. is a leading national provider of
Staffing Services and Telecommunications and Information Solutions
with a Fortune 100 customer base. Operating through a network of over
300 Volt Services Group branch offices, the Staffing Services segment
fulfills IT and other technical, commercial and industrial placement
requirements of its customers, on both a temporary and permanent
basis. The Telecommunications and Information Solutions businesses,
which includes the Telecommunications Services, Computer Systems and
Telephone Directory segments, provide complete telephone directory
production and directory publishing; a full spectrum of
telecommunications construction, installation and engineering
services; and advanced information and operator services systems for
telephone companies. For additional information, please visit the Volt
Information Sciences, Inc., web site at http://www.volt.com.
This press release contains forward-looking statements which are
subject to a number of known and unknown risks, including general
economic, competitive and other business conditions, the degree and
timing of customer utilization and the rate of renewals of contracts
with the Company, that could cause actual results, performance and
achievements to differ materially from those described or implied in
the forward-looking statements. Information concerning these and other
factors that could cause actual results to differ materially from
those in the forward-looking statements is contained in Company
reports filed with the Securities and Exchange Commission. Copies of
the Company's latest Annual Report on Form 10-K and subsequent
Quarterly Reports on Form 10-Q, as filed with the Securities and
Exchange Commission and the New York Stock Exchange, are available
without charge upon request to Volt Information Sciences, Inc., 560
Lexington Avenue, New York, New York 10022, 212-704-2400, Attention:
Shareholder Relations. These and other SEC filings by the Company are
also available to the public over the Internet at the SEC's website at
http://www.sec.gov and at the Company's website at http://www.volt.com
in the Investor Information section.
VOLT INFORMATION SCIENCES, INC.
AND SUBSIDIARIES
SUMMARY OF RESULTS OF OPERATIONS
FOURTH QUARTER FISCAL YEAR
ENDED ENDED
October November October November
31, 2004 2, 2003 31, 2004 2, 2003
(Restated) (Restated)
--------- --------- --------- -----------
(In thousands, except per share amounts)
Net sales $531,607 $436,243 $1,924,777 $1,609,491
========= ========= ========== ===========
Income before items shown
below $21,191 $10,224 $42,133 $7,121
Minority interest-Note B (2,420) (2,420)
--------- --------- ---------- -----------
Income from continuing
operations before income
taxes 18,771 10,224 39,713 7,121
Income tax provision (7,269) (4,064) (15,517) (2,916)
--------- --------- ---------- -----------
Income from continuing
operations 11,502 6,160 24,196 4,205
Discontinued operations-
Note C - - 9,520 -
--------- --------- ---------- -----------
Net income $11,502 $6,160 $33,716 $4,205
========= ========= ========== ===========
Per Share Data
Basic:
Income from continuing
operations $0.75 $0.40 $1.59 $0.28
Discontinued
operations - - 0.62 -
--------- --------- ---------- -----------
Net income $0.75 $0.40 $2.21 $0.28
========= ========= ========== ===========
Weighted average number
of shares outstanding 15,257 15,220 15,234 15,218
========= ========= ========== ===========
Diluted:
Income from continuing
operations $0.75 $0.40 $1.58 $0.28
Discontinued
operations - - 0.62 -
--------- --------- ---------- -----------
Net income $0.75 $0.40 $2.20 $0.28
========= ========= ========== ===========
Weighted average number
of shares outstanding 15,390 15,235 15,354 15,225
========= ========= ========== ===========
VOLT INFORMATION SCIENCES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET DATA
October 31, November 2,
2004 2003
----------- -----------
(Restated)
Assets (In thousands)
Current Assets
Cash and cash equivalents, including
restricted cash of $43,722 (2004) and
$18,870 (2003)-Note D $88,031 $62,057
Short-term investments 4,248 4,149
Trade receivables, net-Note E 409,130 313,946
Inventories 32,676 37,787
Recoverable income taxes - 3,080
Deferred income taxes 9,385 8,722
Prepaid and other assets 14,847 17,008
----------- -----------
Total Current Assets 558,317 446,749
Property, plant and equipment, net 85,038 82,452
Deposits and other assets 1,539 2,300
Intangible assets, net-Note B 45,142 8,982
----------- -----------
Total Assets $690,036 $540,483
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable to bank $7,955 $4,062
Current portion of long-term debt 399 371
Accounts payable 192,163 153,979
Accrued wages and commissions 54,200 45,834
Accrued taxes other than income taxes 17,729 16,741
Other accruals 36,036 14,673
Deferred income and other liabilities 36,909 30,180
Income taxes payable 4,270 -
----------- -----------
Total Current Liabilities 349,661 265,840
Accrued insurance 86 4,098
Long-term debt 15,588 14,098
Deferred income taxes 11,764 15,252
Minority interest-Note B 36,420
Stockholders' Equity 276,517 241,195
----------- -----------
Total Liabilities and Stockholders'
Equity $690,036 $540,483
=========== ===========
VOLT INFORMATION SCIENCES, INC.
AND SUBSIDIARIES
SUMMARY OF RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
FOURTH QUARTER FISCAL YEAR
ENDED ENDED
October November October November
31, 2004 2, 2003 31, 2004 2, 2003
(Restated) (Restated)
(Dollars in thousands)
Net Sales
- ---------
Staffing Services-Note D
Staffing $434,038 $342,393 $1,584,064 $1,269,242
Managed services 312,266 276,135 1,148,116 1,043,572
----------- --------- ----------- ----------
Total gross sales 746,304 618,528 2,732,180 2,312,814
Less non-recourse
managed services (305,309) (257,576) (1,120,079) (967,379)
----------- --------- ----------- ----------
Net Staffing Services 440,995 360,952 1,612,101 1,345,435
Telephone Directory-Note A 20,077 17,901 72,195 69,793
Telecommunications
Services 34,953 32,613 135,398 112,839
Computer Systems 39,467 28,080 120,017 93,639
Elimination of
intersegment sales (3,885) (3,303) (14,934) (12,215)
----------- --------- ----------- ----------
Total Net Sales $531,607 $436,243 $1,924,777 $1,609,491
=========== ========= =========== ==========
Income from Continuing Operations
before Income Taxes and Minority
Interest:
- ---------------------------------
Segment Operating Profit
Staffing Services $14,118 $12,495 $36,718 $21,072
Telephone Directory-Note A 2,900 1,881 10,115 6,748
Telecommunications
Services (1,183) (2,039) (2,838) (3,986)
Computer Systems 11,367 5,521 30,846 14,679
-------- -------- -------- --------
Total Segment Operating
Profit 27,202 17,858 74,841 38,513
General corporate expenses (7,915) (7,665) (30,812) (27,668)
-------- -------- -------- --------
Total Operating Profit 19,287 10,193 44,029 10,845
Interest income and other
expense (1,090) (150) (3,471) (1,953)
Gain on sale of real
estate-Note F 3,295 3,295
Foreign exchange gain, net 195 573 97 299
Interest expense (496) (392) (1,817) (2,070)
-------- -------- -------- --------
Income from Continuing
Operations before
Income Taxes and
Minority Interest $21,191 $10,224 $42,133 $7,121
======== ======== ======== ========
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
SUMMARY OF RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
Note A - The following tables summarize the impact of the
restatement on the previously issued Summary of Results of
Operations, Summary of Results of Operations by Segment and
Balance Sheet Data as at and for the fourth quarter and year
ended November 2, 2003:
FOURTH QUARTER ENDED
November 2, 2003
(In thousands, except per share amounts)
SUMMARY OF RESULTS As
OF OPERATIONS Previously Increase As
Reported (Decrease) Restated
Net Sales $438,758 ($2,515) $436,243
===========================================
Income from continuing
operations before
income taxes $11,433 ($1,209) $10,224
Income tax provision (4,548) 484 (4,064)
-------------------------------------------
Net income $6,885 ($725) $6,160
===========================================
Per Share Data
Basic:
Net income $0.45 ($0.04) $0.41
Diluted:
Net income $0.45 ($0.05) $0.40
SUMMARY OF RESULTS OF OPERATIONS
BY SEGMENT
Net Sales
Telephone Directory
Segment $20,416 ($2,515) $17,901
Total Net Sales $438,758 ($2,515) $436,243
Operating Profit
Telephone Directory
Segment $3,090 ($1,209) $1,881
Total Operating
Profit $11,402 ($1,209) $10,193
Income from continuing
operations before
income taxes $11,433 ($1,209) $10,224
FISCAL YEAR ENDED
November 2, 2003
(In thousands, except per share amounts)
SUMMARY OF RESULTS As
OF OPERATIONS Previously Increase As
Reported (Decrease) Restated
Net Sales $1,609,857 ($366) $1,609,491
===============================================
Income from continuing
operations before
income taxes $8,047 ($926) $7,121
Income tax provision (3,286) 370 (2,916)
-----------------------------------------------
Net income $4,761 ($556) $4,205
===============================================
Per Share Data
Basic:
Net income $0.31 ($0.04) $0.28
Diluted:
Net income $0.31 ($0.04) $0.28
SUMMARY OF RESULTS OF OPERATIONS
BY SEGMENT
Net Sales
Telephone Directory
Segment $70,159 ($366) $69,793
Total Net Sales $1,609,857 ($366) $1,609,491
Operating Profit
Telephone Directory
Segment $7,674 ($926) $6,748
Total Operating
Profit $11,771 ($926) $10,845
Income from continuing
operations before
income taxes $8,047 ($926) $7,121
November 2, 2003
(In thousands, except per share amounts)
As
CONDENSED CONSOLIDATED Previously Increase As
BALANCE SHEET DATA Reported (Decrease) Restated
Inventories $37,357 $430 $37,787
Recoverable income taxes $2,596 $484 $3,080
Prepaid and Other Assets $16,132 $876 $17,008
Total Assets $538,693 $1,790 $540,483
Deferred income and other
liabilities $27,665 $2,515 $30,180
Total current liabilities $263,325 $2,515 $265,840
Stockholders' Equity $241,920 ($725) $241,195
B - On August 2, 2004, Volt Delta Resources, LLC ("VoltDelta"), a
wholly-owned subsidiary of the Company, closed a Contribution
Agreement signed with Nortel Networks, Inc. ("Nortel
Networks") on June 11, 2004 under which Nortel Networks
contributed certain of the assets (consisting principally of
customer base and contracts, intellectual property and
inventory) and certain specified liabilities of its directory
and operator services ("DOS") business to VoltDelta in
exchange for a 24% minority equity interest in VoltDelta.
Together with its subsidiaries, VoltDelta is reported as the
Company's Computer Systems Segment. VoltDelta is using the
assets acquired from Nortel Networks to enhance the operation
of its DOS business. The acquisition will allow VoltDelta to
provide the newly combined customer base with new solutions,
an expanded suite of products, content and enhanced services.
The preliminary allocation of the purchase price resulted in
$20.2 million of goodwill, $15.9 million of other intangible
assets, $34.0 million of minority interest and $2.1 million of
various liabilities assumed in excess of assets acquired. The
income attributable to the minority interest for the fourth
quarter and the fiscal year 2004 was $2.4 million.
C - The results of discontinued operations reflect the sale of
real estate, in the second quarter of 2004, previously leased
by the Company to its former 59% owned subsidiary, Autologic
Information International, Inc., which interest was sold in
November 2001. The cash transaction resulted in a $9.5 million
gain, net of taxes of $4.6 million.
D - Under certain contracts with customers, the Company manages
the customers' alternative staffing requirements, including
transactions between the customer and other staffing vendors
("associate vendors"). When payments to associate vendors are
subject to the receipt of the customers' payment to the
Company, the arrangements are considered non-recourse against
the Company and revenue, other than management fees to the
Company, is excluded from sales. Cash restricted to cover such
obligations is included in cash and cash equivalents on the
October 31, 2004 and November 2, 2003 balance sheets.
E - Under an accounts receivable securitization program, the
Company, through a 100%-owned consolidated special purpose
subsidiary, sold a participation interest of $70.0 million out
of a pool approximating $248.7 million of receivables to an
unaffiliated third party. The outstanding balance of the
participation interest sold at October 31, 2004 was $70.0
million. Accordingly, the trade receivables included on the
October 31, 2004 and November 2, 2003 balance sheets have been
reduced to reflect the $70.0 million participation interest
sold, respectively.
F - The gain on sale of real estate is from the sale of land and a
building in Anaheim, California for cash. The property is no
longer used by the Company.
CONTACT: Volt Information Sciences, Inc.
James J. Groberg/Ron Kochman, 212-704-2400
voltinvest@volt.com