Exhibit 99.1
Volt Information Sciences Announces
Third Quarter Results
NEW YORK--(BUSINESS WIRE)--Sept. 7, 2005--Volt Information
Sciences, Inc. (NYSE: VOL) today reported financial results for the
Company's third quarter and nine months ended July 31, 2005.
Volt will conduct a conference call webcast at 11:00 A.M. (EDT)
today to discuss third quarter results. The conference call dial-in
number is 1-888-469-0571 (domestic) or 1-517-623-4001 (international),
passcode: Third 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.
THIRD QUARTER - FISCAL 2005 RESULTS
For the third quarter of fiscal 2005 ended July 31, 2005, the
Company reported net income of $5.0 million, or $0.32 per share,
compared to $9.2 million, or $0.60 per share, in the fiscal 2004 third
quarter. Net sales for the 2005 quarter increased by 9% to $543.5
million, compared to $500.7 million in last year's comparable quarter.
NINE MONTHS - FISCAL 2005 RESULTS
For the first nine months of fiscal 2005, the Company reported net
income of $8.7 million, or $0.56 per share, on net sales of $1.6
billion, compared to net income of $22.2 million, or $1.45 per share,
on net sales of $1.4 billion last year. The 2004 results included net
income of $9.5 million, or $0.62 per share related to discontinued
operations resulting from the sale of a building used by a subsidiary
previously sold.
REORGANIZATION OF TELECOMMUNICATIONS SERVICE
The Company also announced a restructuring and reorganization of
the Telecommunications Services segment which it commenced
implementing in August. As part of that reorganization, R. J. Anderson
has been appointed President of the segment. Mr. Anderson joined Volt
in 2001 and prior to his promotion held the position of Senior Vice
President of the Construction and Engineering division of the segment.
Prior to coming to Volt, Mr. Anderson had been associated with General
Dynamics for twenty years. His final position in that company was as
President of the Network Infrastructure and Commercial divisions.
Mr. William Shaw, Chairman and President of Volt, in commenting on
the action taken, stated "For several years the depressed economic
conditions in the telecommunications industry has made it extremely
difficult to achieve acceptable profitability using the structure that
had been so profitable in prior years. A detailed and comprehensive
study by Volt has resulted in a decision to adopt a more productive
structure, which we believe should improve results. The
reorganization, when completed", stated Mr. Shaw, "will result in an
annual reduction of approximately $4.2 million in overhead and a more
focused and efficient operating structure."
STAFFING SERVICES
The 8% increase in sales in the fiscal 2005 third quarter from the
comparable fiscal 2004 quarter was due to increased staffing business
in both the Technical Placement and the Administrative and Industrial
divisions offset, by a decrease in the VMC Consulting business of the
Technical Placement division. Gross Profit for the segment increased
2.6% while gross margin as a percentage of sales for the quarter
declined to 15% from 16% in the fiscal 2004 comparable quarter,
primarily due to higher payroll taxes throughout the segment and
reduced markups within VMC Consulting. Overhead increased $6.4
million, primarily the result of an increase in indirect labor and
related payroll costs incurred to sustain the forecasted growth of the
segment, including a material increase in the VMC Consulting business,
resulting in a decrease in overall segment profitability.
COMPUTER SYSTEMS
The Computer Systems segment's sales increase in the third quarter
of fiscal 2005 over the comparable 2004 quarter was primarily due to
improvements in the segment's operator services business, including
ASP directory assistance. The sales increase included $6.2 million of
DOS business acquired from Nortel Networks, which represented 14% of
the segment's sales for the 2005 quarter. A lower gross margin
percentage in the current quarter, as compared to the 2004 third
quarter, was partially due to the favorable settlement of vendor
disputes and refunds in the 2004 quarter approximating $1.5 million,
lower margins recognized in the current quarter related to product
revenue and the absence of Nortel business in the 2004 quarter
(acquired in the fourth quarter of 2004), the margins of which are
lower than other business units of the segment.
TELEPHONE DIRECTORY
The Telephone Directory segment's 23% increase in sales for the
third quarter of fiscal 2005 from the comparable 2004 quarter were the
result of increases in the community telephone directory operation of
DataNational, sales of the telephone directory systems operation and
sales in the printing operation in Uruguay. DataNational's increased
revenue and gross profit was due to an increase in the number of
directories printed and delivered during the quarter. The segment's
$3.0 million increase in operating profit was the result of the sales
increase, partially offset by a decrease in gross margin percentage,
which was primarily due to the product mix within the segment.
TELECOMMUNICATIONS SERVICES
The Telecommunications Services segment's sales decrease of 17% in
the third quarter of fiscal 2005 from the comparable 2004 quarter was
due to declines in the Business Systems and Construction and
Engineering divisions, partially offset by an increase in the smaller
Central Office division. The segment's operating loss for the quarter
was due to the sales decrease and the reduction in gross margin
percentage, partially offset by the decreased overhead. Actions by
certain major long-distance telephone companies to reduce marketing of
local residential service have negatively impacted sales and continue
to impact margins of the segment as increased competition for less
available work continues to pressure pricing and gross margins
throughout most of the segment. Despite an emphasis on cost controls,
which reduced quarterly overhead by 23% compared to the previous year,
the results of the segment continue to be affected by the decline in
capital spending by telephone companies caused by the depressed
conditions within the segment's telecommunications industry customer
base.
GENERAL CORPORATE EXPENSES
The increase in General Corporate expenses compared to the 2004
quarter was related to expenses necessary to meet the disaster
recovery redundancy requirements for business continuity and
communications, increases in compensation and higher professional fees
and costs related to compliance with the Sarbanes-Oxley Act.
Cash and cash equivalents, excluding restricted cash, was $64.9
million at the end of the quarter. At July 31, 2005, the Company had
sold a participating interest in accounts receivable of $95.0 million
under its securitization program and had the ability to finance an
additional $55.0 million under the facility.
In addition, the Company may borrow under a $40.0 million
revolving secured credit facility. The facility requires the
maintenance of certain accounts receivable balances in excess of
borrowings and terminates in April 2008 unless extended. At July 31,
2005, the Company had borrowed $4.2 million (two million Euros and one
million British pounds) under the 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 include 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's 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 OPERATIONS
(UNAUDITED)
THIRD QUARTER ENDED NINE MONTHS ENDED
July 31, August 1, July 31, August 1,
2005 2004 2005 2004 (1)
----------- ----------- ------------ ------------
(Restated)
(Dollars in thousands, except per share data)
Net sales $543,515 $500,732 $1,587,395 $1,393,170
=========== =========== ============ ============
Income from
continuing
operations before
minority interest
and income taxes $9,821 $15,292 $19,195 $20,942
Minority interest --
Note A (1,451) (4,704)
----------- ----------- ------------ ------------
Income from
continuing
operations before
income taxes 8,370 15,292 14,491 20,942
Income tax provision (3,404) (6,053) (5,806) (8,248)
----------- ----------- ------------ ------------
Income from
continuing
operations 4,966 9,239 8,685 12,694
Discontinued
operations -sale of
real estate -- Note
B 9,520
----------- ----------- ------------ ------------
Net income $4,966 $9,239 $8,685 $22,214
=========== =========== ============ ============
Per Share Data
Basic
Income from
continuing
operations $0.32 $0.61 $0.57 $0.84
Discontinued
operations 0.62
----------- ----------- ------------ ------------
Net income $0.32 $0.61 $0.57 $1.46
=========== =========== ============ ============
Diluted:
Income from
continuing
operations $0.32 $0.60 $0.56 $0.83
Discontinued
operations 0.62
----------- ----------- ------------ ------------
Net income $0.32 $0.60 $0.56 $1.45
=========== =========== ============ ============
Weighted average
number of shares
outstanding - basic 15,327,506 15,232,638 15,314,088 15,225,936
=========== =========== ============ ============
Weighted average
number of shares
outstanding -
diluted 15,392,071 15,398,710 15,426,727 15,341,679
=========== =========== ============ ============
(1) As previously announced in January 2005, the Company has restated
its previously issued financial statements for 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.
Accordingly, sales have been increased by $2.5 million and the net
operating profit has been increased by $0.7 million or $0.05 per
share for the nine months ended August 1, 2004.
(Notes Follow)
VOLT INFORMATION SCIENCES, INC.
AND SUBSIDIARIES
SUMMARY OF RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
THIRD QUARTER ENDED NINE MONTHS ENDED
July 31, August 1, July 31, August 1,
2005 2004 2005 2004 (1)
--------- --------- ----------- -----------
Net Sales: (Dollars in thousands) (Restated)
- ----------
Staffing Services -- Note C
Traditional Staffing $440,151 $410,112 $1,297,067 $1,150,026
Managed Services 278,339 306,054 888,105 835,850
--------- --------- ----------- -----------
Total Gross Sales 718,490 716,166 2,185,172 1,985,876
Less: Non-Recourse
Managed Services (268,305) (298,354) (861,790) (814,770)
--------- --------- ----------- -----------
Net Staffing Services 450,185 417,812 1,323,382 1,171,106
Telephone Directory 23,899 19,436 56,972 52,118
Telecommunications
Services 30,825 37,041 93,964 100,445
Computer Systems 43,806 30,128 127,920 80,550
Elimination of inter-
segment sales (5,200) (3,685) (14,843) (11,049)
--------- --------- ----------- -----------
Total Net Sales $543,515 $500,732 $1,587,395 $1,393,170
========= ========= =========== ===========
Income (Loss) from
Continuing Operations
Before Minority Interest
and Income Taxes
Staffing Services $6,952 $11,642 $16,668 $22,600
Telephone Directory 5,603 2,621 10,211 7,215
Telecommunications
Services (983) 1,064 (3,219) (1,655)
Computer Systems 8,050 9,090 24,579 19,479
--------- --------- ----------- -----------
Total Segment Operating
Profit 19,622 24,417 48,239 47,639
General corporate expenses (9,220) (7,704) (26,503) (22,897)
--------- --------- ----------- -----------
Total Operating Profit 10,402 16,713 21,736 24,742
Interest income and other
expense (297) (952) (1,043) (2,381)
Foreign exchange gain
(loss) - net 144 (28) (116) (98)
Interest expense (428) (441) (1,382) (1,321)
--------- --------- ----------- -----------
Income from Continuing
Operations Before
Minority Interest and
Income Taxes $9,821 $15,292 $19,195 $20,942
========= ========= =========== ===========
(1) As previously announced in January 2005, the Company has restated
its previously issued financial statements for 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.
Accordingly, sales have been increased by $2.5 million and the net
operating profit has been increased by $0.7 million for the nine
months ended August 1, 2004.
(Notes Follow)
VOLT INFORMATION SCIENCES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
July 31, October 31,
2005 2004
---------- -----------
Assets (Dollars in thousands)
Current Assets
Cash and cash equivalents, including
restricted cash of $24,168 (2005) and
$43,722 (2004) -- Note C $89,023 $88,031
Short-term investments 4,183 4,248
Trade receivables, net -- Note D 370,682 409,130
Inventories 37,220 32,676
Recoverable income taxes 900 -
Deferred income taxes 9,465 9,385
Prepaid and other assets 19,665 14,847
---------- -----------
Total Current Assets 531,138 558,317
Property, plant and equipment, net 80,052 85,038
Deposits and other assets 2,532 1,539
Goodwill 29,144 29,144
Other intangible assets, net 15,172 15,998
---------- -----------
Total Assets $658,038 $690,036
========== ===========
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable to bank $8,051 $7,955
Current portion of long-term debt 2,367 399
Accounts payable 161,226 192,163
Accrued wages and commissions 52,570 54,200
Accrued taxes other than income taxes 18,013 17,729
Other accruals 30,424 36,036
Deferred income and other liabilities 31,582 36,909
Income taxes payable - 4,270
---------- -----------
Total Current Liabilities 304,233 349,661
Accrued insurance 3,684 86
Long-term debt 13,409 15,588
Deferred income taxes 9,397 11,764
Minority interest -- Note A 41,124 36,420
Stockholders' Equity 286,191 276,517
---------- -----------
Total Liabilities and Stockholders' Equity $658,038 $690,036
========== ===========
(Notes Follow)
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
SUMMARY OF RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
A - 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 permits VoltDelta
to provide the newly combined customer base with new solutions, an
expanded suite of products, content and enhanced services.
B - 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.
C - 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 July 31, 2005 and
October 31, 2004 balance sheets.
D - On April 15, 2002, under a securitization program, the Company,
through a 100%-owned consolidated special purpose subsidiary, sold
a participation interest of $50.0 million out of an initial pool
approximating $162.0 million of receivables to an unaffiliated
third party. The outstanding balance of the participation interest
sold was $95.0 million at July 31, 2005 and $70.0 million at
October 31, 2004. Accordingly, the trade receivables included on
the July 31, 2005 and October 31, 2004 balance sheets have been
reduced to reflect the $95.0 million and $70.0 million
participation interest sold, respectively.
CONTACT: Volt Information Sciences, Inc.
James J. Groberg / Ron Kochman
212-704-2400
voltinvest@volt.com