Exhibit 99.1
Volt Information Sciences Announces Fourth Quarter and Fiscal Year Results
NEW YORK--(BUSINESS WIRE)--Jan. 12, 2006--Volt Information
Sciences, Inc. (NYSE: VOL) today reported financial results for the
Company's fourth quarter and fiscal year ended October 30, 2005.
Volt will conduct a conference call webcast at 11:00 A.M. (EDT)
today to discuss fourth quarter results. The conference call dial-in
number is 1-888-469-0571 (domestic) or 1-517-623-4001 (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 2005 RESULTS
For the fourth quarter of fiscal 2005 ended October 30, 2005, the
Company reported net income of $8.4 million, or $0.54 per share,
compared to $11.5 million, or $0.75 per share, in the 2004 fiscal
fourth quarter. 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). The decline
in net income for the quarter from the 2004 fiscal fourth quarter, net
of the real estate gain, was primarily the result of expenses incurred
during the quarter for the Sarbanes-Oxley Act Section 404 project,
including audit and consulting fees, as well as increased fees for the
year end audit. Net sales for the 2005 quarter increased by 11% to
$590.2 million, compared to $531.6 million in last year's comparable
quarter. Total segment operating profit increased by 14.7% over the
2004 comparable quarter.
FISCAL YEAR 2005 RESULTS
For the twelve months of fiscal 2005, the Company reported net
income of $17.0 million, or $1.11 per share, on net sales of $2.178
billion, compared to net income of $33.7 million, or $2.20 per share,
on net sales of $1.925 billion last year. As in the fourth quarter, an
increase in the operating profit was more than offset by higher
general corporate expenses for the year. The Company reported income
from continuing operations of $17.0 million, or $1.11 per share, in
the twelve months ended October 30, 2005 compared to $24.2 million, or
$1.58 per share, in the comparable fiscal 2004 period.
Income from continuing operations for fiscal 2004 included a 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 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.
Commenting on the results for the fourth quarter and year, Mr.
William Shaw, Chairman, President and Co-CEO of Volt, stated "We are
pleased by the increases in segment operating profit and revenue for
both the year and the fourth quarter. Of particular significance are
the benefits derived from the reorganization of the Telecommunications
Segment, which produced an operating profit in the fourth quarter
compared to a loss of more than $1.0 million in the fiscal 2004
quarter, as well as material strengthening of the Computer Systems
segment market position. The previously announced acquisitions,
subsequent to the end of the fiscal year, of the minority interest in
Delta from Nortel Networks and the Varetis Solutions acquisition
enhance the segment's potential for future growth."
STAFFING SERVICES
The Staffing Services segment's sales increased by $37.4 million,
or 8%, and its operating profit increased by $0.4 million, or 3%, from
the comparable 2004 quarter. Sales increased in three of the segment's
business units, Technical Placements, Administrative and Industrial
and VMC. The increase in operating profit was the result of improved
results for the Technical Placements, ProcureStaff, Administrative and
Industrial and Volt Europe divisions, offset by a decline in operating
profits in the VMC unit compared to fourth quarter of fiscal 2004.
COMPUTER SYSTEMS
The Computer Systems segment's sales increased by $5.7 million, or
15% over the comparable quarter in 2004, and its operating profit for
the quarter was approximately equal to the fourth quarter 2004 profit.
Increased operating profit in the Information Systems unit, including
Operator Services, was offset by a decline in Maintech's operating
profit.
TELEPHONE DIRECTORY
The Telephone Directory segment's sales increased $5.2 million, or
26%, and its operating profit increased $1.8 million, or 62% over the
comparable quarter in 2004. The primary reason for the improved
results was increased profitability in DataNational and Uruguayan
division slightly offset by reduced profitability of the Directory
production unit.
TELECOMMUNICATIONS SERVICES
The Telecommunications Services segment's sales increased by $10.1
million, or 29%, from the comparable 2004 quarter. The fourth quarter
of 2005 had a profit of $0.8 million compared to a loss in the same
quarter of 2004 of $1.2 million. Each of the four divisions in this
segment produced improved results over the 2004 quarter, primarily the
result of reduced overhead expense achieved by the reorganization of
the segment.
GENERAL CORPORATE EXPENSES AND LIQUIDITY
The increase in General Corporate expenses compared to the 2004
quarter was related to higher professional fees and other costs
related to compliance with the Sarbanes-Oxley Act, communications,
compensation and expenses necessary to meet the disaster recovery
redundancy requirements for business continuity.
Cash and cash equivalents, excluding restricted cash, was $62.0
million at the end of the quarter. At October 30, 2005, the Company
had sold a participating interest in accounts receivable of $100.0
million under its securitization program and had the ability to
finance an additional $50.0 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 October
30, 2005, the Company had borrowed 2.0 million Euros under the
facility.
In December 2005, the Company paid approximately $50.0 million,
principally from cash on hand, for the Nortel Networks and Varetis
Solutions acquisitions. The remaining $36.8 million is due February
15, 2006.
SARBANES-OXLEY ACT SECTION 404 STATUS
The Company has completed testing its internal control over
financial reporting as required by the Sarbanes-Oxley Act. Due to the
effect of a control deficiency related to the over-depreciation of
assets of one of its subsidiaries by approximately $1.1 million, it
failed to maintain effective control over financial reporting as of
October 30, 2005. Since the control deficiency could have potentially
resulted in a material misstatement to the annual financial statements
of the Company had it not been corrected, management has determined
that it constituted a material weakness as of October 30, 2005, with
respect to the Sarbanes-Oxley Act.
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.
(Tables Follow)
VOLT INFORMATION SCIENCES, INC.
AND SUBSIDIARIES
SUMMARY OF RESULTS OF OPERATIONS
(UNAUDITED)
FOURTH QUARTER ENDED FISCAL YEAR ENDED
October 30, October 31, October 30, October 31,
2005 2004 2005 2004
----------- ----------- ----------- -----------
(Dollars in thousands, except per share data)
Net sales $590,224 $531,607 $2,177,619 $1,924,777
=========== =========== =========== ===========
Income from continuing
operations before
minority interest and
income taxes $17,098 $21,191 $36,293 $42,133
Minority interest --
Note A (2,320) (2,420) (7,024) (2,420)
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes 14,778 18,771 29,269 39,713
Income tax provision (6,423) (7,269) (12,229) (15,517)
----------- ----------- ----------- -----------
Income from continuing
operations 8,355 11,502 17,040 24,196
Discontinued
operations -sale of
real estate -- Note B 9,520
----------- ----------- ----------- -----------
Net income $8,355 $11,502 $17,040 $33,716
=========== =========== =========== ===========
Per Share Data
Basic
Income from
continuing
operations $0.54 $0.75 $1.11 $1.59
Discontinued
operations 0.62
----------- ----------- ----------- -----------
Net income $0.54 $0.75 $1.11 $2.21
=========== =========== =========== ===========
Diluted:
Income from
continuing
operations $0.54 $0.75 $1.11 $1.58
Discontinued
operations 0.62
----------- ----------- ----------- -----------
Net income $0.54 $0.75 $1.11 $2.20
=========== =========== =========== ===========
Weighted average
number of shares
outstanding - basic 15,339 15,257 15,320 15,234
=========== =========== =========== ===========
Weighted average
number of shares
outstanding - diluted 15,388 15,390 15,417 15,354
=========== =========== =========== ===========
(Notes Follow)
VOLT INFORMATION SCIENCES, INC.
AND SUBSIDIARIES
SUMMARY OF RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
FOURTH QUARTER ENDED FISCAL YEAR ENDED
October 30, October 31, October 30, October 31,
2005 2004 2005 2004
----------- ----------- ----------- -----------
Net Sales: (Dollars in thousands)
Staffing Services --
Note C
Traditional Staffing $468,771 $434,038 $1,765,838 $1,584,064
Managed Services 269,063 312,266 1,157,168 1,148,116
--------- --------- ----------- -----------
Total Gross Sales 737,834 746,304 2,923,006 2,732,180
Less: Non-Recourse
Managed Services (259,406) (305,309) (1,121,196) (1,120,079)
--------- --------- ----------- -----------
Net Staffing Services 478,428 440,995 1,801,810 1,612,101
Telephone Directory 25,326 20,077 82,298 72,195
Telecommunications
Services 45,047 34,953 139,011 135,398
Computer Systems 45,199 39,467 173,119 120,017
Elimination of inter-
segment sales (3,776) (3,885) (18,619) (14,934)
--------- --------- ----------- -----------
Total Net Sales $590,224 $531,607 $2,177,619 $1,924,777
========= ========= =========== ===========
Income (Loss) from
Continuing Operations
Before Minority
Interest and Income
Taxes
Staffing Services $14,511 $14,118 $31,179 $36,718
Telephone Directory 4,684 2,900 14,895 10,115
Telecommunications
Services 790 (1,183) (2,429) (2,838)
Computer Systems 11,222 11,367 35,801 30,846
--------- --------- ----------- -----------
Total Segment
Operating Profit 31,207 27,202 79,446 74,841
General corporate
expenses (12,336) (7,915) (38,839) (30,812)
--------- --------- ----------- -----------
Total Operating Profit 18,871 19,287 40,607 44,029
Interest income and
other expense (1,191) (1,090) (2,234) (3,471)
Gain on sale of Real
Estate 3,295 3,295
Foreign exchange gain
(loss)- net (139) 195 (255) 97
Interest expense (443) (496) (1,825) (1,817)
--------- --------- ----------- -----------
Income from Continuing
Operations Before
Minority Interest and
Income Taxes $17,098 $21,191 $36,293 $42,133
========= ========= =========== ===========
(Notes Follow)
VOLT INFORMATION SCIENCES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
October 30, October 31,
2005 2004
----------- -----------
Assets (Dollars in thousands)
Current Assets
Cash and cash equivalents, including
restricted cash of $26,131 (2005) and
$43,722 (2004) -- Note C $88,119 $88,031
Short-term investments 4,213 4,248
Trade receivables, net -- Note D 399,677 409,130
Inventories 33,758 32,676
Deferred income taxes 10,246 9,385
Prepaid and other assets 19,788 14,847
----------- -----------
Total Current Assets 555,801 558,317
Property, plant and equipment, net 83,272 85,038
Deposits and other assets 2,102 1,539
Goodwill 32,623 29,144
Other intangible assets, net 14,914 15,998
----------- -----------
Total Assets $688,712 $690,036
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable to bank $6,622 $7,955
Current portion of long-term debt 2,404 399
Accounts payable 172,788 192,163
Accrued wages and commissions 55,081 54,200
Accrued taxes other than income taxes 17,586 17,729
Other accruals 35,173 36,036
Deferred income and other liabilities 30,628 36,909
Income taxes payable 1,686 4,270
----------- -----------
Total Current Liabilities 321,968 349,661
Accrued insurance 1,630 86
Long-term debt 13,297 15,588
Deferred income taxes 13,358 11,764
Minority interest -- Note A 43,444 36,420
Stockholders' Equity 295,015 276,517
----------- -----------
Total Liabilities and Stockholders' Equity $688,712 $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 ("Volt Delta"), 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.
On December 29, 2005, Volt Delta repurchased from Nortel Networks
the 24% minority interest. Under the terms of the agreement, Volt
Delta will pay Nortel Networks approximately $56.4 million for its
minority interest in the LLC, and an excess cash distribution of
approximately $5.4 million.
On December 30, 2005, Volt Delta closed the previously announced
acquisition of Varetis AG's Varetis Solutions GmbH subsidiary for
$24.8 million. The acquisition of Varetis Solutions, GmbH allows
the two companies to combine resources to focus on the evolving
global market for directory information systems and services.
Varetis Solutions adds considerable technology in the area of
wireless and wireline database management, directory
assistance/enquiry automation, and wireless handset information
delivery to Volt Delta's significant technology portfolio.
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 October 30, 2005 and
October 31, 2004 balance sheets.
D - Under a securitization program, the receivables related to the
staffing solutions business of the Company are sold from
time-to-time by the Company, through a 100%-owned consolidated
special purpose subsidiary to an unaffiliated third party. The
outstanding balance of the participation interest sold was $100.0
million at October 30, 2005 and $70.0 million at October 31, 2004.
Accordingly, the trade receivables included on the October 30,
2005 and October 31, 2004 balance sheets have been reduced to
reflect the $100.0 million and $70.0 million participation
interest sold, respectively.
CONTACT: Volt Information Sciences, Inc.
James J. Groberg or Ron Kochman, 212-704-2400
voltinvest@volt.com