Exhibit 99.1
Volt Information Sciences Reports
Third Quarter Results, Announces Authorization for Share Repurchase
Program and Stock Incentive Plan
NEW YORK--(BUSINESS WIRE)--Sept. 8, 2006--Volt Information
Sciences, Inc. (NYSE: VOL) today reported financial results for the
Company's third quarter and nine months ended July 30, 2006.
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 1-800-857-6028 (domestic) or 1-210-234-0013 (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 2006 RESULTS
For the third quarter of fiscal 2006 ended July 30, 2006, the
Company reported net income of $8.4 million, or $0.53 per share,
compared to $5.0 million, or $0.32 per share, in the fiscal 2005 third
quarter, an increase of 68%. Net sales for the 2006 quarter increased
by 8% to $584.9 million, compared to $543.5 million in last year's
comparable quarter. Income before minority interest and income taxes
increased by $4.5 million, or 45%, compared to the 2005 comparable
quarter. The minority interest was repurchased from Nortel Networks,
Inc. on December 29, 2005.
NINE MONTHS - FISCAL 2006 RESULTS
For the first nine months of fiscal 2006, the Company reported net
income of $17.1 million, or $1.11 per share, compared to net income of
$8.7 million, or $0.56 per share, in the comparable fiscal 2005
period, an increase of 97%. Net sales for the first nine months of
fiscal 2006 increased by 9% to $1.7 billion, compared to $1.6 billion
in last year's comparable period. Income before minority interest and
income taxes was $30.1 million in the nine months ended July 30, 2006
compared to $19.2 million in the comparable fiscal 2005 period, an
increase of 57%.
Commenting on the results for the third quarter, Mr. Steven A.
Shaw, President and CEO of Volt, stated "We are very pleased with the
quarter's results and the continued trends in our businesses,
especially in the Staffing Services segment. While increased interest
and securitization expense, due to financing levels, rising interest
rates and higher year over year professional fees related to
Sarbanes-Oxley compliance programs negatively impacted earnings,
strong growth for our higher margin Staffing offerings, as well as
lower workers compensation and payroll taxes, were the primary factors
for the more than doubling of the profits of the Staffing group, and
were key drivers in the 34% growth in total segments operating profit.
Telecommunications Services reported lower quarterly losses as a
result of the reorganization and realignment of the segment. We are
extremely pleased by the initiatives deployed and believe the segment
is poised for future profitability. The Directory Services segment,
whose quarterly results are affected by the timing of the distribution
of directories, continues to produce consistent operating results. The
Computer Systems acquisition of Varetis in the first quarter, while
not yet contributing to the bottom line, combined with the Directory
Operator Services business acquired from Nortel Networks and
VoltDelta's existing technology, provides us with the strategic
resources necessary to deliver a fully integrated end to end global
solution and positions the segment well for future growth."
STAFFING SERVICES
The $49.1 million, or 11%, increase in sales in the third quarter
of fiscal 2006 from the comparable fiscal 2005 period was due to
increased staffing business in both the Technical Placement and the
Administrative and Industrial divisions. The increase in operating
profit of $9.3 million was due to the increase in sales, an increase
in gross margin percentage, primarily due to reduced workers'
compensation and payroll tax costs, and a decrease in overhead costs
as a percentage of sales. The segment has been working closely with
customers to better manage worker's compensation costs which are
approximately $2.5 million below last year's run rate per quarter.
COMPUTER SYSTEMS
The Computer Systems segment's sales increase of $2.5 million, or
6%, in the third quarter of fiscal 2006 over the comparable 2005
period was primarily due to increases in the Maintech division's IT
maintenance sales of $1.7 million, or 14%, and $4.2 million of new
business as a result of the segment's acquisition of Varetis Solutions
in December 2005, partially offset by decreases in the segment's other
divisions. The decrease in operating profit of $2.0 million was due to
decreased gross margins, an increase in overhead necessary to support
the sales increase and additional amortization of intangible assets.
TELEPHONE DIRECTORY
The Telephone Directory segment's sales decrease of $2.5 million,
or 10%, for the third quarter of fiscal 2006 from the comparable 2005
period resulted from decreases of $1.6 million, or 9%, in the
Datanational community telephone directory publishing sales and $1.4
million, or 34%, in the telephone production operations and other
sales. The decrease in sales is due to the timing of the delivery of
the directories and the sale of the ViewTech division in the third
quarter of fiscal 2005. The segment's operating profit decreased by
$1.4 million, or 24%, primarily due to the decrease in sales along
with a decrease in gross margins.
TELECOMMUNICATIONS SERVICES
The Telecommunications Services segment's sales decrease of $8.3
million, or 27%, in the third quarter of fiscal 2006 over the
comparable 2005 period was due to decreases of $5.4 million in the
Construction and Engineering division and $2.9 million in the Network
Enterprise Solutions division. The improvement in operating results of
$0.8 million over the same period was due to decreases in overhead
costs and an increase in gross margins partially offset by the
decrease in sales.
GENERAL CORPORATE EXPENSES
The increase in General Corporate expenses compared to the 2005
quarter was related to higher professional fees and costs related to
compliance with the Sarbanes-Oxley Act along with expenses necessary
to meet the disaster recovery redundancy requirements for business
continuity and communications.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents, excluding restricted cash, was $45.3
million at the end of the quarter. At July 30, 2006, the Company had
sold a participating interest in accounts receivable of $110.0 million
under its securitization program and had the ability to finance an
additional $90.0 million under the facility. In August 2006, the
agreement was amended to extend the maturity date to April 2009.
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 30,
2006, the Company had borrowed $6.4 million (five million Euros) under
the facility.
VOLT INFORMATION SCIENCES, INC. 2006 INCENTIVE STOCK PLAN AND
SHARE BUYBACK
The Company also announced that on September 6, 2006 its Board of
Directors adopted the "Volt Information Sciences, Inc. 2006 Incentive
Stock Plan" subject to approval by vote of shareholders of the
Company. The purpose of the Plan is to promote the success of the
Company and its Subsidiaries by providing incentives to Employees and
Non-Employee Directors that will promote the long-term financial
success of the Company and growth in shareholder value. The Plan is
designed to provide flexibility to the Company and its Subsidiaries,
in its ability to motivate, attract, and retain the services of
Employees and Non-Employee Directors upon whose judgment, interest,
and effort the successful conduct of its operation is largely
dependent. The Plan permits the grant of Incentive Stock Options,
Non-Qualified Stock Options, Restricted Stock and Restricted Stock
Units to Employees and Non-Employee Directors of the Company through
September 6, 2016. The maximum aggregate number of Shares that may be
issued pursuant to awards made under the Plan shall not exceed One
Million Five Hundred Thousand (1,500,000) Shares.
The Company also announced that on September 6, 2006 its Board of
Directors had also authorized the repurchase of up to One Million Five
Hundred Thousand (1,500,000) shares of the Company's Common Stock from
time to time in open market or private transactions at the Company's
discretion, subject to market conditions and other factors, in order
to fund awards under the "Volt Information Sciences, Inc. 2006
Incentive Stock Plan". The timing and exact number of shares purchased
will be at the Company's discretion and will depend on market
conditions and is subject to institutional approval for purchases in
excess of $8.5 million in fiscal year 2006 under the terms of the
Company's credit agreements. This stock buyback program does not
obligate the Company to acquire any specific number of shares and may
be suspended or discontinued at any time.
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 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 30, July 31, July 30, July 31,
2006 2005 2006 2005
---------------------- ----------------------
(Dollars in thousands, except per share data)
Net sales $584,914 $543,515 $1,728,233 $1,587,395
====================== ======================
Income before minority
interest and income
taxes $14,278 $9,821 $30,135 $19,195
Minority interest --
Note A - (1,451) (1,021) (4,704)
---------------------- ----------------------
Income before income
taxes 14,278 8,370 29,114 14,491
Income tax provision (5,925) (3,404) (12,028) (5,806)
---------------------- ----------------------
Net income $8,353 $4,966 $17,086 $8,685
====================== ======================
Per Share Data
Basic
Net income $0.54 $0.32 $1.11 $0.57
====================== ======================
Diluted:
Net income $0.53 $0.32 $1.11 $0.56
====================== ======================
Weighted average number
of shares outstanding
- basic 15,558,597 15,327,506 15,444,151 15,314,088
====================== ======================
Weighted average number
of shares outstanding
- diluted 15,679,159 15,392,071 15,443,510 15,426,727
====================== ======================
(Notes Follow)
VOLT INFORMATION SCIENCES, INC.
AND SUBSIDIARIES
SUMMARY OF RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
THIRD QUARTER ENDED NINE MONTHS ENDED
July 30, July 31, July 30, July 31,
2006 2005 2006 2005
---------------------- ----------------------
(Dollars in thousands)
Net Sales:
Staffing Services --
Note B
Traditional Staffing $484,882 $440,151 $1,415,066 $1,297,067
Managed Services 281,948 278,339 806,815 888,105
--------------------- ----------------------
Total Gross Sales 766,830 718,490 2,221,881 2,185,172
Less: Non-Recourse
Managed Services (267,591) (268,305) (762,694) (861,790)
--------------------- ----------------------
Net Staffing Services 499,239 450,185 1,459,187 1,323,382
Telephone Directory 21,426 23,899 54,437 56,972
Telecommunications
Services 22,550 30,825 89,959 93,964
Computer Systems 46,305 43,806 139,716 127,920
Elimination of inter-
segment sales (4,606) (5,200) (15,066) (14,843)
--------------------- ----------------------
Total Net Sales $584,914 $543,515 $1,728,233 $1,587,395
===================== ======================
Income (Loss) before
Minority Interest and
Income Taxes
Staffing Services $16,248 $6,952 $35,573 $16,668
Telephone Directory 4,243 5,603 10,521 10,211
Telecommunications
Services (189) (983) 539 (3,219)
Computer Systems 6,046 8,050 21,632 24,579
--------------------- ----------------------
Total Segment Operating
Profit 26,348 19,622 68,265 48,239
General corporate
expenses (10,126) (9,220) (32,683) (26,503)
--------------------- ----------------------
Total Operating Profit 16,222 10,402 35,582 21,736
Interest income and
other expense (1,094) (297) (3,338) (1,043)
Foreign exchange gain
(loss) - net (351) 144 (707) (116)
Interest expense (499) (428) (1,402) (1,382)
--------------------- ----------------------
Income before Minority
Interest and Income
Taxes $14,278 $9,821 $30,135 $19,195
===================== ======================
(Notes Follow)
VOLT INFORMATION SCIENCES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
July 30, October 30,
2006 2005
----------------------------
Assets (Dollars in thousands)
Current Assets
Cash and cash equivalents, $45,258 $61,698
Restricted cash 23,846 26,421
Short-term investments 4,410 4,213
Trade receivables, net -- Note C 360,597 399,677
Inventories 36,360 33,758
Deferred income taxes 8,522 10,246
Prepaid and other assets 25,779 19,788
----------------------------
Total Current Assets 504,772 555,801
Property, plant and equipment, net 78,750 83,272
Deposits and other assets 1,901 2,102
Goodwill 50,523 32,623
Other intangible assets, net 34,332 14,914
----------------------------
Total Assets $670,278 $688,712
============================
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable to bank $10,410 $6,622
Current portion of long-term debt 461 2,404
Accounts payable 172,762 172,788
Accrued wages and commissions 56,776 55,081
Accrued taxes other than income taxes 18,855 17,586
Other accruals 34,007 35,173
Deferred income and other liabilities 30,101 30,628
Income taxes payable 946 1,686
----------------------------
Total Current Liabilities 324,318 321,968
Accrued insurance - 1,630
Long-term debt 12,948 13,297
Deferred income taxes 13,561 13,358
Minority interest -- Note A - 43,444
Stockholders' Equity 319,451 295,015
----------------------------
Total Liabilities and Stockholders'
Equity $670,278 $688,712
============================
(Notes Follow)
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
SUMMARY OF RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
A - In December 2005, Volt Delta Resources, LLC ("Volt Delta"),
the principal business unit of the Computer Systems segment,
purchased from Nortel Networks, Inc. ("Nortel Networks") its 24%
minority interest in Volt Delta for $62.0 million, including an
excess cash distribution of $5.4 million. Nortel Networks had
originally purchased its 24% interest in August of 2004, and under
the terms of the original purchase agreement, each party had a
one-year option to cause Nortel Networks to sell and Volt Delta to
buy the minority interest for an amount ranging from $25.0 million
to $70.0 million, exercisable starting August 2006.
During the first fiscal quarter of 2006, Volt Delta also purchased
Varetis Solutions GmbH ("Varetis Solutions") from varetis AG for
$24.8 million. The acquisition provides Volt Delta the resources
to focus on the evolving global market for directory information
systems and services. Varetis Solutions adds technology in the
area of wireless and wireline database management, directory
assistance/inquiry automation and wireless handset information
delivery to Volt Delta's significant technology portfolio.
The preliminary allocation of the purchase price of the
transactions resulted in $17.9 million of goodwill and $20.8
million of intangible assets in fiscal 2006.
B - 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
segregated from cash and cash equivalents on the July 30, 2006 and
October 30, 2005 balance sheets.
C - 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. During
the third quarter of fiscal 2006, the Company reduced the
outstanding interest sold from $140.0 million to $110.0 million.
The outstanding balance of the participation interest sold was
$110.0 million and $100.0 million at April 30, 2006 and October
30, 2005, respectively. Accordingly, the trade receivables
included on the July 30, 2006 and October 30, 2005 balance sheets
have been reduced to reflect the participation interest sold.
CONTACT: Volt Information Sciences, Inc.
Jack Egan and Ron Kochman, 212-704-2400
voltinvest@volt.com