Exhibit 99.1
Volt Information Sciences Announces Second Quarter Results
NEW YORK--(BUSINESS WIRE)--June 7, 2005--Volt Information
Sciences, Inc. (NYSE:VOL) today reported financial results for the
Company's second quarter and six months ended May 1, 2005.
Volt will conduct a conference call webcast at 11:00 a.m. (EDT)
today to discuss second quarter results. The conference call dial-in
number is 1-888-469-0571 (domestic) or 1-517-623-4001 (international),
passcode: Second 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.
SECOND QUARTER - FISCAL 2005 RESULTS
For the second quarter of fiscal 2005 ended May 1, 2005, the
Company reported net income of $4.5 million, or $0.29 per share,
compared to $14.1 million, or $0.92 per share, in the fiscal 2004
second quarter. 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. Net sales
for the 2005 quarter increased by 14% to $546.0 million, compared to
$478.5 million in last year's comparable quarter.
Income from continuing operations before minority interest and
income taxes increased by $1.6 million, or 21%, compared to the 2004
comparable quarter.
SIX MONTHS - FISCAL 2005 RESULTS
For the first six months of fiscal 2005, the Company reported net
income of $3.7 million, or $0.24 per share, on net sales of $1.0
billion, compared to $13.0 million, or $0.85 per share, on net sales
of $892.4 million 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. The Company reported income from continuing operations of $3.7
million, or $0.24 per share, in the six months ended May 1, 2005
compared to $3.5 million, or $0.23 per share in the comparable fiscal
2004 period.
Commenting on the results for the second quarter, Mr. William
Shaw, Chairman and President of Volt, stated, "The decrease in
operating profit of the Staffing segment, despite the twelve percent
increase in sales, was a disappointment. The primary reason for this
decline was that the increase in sales was not sufficient to offset
the planned increase in indirect labor headcount, which was believed
necessary to support the recent growth trend of several of the
segment's business units. On the positive side, the other three
segments of the Company, Telecommunications Services, Telephone
Directory and Computer Systems, produced significantly improved
results over the comparable 2004 second quarter, including a return to
profitability of the Telecommunications Services segment. Also of note
is the continued strong improvement in the Computer Services segment's
results, which showed increased operating income for both the business
obtained from the recent acquisition of a Nortel business unit and its
own operations."
STAFFING SERVICES
An $8.7 million increase in overhead, primarily related to an
increase in indirect labor and associated cost, more than offset a $
6.4 million increase in gross margin. This increase in overhead was
spread over several business units, with Technical Staffing and VMC
absorbing the more significant percentage of this increase. Pressure
on margins, both because of increased unemployment taxes and
competitive pressure, resulted in a slight (0.2 %) decrease in gross
margins for the segment compared to the 2004 quarter. The
Administrative and Industrial division of the segment continues to
generate operating losses resulting from competitive pressure on labor
markups and the resistance of customers to the Company's request to
absorb increases in direct labor related costs by increasing mark ups.
COMPUTER SYSTEMS
This segment's 54% increase in operating profit to $9.0 million
compared to the results in the fiscal 2004 quarter was primarily the
result of the increase in sales from both the business acquired in the
Nortel acquisition ($7.6 million) and the increase Delta's regular
business ($9.0 million), as well as a reduction of overhead as a
percentage of sales. Transactions generated in the operator services
business increased from 194 million in 2004 to 309 million in the 2005
quarter. Operating profit for the Maintenance division decreased by
$0.3 million from the comparable 2004 quarter as the result of an
increase in headcount required to staff two recently signed major
maintenance contracts which did not produce revenue in this quarter.
TELEPHONE DIRECTORY
The 25% increase in operating profit for this segment to $2.5
million compared to the 2004 quarter was related entirely to increased
profits in the Directory Production unit. This increase was primarily
the result of profits from a new production contract as well as the
elimination of losses incurred in the 2004 quarter from a directory
publication sold last year. Sales for DataNational, the community
directory publishing unit, increased by $0.7 million, but a reduction
in gross margin, caused by a change in the mix of directories
published in the quarter, resulted in level operating profit compared
to the 2004 quarter.
TELECOMMUNICATIONS SERVICES
Although conditions in the Telecommunications industry remain
difficult, with the continuation of low spending by the segment's
customers and competitive pressures on contracts bid, a $1.3 million
operating profit in the Construction division, compared to a loss of
$1.0 million in the 2004 second quarter, resulted in returning the
segment to a small operating profit. The improvement in this division
resulted from the completion of one major project and increased
government revenues. The other three divisions of the segment incurred
operating losses, with the Business Systems division particularly
negatively affected by the reduction in business from two major
telecommunications companies related to local residential services.
The focus in this segment remains obtaining a reduction in overhead
until the industry increases spending, as well as concentration on
certain areas of the business not affected by the cutbacks where
backlog has increased.
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, higher professional fees
and costs related to compliance with the Sarbanes-Oxley Act.
Cash and cash equivalents, excluding restricted cash, was $62.2
million at the end of the quarter. At May 1, 2005, the Company had
sold a participating interest in accounts receivable of $80.0 million
under its securitization program and had the ability to finance an
additional $70.0 million under the facility. In April 2005, this
facility was amended to extend its expiration date to April 2007.
In addition, the Company may borrow under a $40.0 million
revolving secured credit facility, amended and increased from $30.0
million in April 2005. The facility requires the maintenance of
certain accounts receivable balances in excess of borrowings and
terminates in April 2008 unless extended. At May 1, 2005, the Company
had not borrowed 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 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'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 Web site at
http://www.sec.gov and at the Company's Web site at
http://www.volt.com in the Investor Information section.
VOLT INFORMATION SCIENCES, INC.
AND SUBSIDIARIES
SUMMARY OF OPERATIONS
(UNAUDITED)
SECOND QUARTER ENDED SIX MONTHS ENDED
May 1, May 2, May 1, May 2,
2005 2004 (1) 2005 2004 (1)
----------- ----------- ----------- -----------
(Dollars in thousands, except per share data)
Net sales $ 546,045 $ 478,479 $ 1,043,880 $ 892,438
=========== =========== =========== ===========
Income from continuing
operations before
minority interest
and income taxes $ 9,166 $ 7,548 $ 9,374 $ 5,650
Minority interest --
Note A (1,759) (3,253)
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes 7,407 7,548 6,121 5,650
Income tax provision (2,880) (2,940) (2,402) (2,195)
----------- ----------- ----------- -----------
Income from
continuing operations 4,527 4,608 3,719 3,455
Discontinued
operations -sale of
real estate -- Note B 9,520 9,520
------------ ----------- ----------- -----------
Net income $ 4,527 $ 14,128 $ 3,719 $ 12,975
=========== =========== =========== ===========
Per Share Data
Basic
Income from
continuing
operations $ 0.30 $ 0.31 $ 0.24 $ 0.23
Discontinued
operations 0.62 0.62
------------ ----------- ----------- -----------
Net income $ 0.30 $ 0.93 $ 0.24 $ 0.85
=========== =========== =========== ===========
Diluted:
Income from
continuing
operations $ 0.29 $ 0.30 $ 0.24 $ 0.23
Discontinued
operations 0.62 0.62
------------ ----------- ----------- -----------
Net income $ 0.29 $ 0.92 $ 0.24 $ 0.85
=========== =========== =========== ===========
Weighted average
number of shares
outstanding - basic 15,323,593 15,223,545 15,307,379 15,222,586
=========== =========== =========== ===========
Weighted average
number of shares
outstanding - diluted 15,446,297 15,335,804 15,444,056 15,313,164
=========== =========== =========== ===========
(1) As previously announced, 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 $1.2 million and $2.5 million and the net operating
profit has been increased by $0.4 million and $0.7 million for the
second quarter and six months ended May 2, 2004, respectively.
VOLT INFORMATION SCIENCES, INC.
AND SUBSIDIARIES
SUMMARY OF RESULTS OF OPERATIONS BY SEGMENT
(UNAUDITED)
SECOND QUARTER ENDED SIX MONTHS ENDED
May 1, May 2, May 1, May 2,
2005 2004 (1) 2005 2004 (1)
---------- --------- ---------- ----------
Net Sales: (Dollars in thousands)
- ----------
Staffing Services -- Note C
Traditional Staffing $ 442,822 $ 397,238 $ 856,916 $ 739,914
Managed Services 312,334 291,698 609,766 529,796
--------- --------- ---------- ----------
Total Gross Sales 755,156 688,936 1,466,682 1,269,710
Less: Non-Recourse
Managed Services (302,292) (283,283) (593,485) (516,416)
--------- --------- ---------- ----------
Net Staffing Services 452,864 405,653 873,197 753,294
Telephone Directory 17,369 16,833 33,073 32,682
Telecommunications Services 37,935 33,508 63,139 63,404
Computer Systems 42,920 26,327 84,114 50,422
Elimination of inter-segment
sales (5,043) (3,842) (9,643) (7,364)
--------- --------- ---------- ----------
Total Net Sales $ 546,045 $ 478,479 $1,043,880 $ 892,438
========= ========= ========== ==========
Income (Loss) from
Continuing Operations
Before Minority Interest
and Income Taxes
Staffing Services $ 7,263 $ 9,567 $ 9,716 $ 10,958
Telephone Directory 2,501 1,995 4,608 4,594
Telecommunications Services 193 (817) (2,236) (2,719)
Computer Systems 9,015 5,866 16,529 10,389
--------- --------- ---------- ----------
Total Segment Operating
Profit 18,972 16,611 28,617 23,222
General corporate expenses (8,976) (7,633) (17,283) (15,193)
--------- --------- ---------- ----------
Total Operating Profit 9,996 8,978 11,334 8,029
Interest income and other
expense (290) (913) (746) (1,429)
Foreign exchange loss-net (98) (94) (260) (70)
Interest expense (442) (423) (954) (880)
--------- --------- ---------- ----------
Income from Continuing
Operations Before Minority
Interest and Income Taxes $ 9,166 $ 7,548 $ 9,374 $ 5,650
========= ========= ========== ==========
(1) As previously announced, 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 $1.2 million and $2.5 million and the net operating
profit has been increased by $0.4 million and $0.7 million for the
second quarter and six months ended May 2, 2004, respectively.
VOLT INFORMATION SCIENCES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
May 1, October 31,
2005 2004
--------------- ---------------
Assets (Dollars in thousands)
Current Assets
Cash and cash equivalents, including
restricted cash of $26,421 (2005)
and $43,722 (2004) -- Note B $ 88,614 $ 88,031
Short-term investments 3,900 4,248
Trade receivables, net -- Note D 391,868 409,130
Inventories 32,660 32,676
Recoverable income taxes 2,683 -
Deferred income taxes 9,660 9,385
Prepaid and other assets 19,069 14,847
-------------- ---------------
Total Current Assets 548,454 558,317
Property, plant and equipment, net 81,362 85,038
Deposits and other assets 2,161 1,539
Goodwill 29,144 29,144
Other intangible assets, net 15,447 15,998
-------------- ---------------
Total Assets $ 676,568 $ 690,036
============== ===============
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable to bank $ 4,007 $ 7,955
Current portion of long-term debt 2,330 399
Accounts payable 180,541 192,163
Accrued wages and commissions 51,500 54,200
Accrued taxes other than income taxes 19,304 17,729
Other accruals 31,913 36,036
Deferred income and other liabilities 37,651 36,909
Income taxes payable - 4,270
-------------- ---------------
Total Current Liabilities 327,246 349,661
Accrued insurance 4,478 86
Long-term debt 13,518 15,588
Deferred income taxes 10,721 11,764
Minority interest -- Note A 39,673 36,420
Stockholders' Equity 280,932 276,517
-------------- ---------------
Total Liabilities and Stockholders'
Equity $ 676,568 $ 690,036
============== ===============
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 May 1, 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 $80.0 million at May 1, 2005 and $70.0 million at October
31, 2004. Accordingly, the trade receivables included on the May
1, 2005 and November 2, 2003 balance sheets have been reduced to
reflect the $80.0 million and $70.0 million participation interest
sold, respectively.
CONTACT: Volt Information Sciences, Inc.
James J. Groberg and Ron Kochman, 212-704-2400
voltinvest@volt.com