EX-99 3 a4538447ex991.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Volt Information Sciences Reports Higher Fourth Quarter and Fiscal Year Earnings NEW YORK--(BUSINESS WIRE)--Dec. 22, 2003--Volt Information Sciences, Inc. (NYSE: VOL) today reported net income of $6.9 million for the fourth quarter ended November 2, 2003, a 43% increase over the comparable quarter of the previous year. Net income for the year was $4.8 million compared to a loss of $32.8 million in fiscal 2002. Attached is a summary of the Company's results of operations and notes thereto. The notes in the attachment are an integral part of the summary. The Company will conduct a conference call webcast at 11:00 A.M. (EST) today to discuss fourth quarter and year-end results. The conference call dial-in number is 1-888-790-3149, 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. Fourth Quarter of Fiscal 2003 Results For the fourth quarter ended November 2, 2003, the Company reported net income of $6.9 million, or $0.45 per share, on net sales of $438.8 million, compared to net income of $4.8 million, or $0.32 per share, on net sales of $399.6 million for the comparable quarter of the previous year. Fiscal Year 2003 Results For the fiscal year 2003, the Company reported net income of $4.8 million, or $0.31 per share, on net sales of $1.6 billion, compared to a net loss of $32.8 million, or $2.16 per share, on net sales of $1.5 billion, for the previous year. The previous year's results included non-recurring and other items as noted below. Non-recurring items in fiscal 2002 results included the following: -- A non-cash charge of $31.9 million, or $2.10 per share, for goodwill impairment as of November 5, 2001, presented as a Cumulative Effect of a Change in Accounting; -- A non-recurring charge of $2.1 million, ($1.3 million net of taxes or $0.08 per share), for the early payment of debt; and -- A net gain of $4.3 million, or $0.28 per share, including a tax benefit of $1.7 million, from discontinued operations resulting from the Company's sale of its 59% interest in Autologic Information International, Inc. that comprised the Company's Electronic Publication and Typesetting segment. The gain is comprised of a $4.5 million gain on the sale, partially offset by a $0.2 million loss on operations through November 30, 2001, the date of sale. The net income from continuing operations was $4.8 million, or $0.31 per share for fiscal 2003 compared to a loss of $5.2 million, or $0.34 per share for fiscal 2002. "In last year's press release I noted that the Company had made tremendous strides in rightsizing our business units during the troubled economic time without hindering our ability to take advantage of opportunities when the economy recovers" said William Shaw, Chairman and President. "Based on this year's improved results and our return to profitability, I am more than ever convinced that our strategy was correct. Although there is obviously a question mark as to the rate at which the economy will continue to improve, I believe our strategy of controlling business unit overhead, increasing market share and using our technological skill to stay ahead of competition will give our shareholders the growth they are expecting." STAFFING SERVICES The Staffing Services segment reported an operating profit for the fourth quarter of $12.5 million on $361.0 million in sales compared to an operating profit of $11.2 million on $325.7 million in sales for the comparable quarter of the previous year. Although increased unemployment insurance and workers' compensation costs, as well as intense competition that lowered markups, had a strong negative effect on profits, increased revenue and the excellent performance of VMC, the project management division, resulted in the increase of the segment's operating profit for the quarter and the year. COMPUTER SYSTEMS The segment reported an operating profit of $5.5 million for the fourth quarter, an increase of 132% compared to the $2.4 million for the comparable quarter of the previous year. Sales of products and services and the increase in directory assistance ASP outsourcing contributed to this increase, both for the quarter and the year. Of particular note was the increase in the operating performance of the segment's European subsidiaries, with a $5.1 million increase in revenue for the fourth quarter. Gross margin for the segment increased by 5.0 percentage points for the fourth quarter, while overhead as a percentage of sales decreased by 3.1 percentage points. TELEPHONE DIRECTORY This segment reported a fourth quarter operating profit of $3.1 million on $20.4 million in sales compared to a $4.2 million operating profit on $32.5 million in sales for the comparable quarter of the previous year. Fourth quarter profits were affected by a change in scheduling of the publication of certain community directories and the previously announced termination of a major directory production contract. However, operating profit for the full fiscal year 2003 increased to $7.7 million from $6.7 million in fiscal 2002, primarily as a result of a $1.7 million operating profit increase for DataNational's community directories. TELECOMMUNICATIONS SERVICES This segment reported a fourth quarter operating loss of $2.0 million on sales of $32.6 million compared to an operating loss of $1.9 million on sales of $24.0 million for the comparable quarter of the previous year. The continued contraction of capital spending in the telecommunications industry has made it extremely difficult to return this segment to profitability. However, reduction in overhead, rationalization realized from the merger of the two divisions of this segment and slightly higher revenue accounted for a $9.3 million annual reduction in losses compared to the previous fiscal year. GENERAL AND ADMINISTRATIVE EXPENSES General corporate expenses for the fourth quarter and full fiscal year 2003 increased over the comparable prior year periods, primarily due to previously reported costs to meet disaster recovery requirements, including redundancy and business continuity for the Company's corporate systems and communications network. LIQUIDITY Cash and cash equivalents, excluding restricted cash, increased to $43.2 million at November 2, 2003 from $32.2 million at November 3, 2002. At November 2, 2003, the Company had sold a continuing participation interest in accounts receivable of $70.0 million under its securitization program and had the ability to finance up to an additional $30.0 million under that facility. On November 14, 2003, the Company sold an additional $10.0 million participation under this program, which terminates in April 2005. The Company is presently negotiating an increase in the securitization facility to $150.0 million in anticipation of the potential of increased revenue, as well as an extension of the term. In addition, the Company may borrow under a $40.0 million revolving credit facility, under which borrowings are limited by a specific borrowing base ($40.0 million available on November 2, 2003). This revolver expires in April 2004. To date, the Company has not borrowed under this facility. Volt Information Sciences, Inc. is a leading national provider of Staffing Services and Telecommunications and Information Solutions for its 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 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 ENDED FISCAL YEAR ENDED Nov. 2, Nov. 3, Nov. 2, Nov 3, 2003 2002 (1) 2003 2002 (1,2) -------- -------- ---------- ---------- (In thousands, except per share amounts) Net sales $438,758 $399,567 $1,609,857 $1,467,786 ======== ======== ========== ========== Income (loss) from continuing operations before income taxes $ 11,433 $ 8,631 $ 8,047 ($7,507) Income tax (provision) benefit (4,548) (3,817) (3,286) 2,320 -------- -------- ---------- ---------- Income (loss) from continuing operations 6,885 4,814 4,761 (5,187) Discontinued operations-Note A 4,310 Cumulative effect of a change in accounting-Note B: Goodwill impairment - - - (31,927) -------- -------- ---------- ---------- Net income (loss) $ 6,885 $ 4,814 $ 4,761 ($32,804) ======== ======== ========== ========== Per Share Data Basic and Diluted: Income (loss) from continuing operations $ 0.45 $ 0.32 $ 0.31 ($0.34) Discontinued operations 0.28 Cumulative effect of a change in accounting - - - (2.10) -------- -------- ---------- ---------- Net income (loss) $ 0.45 $ 0.32 $ 0.31 ($2.16) ======== ======== ========== ========== Weighted average number of shares outstanding-basic 15,220 15,217 15,218 15,217 ======== ======== ========== ========== Weighted average number of shares outstanding-diluted 15,235 15,218 15,225 15,217 ======== ======== ========== ========== (1) As previously announced, the Company has changed the method of reporting the revenues of its Professional Employer Organization ("PEO") subsidiary from gross billing to a net revenue basis. Accordingly, reported PEO revenues and related cost of sales for the three months and fiscal year ended November 3, 2002 have been reduced by $5.5 million and $20.1 million, respectively, with no effect on operating profit or the net results of the Company. (2) Pursuant to the Company's adoption of SFAS No. 145, results for the fiscal year ended November 3, 2002 have been restated to give effect to the reclassification of a charge of $2.1 million ($1.3 million, net of taxes) arising from a March 2002 early payment of the Company's $30 million 7.92% Senior Notes to Other Expense, previously presented as an extraordinary item. VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET DATA Nov. 2, Nov. 3, 2003 2002 ---------- ---------- (Unaudited) ASSETS (In thousands) CURRENT ASSETS Cash and cash equivalents, including restricted cash $18,870 (2003) and $11,458 (2002)-Note C $ 62,057 $ 43,620 Short-term investments 4,149 3,754 Trade receivables, net-Note D 313,946 300,670 Inventories 37,357 29,690 Recoverable income taxes 2,596 6,552 Deferred income taxes 8,722 8,343 Prepaid expenses and other assets 16,132 15,212 ---------- ---------- TOTAL CURRENT ASSETS 444,959 407,841 Property, plant and equipment, net 82,452 89,294 Deposits and other assets 2,300 3,380 Intangible assets, net-Note B 8,982 9,075 ---------- ---------- TOTAL ASSETS $ 538,693 $ 509,590 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable to banks $ 4,062 $ 2,424 Current portion of long-term debt 371 1,524 Accounts payable 153,979 154,054 Accrued wages and commissions 45,834 39,529 Accrued taxes other than income taxes 16,741 18,525 Other accruals 14,673 8,276 Deferred income and other liabilities 27,665 19,009 ---------- ---------- TOTAL CURRENT LIABILITIES 263,325 243,341 Accrued insurance 4,098 Long-term debt 14,098 14,469 Deferred income taxes 15,252 14,743 Stockholders' Equity 241,920 237,037 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 538,693 $ 509,590 ========== ========== VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES SUMMARY OF RESULTS OF OPERATIONS BY SEGMENT FOURTH QUARTER ENDED FISCAL YEAR ENDED Nov. 2, Nov. 3, Nov. 2, Nov. 3, 2003 2002 (1) 2003 2002 (1,2) -------- -------- ---------- ---------- (Dollars in thousands) Net Sales --------- Staffing Services-Note C Traditional staffing $342,393 $308,692 $1,269,242 $1,143,761 Managed services 276,135 257,394 1,043,572 745,667 -------- -------- ---------- ---------- Total gross sales 618,528 566,086 2,312,814 1,889,428 Less non-recourse managed services (257,576)(240,381) (967,379) (679,110) -------- -------- ---------- ---------- Net Staffing Services sales 360,952 325,705 1,345,435 1,210,318 Telephone Directory 20,416 32,460 70,159 83,326 Telecommunications Services 32,613 23,962 112,839 108,872 Computer Systems 28,080 20,507 93,639 78,796 Elimination of intersegment sales (3,303) (3,067) (12,215) (13,526) -------- -------- ---------- ---------- Total Net Sales $438,758 $399,567 $1,609,857 $1,467,786 ======== ======== ========== ========== Income from Continuing Operations before Income Taxes: ------------------------- Segment Operating Profit (Loss) ------------------------- Staffing Services $ 12,495 $ 11,194 $ 21,072 $ 20,469 Telephone Directory 3,090 4,207 7,674 6,712 Telecommunications Services (2,039) (1,943) (3,986) (13,259) Computer Systems 5,521 2,384 14,679 8,912 -------- -------- ---------- ---------- Total Segment Operating Profit 19,067 15,842 39,439 22,834 General corporate expenses (7,665) (5,855) (27,668) (22,704) -------- -------- ---------- ---------- Total Operating Profit 11,402 9,987 11,771 130 Interest income and other expense (150) (465) (1,953) (2,611) Foreign exchange gain (loss), net 573 (161) 299 (477) Interest expense (392) (730) (2,070) (4,549) -------- -------- ---------- ---------- Income (Loss) from Continuing Operations before Income Taxes $ 11,433 $ 8,631 $ 8,047 ($7,507) ======== ======== ========== ========== (1) As previously announced, the Company has changed the method of reporting the revenues of its Professional Employer Organization ("PEO") subsidiary, of the Staffing Services segment, from gross billing to a net revenue basis. Accordingly, reported PEO revenues and related cost of sales for three months and fiscal year ended November 3, 2002 have been reduced by $5.5 million and $20.1 million, respectively, with no effect on operating profit or the net results of the Company. (2) Pursuant to the Company's adoption of SFAS No. 145, results for the fiscal year ended November 3, 2002 have been restated to give effect to the reclassification of a charge of $2.1 million ($1.3 million, net of taxes) arising from a March 2002 early payment of the Company's $30 million 7.92% Senior Notes to Other Expense, previously presented as an extraordinary item. (Notes Follow) VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES SUMMARY OF RESULTS OF OPERATIONS BY SEGMENT Note A - The results of discontinued operations reflect the Company's percentage interest in the loss through November 30, 2001 of, and the Company's gain on the sale on that date of its interest in, its 59% owned publicly-held subsidiary, Autologic Information International, Inc. ("Autologic"), that comprised the Company's Electronic Publication and Typesetting segment. Autologic was acquired by Agfa Corporation through a tender offer for all of Autologic's outstanding shares and a subsequent merger. The Company received $24.2 million for its shares. The gain on the sale of $4.5 million, including a tax benefit of $1.7 million, was reflected in the Company's first quarter of fiscal 2002. The results of Autologic are classified as discontinued operations. B - As of the beginning of fiscal year 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." Under the new rules, beginning in fiscal 2002, goodwill and other intangibles with indefinite lives are no longer amortized, but are subject to testing, annually and whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable, using fair value methodology. The results of testing goodwill, upon the adoption of SFAS No. 142, resulted in a non-cash charge to earnings for goodwill impairment of $31.9 million as of November 5, 2001, which is presented as a Cumulative Effect of a Change in Accounting. The charge consisted of a write-down of goodwill of $23.9 million in the Staffing Services segment, primarily related to the goodwill of the IT staffing sector in Europe, and $8.0 million related to community directory acquisitions in the Telephone Directory segment and a joint venture. 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 November 2, 2003 and November 3, 2002 balance sheets. D - On April 15, 2002, under a new 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 $70.0 million at November 2, 2003 and $60.0 million at November 3, 2002. Accordingly, the trade receivables included on the November 2, 2003 and November 3, 2002 balance sheets have been reduced to reflect the $70.0 million and $60.0 million participation interest sold, respectively. Subsequent to November 2, 2003, the Company sold an additional $10.0 million participation interest. CONTACT: Volt Information Sciences, Inc. James J. Groberg or Ron Kochman 212-704-2400 voltinvest@volt.com