EX-99.1 2 a5055131ex99_1.txt EXHIBIT 99.1 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