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VERSAR ANNOUNCES THIRD QUARTER RESULTS

 VERSAR ANNOUNCES THIRD QUARTER RESULTS
 SPRINGFIELD, Va., May 15 /PRNewswire/ -- Versar, Inc. (AMEX: VSR)


today reported financial results for the fiscal 1992 third quarter period ended March 31, 1992. Revenues for the quarter were $12,122,000, a 15 percent decrease from the $14,345,000 sales volume for the same quarter one year ago, both on the basis of continuing operations. Net income from continuing operations for the quarter was a loss of $48,000 compared to a loss of $312,000 for the same period last year. Income from discontinued operations was $58,000 compared to $142,000 last year, for a total income of $10,000 on 4,164,000 shares outstanding. This compares to a loss of 4 cents per share on 3,941,000 shares outstanding for the third quarter of last year.
 Revenues for the first three quarters of fiscal 1992 were $41,048,000, a 4 percent decrease from the revenue of $42,759,000 for the same period last year, both on the basis of continuing operations. Net income from continuing operations for the first three quarters was $75,000, compared to a loss of $963,000 for the same period last year. Income from discontinued operations for the first three quarters was $95,000 compared to $383,000 last year, for a total income of 4 cents per share on 4,075,000 shares outstanding for the period. This compares to a loss of 15 cents per share on 3,919,000 shares outstanding for the same period last year.
 Ben Rawls, president and CEO of Versar, said: "During the third quarter of fiscal 1992 we continued our program to reshape Versar. We now have three quarters of positive earnings after the restructuring charge of the fourth quarter of last fiscal year. Our efforts on more aggressive working capital management in order to reduce bank debt has resulted in lower interest cost of $106,000, or 18 percent, for the third quarter of fiscal 1992, in spite of increased interest rates charged for the 1992 period. Borrowing on March 31, 1992, against our line of credit dropped $5.6 million, or 85 percent, compared to June 30, 1991.
 "Earnings for the quarter were under pressure due to the reduction in sales of 15 percent compared to a year ago. We have restructured our laboratory by downsizing and integrating it into the company rather than selling it in a poor market. The restructuring cost and operating loss resulted in a loss in the laboratory, which more than accounts for the reduction of profit, compared to plan, for the third quarter for the corporation as a whole.
 "A major thrust of our strategy is to retire debt, and we are working with the bank to restructure our debt in a manner that will more appropriately align the short and long term portions of the debt. At this writing, our long-term debt has been reduced by 19 percent from June 30, 1991. This has been done with cash generated from working capital and from the sale of a note receivable. We have reduced the borrowing on our bank line to zero, compared to $6,540,000 for June 30, 1991. We are continuing to seek a solution to the remainder of our long-term debt through the restructuring of our headquarters real estate.
 "I am happy to report that our subsidiary, Versar Architects & Engineers, Inc. (VA&E), has settled its lawsuits with the city of Sterling, Colo. Under the terms of the agreement, VA&E's insurance carrier is to pay the city $650,000. Since this payment is within policy limits, there will be no adverse impact on Versar's consolidated financial. Upon final approval by the bankruptcy court, this matter will come to an end, and the subsidiary can take further actions to resolve the bankruptcy and move forward with its business in the mountain states.
 "The shortfall in sales from expectations is putting pressure on profitability. We are meeting this problem by strengthening our sales staff. We have brought Larry White, P.E., on board as executive vice president, Corporate Development, and we are renewing our marketing efforts. This is a difficult sales environment for our industry which is impacted by the recession in the industrial sector and by a slowdown in government procurements."
 Versar provides a wide range of scientific and technical services to solve environmental and health and safety problems caused by pollutants, hazardous materials, and toxic substances.
 VERSAR, INC, AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 FOR THE THREE AND NINE-MONTH PERIODS ENDED
 MARCH 31, 1992, AND 1991
 (Unaudited -- in thousands, except per share amounts)
 Three Months Ended Nine Months Ended
 March 31, March 31,
 1992 1991(A) 1992 1991(A)
 Revenue $ 12,122 $ 14,345 $ 41,048 $42,759
 Purchased services
 and materials
 at cost 3,591 3,252 10,524 8,982
 Net Revenue From
 Services 8,531 11,093 30,524 33,777
 Contract costs 6,138 8,551 21,031 25,359
 Gross Profit 2,393 2,542 9,493 8,418
 Selling, general and
 administrative
 expenses 1,957 2,418 7,675 7,931
 Interest expense 481 587 1,617 1,962
 Income (loss) from
 continuing operations
 before income taxes (45) (463) 201 (1,475)
 Income Tax (provision)
 Benefit (3) 151 (126) 512
 Income (Loss) From
 Continuing Operations (48) (312) 75 (963)
 Income from discontinued
 operations, Gammaflux,
 (less applicable income
 taxes of $9, 107, 41, and
 $289, less minority interest
 of $2, 33, 11 and $89
 respectively 58 142 95 383
 Net Income (loss) $ 10 $ (170) $ 170 $(580)
 Income (Loss) per share
 from continuing
 operations $ (.01) $ (.08) $ .02 $(.25)
 Income Per Share From
 Discontinued Operations $.01 $ .04 $ .02 $ .10
 Net Income (loss) per
 Share $ .00 $ (.04) $ .04 $(.15)
 Weighted Average Number
 of Shares Outstanding 4,164 3,941 4,075 3,919
 (A) Certain amounts have been reclassified for comparative purposes.
 -0- 5/15/92
 /CONTACT: Versar, Investor Relations, 703-750-3000/
 (VSR) CO: Versar, Inc. ST: Virginia IN: SU: ERN


DC -- DC028 -- 0957 05/15/92 16:58 EDT
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Date:May 15, 1992
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