Volt Information Sciences Reports Fourth Quarter and Fiscal Year Results.NEW YORK New York, state, United StatesNew York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Volt Information Sciences, Inc. (NYSE NYSE See: New York Stock Exchange : VOL VOL Volume VOL Volunteer VOL Volcano VOL Volvo (stock symbol) VOL Verdingungsordnung für Leistungen (German) VOL Volatile Organic Liquid Vol Volscan (linguistics) ) today reported financial results for the Company's fourth quarter and fiscal year ended October 29, 2006. Volt will conduct a conference call webcast at 10:00 A.M. (EST EST electroshock therapy. EST abbr. electroshock therapy ) today to discuss fourth quarter and fiscal year results. The conference call dial-in number is 1-800-857-6028 (domestic) or 1-210-234-0013 (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 2006 RESULTS For the fourth quarter of fiscal 2006 ended October 29, 2006, the Company reported net income of $13.6 million, or $0.86 per share, compared to $8.4 million, or $0.54 per share, in the fiscal 2005 fourth quarter, an increase of 62%. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the 2006 quarter increased by 3% to $610.2 million, compared to $590.2 million in last year's comparable quarter. Income before minority interest and income taxes increased by $4.3 million, or 25%, compared to the 2005 comparable quarter. The minority interest was repurchased from Nortel Networks (Nortel Networks Limited, Brampton, Ontario, www.nortelnetworks.com) A world leader in telecommunications products, which includes switching, wireless and broadband systems for service providers and carriers, telephones and systems for residential and business users, computer telephony , Inc. on December 29, 2005. FISCAL YEAR 2006 RESULTS For the twelve months of fiscal 2006, the Company reported net income of $30.7 million, or $1.97 per share, compared to net income of $17.0 million, or $1.11 per share, in the comparable fiscal 2005 period, an increase of 80%. Net sales for the twelve months of fiscal 2006 increased by 7% to $2.3 billion, compared to $2.2 billion last year. Income before minority interest and income taxes was $51.6 million in the fiscal year 2006 compared to $36.3 million last year, an increase of 42%. Commenting on the results for the fourth quarter and year, Mr. Steven A. Shaw, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Volt, stated "Staffing Services continued to be the main force behind our improved fourth quarter and full fiscal year results. Strong demand in our IT and Engineering markets, tight control of workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. and unemployment costs, and solid execution of our business plan to focus on higher margin clients and services were the primary drivers for the improved results. In addition to our Staffing Services segment, the Directory Services and Computer Systems segments continue to be major contributors to the bottom line. We are pleased with both our results and corporate initiatives and are confident that our capable employees and broad array of workforce, technology, and telecommunications solutions will provide us with the opportunity and ability to continue to grow our Company." STAFFING SERVICES The $34.7 million, or 7%, increase in sales in the fourth quarter of fiscal 2006 from the comparable fiscal 2005 period was due to a 12% increase in the Technical Placement division partially offset by a 1% decrease in the Administrative and Industrial division. The increase in operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of $8.7 million was due to the increase in sales, an increase in gross margin percentage, primarily due to an increase in high-margin direct placement business, reduced workers' compensation and payroll tax Payroll Tax Tax an employer withholds and/or pays on behalf of their employees based on the wage or salary of the employee. In most countries, including the U.S., both state and federal authorities collect some form of payroll tax. costs, and a decrease in overhead costs overhead costs see fixed costs. as a percentage of sales. The segment has been working closely with customers to better manage worker's compensation costs which are approximately $1.4 million below last year's run rate for the quarter. The most significant aspect of the reduction in overhead costs as a percentage of sales was a reduction of approximately $4.2 million in general insurance costs as a result of retrospective adjustments related to the division's positive claim experience. COMPUTER SYSTEMS The Computer Systems segment's sales increase of $3.0 million, or 7%, in the fourth quarter of fiscal 2006 over the comparable 2005 period was primarily due to increases of $5.5 million in new business as a result of the segment's acquisition of Varetis Solutions in December 2005 and an increase in the Maintech division's IT maintenance sales of $0.9 million partially offset by decreases in the segment's other divisions. The decrease in operating profit of $4.4 million was due to decreased gross margins, increases in overhead necessary to support the sales increase and additional amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. . TELEPHONE DIRECTORY The Telephone Directory segment's sales decrease of $0.4 million, or 2%, for the fourth quarter of fiscal 2006 from the comparable 2005 period resulted from decreases of $0.6 million, or 3%, in publishing sales due to the timing of delivery of telephone directories. The segment's operating profit increased by $0.6 million, or 13%, primarily due to increased gross margins. TELECOMMUNICATIONS SERVICES In telecommunication, the term telecommunications service has the following meanings: 1. Any service provided by a telecommunication provider. 2. The Telecommunications Services segment's sales decrease of $16.1 million, or 36%, in the fourth quarter of fiscal 2006 over the comparable 2005 period was due to decreases of $14.5 million in the Construction and Engineering division and $1.6 million in the Network Enterprise Solutions division. The higher sales in the Construction and Engineering division in fiscal 2005 resulted from customer acceptance of several large construction jobs in that year. The segment sustained a loss of $1.7 million in the 2006 fourth quarter compared to an operating profit of $0.8 million in the prior year due to the decreased sales and higher overhead as a percentage of sales. GENERAL CORPORATE EXPENSES The decrease in General Corporate expenses compared to the 2005 quarter was related to higher professional fees and costs related to the first year compliance with the Sarbanes-Oxley Act See SOX. in the 2005 quarter. CASH AND CASH EQUIVALENTS Cash and cash equivalents, excluding restricted cash, was $38.5 million at the end of the quarter. At October 29, 2006, the Company had sold a participating interest in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying of $110.0 million under its securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. program and had the ability to finance an additional $90.0 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. Effective December 19, 2006, the Company's wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Volt Delta Resources ("Delta") entered into a stand-alone three year $70.0 million secured, syndicated, revolving credit agreement Revolving credit agreement A legal commitment in which a bank promises to lend a customer up to a specified maximum amount during a specified period. revolving credit agreement See line of credit. ("Delta Credit Facility") with Wells Fargo Wells Fargo armored carriers of bullion. [Am. Hist.: Brewer Dictionary, 1147] See : Protectiveness Wells Fargo company that handled express service to western states; often robbed. [Am. Hist. ,N.A. as the administrative agent and arranger, and as a lender thereunder. Wells Fargo and the other three lenders under the Delta Credit Facility, Lloyd TSB TSB TPS (Thermal Protection System) Sample Box TSB Technical Service Bulletin TSB Transportation Safety Board of Canada TSB Telecommunication Standardization Bureau TSB Trustee Savings Bank TSB Telecommunications Systems Bulletin Bank Plc, Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. , N.A and JPMorgan Chase JPMorgan Chase (NYSE: JPM TYO: 8634 ) is one of the oldest financial services firms in the world. The company, headquartered in New York City, is one of the leaders in investment banking, financial services, asset and wealth management and private equity. With assets of $1. also participate in the Company's $40.0 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. Neither the Company nor Delta guarantee each other's facility but certain subsidiaries of both are guarantors of their respective parent companies. Under the Delta Credit Facility, Delta is required to pay down approximately $38.0 million in intercompany debt owed to the Company within 30 days of closing. 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 A variety of telephone services that require human intervention, including person-to-person calls, collect calls, credit card billing and directory and dialing assistance. Such services are performed by LECs, IXCs and alternative operator services (AOS), organizations that are used by 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and subsequent Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. , as filed with the Securities and Exchange Commission and the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. , 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.
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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 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 $18.3 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 October 29, 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. The
outstanding balance of the participation interest sold was $110.0
million and $100.0 million at October 29, 2006 and October 30,
2005, respectively. Accordingly, the trade receivables included on
the October 29, 2006 and October 30, 2005 balance sheets have been
reduced to reflect the participation interest sold.
D - On December 19, 2006, the Company's Board of Directors authorized
and approved a three-for-two stock split in the form of a dividend
on the Company's common stock, par value $.10 per share. Shares of
common stock will be paid on January 26, 2007, to all stockholders
of record as of January 15, 2007.
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