VOLT INFORMATION SCIENCES, INC. - FORM 8-K - EX-99.3 - PRO-FORMA FINANCIAL STATEMENTS - December 5, 2014

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8-K - CURRENT REPORT - VOLT INFORMATION SCIENCES, INC.ss408126_8k.htm
EX-2.1 - MEMBERSHIP INTEREST PURCHASE AGREEMENT - VOLT INFORMATION SCIENCES, INC.ss408126_ex0201.htm
EX-99.1 - PRESS RELEASE - VOLT INFORMATION SCIENCES, INC.ss408126_ex9901.htm
EX-99.2 - NON-GAAP FINANCIAL INFORMATION - VOLT INFORMATION SCIENCES, INC.ss408126_ex9902.htm
                   
Unaudited Pro Forma Financial Information
            
On December 1, 2014, Volt Delta Resource Holdings, Inc., a wholly-owned subsidiary of Volt Information Sciences, Inc. (the “Company”), and the Company entered into a Membership Interest Purchase Agreement with NewNet Communication Technologies, LLC (“NewNet”) pursuant to which NewNet will purchase Volt Delta Resources, LLC (“VoltDelta”).
 
The following unaudited pro forma financial information gives effect to the sale of VoltDelta to NewNet, and is based on the historical consolidated financial statements of the Company.  The statements of income for the years ended November 3, 2013, October 28, 2012, and October 30, 2011 and for the nine months ended August 3, 2014 give effect to the disposition as if it had occurred at October 30, 2011.  Because the operations covered by the VoltDelta sale have not been reflected as discontinued operations in the Company’s annual historical financial statements, the Company is providing pro forma financial information for the three most recent fiscal years and the subsequent interim period.
 
The historical consolidated financial information presented herein should be read in conjunction with the audited consolidated financial statements and notes thereto appearing in the Company’s Annual Report on Form 10-K for the year ended November 3, 2013, the unaudited consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the nine months ended August 3, 2014.
 
These unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the results of future operations or the actual results that would have been achieved had the sale been consummated during the periods indicated. The pro forma adjustments are based on the best information available to date, which may change as additional information is obtained.
 
 
 
 
 
 
 
 
 
 
 
                     
 VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Condensed Balance Sheet
August 3, 2014
 (in thousands)
 
                   
   
As reported
    
Pro Forma
Adjustment
    
Pro Forma
  
ASSETS
                  
CURRENT ASSETS:
                  
Cash and cash equivalents
   $ 10,449     $ (1,094 )   $ 9,355  
Restricted cash and short-term investments
     46,282       -       46,282  
Trade accounts receivable
     251,229       (9,666 )     241,563  
Recoverable income taxes
     18,051       (1,024 )     17,027  
Prepaid insurance and other current assets
     30,882       (2,464 )     28,418  
Assets held for sale
     -       21,378       21,378  
TOTAL CURRENT ASSETS
     356,893       7,130       364,023  
                         
Prepaid insurance and other assets, excluding current portion
     46,859       (3,577 )     43,282  
Property, equipment and software, net
     29,924       (3,553 )     26,371  
TOTAL ASSETS
   $ 433,676     $ -     $ 433,676  
                         
LIABILITIES AND STOCKHOLDERS’ EQUITY
                        
CURRENT LIABILITIES:
                        
Accrued compensation
   $ 44,038     $ (2,196 )   $ 41,842  
Accounts payable
     53,070       (1,851 )     51,219  
Accrued taxes other than income taxes
     18,369       (758 )     17,611  
Accrued insurance and other accruals
     39,687       (2,654 )     37,033  
Deferred revenue, net, current portion
     10,825       (6,206 )     4,619  
Short-term borrowings, including current portion of long-term debt
     143,196       -       143,196  
Liabilities held for sale
     -       18,169       18,169  
TOTAL CURRENT LIABILITIES
     309,185       4,504       313,689  
                         
Accrued insurance and other, excluding current portion
     13,036       (340 )     12,696  
Deferred revenue, excluding current portion
     3,225       (3,146 )     79  
Income taxes payable, excluding current portion
     9,109       (1,018 )     8,091  
Long-term debt, excluding current portion
     7,451       -       7,451  
TOTAL LIABILITIES
     342,006       -       342,006  
                         
Commitments and contingencies
                        
                         
STOCKHOLDERS’ EQUITY
                        
Preferred stock, par value $1.00
     -       -       -  
Common stock, par value $0.10
     2,356       -       2,356  
Paid-in capital
     72,399       -       72,399  
Retained earnings
     62,226       -       62,226  
Accumulated other comprehensive loss
     (3,431 )     -       (3,431 )
Treasury stock
     (41,880 )     -       (41,880 )
TOTAL STOCKHOLDERS’ EQUITY
     91,670       -       91,670  
                         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   $ 433,676     $ -     $ 433,676  
 
 
 
 
 
                   
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Statements of Operations
For the nine months ended August 3, 2014
(in thousands, except per share amounts)
                     
   
As Reported
    
Pro Forma
Adjustment
  
Pro Forma
  
REVENUE:
                  
Staffing service revenue
   $ 1,195,981     $ -     $ 1,195,981  
Other revenue
     129,623       (45,247 )     84,376  
NET REVENUE
     1,325,604       (45,247 )      1,280,357  
                         
EXPENSES:
                        
Direct cost of staffing services revenue
     1,026,063       -       1,026,063  
Cost of other revenue
     111,824       (41,307 )      70,517  
Selling, administrative and other operating costs
     192,378       (14,537 )      177,841  
Amortization of purchased intangible assets
     754       (598 )      156  
Restructuring costs
     2,396       (599 )      1,797  
Restatement, investigations and remediation
     5,261       -       5,261  
TOTAL EXPENSES
     1,338,676       (57,041 )      1,281,635  
                         
OPERATING LOSS
     (13,072 )     11,794       (1,278 )
                         
OTHER INCOME (EXPENSE), NET
                        
Interest income (expense), net
     (2,449 )     (1 )      (2,450 )
Foreign exchange gain (loss), net
     (1,645 )     1,268       (377 )
Other income (expense), net
     134       136       270  
TOTAL OTHER INCOME (EXPENSE), NET
     (3,960 )     1,403       (2,557 )
                         
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
     (17,032 )     13,197       (3,835 )
Income tax provision (benefit)
     4,017       45       4,062  
LOSS FROM CONTINUING OPERATIONS
     (21,049 )     13,512       (7,897 )
                         
LOSS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES
     -       (13,152 )     (13,152 )
                         
NET LOSS
   $ (21,049 )   $ -     $ (21,049 )
                         
                         
PER SHARE DATA:
                        
                         
Basic:
                        
   Loss from continuing operations
   $ (1.01 )   $ -     $ (0.38 )
   Loss from discontinued operations
     -       (0.63 )     (0.63 )
   Net loss
   $ (1.01 )   $ (0.63 )   $ (1.01 )
   Weighted average number of shares
     20,859       20,859       20,859  
Diluted:
                        
   Loss from continuing operations
   $ (1.01 )   $ -     $ (0.38 )
   Loss from discontinued operations
     -       (0.63 )     (0.63 )
   Net loss
   $ (1.01 )   $ (0.63 )   $ (1.01 )
   Weighted average number of shares
     20,859       20,859       20,859  
                              
 
 
 
                 
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Statements of Operations
For the year ended November 3, 2013
(in thousands, except per share amounts)
                   
   
As Reported
    
Pro Forma
Adjustment
  
Pro Forma
  
REVENUE:
                        
Staffing service revenue
   $ 1,899,723     $ -     $ 1,899,723  
Other revenue
     191,214       (73,465 )      117,749  
NET REVENUE
     2,090,937       (73,465 )      2,017,472  
                         
EXPENSES:
                        
Direct cost of staffing services revenue
     1,634,365       -       1,634,365  
Cost of other revenue
     160,199       (65,680 )      94,519  
Selling, administrative and other operating costs
     294,034       (24,314 )      269,720  
Amortization of purchased intangible assets
     1,369       (858 )      511  
Restructuring costs
     4,726       (3,945 )      781  
Restatement, investigations and remediation
     24,828       -       24,828  
TOTAL EXPENSES
     2,119,521       (94,797 )      2,024,724  
                         
OPERATING LOSS
     (28,584 )     21,332       (7,252 )
                         
OTHER INCOME (EXPENSE), NET
                        
Interest income (expense), net
     (2,957 )     (2 )      (2,959 )
Foreign exchange gain (loss), net
     1,104       (735 )      369  
Other income (expense), net
     31       (10 )      21  
TOTAL OTHER INCOME (EXPENSE), NET
     (1,822 )     (747 )      (2,569 )
                         
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
     (30,406 )     20,585       (9,821 )
Income tax provision (benefit)
     469       2,231       2,700  
LOSS FROM CONTINUING OPERATIONS
     (30,875 )     18,354       (12,521 )
                         
LOSS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES
     -       (18,354 )     (18,354 )
                         
NET LOSS
   $ (30,875 )   $ -     $ (30,875 )
                         
                         
PER SHARE DATA:
                        
                         
Basic:
                        
   Loss from continuing operations
   $ (1.48 )   $ -     $ (0.60 )
   Loss from discontinued operations
     -       (0.88 )     (0.88 )
   Net loss
   $ (1.48 )   $ (0.88 )   $ (1.48 )
   Weighted average number of shares
     20,826       20,826       20,826  
Diluted:
                        
   Loss from continuing operations
   $ (1.48 )   $ -     $ (0.60 )
   Loss from discontinued operations
     -       (0.88 )     (0.88 )
   Net loss
   $ (1.48 )   $ (0.88 )   $ (1.48 )
   Weighted average number of shares
     20,826       20,826       20,826  
      
 
 
 
 
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Pro Forma Consolidated Statements of Operations
For the year ended October 28, 2012
(in thousands, except per share amounts)
 
   
As Reported
    
Pro Forma
Adjustment
  
Pro Forma
  
REVENUE:
                        
Staffing service revenue
  
$
2,027,601
    
$
-
    
$
2,027,601
  
Other revenue
    
218,526
      
(99,679
 )    
118,847
  
NET REVENUE
    
2,246,127
      
(99,679
 )    
2,146,448
  
                         
EXPENSES:
                        
Direct cost of staffing services revenue
    
1,738,933
      
-
      
1,738,933
  
Cost of other revenue
    
163,853
      
(68,281
 )    
95,572
  
Selling, administrative and other operating costs
    
310,847
      
(26,897
 )    
283,950
  
Amortization of purchased intangible assets
    
1,382
      
(859
 )    
523
  
Gain on sale of building
    
(4,418
)
    
-
      
(4,418
)
Restatement, investigations and remediation
    
42,906
      
-
      
42,906
  
TOTAL EXPENSES
    
2,253,503
      
(96,037
 )    
2,157,466
  
                         
OPERATING INCOME (LOSS)
    
(7,376
)
    
(3,642
 )    
(11,018
)
                         
OTHER INCOME (EXPENSE), NET
                        
Interest income (expense), net
    
(3,072
)
    
23
 
    
(3,049
)
Foreign exchange gain (loss), net
    
(131
)
    
509
 
    
378
  
Other income (expense), net
    
(633
)
    
(1
 )    
(634
)
TOTAL OTHER INCOME (EXPENSE), NET
    
(3,836
)
    
531
 
    
(3,305
)
                         
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
    
(11,212
)
    
-
      
(14,323
)
Income tax provision
    
2,391
      
(689
 )    
1,702
  
LOSS FROM CONTINUING OPERATIONS
    
(13,603
)
    
(2,422
 )    
(16,025
)
                         
INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES
    
-
      
2,422
      
2,422
  
                         
NET INCOME (LOSS)
  
$
(13,603
)
  
$
-
    
$
(13,603
)
                         
                         
PER SHARE DATA:
                        
                         
Basic:
                        
   Loss from continuing operations
  
$
(0.65
)
  
$
-
    
$
(0.77
)
   Income from discontinued operations
    
-
      
0.12
      
0.12
  
   Net income (loss)
  
$
(0.65
)
  
$
0.12
    
$
(0.65
)
   Weighted average number of shares
    
20,813
      
20,813
      
20,813
  
Diluted:
                        
   Loss from continuing operations
  
$
(0.65
)
  
$
-
    
$
(0.77
)
   Income from discontinued operations
    
-
      
0.12
      
0.12
  
   Net income (loss)
  
$
(0.65
)
  
$
0.12
    
$
(0.65
)
   Weighted average number of shares
    
20,813
      
20,884
      
20,813
  
                               
 
 
 
                              
VOLT INFORMATION SCIENCES, INC. AND SUBSIDIARIES
Pro Forma Consolidated Statements of Operations
For the year ended October 30, 2011
(in thousands, except per share amounts)
                                   
   
As Reported
    
Pro Forma
Adjustment
  
Pro Forma
  
REVENUE:
                        
Staffing service revenue
  
$
1,957,905
    
$
-
    
$
1,957,905
  
Other revenue
    
280,204
      
(165,349
 )    
114,855
  
NET REVENUE
    
2,238,109
      
(165,349
 )    
2,072,760
  
                         
EXPENSES:
                        
Direct cost of staffing services revenue
    
1,698,711
      
-
      
1,698,711
  
Cost of other revenue
    
166,211
      
(76,022
 )    
90,189
  
Selling, administrative and other operating costs
    
302,882
      
(28,835
 )    
274,047
  
Amortization of purchased intangible assets
    
1,347
      
(855
 )    
492
  
Restatement, investigations and remediation
    
49,193
      
-
      
49,193
  
TOTAL EXPENSES
    
2,218,344
      
(105,712
 )    
2,112,632
  
                         
OPERATING INCOME (LOSS)
    
19,765
      
(59,637
 )    
(39,872
)
                         
OTHER INCOME (EXPENSE), NET
                        
Interest income (expense), net
    
(2,889
)
    
(4
 )    
(2,893
)
Foreign exchange gain (loss), net
    
(569
)
    
306
 
    
(263
)
Other income (expense), net
    
(1,026
)
    
9
 
    
(1,017
)
TOTAL OTHER INCOME (EXPENSE), NET
    
(4,484
)
    
311
 
    
(4,173
)
                         
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
    
15,281
      
-
      
(44,045
)
Income tax provision (benefit)
    
(348
)
    
(15,135
 )    
(15,483
)
INCOME (LOSS) FROM CONTINUING OPERATIONS
    
15,629
      
(44,191
 )    
(28,562
)
                         
INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES
    
-
      
44,191
      
44,191
  
                         
NET INCOME
  
$
15,629
    
$
-
    
$
15,629
  
                         
                         
PER SHARE DATA:
                        
                         
Basic:
                        
   Income (loss) from continuing operations
  
$
0.75
    
$
-
    
$
(1.37
)
   Income from discontinued operations
    
-
      
2.12
      
2.12
  
   Net income
  
$
0.75
    
$
2.12
    
$
0.75
  
   Weighted average number of shares
    
20,813
      
20,813
      
20,813
  
Diluted:
                        
   Income (loss) from continuing operations
  
$
0.75
    
$
-
    
$
(1.37
)
   Income from discontinued operations
    
-
      
2.12
      
2.12
  
   Net income
  
$
0.75
    
$
2.12
    
$
0.75
  
   Weighted average number of shares
    
20,896
      
20,896
      
20,896
  
          
 
 
 
     
Notes to Unaudited Pro Forma Financial Information
           
1. Basis of Pro Forma Presentation
 
On December 1, 2014, Volt Delta Resource Holdings, Inc., a wholly-owned subsidiary of Volt Information Sciences, Inc. (the “Company”), and the Company entered into a Membership Interest Purchase Agreement with NewNet Communication Technologies, LLC (“NewNet”) pursuant to which NewNet will purchase Volt Delta Resources, LLC (“VoltDelta”).
 
The proceeds to the Company from the transaction are a $10 million note bearing interest at one half percent (0.5%) per year due in 4 years and convertible into a capital interest of up to 20% in NewNet. The Company may convert the note at any time and is entitled to receive early repayment in the event of certain events such as a change in control of NewNet. The proceeds are in exchange for the ownership of Volt Delta Resources, LLC and its operating subsidiaries, which comprise the Company’s Computer Systems segment, and payment of $4 million by the Company during the first 45 days following the transaction. An additional payment will be made between the parties based on working capital adjustments.
 
The pro forma adjustments reflected in the accompanying unaudited pro forma condensed consolidated financial information reflects estimates and assumptions that the Company’s management believes to be reasonable, the final amounts could be different by a material amount.
 
2. Pro Forma Adjustments
 
The unaudited pro forma condensed consolidated balance sheet at August 3, 2014 reflects the following pro forma adjustments:
 
·
Adjustment to reflect the assets and liabilities sold in the VoltDelta sale or otherwise disposed of in connection therewith
 
The unaudited pro forma condensed consolidated statements of operations for the nine months ended August 3, 2014 and the years ended November 3, 2013, October 28, 2012, and October 30, 2011 reflect the following pro forma adjustments:
 
·
Elimination of the revenues, cost of sales, and operating expenses of the Computer Systems segment being sold or otherwise disposed of, net of taxes.
 
 
 
 
 
 
 
 

VOLT INFORMATION SCIENCES, INC. Reports