Volt Information Sciences Inc.
Volt Information Sciences Inc.
Incorporated: 1957 as Volt Technical Corp.
Sales: $1.42 billion (1997)
Stock Exchanges: New York
Ticker Symbol: VOL
SICs: 2741 Miscellaneous Publishing; 2759 Commercial Printing, Not Elsewhere Classified; 2791 Typesetting; 2796 Platemaking & Related Services; 3555 Printing Trade Machinery & Equipment; 5045 Computers & Computer Peripheral Equipment & Software; 7363 Help Supply Services; 7371 Computer Programming Services; 7372 Prepackaged Software; 7373 Computer Integrated Systems Design; 7374 Computer Processing & Data Preparation & Processing Services; 8741 Management Services
Volt Information Sciences Inc. is a diversified company in three major businesses: staffing services; telecommunications and information solutions, including the publication of telephone directories; and prepress publishing systems. Its chief business, supplying professional and technical employees to clients on a temporary basis, was being directed in 1997 from 272 branch and onsite offices throughout the United States.
Diversified Technical Company: 1951-80
The company originated as a technical documentation business established in Brooklyn, New York, in 1951. The founders—William Shaw and his brother Jerome—began putting together technical manuals for the military during the Korean War. This involved writing material to instruct untrained draftees in the operation and maintenance of military equipment, making illustrations, and cataloging parts. The company, which was incorporated in 1957 as Volt Technical Corp., also did well after the war, a period during which expensive missile programs were initiated and cost-plus-fixed-fee writing contracts were easy to obtain. Gross revenue grew from $988,401 in fiscal 1957 (the year ended October 31, 1957) to $7.3 million in fiscal 1961. Net income increased from $19,893 to $366,016 during this period.
During the early 1960s less work was available because of a slowdown in the funding of big new defense projects. Volt, which went public in 1962, acquiring five affiliated corporations in an exchange of stock, moved heavily into the services end of the business. By 1963 it was supplying clients with technically trained personnel, and in the mid-1960s, at the request of several aerospace clients who needed nontechnical temporary help, it created Volt Instant Personnel, providing bookkeepers, stenographers, secretaries, and clerks. To keep its newly leased IBM 360 system occupied, Volt was already offering such computer services as systems analysis, programming, and payroll processing. The Vietnam War further stimulated business; during fiscal 1968 revenues reached $39.8 million and net income, $2.1 million. A share of Volt stock soared as high as $110 in 1968—just before a 5-for-l split—compared with $7.50 in 1966.
The company name was changed to Volt Information Sciences in 1968 to reflect its broader scope. In 1970 Volt was offering, through some 50 offices nationwide, services including engineering, training, data processing, graphics, marketing, and temporary personnel. It also was publishing as well as preparing technical manuals, having purchased the company doing the page makeup when it was close to failure. This company eventually became Autologic, Inc., which began making computerized typesetters. During 1971-72 Volt acquired Autologic’s parent, Alphanumeric Publication Systems, Inc., which included another subsidiary engaged in the manufacture and sale of these typesetters and in other computer services.
Volt also started a school at its New York City headquarters in 1966 to teach computer programming and operation. By the 1970s it was developing and administering education and training programs for government and community agencies and industrial concerns. Nevertheless, as the military buildup in Vietnam waned, the company’s revenues dropped from $45 million in fiscal 1969 to $33 million in fiscal 1970, during which it lost $1.4 million. Volt lost $3.4 million on only $27 million in revenues in fiscal 1971. It returned to the black in fiscal 1972 but lost money again in fiscal 1973, a year in which the stock fell to below $1 a share. The company’s fortunes then turned around, and in the latter years of the decade it had net income as high as $9 million a year. In 1980, when Volt earned $9.3 million on revenues of $171.4 million, a share of its stock traded as high as $40.
Autologic became Volt’s Electronic Pre-Press Equipment Division. By 1979 its APS-5 state-of-the-art cold-type photo-typesetter was the world’s leading digital cathode-ray-tube typesetter, with output speed of up to 3,000 lines a minute. More than 400 of these machines and those of the earlier APS-4 model had been sold. Volt itself was using this equipment to photocompose telephone directories, technical documents, and other publications produced by its various service divisions.
The company’s Technical Publications Division installed Autologic’s new text-management system in 1978 and immediately put it to use in the preparation of quick-reaction proposals for customers bidding on government contracts. Next the system was applied to the processing of large complex databases, such as those involved in the preparation and updating of operations-and-maintenance manuals for defense and aerospace products.
Volt’s Technical Services Division, enhanced by systems analysts, programmers, and terminal operators, was using computer storage devices and microfilm and microfiche in addition to the printed page to record technical information. Systems developed by Volt now were capable of merging graphics and artwork with tax material in computer-indexed files for storage, display, and transmission in a variety of modes.
Volt believed its telephone directory systems to be the most advanced in use, offering telephone companies substantial savings in product costs and higher directory advertising revenue. The key feature in systems being developed by Volt for these companies was distributed processing. The telephone company processed changes to its tariff structure and transmitted them to the master database maintained by Volt. These changes were further processed by Volt to produce updates to the many telephone network documents affected by tariff modifications. The first long-term contract for these services was signed in 1978.
Volt’s Contract Services Group was providing its clients with technical and professional personnel for assignments around the world. These personnel included systems analysts, programmers, computer operators, and technical writers, editors, and illustrators. Volt took care of all administration, salaries, payroll taxes, and fringe benefits, with the client paying a fixed dollar rate for each hour actually worked. The Temporary Personnel Group was a source for all kinds of temporary office and industrial help, including clerks, secretaries and word processors, keypunch operators, bookkeepers and accountants, communications and marketing specialists, truck drivers, fork-lift operators, welders, and assemblers.
Mixed Fortunes: 1980-95
In 1980 Autologic introduced APS-Micro 5, a high-speed digital typesetter aimed at the mid-range market with a selling price of less than $50,000. Also that year, Volt acquired Delta Resources Inc., a subsidiary of Itel Corp. It formed a subsidiary, Volt Delta Resources Inc., to continue the acquired company’s operations, which consisted of designing and leasing customized computer systems for telephone directory assistance. By fiscal 1983 Volt Delta Resources was accounting for 36 percent of the parent company’s profits on only 12 percent of its sales.
Volt had record net income of $16.8 million in fiscal 1983 and $13 million in fiscal 1984. In the latter year, however, Autologic lost money. Autologic was producing the typesetting systems used by many of the nation’s biggest newspapers, including the New York Times, Los Angeles Times, and USA Today, but it was falling behind the curve as publishers began to switch to desktop publishing. Moreover, the parent company was incurring heavy interest costs as its long-term debt swelled to a record $124.3 million in 1984. Even as its revenues continued to climb, Volt lost money in fiscal 1985 and 1986. The following year it was back in the black, but Autologic lost $27.5 million.
After three profitable years, Volt lost $1.9 million in fiscal 1990 because of a variety of problems, including military cutbacks following the end of the cold war and cost overruns on contracts associated with entering new markets. The Technical Publication Services Division, aimed particularly at companies in defense and aerospace, fell into debt, discarded its full-service reproduction and printing operations, and was discontinued in 1991.
“What’s interesting about our business is that the horizon of our vision keeps getting pushed farther and farther into the distance. So, in a very real sense, we can never arrive. We can only continue the process. And we’re happy with the notion of continual growth and improvement.
“At this moment, my brother and I are surfing a big wave of critical services: people, information, exploding technology, and international commerce. We ‘re definitely going to ride this big wave of helping companies succeed right into the 21st century.
“But what could be better than to be judged by how well you’ve helped others to succeed?”
—Jerome Shaw, cofounder
On the favorable side, Autologic returned to profitability, recording a fat $10.5 million profit in fiscal 1991 on only 12 percent of the parent company’s sales. In addition, Volt’s group for producing telephone directories and installing equipment for telephone companies had entered new areas. During the mid-1980s it created a joint venture with a subsidiary of Southwestern Bell Publications to sell telephone directory advertising for most of Australia. In addition, in 1987 it formed a company with a subsidiary of Pacific Bell Directory to centralize and automate directory operations for telephone books published in California and Nevada. Both ventures proved profitable, especially the Australian operation. By 1993 Volt also was putting out the entire telephone book in Uruguay, handling advertising sales and prepress preparation as well as the printing.
Volt also was installing the computers necessary for telephone company information systems. By 1993 it had such systems installed for American Telephone & Telegraph Co., GTE Corp., NYNEX Corp., Pacific Telesis Group, and other customers.
By 1994 Volt had a licensing partnership with Bolt, Beranek & Newman Inc., a supplier of speech recognition technology, that allowed a computer to respond to spoken words—such as locations and company names—without human assistance on Volt’s automated systems. The biggest share of the company’s revenues (60 percent in fiscal 1992) continued to come, however, from the division in charge of technical services and temporary personnel. Volt had developed a database for placing technical personnel that was one of the largest in the country.
Dragging down the parent company’s earnings—and helping account for a $2.7 million loss in fiscal 1993—was Volt’s construction and engineering division, which lost money three years in a row before turning profitable in 1994. The computer systems unit, supplying hardware and networking equipment, mainly to telephone companies, also lost money in 1993 and 1994 before making a profit in 1995. The telephone directory business, with major investments in Brazil (acquired in 1994) as well as Uruguay, still was losing money in 1995, however. In January 1997 Volt sold its interest in Telelistas Editors Ltda., the Brazilian company that had printed Rio de Janeiro’s telephone listings. Later that year it sold its part of the Australian joint venture. In 1995 Volt merged Autologic with a competitor, Information International, Inc., and spun off the new unit, retaining 59 percent of the business.
Renewed Prosperity in the Mid-to-Late 1990s
Volt’s rebound in the mid-1990s was outstanding. Revenues increased from $734.5 million in fiscal 1994 to $1.42 billion in fiscal 1997, and net income also rose sharply each year, from $11.8 million to $39.9 million. Technical services and temporary personnel, especially the high-tech staffing unit, continued to be Volt’s biggest revenue generator and was also its chief source of profits. This division accounted for 72 percent of sales and 51 percent of operating profits in fiscal 1997. Corporate downsizing and a shortage of high-tech personnel in virtually every industry had made the company one of the nation’s ten largest temporary staffing companies, with clients that included Microsoft Corp., Hewlett Packard, and Pacific Telesis.
Volt’s Telecommunications Services segment was its second largest source of business, accounting for ten percent of sales and 31 percent of operating profit in fiscal 1997. This segment included Voltecon, a nationwide full-service provider of telecommunications services, including engineering, design, construction, installation, maintenance, removals, and distribution of telecommunications products. It also consisted of Advanced Technology Services, a division established in 1994 to meet the challenges of the “information superhighway” and the merging of voice, data, and video services to telephony, broadband, and other providers of information system services.
The Telephone Directory segment was Volt’s third biggest in fiscal 1997, accounting for six percent of its sales and 15 percent of its operating profit. This segment consisted of the division responsible for the production, licensing, commercial printing, database management, sales and marketing services, and contract management software systems to telephone directory and other advertising media publishers, as well as for Volt’s own (through the DataNational division) publishing of 67 telephone directories in seven states. The Uruguay unit was printing telephone directories in Argentina and Brazil as well as performing commercial printing in all three countries.
The Electronic Publication and Typesetting Systems segment consisted of Autologic Information International, Inc. Volt’s share in this subsidiary accounted for six percent of its sales and 2.5 percent of its operating profit in fiscal 1997. Autologic’s products were computerized imagesetting and publication systems equipment and software to automate the various prepress production steps in the publishing process.
The Computer Systems segment accounted for five percent of Volt’s sales but less than one percent of its operating profit in fiscal 1997. Through Volt Delta Resources and Volt VIEWtech, it was designing, developing, selling, leasing, and maintaining computer-based directory assistance and other database management and telecommunications systems and related services for the telecommunications industry. It also was providing services, principally computer-based projects, to public utilities.
Volt’s stock traded as high as $70 per share during 1997. William Shaw continued to be chairman, president, and chief executive officer of the company, and Jerome Shaw was executive vice-president and secretary. In early 1998 William Shaw owned 24.6 percent of the common stock, Jerome Shaw owned 21.3 percent, and institutions owned about 34 percent. The long-term debt was $55.4 million at the end of fiscal 1997.
Autologic Information International, Inc. (59%); DataNational, Inc.; Shaw & Shaw, Inc.; Tainol, S.A. (Uruguay); Volt Delta Resources, Inc.; Volt Holding Corp.; Volt Real Estate Corporation; Volt Technical Corp.; Volt Temporary Services, Inc.; Volt Viewtech, Inc.
Principal Operating Units
Advanced Technologies, Research & Development; Advanced Technology Services; Autologic Information International, Inc.; DataNational; Directory Systems/Services; Shaw & Shaw; Uruguay; Volt Delta Resources; Volt Services Group; Volt VIEWtech; Voltelcon.
Agovino, Theresa, “Volt’s Red Ink Makes Analysts Skittish,” Grain’s New York Business, March 18, 1991, p. 16.
“Alphanumeric Transfers 30% Stakes in 2 Firms to Volt Information,” Wall Street Journal, April 26, 1972, p. 6.
Loehwing, David A., “No Pi in the Sky,” Barron’s, May 15,1972, p. 3.
McNatt, Robert, “Economy on Mend Giving Firm Voltage, Cram’s New York Business, February 8, 1993, pp. 3, 30.
Messina, Judith, “Deregulation Puts a Jolt into Lethargic Volt,” Grain’s New York Business, August 5, 1996, pp. 3, 31.
Morgan, Mary, “Volt Claims Gains Despite Objections,” Rochester Business Journal, August 26, 1994, p. 2.
“New Lease on Life,” Barron’s, April 25, 1966, pp. 5, 14.
Rosenberg, Jim, “Autologic to Merge with Triple-I,” Editor & Publisher, July 8, 1995, p. 28.
Storch, Harvey B., “Volt Information Sciences,” Wall Street Transcript, April 2, 1979, p. 53,848.