Versar, Inc. (NYSE Amex: VSR) announced third quarter financial results for fiscal year 2010 for the period ending March 26, 2010. Gross revenue for the third quarter of fiscal year 2010 was $24,355,000 a decrease of $7,496,000 (24%) from the third quarter of fiscal year 2009.

The year over year decrease was due to a decline in the Company’s International Program Management business segment and continued budget shortfalls in state and municipal agencies that affected our Compliance and Environmental business segment. The Company’s Professional Services business segment revenue grew 8%, from $3,050,000 to $3,293,000 over the same period. The National Security business segment revenue grew 62%, from $2,539,000 to $4,113,000, driven by the acquisition of Personal Protection Systems, Ltd (PPS) on January 5, 2010.

The Company reported a loss of $1,517,000 or ($0.16) per share compared to a profit of $1,125,000, or $0.12 per share, in the third quarter of fiscal year 2009. During the third quarter of fiscal year 2010 the Company incurred expenses of $1,269,000 attributed to the Cost Reduction Plan reported in early February 2010 and the acquisition expenses related to the previously discussed PPS acquisition and the ADVENT Environmental, Inc. acquisition on March 17, 2010. The Cost Reduction Plan was implemented to lower the Company’s overall cost structure and will generate savings of approximately $3.3 million per year. The two acquisitions are forecasted to contribute $17 million of revenue in their first full year with Versar.

Gross revenue for the first nine months of fiscal year 2010 was $73,456,000, a decrease of $11,360,000 (13%) compared to $84,816,000 for the first nine months of the prior fiscal year. The Company reported a loss of $1,580,000, or ($0.17) per share, for the first nine months of fiscal year 2010 compared to net income of $2,214,000, or $0.24 per share, during the same period in 2009. The decrease in net income was due to the same factors described above.

Anthony Otten, CEO of Versar said, “Versar remains committed to improved profit margins and revenue growth. The restructuring charge and cost reduction efforts were designed to improve our agility and turn around our financial performance as rapidly as possible. We are beginning to see improvement in our leading indicators. Furthermore, our two acquisitions announced during the third quarter, as well as our recent wins at Ft. Irwin, Ca., Deseret Chemical Depot, Utah, the Environmental Protection Agency, and our Iraq Personal Services extension, bode well for the remainder of fiscal year 2010 and forward.”

VERSAR, INC., headquartered in Springfield, VA, is a publicly held international professional services firm supporting government and industry in national defense/homeland defense programs, environmental health and safety and infrastructure revitalization. VERSAR operates a number of web sites, including the corporate Web sites, http://www.versar.com, http://www.homelanddefense.com, http://www.geomet.com; http://www.viap.com; http://www.dtaps.com; and www.ppsgb.com.

This press release contains forward-looking information. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be significantly impacted by certain risks and uncertainties described herein and in Versar’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended June 26, 2009. The forward-looking statements are made as of the date hereof and Versar does not undertake to update its forward-looking statements.
 

VERSAR, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited – in thousands, except per share amounts)
       

 

 

For the Three-MonthPeriods Ended

For the Nine-MonthPeriods Ended

 

 

March 26,2010
 

March 27,2009

March 26,2010
 

March 27,2009
 
GROSS REVENUE $ 24,355 $ 31,851 $ 73,456 $ 84,816
Purchased services and materials, at cost 13,750 17,470 39,870 46,670
Direct costs of services and overhead   9,346   10,026   28,246   27,408
GROSS PROFIT 1,259 4,355 5,340 10,738

Selling, general and administrative  Expenses

2,256

2,525

6,469

6,759
Other expense   1,269   ---   1,269   ---
 
OPERATING (LOSS) INCOME (2,266) 1,830 (2,398) 3,979
 
OTHER EXPENSE/(INCOME)
(Gain) loss on marketable securities --- (20) --- 326
Interest income (41) (1) (106) (3)
Interest expense   25   22   47   43

(LOSS) INCOME BEFORE INCOMETAXES
(2,250) 1,829 (2,339) 3,613
 
 
Income tax (benefit) expense   (733)   704   (759)   1,399
 
NET (LOSS) INCOME $ (1,517) $ 1,125 $ (1,580) $ 2,214
 

NET (LOSS) INCOME PER SHARE –BASIC

$

(0.16)

$

0.12

$

(0.17)

$

0.24

NET (LOSS) INCOME PER SHARE –DILUTED

 

$

 

(0.16)

 

$

 

0.12

 

$

 

(0.17)

 

$

 

0.24
 
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING – BASIC   9,224   9,170   9,107   9,099
 
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING – DILUTED   9,224   9,199   9,107   9,131

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