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Exhibit 99.1
CONTACT:
Steven Purcell
Chief Financial Officer
(847) 381-6701, Ext. 4251
FOR IMMEDIATE RELEASE
ALTERNATIVE RESOURCES CORPORATION REPORTS FOURTH QUARTER RESULTS
- •
- EBITDA positive for 11 straight quarters
BARRINGTON, IL, April 10, 2003—Alternative Resources Corporation (ARC) (OTCBB: ALRC), a leading provider of information technology services, today announced results for the fourth quarter ended December 31, 2002.
Revenue for the fourth quarter was $39.2 million, which was down from $40.4 million in the third quarter of 2002 and down from the $46.1 million in the fourth quarter of 2001. Revenue for IT Solutions was $20.4 million, up 7.9% from $18.9 million in the fourth quarter of 2001 and down 8.1% from the third quarter of 2002. Revenue for IT Staffing was $18.8 million, which was down from $27.2 million in the prior year period and up from $18.2 million in the third quarter of 2002.
Gross margin for the fourth quarter of 2002 was 24.9%, which compares to the 27.2% in the third quarter of 2002 and 29.8% in the fourth quarter of 2001.
SG&A expenses, excluding a $0.3 million non-cash charge for severance associated with a reorganization of the Company, were $10.1 million or 25.9% of sales in the fourth quarter of 2002, which compares to $13.7 million or 29.7% of sales in the fourth quarter of 2001.
Loss from operations for the fourth quarter 2002 was $(684) thousand including the restructuring charge, as compared to income of $37 thousand in the fourth quarter of 2001. Loss per share was $(0.22) for the fourth quarter of 2002, versus a loss of $(0.05) in the same period last year.
Revenue for the full year 2002 was $158.7 million, down 24% from $209.0 million in 2001. Staffing revenue was $80.0 million, down from $139.2 million in 2001, and Solutions revenue was $78.7 million, up from $69.9 million last year. Loss from Operations for the year was $(8.6) million including the restructuring charge, compared to income of $0.5 million in 2001. Loss per share was $(0.65) compared to loss of $(0.18) in 2001.
In 2002, the Company adopted Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets," (SFAS No. 142), which no longer requires the amortization of goodwill. The adoption of SFAS No. 142 did not have a material impact on the Company in 2002. The Company also adopted Emerging Issues Task Force No. 00-1, "Income Statement Characterization of Reimbursements for "Out-of-Pocket" Expenses Incurred" (EITF No. 00-1). EITF No. 01-14 requires that certain out-of-pocket expenses rebilled to customers be recorded as revenue versus an offset to the related expense. This had the effect of increasing revenue by $2.0 million and $1.8 million for three months ended December 31, 2002 and 2001, respectively. Cost of services were increased by an equal amount with no impact on gross profit dollars. For the twelve months, the effect on revenue and cost of services was $6.6 million and $7.3 million in 2002 and 2001, respectively.
Q4 Investor Relations Conference Call—April 10, 2003
Following this release, the Company will host a conference call with analysts and investors at 11:00 am EST that will be broadcast live over the Internet athttp:/www.arcnow.com.
To access the webcast, participants should visit the About ARC, Investor Relations section of the website at least fifteen minutes prior to the start of the conference call to download and install any necessary audio software. There will be a replay of the webcast available at the Company's web-site one hour after the call.
About ARC
ARC is a leading provider of information technology solutions and staffing services. The Company has developed a significant, high quality business in the IT solutions and staffing industry with an emphasis on Help Desk, Desktop Support and Technology Deployment Service offerings. Operating in most major metropolitan areas across the US, the Company serves Fortune 1000 and mid-sized clients. A nationwide integrated network of field sales, recruiting and a service personnel delivers high quality solutions across the desktop technology lifecycle and provides IT professionals to clients on a near real-time basis, ready to be fully integrated into a broad range of technology environments.
Forward Looking Statement
Except for historical information, all of the statements, expectations and assumptions contained in the foregoing are forward-looking statements that involve a number of risks and uncertainties that could cause actual future results to differ materially from those anticipated in the forward looking statements, including, but not limited to attract and retain qualified technology professionals, to initiate and develop client relationships, to identify and respond to trends in information technology, to gain market acceptance of service offerings, to complete cost reductions and competitive influences as well as other risks described from time to time in the Company's filings with the Securities and Exchange Commission. Although the Company has used its best efforts to be accurate in making those forward-looking statements, there can be no assurance that the assumptions made by management will materialize. In addition, the information set forth in the Company's Form 10-K for the fiscal year ended December 31, 2001, describes certain additional risks and uncertainties that could cause actual results to vary materially from the future results covered in such forward-looking statements. The Company undertakes no obligation to publicly revise or update the forward-looking statements to reflect new information, subsequent events or otherwise. The above statements are based exclusively on current expectations and do not include the potential impact of any business combinations or divestitures that may be completed after the date of this release.
ALTERNATIVE RESOURCES CORPORATION
FINANCIAL INFORMATION
(In thousands, except per share and selected operating data)
| | Three Months
Ended December 31,
| | Twelve Months
Ended December 31,
| |
|---|
| | 2002
| | 2001
| | 2002
| | 2001
| |
|---|
| | (Unaudited)
| |
| | (Unaudited)
| |
| |
|---|
| CONSOLIDATED STATEMENTS OF OPERATIONS | | | | | | | | | | | | | |
Revenue |
|
$ |
39,152 |
|
$ |
46,093 |
|
$ |
158,693 |
|
$ |
209,036 |
|
| Cost of services | | | 29,401 | | | 32,378 | | | 115,955 | | | 149,127 | |
| | |
| |
| |
| |
| |
| Gross profit | | | 9,751 | | | 13,715 | | | 42,738 | | | 59,909 | |
| Operating expenses | | | | | | | | | | | | | |
| | Selling, general and administrative expenses | | | 9,188 | | | 12,387 | | | 41,092 | | | 53,963 | |
| | Depreciation and amortization | | | 942 | | | 1,291 | | | 4,143 | | | 5,423 | |
| | Restructuring and other charges | | | 305 | | | 0 | | | 6,055 | | | 0 | |
| | |
| |
| |
| |
| |
| | | Total operating expenses | | | 10,435 | | | 13,678 | | | 51,290 | | | 59,386 | |
| | |
| |
| |
| |
| |
| Income (loss) from operations | | | (684 | ) | | 37 | | | (8,552 | ) | | 523 | |
| Other expense, net | | | (979 | ) | | (675 | ) | | (3,677 | ) | | (3,597 | ) |
| | |
| |
| |
| |
| |
| Loss before income taxes | | | (1,663 | ) | | (638 | ) | | (12,229 | ) | | (3,074 | ) |
| Income tax benefit | | | 2,119 | | | 583 | | | (1,094 | ) | | 0 | |
| | |
| |
| |
| |
| |
| Net loss | | $ | (3,782 | ) | $ | (1,221 | ) | $ | (11,135 | ) | $ | (3,074 | ) |
| | |
| |
| |
| |
| |
| Basic and Diluted loss per share | | $ | (0.22 | ) | $ | (0.07 | ) | $ | (0.65 | ) | $ | (0.18 | ) |
| | |
| |
| |
| |
| |
| Weighted average common and common equivalent shares outstanding | | | 17,117 | | | 16,723 | | | 17,095 | | | 16,779 | |
| | |
| |
| |
| |
| |
SELECTED OPERATING DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
24.9 |
% |
|
29.8 |
% |
|
26.9 |
% |
|
28.7 |
% |
| Operating margin | | | -1.7 | % | | 0.1 | % | | -5.4 | % | | 0.3 | % |
| Net margin | | | -9.7 | % | | -2.6 | % | | -7.0 | % | | -1.5 | % |
| | December 31,
2002
| | December 31,
2001
|
|---|
| | (Unaudited)
| |
|
|---|
| CONDENSED CONSOLIDATED BALANCE SHEETS | | | | | | |
Cash and cash equivalents |
|
$ |
54 |
|
$ |
127 |
| Accounts receivable, net | | | 34,497 | | | 36,489 |
| Net property and equipment | | | 10,998 | | | 14,592 |
| Other assets | | | 7,181 | | | 8,184 |
| | |
| |
|
| | Total assets | | $ | 52,730 | | $ | 59,392 |
| | |
| |
|
| Liabilities | | | 29,004 | | | 27,856 |
| Debt | | | 27,107 | | | 26,877 |
| Stockholders' equity | | | (3,381 | ) | | 4,659 |
| | |
| |
|
| | | Total liabilities and stockholders' equity | | $ | 52,730 | | $ | 59,392 |
| | |
| |
|
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