APAC Customer Services, Inc. Announces Second Quarter 2005 Results and Plans to Achieve Profitability.DEERFIELD Deerfield, towns, United States Deerfield. 1 Village (1990 pop. 17,327), Cook and Lake counties, NE Ill., a residential suburb of Chicago; inc. 1903. The huge Sara Lee Bakery is its major industry, and there is other light manufacturing. , Ill. -- APAC Customer Services
APAC Customer Services, Inc. is a provider of customer interaction solutions to large corporations in the communications, financial services, insurance, healthcare, logistics, publishing, and hospitality , Inc. (Nasdaq:APAC APAC Australian Partnership for Advanced Computing APAC Agricultural Policy Analysis Center APAC Asia and Pacific APAC Asian Pacific American Coalition APAC Adapted Physical Activity Council (American Alliance for Health) ): --Accelerated Shift to Customer Care Focus --Closing of Sites to Improve Utilization --Rationalization of Cost Structure APAC Customer Services, Inc. (Nasdaq:APAC), a leading provider of customer interaction solutions, today reported financial results for its second quarter ended July July: see month. 3, 2005. The Company also announced plans to exit virtually all of its outbound out·bound adj. Outward bound; headed away: outbound trains. Adj. 1. outbound - that is going out or leaving; "the departing train"; "an outward journey"; "outward-bound ships" customer acquisition business, restructure operations and focus resources on profitable client relationships in a limited number of key industries. Management believes this strategic realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. will improve near-term near-term adj. Of, for, or involving a short period of time in the near future. financial performance and position the Company for long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth and profitability. For the second quarter, the Company reported a net loss of $5 million, or $.10 per share, on revenue of $58.2 million. Revenue and margins declined from prior periods driven largely by further reductions in campaign-driven outbound customer acquisition business resulting in significant underutilized capacity and excess overhead. Net cash provided by operating activities was $4.5 million during the quarter due to improvements in receivable collections which allowed the Company to reduce debt and fund $2.7 million of capital expenditures. Moving forward, the Company will focus on its customer care business where it provides value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. . The Company expects to exit its non-strategic and unprofitable client relationships, discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: certain services and dramatically realign re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. its cost structure over the balance of this year. Revenue associated with the business the Company plans to exit was approximately $14.3 million for the second quarter. The Company is committed to work closely with affected clients to provide an orderly orderly /or·der·ly/ (or´der-le) an attendant in a hospital who works under the direction of a nurse. or·der·ly n. An attendant in a hospital. transition of discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: business. The Company expects to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. $10-$15 million in restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. as it closes more than half of its Customer Interaction Centers and eliminates 400 salaried positions which will generate almost $40 million of annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. cost savings. Combined with other operational improvements, these measures are expected to restore the Company to positive free cash flow before restructuring charges in the fourth quarter of 2005. Bob Keller, APAC Customer Services' 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. , commented, "I've I've Contraction of I have. I've I have I've have said consistently since I arrived that the Company's success depends on its ability to deliver high quality in the value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: customer care segment of our industry. We've we've Contraction of we have. we've have worked very hard to strengthen performance and relationships with our core clients and to add new clients with similar characteristics. We've demonstrated over the past year that we can win in the industries that mean the most to us. "We believe a strong base of customer care clients and our new business pipeline positions us to accelerate our departure from other services. The changes we are making are dramatic, but we will be a stronger and more focused company almost immediately. By exiting the commoditized portion of our business, we can devote our full resources toward growing our value-added business and maximizing shareholder returns. "To that end, we expect to improve our operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: sequentially from this past quarter, restore positive free cash flow before restructuring charges in the fourth quarter of 2005 and return to profitability by the first quarter of 2006." The Company also announced that it entered into an amendment to its credit facility with LaSalle Bank LaSalle Bank Corporation is the holding company for LaSalle Bank N.A. and LaSalle Bank Midwest N.A. With $116 billion in assets, it is headquartered at 135 South LaSalle Street in Chicago, Illinois. that will facilitate the strategic realignment. Senior management of the Company will hold a conference call to discuss its strategic realignment and financial results at 10:00 a.m. CDT CDT abbr. Central Daylight Time CDT Central Daylight Time CDT n abbr (US) (= Central Daylight Time) → hora de verano del centro; (BRIT Thursday Thursday: see week. , July 28th. About the Conference Call The conference call will be available live at the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of APAC Customer Services' website, www.apaccustomerservices.com. Please access the site at least 15 minutes prior to the scheduled start time in order to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. the required audio software (RealPlayer A multimedia player from RealNetworks that plays RealAudio and RealVideo transmissions. Included is the technology (see RealJukebox) for organizing music files and creating MP3 files from audio CDs. or Windows Media Player Digital jukebox software for Windows from Microsoft that plays a variety of audio, video and streaming formats including MP3, WMA, CD audio and MIDI. Starting with Version 6.2 in 1999, the Windows Media Rights Manager was added for securing copyrighted content. ). A replay of the webcast will be accessible through the Company's website for 7 days following the live event. For those unable to listen to the call via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , a replay of the call will be available until 11:00 p.m. CDT on Thursday, August 4, 2005 by dialing (888) 203-1112 or (719) 457-0820 for international participants. The confirmation number for the replay is 7308645. About APAC Customer Services, Inc. APAC Customer Services, Inc. (Nasdaq: APAC) is a leading provider of customer care solutions for market leaders in healthcare, publishing, business services, financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , communications, travel and hospitality and insurance. APAC partners with its clients to deliver custom solutions that enhance bottom line performance. For more information, call 1-800-OUTSOURCE. APAC's comprehensive web site is at http://www.apaccustomerservices.com. Forward Looking Statements This document 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. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such statements include, but are not limited to, statements about the expected benefits of the Company's strategic realignment and future financial and operating results. Forward looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results to differ materially from historical results or those expressed or implied in the forward-looking statements. Such statements are based upon the current beliefs and expectations of the Company's management. The Company intends its forward looking statements to speak only as of the time of this release and does not undertake to update or revise them as more information becomes available. The following factors, among others, could cause actual results to differ from historical results or those expressed or implied in the forward-looking statements: reliance by the Company on a small number of principal clients for a substantial portion of its total revenue; changes in or events affecting the business of the Company's clients; fluctuations in quarterly results of operations due to the timing of clients' initiation and termination of large programs; the ability of the Company's clients to terminate contracts on relatively short notice; the reaction of the Company's clients and employees to the announcement of its exit of non-strategic and unprofitable client relationships, the closing of Customer Interaction Centers and the reduction in the number of employees; and the Company's ability to successfully manage the costs and expenses associated with these activities and generate sufficient cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses during the transition. Other reasons that may cause actual results to differ from historical results or those expressed or implied in the forward-looking statements can be found in the Company's 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. for the year ended January January: see month. 2, 2005, filed with the SEC and available on its website at http://www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. .
APAC Customer Services, Inc. and Subsidiaries
Consolidated Statements of Income
(In thousands, except for per share data)
Unaudited
Thirteen Weeks Ended
-----------------------------------
Increase
July 3, June 27, (Decrease)
2005 2004 %
----------- ----------- -----------
Net revenue $58,159 $68,006 -14%
Cost of services 55,335 58,496 -5%
----------- ----------- -----------
Gross profit 2,824 9,510 -70%
Operating expenses:
Selling, general and
administrative expenses 9,111 9,682 -6%
Restructuring and other charges 860 999 -14%
Asset impairment charges 124 124 0%
----------- ----------- -----------
Total operating expenses 10,095 10,805 -7%
----------- ----------- -----------
Operating Loss (7,271) (1,295) -
Interest expense, net 457 (63) -825%
----------- ----------- -----------
Loss before income taxes (7,728) (1,232) -
Benefit for income taxes (2,715) (468) -
----------- ----------- -----------
Net loss $(5,013) $(764) -
=========== =========== ===========
Loss per share:
Basic $(0.10) $(0.02)
=========== ===========
Diluted $(0.10) $(0.02)
=========== ===========
Weighted average shares
outstanding:
Basic 49,455 49,454
=========== ===========
Diluted 49,455 49,454
=========== ===========
Twenty-Six Weeks Ended
-----------------------------------
Increase
July 3, June 27, (Decrease)
2005 2004 %
----------- ----------- -----------
Net revenue $123,833 $139,410 -11%
Cost of services 114,309 118,626 -4%
----------- ----------- -----------
Gross profit 9,524 20,784 -54%
Operating expenses:
Selling, general and
administrative expenses 18,972 20,501 -7%
Restructuring and other charges 1,137 1,850 -39%
Asset impairment charges 124 2,234 -
----------- ----------- -----------
Total operating expenses 20,233 24,585 -18%
----------- ----------- -----------
Operating Loss (10,709) (3,801) -
Interest expense, net 639 97 559%
----------- ----------- -----------
Loss before income taxes (11,348) (3,898) -
Benefit for income taxes (3,953) (1,481) -
----------- ----------- -----------
Net loss $(7,395) $(2,417) -
=========== =========== ===========
Loss per share:
Basic $(0.15) $(0.05)
=========== ===========
Diluted $(0.15) $(0.05)
=========== ===========
Weighted average shares
outstanding:
Basic 49,455 49,451
=========== ===========
Diluted 49,455 49,451
=========== ===========
APAC Customer Services, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
(In thousands)
Unaudited
July 3, January 2,
Assets 2005 2005
------------------------------------------ ----------- -----------
Current Assets:
Cash and cash equivalents $865 $271
Accounts receivable, net 32,146 41,002
Other current assets 10,280 11,253
----------- -----------
Total current assets 43,291 52,526
Property and Equipment, net 24,722 24,214
Goodwill and Intangibles, net and Other
Assets 47,103 42,793
----------- -----------
Total Assets $115,116 $119,533
=========== ===========
Liabilities and Shareholders' Equity
------------------------------------------
Current Liabilities:
Current maturities of long-term debt $4,988 $313
Accounts payable and other current
liabilities 42,117 43,702
----------- -----------
Total current liabilities 47,105 44,015
Long-term Debt, less current maturities - -
Other Liabilities 1,221 1,355
Total Shareholders' Equity 66,790 74,163
----------- -----------
Total Liabilities and Shareholders' Equity $115,116 $119,533
=========== ===========
APAC Customer Services, Inc. and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(In thousands)
Unaudited
Twenty-Six Weeks Ended
-----------------------
July 3, June 27,
2005 2004
----------- -----------
Operating activities:
Net loss $(7,395) $(2,417)
Depreciation and amortization 5,950 5,423
Non-cash restructuring 22 190
Asset impairment charges 124 2,200
Deferred income taxes (4,235) 32
Change in operating assets and liabilities 7,237 (2,277)
----------- -----------
Net cash provided by operating
activities 1,703 3,151
Investing activities:
Purchases of property and equipment, net (5,307) (4,227)
----------- -----------
Net cash used by investing activities (5,307) (4,227)
Financing activities:
Borrowings under revolving credit facility 4,882 -
Payments on long-term debt (207) (192)
Financing fees (477) -
Stock and warrant transactions - 24
----------- -----------
Net cash provided (used) by financing
activities 4,198 (168)
----------- -----------
Net change in cash and cash equivalents: 594 (1,244)
Beginning cash balance 271 11,428
----------- -----------
Ending cash balance $865 $10,184
=========== ===========
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