Alternative Resources Corporation Reports Fourth Quarter and Full Year Results.Business Editors BARRINGTON Barrington, town (1990 pop. 15,849), Bristol co., E R.I., on the Barrington River; settled c.1670, included in Massachusetts until 1746, inc. 1770. It is a residential and resort area. Barrington College is there. , Ill.--(BUSINESS WIRE)--March 25, 2004 Alternative Resources Corporation (ARC arc, in electricity arc, in electricity, highly luminous and intensely hot discharge of electricity between two electrodes. The arc was discovered early in the 19th cent. by the English scientist Sir Humphry Davy, who so named it because of its shape. ) (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). BB:ALRC ALRC Australian Law Reform Commission ALRC Alberta Research Council ALRC Airlift Logistics Readiness Center (USAF) ) a leading provider of information technology services, today announced results for the fourth quarter and full year ended December December: see month. 31, 2003. Revenue for the fourth quarter was $33.0 million compared to $39.2 million in the fourth quarter of last year. IT Staffing had revenue of $17.4 million in the fourth quarter compared to $18.8 million in the same quarter last year. IT Solutions revenue was $15.6 million in the fourth quarter compared to $20.4 million in the fourth quarter of 2002. Fourth quarter earnings per share was a loss of $(0.12) compared to a loss of $(0.22) in the fourth quarter of 2002. For the full year, revenue decreased $20.5 million or 12.9% from $158.7 million in 2002 to $138.1 million in 2003, primarily from the slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in IT spending experienced industry-wide. IT Solutions revenue decreased by $10.1 million or 12.8% from $78.7 million in 2002 to $68.6 million in 2003. The decline in solutions revenue was driven by declines in the Technology Deployments and Field Service offerings. The decline in the Technology Deployments revenue is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the loss of a major customer. The decline in Field Services was due to the Company's major customer of these services changing to a multi-vendor strategy. The Company's traditional staffing business decreased by $10.5 million or 13.1% from $80.0 million in 2002 to $69.5 million in 2003. The decrease in the staffing business reflects the general downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in IT spending and more particularly, the emphasis by many companies to reduce the headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. necessary to support the IT infrastructure. Gross profit decreased by $10.0 million or 23.5% from $42.7 million in 2002 to $32.7 million in 2003. Margins decreased by $5.1 million in the staffing service offerings due to decreased revenue and overall pricing pressure from customers. Margins in the solutions service offerings decreased by $4.9 million. The most significant factor in the margin decline was the impact on Field Service margins as the Company adjusted its workforce to effect the customers' shift to multiple vendors. As a percentage of revenue, gross profit decreased by 3.2 percentage points from 26.9% in 2002 to 23.7% in 2003. The percentage decline was equally split between the two service offerings. Selling, general and administrative expenses decreased by $7.8 million or 17.2% from $45.2 million in 2002 to $37.4 million in 2003. The decrease in selling, general and administrative expenses was primarily attributable to the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). actions the Company has taken in the past, which is reflected in reduced office space and lower headcount. As a percentage of revenue, operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. decreased from 28.5% in 2002 to 27.1% in 2003. Restructuring and other charges were $4.8 million in 2003 and $6.1 million in 2002. As a percentage of revenue, restructuring and other charges represented 3.5% in 2003 and 3.8% in 2002. The restructuring and other charges in 2003 represented a $4.5 million charge for debt extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. and origination fees A charge imposed by a lending institution or a bank for the service of processing a loan. For example, a bank might charge an individual who has applied for a student loan an origination fee of one percent for processing the application and granting the loan. and a $0.9 million charge for severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs associated with the restructuring of the Company's sales, delivery and corporate staff, partially offset by a $0.6 million restructuring reserve reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its due to a change in various real estate cost assumptions made versus actual activity. Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. Stanojev, the Company's Chairman and Chief Executive Officer, commented that, "The Company's 2003 operating results generally reflect the continued depressed levels of IT spending industry wide. Many companies also significantly reduced the level of manpower devoted to the support of their IT infrastructure as a means to reduce costs in an uncertain economic environment." Stanojev further commented, "2003 continued to be a very difficult year for the Company. In response to these challenges, we made a number of management changes and embarked on a significant transformation strategy. The Company began certain strategic initiatives to position itself for a return to growth and to leverage its recognized quality and customer relationships. There were four key elements to our strategy for improving the company's long term financial performance. First, the sales force was realigned to enable more selling of solution type sales, accomplished through increased sales and product training, and substantial upgrading of sales personnel. Second, the sales and delivery function were more closely aligned to provide a stronger selling team to more effectively sell total solutions to the customer. Third, the Company focused on building alliances with key customers and partners. Fourth, the Company began a program to refresh (1) To continuously charge a device that cannot hold its content. CRTs must be refreshed, because the phosphors hold their glow for only a few milliseconds. Dynamic RAM chips require refreshing to maintain their charged bit patterns. See vertical scan frequency and redraw. all of its service offerings including the development of new technology to enhance its services." Outlook Stanojev stated that, "there appears to be the beginning of some renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. IT spending. We are seeing that in the number of proposals we are getting and the increased number of deployments that are taking place. There is some cautious optimism Optimism See also Hope. Bontemps, Roger personification of cheery contentment. [Fr. Lit.: “Roger Bontemps” in Walsh Modern, 66] Candide beset by inconceivable misfortunes, hero indifferently shrugs them off. [Fr. that the later parts of 2004 will experience an upturn in IT spending". 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 A network that supports both data and voice and/or different networking protocols. See converged network and new public network. of field sales, recruiting and a service personnel delivers high quality solutions across the desktop technology lifecycle Most new technologies follow a similar technology lifecycle describing the technological maturity of a product. This is not similar to a product life cycle, but applies to an entire technology, or a generation of a technology. and provides IT professionals to clients on a near real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. 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 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. 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 INITIATE. A right which is incomplete. By the birth of a child, the husband becomes tenant by the curtesy initiate, but his estate is not consummate until the death of the wife. 2 Bouv. Inst. n. 1725. 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 ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. . In addition, the information set forth in the Company's Form 10-K/A for the fiscal year ended December 31, 2002, 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.
Three Months Twelve Months
Ended December 31, Ended December 31,
2003 2002 2003 2002
----------------------- ---------------------
(Unaudited) (Unaudited) (Unaudited)
CONSOLIDATED STATEMENTS
OF OPERATIONS
Revenue $33,039 $39,152 $138,146 $158,693
Cost of services 24,832 29,401 105,449 115,955
----------------------- ---------------------
Gross profit 8,207 9,751 32,697 42,738
Operating expenses
Selling, general and
administrative
expenses 7,823 9,188 33,833 41,092
Depreciation and
amortization 872 942 3,605 4,143
Restructuring and
other charges 406 305 4,809 6,055
----------------------- ---------------------
Total operating
expenses 9,101 10,435 42,247 51,290
----------------------- ---------------------
Income (loss) from
operations (894) (684) (9,550) (8,552)
Other expense, net (1,250) (979) (4,345) (3,677)
----------------------- ---------------------
Loss before income
taxes (2,144) (1,663) (13,895) (12,229)
Income tax expense
(benefit) 5 2,119 (814) (1,094)
----------------------- ---------------------
Net loss $(2,149) $(3,782) $(13,081) $(11,135)
======================= =====================
Basic and Diluted loss
per share $(0.12) $(0.22) $(0.76) $(0.65)
======================= =====================
Weighted average common
and common equivalent
shares outstanding 17,117 17,117 17,117 17,095
======================= =====================
SELECTED OPERATING DATA
Gross margin 24.8% 24.9% 23.7% 26.9%
Operating margin -2.7% -1.7% -6.9% -5.4%
Net margin -6.5% -9.7% -9.5% -7.0%
December 31, December 31,
CONDENSED CONSOLIDATED BALANCE SHEETS 2003 2002
-------------------------
(Unaudited)
Cash and cash
equivalents $19 $54
Accounts receivable,
net 21,423 34,497
Net property and
equipment 7,533 10,998
Other assets 4,838 7,181
-------------------------
Total assets $33,813 $52,730
=========================
Liabilities 23,684 29,004
Debt 26,514 27,107
Stockholders' deficit (16,385) (3,381)
-------------------------
Total liabilities and
stockholders' deficit $33,813 $52,730
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