Alternative Resources Corporation Reports First Quarter Results

* EBITDA up over 100% Sequentially

* EPS at break even versus ($.16) loss in Q1 2000



Apr 19, 2001, 01:00 ET from Alternative Resources Corporation

    BARRINGTON, Ill., April 19 /PRNewswire/ -- Alternative Resources
 Corporation (ARC) (Nasdaq:   ALRC), a leading provider of information technology
 services, today announced income from operations for the first quarter of 2001
 was $.7 million as compared to a loss of ($3.0) million in first quarter 2000
 and EPS was breakeven for the first quarter versus ($.16) in 2000. The Company
 also reported that EBITDA was $2.5 million up from ($1.2) in the prior year
 first quarter and up 100% sequentially from $1.2 million in the fourth quarter
 of 2000. First quarter 2001 revenue was $57.7 million versus $70.5 million for
 the first quarter of 2000. Revenue for the quarter of $57.7 million included
 time and material revenue of $41.8 million down 16% from the first quarter of
 2000 and solutions revenue of $15.9, down 24% from last year.
     Gross margins were 29.2% up from 26.6% last year and SG&A expenses were
 28.0% down from 30.9% in the first quarter of 2000. In dollars, SG&A expenses
 were $16.1 million, down by $5.7 million from $21.8 million last year. The
 Company reported that its debt level had been reduced from $44 million at year
 end to $38.6 at the end of the first quarter.
     Raymond R. Hipp, Chairman and Chief Executive Officer, commenting on the
 quarter said, "This was by far the best quarter we have reported in a long
 while. Although revenue was a little softer than we expected due to general
 industry conditions, the actions we have taken in strengthening margins and
 reducing costs produced an operating profit for the quarter that is our first
 profitable quarter in the last six. This quarter also generated strong cash
 flow with EBITDA more than doubling that of the fourth quarter of 2000
 allowing us to continue reducing our debt burden."
     Mr. Hipp further commented that, "Our financial results over the last
 several quarters have put us in a much better position to obtain long-term
 financing. We are currently working with a potential lender on a new credit
 facility which we hope to close within the next several months. However,
 nothing can be guaranteed in today's lending environment."
 
     OUTLOOK - 2001
     Mr. Hipp commented, "The remainder of 2001 is still very difficult to
 predict in terms of revenue because of the uncertainties in the industry.
 However, I do believe that ARC can generate between 6% and 7% EBITDA and
 positive EPS in 2001. We will need to see how the second quarter develops in
 order to get a better sense of revenue levels for the remainder of 2001. We
 are seeing, however, a pick-up in our programming services and solutions
 revenue that may signal an increase in IT spending in the second half of
 2001."
 
     Q1 Investor Relations Conference Call - April 19, 2001
     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 at http:/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 management and
 staffing services. The company has developed a significant, high quality
 business in the IT staffing industry with an emphasis on Help Desk, Desktop
 Support and Technology Deployment Service offerings. The company also has a
 consulting practice which supports those service offerings. The company
 operates through 41 field offices and 3 regional recruiting centers with over
 115 personnel in field sales, supported by 80 recruiters and its unique
 organization of over 60 client support managers. The company serves Fortune
 1000 and mid-sized clients throughout the US and Canada.
 
     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, the company's ability 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 to
 refinance its outstanding debt 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, 2000, 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
                                                          Ended March 31,
                                                       2001           2000
                                                    (Unaudited)   (Unaudited)
     CONSOLIDATED STATEMENTS OF OPERATIONS
 
     Revenue                                         $ 57,720       $ 70,520
     Cost of services                                  40,869         51,782
     Gross profit                                      16,851         18,738
     Selling, general and administrative expenses      16,148         21,758
     Income (loss) from operations                        703         (3,020)
     Other expense, net                                  (742)        (1,029)
     Loss before income taxes                             (39)        (4,049)
     Income tax expense (benefit)                          32         (1,541)
     Net loss                                            $(71)      $ (2,508)
     Diluted earnings (loss) per share                 $(0.00)        $(0.16)
     Weighted average common and common
       equivalent shares outstanding                   16,805         15,521
 
     SELECTED OPERATING DATA
 
     Gross margin                                       29.2%          26.6%
     Operating margin                                    1.2%          -4.3%
     Net margin                                         -0.1%          -3.6%
 
 
     CONDENSED CONSOLIDATED BALANCE SHEETS
                                                      March 31,   December 31,
                                                         2001           2000
                                                     (Unaudited)
     Cash and short-term investments                     $ 41           $753
     Accounts receivable, net                          48,825         57,124
     Net property and equipment                        17,090         18,115
     Other assets                                      11,012         13,627
       Total assets                                  $ 76,968       $ 89,619
     Liabilities                                       30,874         38,010
     Debt                                              38,594         43,966
     Stockholders' equity                               7,500          7,643
       Total liabilities and stockholders' equity    $ 76,968       $ 89,619
 
 

SOURCE Alternative Resources Corporation
    BARRINGTON, Ill., April 19 /PRNewswire/ -- Alternative Resources
 Corporation (ARC) (Nasdaq:   ALRC), a leading provider of information technology
 services, today announced income from operations for the first quarter of 2001
 was $.7 million as compared to a loss of ($3.0) million in first quarter 2000
 and EPS was breakeven for the first quarter versus ($.16) in 2000. The Company
 also reported that EBITDA was $2.5 million up from ($1.2) in the prior year
 first quarter and up 100% sequentially from $1.2 million in the fourth quarter
 of 2000. First quarter 2001 revenue was $57.7 million versus $70.5 million for
 the first quarter of 2000. Revenue for the quarter of $57.7 million included
 time and material revenue of $41.8 million down 16% from the first quarter of
 2000 and solutions revenue of $15.9, down 24% from last year.
     Gross margins were 29.2% up from 26.6% last year and SG&A expenses were
 28.0% down from 30.9% in the first quarter of 2000. In dollars, SG&A expenses
 were $16.1 million, down by $5.7 million from $21.8 million last year. The
 Company reported that its debt level had been reduced from $44 million at year
 end to $38.6 at the end of the first quarter.
     Raymond R. Hipp, Chairman and Chief Executive Officer, commenting on the
 quarter said, "This was by far the best quarter we have reported in a long
 while. Although revenue was a little softer than we expected due to general
 industry conditions, the actions we have taken in strengthening margins and
 reducing costs produced an operating profit for the quarter that is our first
 profitable quarter in the last six. This quarter also generated strong cash
 flow with EBITDA more than doubling that of the fourth quarter of 2000
 allowing us to continue reducing our debt burden."
     Mr. Hipp further commented that, "Our financial results over the last
 several quarters have put us in a much better position to obtain long-term
 financing. We are currently working with a potential lender on a new credit
 facility which we hope to close within the next several months. However,
 nothing can be guaranteed in today's lending environment."
 
     OUTLOOK - 2001
     Mr. Hipp commented, "The remainder of 2001 is still very difficult to
 predict in terms of revenue because of the uncertainties in the industry.
 However, I do believe that ARC can generate between 6% and 7% EBITDA and
 positive EPS in 2001. We will need to see how the second quarter develops in
 order to get a better sense of revenue levels for the remainder of 2001. We
 are seeing, however, a pick-up in our programming services and solutions
 revenue that may signal an increase in IT spending in the second half of
 2001."
 
     Q1 Investor Relations Conference Call - April 19, 2001
     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 at http:/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 management and
 staffing services. The company has developed a significant, high quality
 business in the IT staffing industry with an emphasis on Help Desk, Desktop
 Support and Technology Deployment Service offerings. The company also has a
 consulting practice which supports those service offerings. The company
 operates through 41 field offices and 3 regional recruiting centers with over
 115 personnel in field sales, supported by 80 recruiters and its unique
 organization of over 60 client support managers. The company serves Fortune
 1000 and mid-sized clients throughout the US and Canada.
 
     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, the company's ability 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 to
 refinance its outstanding debt 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, 2000, 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
                                                          Ended March 31,
                                                       2001           2000
                                                    (Unaudited)   (Unaudited)
     CONSOLIDATED STATEMENTS OF OPERATIONS
 
     Revenue                                         $ 57,720       $ 70,520
     Cost of services                                  40,869         51,782
     Gross profit                                      16,851         18,738
     Selling, general and administrative expenses      16,148         21,758
     Income (loss) from operations                        703         (3,020)
     Other expense, net                                  (742)        (1,029)
     Loss before income taxes                             (39)        (4,049)
     Income tax expense (benefit)                          32         (1,541)
     Net loss                                            $(71)      $ (2,508)
     Diluted earnings (loss) per share                 $(0.00)        $(0.16)
     Weighted average common and common
       equivalent shares outstanding                   16,805         15,521
 
     SELECTED OPERATING DATA
 
     Gross margin                                       29.2%          26.6%
     Operating margin                                    1.2%          -4.3%
     Net margin                                         -0.1%          -3.6%
 
 
     CONDENSED CONSOLIDATED BALANCE SHEETS
                                                      March 31,   December 31,
                                                         2001           2000
                                                     (Unaudited)
     Cash and short-term investments                     $ 41           $753
     Accounts receivable, net                          48,825         57,124
     Net property and equipment                        17,090         18,115
     Other assets                                      11,012         13,627
       Total assets                                  $ 76,968       $ 89,619
     Liabilities                                       30,874         38,010
     Debt                                              38,594         43,966
     Stockholders' equity                               7,500          7,643
       Total liabilities and stockholders' equity    $ 76,968       $ 89,619
 
 SOURCE  Alternative Resources Corporation