SOURCE: Analysts International

March 04, 2008 08:00 ET

Analysts International Corporation Reports 2007 Fourth Quarter and Full Year Financial Results

Earns Positive Operating Income Before Special Charges

MINNEAPOLIS, MN--(Marketwire - March 4, 2008) - Analysts International Corporation (NASDAQ: ANLY), a diversified IT services company, today reported its fourth quarter and full-year results for 2007.

--  Revenues totaled $87.8 million for the fourth quarter of 2007, compared
    to $86.8 million for the comparable quarter a year ago.
--  Including special charges of $13.5 million, Analysts International
    Corporation reported a net loss of ($13.0) million, or $(.52) per
    diluted share for the fourth quarter of 2007, compared to a net loss of
    $(534,000) or $(.02) per diluted share for the fourth quarter of 2006.
    These special charges consisted primarily of:
    --  $1.8 million in severance and other costs associated with the
        initiation of the new strategic plan,
    --  A non-cash charge of $3.0 million to write-off customer and
        trademark related intangible assets which had become impaired
        during the fourth quarter,
    --  A non-cash charge of $5.5 million to eliminate a portion of our
        recorded goodwill which was deemed to be impaired as a result of a
        shift in strategic focus for the company under the new strategic
        plan, and
    --  A non-cash charge of $2.6 to establish a valuation allowance to
        fully reserve the company's deferred tax assets.
--  Excluding the special charges, the Company earned $453,000 in the
    fourth quarter of 2007, compared to a loss of $(531,000) in the
    comparable quarter a year ago.

For the twelve months ended December 29, 2007, the Company reported revenues of $359.7 million compared to $347.0 million in fiscal year 2006. The net loss for the year, including special charges of $15.4 million, was $(16.2) million, or $(.65) per diluted share, compared to a net loss of $(1.1) million in 2006, or $(.04) per diluted share.

"The trend towards improved performance began in the second half of 2007," said Elmer Baldwin, president and CEO of Analysts International Corporation. "Since that time, we have taken significant steps to reduce our costs and re-focus the business on providing value-driven IT services. In order for us to meet the long-term goals outlined in our strategic plan and return Analysts International Corporation to sustained profitability, we have a lot more work to do."

"We believe our performance in the fourth quarter demonstrates we are on the right track. Before special charges, for the first time in nearly two years, we were profitable."

"We secured several new clients in the fourth quarter that are worth mentioning, including a leading North American automotive manufacturer, two major healthcare companies and a state government agency. We still face many challenges as a business. Given the strength of our people, the commitment to change and the positive momentum around our plan, I am confident that the company has a positive future," Mr. Baldwin concluded.

Analysts International expects to complete its restructuring during the second quarter of 2008 and attain sustained profitability (that is, positive net income) in the second half of the year.

Analysts will host a conference call today at 9:00 a.m. CT to discuss these results in detail and answer questions participants may have. Interested parties may access the call by dialing 1-800-762-8795 or 1-480-629-9031 for international participants, and asking for the Analysts International conference call moderated by Company President and CEO Elmer Baldwin. Live audio of the conference may also be accessed via the Internet at www.analysts.com, where it will be archived. Interested parties can also hear a replay of the call from 12:00 pm CT on March 4, 2008 to 10:59 pm CT on March 11, 2008, by calling 1-800-406-7325 and using access code 3844769.

About Analysts International

Headquartered in Minneapolis, Analysts International is a diversified IT services company. With sales and customer support offices in the United States and Canada, Analysts International provides information technology solutions and staffing services, including: Technology Solutions, which provides network services, infrastructure, application integration, IP telephony and hardware solutions to the middle market; Professional Services, which provides highly skilled, project managers, business analysts, developers and other IT consultants to assist its clients with strategic change; and IT Resources Staffing, which provides best value, best response supply of resources to high-volume clients. For more information, visit www.analysts.com.

(Financials follow)

                    Analysts International Corporation
                  Consolidated Statements of Operations
                                (unaudited)



                                 Three Months Ended   Twelve Months Ended
                                --------------------  --------------------
(in thousands except per share  December   December   December   December
 amounts)                       29, 2007   30, 2006   29, 2007   30, 2006

Professional Services Revenue:
   Provided directly            $  60,097  $  64,520  $ 243,372  $ 261,489
   Provided through
    subsuppliers                   13,688     14,708     58,339     54,902
   Product sales                   13,984      7,532     57,959     30,596
                                ---------  ---------  ---------  ---------
      Total revenue                87,769     86,760    359,670    346,987

Expenses:
   Salaries, contracted
    services and direct charges    61,033     65,176    250,286    260,619
   Cost of product sales           11,554      6,947     51,338     27,149
   Selling, administrative and
    other operating costs          14,869     14,746     58,347     58,847
   Amortization of intangible
    assets                            266        267      1,065      1,053
   Restructuring and other
    severance related costs         1,845          3      3,604        (51)
   Impairment of intangible
    assets                          3,049         --      3,049         --
   Goodwill impairment              5,500         --      5,500         --
   Merger related expenses             --         --         --       (327)
                                ---------  ---------  ---------  ---------

Operating loss                    (10,347)      (379)   (13,519)      (303)
Non-operating income                   46          5        297         20
Interest expense                     (141)      (150)      (384)      (736)
                                ---------  ---------  ---------  ---------

Loss before income taxes          (10,442)      (524)   (13,606)    (1,019)
Income tax expense                  2,572         10      2,606         41
                                ---------  ---------  ---------  ---------
Net loss                        $ (13,014) $    (534) $ (16,212) $  (1,060)
                                =========  =========  =========  =========

Per common share:
   Basic loss                   $    (.52) $    (.02) $    (.65) $    (.04)
                                =========  =========  =========  =========
   Diluted loss                 $    (.52) $    (.02) $    (.65) $    (.04)
                                =========  =========  =========  =========

Average common shares
 outstanding                       24,896     24,688     24,908     24,645
Average common and common
 equivalent shares outstanding     24,896     24,688     24,908     24,645





                    Analysts International Corporation
                        Consolidated Balance Sheets




                                                December 29,
                                                    2007      December 30,
(in thousands)                                  (unaudited)       2006
                                                ------------- -------------
Assets

Current assets:
   Cash and cash equivalents                    $          91 $         179
   Accounts receivable, less allowance for
    doubtful accounts                                  66,074        64,196
   Other current assets                                 2,101         2,484
                                                ------------- -------------
      Total current assets                             68,266        66,859

Property and equipment, net                             2,711         2,925
Other assets                                           14,294        26,447
                                                ------------- -------------
      Total assets                              $      85,271 $      96,231
                                                ============= =============

Liabilities and Shareholders' Equity

Current liabilities:
   Accounts payable                             $      27,780 $      24,411
   Salaries and vacations                               6,885         7,416
   Line of credit                                       1,587         2,661
   Deferred revenue                                     1,943         1,267
   Restructuring accrual, current portion               1,900           385
   Self-insured health care reserves and other
    amounts                                             1,516         1,670
   Deferred compensation                                1,868           208
                                                ------------- -------------
      Total current liabilities                        43,479        38,018

Non-current liabilities:
   Deferred compensation                                  927         2,319
   Restructuring accrual                                  138           160
   Other long-term liabilities                            692            --
Shareholders' equity                            $      40,035 $      55,734
                                                ------------- -------------
                                                $      85,271 $      96,231
                                                ============= =============





                    Analysts International Corporation
              Reconciliation of non-GAAP Financial Measures
                              (in thousands)



                                 Three Months Ended   Twelve Months Ended
                                --------------------  --------------------
                                December   December   December   December
                                29, 2007   30, 2006   29, 2007   30, 2006

Net loss as reported            $ (13,014) $    (534) $ (16,212) $  (1,060)

Plus:
Merger related costs                   --         --         --       (327)
Restructuring and severance
 related costs                      1,845          3      3,604        (51)
Impairment of intangibles and
 other long-lived assets            3,049         --      3,049         --
Goodwill impairment                 5,500         --      5,500         --
Return of common stock                 --         --       (198)        --
Deferred tax asset valuation
 allowance adjustment               2,596         --      2,596         --
Other asset impairments and
 consulting related costs             477                   886
                                ---------             ---------

   Total special charges           13,467          3     15,437       (378)
                                ---------  ---------  ---------  ---------

Income (loss) before special
 charges                              453       (531)      (775)    (1,438)

Depreciation                          416        602      1,699      2,411
Amortization                          266        267      1,065      1,053
Net interest expense                   95        145        285        716
Income tax benefit expense
 excluding valuation allowance
 adjustment                           (24)        10         10         41
                                ---------  ---------  ---------  ---------

      Adjusted EBITDA*          $   1,206  $     493  $   2,284  $   2,783
                                =========  =========  =========  =========

*To supplement our consolidated financial statements presented in accordance with GAAP, we use the non-GAAP financial measure of Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) which is adjusted from results based on GAAP to exclude certain items. For the 2007 periods, we have excluded costs associated with severance payments, restructure charges and adjustments, the costs associated with outside consultants engaged by the Board of Directors, intangible impairments, goodwill impairment, deferred tax asset valuation allowance adjustment, and the return of common stock from an escrow account following the departure of two of the principals of a company we acquired in 2005. For the 2006 periods we have excluded credits resulting from the reversal of certain accruals associated with our attempted merger with Computer Horizons and restructuring adjustments. We believe these adjustments are helpful in providing a meaningful comparison between current results and prior reported results. This non-GAAP financial measure is provided to enhance the user's overall understanding of our current financial performance and our prospects for the future. This measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. The non-GAAP financial measure included in this press release has been reconciled to the nearest GAAP measure.

Cautionary Statement for the Purpose of Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995

This Press Release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by words such as "believe," "expect," "anticipate," "plan," "potential," "continue" or similar expressions. Forward-looking statements also include the assumptions underlying or relating to any of the foregoing statements. Such forward-looking statements are based upon current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Statements made in the Press Release for the conference call by the Company, or its President and CEO, Elmer Baldwin, regarding: (i) expectations that the Company will complete its restructuring by the second quarter of fiscal year 2008; and (ii) that the Company will return to sustained profitability in the second half of fiscal year 2008 are forward-looking statements. These statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed herein. In any forward-looking statement in which the Company or Mr. Baldwin expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement or expectation or belief will result or be achieved or accomplished. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: (i) the risk that management may not fully or successfully implement planned investments, cost reductions and productivity improvements; (ii) lack of success in or advisability of efforts to capture growth opportunities, including geographic expansion of our solutions service offerings or expansion of more desirable areas of our business; (iii) the risk that we will be unable to exit non-core or less desirable areas of the business in a timely manner or on favorable terms; (iv) market conditions in the IT services industry, including intense competition for billable technical personnel at competitive rates and strong pricing pressures from many of our largest clients and difficulty in identifying, attracting and retaining qualified billable technical personnel; (v) lack of success at reducing employee-related costs without unduly disrupting the operations of our business; (vi) significant rapid growth or a significant loss in our business or significant lengthening of payment terms with a major client that creates a need for additional working capital; (vii) lack of success in completing the Company's restructuring by the second quarter of 2008 or the occurrence of additional costs for severance-related costs, real-estate consolidation or transition costs; (viii) an increase in expected capital expenditures planned to implement the Company's new business plan in 2008; and (ix) and other economic, business, market, financial, competitive and/or regulatory factors affecting the Company's business generally, including those set forth in the Company's filings with the SEC, including its Annual Report on Form 10-K for its most recent fiscal year, especially in the Management's Discussion and Analysis section, its most recent Quarterly Report on Form 10-Q and its Current Reports on Form 8-K. All forward-looking statements included in this Press Release are based on information available to the Company on the date of the Press Release. The Company undertakes no obligation (and expressly disclaims any such obligation) to update forward-looking statements made in the conference call to reflect events or circumstances after the date of the Press Release or to update reasons why actual results would differ from those anticipated in such forward-looking statements.

Contact Information

  • Media Contacts:
    Ruth Pachman
    Andrea Calise
    Kekst and Company
    (212) 521-4891 / (212) 521-4845