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SOURCE: Analysts International
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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.