EX-99.1 2 a09-6306_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

Media Contacts:

Marne Oberg

Analysts International Corporation

(952) 838-2867

 

Analysts International Corporation Reports Fourth Quarter and Fiscal Year 2008
Financial Results

 

Margins Improve as Strategic Initiatives Aim to Address Challenging Economic Conditions

 

MINNEAPOLIS, MN — February 25, 2009 — Analysts International Corporation (NASDAQ: ANLY) today announced results for the fourth quarter and fiscal year ended January 3, 2009. The Company reported revenue of $56.8 million for the fourth quarter of 2008 compared to $87.8 million for the fourth quarter of 2007. The Company reported a net loss of $7.6 million, or $0.30 per share, for the fourth quarter of 2008, compared to a net loss of $13.0 million, or $0.52 per share, for the fourth quarter of 2007. The fourth quarter 2008 loss included a non-cash charge of $6.3 million to write-off goodwill due to the deteriorating economic environment and the decline in the Company’s stock price and a $0.2 million charge for restructuring, severance and other consulting costs, or $0.26 per share. The fourth quarter 2007 loss included special charges of $13.5 million or $0.54 per share. Excluding these special charges, the Company’s net loss was $1.1 million in the fourth quarter of 2008, or $0.04 per share, compared to net earnings of $0.5 million in the fourth quarter of 2007, or $0.02 per share.

 

For fiscal year 2008, the Company reported revenue of $284.2 million compared to $359.7 million in fiscal year 2007. The net loss for fiscal year 2008 was $10.1 million, or $0.41 per share, compared to a net loss of $16.2 million, or $0.65 per share, for the comparable period a year ago. The fiscal year 2008 loss included a non-cash charge of $6.3 million to write-off goodwill and a $3.3 million charge for restructuring, severance and other consulting costs, or $0.38 per share. The fiscal year 2007 loss included special charges of $15.4 million or $0.62 per share.  Excluding these special charges, the Company’s net loss was $0.6 million in fiscal year 2008, or $0.02 per share, compared to a net loss of $0.8 million in the fiscal year 2007, or $0.03 per share.

 

“2008 represented the first year of AIC’s business transformation. As such, we made solid progress on our plan to transform AIC into a value-driven, higher margin IT services company. While the challenging

 


 

economic environment has slowed our ability to realize the benefits of our transformation, we remain firmly committed to realizing that vision today,” said Elmer Baldwin, President and CEO. “Our objective for 2009 is to continue to focus our business, reduce expenses and drive growth in our higher-margin services business by delivering value and exceeding clients’ expectations each and every day.”

 

“During these challenging economic times, we will continue to aggressively manage our cost structure and execute on our strategic plan of exiting lower-margin and non-core lines of business while investing in those areas that we believe are critical to the needs of our clients,” said Randy Strobel, Chief Financial Officer. “In 2008, we made substantial progress in aligning the cost structure to the requirements of the business and investing in service offerings where we believe we have the potential to be successful in the marketplace. The cost reduction initiatives and strategic decisions we made in 2008 have positioned us well to continue our business transformation plan in 2009.”

 

2008 Fourth Quarter and Fiscal Year Review

 

The decrease in revenue in the fourth quarter and fiscal year 2008 compared to the fourth quarter and fiscal year 2007, is a result of the negative impact the economic environment has had on the demand for IT professional services, staffing and products and the Company’s planned exit from non-core and low-margin lines of business. Early in the third quarter of 2008, the Company sold Symmetry Workforce Solutions, its managed services business, to Comsys and discontinued its staffing relationship with one of its large accounts. Together, business through Symmetry and the large staffing account represented approximately $15 million in quarterly revenue and $60 million in annual revenue.

 

Gross margins were $11.0 million, or 19.3 percent of revenue, for the fourth quarter of 2008, compared to $15.2 million, or 17.3 percent of revenue, in the fourth quarter of 2007. Gross margins were $50.3 million, or 17.7 percent of revenue, for fiscal year 2008, compared to $58.0 million, or 16.1 percent of revenue, for fiscal year 2007.  The increase in gross margins as a percent of revenue reflects the impact of implementing the Company’s strategy of exiting low margin lines of business and accounts and the reduction in lower margin product sales.

 

Selling, administrative and other general expenses declined by $3.2 million in the fourth quarter of 2008, when compared to the fourth quarter of 2007, and by $8.3 million for fiscal year 2008, when compared to the comparable period of 2007. This is largely a result of the Company reducing its operating costs as part of the business transformation plan that was announced in early 2008.

 

The Company generated cash from operations of $4.1 million in the fourth quarter of 2008 compared to $7.6 million in the fourth quarter of 2007. The Company generated cash from operations of $5.4 million for fiscal year 2008 compared to $2.5 million in fiscal year 2007. As of January 3, 2009, the Company had a cash balance of $2.3 million and no borrowings from its $45 million credit facility.

 


 

Fourth Quarter and Fiscal Year 2008 Conference Call

 

Analysts will host a conference call on Thursday, February 26 at 9:00 a.m. CT to discuss fourth quarter and fiscal year 2008 financial results. Participants may access the call by dialing 1-877-857-6161, or 1-719-325-4765 for international participants, and asking for the Analysts International conference call. 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 p.m. CT on February 26, 2009, to 10:59 p.m. CT on March 5, 2009, by calling 1-866-245-6755, or 1-416-915-1035 for international callers, and using access code 908927.

 

About Analysts International Corporation

 

Analysts International Corporation (NASDAQ: ANLY) is an information technology services company that’s focused on providing configured solutions for its clients. We proudly serve a broad portfolio of clients throughout the United States with technology staffing, collaboration solutions, infrastructure solutions, project and application solutions and managed services offerings. For more information, visit us online at www.analysts.com.

 

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.  Statements made in this press release or during the conference call referred to herein by the Company, its CEO Elmer Baldwin, or its CFO Randy Strobel, regarding, for instance: (i) the Company’s commitment to executing its business transformation plan; (ii) the Company’s intention to reduce expenses and exit lower margin and non-core lines of business; and (iii) management’s beliefs with respect to the impact of cost reduction initiatives and strategic decisions made in 2008, are forward-looking statements. These forward-looking statements are based on current information, which we have assessed, which by its nature is dynamic and subject to rapid and even abrupt changes. Forward-looking statements include statements expressing the intent, belief or current expectations of the Company and members of our management team and involve certain risks and uncertainties, including (i) the risk that management may not fully or successfully implement its business transformation plan; (ii) the risk that the Company will not be able to successfully reduce costs or exit non-core or less desirable areas of the business in a timely manner or on favorable terms; (iii) prevailing 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; (iv) potentially incorrect assumptions by management with respect to the downturn in the economy or the impact of prior cost reduction initiatives and strategic decisions; and (v) 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. You are cautioned not to place undue reliance on these or any forward-looking statements, which speak only as of the date of this press release and conference call.

 

(Financials follow)

 


 

Analysts International Corporation

Consolidated Statements of Operations

(in thousands, except per share amounts)

 

 

 

Three Months Ended 

 

Twelve Months Ended

 

 

 

Jan. 3,
2009

 

Dec. 29,
2007

 

Jan. 3,
2009

 

Dec. 29,
2007

 

Professional services revenue:

 

 

 

 

 

 

 

 

 

Provided directly

 

$

47,474

 

$

60,097

 

$

216,492

 

$

243,372

 

Provided through subsuppliers

 

1,457

 

13,688

 

32,674

 

58,339

 

Product sales

 

7,862

 

13,984

 

35,037

 

57,959

 

Total revenue

 

56,793

 

87,769

 

284,203

 

359,670

 

 

 

 

 

 

 

 

 

 

 

Cost of goods and services sold:

 

 

 

 

 

 

 

 

 

Cost of services provided directly

 

37,470

 

47,925

 

170,745

 

194,297

 

Cost of services provided through subsuppliers

 

1,394

 

13,108

 

31,494

 

55,989

 

Cost of product sales

 

6,971

 

11,554

 

31,653

 

51,338

 

Total cost of goods and services sold

 

45,835

 

72,587

 

233,892

 

301,624

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

10,958

 

15,182

 

50,311

 

58,046

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Selling, administrative and other operating costs

 

11,678

 

14,869

 

50,087

 

58,347

 

Restructuring, severance and other related costs

 

202

 

1,845

 

2,861

 

3,604

 

Amortization of intangible assets

 

234

 

266

 

1,027

 

1,065

 

Impairment of intangible assets

 

—

 

3,049

 

—

 

3,049

 

Goodwill impairment

 

6,299

 

5,500

 

6,299

 

5,500

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

(7,455

)

(10,347

)

(9,963

)

(13,519

)

 

 

 

 

 

 

 

 

 

 

Non-operating income

 

24

 

46

 

121

 

297

 

Interest expense

 

(13

)

(141

)

(156

)

(384

)

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(7,444

)

(10,442

)

(9,998

)

(13,606

)

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

121

 

2,572

 

136

 

2,606

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(7,565

)

$

(13,014

)

$

(10,134

)

$

(16,212

)

 

 

 

 

 

 

 

 

 

 

Per common share:

 

 

 

 

 

 

 

 

 

Basic loss

 

$

(0.30

)

$

(0.52

)

$

(0.41

)

$

(0.65

)

Diluted loss

 

$

(0.30

)

$

(0.52

)

$

(0.41

)

$

(0.65

)

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding

 

24,913

 

24,896

 

24,913

 

24,908

 

Average common and common equivalent shares outstanding

 

24,913

 

24,896

 

24,913

 

24,908

 

 


 

Analysts International Corporation

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

January 3,
2009

 

December 29,
2007

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

2,288

 

$

91

 

Accounts receivable, less allowance for doubtful accounts

 

40,814

 

66,074

 

Other current assets

 

1,521

 

2,101

 

Total current assets

 

44,623

 

68,266

 

 

 

 

 

 

 

Property and equipment, net

 

3,081

 

2,711

 

Other assets, net

 

6,550

 

14,294

 

Total assets

 

$

54,254

 

$

85,271

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

15,581

 

$

27,780

 

Salaries and vacations

 

2,648

 

6,885

 

Line of credit

 

—

 

1,587

 

Deferred revenue

 

1,473

 

1,943

 

Restructuring accrual, current portion

 

184

 

1,900

 

Health care reserves and other amounts

 

1,684

 

1,516

 

Deferred compensation

 

217

 

1,868

 

Total current liabilities

 

21,787

 

43,479

 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

Deferred compensation

 

1,068

 

927

 

Restructuring accrual

 

65

 

138

 

Other long-term liabilities

 

939

 

692

 

Shareholders’ equity

 

30,395

 

40,035

 

Total liabilities and shareholders’ equity

 

$

54,254

 

$

85,271

 

 


 

Analysts International Corporation

Reconciliation of non-GAAP Financial Measures

(in thousands)

 

 

 

Three Months Ended 

 

Twelve Months Ended

 

 

 

Jan. 3,
2009

 

Dec. 29,
2007

 

Jan. 3,
2009

 

Dec. 29,
2007

 

Net loss as reported

 

$

(7,565

)

$

(13,014

)

$

(10,134

)

$

(16,212

)

Plus:

 

 

 

 

 

 

 

 

 

Goodwill impairment

 

6,299

 

5,500

 

6,299

 

5,500

 

Restructuring, severance and other related costs

 

202

 

1,845

 

2,861

 

3,604

 

Impairment of intangibles and other long-lived assets

 

—

 

3,049

 

—

 

3,049

 

Deferred tax asset valuation allowance adjustment

 

—

 

2,596

 

—

 

2,596

 

Return of common stock

 

—

 

—

 

—

 

(198

)

Other asset impairments and consulting related costs

 

—

 

477

 

421

 

886

 

(Loss) income before special charges

 

(1,064

)

453

 

(553

)

(775

)

 

 

 

 

 

 

 

 

 

 

Stock based compensation expense

 

105

 

97

 

494

 

902

 

Depreciation

 

409

 

416

 

1,592

 

1,699

 

Amortization

 

234

 

266

 

1,027

 

1,065

 

Non-operating (income) expense

 

(11

)

95

 

35

 

285

 

Income tax expense (benefit)

 

121

 

(24

)

136

 

10

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA*

 

$

(206

)

$

1,303

 

$

2,731

 

$

3,186

 

 

* Non-GAAP Financial Information

 

In evaluating the Company’s business, the Company’s management considers and uses Adjusted EBITDA as a supplemental measure of operating performance. Adjusted EBITDA refers to a financial measure that the Company defines as net income (loss) excluding interest, taxes, depreciation, amortization, share-based compensation, special charges and other gains and losses that are not related to the Company’s operations. This measure is an essential component of the Company’s internal planning process because it facilitates period-to-period comparisons of the Company’s operating performance by eliminating potential differences in net income (loss) caused by the existence and timing of certain non-cash items, special charges and other gains and losses. 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.

 

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