UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): 13 March 1997
ALPNET, INC.
(Exact name of registrant as specified in its charter)
UTAH 0-15512 87-0356708
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
4460 South Highland Drive #100
Salt Lake City, Utah 84124-3543
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 273-6600
Former name or former address, if changed since last report: Not applicable
Item 5. Other Events --- Press Releases: "ALPNET Announces Unaudited 1996
Results" and "ALPNET Announces 20% Increase in Sales"
ALPNET Announces Unaudited 1996 Results:
13 March 1997 -- Salt Lake City, Utah. ALPNET, Inc. (NASDAQ: AILP), the largest
dedicated commercial provider of language translation, product localization, and
language-related services to international businesses, today announced unaudited
results for 1996. Worldwide sales for the year ended December 31, 1996 increased
20% over sales for the year ended December 31, 1995. Sales for 1996 were $32.3
million, compared to 1995 sales of $26.9 million. Fourth quarter sales in 1996
were $9.3 million, an increase of 29% over fourth quarter 1995 sales of $7.2
million. Net income in 1996 was $596,000, or $.03 per share, compared to net
income in 1995 of $621,000, or $.03 per share. A net loss of $118,000, or $.01
per share, was sustained in the fourth quarter of 1996, compared with net income
of $253,000, or $.01 per share for the fourth quarter of 1995.
Thomas F. Seal, ALPNET President and CEO, stated "We are very pleased to report
continued strong growth in our sales. ALPNET previously stated that we believed
the market for translation and localization services would grow rapidly, and
companies which positioned themselves to take advantage of this growth would
benefit from the expanding market. In 1996, we implemented a worldwide growth
plan based on a controlled expansion and upgrading of our facilities, and
personnel resources, to make sure we had the right kind and levels of capability
in place for the expected increases in demand. Our new or expanded offices in
Amsterdam, Singapore, Seoul, Tokyo, Salt Lake City, and Ypres have dramatically
expanded our capability to handle the increasingly large and technically
sophisticated projects which our clients are giving us. We expect the market to
continue to grow for the foreseeable future, and we believe we are now well
equipped to produce the growth in sales we expect in 1997 without significant
further expansion."
Mr. Seal continued by stating, "While the growth in revenues is good news, the
fourth quarter results are a disappointment to us. It is important to understand
that about half of this loss is a paper loss caused by an unusually strong UK
Pound as of December 31, 1996. US accounting rules require us to revalue all
receivables as of the end of each accounting period. Our UK subsidiary had a
large amount of US$ denominated receivables outstanding as of December 31, and
based on the strength of the UK Pound against the US$, the Company recorded a
significant paper loss on these receivables. The strengthening of the US$
against the UK Pound in 1997 has meant that this paper loss has not been
realized. The remainder of the loss stems from a combination of events,
primarily lower than planned margins on work produced in Asia, due to technology
implementation problems and other inefficiencies related to our rapid expansion
in this region in the last part of the year."
"After setting aside the unrealized loss, the Company actually experienced a
slight increase in results for the year in terms of absolute dollars of profit.
In effect, the Company produced 20% more volume, opened, equipped, and staffed
new offices, and dramatically increased marketing and sales efforts, all funded
primarily from internal operations."
Mr. Seal concluded by saying "In addition, ALPNET has begun some important steps
in controlling fixed costs, to improve the results on sales we believe we will
successfully close and produce in 1997. We are restructuring our operations in
France by moving translation production to Lyon, which will reduce overall costs
and improve margins on work produced in France. In addition, we closed our
office in Switzerland at the end of 1996. While we have some important Swiss
clients, this office had high fixed costs, and was not strategic in our overall
plan. We believe we will retain a large portion of our Swiss sales, by providing
services from our offices in Germany. Finally, most of the non-productive
startup costs associated with the new and expanded offices are now behind us,
leaving us in a good position to increase margins in 1997."
ALPNET is the largest publicly-owned dedicated supplier of worldwide translation
and product localization services, with more than 375 employees working in 34
wholly-owned offices in 14 countries throughout Europe, North America and Asia.
ALPNET supplies its clients with language translation, product localization,
language interpreting, language training, and multilingual desktop publishing
and printing services. Additional information about ALPNET is available on the
World Wide Web at http://www.alpnet.com or you can call to receive a copy of
ALPNET Review.
ALPNET Announces 20% Increase in Sales:
13 March 1997 -- Salt Lake City, Utah. ALPNET, Inc. (NASDAQ: AILP), the largest
dedicated commercial provider of language translation, product localization, and
language-related services to international businesses, today announced a 20%
year-on-year increase in sales, in conjunction with the announcement of its
unaudited results for 1996. Sales for 1996 were $32.3 million, compared to 1995
sales of $26.9 million. Fourth quarter sales in 1996 were $9.3 million, an
increase of 29% over fourth quarter 1995 sales of $7.2 million. Net income in
1996 was $596,000, or $.03 per share, compared to net income in 1995 of
$621,000, or $.03 per share. A net loss of $118,000, or $.01 per share, was
sustained in the fourth quarter of 1996, compared with net income of $253,000,
or $.01 per share for the fourth quarter of 1995.
In making the announcement, Thomas F. Seal, ALPNET President and CEO, made the
following statement:
"We are pleased to announce that the growth in ALPNET sales is continuing. This
20% increase in sales on top of last year's 30% increase over 1994, has given
ALPNET a more than 50% revenue growth in two years. This is consistent with the
dramatic growth that has been predicted for the translation and localization
industry. ALPNET believes this growth is not based simply upon increased volumes
of the same type of work, but rather on an evolution of demand, where more
companies need more sophisticated translation and localization services, in
order for them to compete in the increasingly demanding international markets.
Because of this, current and potential clients are looking for a service
provider who is able to provide the high degree of technical translation and
localization they need on a long-term partnership basis, rather than shopping
for a vendor for each new project. In addition, ALPNET is seeing increased
demand for additional languages. Where the bulk of translation requirements in
the past was for European-based languages, we are now experiencing a dramatic
increase in requests for Asian languages, in addition to European languages."
"Foreseeing this, ALPNET made the strategic decision to grow its capability to
produce the increasing amounts of work and the more sophisticated types of
projects that we believed would be required. We invested in new and expanded
offices around the world, and in additional staff and equipment. We now have
well equipped high-tech production offices in Tokyo, Seoul, Shenzhen, Singapore,
Amsterdam, Salt Lake City, and Montreal, and a dedicated multi-lingual
production center in Ypres. This office, located in the Flanders Language
Valley in Belgium, is equipped with the latest in language translation
technology, and we believe it will become the model for production of high
volume, high quality translations at a controlled cost. This worldwide expansion
has been expensive in terms of increased fixed costs, but has been essential in
order to expand our production capability, and thus our ability to capture the
increasingly sophisticated large projects we are now being awarded, and
negotiating with clients."
"Historically, the bulk of ALPNET s sales have come from the traditional
translation market, rather than the software localization market which is
experiencing the predicted high growth rates. We believed that in order for us
to successfully expand in the software localization market it was essential for
ALPNET to improve both the quantity and the experience level of our resources.
We added the sophisticated experience and equipment that clients require, to
give them confidence in awarding work to us. In 1996, we have added almost 150
additional staff, worldwide, to give us the capability to produce this work for
the computer and software industry. The new projects we have received from Baan,
GEAC, Oracle, Dell, and Apple are all evidence of the principle that we must
have the client-required capability, in order to get the work. ALPNET was not
working with any of these clients in 1995, and in 1996 we did not get beyond the
startup phase for many of these projects. We bore the cost of this investment in
1996. However, we believe the real benefit will come in 1997 and beyond, when
increased revenue from these and other software localization clients may add
another $10 million in revenues to our 1996 levels."
"At the same time as we have invested in additional capability for the software
localization market, we continued to strengthen and upgrade our capability to
serve our traditional markets. New projects and ongoing business relationships
in the automotive sector, the computer-based training, industrial training,
consumer electronics, and legal and finance sectors all have contributed to the
overall strength and growth of the Company. It is ALPNET s broad base, and
strong client relationships in diverse markets that give us the stability and
credibility to be a continuing force in the market."
"While we are pleased at the revenue growth, we understand that many people will
be disappointed in the lack of growth in earnings in 1996. It is important to
understand that all of this growth in increased capability as well as our
increased marketing effort has been funded primarily from internal operations of
the Company. This has indeed taken a toll on 1996 earnings. However, we believe
ALPNET is now well positioned to produce the significant increase in sales we
are expecting in 1997, without the need for further extensive expansion of our
fixed cost facilities."
"An additional point is that as an ever-larger percentage of our overall
revenues derives from large multi-language projects, the revenue and resulting
margins will fluctuate from quarter to quarter. This is caused as large projects
which represent a significant portion of overall revenues are completed and new
projects are received, which may not start immediately. While we attempt to plan
and balance the demand and supply as much as possible, the combination of
fluctuating revenue and margins, along with higher fixed costs, result in a
situation where we will have significant variations in profits from quarter to
quarter. As an example, we expect the first quarter of 1997 to produce a loss,
as delays in starting large 1997 projects from several new clients will defer
revenues from the first quarter to the second quarter. However, based on current
and expected client orders, we believe the second quarter of 1997 will be a
strong quarter for the Company."
"ALPNET believes the market for translation and localization services will
continue to grow, and with our worldwide network of in-country production
offices, our stable client base in a wide variety of industries, our
demonstrated high quality production capability, and our increased marketing and
resulting greater visibility, we expect improved sales and profits in 1997 and
beyond, as the investment we made in growth in 1996 begins to yield results."
ALPNET is the largest publicly-owned dedicated supplier of worldwide translation
and product localization services, with more than 375 employees working in 34
wholly-owned offices in 14 countries throughout Europe, North America and Asia.
ALPNET supplies its clients with language translation, product localization,
language interpreting, language training, and multilingual desktop publishing
and printing services. Additional information about ALPNET is available on the
World Wide Web at http://www.alpnet.com or you can call to receive a copy of
ALPNET Review.
Statements in this press release which present information which is not
historical should be deemed to be forward-looking statements. There are many
factors which could cause actual results to differ materially from those which
may be anticipated from these forward-looking statements. These factors include
uncertainties caused by clients (including the timing of projects and changes in
the scope of services requested), changes in overall competitive and economic
conditions, changes in currency exchange rates, or other risks and uncertainties
that may be disclosed from time to time in future public statements or in
documents filed with the Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ALPNET, Inc.
(Registrant)
Date: 13 March 1997 \s\ Thomas F. Seal
Thomas F. Seal
President and Chief Executive Officer
Date: 13 March 1997 \s\ D. Kerry Stubbs
D. Kerry Stubbs
Chief Financial Officer
