<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
Commission file number 0-23940
ALTERNATIVE RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 38-2791069
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 TRI-STATE INTERNATIONAL, SUITE 300, LINCOLNSHIRE, IL 60069
(Address of principal executive offices) (Zip code)
(847) 317-1000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO .
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
15,957,347 shares of Common Stock outstanding as of July 31, 1998.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
ALTERNATIVE RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
ASSETS
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
----------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 971 $ 4,381
Short-term investments 7,673 --
Trade accounts receivable, net of allowance for doubtful accounts 83,124 71,177
Prepaid expenses 780 975
Other receivables 3,281 3,212
----------- -----------
Total current assets 95,829 79,745
----------- -----------
Property and equipment:
Office equipment 7,783 10,697
Furniture and fixtures 2,440 2,641
Software 4,835 7,735
Leasehold improvements 730 772
----------- -----------
15,788 21,845
Less accumulated depreciation and amortization (6,562) (7,897)
----------- -----------
Net property and equipment 9,226 13,948
Other assets:
Long-term investments 502 --
Goodwill, net of amortization 47,624 51,947
Restricted cash held in escrow 20,000 20,000
Other assets 1,269 1,268
----------- -----------
Total other assets 69,395 73,215
----------- -----------
Total assets $ 174,450 $ 166,908
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,261 $ 3,853
Payroll and related expenses 11,843 20,615
Accrued expenses 9,357 2,110
Income taxes payable 573 17
----------- -----------
Total current liabilities 30,034 26,595
Long-term debt 73,500 62,000
Deferred rent payable 271 267
----------- -----------
Total liabilities 103,805 88,862
----------- -----------
Stockholders' equity:
Preferred Stock, $.01 par value, 1,000,000 shares authorized, none issued and outstanding -- --
Common Stock, $.01 par value, 50,000,000 shares authorized, 15,777,564 and 15,957,204
shares issued and outstanding at December 31, 1997 and June 30, 1998, respectively 158 160
Additional paid-in capital 23,886 26,297
Retained earnings 46,581 52,000
Accumulated other comprehensive income 439 8
----------- -----------
71,064 78,465
Less: Treasury shares, at cost, 19,000 shares at December 31, 1997 and
June 30, 1998, respectively 419 419
----------- -----------
Total stockholders' equity 70,645 78,046
----------- -----------
Total liabilities and stockholders' equity $ 174,450 $ 166,908
----------- -----------
----------- -----------
</TABLE>
See accompanying Notes to Consolidated Financial Statements
Page 2
<PAGE>
ALTERNATIVE RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
---------------------- ------------------------
1997 1998 1997 1998
------- ------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenue $62,803 $84,383 $120,561 $167,212
Cost of services 40,939 56,403 79,287 111,570
------- ------- -------- --------
Gross profit 21,864 27,980 41,274 55,642
Selling, general and administrative expenses 16,277 22,195 31,481 44,964
------- ------- -------- --------
Income from operations 5,587 5,785 9,793 10,678
Other income (expense), net 307 (1,140) 724 (1,541)
------- ------- -------- --------
Income before income taxes 5,894 4,645 10,517 9,137
Income taxes 2,299 1,920 4,148 3,718
------- ------- -------- --------
Net income $3,595 $2,725 $6,369 $5,419
------- ------- -------- --------
------- ------- -------- --------
Net earnings per share:
Basic $0.23 $0.17 $0.41 $0.34
------- ------- -------- --------
------- ------- -------- --------
Diluted $0.23 $0.17 $0.40 $0.34
------- ------- -------- --------
------- ------- -------- --------
Shares used to compute net
earnings per share:
Basic 15,689 15,914 15,673 15,839
------- ------- -------- --------
------- ------- -------- --------
Diluted 15,910 16,115 15,850 16,170
------- ------- -------- --------
------- ------- -------- --------
</TABLE>
See accompanying Notes to Consolidated Financial Statements
Page 3
<PAGE>
ALTERNATIVE RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF
COMPRESHENSIVE INCOME
(In thousands)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
--------------------- ---------------------
1997 1998 1997 1998
------ ------ ------ ------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net income $3,595 $2,725 $6,369 $5,419
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment 5 (37) (2) (32)
Unrealized holding gains (losses) on
marketable securities:
Unrealized holding gains (losses) arising
during the period 14 -- (13) 382
Less: reclassification adjustment for (gains)
losses included in net income 20 -- 17 (781)
------ ------ ------ ------
Comprehensive income $3,634 $2,688 $6,371 $4,988
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
See accompanying Notes to Consolidated Financial Statements
Page 4
<PAGE>
ALTERNATIVE RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1997 1998
------- -------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,369 $ 5,419
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 766 1,982
Allowance for doubtful accounts, net 110 (234)
Change in assets and liabilities:
Trade accounts receivable (7,198) 12,181
Prepaid expenses (244) (195)
Other receivables 1,650 69
Other assets (8) (31)
Accounts payable 5 (4,408)
Payroll and related expenses 2,875 8,772
Accrued expenses (497) (7,247)
Income taxes payable 461 (556)
Deferred rent payable (66) (4)
------- -------
Net cash provided by operating activities 4,223 15,748
------- -------
Cash flows from investing activities:
Purchases of property and equipment (1,790) (6,057)
Acquisitions -- (4,970)
Purchases of available-for-sale securities (12,205) (327)
Redemption of available-for-sale securities 10,890 8,103
Redemption of held-to-maturity securities 2,435 --
------- -------
Net cash used in investing activities (670) (3,251)
------- -------
Cash flows from financing activities:
Payments received on stock options exercised 218 2,516
Proceeds from long-term debt -- 1,500
Payments on long-term debt -- (13,000)
Repurchase of common stock (736) (687)
Issuance of common stock under employee stock purchase plan 626 584
------- -------
Net cash provided by (used in) financing activities 108 (9,087)
------- -------
Net increase in cash and cash equivalents 3,661 3,410
Cash and cash equivalents at beginning of period 2,310 971
------- -------
Cash and cash equivalents at end of period $ 5,971 $ 4,381
------- -------
------- -------
Supplemental disclosures:
Cash paid for interest $ -- $ 1,692
Cash paid for income taxes $ 2,056 $ 4,452
</TABLE>
See accompanying Notes to Consolidated Financial Statements
Page 5
<PAGE>
ALTERNATIVE RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
1. BASIS OF PRESENTATION
The interim consolidated financial statements presented are unaudited,
but in the opinion of management, have been prepared in conformity with
generally accepted accounting principles applied on a basis consistent with
those of the annual financial statements. Such interim consolidated
financial statements reflect all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of the financial position and the
results of operations for the interim periods presented. The results of
operations for the interim periods presented are not necessarily indicative
of the results to be expected for the year ending December 31, 1998. The
interim consolidated financial statements should be read in connection with
the audited consolidated financial statements for the year ended December 31,
1997, included in the December 31, 1997 Form 10-K of Alternative Resources
Corporation (the "Company").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION. The accompanying financial statements of
Alternative Resources Corporation include the consolidated financial position
and results of operations of the Company and its subsidiaries with all
intercompany transactions eliminated in their entirety.
COMPUTATION OF EARNINGS PER SHARE. Basic earnings per share is based
on the weighted average number of common shares outstanding for the period.
Diluted earnings per share is based on the weighted average number of common
shares outstanding and includes the dilutive effect of unexercised stock
options using the treasury stock method.
INVESTMENT SECURITIES. The Company classifies all investment securities
as available-for-sale. The Company reports available-for-sale securities at
fair value, with unrealized gains and losses excluded from earnings and
reported as a separate component of stockholders' equity.
RECLASSIFICATIONS. Certain 1997 amounts have been reclassified to
conform with the 1998 presentation.
Page 6
<PAGE>
Item 2. - Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
The Company has experienced substantial growth in revenue driven by
industry trends toward component-based outsourcing of information services
operations, increased penetration of existing clients, expansion into new
markets, increased productivity of existing branch offices, the opening of
new branch offices and the introduction of new services. Essentially all of
the Company's revenue is generated from technical resource services that
offer the benefits of outsourcing, while allowing information services
operations managers to retain strategic control of their operations.
On November 7, 1997, ARC acquired CGI Systems, Inc. (CGI). The
acquisition represented a strategic expansion of ARC's service offerings in
the Information Technology (IT) staffing and managed services area that will
allow for a broader base of solutions to an increasingly sophisticated
information technology marketplace. Additional services, which the Company
now provides as a result of the acquisition, include applications support;
network solutions, including network implementation and Lotus Notes
practices; applications development practices; and application consulting
practices for SAP, data warehousing and other applications.
The acquired business has been assimilated into ARC's core business.
The applications support components of the business include both the base of
business that was acquired and the incremental business associated with the
rollout of applications support services to the Company's branch network.
While the management's discussion and analysis will include a comparison of
the results of operations for the three month and six month periods of 1997
as compared to 1998, it is not possible to identify what portion of the
changes relate specifically to the base of business that was acquired, due to
the aforementioned assimilation. On a go-forward basis, the Company's
service lines will continue to be time and material staffing services,
Smartsourcing-Registered Trademark- Solutions and project-related work.
These service lines will contain the Company's traditional operations support
business as well as the newly added applications support business.
During the second quarter of 1998, the Company continued the rollout of
its new applications support service offering to its branch network which
began in the first quarter of 1998. This initiative required additional
recruiting resources in order to increase the database of programmers as well
as training and orientation expenses for field personnel. As with past
initiatives, these types of costs, which are included in
Page 7
<PAGE>
selling, general and administrative expenses, are incurred in advance of the
revenue that is generated.
The Company continues to adapt its business to a more solutions-based
model. This is being accomplished through the Company's
Smartsourcing-Registered Trademark- Solutions service offering. Under a
Smartsourcing-Registered Trademark- arrangement, wherein the Company may take
over an entire portion of a client's IT operations, the Company may provide
for flexibility in invoicing arrangements other than more traditional hourly
billing. Such arrangements may include fixed price or per unit billing, as
well as commitments made by the Company to meet specific service levels.
Management believes that Smartsourcing-Registered Trademark- revenue is an
important measure of clients' confidence and willingness to engage the
Company to provide more comprehensive IT staffing solutions.
As of June 30, 1998, the Company had 60 offices in the United States and
Canada, as compared to 57 offices at June 30, 1997.
SECOND QUARTER FISCAL 1998 COMPARED TO SECOND QUARTER FISCAL 1997
REVENUE. Revenue increased by 34.4% from $62.8 million in the second
quarter of 1997 to $84.4 million in the second quarter of 1998, primarily as
a result of an increase in the hours of service provided, and to a lesser
extent, from an increase in the average revenue per project hour. The
increase in hours of service was primarily due to increased productivity of
existing branch offices, hours of service provided by new branch offices, the
addition of the CGI business, and the rollout of applications support
services to the Company's branch network. The increase in average revenue
per project hour reflects demand for technical employees with higher skill
levels as well as the addition of the applications support business, which
carries a higher hourly bill rate.
GROSS PROFIT. Gross profit increased by 28.0% from $21.9 million in the
second quarter of 1997 to $28.0 million in the second quarter of 1998, again
primarily as a result of an increase in hours of service provided to clients.
Gross margin decreased from 34.8% of revenue in the second quarter of 1997 to
33.2% in the second quarter of 1998. The decrease in gross margin was
primarily due to higher benefit costs and other direct expenses in the second
quarter of 1998. The benefits program was expanded during the third quarter
of 1997 to cover all technical employees who have been on assignment for at
least 500 hours. Other direct expenses include travel, lodging and other
project related expenses.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased from $16.3 million in the second quarter of
1997 to $22.2 million in the second quarter of 1998. This increase in
selling, general and administration is
Page 8
<PAGE>
primarily due to increased commissions, bonuses and staffing expenses
associated with revenue and profitability growth, and an increased number of
offices and their related operating costs, the addition of the CGI business
along with the related selling, general and administrative expenses and the
amortization of goodwill. In addition, the second quarter of 1998 was
impacted by additional recruiting and training costs associated with the
aforementioned rollout of applications support services to ARC's branch
network. As a result of these rollout costs, selling, general and
administrative expenses increased as a percentage of revenue from 25.9% in
the second quarter of 1997 to 26.3% in the second quarter of 1998.
INCOME FROM OPERATIONS. Income from operations increased from $5.6
million in the second quarter of 1997, or 8.9% of total revenue, to $5.8
million in the second quarter of 1998, or 6.9% of total revenue.
OTHER INCOME (EXPENSE). Other income (expense) for the second quarter
of 1997 consisted of interest income earned on the Company's outstanding cash
and investment positions. For the second quarter of 1998, other income
(expense) consisted of interest expense related to the 3-year revolving line
of credit used to finance the acquisition of CGI (see "Liquidity and Capital
Resources" below), offset by interest income from investments.
PROVISION FOR INCOME TAXES. The Company's provision for income taxes
decreased from $2.3 million, or an effective tax rate of 39.0%, in the second
quarter of 1997 to $1.9 million, an effective tax rate of 41.3%, in the
second quarter of 1998. The amortization of goodwill, which is not tax
deductible, caused the effective tax rate to increase.
NET INCOME. The Company's net income decreased from $3.6 million in the
second quarter of 1997, or 5.7% of total revenue, to $2.7 million in the
second quarter of 1998, or 3.2% of total revenue.
FIRST SIX MONTHS FISCAL 1998 COMPARED TO FIRST SIX MONTHS QUARTER FISCAL 1997
REVENUE. Revenue increased by 38.7% from $120.6 million in the first
six months of 1997 to $167.2 million in the first six months of 1998,
primarily as a result of an increase in the hours of service provided, and to
a lesser extent, from an increase in the average revenue per project hour.
The increase in hours of service was primarily due to increased productivity
of existing branch offices, hours of service provided by new branch offices,
the addition of the CGI business, and the rollout of applications support
services to the Company's branch network. The increase in average revenue
per project hour reflects demand for technical employees with higher skill
levels as well as the addition of the applications support business, which
carries a higher hourly bill rate.
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<PAGE>
GROSS PROFIT. Gross profit increased by 34.8% from $41.3 million in the
first six months of 1997 to $55.6 million in the first six months of 1998,
again primarily as a result of an increase in hours of service provided to
clients. Gross margin decreased from 34.2% of revenue in the first six months
of 1997 to 33.3% in the first six months of 1998. The decrease in gross
margin was primarily due to higher benefit costs and direct expenses in the
first six months of 1998. The benefits program was expanded during the third
quarter of 1997 to cover all technical employees who have been on assignment
for at least 500 hours. Other direct expenses include travel, lodging and
other project related expenses.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased from $31.5 million in the first six months
of 1997 to $45.0 million in the first six months of 1998. This increase in
selling, general and administration is primarily due to increased
commissions, bonuses and staffing expenses associated with revenue and
profitability growth, and an increased number of offices and their related
operating costs, the addition of the CGI business along with the related
selling, general and administrative expenses and the amortization of
goodwill. In addition, the first six months of 1998 was impacted by
additional recruiting and training costs associated with the aforementioned
rollout of applications support services to ARC's branch network. As a
result of these rollout costs, selling, general and administrative expenses
increased as a percentage of revenue from 26.1% in the first six months of
1997 to 26.9% in the first six months of 1998.
INCOME FROM OPERATIONS. Income from operations increased from $9.8
million in the first six months of 1997, or 8.1% of total revenue, to $10.7
million in the first six months of 1998, or 6.4% of total revenue.
OTHER INCOME (EXPENSE). Other income (expense) for the first six months
of 1997 consisted of interest income earned on the Company's outstanding cash
and investment positions. For the first six months of 1998, other income
(expense) consisted of interest expense related to the 3-year revolving line
of credit used to finance the acquisition of CGI (see "Liquidity and Capital
Resources" below). Interest expense was offset by interest income and by
gains on the liquidation of investments during the first six months as the
Company converted its investment positions into cash.
PROVISION FOR INCOME TAXES. The Company's provision for income taxes
decreased from $4.1 million, or an effective tax rate of 39.4%, in the first
six months of 1997 to $3.7 million, or an effective tax rate of 40.7%, in the
first six months of 1998. The amortization of goodwill, which is not tax
deductible, caused the effective tax rate to increase.
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<PAGE>
NET INCOME. The Company's net income decreased from $6.4 million in the
first six months of 1997, or 5.3% of total revenue, to $5.4 million in the
first six months of 1998, or 3.2% of total revenue.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of 1998, cash flow generated from operations
was $15.8 million resulting primarily from earnings, increased accrued
payroll expenses, and decreases in trade accounts receivable partially offset
by decreases in accounts payable and accrued expenses. Working capital
decreased from $65.8 million at December 31, 1997, to $53.2 million at June
30, 1998 as cash provided by operations was used to repay a portion of
long-term debt.
In connection with the acquisition of CGI, the Company established a $75
million, 3-year revolving line of credit that was used to finance the
acquisition. Total borrowings under the line at June 30, 1998 were $62.0
million. The Company believes its cash balances and funds provided by
operations will be sufficient to finance continued expansion of its office
network and to meet all of its anticipated cash requirements for at least the
next twelve months.
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information,"
which is effective for the Company's 1998 annual financial statements. SFAS
No. 131 establishes standards for reporting information about operating
segments in annual financial statements and requires selected information
about operating segments in interim financial reports issued to shareholders.
It also establishes standards for related disclosures about products and
services, geographic areas and major customers. SFAS No. 131 supersedes SFAS
No. 14, "Financial Reporting for Segments of Business Enterprise," but
retains the requirement to report information about major customers.
The Company is currently evaluating the impact this statement will have
on its financial statements.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of stockholders of Alternatives Resources
Corporation was held on April 28, 1998.
(b) The individuals specified in (c) below were elected as directors at
the meeting and the terms of office of Larry I. Kane, Bruce R. Smith,
Raymond R. Hipp and Richard B. Williams as directors continued after
the meeting.
(c) Set forth below is the tabulation of the votes with respect to the
election of JoAnne Brandes, Robert V. Carlson and Michael E. Harris
as Class I Directors.
<TABLE>
<CAPTION>
Withhold
Director For Authority
----------------- ---------- ---------
<S> <C> <C>
JoAnne Brandes 12,884,177 636,480
Robert V. Carlson 12,886,069 634,588
Michael E. Harris 12,885,717 634,940
</TABLE>
Set forth below is the tabulation of the votes on the motion to
approve an amendment to the Company's Amended and Restated Incentive Stock
Option Plan increasing the number of shares of common stock available for
grant thereunder by 900,000 shares to a total of 4,900,000.
<TABLE>
<CAPTION>
Broker
For Against Abstain Nonvotes
--------- --------- ------- ---------
<S> <C> <C> <C>
5,575,316 5,637,865 33,405 2,274,071
</TABLE>
ITEM 5. - OTHER INFORMATION
On March 27, 1998, A. Donald Rully, George B. Cobbe and Syd N. Heaton were
appointed to the Company's board of directors. Mr. Rully returned to the
board of directors after a temporary absense in which he pursued other
business interests. Mr. Cobbe, currently a management consultant, is a
retired vice president of Hewlett-Packard's Americas Geographic Operations.
Mr. Heaton is a retired chairman and chief executive officer of Advantis, a
network services partnership of IBM Corporation and Sears.
On April 10, 1998, Richard B. Williams resigned from the position of Vice
Chairman and from the Company's board of directors.
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<PAGE>
On July 31, 1998, Larry I. Kane, Chairman and Chief Executive Officer,
retired. Mr. Kane remains on the Company's board of directors. For
additional information reference is made to the press release dated July 24,
1998 filed as exhibit 99(a).
On August 1, 1998, Raymond R. Hipp joined the Company as Chairman, President
and Chief Executive Officer. Mr. Hipp served as a member of the Company's
board of directors for four years prior to becoming Chairman, President
and Chief Executive Officer. For additional information reference is
made to the press release dated July 24, 1998 filed as exhibit 99(a).
On August 1, 1998, Steve Purcell joined the Company as Chief Financial
Officer, Secretary and Treasurer. For additional information reference is
made to the press release dated August 5, 1998 filed as exhibit 99(b).
ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are furnished as an exhibit and numbered
pursuant to Item 601 of Regulation S-K:
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<C> <S>
27.1 Financial Data Schedule
27.2 Restated Financial Data Schedule
99(a) Press Release dated July 24, 1998
99(b) Press Release dated August 5, 1998
</TABLE>
(b) The registrant was not required to file any reports on Form 8-K for
the quarter.
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<PAGE>
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 thereunto duly authorized.
ALTERNATIVE RESOURCES CORPORATION
Date: August 12, 1998 /s/ Bradley K. Lamers
---------------------------------
Bradley K. Lamers
Vice President
Page 14
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
27.1 Financial Data Schedule
27.2 Restated Financial Data Schedule
99(a) Press Release dated July 24, 1998
99(b) Press Release dated August 5, 1998
</TABLE>
Page 15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOUND IN THE COMPANY'S 10-Q FOR THE SIX MONTH
PERIOD ENDED JUNE 30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 4,381
<SECURITIES> 0
<RECEIVABLES> 71,177
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 79,745
<PP&E> 21,845
<DEPRECIATION> 7,897
<TOTAL-ASSETS> 166,908
<CURRENT-LIABILITIES> 26,595
<BONDS> 0
0
0
<COMMON> 160
<OTHER-SE> 77,886
<TOTAL-LIABILITY-AND-EQUITY> 166,908
<SALES> 0
<TOTAL-REVENUES> 167,212
<CGS> 0
<TOTAL-COSTS> 111,570
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,525
<INCOME-PRETAX> 9,137
<INCOME-TAX> 3,718
<INCOME-CONTINUING> 5,419
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,419
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0.34
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,971
<SECURITIES> 19,425
<RECEIVABLES> 40,295
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 68,103
<PP&E> 7,047
<DEPRECIATION> 3,142
<TOTAL-ASSETS> 73,660
<CURRENT-LIABILITIES> 11,235
<BONDS> 0
0
0
<COMMON> 157
<OTHER-SE> 61,989
<TOTAL-LIABILITY-AND-EQUITY> 73,660
<SALES> 0
<TOTAL-REVENUES> 120,561
<CGS> 0
<TOTAL-COSTS> 79,287
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,517
<INCOME-TAX> 4,148
<INCOME-CONTINUING> 6,369
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<PAGE>
EXHIBIT 99(a) - PRESS RELEASE DATED JULY 24, 1998
ALTERNATIVE RESOURCES CORPORATION
100 TRI-STATE INTERNATIONAL
SUITE 300
LINCOLNSHIRE, IL 60069
NASDAQ: ALRC
CONTACT:
BRAD LAMERS SUSAN H. FISHER
CHIEF FINANCIAL OFFICER DIRECTOR, INVESTOR RELATIONS
(847) 317-1000, EXT. 248 (847) 317-1000, EXT. 287
ALTERNATIVE RESOURCES CORPORATION NAMES RAYMOND R. HIPP
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER;
FOUNDER LARRY KANE RETIRES AND WILL REMAIN
ON BOARD OF DIRECTORS
LINCOLNSHIRE, IL, JULY 24, 1998 - ALTERNATIVE RESOURCES CORPORATION (NASDAQ:
ALRC), a leading provider of information technology (IT) services, today
announced that Raymond R. Hipp will join ARC as chairman, president and chief
executive officer, effective August 1, 1998. Larry Kane, ARC's founder and
former chief executive, will retire effective July 31, 1998. However, he
will remain on the ARC Board of Directors. Mr. Hipp, a current ARC board
member, will have overall responsibility for ARC's strategy and operations,
focusing on the integration of the company's new practice areas, as well as
the recently announced goal of generating higher revenue growth and margins
from its national sales and marketing organization.
Mr. Hipp, 56, was president and CEO of ITI Marketing Services, Inc., of
Omaha, NE, a large teleservices provider which was recently sold to APAC
Teleservices, Inc., of Deerfield, IL. He was brought into ITI in 1996 by a
private investment group to lead the company. Under his leadership, the
organization, with more than 10,000 employees and 24 customer contact
centers, experienced significant revenue growth and showed a dramatic
improvement in profitability.
Prior to heading ITI Marketing Services, Mr. Hipp was founder and president
of Comdisco Disaster Recovery Services (CDRS), the largest global provider of
Business Continuity Services for the IT industry. From its inception in 1980
to 1994, CDRS grew to approximately $230 million in revenues. He was an
executive vice president of parent company, Comdisco, Inc, as well as a
member of the Board of Directors. Prior to that, Mr. Hipp held numerous
positions with the IBM Corporation over a 15-year period, with the most
recent being regional manager in the Office Products Division.
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<PAGE>
"Following the long search for someone with Ray's background and experience
to serve as ARC's new chief executive, we are extremely fortunate that Ray
has become available at this time," said chairman Larry Kane.
"His 30 years of IT management experience have given him strong operating and
marketing skills to lead ARC's continuing efforts to accelerate the
integration of our new practice initiatives and drive rapid internal growth.
I have full confidence in relinquishing responsibilities to Ray, who has been
an invaluable ARC board member for the past four years. I look forward to
working with Ray as we all strive to expand on this company's success over
the past 11 years."
"ARC is an exciting company and one of the first IT services providers to
establish a national branch network supported by an industry-leading resource
of skilled IT professionals," said Mr. Hipp. "The company is well positioned
to maintain its growth as it integrates the newly acquired programming
services into its vast client network. I am delighted to have this unique
opportunity and am confident that I can contribute extensive strategic and
operating expertise to ARC's management as we work to improve profitability
over the near term and, more importantly, to achieve the company's
extraordinary long-term potential."
ABOUT ARC
Alternative Resources Corporation (ARC) is a leading provider of information
technology services, including component outsourcing, technology deployments,
and IT projects staffing. Headquartered in Lincolnshire, IL, the company
serves Fortune 1000 and mid-sized clients from 60 offices in the U.S. and
Canada.
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<PAGE>
EXHIBIT 99(b) - PRESS RELEASE DATED AUGUST 5, 1998
ALTERNATIVE RESOURCES CORPORATION
100 TRI-STATE INTERNATIONAL
SUITE 300
LINCOLNSHIRE, IL 60069
NASDAQ: ALRC
CONTACT:
Susan H. Fisher
Director, Investor Relations
(847) 317-1000, Ext. 287
FOR IMMEDIATE RELEASE
WEDNESDAY, AUGUST 5, 1998
ALTERNATIVE RESOURCES CORPORATION NAMES STEVEN PURCELL
CHIEF FINANCIAL OFFICER, SECRETARY AND TREASURER
LINCOLNSHIRE, IL, AUGUST 5, 1998 - Alternative Resources Corporation (Nasdaq:
ALRC), a leading provider of information technology (IT) services, today
announced that Steven Purcell has joined ARC as chief financial officer,
secretary and treasurer. Bradley K. Lamers, ARC's current chief financial
officer, will remain with the company in the capacity of vice president
- -finance, reporting to Mr. Purcell. Mr. Purcell will have overall
responsibility for the financial, tax and treasury functions of the company.
Mr. Purcell, 47, was chief financial officer for American Business
Information (Nasdaq: IUSAA), a $250 million provider of business and
consumer data and data processing services. Prior to that, Mr. Purcell
served as vice president -finance, chief financial officer and treasurer, of
Micro Warehouse, a direct marketer of hardware, software and accessories.
During his five-year tenure with the company, from 1991 to 1996, Micro
Warehouse grew from a $200 million privately held organization to a $2
billion publicly traded company with operations in 16 countries.
From 1985 to 1991, Mr. Purcell worked for Electrocomponents, PLC., a
London-based distributor of electrical products, serving as chief executive
officer for its Misco, Inc. subsidiary and, prior to that, as vice president
- - finance for Electrocomponents, Inc., the U.S. holding company. From 1978
to 1985, Mr. Purcell held positions in finance and accounting with Hubbell
Incorporated, a Fortune 500 manufacturer of electrical products, with the
most recent
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<PAGE>
being division controller at the Hubbell Lighting Division. From 1975 to
1978, Mr. Purcell, a certified public accountant (CPA), was a senior
accountant for Price Waterhouse & Company.
"The addition of Steve Purcell as chief financial officer significantly
strengthens ARC's management approach to an increasingly challenging
information technology environment," said Raymond R. Hipp, chairman,
president and chief executive officer. "Steve brings a depth of experience
and leadership in finance and strategy that will help ARC focus on
profitability over the near term and, more importantly, help achieve our
company's extraordinary long-term growth potential."
"ARC is an exciting company with one of the premier sales and distribution
channels within the IT services industry," said Mr. Purcell. "The company is
well positioned to maintain its growth and drive higher margins, while
bringing more value to its clients and its extensive base of skilled IT
professionals. I am delighted to have the opportunity to work with Ray Hipp
and ARC's management team as we work to move ARC to the next level and
increase ARC's shareholder value."
About ARC
Headquartered in Lincolnshire, IL, Alternative Resources Corporation is a
leading provider of information technology services, including component
outsourcing, technology deployments and IT project staffing. The company
services Fortune 1000 and mid-sized clients from 60 offices in the U.S. and
Canada.
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