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) April 2, 1999
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APAC TELESERVICES, INC.
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(Exact name of registrant as specified in charter)
Illinois 0-26786 36-2777140
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) file number) Identification No.)
One Parkway North Center, Suite 510, Deerfield, IL 60015
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code 847/374-4980
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N/A
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(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS
On April 2, 1999, Registrant issued a press release, a copy of which is
attached as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit No. Description of Document
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(99.1) Press release dated April 2, 1999, issued by
the Registrant.
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.
Date: April 7, 1999 APAC TELESERVICES, INC.
By: /s/ Mark O. Remissong
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Mark O. Remissong
Chief Financial Officer
CONTACT:
Karen M. Chambers
Investor Relations
APAC TeleServices, Inc.
847-374-3204
FOR IMMEDIATE RELEASE:
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APAC REPORTS SPECIAL CHARGES AND 1998 RESULTS
APAC TeleServices, Inc. (NASDAQ:APAC), a premier provider of outsourced customer
service and sales, today reported special charges and consolidated financial
results for its 1998 fiscal year. The Company announced pre-tax special charges
taken in the fourth quarter of 1998 for a non-cash impairment of long-lived
assets of $69.7 million and for discontinuance of an operation of $9.5 million.
The Company also announced net revenue of $425.0 million for the 1998 year, up
21% from $350.5 million recorded in 1997. For the fourteen weeks ended January
3, 1999 net revenue totaled $115.0 million, up 26% from $91.4 million in the
comparable period in 1997. The results for 1998 include the revenue contributed
by ITI Marketing, Inc. subsequent to its acquisition on May 20, 1998. Previously
reported revenue for 1997 has been reclassified to account for the Company's
discontinued operations.
Largely as a result of these special charges, the Company reported a net loss of
$79.3 million or $1.63 per share for the year compared to a net loss of $1.2
million or $0.03 per share for the 1997 year. For the fourteen weeks ended
January 3, 1999, including special charges, the net loss was $84.1 million or
$1.78 per share, compared to a net loss of $20.3 million or $0.42 per share in
the comparable period in 1997.
Included in the net loss for 1998 is a non-cash, long-lived asset impairment
charge of $69.7 million recorded in the fourth quarter. This amount principally
represents the goodwill and other intangible assets associated with its Sales
Solutions segment recorded in connection with the ITI Marketing, Inc.
acquisition. During the fourth quarter, the Company performed an in-depth
evaluation of the carrying value of the goodwill due to the poor operating
performance of the Company's Sales Solutions business relating to changes in
ITI's client base and in the industry outlook for outbound telemarketing
services. The Company has concluded that due to the significant decline in the
growth of the outbound telemarketing industry and the reduced growth prospects
for the Company in this area, a permanent impairment of goodwill had occurred.
Earnings before interest, taxes, depreciation, amortization, restructuring
charges, goodwill impairment and provision for discontinued operations were
$50.3 million for the 1998 year, compared to $57.8 million for the 1997 year.
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The Company has received a routine notice from the NASDAQ that due to the
Company's common stock price being below $5 per share for more than thirty days,
NASDAQ will review continued listing of the Company's common stock pursuant to
NASDAQ rules, unless the closing bid price exceeds $5 per share for ten
consecutive days prior to May 7, 1999. Should the common stock cease to be
listed on the NASDAQ National Market, the Company believes it qualifies for
listing on the NASDAQ Small-Cap Market or the American Stock Exchange and will
seek listing in one of these markets.
"Despite the challenges of the fourth quarter, APAC's people have made great
progress improving our customer satisfaction levels and positioning the business
for continued future growth and profitability," said Theodore G. Schwartz,
APAC's chairman, CEO and largest shareholder. "We maintained substantial cash
flow from continuing operations during challenging times. I am confident that we
are doing the right things to establish a foundation upon which we can build
meaningful shareholder value in the long term," he added.
This release contains certain statements that describe the Company's assessments
of future business conditions and the outlook for the Company based on available
information. Whenever possible, the Company has identified these
"forward-looking" statements (as defined in Section 21E of the Securities and
Exchange Act of 1934) by words such as "anticipates," "believes," "estimates,"
"expects," and similar phrases. These forward-looking statements are based on
assumptions the Company believes are reasonable; however such statements are
subject to risks and uncertainties which could cause the Company's actual
results to differ materially from those expressed in, or implied by, these
statements. Some forward-looking statements in this release concern anticipated
revenue levels, cost estimates and resulting earnings that are not necessarily
indicative of subsequent periods due to the level and mix of future sales, which
may vary significantly from quarter to quarter. The Company assumes no
obligation to update publicly any forward-looking statements whether as a result
of new information, future events or otherwise. A discussion of the risks and
uncertainties related to forward-looking statements by the Company, as well as
the complete financial statements and footnotes and management's discussion and
analysis of financial condition and results of operations, is contained in its
Form 10-K Report for the fiscal year ended January 3, 1999 to be filed with the
Securities and Exchange Commission on April 5, 1999.
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APAC TELESERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
FOR THE FISCAL YEARS ENDED
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JANUARY 3, 1999 DECEMBER 28, 1997*
(53 WEEKS) (52 WEEKS)
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<S> <C> <C>
NET REVENUE $ 425,028 $ 350,533
OPERATING EXPENSES:
Cost of services 353,979 268,177
Selling, general and administrative expenses 56,230 45,810
Asset impairment charges 71,172 3,238
Restructuring charge 9,000 --
Total operating expenses 490,381 317,225
Operating income (loss) (65,353) 33,308
INVESTMENT INCOME -- --
INTEREST EXPENSE 8,139 1,499
Income (loss) from continuing operations before income taxes and cumulative
effect of accounting change (73,492) 31,809
INCOME TAXES (BENEFIT) (5,200) 12,100
Income (loss) from continuing operations before cumulative effect of
accounting change (68,292) 19,709
DISCONTINUED OPERATIONS:
Lossfrom operations of Paragren Technologies, Inc., less income taxes
(benefit) of ($1,100) in 1998, and
$670 in 1997 (2,628) (18,726)
Loss on disposal of Paragren Technologies, Inc., including provision of
$3,000 for operating losses during phaseout period, less deferred
income tax
benefit of $1,100 (8,400) --
Total discontinued operations (11,028) (18,726)
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE, less income tax benefit of $1,349 -- (2,200)
NET INCOME (LOSS) ($ 79,320) ($ 1,217)
NET INCOME (LOSS) PER SHARE:
Basic:
Income (loss) from continuing operations before cumulative effect of
accounting change ($ 1.40) $ 0.41
Loss from discontinued operations (0.23) (0.39)
Cumulative effect of accounting change -- (0.05)
Net income (loss) ($ 1.63) ($ 0.03)
Diluted:
Income (loss) from continuing operations before
cumulative effect of accounting change ($ 1.40) $ 0.41
Loss from discontinued operations (0.23) (0.39)
Cumulative effect of accounting change -- (0.05)
Net income (loss) ($ 1.63) ($ 0.03)
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 48,609 47,453
Diluted 48,609 48,505
*Reclassified to conform to current year's classifications
3
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