APAC Customer Services, Inc., a leading provider of customer interaction solutions, reported financial results for its first quarter ended March 28, 2004. The Company reported a net loss of $1.7 million, or $.03 per share, on revenue of $71.4 million compared to net income of $2.1 million, or $.04 per share, on revenue of $86.2 million in the same period a year ago. The 2004 first quarter results included $3.0 million of pre-tax special charges, including $2.1 million of non-cash charges related to the impairment of unutilized software assets and $.9 million of restructuring charges associated with the implementation of certain cost reduction initiatives.
Revenue decreased $3.5 million from the fourth quarter of 2003 due to the previously reported decision by a large communications client to bring certain programs in house. The decline in revenue from the first quarter of 2003 resulted from this decision and a cutback in consumer marketing by several financial services clients, partly in response to the roll out of the national do-not-call registry last October.
Gross margin of 15.8% for the quarter declined from 17.6% in the fourth quarter of 2003 primarily due to higher labor costs and lower pricing related to certain client programs. Gross margin decreased by 3.7 percentage points from the first quarter of 2003 principally due to the impact of lower capacity utilization, higher labor costs and softening prices.
Selling, general and administrative expenses decreased $2.2 million, or 16.8% year over year, in line with the percentage decline in revenue. As of March 28, 2004, the Company reported cash and cash equivalents of $6.8 million, a decrease of $4.6 million from the beginning of the year. The Company used cash to pay down certain current liabilities and fund investments in technology and facilities.
Robert J. Keller, APAC Customer Services’ CEO commented, “Since joining the Company on March 15th and meeting many of our employees, clients, and prospects, I am even more excited about APAC’s future. By investing in our people, processes and technologies, I am confident we will deliver value to our clients and shareholders. I look forward to sharing our successes as we reposition ourselves to create a differentiated brand within our industry segment and I believe those results will be evident by the fourth quarter of this year.”
About APAC Customer Services, Inc.
APAC Customer Services, Inc. (Nasdaq: APAC) is a leading provider of customer interaction solutions for market leaders in communications, financial services, insurance, healthcare, logistics and travel and hospitality. APAC partners with its clients to deliver custom solutions that enhance bottom line performance. Founded in 1973 and headquartered in Deerfield, Illinois, the company employs approximately 10,200 people and maintains 27 customer interaction centers.
For more information on APAC’s first quarter performance visit CardData ([www.carddata.com]).