Jack-
The pres says "based on current and expected client orders, we believe the 2nd quarter of 97 will be a strong quarter from the company"
Below are his fairly extensive comments:
SALT LAKE CITY, Utah--(BUSINESS WIRE)--March 13, 1997--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 believe 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 continue 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." |
