ARI Reports Increased Revenues for Fiscal 2009

MILWAUKEE—October 29 -- ARI, a leading provider of technology solutions that help dealers, distributors and manufacturers in selected vertical markets sell and service their products, today reported results for the fourth fiscal quarter and fiscal year ended July 31, 2009.

Full Year Fiscal 2009 Highlights

* Revenues increased to $17.6 million for fiscal 2009, from revenues of $16.9 million in fiscal 2008.

* Operating income was $767,000 for fiscal 2009, compared to operating income of $821,000 for the prior fiscal year.

* Net income was $424,000 or $0.06 per diluted share for fiscal 2009, compared to net income of $1.4 million or $0.20 per diluted share for fiscal 2008.

Fourth Quarter Fiscal 2009 Highlights

* Revenues increased 24% to $5.3 million for the fourth quarter of fiscal 2009, from revenues of $4.3 million for the fourth quarter of fiscal 2008.

* Operating loss was $105,000 for the fourth quarter of fiscal 2009, compared to an operating loss of $237,000 for the fourth quarter of the prior year.

* The company recorded a net loss of $114,000 or $0.02 per diluted share for the fourth quarter of fiscal 2009, compared to net income of $378,000 or $0.05 per diluted share for the fourth quarter of fiscal 2008.

Operations Review

"Fiscal 2009 was a good year for ARI. We increased revenues, remained profitable and successfully completed two acquisitions, all within a challenging economic environment," said Roy W. Olivier, President and Chief Executive Officer of ARI.  "We generated $2.7 million in cash from operations for the year, which we used for the two acquisitions, investments in equipment and software development and for the repayment of debt and capital lease obligations."

Olivier said the increased revenues reflected the continued growth of the company`s marketing services business and increased revenues from catalog subscriptions, partially offset by a decline in professional services fees as companies delayed projects in response to the economic downturn. The two businesses acquired during the year, Channel Blade Technologies Corp. and the finance and insurance assets of Powersports Outsourcing Group, LLC, also contributed to the higher fiscal 2009 revenues. Catalog revenues benefited from the July, 2008 acquisition of InfoAccess, an electronic parts catalog business.  "Recurring revenues remained consistent at over 90% renewals for our two core product lines, WebsiteSmartPro and PartSmart®," said Olivier.

"The small decrease in operating income for the year was primarily due to expenses related to the two acquisitions and their integration into ARI," added Brian E. Dearing, Chairman and Interim Chief Financial Officer of ARI. "Factors contributing to the decrease in net income included non-cash charges related to increased valuation reserves for deferred tax assets and amortization expense related to acquired intangible assets. There is also a cash charge related to higher interest payments for debt associated with the Channel Blade acquisition. In addition, shareholders` equity, an indicator of our financial stability, continued to increase in fiscal 2009."

"We made excellent progress on growing our marketing services business over the past year," Oliver added. "We expanded into the marine and recreation vehicle markets through the acquisition of Channel Blade Technologies, the leading provider of websites, lead management and marketing automation solutions for these markets. The synergies with Channel Blade include opportunities to expand its lead generation platform, Footsteps, to our existing customer base, further enhancing the value ARI brings to manufacturers, dealers and distributors in key markets."

"Our recurring revenue model provided stability for ARI during a challenging year for the economy. Because our products support the service and accessorizing side of our customers` businesses, we benefited as many people repaired or enhanced their existing outdoor power equipment, power sports vehicles, motorcycles and other equipment rather than making new purchases. In fact, we saw an 18% increase in parts and accessory sales processed on our e-commerce customer platform during the year," said Olivier.

"We enter fiscal 2010 in a good position. The two acquisitions will contribute to revenues for the full year, as will our key new products SearchEngineSmart and PartStream, each of which we developed and launched during fiscal year 2009.

We also expect to generate cash and remain profitable as we continue to benefit from our significantly reduced cost structure. Our priorities for the year include expanding sales to new customers, retaining current customers and providing additional products to this established customer base, further integrating the two acquisitions and continuing to invest in new product development," added Olivier.

Closures Sting But the Virginia Beach Region Hasn't Lost Manufacturing Base

The International Paper mill outside Franklin - gone by next spring, shredding 1,100 jobs.

Also closing next year: the Smithfield Foods Packing Co. South Plant in Smithfield and the CooperVision contact-lens plant in Norfolk.

Combined, the three shutdowns will cost the region at least 2,300 jobs.

Two years ago, Ford Motor Co. closed its Norfolk Assembly Plant, which at its peak employed 2,500 people to produce F-150 trucks.

Will anything be made anymore in Hampton Roads?

Definitely - from power tools to auto parts to Navy warships.

Reports of the death of American manufacturing are greatly exaggerated, say economists and companies.

Yes, manufacturing has taken a huge hit from the recession, compounding decades of employment losses triggered by automation and global competition.

Last month, the federal government reported that employment in manufacturing had fallen by 2.1 million since the recession began. That's about 30 percent of all U.S. jobs lost, said Dave Huether, chief economist for the National Association of Manufacturers.

Yet manufacturing's share of the U.S. gross domestic product, Huether said, has held between 13 and 14 percent for most of the past two decades. That amounts to $1.6 trillion a year.

In September, U.S. industrial production rose 0.7 percent, leading analysts to put manufacturing at the forefront of the recovery.

"It's not the death of manufacturing; it's the restructuring," said Peter Shaw, a professor of business and economics at Tidewater Community College.

Huether called it "a change in composition of manufacturing."

Consumers can't help but notice the declines - in areas such as apparel and cars. Less obvious, he said, are the areas where U.S. manufacturing has grown, including chemical products, pharmaceuticals and computer chips.

Hampton Roads, with its substantial military influence, doesn't rely heavily on manufacturing. Yet as a percentage of "non-farm employment," the region's 7 percent rate for manufacturing exceeds the state's 6.5 percent, said Bill Mezger, an economist with the Virginia Employment Commission.

Despite the future closings, the region shows healthy manufacturing signs.

In contrast with the nation, which lost 51,000 manufacturing jobs from August to September, Hampton Roads gained 700, growing from 53,700 to 54,400, the state announced last week.

Mezger said the growth probably occurred in the auto parts sector, driven in part by the Cash for Clunkers program.

Also promising: More than 40 percent of the local manufacturing jobs - about 23,000 - are in shipbuilding.

"Shipbuilding largely operates by government contracts," Mezger said. "That industry in Hampton Roads seems to be very healthy."

Northrop Grumman Newport News accounts for the lion's share of that number, with a work force of about 19,000, spokeswoman Lauren Green said in an e-mail.

"Our employment has been stable," said Green, who noted that the shipyard has openings for welders, pipefitters and sheet-metal workers. "We are not significantly impacted by the economic downturn, as our contracts span many years."

Last year, the shipyard was awarded federal contracts totaling $11.5 billion, Green said. It is the nation's only builder of aircraft carriers and one of two submarine makers.

Stihl Inc., which makes power tools, is one of the largest manufacturers in South Hampton Roads, with 2,150 employees at its Virginia Beach site and branches, said its president, Fred Whyte. Although it furloughed some workers this year, he said, it didn't lay anyone off and it plans holiday bonuses.

Last week, Stihl announced a new line of 36 lithium-ion-battery-powered products, including hedge trimmers and blowers, to be introduced in the second quarter of 2010. The company has enjoyed 17 straight years of U.S. sales increases. This won't be the 18th, Whyte said, though the company did not experience significant U.S. losses. "Domestic sales are basically on a par with last year," he said.

The German-owned company has invested more than $200 million over the past five years, including the opening of a $25 million guide-bar plant in 2007.

"We are there for the long term," Whyte said, "and the testimony is in bricks and mortar."

Closures Sting But the Virginia Beach Region Hasn't Lost Manufacturing Base

The International Paper mill outside Franklin - gone by next spring, shredding 1,100 jobs.

Also closing next year: the Smithfield Foods Packing Co. South Plant in Smithfield and the CooperVision contact-lens plant in Norfolk.

Combined, the three shutdowns will cost the region at least 2,300 jobs.

Two years ago, Ford Motor Co. closed its Norfolk Assembly Plant, which at its peak employed 2,500 people to produce F-150 trucks.

Will anything be made anymore in Hampton Roads?

Definitely - from power tools to auto parts to Navy warships.

Reports of the death of American manufacturing are greatly exaggerated, say economists and companies.

Yes, manufacturing has taken a huge hit from the recession, compounding decades of employment losses triggered by automation and global competition.

Last month, the federal government reported that employment in manufacturing had fallen by 2.1 million since the recession began. That's about 30 percent of all U.S. jobs lost, said Dave Huether, chief economist for the National Association of Manufacturers.

Yet manufacturing's share of the U.S. gross domestic product, Huether said, has held between 13 and 14 percent for most of the past two decades. That amounts to $1.6 trillion a year.

In September, U.S. industrial production rose 0.7 percent, leading analysts to put manufacturing at the forefront of the recovery.

"It's not the death of manufacturing; it's the restructuring," said Peter Shaw, a professor of business and economics at Tidewater Community College.

Huether called it "a change in composition of manufacturing."

Consumers can't help but notice the declines - in areas such as apparel and cars. Less obvious, he said, are the areas where U.S. manufacturing has grown, including chemical products, pharmaceuticals and computer chips.

Hampton Roads, with its substantial military influence, doesn't rely heavily on manufacturing. Yet as a percentage of "non-farm employment," the region's 7 percent rate for manufacturing exceeds the state's 6.5 percent, said Bill Mezger, an economist with the Virginia Employment Commission.

Despite the future closings, the region shows healthy manufacturing signs.

In contrast with the nation, which lost 51,000 manufacturing jobs from August to September, Hampton Roads gained 700, growing from 53,700 to 54,400, the state announced last week.

Mezger said the growth probably occurred in the auto parts sector, driven in part by the Cash for Clunkers program.

Also promising: More than 40 percent of the local manufacturing jobs - about 23,000 - are in shipbuilding.

"Shipbuilding largely operates by government contracts," Mezger said. "That industry in Hampton Roads seems to be very healthy."

Northrop Grumman Newport News accounts for the lion's share of that number, with a work force of about 19,000, spokeswoman Lauren Green said in an e-mail.

"Our employment has been stable," said Green, who noted that the shipyard has openings for welders, pipefitters and sheet-metal workers. "We are not significantly impacted by the economic downturn, as our contracts span many years."

Last year, the shipyard was awarded federal contracts totaling $11.5 billion, Green said. It is the nation's only builder of aircraft carriers and one of two submarine makers.

Stihl Inc., which makes power tools, is one of the largest manufacturers in South Hampton Roads, with 2,150 employees at its Virginia Beach site and branches, said its president, Fred Whyte. Although it furloughed some workers this year, he said, it didn't lay anyone off and it plans holiday bonuses.

Last week, Stihl announced a new line of 36 lithium-ion-battery-powered products, including hedge trimmers and blowers, to be introduced in the second quarter of 2010. The company has enjoyed 17 straight years of U.S. sales increases. This won't be the 18th, Whyte said, though the company did not experience significant U.S. losses. "Domestic sales are basically on a par with last year," he said.

The German-owned company has invested more than $200 million over the past five years, including the opening of a $25 million guide-bar plant in 2007.

"We are there for the long term," Whyte said, "and the testimony is in bricks and mortar."