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RCM revenue up, margin narrows

March 23 2009

Fourth-quarter revenue rose 9.7% year-over-year at RCM Technologies Inc. (NASD: RCMT) to $53.5 million, the company announced Friday. Fourth-quarter gross margin, however, slipped to 24.8% from 27.1% in the year-ago period.

Net loss for the fourth quarter was $39.1 million compared with net income of $1.6 million in the fourth quarter of 2007 at the Pennsauken NJ-based company, which provides engineering, information technology and commercial staffing. RCM said the 2008 fourth quarter included a $43.3 million charge for impairment of goodwill and intangible assets.

Full-year 2008 revenue fell 2.3% year-over-year to $209.3 million. Full-year gross margin improved to 25.8% from 24.7%.

RCM posted a full-year 2008 net loss of $39.8 million compared with net income of $6.8 million in 2007.

The company estimated first-quarter revenue of between $46.5 million to $48.5 million, a year-over-year decrease of 1.2% to 5.3%.

"In the first quarter of 2009, we have experienced some softness in our business segments," Chairman and CEO Leon Kopyt said. "Our information technology group has seen weak sales, in particular from our clients in the automobile, financial services and manufacturing sectors. Additionally, our two largest pharmaceutical clients are being acquired, consequently delaying major initiatives that had been scheduled for the first quarter of 2009. In our engineering group, we completed several large projects in the fourth quarter of 2008, while new projects have yet to ramp up in the current quarter."

RCM also announced Friday it reached a $9.8 million settlement with attorneys and law firms who had served as its legal counsel in some acquisition transactions, according to a filing with the U.S. Securities and Exchange Commission. The suit was filed November 2002.

RCM Technologies Inc. (NASD: RCMT)
For the fourth quarter ended Dec. 27, 2008, compared with the same period in 2007.
Revenue: $53.5 million, +9.7%
Net loss: $39.1 million vs. net income of $1.6 million

For the full year ended Dec. 27, 2008, compared with 2007.
Revenue: $209.3 million, -2.3%
Net loss: $39.8 million vs. net income of $6.8 million

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