SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, D.C.  20549  FORM 10-Q  QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly
period ended March 31, 2001 Commission file
number 0-23940  ALTERNATIVE RESOURCES
  CORPORATION(Exact name of registrant as specified in
  its charter)  Delaware
  38-2791069(State or other jurisdiction of
  (I.R.S. Employerincorporation or organization)
  Identification No.)600 Hart Road, Suite 300, Barrington, IL
  60010(Address of principal executive offices)
  (Zip code)(847) 381-6701(Registrant's telephone number, including
  area code)
 Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.  YESTNO£. Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 17,390,594 shares of
Common Stock outstanding as of May 7, 2001.


PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements ALTERNATIVE RESOURCES
CORPORATION
CONSOLIDATED BALANCE SHEETS(In thousands,
except share data) ASSETS December
  31, 
  2000
  March
  31, 
  2001Current assets:
  (Unaudited)Cash and cash equivalents
  $114
  $41Short-term investment
  639
  -Trade accounts receivable, net of
  allowance for doubtful accounts
  57,124
  48,825Prepaid expenses
  1,325
  1,406Income taxes receivable
  7,059
  4,275Other receivables
  295
  317Deferred income taxes
  1,030
  1,111Total current assets
  67,586
  55,975Property and
  equipment:Office equipment
  8,109
  8,085Furniture and fixtures
  2,404
  2,389Software
  17,739
  18,120Leasehold improvements
  1,973
  1,98830,225
  30,582Less accumulated depreciation and
  amortization
  (12,110)
  (13,492)Net property and equipment
  18,115
  17,090Other assets:Goodwill, net of amortization
  2,799
  2,780Other assets
  1,119
  1,067Total other assets
  3,918
  3,847Total assets
  $89,619
  $76,912 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities:Cash overdraft
  $5,512
  $2,392Short-term debt
  43,966
  38,594Accounts payable
  14,053
  12,019Payroll and related expenses
  10,927
  9,755Accrued expenses
  5,908
  5,103Total current liabilities
  80,366
  67,863Other liabilities
  294
  302Deferred income taxes
  1,316
  1,316Total liabilities
  81,976
  69,481Stockholders' equity:Preferred Stock, $.01 par value,
  1,000,000 shares authorized, none issued and outstanding
  -
  -Common Stock, $.01 par value,
  50,000,000 shares authorized, 17,390,594 shares       issued at December 31, 2000 and
  March 31, 2001
  174
  174Additional paid-in capital
  27,425
  27,407Deferred Compensation
  (318)
  (229)Accumulated other comprehensive income
  (loss)
  172
  (40)Accumulated deficit
  (15,013)
  (15,084)12,440
  12,228Less: Treasury stock, at cost, 585,000
  shares at December 31, 2000    and
  March 31, 2001
  (4,797)
  (4,797)Total stockholders' equity
  7,643
  7,431Total liabilities and
  stockholders' equity
  $89,619
  $76,912 See
accompanying Notes to Consolidated Financial Statements ALTERNATIVE RESOURCES
CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)  Three
  Months Ended March 31,2000
  2001(Unaudited)Revenue
  $70,520
  $57,720Cost of services
  51,782
  40,869Gross profit
  18,738
  16,851Selling, general and
  administrative expenses
  21,758
  16,148Income (loss) from
  operations
  (3,020)
  703Other expense, net
  (1,029)
  (742)Loss before income
  taxes
  (4,049)
  (39)Income tax expense
  (benefit)
  (1,541)
  32Net loss
  $(2,508)
  $(71)Net earnings (loss)
  per share:Basic and diluted
  $(0.16)
  $(0.00)Shares used to compute
  earnings (loss) per share:Basic and diluted
  15,521
  16,805  See
accompanying Notes to Consolidated Financial Statements


ALTERNATIVE RESOURCES
CORPORATION
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)(In thousands)  Three
  Months 
  Ended March 31,2000
  2001(Unaudited)Net loss
  $(2,508)
  $(71)Other comprehensive
  income (loss):Foreign currency translation
  adjustment, net of tax
  -
  9Unrealized holding gain on security,
  net of tax:Unrealized holding gain on
  security, net of tax
  -
  -Less: reclassification
  adjustment for gain included in net loss
  -
  (221)Other comprehensive
  loss
  -
  (212)Comprehensive loss
  $(2,508)
  $(283)  See
accompanying Notes to Consolidated Financial Statements


ALTERNATIVE RESOURCES
CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) Three
  Months Ended 
  March 31,2000
  2001(Unaudited)Cash flows from
  operating activities:Net loss
  $(2,508)
  $(71)Adjustments to reconcile net loss to
  net cash provided by (used in) operating activities:Depreciation and amortization
  1,858
  1,468Deferred income taxes
  -
  (81)Provision for doubtful accounts
  -
  (150)Realized net gain on sale of
  security
  -
  (221)Deferred compensation on
  restricted shares
  -
  89Change in assets and
  liabilities:Trade accounts receivable
  7,962
  8,449Prepaid expenses
  (1,085)
  (81)Other receivables
  101
  (22)Other assets
  (905)
  52Accounts payable
  (3,799)
  (2,034)Payroll and related
  expenses
  (2,234)
  (1,172)Accrued expenses and other liabilities
  (3,554)
  (797)Income taxes
  2,539
  2,784Net cash provided by
  (used in) operating activities
  (1,625)
  8,213Cash flows from
  investing activities:Purchases of property and equipment
  (628)
  (424)Redemption of available-for-sale
  securities
  -
  639Net cash provided by
  (used in) investing activities
  (628)
  215Cash flows from
  financing activities:Payments received on stock options
  exercised
  51
  -Proceeds from short-term debt
  -
  85,870Payments on short-term debt
  -
  (91,242)Contributions to employee stock
  purchase plan
  (35)
  (18)Cash overdraft
  2,354
  (3,120)Net cash provided by
  (used in) financing activities
  2,370
  (8,510)Effect of exchange
  rate changes on cash and cash equivalents
  -
  9Net increase
  (decrease) in cash and cash equivalents
  117
  (73)Cash and cash
  equivalents at beginning of period
  374
  114Cash and cash
  equivalents at end of period
  $491
  $41Supplemental
  disclosures of cash flow information:Cash paid for interest
  $1,040
  $1,246Cash paid for income taxes
  30
  10  See
accompanying Notes to Consolidated Financial Statements


ALTERNATIVE
RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  1.Basis of Presentation The
interim consolidated financial statements presented are unaudited, but in the
opinion of management, have been prepared in conformity with generally accepted
accounting principles applied on a basis consistent with those of the annual
financial statements.  Such interim
consolidated financial statements reflect all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of the financial position
and the results of operations for the interim periods presented.  The results of operations for the interim
periods presented are not necessarily indicative of the results to be expected
for the year ending December 31, 2001. 
The interim consolidated financial statements should be read in connection
with the audited consolidated financial statements for the year ended December
31, 2000, included in the December 31, 2000 Form 10-K of Alternative Resources
Corporation ("ARC" or the Company). 2.Computation of Earnings per Share Basic
earnings per share is based on the weighted average number of common shares
outstanding for the period.  Diluted
earnings per share is based on the weighted average number of common shares
outstanding and includes the dilutive effect of unexercised vested stock options
using the treasury stock method.  
Dilutive securities have not been included in the weighted average
shares used for the calculation of earnings per share in periods of net loss
because the effect of such securities would be anti-dilutive. 3.Recently Issued Accounting Pronouncements In
June 1999, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards ("SFAS") No. 133, Accounting for
Derivative Instruments and Certain Hedging Activities.  In June 2000, the FASB issued SFAS No. 138,
Accounting for Certain Derivative Instruments and Certain Hedging Activity, an
Amendment of SFAS No. 133.  SFAS No.
133 and SFAS No. 138 require that all derivative instruments be recorded on the
balance sheet at their respective fair values. 
SFAS No.133 and SFAS No. 138 are effective for all fiscal quarters of
all fiscal years beginning after June 15, 2000; the Company adopted SFAS No.
133 and SFAS No. 138 on January 1, 2001, which currently have no impact on the
Company's financial position or results of operations as the Company has not
utilized derivative instruments or entered into any hedging transactions that
are covered by those pronouncements. 4.Restructuring Charge  2000 During
the fourth quarter of 2000, the Company incurred a $0.5 million restructuring
charge representing severance costs associated with the restructuring of the
Companys sales, recruiting, delivery and administrative support models.  A total of 29 positions were eliminated,
with 20 of them being administrative positions.  This charge was a continuation of the 1998 restructuring, which
was designed to optimize the branch field model. The primary components of the
restructuring charge can be summarized as follows: Total
  2000
  Balance at
  2001
  Balance atInitial
  Cash
  December
  Cash
  MarchIn thousands
  Reserve
  Payments
  31, 2000
  Payments
  31, 2001Severance
  $535
  $(246)
  $289
  $(188)
  $101 5.Restructuring Charge - 1999 During the fourth quarter of 1999, the Company incurred a $4.1 million restructuring
charge representing real estate and severance costs associated with
re-engineering the Company's sales, recruiting and delivery models. This action
was a natural extension of the changes announced in 1998, which were designed
to optimize the existing branch field model, and entails a comprehensive shift
to a model organized along the functional lines of sales, recruiting and
delivery. The new model is more efficient in terms of meeting the demands of
the Company's clients at a lower cost. The primary components of the
restructuring charge can be summarized as follows:

Total
  1999
  Balance
  at
  2000
  Balance
  at
  2001
  Balance
  atInitial
  Cash
  December
  Cash
  December
  Cash
  MarchIn thousands
  Reserve
  Payments
  31,
  1999
  Payments
  31,
  2000
  Payments
  31,
  2001Real
  estate costs
  $3,538
  $(30)
  $3,508
  $(1,888)
  $1,620
  $(361)
  $1,259Severance
  630
  (416)
  214
  (184)
  30
  (30)
  -Total
  $4,168
  $(446)
  $3,722
  $(2,072)
  $1,650
  $(391)
  $1,259The portion of the charge related to real estate costs, which totaled
$3.5 million, relates to lease costs associated with vacating offices as the
Company downsizes its office space requirements. Through a combination of
adopting a more virtual office model and eliminating administrative functions
that had been performed in the field offices, the Company relocated from most
of its existing leased office space to smaller office space that will require
60% less square footage than what was in use. The costs associated with this
charge related primarily to the present value of ongoing lease obligations for
vacated offices net of anticipated sublease income. A portion of the charge
also related to broker commissions and estimated leasehold improvement costs
necessary to sublease vacated offices. The majority of the unpaid restructuring
reserve as of March 31, 2001 relates to future lease obligations that will be
paid over the next 4 years.

6.          Short-term borrowings

During
the first quarter of 2001, ARC and the lending syndicate executed amendments to
the revolving credit agreement. The impact of these amendments was to extend
the maturity date to May 18, 2001 and reduce the borrowing limit subject to
pledged accounts receivable as collateral in consideration for modification of
certain loan covenants. Additionally, the Company has two irrevocable standby
letters of credit for $1,268,000, which expire on December 31, 2001.

Item 2.
- Management's Discussion and Analysis of Financial Condition and Results of
Operations

Results of Operations

Essentially
all of the Companys revenue is generated from information technology services
that offer the benefits of outsourcing, while allowing information services
operations managers to retain strategic control of their operations.

RESTRUCTURING AND OTHER CHARGES

During
the fourth quarter of 2000, the Company recorded a $36.6 million charge. This
charge was comprised of an impairment charge of $34.9 million related to
goodwill, $1.2 million related to write-off of excess assets, and $0.5 million
related to severance costs.

During
the fourth quarter of 1999, the Company recorded a $5.2 million charge. This
charge was comprised of $3.5 million related to lease costs, $0.6 million
related to severance costs, and $1.1 million related to write-down of fixed
asset values.

The
results of the above mentioned restructuring and other charges is evidenced by
the improvement of EBITDA noted below.

First Quarter Fiscal 2001 Compared to First Quarter Fiscal
2000

Revenue.Revenues consist of fees earned from ARC
Staffing Management Services and ARC Technology Management Solutions.  Revenue decreased $12.8 million or 18.1%
from $70.5 million in 2000 to $57.7 million in 2001, primarily from the
restructuring of the Company from a branch organization to a functionally
organized business model. This change in business model resulted in significant
disruption to the business and increased the turnover in both the staff and
technical consultants. Also contributing to the decrease in revenue was an
overall slowdown in IT spending as companies curtailed spending on IT
investments in reaction to a soft economy. ARC Technology Management Solutions
revenue decreased by $4.9 million or 23.6% from $20.8 million in 2000 to $15.9
million in 2001. The Companys traditional staffing business decreased by $7.9
million or 15.9% from $49.7 million in 2000 to $41.8 million in 2001.

Gross
profit.Gross profit decreased by $1.9 million or
10.1% from $18.7 million in 2000 to $16.8 million in 2001. The decrease was
primarily attributable to the reduction in revenue. As a percentage of
revenues, gross profit increased 2.6 percentage points from 26.6% in 2000 to
29.2% in 2001 due to an underutilization of technical resources on a major
project with one customer in early 2000. The major project situation was  rectified in early 2000, restoring margins
for the customer  closer to historical
levels.

Selling,
general and administrative expenses.Selling, general and administrative expenses
consist of sales and marketing costs, recruiting, retention and training costs
and management and administrative costs. 
Selling, general and administrative expenses decreased by $5.7 million
or 26.1% from $21.8 million in 2000 to $16.1 million in 2001.  The selling, general and administrative
expense decrease was attributable to the restructuring actions taken in  2000, which is reflected in reduced office
space and lower headcount. The impact of these actions was fully realized in
the first quarter of 2001. As a percentage of revenues, selling, general and
administrative expenses decreased by 2.9 percentage points from 30.9% in 2000
to 28.0% in 2001, primarily as a result of the actions described previously.

Income
(loss) from operations.Income (loss) from operations increased by
$3.7 million from a loss of $3.0 million in 2000 to income of $0.7 million in
2001. The increase in income from operations was the result of a higher gross
margin percentage and reduced selling, general and administrative expenses
partially offset by the lower revenue levels.

Other
(income) expense, net.Other
(income) expense, net consists of 
interest expense of  $1.4 million
on the Companys revolving credit facility offset by interest income on the
Companys tax refund and a $0.4 million gross gain on the sale of stock  that was distributed to ARC from its Health
care provider, MetLife, as it transitioned from a mutual company to a public
company.

Earnings
before interest, income taxes, depreciation and amortization.Earnings before interest, income
taxes, depreciation and amortization (EBITDA) was $2.5 million, which is
comprised of earnings before taxes of zero plus depreciation of  $1.5 million and net interest of $1.0
million.  This compares to EBITDA of a
loss of $1.1 million in the first quarter of 2000. The increase is primarily
due to the increase in income from operations.

Liquidity and Capital Resources

ARC
has historically financed its operations and capital expenditures through sales
of equity securities, a bank line of credit and cash generated from operations.
Net cash provided by operations was $8.2 million in the first quarter of 2001.
Net cash flow in 2001 was favorably impacted by the reduction in accounts
receivable and the receipt of certain tax refunds of $2.9 million.

Current liabilities exceeded current
assets by $11.9 million at March 31, 2001. Current liabilities include $38.6
million of outstanding borrowings against its line of credit that has a
maturity date of May 18, 2001. During the first quarter of 2001, the Company
used the cash provided by operations to reduce its debt by $5.4 million. The
Company is in the process of amending its current facility to extend the
maturity date to August 18, 2001. In addition, the Company is currently
negotiating the terms of a new line of credit, which would extend the maturity
date to 2004. There can be no guarantee that the refinancing will be
completed.  Should this not be
completed, the Company will pursue other financing alternatives.

Assuming the successful negotiation of a
new credit facility, or the continued extension of its current banking
arrangement, the Company believes its cash balances, available line of credit
and funds from operations will be sufficient to meet all of its anticipated
cash requirements for at least the next 12 months.

Item 3.  Quantitative and Qualitative Disclosures About
Market Risk

The market risk that the Company is
exposed to primarily relates to changes in interest rates on its borrowings. At
March 31, 2001 the Company had $38.6 million in floating-rate debt. An adverse
charge in interest rates during any period that the loan is outstanding would
cause an increase in interest expense. A 100 basis point increase in the banks
base rate would increase the annual amount of interest paid by approximately
$0.4 million.

PART II - OTHER INFORMATION

Item 6. - Exhibits and Reports on Form 8-K

(a)       The following documents are furnished as exhibits and numbered
pursuant to Item 601 of Regulation S-K:

Exhibit
  Number
  Description4.1
  Ninth
  Amendment to Credit Agreement4.2
  Tenth
  Amendment to Credit Agreement

(b)       The registrant was not required to file and did not
voluntarily file any reports on Form 8-K for the quarter ended March 31, 2001.

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 thereunto duly authorized.



ALTERNATIVE
  RESOURCES CORPORATIONDate:
  May 15, 2001
  /s/ Steven PurcellSteven
  PurcellSenior
  Vice President, Chief Financial Officer,Treasurer
  and Secretary