* Fourth Quarter Net Income of $7.4 Million, or $0.19 Per Share,
Excluding Impairment Charge
* Records Non-Cash Impairment Charge of $115.2 Million, After Tax
TAMPA, Fla., Feb. 10, 2009 (GLOBE NEWSWIRE) -- Kforce Inc. (Nasdaq:KFRC), a provider of professional staffing services and solutions, today announced results for its fourth quarter of 2008. For the quarter ended December 31, 2008, revenue from continuing operations was $241.0 million, a decrease of 2.4% over the quarter ended December 31, 2007 and 4.0% over the quarter ended September 30, 2008. Excluding the non-cash goodwill and other intangible assets impairment charge recorded in the quarter ended December 31, 2008, Kforce reported net income of $7.4 million, or $0.19 per share, versus $10.0 million, or $0.24 per share, in the comparable quarter in 2007, which represents a year-over-year decline of 26.2% in net income and 20.8% in earnings per share. Net income for the quarter ended September 30, 2008 was $7.9 million, or $0.20 per share.
Excluding the non-cash goodwill and other intangible assets impairment charge, Kforce reported net income of $31.1 million, or $0.78 per share, for the year ended December 31, 2008, versus net income of $40.4 million and $0.95 per share for 2007 representing a year-over-year decline of 22.9% in net income and 17.9% in earnings per share.
Kforce also announced that it has recorded a non-cash goodwill and other intangible assets impairment charge (the "impairment charge") in the fourth quarter of 2008 of $129.4 million on a pre-tax basis. The income tax benefit associated with this impairment charge was $14.2 million resulting in an after-tax charge to net income of $115.2 million. On a GAAP basis, Kforce reported a net loss for the quarter ended December 31, 2008 of $107.9 million, or $2.81 loss per share, and a net loss for the year ended December 31, 2008 of $84.1 million, or $2.13 loss per share.
The impairment charge results primarily from the impact that the unprecedented economic environment, including the turmoil in financial and credit markets, and increasing jobless claims and unemployment rates have had on overall equity values as well as on our operations, forecasted cash flows and market capitalization. Kforce does not expect the impairment charge to result in any cash expenditures and it is not expected to affect Kforce's cash position, cash flow from operating activities, liquidity position or availability under its Credit Facility, nor does it have any effect on current or future operations of Kforce.
"The Firm delivered solid performance in the fourth quarter during a period where there continued to be extraordinary concerns and significant deterioration in the macroeconomic environment," said David L. Dunkel, Chairman and CEO. Mr. Dunkel continued, "While there remains uncertainty about the length and depth of this recession, we believe the secular drivers for professional staffing and solutions remain intact. We have made and will continue to make adjustments as necessary to put Kforce in a position to perform well as we navigate through this recession and for continued strong performance as the economy improves. We believe Kforce has an experienced management team and a strong balance sheet, which allows us to be flexible from an operational and financial standpoint. During this phase of the economic cycle, our priorities are to maintain positive cash flow and retain the highly talented people that are the lifeblood of our future success. We will continue to use cash flow for debt retirement, share repurchases and acquisitions that meet very high thresholds as was the case with the recent acquisition of dNovus RDI, which we believe is a significant enhancement to our Government Solutions' revenue footprint in the federal government sector. We are pleased to have crossed the $100 million annualized revenue threshold in the government sector, which we believe gives us a scalable platform for sustained growth. We also believe that our concerted efforts to maintain a professional staffing and solutions revenue stream that is almost entirely domestic and well-diversified from a client perspective has positioned Kforce well for the future."
William L. Sanders, President, said, "Our vision is to be the Firm most respected by those we serve. A key aspect of our vision is building a Firm that delivers sustainable and consistent revenue and earnings performance. From our experience in past recessions, we believe we have carefully managed the risks to our revenue stream, particularly in permanent placement. We believe that steps taken during the past six years have prepared the Firm for this economic down cycle. We believe our mix of service offerings has a significantly lower exposure to economic pressures than during the last down cycle. We have exited businesses that were not aligned with our operating model. It also appears that clients have been more rational in their hiring during the past up cycle, particularly in Technology. In addition, the completion of our upgraded technology platform, the creation of our centralized National Recruiting Center and the implementation of a volume account strategy have, we believe, enhanced operating leverage and positioned the Firm well."
Mr. Sanders noted additional operational highlights of the fourth quarter include:
* Flex revenue of $228.2 million decreased 3.1% from $235.4 million
in Q3 '08 and decreased 0.5% from $229.3 million in Q4 '07,
* Search revenue of $12.8 million decreased 17.5% from $15.5 million
in Q3 '08 and decreased 27.6% from $17.7 million in Q4 '07,
* Flex revenue per billing day of $3.7 million in Q4 '08 was flat
with Q3 '08 and decreased 2.1% from $3.8 million in Q4 '07,
* Flex revenue per billing day in Q4 '08 by segment was $2.0 million
for Technology, $0.6 million for F&A, $0.7 million for HLS and $0.3
million for Government Solutions. Sequential percentage changes on
a billing day basis by segment were 2.1% increase for Technology,
5.0% decrease for F&A, 6.5% decrease for HLS and an 15.3% increase
for Government Solutions,
* Flex gross profit declined sequentially 40 basis points to 29.8% in
Q4 '08 from 30.2% in Q3 '08 and 110 basis points from 30.9% in
Q4 '07.
Joe Liberatore, Chief Financial Officer said, "During these unprecedented times and as we head into 2009, we are very pleased with our revenue footprint and strength of our balance sheet. Our working capital at the end of 2008 is $60.3 million and our current ratio is 1.7. Additionally, during the fourth quarter of '08, the Board of Directors increased its authorization to repurchase up to $75 million in Kforce common stock."
Financial highlights for 2008:
* Total revenue from continuing operations for 2008 was $997.0
million, an increase of 2.5% from $972.8 million in 2007,
* Earnings per share before the impact of equity based compensation
expense and impairment charge for 2008 was $0.84, an 11.6% decrease
from $0.95 in 2007,
* Cash flows from operating activities for 2008 of $89.3 million
increased 83.2% from $48.8 million in 2007,
* During 2008, we repurchased 4.5 million shares of common stock at a
total cost of $37.9 million with $74.8 million remaining under
current Board authorizations as of December 31, 2008,
* After taking into account the share repurchases and acquisition of
dNovus RDI in December 2008, bank debt at the end of Q4 '08 was
$38.0 million, reflecting a reduction of $12.3 million from $50.3
million at the end of 2007.
Mr. Liberatore continued, "Looking forward to the first quarter of 2009 we expect revenue may be in the $226 million to $235 million range, and earnings per share in the range of $0.05 to $0.09 which reflects an impact of approximately $0.05 per share of payroll tax related costs."
On Tuesday, February 10, 2009, Kforce will host a conference call to discuss these results. The call will begin at 5:00 p.m. Eastern Time. The dial-in number is 800-811-0667. The replay of the call will be available from 7:00 p.m. Eastern Daylight Time Tuesday, February 10 to February 25, 2009 by dialing 888-203-1112, passcode 5468013.
This call is being webcast by Shareholder.com and can be accessed at Kforce's web site at www.kforce.com (select "Investor Relations"). The webcast replay will be available until February 25, 2009.
About Kforce
Kforce (Nasdaq:KFRC) is a professional staffing firm providing flexible and permanent staffing solutions in the skill areas of technology, finance & accounting, and health and life sciences. Backed by over 2,000 staffing specialists, Kforce is committed to "Great People = Great Results" for our valued clients and candidates. Kforce operates with 63 offices in 41 markets in North America and two in the Philippines. For more information, please visit our Web site at http://www.kforce.com/.
The Kforce Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3749
About Kforce Government Solutions
KGS provides innovative technology, financial management, data architecture and continuous process improvement and finance and accounting solutions to federal government clients. KGS, with over 700 professionals currently on assignment, has been partnering with our clients since 1970 to successfully solve their challenges. KGS' in-depth operational knowledge and understanding of Federal Agencies, the Defense Department, Homeland Security and industry best practices, combined with expert and highly-skilled professionals, have resulted in a comprehensive portfolio of technologically advanced and innovative consulting solutions designed to guide clients through today's environment of complex challenges, risk, and cost. For more information, visit http://www.kforcegov.com/.
Certain of the above statements contained in this press release are forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. Factors that could cause actual results to differ materially include the following: business conditions and growth in the staffing industry and general economy; competitive factors, risks due to shifts in the market demand, including, without limitation, shifts in demand for our Kforce Government Solutions, Health and Life Sciences, Finance and Accounting and Technology groups, as well as the market for search and flexible staffing assignments; changes in the service mix; ability of the Firm to complete acquisitions; and the risk factors listed from time to time in the Firm's reports filed with the Securities and Exchange Commission, as well as assumptions regarding the foregoing. The words "should," "believe," "estimate," "expect," "intend," "anticipate," "foresee," "plan" and similar expressions and variations thereof identify certain of such forward-looking statements, which speak only as of the dates on which they were made. The Firm undertakes no obligation to publicly update or revise any forward-looking statements. As a result, such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. Readers are cautioned not to place undue reliance on these forward-looking statements.
Kforce Inc.
Summary of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended
-------------------------------
Dec. 31, Sept. 30, Dec.
