* 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. 31,
2008 2008 2007
--------- --------- ---------
Revenue by Function:
Technology $ 128,781 $ 131,203 $ 131,664
Finance & Accounting 46,428 51,182 56,392
Health & Life Sciences 45,048 50,005 42,448
Government Solutions 20,697 18,528 16,451
--------- --------- ---------
Total Revenue 240,954 250,918 246,955
Revenue by Time:
Perm 12,775 15,487 17,652
Flexible 228,179 235,431 229,303
--------- --------- ---------
Total Revenue 240,954 250,918 246,955
Direct Costs
Of Services 160,249 164,351 158,445
--------- --------- ---------
Gross Profit 80,705 86,567 88,510
GP % 33.5% 34.5% 35.8%
Flex GP % 29.8% 30.2% 30.9%
Selling, General & Administrative:
Selling, General & Administrative,
Excluding Impairment 65,785 71,613 68,914
Goodwill & Intangible Assets
Impairment 129,409 -- --
--------- --------- ---------
Total Selling, General &
Administrative 195,194 71,613 68,914
Depreciation & Amortization 3,174 3,028 3,687
--------- --------- ---------
(Loss) Income from Operations (117,663) 11,926 15,909
Other Expense, Net 371 422 1,031
--------- --------- ---------
(Loss) Income from Continuing
Operations, Before Income Taxes (118,034) 11,504 14,878
Income Tax (Benefit) Expense (10,196) 4,522 5,709
--------- --------- ---------
(Loss) Income from Continuing
Operations (107,838) 6,982 9,169
(Loss) Income from Discontinued
Operations, Net of Income Taxes (40) 910 802
--------- --------- ---------
Net (Loss) Income $(107,878) $ 7,892 $ 9,971
========= ========= =========
(Loss) Earnings Per Share - Diluted $ (2.81) $ 0.20 $ 0.24
Adjusted EBITDA Per Share $ 0.40 $ 0.41 $ 0.49
Shares Outstanding - Diluted 38,408 39,977 42,209
Adjusted EBITDA $ 15,634 $ 16,421 $ 20,528
Selected Cash Flow Information:
Bad Debt (Recovery)
Expense from Continuing
Operations $ (183) $ 3,789 $ (123)
Capital Expenditures $ 1,471 $ 2,371 $ 3,533
Other Information:
Equity-Based Compensation
Expense, Net $ 462 $ 885 $ 426
Billing Days 62 64 61
Kforce Inc.
Summary of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Twelve Months Ended
--------------------
Dec. 31, Dec. 31,
2008 2007
--------- ---------
Revenue by Function:
Technology $ 519,867 $ 518,788
Finance & Accounting 211,259 233,125
Health & Life Sciences 189,666 159,104
Government Solutions 76,225 61,764
--------- ---------
Total Revenue 997,017 972,781
Revenue by Time:
Perm 65,985 75,747
Flexible 931,032 897,034
--------- ---------
Total Revenue 997,017 972,781
Direct Costs
Of Services 652,366 620,758
--------- ---------
Gross Profit 344,651 352,023
GP % 34.6% 36.2%
Flex GP % 29.9% 30.8%
Selling, General & Administrative:
Selling, General & Administrative, Excluding
Impairment 286,475 272,335
Goodwill & Intangible Assets Impairment 129,409 --
--------- ---------
Total Selling, General & Administrative 415,884 272,335
Depreciation & Amortization 13,824 14,487
--------- ---------
(Loss) Income from Operations (85,057) 65,201
Other Expense, Net 2,136 4,422
--------- ---------
(Loss) Income from Continuing Operations,
Before Income Taxes (87,193) 60,779
Income Tax Expense 1,928 23,856
--------- ---------
(Loss) Income from Continuing Operations (89,121) 36,923
Income from Discontinued Operations,
Net of Income Taxes 5,013 3,444
--------- ---------
Net (Loss) Income $ (84,108) $ 40,367
========= =========
(Loss) Earnings Per Share - Diluted $ (2.13) $ 0.95
Adjusted EBITDA Per Share $ 1.75 $ 1.97
Shares Outstanding - Diluted 39,471 42,294
Adjusted EBITDA $ 70,042 $ 83,121
Selected Cash Flow Information:
Bad Debt Expense from
Continuing Operations $ 5,205 $ 835
Capital Expenditures $ 10,368 $ 14,815
Other Information:
Equity-Based Compensation Expense, Net $ 7,265 $ 2,473
Billing Days 253 251
Kforce Inc.
Key Statistics
(Unaudited)
Q4 2008 Q3 2008 Q4 2007
--------- --------- ---------
Total Firm
----------
Flex Revenue (000's) $ 228,179 $ 235,431 $ 229,303
Revenue per billing day (000's) $ 3,680 $ 3,679 $ 3,759
Sequential Flex Revenue Change -3.1% 0.1% 1.2%
Hours (000's) 3,794 3,862 3,831
Flex GP % 29.8% 30.2% 30.9%
Search Revenue (000's) $ 12,775 $ 15,487 $ 17,652
Placements 840 1,120 1,308
Average Fee $ 15,207 $ 13,825 $ 13,486
Billing days 62 64 61
Technology
----------
Flex Revenue (000's) $ 123,648 $ 125,019 $ 124,897
Revenue per billing day (000's) $ 1,994 $ 1,953 $ 2,047
Sequential Flex Revenue Change -1.1% 0.9% 0.4%
Hours (000's) 1,920 1,926 1,881
Flex GP % 27.4% 27.4% 28.0%
Search Revenue (000's) $ 5,133 $ 6,184 $ 6,766
Placements 313 407 468
Average Fee $ 16,414 $ 15,179 $ 14,463
Finance & Accounting
--------------------
Flex Revenue (000's) $ 39,192 $ 42,604 $ 46,164
Revenue per billing day (000's) $ 632 $ 666 $ 757
Sequential Flex Revenue Change -8.0% -4.6% 2.4%
Hours (000's) 1,127 1,181 1,277
Flex GP % 34.0% 34.0% 33.8%
Search Revenue (000's) $ 7,236 $ 8,578 $ 10,229
Placements 491 675 797
Average Fee $ 14,727 $ 12,712 $ 12,825
Health & Life Sciences
----------------------
Flex Revenue (000's) $ 44,642 $ 49,280 $ 41,791
Revenue per billing day (000's) $ 720 $ 770 $ 685
Sequential Flex Revenue Change -9.4% 3.2% 1.0%
Hours (000's) 505 553 501
Flex GP % 29.2% 30.7% 33.8%
Search Revenue (000's) $ 406 $ 725 $ 657
Placements 36 38 43
Average Fee $ 11,287 $ 19,077 $ 15,224
Government Solutions
--------------------
Flex Revenue (000's) $ 20,697 $ 18,528 $ 16,451
Revenue per billing day (000's) $ 334 $ 289 $ 270
Sequential Flex Revenue Change 11.7% -2.0% 4.0%
Hours (000's) 242 202 172
Flex GP % 37.1% 39.0% 37.4%
Kforce Inc.
Key Statistics - Health & Life Sciences
(Unaudited)
Q4 2008 Q3 2008 Q4 2007
--------- --------- ---------
Clinical Research
-----------------
Flex Revenue (000's) $ 27,058 $ 29,980 $ 24,677
Revenue per billing day (000's) $ 436 $ 468 $ 404
Sequential Flex Revenue Change -9.7% 1.8% -1.0%
Hours (000's) 304 332 277
Flex GP % 26.7% 27.5% 31.7%
Search Revenue (000's) $ 272 $ 490 $ 439
Placements 24 23 27
Average Fee $ 11,343 $ 21,311 $ 16,143
Healthcare
----------
Flex Revenue (000's) $ 17,584 $ 19,300 $ 17,114
Revenue per billing day (000's) $ 284 $ 302 $ 281
Sequential Flex Revenue Change -8.9% 5.4% 4.0%
Hours (000's) 201 221 224
Flex GP % 33.1% 35.5% 36.9%
Search Revenue (000's) $ 134 $ 235 $ 218
Placements 12 15 16
Average Fee $ 11,176 $ 15,653 $ 13,683
Kforce Inc.
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
Dec. 31, Dec. 31,
2008 2007
--------- ---------
ASSETS
Current Assets:
Cash and cash equivalents $ 660 $ 1,083
Trade receivables, net of allowance for
doubtful accounts and fallouts 132,428 166,777
Income tax refund receivable 487 377
Deferred tax asset, net 5,994 8,409
Prepaid expenses and other current assets 6,177 4,268
--------- ---------
Total current assets 145,746 180,914
Fixed assets, net 14,687 13,355
Other assets, net 29,032 31,982
Deferred tax asset non-current, net 10,627 --
Intangible assets, net 10,604 12,276
Goodwill 140,119 237,609
--------- ---------
Total assets $ 350,815 $ 476,136
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and other accrued
liabilities $ 28,084 $ 25,222
Accrued payroll costs 51,310 53,613
Other current debt 1,917 3,859
Income taxes payable 4,133 2,872
--------- ---------
Total current liabilities 85,444 85,566
Long-term debt - credit facility 38,022 50,330
Long-term debt - other 2,294 2,670
Deferred tax liability, net -- 6,624
Other long-term liabilities 19,212 18,478
--------- ---------
Total liabilities 144,972 163,668
Commitments and Contingencies
Stockholders' Equity:
Preferred stock -- --
Common stock 619 609
Additional paid-in capital 325,187 310,165
Accumulated other comprehensive
income 389 --
Retained earnings 28,472 112,580
Less reacquired shares at cost (148,824) (110,886)
--------- ---------
Total stockholders' equity 205,843 312,468
--------- ---------
Total liabilities and stockholders'
equity $ 350,815 $ 476,136
========= =========
Kforce Inc.
Selected Financial Information and Reconciliations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Net Income and Earnings Per Share Before Impairment Charge
Three Months Ended Twelve Months Ended
Dec. 31, 2008 Dec. 31, 2008
------------------ ------------------
$ Per share $ Per share
--------- ------ --------- ------
GAAP Net Loss $(107,878) $(2.81) $ (84,108) $(2.13)
Goodwill & Intangible
Assets Impairment,
Pre-Tax 129,409 3.37 129,409 3.28
Tax benefit from
impairment charge (14,174) (0.37) (14,174) (0.36)
--------- ------ --------- ------
Goodwill & Intangible
Assets Impairment,
After-Tax 115,235 3.00 115,235 2.92
Earnings Per Share
Adjustment (*) -- -- -- (0.01)
--------- ------ --------- ------
Adjusted Net Income and
Earnings Per Share $ 7,357 $ 0.19 $ 31,127 $ 0.78
Weighted Average Shares
Outstanding - Basic 38,408 39,471
Weighted Average Shares
Outstanding - Diluted 38,860 39,926
Adjusted Net Income and Earnings Per Share, a non-GAAP financial
measure, is defined as net income before the non-cash impairment
charges related to goodwill and intangible assets. Adjusted Net
Income should not be considered a measure of financial performance
under generally accepted accounting principles and has been provided
for consistency and comparability of the 2008 results with net income
and earnings per share from prior periods.
(*) This earnings per share adjustment is necessary to properly
reconcile net loss per share on a GAAP basis to Adjusted Net Income
per share. Earnings Per Share Before Impairment Charge, a non-GAAP
financial measure, is based on Net Income Before Impairment
Charge and diluted weighted average shares outstanding; however, the
reconciling items within the table above are based on basic weighted
average shares outstanding, as the inclusion of dilutive securities
such as stock options and stock awards would have an anti-dilutive
effect on loss per share.
Quarterly Adjusted EBITDA
Three Months Ended
------------------------------------------------------
Dec. 31, 2008 Sept. 30, 2008 Dec. 31, 2007
------------------ --------------- ---------------
Per Per Per
$ share $ share $ share
--------- ------ ------- ----- ------- -----
GAAP Net
(Loss)
Income $(107,878) $(2.81) $ 7,892 $0.20 $ 9,971 $0.24
(Loss)
Income from
Discontinued
Operations,
Net of
Income Taxes (40) (0.00) 910 0.02 802 0.02
--------- ------ ------- ----- ------- -----
(Loss) Income
from
Continuing
Operations $(107,838) $(2.81) $ 6,982 $0.18 $ 9,169 $0.22
Goodwill &
Intangible
Assets
Impairment,
Pre-Tax 129,409 3.37 -- -- -- --
Depreciation
& Amortiza-
tion 3,174 0.08 3,028 0.08 3,687 0.09
Amortization
of Stock
Options &
SARS 147 0.00 668 0.01 611 0.01
Amortization
of Restricted
Stock & PARS 571 0.01 791 0.02 303 0.01
Interest
Expense and
Other 367 0.01 430 0.01 1,049 0.02
Income Tax
(Benefit)
Expense (10,196) (0.27) 4,522 0.11 5,709 0.14
Earnings Per
Share
Adjustment
(*) -- 0.01 -- -- -- --
--------- ------ ------- ----- ------- -----
Adjusted
EBITDA $ 15,634 $ 0.40 $16,421 $0.41 $20,528 $0.49
========= ====== ======= ===== ======= =====
Weighted
Average
Shares
Outstanding -
Basic 38,408 39,249 41,548
Weighted
Average
Shares
Outstanding -
Diluted 38,860 39,977 42,209
Adjusted EBITDA, a non-GAAP financial measure, is defined as
earnings before income (loss) from discontinued operations, non-cash
impairment charges, interest, income taxes, depreciation and
amortization and amortization of stock-based compensation expense.
Adjusted EBITDA should not be considered a measure of financial
performance under generally accepted accounting principles. Items
excluded from Adjusted EBITDA are significant components in
understanding and assessing financial performance.
(*) This earnings per share adjustment is necessary to properly reconcile
net loss per share on a GAAP basis to Adjusted EBITDA per share.
Adjusted EBITDA Per Share, a non-GAAP financial measure, is based on
Adjusted EBITDA and diluted weighted average shares outstanding;
however, the reconciling items within the table above are based on basic
weighted average shares outstanding, as the inclusion of dilutive
securities such as stock options and stock awards would have an anti-
dilutive effect on loss per share.
Quarterly Net Income before Equity-Based Compensation Expense and
Impairment Charge
Three Months Ended
------------------------------------------------------
Dec. 31, 2008 Sept. 30, 2008 Dec. 31, 2007
------------------ --------------- ---------------
Per Per Per
$ share $ share $ share
--------- ------ ------- ----- ------- -----
GAAP Net
(Loss)
Income $(107,878) $(2.81) $ 7,892 $0.20 $ 9,971 $0.24
(Loss)
Income from
Discontinued
Operations,
Net of
Income Taxes (40) (0.00) 910 0.02 802 0.02
--------- ------ ------- ----- ------- -----
(Loss) Income
from Continuing
Operations $(107,838) $(2.81) $ 6,982 $0.18 $ 9,169 $0.22
Goodwill &
Intangible
Assets
Impairment,
Net of Income
Taxes 115,235 3.00 -- -- -- --
Equity-Based
Compensation
Expense, Net:
Alternative
LTI Valuation
Expense -- -- -- -- (213) 0.00
Amortization
of Stock
Options &
SARS 147 0.00 668 0.01 611 0.01
Amortization
of Restricted
Stock & PARS 571 0.01 791 0.02 303 0.01
Income Tax
(Benefit)
Expense (256) 0.00 (574) (0.01) (275) (0.01)
--------- ------ ------- ----- ------- -----
Equity-Based
Compensation
Expense, Net 462 0.01 885 0.02 426 0.01
--------- ------ ------- ----- ------- -----
Net Income
before
Equity-Based
Compensation
Expense and
Impairment
Charge $ 7,859 $ 0.20 $ 7,867 $0.20 $ 9,595 $0.23
========= ====== ======= ===== ======= =====
Weighted
Average
Shares
Outstanding -
Basic 38,408 39,249 41,548
Weighted
Average
Shares
Outstanding -
Diluted 38,860 39,977 42,209
"Net Income before Equity-Based Compensation Expense and Impairment
Charge", a non-GAAP financial measure, is defined as income from
continuing operations, excluding non-cash impairment charges, before
compensation expense incurred in conjunction with awards accounted for
under Statement of Financial Accounting Standards No. 123R "Share-Based
Payment" ("SFAS 123R"). SFAS 123R requires Kforce to measure the cost of
employee services received in exchange for an equity based award based
on the grant-date fair value of the award (with limited exceptions).
That cost is recognized over the period in which the employee is
required to provide service in exchange for the award, which is usually
the vesting period.
Adjusted Net Income, Adjusted EBITDA and Net Income before
Equity-Based Compensation Expense and Impairment Charge are key measures
used by management to evaluate its operations and to provide useful
information to investors. These measures should not be considered in
isolation or as an alternative to net income, cash flows data or
other financial statement information presented in the consolidated
financial statements as indicators of financial performance or
liquidity. These measurements are not determined in accordance with
generally accepted accounting principles and are thus susceptible to
varying calculations. The measures as presented may not be
comparable to similarly titled measures of other companies.
Kforce Inc.
Selected Financial Information and Reconciliations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Year to Date Adjusted EBITDA
Twelve Months Ended
-------------------------------------------
Dec. 31, 2008 Dec. 31, 2007
-------------------- ------------------
$ Per share $ Per share
--------- ------ -------- ------
GAAP Net (Loss) Income $ (84,108) $(2.13) $ 40,367 $ 0.95
Income from
Discontinued
Operations, Net of
Income Taxes 5,013 0.13 3,444 0.07
--------- ------ -------- ------
(Loss) Income from
Continuing Operations $ (89,121) $(2.26) $ 36,923 $ 0.88
Goodwill & Intangible
Assets Impairment,
Pre-Tax 129,409 3.28 -- --
Depreciation &
Amortization 13,824 0.35 14,487 0.35
Acceleration of SARS &
PARS 6,009 0.15 -- --
Amortization of Stock
Options & SARS 2,363 0.06 2,310 0.05
Amortization of
Restricted Stock & PARS 3,372 0.09 1,120 0.03
Interest Expense and
Other 2,258 0.06 4,425 0.10
Income Tax Expense 1,928 0.05 23,856 0.56
Earnings Per Share
Adjustment (*) -- (0.03) -- --
--------- ------ -------- ------
Adjusted EBITDA $ 70,042 $ 1.75 $ 83,121 $ 1.97
========= ====== ======== ======
Weighted Average Shares
Outstanding - Basic 39,471 41,308
Weighted Average Shares
Outstanding - Diluted 39,926 42,294
Adjusted EBITDA, a non-GAAP financial measure, is defined as
earnings before income from discontinued operations, non-cash
impairment charges, interest, income taxes, depreciation and
amortization and amortization of stock-based compensation expense.
Adjusted EBITDA should not be considered a measure of financial
performance under generally accepted accounting principles. Items
excluded from Adjusted EBITDA are significant components in
understanding and assessing financial performance.
(*) This earnings per share adjustment is necessary to properly
reconcile net loss per share on a GAAP basis to Adjusted EBITDA
per share. Adjusted EBITDA Per Share is based on Adjusted EBITDA
and diluted weighted average shares outstanding; however, the
reconciling items within the table above are based on basic weighted
average shares outstanding, as the inclusion of dilutive securities
such as stock options and stock awards would have an anti-dilutive
effect on loss per share.
Year to Date Net Income before Equity-Based Compensation Expense and
Impairment Charge
Twelve Months Ended
-------------------------------------------
Dec. 31, 2008 Dec. 31, 2007
-------------------- ------------------
$ Per share $ Per share
--------- ------ -------- ------
GAAP Net (Loss) Income $ (84,108) $(2.13) $ 40,367 $ 0.95
Income from
Discontinued
Operations, Net of
Income Taxes 5,013 0.13 3,444 0.07
--------- ------ -------- ------
(Loss) Income from
Continuing Operations $ (89,121) $(2.26) $ 36,923 $ 0.88
Goodwill & Intangible
Assets Impairment, Net
of Income Taxes 115,235 2.92 --
Equity-Based Compensation
Expense, Net:
Alternative LTI
Valuation Expense -- -- 641 0.03
Acceleration of SARS &
PARS 6,009 0.15 -- --
Amortization of Stock
Options & SARS 2,363 0.06 2,310 0.05
Amortization of
Restricted Stock & PARS 3,372 0.09 1,120 0.03
Income Tax Expense (4,479) (0.12) (1,598) (0.04)
--------- ------ -------- ------
Equity-Based
Compensation Expense,
Net 7,265 0.18 2,473 0.07
--------- ------ -------- ------
Net Income before
Equity-Based Compensation
Expense and Impairment
Charge $ 33,379 $ 0.84 $ 39,396 $ 0.95
========= ====== ======== ======
Weighted Average Shares
Outstanding - Basic 39,471 41,308
Weighted Average Shares
Outstanding - Diluted 39,926 42,294
"Net Income before Equity-Based Compensation Expense and Impairment
Charge", a non-GAAP financial measure, is defined as income from
continuing operations, excluding non-cash impairment charges, before
compensation expense incurred in conjunction with awards accounted for
under Statement of Financial Accounting Standards No. 123R "Share-Based
Payment" ("SFAS 123R"). SFAS 123R requires Kforce to measure the cost
of employee services received in exchange for an equity based award
based on the grant-date fair value of the award (with limited
exceptions). That cost is recognized over the period in which the
employee is required to provide service in exchange for the award,
which is usually the vesting period.
Adjusted EBITDA and Net Income before Equity-Based Compensation
Expense and Impairment Charge are key measures used by management
to evaluate its operations and to provide useful information to
investors. These measures should not be considered in isolation or
as an alternative to net income, cash flows data or other financial
statement information presented in the consolidated financial statements
as indicators of financial performance or liquidity. These measurements
are not determined in accordance with generally accepted accounting
principles and are thus susceptible to varying calculations. The
measures as presented may not be comparable to similarly titled
measures of other companies.