EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

           

Kforce Inc.

1001 East Palm Ave.

Tampa, FL 33605

(NASDAQ: KFRC)

   

AT THE FIRM

Michael Blackman

Senior Vice President – Investor Relations

(813) 552-2927

KFORCE REPORTS REVENUE OF $241.0 MILLION AND EPS OF $0.19 BEFORE

IMPAIRMENT CHARGE FOR THE FOURTH QUARTER OF 2008

 

  •  

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 (PRIME 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% 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,
2008		     Sept. 30,
2008		     Dec. 31,
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,
2008		     Dec. 31,
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,
2008		     Dec. 31,
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
Dec. 31, 2008		     Twelve Months Ended
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 share     $    Per share    $    Per 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 & Amortization

      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 share     $     Per share     $     Per 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.