Press Releases

Kforce Reports Revenue of $226.0 Million and EPS of $0.10

Aug 4, 2009

TAMPA, Fla., Aug 4, 2009 (GlobeNewswire via COMTEX News Network) -- Kforce Inc. (Nasdaq:KFRC), a provider of professional staffing services and solutions, today announced results for its second quarter of 2009. For the quarter ended June 30, 2009, total revenue was $226.0 million, a decrease of 11.4% and 2.3% over the quarters ended June 30, 2008 and March 31, 2009, respectively. For the quarter ended June 30, 2009, Kforce reported net income of $3.9 million, or $0.10 per share, versus $8.7 million, or $0.22 per share, in the comparable quarter in 2008, which represents a year-over-year decline of 55.1% in net income and 54.5% in earnings per share. Net income for the quarter ended March 31, 2009 was $3.2 million or $0.08 per share.

"We are pleased with our performance which, we believe, is a result of years of effort in building our culture, adhering to our core values and refining our service offerings and operating platform. We have made significant improvements to both our front and back office with the constant goal of positioning the Firm for optimal performance in the next up-cycle," said David L. Dunkel, Chairman and CEO. Mr. Dunkel continued, "We believe that Kforce has demonstrated excellent performance in this difficult macro-economic environment. Kforce has a highly experienced management team and a strong balance sheet. Our priorities continue to be maintaining positive cash flow and retaining 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 our very high thresholds."

Mr. Dunkel continued, "Kforce is aggressively pursuing business opportunities with the goal of gaining customer and market share. We believe that Kforce has developed a highly leverageable and flexible platform that can deliver solid results across our service spectrum. We are not simply waiting for a cyclical turn, but instead are proactively putting in place the people and processes that we believe will create future success."

William L. Sanders, President, said, "From our experience in past recessions, we believe we have carefully managed the risks to our revenue stream, particularly our exposure to the highly volatile permanent placement business, which now represents less than 3% of our revenue stream. We continue to execute and take market share across all business lines utilizing competitive advantages such as our National Recruiting Center, which is particularly effective in delivering to our large national accounts, and our state of the art technology infrastructure. These competitive differentiators are the result of purposeful strategic decisions that have been made by our seasoned executive team in preparation for the next economic up-cycle."

Mr. Sanders noted additional operational results of the second quarter included:



 -- Flex revenue of $219.3 million in Q2 '09 decreased 1.9% from
    $223.5 million in Q1 '09 and decreased 6.7% from $235.2 million in
    Q2 '08.

 -- Flex revenue per billing day of $3.4 million in Q2 '09 decreased
    4.9% and 6.7% over Q1 '09 and Q2' 08, respectively.

 -- Flex revenue per billing day in Q2 '09 by segment was $1.7 million
    for Technology, $0.6 million for F&A, $0.6 million for HLS and
    $0.5 million for Government Solutions. Sequential percentage
    changes on a billing day basis by segment were a 6.4% decrease for
    Technology, flat for F&A, a 9.7% decrease for HLS and a 2.7%
    increase for Government Solutions.

 -- Search revenue of $6.6 million in Q2 '09 decreased 15.3% from $7.8
    million in Q1 '09 and decreased 66.8% from $20.0 million in Q2 '08.

 -- Flex gross profit increased 80 basis points to 29.6% in Q2 '09
    from 28.8% in Q1 '09 and declined 80 basis points from 30.4% in
    Q2 '08.

Joe Liberatore, Chief Financial Officer, said, "The Firm continued to perform well in a challenging environment in Q2, coming in at the high-end of guidance for revenue and exceeding guidance for earnings per share. We believe the second quarter is a reflection of our strong culture and focus on execution in all aspects of the business, including improving client relationships, balancing bill/pay rate spreads, expense management and optimizing cash flow."

Financial highlights for Q2 '09 included:



 -- Total revenue for Q2 '09 was $226.0 million, a decrease of 11.4%
    from $255.1 million in Q2 '08.

 -- Selling, general and administrative expenses as a percentage of
    revenue for Q2 '09 were 27.5% compared to 30.8% for Q2 '08 and
    27.4% for Q1 '09.

 -- EBITDA for Q2 '09 was $11.2 million, a decrease of 45.5% from
    $20.5 million in Q2 '08 and an increase of 14.1% from $9.8 million
    in Q1 '09.

 -- Bank debt at the end of Q2 '09 was $24.9 million, reflecting a
    decrease of $13.1 million from $38.0 million at the end of 2008
    and a decrease of $19.1 million from March 31, 2009.

Mr. Liberatore continued, "Looking forward to the third quarter of 2009, we expect revenue may be in the $221 million to $226 million range, and earnings per share in the range of $0.07 to $0.10."

On Tuesday, August 4, 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 Time Tuesday, August 4 to August 18, 2009 by dialing 888-203-1112, passcode 4438985.

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 August 18, 2009.

About Kforce

Kforce (Nasdaq:KFRC) is a professional staffing and solutions firm providing flexible and permanent staffing solutions in the skill areas of technology, finance & accounting, and health and life sciences. Backed by approximately 1,900 staffing specialists, Kforce is committed to "Great People = Great Results" for our valued clients and candidates. Kforce operates with 62 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)

KGS provides innovative technology, financial management, data architecture and continuous process improvement and finance and accounting solutions to federal government clients. KGS, with approximately 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 Technology, Finance and Accounting, Health and Life Sciences and Government Solutions segments, 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)

                                                Quarter Ended
                                      --------------------------------
                                       June 30,   March 31,  June 30,
                                         2009       2009       2008
                                      ---------- ---------- ----------

 Revenue by Function:
     Technology                       $ 113,478  $ 117,538  $ 131,783
     Finance & Accounting                41,096     40,574     56,067
     Health & Life Sciences              41,722     45,240     48,376
     Government Solutions                29,656     27,957     18,907
                                      ---------- ---------- ----------
 Total Revenue                          225,952    231,309    255,133

 Revenue by Time:
    Perm                                  6,626      7,822     19,951
    Flexible                            219,326    223,487    235,182
                                      ---------- ---------- ----------
 Total Revenue                          225,952    231,309    255,133

 Costs Of Services                      154,331    159,088    163,769
                                      ---------- ---------- ----------
 Gross Profit                            71,621     72,221     91,364
    GP %                                   31.7%      31.2%      35.8%
    Flex GP %                              29.6%      28.8%      30.4%

 Selling, General & Administrative
  Expenses                               62,084     63,410     78,697
 Depreciation & Amortization              2,885      3,040      3,670
                                      ---------- ---------- ----------

 Income from Operations                   6,652      5,771      8,997

 Other Expense, Net                         275        349        552
                                      ---------- ---------- ----------

 Income from Continuing Operations,
  Before Income Taxes                     6,377      5,422      8,445

 Income Tax Expense                       2,470      2,261      3,330
                                      ---------- ---------- ----------

 Income from Continuing Operations        3,907      3,161      5,115

 Income from Discontinued Operations,
  Net of Income Taxes                        --         --      3,585
                                      ---------- ---------- ----------

 Net Income                           $   3,907  $   3,161  $   8,700
                                      ========== ========== ==========

 Earnings Per Share - Diluted         $    0.10  $    0.08  $    0.22
 EBITDA Per Share                     $    0.29  $    0.25  $    0.51
 Shares Outstanding - Diluted            38,988     38,542     40,317

 EBITDA                               $  11,178  $   9,799  $  20,499

 Selected Cash Flow Information:
    Bad Debt (Recovery) Expense from
     Continuing Operations            $    (189) $    (523) $     556
    Capital Expenditures              $   1,170  $     904  $   3,706

 Selected Balance Sheet Information:
    Total Cash and Cash Equivalents   $     467  $     900  $   2,056
    Accounts Receivable, Less
     Allowances                       $ 127,844  $ 131,085  $ 151,282
    Total Assets                      $ 343,902  $ 349,143  $ 461,918
    Bank Debt                         $  24,863  $  44,000  $  33,000
    Other Current Liabilities         $  80,602  $  74,113  $  81,853
    Other Long-Term Liabilities       $  23,766  $  21,335  $  29,927
    Total Stockholders' Equity        $ 214,671  $ 209,695  $ 317,138

 Other Information:
    Equity-Based Compensation Expense,
     Net                              $     736  $     735  $   4,741

 Billing Days                                64         62         64


                               Kforce Inc.
                             Key Statistics
                              (Unaudited)

                                        Q2 2009    Q1 2009    Q2 2008
                                      ---------- ---------- ----------
             Total Firm
             ----------
 Flex Revenue (000's)                 $ 219,326  $ 223,487  $ 235,182
 Revenue per billing day (000's)      $   3,427  $   3,605  $   3,675
 Sequential Flex Revenue Change            -1.9%      -2.1%       1.3%
 Hours (000's)                            3,698      3,670      3,884
 Flex GP %                                 29.6%      28.8%      30.4%

 Search Revenue (000's)               $   6,626  $   7,822  $  19,951
 Placements                                 575        585      1,328
 Average Fee                          $  11,526  $  13,372  $  15,023
 Billing days                                64         62         64

             Technology
             ----------
 Flex Revenue (000's)                 $ 111,022  $ 114,928  $ 123,884
 Revenue per billing day (000's)      $   1,735  $   1,854  $   1,936
 Sequential Flex Revenue Change            -3.4%      -7.1%       2.6%
 Hours (000's)                            1,766      1,806      1,906
 Flex GP %                                 27.3%      26.4%      27.5%

 Search Revenue (000's)               $   2,456  $   2,610  $   7,899
 Placements                                 179        188        467
 Average Fee                          $  13,709  $  13,915  $  16,913

        Finance & Accounting
        --------------------
 Flex Revenue (000's)                 $  37,139  $  36,000  $  44,651
 Revenue per billing day (000's)      $     580  $     581  $     698
 Sequential Flex Revenue Change             3.2%      -8.1%      -6.2%
 Hours (000's)                            1,096      1,048      1,224
 Flex GP %                                 31.3%      31.6%      33.6%

 Search Revenue (000's)               $   3,957  $   4,574  $  11,416
 Placements                                 377        353        820
 Average Fee                          $  10,503  $  12,945  $  13,922

       Health & Life Sciences
       ----------------------
 Flex Revenue (000's)                 $  41,509  $  44,602  $  47,740
 Revenue per billing day (000's)      $     649  $     719  $     746
 Sequential Flex Revenue Change            -6.9%      -0.1%       4.2%
 Hours (000's)                              497        502        549
 Flex GP %                                29.3%       28.8%      32.0%

 Search Revenue (000's)               $     213  $     638  $     636
 Placements                                  19         44         41
 Average Fee                          $  11,208  $  14,491  $  15,506

        Government Solutions
        --------------------
 Flex Revenue (000's)                 $  29,656  $  27,957  $  18,907
 Revenue per billing day (000's)      $     463  $     451  $     295
 Sequential Flex Revenue Change             6.1%      35.1%       4.5%
 Hours (000's)                              339        314        205
 Flex GP %                                 36.9%      35.1%      37.3%

                                  Kforce Inc.
                     Key Statistics - Health & Life Sciences
                                  (Unaudited)

                                        Q2 2009    Q1 2009    Q2 2008
                                      ---------- ---------- ----------
         Clinical Research
         -----------------
 Flex Revenue (000's)                 $  27,588  $  29,525  $  29,437
 Revenue per billing day (000's)      $     431  $     476  $     460
 Sequential Flex Revenue Change            -6.6%       9.1%       2.8%
 Hours (000's)                              326        326        331
 Flex GP %                                 25.7%      25.5%      29.0%

 Search Revenue (000's)               $      59  $     184  $     344
 Placements                                   3         13         20
 Average Fee                          $  19,634  $  14,110  $  17,190

             Healthcare
             ----------
 Flex Revenue (000's)                 $  13,921  $  15,077  $  18,303
 Revenue per billing day (000's)      $     218  $     243  $     286
 Sequential Flex Revenue Change            -7.7%     -14.3%       6.5%
 Hours (000's)                              171        176        218
 Flex GP %                                 36.3%      35.3%      36.6%

 Search Revenue (000's)               $     154  $     454  $     292
 Placements                                  16         31         21
 Average Fee                          $   9,628  $  14,650  $  13,902


                              Kforce Inc.
          Selected Financial Information and Reconciliations
               (In Thousands, Except Per Share Amounts)
                              (Unaudited)

 EBITDA
                                     Three Months Ended
                       -----------------------------------------------
                           June 30,       March 31,        June 30,
                             2009           2009             2008
                       --------------- --------------- ---------------
                                 Per             Per             Per
                           $    share      $    share      $    share
                       -------- ------ -------- ------ -------- ------

 GAAP Net Income       $ 3,907  $0.10  $ 3,161  $0.08  $ 8,700  $0.22
   Income from
    Discontinued
    Operations, Net of
    Income Taxes            --     --       --     --    3,585   0.09
                       -------- ------ -------- ------ -------- ------
 Income from Continuing
  Operations           $ 3,907  $0.10  $ 3,161  $0.08  $ 5,115  $0.13
   Intangible Asset
    Impairment, Pre-Tax    870   0.02       --     --       --     --
   Depreciation &
    Amortization         2,885   0.07    3,040   0.08    3,670   0.09
   Acceleration of SARS
    & PARS                  --     --       --     --    6,009   0.15
   Amortization of
    Stock Options &
    SARS                    56   0.00       56   0.00      716   0.02
   Amortization of
    Restricted Stock &
    PARS                   660   0.02      846   0.02    1,102   0.02
   Interest Expense and
    Other                  330   0.01      435   0.01      557   0.01
   Income Tax Expense    2,470   0.07    2,261   0.06    3,330   0.09
                       -------- ------ -------- ------ -------- ------
 EBITDA                $11,178   0.29  $ 9,799   0.25  $20,499   0.51
                       ======== ====== ======== ====== ======== ======

 Weighted Average
  Shares Outstanding -
  Diluted               38,988          38,542          40,317

 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. EBITDA should not
 be considered a measure of financial performance under generally
 accepted accounting principles. Items excluded from EBITDA are
 significant components in understanding and assessing financial
 performance.

 Net Income before Equity-Based Compensation Expense

                                      Three Months Ended
                       -----------------------------------------------
                            June 30,       March 31,       June 30,
                              2009           2009            2008
                       --------------- --------------- ---------------
                                 Per             Per             Per
                           $    share      $    share      $    share
                       -------- ------ -------- ------ -------- ------

 GAAP Net Income       $ 3,907  $0.10  $ 3,161  $0.08  $ 8,700  $0.22
   Income from
    Discontinued
    Operations, Net of
    Income Taxes            --     --       --     --    3,585   0.09
                       -------- ------ -------- ------ -------- ------
 Income from Continuing
  Operations           $ 3,907  $0.10  $ 3,161  $0.08  $ 5,115  $0.13
 Equity-Based
  Compensation Expense,
  Net:
   Alternative LTI
    Valuation Expense      513   0.01      359   0.01       --     --
   Acceleration of SARS
    & PARS                  --     --       --     --    6,009   0.15
   Amortization of
    Stock Options &
    SARS                    56   0.00       56   0.00      716   0.02
   Amortization of
    Restricted Stock &
    PARS                   660   0.02      846   0.02    1,102   0.02
   Income Tax Expense     (493) (0.01)    (526) (0.01)  (3,086) (0.08)
                       -------- ------ -------- ------ -------- ------
   Equity-Based
    Compensation
    Expense, Net           736   0.02      735   0.02    4,741   0.11
                       -------- ------ -------- ------ -------- ------
 Net Income before
  Equity-Based
  Compensation Expense $ 4,643   0.12  $ 3,896   0.10  $ 9,856   0.24
                       ======== ====== ======== ====== ======== ======

 Weighted Average
  Shares Outstanding -
  Diluted               38,988          38,542          40,317

 "Net Income before Equity-Based Compensation Expense", a non-GAAP
 financial measure, is defined as income from continuing operations,
 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.

 EBITDA and Net Income before Equity-Based Compensation Expense 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.

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Kforce Inc.

Kforce Inc.
Michael Blackman, Senior Vice President - Investor Relations
(813) 552-2927

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