WOODBURY, N.Y., Nov. 5 /PRNewswire-FirstCall/ -- COMFORCE
Corporation (NYSE Amex: CFS), a leading provider of outsourced
staffing management services, specialty staffing and consulting
services today announced results for its third quarter ended
September 27, 2009. Revenues for the quarter declined 6.5% to
$139.7 million compared to revenues of $149.4 million for the third
quarter of 2008. Lower revenues for the quarter continued to be
impacted by global economic conditions, which continue to adversely
affect demand in the labor markets. Revenues of PrO Unlimited®, the
Company's Human Capital Management segment, increased $3.0 million,
or 3.0% over third quarter 2008. PrO's increase in the third
quarter of 2009 as compared to third quarter 2008 was primarily due
to an increase in services provided to new clients, which was
partially offset by a decrease in services provided to existing
clients. Staff Augmentation revenues decreased by $12.2 million, or
23.7% due primarily to a decrease in client demand for services in
this sector. Gross profit for the third quarter of 2009 was $19.9
million, or 14.3% of sales, compared to $23.6 million, or 15.8% of
sales for the third quarter of 2008. The decrease in gross profit
is the result of pricing pressures the Company is facing in the
current economic environment, and also due to lower sales volume on
higher margin services. In addition, the Company recorded an
accrual of approximately $600,000 in the third quarter of 2009
related to a state tax examination. COMFORCE reported operating
income of $2.6 million for the third quarter, compared to $4.0
million for the same quarter last year. Interest expense was
$398,000 for the third quarter of 2009, compared to $1.0 million
for the third quarter of 2008. This decrease was primarily due to
the Company's retirement and redemption of $11.7 million of 12%
Senior Notes in 2008 and to lower interest rates being charged
under the Company's credit facility. Other expense, net, for the
third quarter of 2009 of $286,000, as compared to $445,000 for the
same quarter last year, principally consists of losses on foreign
currency exchanges. COMFORCE recorded income before income taxes of
$1.9 million for the third quarter, compared to $2.4 million for
the comparable quarter last year. The Company recognized a
provision for income taxes of $883,000 in the third quarter of
2009, compared to $1.1 million in the third quarter of 2008. Net
income for the third quarter was $1.1 million, or $0.05 per basic
share and $0.03 per diluted share, compared to net income of $1.3
million, or $0.06 per basic share and $0.04 per diluted share for
the same quarter last year. Nine Month Results COMFORCE reported
revenues of $419.4 million for the first nine months of 2009,
compared to revenues of $452.4 million for the first nine months of
2008. PrO Unlimited revenues declined less than 1.0% for the first
nine months of 2009. The Company's gross profit for the first nine
months was $60.8 million, or 14.5% of sales, compared to $71.8
million, or 15.9% of sales for the same period last year. The
decrease in gross profit is the result of pricing pressures the
Company is facing in the current economic environment and lower
sales volume on higher margin services. In addition, the Company
recorded an additional accrual of approximately $1.5 million in the
second and third quarters of 2009 related to a state tax
examination. Operating income for the nine month period was $4.7
million, compared to $11.5 million for the first nine months of
2008. Interest expense for the first nine months of 2009 was $1.5
million, compared to $3.5 million for the first nine months of
2008. This lower interest expense was primarily due to the
repurchase and redemption of the 12% Senior Notes mentioned above
and lower interest rates under the Company's credit facility. Other
income, net, for the first nine months of 2009 of $106,000
principally consists of gains on foreign currency exchanges as
compared to other expense, net, for the first nine months of 2008
of $622,000 principally consisting of losses on foreign currency
exchanges. COMFORCE reported income before income taxes of $3.3
million for the first nine months of 2009, compared to income
before income taxes of $7.1 million for the first nine months of
2008. The Company recognized a tax provision of $1.5 million for
the first nine months of 2009, compared to a tax provision of $3.2
million for the first nine months of 2008. COMFORCE reported net
income of $1.8 million for the first nine months of 2009, or $0.06
per basic share and $0.05 per diluted share, compared to a net
income of $3.9 million for the first nine months of 2008, or $0.18
per basic share and $0.12 per diluted share. Comments from
Management John Fanning, Chairman and CEO of COMFORCE commented,
"We had indicated that 2009 would be a demanding year and it has
been. However we believe our results, albeit not at the level we
would like, demonstrate the flexibility of our management team, the
validity of our business plan and our commitment to containing
costs, even as we look to grow our business. We were pleased to
report a sequential improvement in PrO's revenues of 2.6% over the
second quarter. Mr. Fanning continued, "We, like other companies in
our industry, are continuing to be negatively impacted by the
current economic environment and weak labor markets. Even though
the rate of job losses has decreased in recent months, job losses
continue and we still have no visibility as to when this might
translate into a real recovery in our business. "Earlier this week,
we announced that COMFORCE has amended our revolving credit
facility to extend our maturity date from July 2010 to November
2012. The confidence our bankers have shown in our management team
validates our business plan and financial discipline." Mr. Fanning
concluded "We remain confident in COMFORCE's prospects and we
continue to work to weather the current environment and to position
COMFORCE for future growth as the economy improves." About COMFORCE
COMFORCE Corporation is a leading provider of outsourced staffing
management services that enable Fortune 1000 companies and other
large employers to consolidate, automate and manage staffing,
compliance and oversight processes for their contingent workforces.
We also provide specialty staffing, consulting and other
outsourcing services to Fortune 1000 companies and other large
employers for their healthcare support, technical and engineering,
information technology, telecommunications and other staffing
needs. We operate in three segments -- Human Capital Management
Services, Staff Augmentation and Financial Outsourcing Services.
The Human Capital Management Services segment provides consulting
services for managing the contingent workforce through its PrO
Unlimited subsidiary. The Staff Augmentation segment provides
Healthcare Support Services, including RightSourcing® Vendor
Management Services, Technical, Information Technology and Other
Staffing Services. The Financial Outsourcing Services segment
provides funding and back office support services to independent
consulting and staffing companies. To view the Company's web page
visit http://www.comforce.com/ We have made statements in this
release, including the comments from management that are
forward-looking statements such as projections of our future
financial performance, our anticipated growth strategies and
anticipated trends in our business and industry. These statements
are only predictions based on our current expectations and
projections about future events. Although we believe the
expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee our future results, particularly in
light of the current global economic crisis that has been marked by
dramatic and rapid shifts in market conditions and government
responses, nor will we undertake any obligation to update any of
these statements. Factors which may cause our actual results to
differ materially from those expressed or implied by the
forward-looking statements include the following: -- unfavorable
global, national or local economic conditions that cause our
clients to defer hiring contingent workers or reduce spending on
the human capital management services and staffing that we provide;
-- the current economic crisis has created a tightening of the
credit markets coupled with increasing interest rates, which, if
these conditions persist or deteriorate, could significantly
increase our interest expense; -- in the current economic climate,
some state taxing authorities are more strictly interpreting
business tax laws and regulations and more aggressively seeking to
enforce these laws and regulations to address shortfalls in state
tax revenues; -- increases in the effective rates of any
payroll-related costs or business taxes that we are unable to pass
on to or recover from our clients, particularly in a climate of
heightened competitive pressure; -- increases in the costs of
complying with the complex federal, state and foreign laws and
regulations in which we operate, or our inability to comply with
these laws and regulations; -- our inability to collect fees due to
the bankruptcy of our clients, including the amount of any wages we
have paid to our employees for work performed for these clients; --
our inability to keep pace with rapid changes in technology in our
industry; -- potential losses relating to the placement of our
employees in other workplaces, including our employees' misuse of
client proprietary information, misappropriation of funds,
discrimination, harassment, theft of property, accidents, torts or
other claims; -- our inability to successfully develop new services
or enhance our existing services as the markets in which we compete
grow more competitive; -- unfavorable developments in our business
may result in the necessity of writing off goodwill in future
periods; -- as a result of covenants and restrictions in our credit
facility, our inability to use available cash in the manner we
believe will maximize stockholder value; -- unfavorable press or
analysts' reports concerning our industry or our company could
negatively affect the perception investors have of our company and
our prospects; or -- any of the other factors described under "Risk
Factors" in Item 1A of our annual report on Form 10-K for the year
ended December 28, 2008 (copies of which may be accessed through
http://www.sec.gov/ or http://www.comforce.com/). COMFORCE
CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of
Income (in thousands, except per share amounts) (unaudited) Three
Months Ended Nine Months Ended September September September
September 27, 28, 27, 28, 2009 2008 2009 2008 -------- --------
-------- -------- Net sales of services $139,710 $149,435 $419,428
$452,401 -------- -------- -------- -------- Costs and expenses:
Cost of services 119,762 125,884 358,651 380,651 Selling, general
and administrative expenses 16,405 18,727 53,425 57,978
Depreciation and amortization 920 824 2,633 2,237 --- --- -----
----- Total costs and expenses 137,087 145,435 414,709 440,866
------- ------- ------- ------- Operating income 2,623 4,000 4,719
11,535 ----- ----- ----- ------ Other (expense) income: Interest
expense (398) (963) (1,483) (3,531) Loss on debt extinguishment -
(149) - (278) Other (expense) income, net (286) (445) 106 (622)
---- ---- --- ---- (684) (1,557) (1,377) (4,431) Income before
income taxes 1,939 2,443 3,342 7,104 Provision for income taxes 883
1,096 1,532 3,166 Net income $1,056 $1,347 $1,810 $3,938 ------
------ ------ ------ Dividends on preferred stock 252 252 754 754
--- --- --- --- Net income available to common stockholders $804
$1,095 $1,056 $3,184 ==== ====== ====== ====== Basic income per
common share $0.05 $0.06 $0.06 $0.18 ===== ===== ===== =====
Diluted income per common share $0.03 $0.04 $0.05 $0.12 ===== =====
===== ===== Weighted average common shares outstanding, basic
17,388 17,388 17,388 17,388 ====== ====== ====== ====== Weighted
average common shares outstanding, diluted 33,834 33,021 28,209
32,612 ====== ====== ====== ====== COMFORCE CORPORATION AND
SUBSIDIARIES Consolidated Balance Sheets September 27, 2009 and
December 28, 2008 (in thousands, except share and per share
amounts) (unaudited) September 27, December 28, Assets 2009 2008
-------- -------- Current assets: Cash and cash equivalents $3,819
6,137 Accounts receivable, less allowance of $128 in 2009 and $92
in 2008 121,516 140,763 Funding and service fees receivable, less
allowance of $8 in 2009 and $20 in 2008 7,877 8,941 Prepaid
expenses and other current assets 3,252 3,014 Deferred income
taxes, net 353 353 --- --- Total current assets 136,817 159,208
Property and equipment, net 9,183 10,057 Deferred financing costs,
net 96 213 Goodwill 32,073 32,073 Other assets, net 85 185 -- ---
Total assets $178,254 201,736 ======== ======= Liabilities and
Stockholders' Deficit Current liabilities: Accounts payable $4,362
2,675 Short-term debt (related party) 1,849 1,778 Accrued expenses
107,226 131,441 ------- ------- Total current liabilities 113,437
135,894 Long-term debt 65,198 68,200 Deferred income taxes, net
1,205 1,074 Other liabilities 190 401 --- --- Total liabilities
180,030 205,569 ------- ------- Commitments and contingencies
Stockholders' deficit: Common stock, $.01 par value; 100,000,000
shares authorized; 17,387,649 and 17,387,560 shares issued and
outstanding in 2009 and 2008, respectively 174 174 Convertible
preferred stock, $.01 par value: Series 2003A, 6,500 shares
authorized, 6,148 shares issued and outstanding at September 27,
2009 and December 28, 2008, with an aggregate liquidation
preference of $9,195 at September 27, 2009 and $8,850 at December
28, 2008 4,304 4,304 Series 2003B, 3,500 shares authorized, 513
shares issued and outstanding at September 27, 2009 and December
28, 2008, with an aggregate liquidation preference of $743 at
September 27, 2009 and $714 at December 28, 2008 513 513 Series
2004A, 15,000 shares authorized, 6,737 shares issued and
outstanding at September 27, 2009 and December 28, 2008, with an
aggregate liquidation preference of $9,170 at September 27, 2009
and $8,790 at December 28, 2008 10,264 10,264 Additional paid-in
capital 48,458 48,406 Accumulated other comprehensive loss (327)
(522) Accumulated deficit (65,162) (66,972) ------- ------- Total
stockholders' deficit (1,776) (3,833) ------ ------ Total
liabilities and stockholders' deficit $178,254 201,736 ========
======= DATASOURCE: COMFORCE Corporation CONTACT: Bob Ende, Senior
Vice President - Finance, COMFORCE Corporation, +1-516-437-3300, ;
General Info: Marilynn Meek, Financial Relations Board,
+1-212-827-3773 Web Site: http://www.comforce.com/
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