WOODBURY, N.Y., May 7 /PRNewswire-FirstCall/ -- COMFORCE
Corporation (NYSE Amex: CFS), a leading provider of outsourced
staffing management services, specialty staffing and consulting
services today reported results for its first quarter ended March
29, 2009. The Company reported revenues for the quarter of $138.0
million, compared to revenues of $150.2 million for the first
quarter of 2008, an 8.1% decrease. Lower revenues for the quarter
were primarily due to the continued decline in the global economy,
which has adversely affected demand in the labor markets. Revenue
in the Human Capital Management Services segment, consisting of PRO
Unlimited(R), declined $5.3 million, or 5.5% over first quarter
2008. This decrease was primarily due to a decrease in services
provided to existing clients, which was partially offset by an
increase in services provided to new clients. PRO reported gross
profit for the quarter of $11.6 million, compared to $12.5 million
for the first quarter of 2008. Staff Augmentation segment revenue
decreased by $6.7 million, or 12.5% reflecting a decrease in
clients' demand for services across all lines of business in this
segment, except for RightSourcing(R) where revenues increased. The
Company's gross profit for the quarter was $20.6 million or 14.9%
of sales, compared to $23.8 million, or 15.8% of sales for first
quarter 2008. Selling, general and administrative expenses
decreased by $845,000 in the first quarter of 2009, primarily due
to lower personnel costs in the Human Capital Management segment,
principally as a result of lower revenues, as discussed above.
Operating income for the quarter was $1.0 million, compared to
operating income of $3.5 million for the same quarter last year.
Interest expense was $644,000 for the quarter, compared to $1.4
million for the first quarter of 2008. This decrease was primarily
due to the Company's retirement and redemption of $11.7 million of
12% Senior Notes since the beginning of 2008, including the final
redemption of $5.2 million principal amount of Senior Notes in
August 2008. Income before income taxes was $292,000 for the first
quarter of 2009, compared to $1.8 million for the same period last
year. COMFORCE recorded a tax provision of $136,000 in the first
quarter of 2009, compared to a tax provision of $800,000 in the
first quarter of 2008. Net income for the first quarter was
$156,000, compared to net income of $992,000 for the same period
last year. The net loss available to common stockholders for the
first quarter was $(95,000), or $(0.01) per basic and diluted
share, compared to a net income available to common stockholders of
$741,000, or $0.04 per basic share and $0.03 per diluted share for
the same period last year. Comments from Management John Fanning,
Chairman and Chief Executive Officer of COMFORCE commented, "As we
discussed last quarter, we are not immune to the global
deterioration in the labor markets. Our Company began to feel the
impact of the economic downturn at the beginning of this year and
had anticipated reporting lower revenues over last year's first
quarter. "We are focusing on areas of our business that we believe
will be in demand longer term, including PRO Unlimited and
RightSourcing. We were particularly pleased that RightSourcing's
revenues increased in the first quarter compared to the first
quarter of 2008. At the same time, we continue to take steps to
contain and reduce expenses." Mr. Fanning concluded, "We don't
minimize the challenging environment in which we are operating;
however, we believe we have positioned our Company to both survive
the current recession and to take advantage of opportunities to
grow our business in the long term. All of us are working
diligently towards building COMFORCE to the benefit of all our
stakeholders including clients and shareholders" 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 banking 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 and make it more difficult and costly
for us to refinance or extend our credit facility at its maturity
in July 2010; -- significant increases in the effective rates of
any payroll-related costs that we are unable to pass on to our
clients; -- increases in the costs of complying with the complex
federal, state and foreign laws and regulations under 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; -- in that we place our employees in other workplaces,
losses incurred by reason of 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 the documents governing our
bank credit facility, or any future debt instruments, our inability
to use available cash in the manner management believes will
maximize shareholder 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 the Company's 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/). -
Financial Tables Follow - COMFORCE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income (in thousands, except
per share amounts) Three Months Ended March 29, March 30, 2009 2008
---- ---- Net sales of services $138,029 $150,210 -------- --------
Costs and expenses: Cost of services 117,410 126,402 Selling,
general and administrative expenses 18,774 19,619 Depreciation and
amortization 836 675 --- --- Total costs and expenses 137,020
146,696 ------- ------- Operating income 1,009 3,514 ----- -----
Other expense income: Interest expense (644) (1,439) Other expense,
net (73) (283) --- ---- (717) (1,722) Income before income taxes
292 1,792 Provision for income taxes 136 800 Net income $156 $992
---- ---- Dividends on preferred stock 251 251 --- --- Net (loss)
income available to common stockholders $(95) $741 ==== ==== Basic
(loss) income per common share $(0.01) $0.04 ====== ===== Diluted
(loss) income per common share $(0.01) $0.03 ====== ===== Weighted
average common shares outstanding, basic 17,388 17,388 ======
====== Weighted average common shares outstanding, diluted 17,388
32,624 ====== ====== COMFORCE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets March 29, 2009 and December 28, 2008
(in thousands, except share and per share amounts) March 29,
December 28, Assets 2009 2008 ---- ---- Current assets: Cash and
cash equivalents $4,945 6,137 Accounts receivable, less allowance
of $121 in 2009 and $92 in 2008 131,044 140,763 Funding and service
fees receivable, less allowance of $16 in 2009 and $20 in 2008
7,087 8,941 Prepaid expenses and other current assets 3,483 3,014
Deferred income taxes, net 353 353 --- --- Total current assets
146,912 159,208 Property and equipment, net 9,774 10,057 Deferred
financing costs, net 173 213 Goodwill 32,073 32,073 Other assets,
net 166 185 --- --- Total assets $189,098 201,736 ======== =======
Liabilities and Stockholders' Deficit Current liabilities: Accounts
payable $2,140 2,675 Short-term debt (related party) 1,778 1,778
Accrued expenses 114,492 131,441 ------- ------- Total current
liabilities 118,410 135,894 Long-term debt 73,088 68,200 Deferred
income taxes, net 1,046 1,074 Other liabilities 280 401 --- ---
Total liabilities 192,824 205,569 ------- ------- Commitments and
contingencies Stockholders' deficit: Common stock, $.01 par value;
100,000,000 shares authorized; 17,387,560 shares issued and
outstanding in 2009 and 2008 174 174 Convertible preferred stock,
$.01 par value: Series 2003A, 6,500 shares authorized, 6,148 shares
issued and outstanding at March 29, 2009 and December 28, 2008,
with an aggregate liquidation preference of $8,965 at March 29,
2009 and $8,850 at December 28, 2008 4,304 4,304 Series 2003B,
3,500 shares authorized, 513 shares issued and outstanding at March
29, 2009 and December 28, 2008, with an aggregate liquidation
preference of $724 at March 29, 2009 and $714 at December 28, 2008
513 513 Series 2004A, 15,000 shares authorized, 6,737 shares issued
and outstanding at March 29, 2009 and December 28, 2008, with an
aggregate liquidation preference of $8,916 at March 29, 2009 and
$8,790 at December 28, 2008 10,264 10,264 Additional paid-in
capital 48,406 48,406 Accumulated other comprehensive loss (571)
(522) Accumulated deficit (66,816) (66,972) ------- ------- Total
stockholders' deficit (3,726) (3,833) ------ ------ Total
liabilities and stockholders' deficit $189,098 201,736 ========
======= 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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