WOODBURY, N.Y., Aug. 5 /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 second quarter ended June
28, 2009. The Company reported revenues of $141.7 million for the
second quarter of 2009, compared to revenues of $152.8 million for
the second quarter of 2008, a 7.2% 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.
Sequentially, revenues for the second quarter 2009 improved 2.7%
from the prior quarter. Revenue in the Human Capital Management
Services segment, consisting of PrO Unlimited , increased $81,000
over second quarter 2008, and also improved sequentially 7.3% over
this year's first quarter. PrO's increase in the second quarter of
2009 as compared to 2008 was primarily due by an increase in
services provided to new clients, which was offset by a decrease in
services provided to existing clients. Staff Augmentation segment
revenue decreased by $10.8 million, or 19.7% reflecting a decrease
in clients' demand for services in this sector. Gross profit for
the second quarter of 2009 was $20.2 million, or 14.3% of sales,
compared to a gross profit of $24.4 million, or 16.0% of sales for
the comparable period last year. The decrease in gross profit is
the result of pricing pressures the Company is facing in the
current economic environment, lower sales volume on higher margin
services and less favorable workers compensation claim experience
in the 2009 period. In addition, the Company recorded an additional
accrual of approximately $920,000 in the second quarter of 2009
related to a state tax examination. Selling, general and
administrative (SG&A) expenses decreased by $1.4 million in the
second quarter of 2009, as compared to the second quarter of 2008.
SG&A expenses as a percentage of net sales were 12.9% for the
second quarter of 2009, compared to 12.9% for the second quarter of
2008. Management continues to undertake initiatives to reduce
SG&A expenses and has been successful in controlling costs as
sales decreased. COMFORCE reported operating income of $1.1 million
for the second quarter of 2009, compared to operating income of
$4.0 million for the second quarter of 2008. The Company's interest
expense for the second quarter of 2009 was $441,000 compared to
$1.1 million for the second 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 income,
net, for the second quarter of 2009 of $465,000 compared to
$106,000 for second quarter 2008, principally consists of gains on
foreign currency exchanges. Income before income taxes was $1.1
million for the second quarter of 2009, compared to income before
income taxes of $2.9 million for the comparable period last year.
COMFORCE recognized a provision for income taxes of $513,000 in the
second quarter of 2009, compared to a tax provision for income
taxes of $1.3 million in the second quarter of 2008. The Company
reported net income of $598,000, or $0.02 per basic and diluted
share for the second quarter of 2009, compared to net income of
$1.6 million, $0.08 per basic share and $0.05 per diluted share for
the second quarter of 2008. Six Months Results COMFORCE recorded
revenues of $279.7 million for the first six months of 2009,
compared to revenues of $303.0 million for the first six months of
2008. PrO Unlimited revenues declined 2.7% to $188.1 million,
compared to $193.3 million for the first six months of 2008. Gross
profit for the first six months of 2009 was $40.8 million, or 14.6%
of sales, compared to gross profit of $48.2 million, or 15.9% of
sales for the first six months of 2008. The decrease in gross
profit is the result of pricing pressures the Company is facing in
the current economic environment, lower sales volume on higher
margin services and less favorable workers compensation claim
experience in the 2009 period. In addition, the Company recorded an
additional accrual of approximately $920,000 in the second quarter
of 2009 related to a state tax examination. The Company's operating
income for the first half of 2009 was $2.1 million, compared to
operating income of $7.5 million for the first half of 2008.
Interest expense for the first six months of 2009 was $1.1 million,
compared to $2.6 million for the first six months of 2008. The
lower interest expense was primarily due to the redemption and
repurchase of the Senior Notes mentioned above and to lower
interest rates being charged under the Company's credit facility.
Other income, net, for the first six months of 2009 of $392,000,
compared to other expense, net, of $177,000 for the first six
months of 2008, principally consists of gains and losses,
respectively, on foreign currency exchanges. COMFORCE reported
income before income taxes of $1.4 million for the first six months
of 2009, compared to income before income taxes of $4.7 million for
the first six months of 2008. The Company recognized a tax
provision of $649,000 for the first half of 2009, compared to a tax
provision of $2.1 million for the first half of 2008. Net income
for the first six months of 2009 was $754,000, or $0.01 per basic
and diluted share, compared to $2.6 million, or $0.12 per basic
share and $0.08 per diluted share for the same period last year.
Comments from Management John Fanning, Chairman and Chief Executive
Officer of COMFORCE commented, "While our results for the second
quarter continued to be negatively impacted by the global economy,
sequentially, we realized improved financial performance in key
metrics including revenues, operating income, and net income. The
sequential improvement suggests stabilization in our business that
we began to observe toward the end of the first quarter and
continued into our second quarter." Mr. Fanning continued, "We
continue to position our company for future growth and remain
focused on those business areas that we believe will be more in
demand as the economy recovers, including PrO Unlimited and
RightSourcing . At the same time, we continue to prudently manage
our costs and allocate our capital to seek to position our company
for long-term sustainable growth." "Our primary goal is to meet our
customers' needs and build COMFORCE to the benefit of our
shareholders longer term," concluded Mr. Fanning. 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 and make it more difficult and costly
for us to refinance or extend our credit facility at its maturity
in July 2010; -- 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 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) (unaudited) Three Months Ended Six Months Ended
June 28, June 29, June 28, June 29, 2009 2008 2009 2008 ---- ----
---- ---- Net sales of services $141,689 $152,756 $279,718 $302,966
-------- -------- -------- -------- Costs and expenses: Cost of
services 121,479 128,365 238,889 254,767 Selling, general and
administrative expenses 18,246 19,632 37,020 39,251 Depreciation
and amortization 877 738 1,713 1,413 --- --- ----- ----- Total
costs and expenses 140,602 148,735 277,622 295,431 ------- -------
------- ------- Operating income 1,087 4,021 2,096 7,535 -----
----- ----- ----- Other income (expense): Interest expense (441)
(1,129) (1,085) (2,568) Loss on debt extinguishment - (129) - (129)
Other (expense) income, net 465 106 392 (177) --- --- --- ---- 24
(1,152) (693) (2,874) Income before income taxes 1,111 2,869 1,403
4,661 Provision for income taxes 513 1,270 649 2,070 Net income
$598 $1,599 $754 $2,591 ---- ------ ---- ------ Dividends on
preferred stock 251 251 502 502 --- --- --- --- Net income
available to common stockholders $347 $1,348 $252 $2,089 ====
====== ==== ====== Basic income per common share $0.02 $0.08 $0.01
$0.12 ===== ===== ===== ===== Diluted income per common share $0.02
$0.05 $0.01 $0.08 ===== ===== ===== ===== Weighted average common
shares outstanding, basic 17,388 17,388 17,388 17,388 ====== ======
====== ====== Weighted average common shares outstanding, diluted
28,355 32,853 17,401 32,628 ====== ====== ====== ====== COMFORCE
CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets June 28,
2009 and December 28, 2008 (in thousands, except share and per
share amounts) (unaudited) June 28, December 28, Assets 2009 2008
---- ---- Current assets: Cash and cash equivalents $5,679 6,137
Accounts receivable, less allowance of $128 in 2009 and $92 in 2008
119,540 140,763 Funding and service fees receivable, less allowance
of $8 in 2009 and $20 in 2008 8,452 8,941 Prepaid expenses and
other current assets 3,178 3,014 Deferred income taxes, net 353 353
--- --- Total current assets 137,202 159,208 Property and
equipment, net 9,582 10,057 Deferred financing costs, net 134 213
Goodwill 32,073 32,073 Other assets, net 93 185 -- --- Total assets
$179,084 201,736 ======== ======= Liabilities and Stockholders'
Deficit Current liabilities: Accounts payable $3,182 2,675
Short-term debt (related party) 1,849 1,778 Accrued expenses
104,832 131,441 ------- ------- Total current liabilities 109,863
135,894 Long-term debt 70,883 68,200 Deferred income taxes, net
1,110 1,074 Other liabilities 212 401 --- --- Total liabilities
182,068 205,569 ------- ------- Commitments and contingencies
Stockholders'deficit: Common stock, $.01 par value; 100,000,000
shares authorized; 17,387,643 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 June 28, 2009
and December 28, 2008, with an aggregate liquidation preference of
$9,080 at June 28, 2009 and $8,850 at December 28, 2008 4,304 4,304
Series 2003B, 3,500 shares authorized, 513 shares issued and
outstanding at June 28, 2009 and December 28, 2008, with an
aggregate liquidation preference of $733 at June 28, 2009 and $714
at December 28, 2008 513 513 Series 2004A, 15,000 shares
authorized, 6,737 shares issued and outstanding at June 28, 2009
and December 28, 2008, with an aggregate liquidation preference of
$9,043 at June 28, 2009 and $8,790 at December 28, 2008 10,264
10,264 Additional paid-in capital 48,452 48,406 Accumulated other
comprehensive loss (473) (522) Accumulated deficit (66,218)
(66,972) ------- ------- Total stockholders' deficit (2,984)
(3,833) ------ ------ Total liabilities and stockholders' deficit
$179,084 201,736 ======== ======= 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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