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ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Forward Looking and Cautionary Statements
This Annual Report on Form 10-K contains
‘‘forward-looking statements’’“forward-looking statements” within the meaning of the
Private Securities Litigation1995 Reform Act,
of 1995 (the ‘‘1995 Reform Act’’), Section 27A of the Securities Act
of 1933, as amended and Section 21E of the
Securities Exchange
Act of 1934, as amended.Act. TeamStaff desires to avail itself of certain
‘‘safe harbor’’“safe harbor” provisions of the 1995 Reform Act and is therefore including this special note to enable TeamStaff to do so. Forward-looking statements are identified by words such as
‘‘believe,’’ ‘‘anticipate,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘plan,’’ ‘‘will,’’ ‘‘may’’“believe,” “anticipate,” “expect,” “intend,” “plan,” “will,” “may” and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements included in this report involve known and unknown risks, uncertainties and other factors which could cause TeamStaff’s actual results, performance (financial or operating) or achievements to differ from the future results, performance (financial or operating) or achievements expressed or implied by such forward-looking statements. We based these forward-looking statements on our current expectations and best estimates and projections about future events. Our actual results could differ materially from those discussed in, or implied by, these forward-looking statements. The following factors (among others) could cause our actual results to differ materially from those implied by the forward-looking statements in this Annual
Report:Report on Form 10-K: our ability to continue to recruit qualified temporary and permanent healthcare professionals and administrative staff at reasonable costs; our ability to retain qualified temporary healthcare professionals and administrative staff for multiple assignments at reasonable costs; our ability to attract and retain sales and operational personnel; our ability to enter into contracts with hospitals, healthcare facility clients, affiliated healthcare networks, physician practice groups and the United States
governmentGovernment on terms attractive to us and to secure orders related to those contracts; our ability to demonstrate the value of our services to our healthcare and other facility clients; changes in the timing of hospital, healthcare facility clients’, physician practice groups’ and U.S. Government orders for and our placement of temporary and permanent healthcare professionals and administrative staff; the general level of patient occupancy at our hospital, healthcare facility clients’ and physician practice groups’ facilities; the overall level of demand for services offered by temporary and permanent healthcare staffing providers; the ability of our hospital, healthcare facility and physician practice group clients to retain and increase the productivity of their permanent staff; the variation in pricing of the healthcare facility contracts under which we place temporary and permanent healthcare professionals; our ability to successfully implement our strategic growth, acquisition and integration strategies; our ability to successfully integrate completed acquisitions into our current operations; our ability to manage growth effectively;
our ability to leverage our cost structure; the performance of our management information and communication systems; the effect of existing or future government legislation and regulation;
our ability to grow and operate our business in compliance with these legislation and regulations; the impact of medical malpractice and other claims asserted against us; the disruption or adverse impact to our business as a result of a terrorist attack; our ability to carry out our business strategy; the loss of key officers, and management personnel that could adversely affect our ability to remain competitive; the effect of recognition by us of an impairment to
goodwill;goodwill and intangible assets; other tax and regulatory issues and developments; and the effect of adjustments by us to accruals for self-insured retentions.
Critical Accounting Policies and EstimatesTeamStaff believes
Our discussion and analysis of our financial condition and results of operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the SEC. The preparation of our Consolidated Financial Statements and related notes in accordance with generally accepted accounting principles requires us to make estimates, which include judgments and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, and related disclosure of contingent assets and liabilities. We have based our estimates on historical experience and on various assumptions that we believe to be reasonable under the circumstances. We evaluate our estimates on a regular basis and make changes accordingly. Actual results may differ from these estimates under different assumptions or conditions. To the extent that there are material differences between these estimates and actual results, our financial condition, results of operations and cash flow will be affected.
A critical accounting estimate is based on judgments and assumptions about matters that are uncertain at the time the estimate is made. Different estimates that reasonably could have been used or changes in accounting estimates could materially impact our financial statements. We believe that the policies
described below represent
itsour critical accounting policies,
due toas they have the
significance or estimation process involved in each.Revenue Recognition
From October 1, 2005 through May 31, 2006, TeamStaff operated two different linesgreatest potential impact on our Consolidated Financial Statements. However, you should also review ourSummary of business from which it derived substantially all of its revenue: temporary and permanent staffing and payroll services. Effective May 31, 2006, TeamStaff sold substantially allSignificant Accounting Policiesbeginning on page F-8 of the assets of its DSI Payroll
Table of ContentsServices division (see Note 4 of Notesnotes to our Consolidated Financial Statements), and as a result, as of September 30, 2006 TeamStaff operatedStatements contained elsewhere in only one segment, which is the temporary and permanent medical and administrative staffing business.this Annual Report on Form 10-K.
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Revenue Recognition
TeamStaff accounts for its revenues in accordance with EITF 99-19,
Reporting Revenues Gross as a Principal Versus Net as an Agent,and SAB 104
, Revenue Recognition. TeamStaff recognizes all amounts billed to its temporary staffing customers as gross revenue because, among other things, TeamStaff is the primary obligor in the temporary staffing
arrangement,arrangement; TeamStaff has pricing
latitude,latitude; TeamStaff selects temporary employees for a given assignment from a broad pool of
individuals,individuals; TeamStaff is at risk for the payment of its direct
costs,costs; and, TeamStaff assumes a significant amount of other risks and liabilities as an employer of its temporary employees, and therefore, is deemed to be a principal in regard to these services. TeamStaff also recognizes as gross revenue and as unbilled receivables, on an accrual basis, any such amounts that relate to services performed by temporary employees which have not yet been billed to the customer as of the end of the accounting period.
Revenues related to retroactive billings in 2008 from certain agencies of the Federal government are recognized when: (1) the Company develops and calculates an amount for such prior period services and has a contractual right to bill for such amounts under its arrangements and (2) there are no remaining unfulfilled conditions for approval of such billings. The related direct costs, principally comprised of salaries and benefits, are recognized to match the recognized reimbursements from the Federal agencies; upon approval, wages are processed for payment to the employees.
During the year ended September 30, 2008, TeamStaff recognized revenues of $10.8 million and direct costs of $10.1 million related to these non-recurring arrangements. At September 30, 2008, the amount of the remaining accounts receivable with the DVA approximates $9.3 million and accrued liabilities for salaries to employees and related benefits totaled $8.7 million. Accounts receivable includes $7.6 million that was unbilled to the DVA at September 30, 2008.
Staffing (whether medical or administrative) revenue is recognized as service is rendered. TeamStaff bills its clients based on an hourly rate. The hourly rate is intended to cover TeamStaff’s direct labor costs of the temporary employees, plus an estimate to cover overhead expenses and a profit margin. Additionally, commissions from permanent placements are included in revenue
related to Medical Staffing.as placements are made. Commissions from permanent placements result from the successful placement of a medical staffing employee to a customer’s workforce as a permanent employee.
In connection with The Company also reviews the status of such placements to assess the Company’s discontinued payroll services operation, payroll services revenue was recognized as service was rendered and consisted primarily of administrative service fees charged to clients for the processing of paychecks as well as preparing quarterly and annual payroll related reports.
future performance obligations under such contracts.
Direct costs of services are reflected in TeamStaff’s
Consolidated Statement of Operations as
‘‘direct expenses’’“direct expenses” and are reflective of the type of revenue being generated. Direct costs of the temporary staffing business include wages, employment related taxes and reimbursable expenses.
Payroll services’ direct costs include salaries and supplies associated with the processing of the payroll service.Goodwill and Intangible Assets Beginning October 1, 2001,
with the adoption of accounting standard (SFAS 142), TeamStaff no longer amortizes goodwill or indefinite life intangible
assets, but continues to amortize software at its expected useful life.assets. TeamStaff continues to review its goodwill and other intangible assets for possible impairment or loss of value at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. If an impairment write off of all the goodwill became necessary, a charge of up to
$12.0$10.3 million would be expensed
onin the
Consolidated Statement of Operations. All goodwill is attributable to the staffing services reporting units. If an impairment write off of all the trade
namenames became necessary, a charge of up to $4.6 million would be expensed
onin the
Consolidated Statement of Operations.
During 2007, in connection with the Company’s decision to exit the Nursing Innovation per diem operations, an impairment loss of $1.6 million was recognized to reduce the carrying value of goodwill to net realizable value. TeamStaff
does not believehas concluded, at present, that there is
not any
other required write off of goodwill or its tradename.
Workers’ CompensationPrepaid Workers’ Compensation:
Compensation
TeamStaff’s current workers’ compensation insurance program is provided by Zurich American Insurance Company.Company (“Zurich”). This program covers TeamStaff’s temporary employees and its corporate employees. The program is managed by Cedar Hill and GAB Robins provides claims handling services. This program is a fully insured, guaranteed cost program that contains no deductible or retention feature. The premium for the program is paid monthly based upon actual payroll and is subject to a policy year-end audit.
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As part of the Company’s discontinued
PEO operations, TeamStaff had a workers’ compensation program with Zurich,
American Insurance Company, which
originally covered the period from March 22, 2002
Table of Contentsthrough March 31,November 17, 2003, inclusive. The Company subsequently renewedPayments for the policy with Zurich for the period from April 1, 2003, through March 31, 2004, inclusive. The renewal program was collateralized by a letter of credit inuring to the benefit of Zurich, and cash held in a trust account by a third party. Effective March 31, 2005, Zurich withdrew the requirement for a letter of credit and $1.8 million of restricted cash held in the form of a certificate of deposit at SunTrust Bank was released to TeamStaff. Payments were made to the trust monthly based on projected claims for the year.policy period. Interest on all assets held in the trust is credited to TeamStaff. Payments for claims and claims expenses are made from the trust. Assets inFrom time-to-time, trust assets have been refunded to the trust may be adjusted from time to timeCompany based on program experience.Zurich’s overall assessment of claims experience and historical and projected settlements. In conjunction withMarch 2008, Zurich reduced the sale of its PEO assetscollateral requirements on outstanding workers’ compensation claims and released $350,000 in trust account funds back to GevityHR, Inc., TeamStaff requestedthe Company. In fiscal years ended September 30, 2007 and received a pro rata cancellation of the policy as of November 17, 2003. On March 3, 2006, Zurich reduced the collateral requirements on outstanding workers’ compensation claims and released $1.19 million and $2.25 million, respectively, in trust account funds back to TeamStaff.the Company. The final amount of trust funds that could be refunded to the Company is subject to a number of uncertainties (e.g. claim settlements and experience, health care costs and the extended statutory filing periods for such claims); however, based on a third party’s study of claims experience, TeamStaff estimates that ofat September 30, 2008, the remaining prepaid asset an additional approximately $1.0of $0.4 million in return premiums willis expected to be received within the next twelve months. This is reflected on theTeamStaff’s balance sheet atas of September 30, 20062008 as a current asset.
asset, in addition to approximately $0.2 million related to current policy deposits.
As of September 30,
20062008 and
20052007 the adequacy of the workers’ compensation reserves
(which are offset against the trust fund balances in prepaid assets) was determined, in management’s opinion, to be reasonable. In determining our reserves we rely in part upon information regarding loss data received from our workers’ compensation insurance carriers that may include loss data for claims incurred during prior policy periods. In addition, these reserves are for claims that have not been sufficiently developed,
due to their relatively young age, and such variables as timing of payments and investment returns thereon are uncertain or unknown, therefore actual results may vary from current estimates. TeamStaff will continue to monitor the development of these reserves, the actual payments made against the claims incurred, the timing of these payments, the interest accumulated in TeamStaff’s prepayments and adjust the
related reserves as deemed appropriate.
Accrued Workers’ Compensation:
As was previously reported in TeamStaff’s Exchange Act filing on Form 8-K, filed on October 20, 2005, the Company settled certain disputed workers’ compensation insurance premium and loss claims totaling nearly $4.4 million for $2.05 million payable over two (2) years (subject to certain prepayment requirements), and was fully reserved as of the Company’s June 30, 2005 balance sheet. The settlement was entered on or about October 10, 2005. In or about January, 2001, TeamStaff purchased from Transportation Insurance Company (‘‘TPIC’’), Transcontinental Insurance Company (‘‘TCIC’’), Continental Casualty Company (‘‘CCC’’), CNA Claimplus, Inc. (‘‘ClaimPlus’’) and North Rock Insurance Company Limited (‘‘North Rock’’) (together, the ‘‘CNA Entities’’) a workers’ compensation insurance program to provide workers’ compensation insurance and claims services for TeamStaff’s professional employee operations nationwide (the ‘‘Program’’). The Program provided TeamStaff with workers’ compensation insurance coverage and claims services for all covered claims incurred during the period from January 22, 2001 to January 22, 2002 (the ‘‘Initial Policy Term’’). TeamStaff secured its obligations under the Program through its February 5, 2001 purchase of an Exposure Buyback Policy numbered EBP 006/001 from North Rock (the ‘‘Exposure Buyback Policy’’), also covering the period from January 22, 2001 to January 22, 2002. On or around January 22, 2002, TeamStaff purchased from TCIC and RSKCo an extension of the Program (the ‘‘Program Extension’’). The Program Extension provided TeamStaff with workers’ compensation insurance coverage and claims services for all covered claims incurred during the period from January 22, 2002 to March 22, 2002 (the ‘‘Extended Policy Term’’).
TeamStaff contested the CNA Entities’ accounting of the amount due and owing under the Program, the Program Extension and the Exposure Buyback Policy, and of the ultimate losses projected to be due from TeamStaff. TeamStaff additionally asserted that the CNA Entities committed certain errors in claims management which unjustifiably increased the losses incurred under the Program and the Program Extension, and inappropriately included certain non-recoverable items in the premium calculations for both the Program and the Program Extension, thereby entitling TeamStaff to a credit against the amounts ultimately due and owing under the Program, the Program Extension and the Exposure Buyback Policy. The CNA Entities maintained that there was due and owing from TeamStaff the sum of $1,824,975 in premiums, deductibles, claims services fees, losses and allocated
Table of Contentsloss adjustment expenses under the Program and the Program Extension, and $835,596 in premiums and losses under the Exposure Buyback Policy. The CNA Entities projected that TeamStaff would be liable for an additional $1,181,301 of losses under the Program and the Program Extension, and an additional $556,176 of losses under the Exposure Buyback Policy. The aggregate amounts totaled $4,398,048.
The settlement fully and completely resolved, without litigation, all of the issues addressed above on the material terms described below and in the Agreement, without admitting and, in fact, expressly denying, the allegations and claims each party could have made against the other. Under the settlement, TeamStaff agreed to pay the CNA Entities the sum of $2,050,000, plus interest at a rate of 6.0%, as follows: (1) $300,000 upon execution of the Agreement; (2) $250,000 every 90 days thereafter, plus interest on the unpaid sum at a rate of 6.0% from the date of the preceding payment, for a total of eight (8) payments. TeamStaff made the first $250,000 payment on or about January 20, 2006. The $300,000 payment made at execution was in settlement of the outstanding premiums, deductibles, claims services fees, losses and allocated loss adjustment expenses due and owing under the Program, the Program Extension and the Exposure Buyback Policy. The second through eighth payments were in settlement of liabilities that become due and/or may become due under the Program, the Program Extension and the Exposure Buyback Policy, including but not limited to, premiums, deductibles, claims services fees, losses and allocated loss adjustment expenses. It was also agreed that the payment schedule would be accelerated by and in the amount of any and all payments TeamStaff receives from Zurich North American in settlement of the receivable TeamStaff is carrying from its prior years’ workers’ compensation insurance programs, up and to the then outstanding balance due the CNA Entities.
As a result of the release of $2.25 million by Zurich on March 3, 2006, TeamStaff satisfied its remaining obligation to CNA under the settlement agreement by paying the remaining settlement amount of $1.5 million plus accrued interest in full.
Employee Pension Plan
Effective October 1, 2000, TeamStaff adopted a non-qualified Supplemental Retirement Plan (SERP) covering certain TeamStaff corporate officers. TeamStaff’s former President and Chief Executive Officer and its former Chief Financial Officer were the only SERP participants. No current employees are covered under the SERP. SERP participants also were provided with a split dollar life insurance policy, insuring the life of the participant. Each participant collaterally assigned his policy to TeamStaff to secure repayment of policy premiums. In connection with the change in their employment status, TeamStaff engaged in negotiations with its former President and Chief Executive Officer and the former Chief Financial Officer regarding the payment of certain severance benefits and the satisfaction of TeamStaff’s obligations to each of them under the SERP and the split dollar life insurance arrangements.
On December 31, 2003, TeamStaff executed an agreement with its former President and Chief Executive Officer pursuant to which TeamStaff agreed to, among other things, release the collateral assignment of the split dollar life insurance policy as of December 31, 2003 and to accelerate the payment of certain agreed upon payments under the SERP in complete satisfaction of TeamStaff’s obligations under the SERP.
TeamStaff entered into a similar agreement with its former Chief Financial Officer effective as of December 30, 2003 in complete satisfaction of TeamStaff’s obligations under the SERP. That agreement also provided for the payment of severance and other benefits over time in complete satisfaction of TeamStaff’s obligations to its former Chief Financial Officer under his severance agreement effective May 22, 2002.
Cash payments aggregating $0.3 million have been made to the former President and Chief Executive Officer and the former Chief Financial Officer during the fiscal year ended September 30, 2006.
Income Taxes
TeamStaff accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109,
‘‘Accounting“Accounting for Income Taxes.
’’” Under SFAS No. 109, deferred tax assets and liabilities are
Table of Contentsdetermined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized. SFAS No. 109 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax asset will not be realized.
At
In the fourth quarter of the year ended September 30, 2006, after an assessment of all available evidence (including historical and forecasted operating results), management concluded that realization of the Company’s net operating loss carryforwards (which includes those amounts acquired in previous years’ business combinations, collectively “NOLs”), tax credits and other deferred tax assets, could not be considered more likely than not. Accordingly, for the year ended September 30, 2008 and 2007, the Company provideddid not record a tax benefit for net operating losses. Based on similar assessments, the Company increased the valuation allowance established on deferred tax assets by approximately $0.6 million and $0.8 million in 2008 and 2007, respectively. The primary reason for the NOL in 2008 relates to the realized tax loss (unrealized in 2007) on the sale of the discontinued operation’s assets (see Note 4). The increase in the valuation allowance of approximately $16.9 million. In assessing the need for a valuation allowance, the Company historically has considered all positive and negative evidence, including scheduled reversals of deferred tax liabilities, prudent and feasible tax planning strategies and recent financial performance. The Company determined that negative evidence, including historic and current taxable losses, as well as uncertainties$0.6 million related to the abilitynet operating loss was offset by a decrease of approximately $1.1 million, representing adjustments to utilize certain Federalstate NOLs and state net loss carryforwards, outweighed any objectively verifiable positive factors, andother fully reserved deferred tax assets. Based on an assessment performed as such, concluded thatof September 30, 2008, the Company has maintained a full valuation allowance was necessary. Theagainst remaining NOLs and other deferred tax assets; as the realization of such amounts, at that date, could not be considered more likely than not. In prospective periods, there may be reductions to the valuation allowance to the extent that the Company is providing a 100% valuation allowanceconcludes that it is more likely thanthat not that it will not be able to realize the full benefitall or a portion of the deferred tax asset. assets can be utilized (subject to annual limitations and prior to the expiration of such NOLs), to offset future periods’ taxable income.
The establishmentCompany recorded tax expense of $60,000 related to certain estimated state taxes due. The income tax benefit of $123,000 for 2007 is attributable to an overaccrual of estimated state taxes at September 30, 2006 against amounts computed in the deferredpreparation of various income tax asset allowance does not precludereturns.
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At September 30, 2008 the Company
from reversing any or allhad net operating losses of
the allowanceapproximately $28.3 million, $14.4 million and $8.5 million for U.S, New Jersey and other states’ tax return purposes, respectively, and unutilized tax credits approximate $1.1 million. As a result of previous business combinations and changes in
future periods if the Company believes the positive evidenceits ownership, there is
sufficient enough to utilize the deferred tax asset, nor does it limit the ability to utilize losses for tax purposes,a substantial amount of U.S. NOLs that are subject to
loss carry forwardannual limitations
on utilization. The U.S. NOLs begin to expire in 2021 and
periods permitted by law.continue to expire through 2028.
Allowance for doubtful accountsDoubtful Accounts TeamStaff maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to pay. However, if the financial condition of TeamStaff’s customers were to deteriorate rapidly, resulting in nonpayment, TeamStaff’s accounts receivable balances could grow and TeamStaff could be required to provide for additional allowances, which would decrease net income in the period that such determination was made. For example, TeamStaff currently maintains an allowance of
approximately .5%less than 1% of billed accounts receivable due to the fact that a significant portion of accounts
receivable.receivable are from the Federal Government which historically have had little, if any, write-offs for non-payment. If, for example, the allowance grew to 2% of
September 30, 2008 accounts receivable,
netpre-tax income would have been reduced by
$131,000.$256,000.
Fiscal Year 2006Overview
Business description
TeamStaff provides specialized medical, nursing, logistics and administrative staffing services by supplying allied healthcare and nursing professionals, logistics and administrative personnel through two staffing subsidiaries. The Company’s TeamStaff Rx subsidiary operates throughout the United States and specializes in providing travel allied medical employees and nurses (typically on a thirteen-week assignment basis), as
Compared to Fiscal Year 2005-Continuing OperationsTeamStaff’s revenues for the fiscal years ended September 30, 2006well as permanent placement services. Allied medical staff includes MRI technicians, mammographers, physical therapists, occupational therapists, dosimetrists, ultrasound staff and 2005 were $75.0 million and $51.2 million, respectively, which represents an increase of $23.8 million, or 46.5% over the prior fiscal year. Revenues for fiscal year 2006 and 2005 include $43.8 million and $13.0 million, respectively, related to the acquisition of RS Staffing Services, a Monroe, Georgia-based provider ofphysicists. TeamStaff Rx places temporary employees at approximately 225 client facilities. The Company’s TeamStaff GS subsidiary specializes in providing medical and office administration/technical professionals effective as of June 4, 2005 (See Note 3 of Notes to Consolidated Financial Statements.) This acquisition helped offset a decrease of $6.7 million in revenues inthrough FSS contracts with both the travel alliedGSA and nursing portion of our staffing services division from fiscal year 2005 to fiscal year 2006. DVA. TeamStaff GS places temporary employees at approximately 40 facilities.
The
decrease was driven by continued weak demand for radiological technologists in our allied division and the largest nurse per diem client joining an association thus reducing our billing rates. The Company’s travel allied and nursing divisions continued to under perform the market in fiscal 2006. During fiscal 2006, the Company
ledhas implemented several initiatives to position
these divisionsthe staffing services subsidiaries for
growth in fiscal 2007. Actionsgrowth. Sales initiatives include
expandingassessing, restructuring and adding to its sales force and recruiting efforts
and continued management of a pricing and gross margin improvement plan. In September 2008, the Company hired Dale West as President of its TeamStaff Rx subsidiary. Ms. West was former President of RNNetwork as well as an owner and original founder of RNNetwork. Ms. West grew RN Network from a start-up to approximately $100 million in annual revenue over a five year period. In February 2008, TeamStaff Rx received Joint Commission on Accreditation of Healthcare Organizations (“JCAHO”) certification which serves to validate the Company’s hiring practices and our commitment to providing quality healthcare services. The Company believes this Gold Seal is critical in maximizing additional recruiting and sales opportunities. During the fiscal year, efforts to build marketing presence included the launching of new TeamStaff Rx, TeamStaff GS and corporate websites, implementing a print advertisement campaign, and revising our strategic marketing communications plan in an effort to attract allied medical and nurse travelers. During the year, we also added several marketing events to our tradeshow calendar in order to increase our brand recognition. This added exposure is allowing us to introduce our suite of offerings to an expanded market. We continue to focus on our sales and marketing efforts throughout our operating divisions in order to increase our contact with current and prospective clients. We initiated a corporate branding campaign which will promote consistency and brand recognition as well as increase TeamStaff’s visibility in the
allied segment into more active modalities suchmarketplace. TeamStaff GS, formerly known as
physical and respiratory therapy and sales personnel changes including changes at both the TeamStaff Rx and Nursing Innovations business leader level. Subsequent to the September 30, 2006 balance sheet date, the Company consolidated the Nursing Innovations travel platform into TeamStaff Rx’s Clearwater, Florida location.Longer term, we continue to believe the demand for temporary medical personnel will increase. Key drivers in our major business segments include an aging population, an improving employment environment and growth in hospital admissions. We believe demand will also increase as more states introduce legislation for mandatory minimum nurse to patient ratios and overtime limitations. The acquisition of Nursing Innovations provides TeamStaff with the opportunity to benefit from these industry changes that, we believe, impact our temporary nurse staffing business most significantly. Our
Table of Contentsacquisition of RS Staffing completed in early June 2005Services, gives us a strong presence in the government sector and provides us with an opportunity to bid on awards for large multi-year contracts with solidfavorable operating margins. WeIn February 2008 we announced the renaming of RS Staffing Services to TeamStaff Government Solutions. The name change reflects the subsidiary’s expanding service offerings in providing staffing for government logistical support positions.
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Sale of Nursing Innovations
On January 31, 2008, we completed the sale of our per diem nurse staffing business located in Memphis, Tennessee and operating under the name of Nursing Innovations, to Temps, Inc. Under the terms of the definitive asset purchase agreement, effective as of January 27, 2008, we received a cash purchase price of $447,000 for the acquired business and related assets, of which $357,000 was paid at closing and $90,000 was deposited in a required escrow account for six months. Payment of the escrow to TeamStaff was subject to the downward adjustment for the amount of pre-closing accounts receivables uncollected by the purchaser during such six-month period. Approximately $89,000 of escrow was released to the Company during the fourth quarter of fiscal 2008. As described in greater detail in Note 4 to our consolidated financial statements, the results of operations, cash flows and related assets and liabilities of our per diem nurse staffing business was reclassified in the accompanying consolidated financial statements from those of our continuing businesses to discontinued operations.
Reverse Split
On April 17, 2008, the Company filed an amendment to its Amended and Restated Certificate of Incorporation in order to effect a one-for-four reverse split of the Company’s common stock. The reverse split was approved on April 17, 2008 at the Company’s annual meeting of shareholders and became effective on April 21, 2008, at which time the Company’s common stock began trading on the Nasdaq Global Market on a split-adjusted basis. The Company did not issue any fractional shares resulting from the reverse split and will pay holders the cash value of fractional shares that would have otherwise been issued. As a result of the reverse stock split, each four shares of Common Stock was combined and reclassified into one share of common stock. All references to common stock, options, share based arrangements, exercise price, fair values and related data within this Annual Report on Form 10-K have been retroactively restated so as to incorporate the effect of this reverse stock split. On May 12, 2008, the Company announced that it was notified by the Nasdaq Stock Market that, as a result of the Company’s common stock closing at $1.00 per share or more for a minimum of 10 consecutive trading days, it has regained compliance with the minimum bid price requirement for continued listing on the Nasdaq Global Market.
Recent Business Trends
TeamStaff Rx
Demand for travelers has softened due to hospital budget constraints and continued low patient census. On the supply side, during a period of economic instability, travelers prefer the security of a permanent position. Additionally, a poor economic climate has had an adverse impact on hospital staff wanting to leave their position and take a travel assignment with us. In an effort to attract travelers, the Company recently enhanced its benefits package and traveler loyalty program.
Longer term, we continue to focusbelieve the demand for temporary medical personnel will rebound as a result of key drivers in our business segment such as the declining health of an aging population, advances in medical technology, hospital employee turnover, growth in hospital admissions and regulatory legislation.
TeamStaff Government Solutions
TeamStaff GS has achieved positive results in expanding its penetration of DVA facilities through vertical expansion of previously awarded contracts. The Company is expanding its reach within the government sector beyond VA opportunities by bidding on Department of Defense (“DOD”) staffing contracts afforded to large businesses and GSA’se-Buyportal, an electronic Request for Quote (RFQ) / Request for Proposal (RFP) system designed to allow Federal buyers to request information, find sources, and prepare RFQs/RFPs, online, for various services offered through GSA’s Multiple Award Schedule. Additionally, TeamStaff GS is evaluating opportunities to satisfy the staffing needs of other government agencies in addition to the DVA and DOD as a means of horizontal expansion of its client base.
We believe demand will remain strong as the government looks to maintain or improve social services provided to our returning veterans. In addition, we believe the government staffing business is more stable in an economic downturn due to the longer term duration of its contracts.
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Results of Operations
Fiscal Year 2008 as Compared to Fiscal Year 2007
The following table summarizes, for the periods indicated, selected consolidated statements of operations data expressed as a percentage of revenue:
| | | | | | | | |
| | Fiscal Year | | | Fiscal Year | |
| | Ended | | | Ended | |
| | September 30, | | | September 30, | |
| | 2008 | | | 2007 | |
|
Condensed Consolidated Statement of Operations: | | | | | | | | |
|
Revenue | | | 100.0 | % | | | 100.0 | % |
Direct Expenses | | | 83.5 | % | | | 83.5 | % |
| | | | | | |
Gross Profit | | | 16.5 | % | | | 16.5 | % |
Selling, general and administrative | | | 15.0 | % | | | 19.0 | % |
Depreciation and amortization expense | | | 0.4 | % | | | 0.5 | % |
| | | | | | |
Income (loss) from operations | | | 1.0 | % | | | -3.0 | % |
Other income (expense) | | | 0.7 | % | | | -2.2 | % |
| | | | | | |
Income (loss) from continuing operations before taxes | | | 1.7 | % | | | -5.2 | % |
Income tax (expense) benefit | | | -0.1 | % | | | 0.2 | % |
| | | | | | |
Income (loss) from continuing operations | | | 1.6 | % | | | -5.0 | % |
(Loss) from discontinued operations | | | -0.1 | % | | | -2.0 | % |
| | | | | | |
Net income (loss) | | | 1.6 | % | | | -7.0 | % |
| | | | | | |
TeamStaff’s revenues for the fiscal years ended September 30, 2008 and 2007 were $73.3 million and $66.9 million, respectively, which represents an increase of $6.4 million or 9.6% over the prior fiscal year. Revenue for the fiscal year 2008 and 2007 include $59.2 million and $44.9 million, respectively, related to TeamStaff GS. This subsidiary’s revenue helped to offset a decrease of $10.3 million in revenues in the TeamStaff Rx travel allied and travel nursing subsidiary from fiscal year 2007 to fiscal year 2008. The decrease in revenue is in part due to adverse economic conditions resulting in lower demand for certain allied services and the continued shortage of qualified nursing professionals. The Company anticipates that the management changes made in fiscal 2007 and 2008, in addition to a redirected sales and marketing efforts throughoutfocus, will help increase the divisionsclient base of and attract new travelers to TeamStaff Rx.
TeamStaff GS is seeking approval from the Federal government for gross profit on retroactive billing rate increases associated with certain government contracts at which it has employees staffed on contract assignments. These adjustments are due to changes in the contracted wage determination rates for these contract employees. A wage determination is the listing of wage rates and fringe benefit rates for each classification of laborers whom the Administrator of the Wage and Hour Division of the U.S. Department of Labor (“DOL”) has determined to be prevailing in a given locality. Contractors performing services for the Federal government under certain contracts are required to pay service employees in various classes no less than the wage rates and fringe benefits found prevailing in these localities. An audit by the DOL at one of the facilities revealed that notification, as required by contract, was not provided to TeamStaff GS in order to
increaseeffectuate the wage increases in a timely manner. Wages for contract employees currently on assignment have been adjusted prospectively to the prevailing rate and hourly billing rates to the DVA have been increased accordingly. During the year ended September 30, 2008, TeamStaff recognized nonrecurring revenues of $10.8 million and direct costs of $10.1 million. At September 30, 2008, the amount of the remaining accounts receivable with the DVA approximates $9.3 million. TeamStaff has recognized revenue based on amounts that are contractually due under its arrangements with the Federal agencies and is currently in the process of negotiating a final amount related to gross profit on these adjustments. As such, there may be additional revenues recognized in future periods once the approval for such additional amounts are obtained. The range of revenue (and gross profit) are estimated to be between $0.4 million and $0.7 million. At present, the Company expects to collect such amounts in the fiscal quarter ending March 31, 2009. Because these amounts are subject to government review, no assurances can be given that we will receive any additional billings from our
contact with current and prospective clients.government contracts or that if additional amounts are received, that the amount will be within the range specified above.
Direct expenses for the fiscal years ended September 30, 20062008 and 20052007 were $62.5$61.2 million and $42.1$55.9 million, respectively which represents an increase of $20.4$5.3 million or 48.5%9.6%. This increase is a directthe result of increasedhigher revenues. As a percentage of revenue, direct expenses were 83.5% for each of the fiscal years ended September 30, 20062008 and 2005 were 83.3% and 82.2%, respectively. This increase is the result of a higher volume of teaming partner (subcontractor) costs due to the inclusion of RS Staffing for the full fiscal year 2006. Teaming is a business practice expected by government entities who prefer their suppliers to provide more of a master vendor service where the supplier looks to outside sources when needed to fill open staffing positions.2007.
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Gross profits for the fiscal years ended September 30,
20062008 and
20052007 were
$12.5$12.1 million and
$9.1 million, respectively, which represents an increase of $3.4 million, or 37.1%. This increase is attributable to the growth by acquisition of our staffing business. Gross profits, as a percentage of revenue, decreased to 16.7% from 17.8%, for the fiscal years ended September 30, 2006 and 2005, respectively. This decrease is primarily due to the inclusion of RS Staffing for the full fiscal year 2006 and the lower gross profit associated with staffing teaming partners.Selling, general and administrative (‘‘SG&A’’) expenses for the fiscal years ended September 30, 2006 and 2005 were $14.0 million and $12.9$11.0 million, respectively, which represents an increase of $1.1 million, or 8.5%9.3%. IncludedThe improvement in fiscal year 2006gross margin is $3.0 milliona direct result of SG&A expenses related to RS Staffing. Included in fiscal year 2005 is $0.5 millionincreased pricing on contracts and direct cost control initiatives as well as reduced use of workers’ compensation receivable write-offs related to adverse claims development for the period April 1, 2002 through November 17, 2003 (the date of sale of the discontinued PEO operation), $0.2 from certain loan forgiveness related to TeamStaff’s acquisition of BrightLane in 2001 and $1.0 million of SG&A expenses related to RS Staffing from the date of acquisition in June 2005 to the end of the fiscal year September 30, 2005. After adjusting for SG&A expenses in fiscal 2005 and 2006 related to RS Staffing and the write-offs related to the worker’s compensation receivable write-off and TeamStaff’s acquisition of BrightLane in 2001, expenses for the fiscal year decreased 2.6% from 2005 to 2006. SG&A expenses,TeamStaff GS teaming partners (subcontractors). Gross profit, as a percentage of revenue, were 18.7%was 16.5% for each of the fiscal years ended September 30, 2008 and 25.3%,2007. Included in fiscal 2008 is gross profit of approximately $0.7 million related to the retroactive billings. Adjusted for the retroactive billings, TeamStaff’s gross profit in fiscal 2008 was 18.2%.
Selling, general and administrative (“SG&A”) expenses for the fiscal years ended September 30,
20062008 and
2005, respectively.2007 were $11.0 million and 12.7 million, respectively, which represents a decrease of $1.7 million, or 13.3%. The Company continues with its cost saving initiatives, which have resulted in reduced headcount and G&A costs. These cost savings have helped to offset an increase in new business expense of $0.4 million from fiscal 2007 to 2008. The increased spending is related to increased sales staff and marketing efforts. The Company seeks continued elimination of overhead costs deemed to be non-essential to growth or infrastructure.
Depreciation and amortization expense was approximately $311,000 and $349,000 for the fiscal years ended September 30, 20062008 and 20052007, respectively.
Income from operations for the fiscal year ended September 30, 2008 was
approximately $381,000 and $422,000, respectively. This decrease is due$0.7 million as compared to a
reduction in depreciation expense caused by several asset groups becoming fully depreciated duringloss from operations for the fiscal
year.year ended September 30, 2007 of $2.0 million. This represents an improvement of $2.7 million in results from operations from fiscal 2007 to 2008.
Other income, which is comprised
primarily of
late fee income in the TeamStaff Rx subsidiary and interest income,
was approximately $188,000 and
late fee income,$219,000 for the fiscal years ended September 30,
20062008 and
2005 was approximately $236,0002007, respectively. In addition, based on an assessment of periods settled and
$228,000, respectively, representing an increasethe status of
$8,000. This is primarily a result of increased interest earned onopen periods under review by the
proceeds ofIRS regarding notices the
sale of DSI Payroll Services offsetCompany received related predominantly to its former PEO operations, the Company reduced its estimated liability for payroll tax contingencies by
decreased late fee income due to a reduction in accounts receivable in the allied healthcare division.$0.7 million and recorded such adjustment as other income.
Interest expense for the fiscal years ended September 30, 20062008 and 20052007 was approximately $539,000$159,000 and $211,000,$197,000, respectively, representing an increasea decrease of $328,000.$38,000. This increasedecrease is primarily a result ofdue to reduced interest expenserates related to borrowing on the revolving credit facility effective asline of June 8, 2005, as well as interestcredit.
The Company recorded other expense
fromof $0.2 million and $1.5 million, for the
notes payablefiscal years ended September 30, 2008 and 2007, respectively representing a decrease of $1.3 million. This expense is related to
legal representation and investigation costs incurred in connection with the
acquisitionFederal Grand Jury subpoena issued to our subsidiary formerly known as RS Staffing Services on April 17, 2007. The subpoena requested production of
certain documents dating back to 1997. The Company acquired RS Staffing effective as of June
4, 2005.
Income tax expense from continuing operations for These expenses are classified as non-operating expenses because the subpoena relates to activity prior to the acquisition.
Beginning in fiscal
year ended September 30, 2006,
was $16.0 million. As a component of this tax expense,the Company provided a
100% deferred tax valuation allowance
because it believes that it cannot be considered more likely than not that it will be able to realize the full benefit of
approximately $16.9 million. In assessing the
need for a valuation allowance, the Company historically has considered all positive and negative evidence, including scheduled reversals of deferred tax
liabilities, prudent and feasible tax planning strategies and recent financial performance.asset. The Company determined that negative evidence, including historic and current taxable losses, as well as uncertainties related to the ability to utilize certain Federal and state net loss carry forwards, outweighed any objectively verifiable positive factors, and as such, concluded that a
Table of Contentsvaluation allowance was necessary. The Company is providingIn assessing the need for a 100% valuation allowance, that it is more likely than not that it will not be able to realize the full benefitCompany historically has considered all positive and negative evidence, including scheduled reversals of the deferred tax asset.liabilities, prudent and feasible tax planning strategies and recent financial performance. For all of fiscal 2008, the Company did not record a Federal tax provision or benefit but recorded tax expense of $60,000 related to certain estimated states’ taxes due. Income tax benefit from continuing operations for fiscal year ended September 30, 20052007 was $1.6 million.
Loss$0.1 million as a result of adjustments in amounts accrued for tax provisions or settlements for fiscal year 2006 when the final Federal and state returns were prepared and filed.
Income from continuing operations for the fiscal year ended September 30,
20062008 was
$18.2$1.2 million, or
$(0.95)$0.25 per
fullybasic and diluted share, as compared to
a loss from continuing operations
of $3.4 million, or ($0.70) per basic and diluted share, for the fiscal year ended September 30,
2005 of $2.6 million, or $(0.14) per fully diluted share.Income2007.
Loss from discontinued operations, net of tax, for the fiscal year ended September 30,
20062008 and 2007 was
$5.0$0.04 million, or
$0.26($0.01) per
fullybasic and diluted share,
as compared to income from discontinued operations, net of tax, for the fiscal year ended September 30, 2005 of $0.1 million, or $0.0 per fully diluted share. Income from operations from the discontinued business unit, net of tax, for the fiscal years ended September 30, 2006 and
2005 was $0.4 million and $0.1 million, respectively. In fiscal 2006, this income includes income from operations, net of tax, of the discontinued DSI Payroll Services business unit of $0.8 million offset by loss from operations of the discontinued PEO business unit, net of tax, of $0.4 million, which primarily consists of legal fees and settlement expenses related to the settlement of the Atomic Fusion suit. Income from disposal, net of tax, of $4.6 million is related to the net gain on the sale of the DSI Payroll Services division (See Note 4 of Notes to Consolidated Financial Statements). There was virtually no activity from disposal of the discontinued business unit for fiscal year 2005.Net loss for the fiscal year ended September 30, 2006 was $13.2 million, or ($0.69) per fully diluted share, as compared to a net loss of $2.5 million, or $(0.14) per fully diluted share, for the fiscal year ended September 30, 2005.
Fiscal Year 2005 as Compared to Fiscal Year 2004-Continuing Operations
TeamStaff’s revenues for the fiscal years ended September 30, 2005 and 2004 were $51.2 million and $32.9 million, respectively, which represents an increase of $18.3 million, or 55.8% over the prior fiscal year. All continuing operations revenues were derived from the staffing services segment. Revenues for fiscal 2005 include $12.8 million related to the acquisition of Nursing Innovations, a Memphis, Tennessee-based provider of travel and per diem nurses effective as of November 14, 2004 (See Note 3 of Notes to Consolidated Financial Statements) and $13.0 million related to the acquisition of RS Staffing Services, a Monroe, Georgia-based provider of medical and office administration/technical professionals effective as of June 4, 2005 (See Note 3 of Notes to Consolidated Financial Statements.) These acquisitions helped offset a decrease in the revenues of the allied healthcare portion of our Staffing Services division for fiscal 2005 of $7.4 million.
We believe that during the first half of fiscal 2005, hospitals continued to focus on cost efficiencies by placing greater reliance on existing full time staff. This, in turn, led to less demand for temporary health care professionals. We also believe that some healthcare providers who once traveled for temporary assignments took full time jobs, specifically because they viewed them as more stable or secure. This trend also provided facilities with a greater pool of full time staff on which to rely. We also believe that the continued lack of growth in hospital admissions nationwide may have had an adverse impact on demand for our temporary medical staffing services for this period.
We did see increases in demand as well as increases in applicants entering the field for traveling nurses during the second half of fiscal 2005. For our Nursing Innovations division, this translated into an 11 percent sequential quarterly increase in revenues for the last two quarters of fiscal 2005, from $3.6 million for quarter ended June 30, 2005 to $4.0 million for quarter ended September 30, 2005. Recovery in our allied segment still continued to be slower than expected, however, as hospitals sought to contain costs by limiting temporary staff in higher health care professional payroll areas. For our allied health division, this resulted in a 2.8% sequential quarterly increase in billable hours and a 3.7% sequential quarterly increase in revenues, not including permanent placement revenues, for the last two quarters of fiscal 2005. We believe that since the business fundamentals of allied health are similar to those in the nursing segment, that the allied sector will eventually experience a sustained rebound.
Longer term, we believe the demand for temporary medical personnel will increase. Key drivers in our major business segments include an aging population, an improving employment environment and
Table of Contentsgrowth in hospital admissions. We believe demand will also increase as more states introduce legislation for mandatory minimum nurse to patient ratios and overtime limitations. The acquisition of Nursing Innovations provides TeamStaff with the opportunity to benefit from these industry changes that, we believe, impact our temporary nurse staffing business most significantly. Our acquisition of RS Staffing completed in early June 2005 gives us a strong presence in the government sector and provides us with an opportunity to cross sell to our nursing and allied divisions. We continue to expand our sales and marketing efforts throughout the divisions in order to increase our contact with current and prospective clients.
Direct expenses for the fiscal years ended September 30, 2005 and 2004 were $42.1 million and $26.9 million, respectively, which represents an increase of $15.2 million, or 56.4%. This increase is a direct result of increased revenues. As a percentage of revenue, direct expenses for the fiscal years ended September 30, 2005 and 2004 were 82.2% and 81.8%, respectively.
Gross profits for the fiscal years ended September 30, 2005 and 2004 were $9.1 million and $6.0 million, respectively, which represents an increase of $3.1 million, or 52.7%. This increase is attributable to the growth by acquisition of our staffing business as well as more prudent expense management and selected price increases in the Medical Staffing division. Gross profits, as a percentage of revenue, decreased to 17.8% from 18.2%, for the fiscal years ended September 30, 2005 and 2004, respectively. This decrease is primarily due to the inclusion of RS Staffing in the last four months of fiscal 2005 and costs related to staffing teaming partners.
Selling, general and administrative (‘‘SG&A’’) expenses for the fiscal years ended September 30, 2005 and 2004 were $12.9 million and $10.3 million, respectively, which represents an increase of $2.6 million, or 26.2%. This increase includes $0.5 million of workers’ compensation receivable write-offs related to adverse claims development for the period April 1, 2002 through November 17, 2003 (the date of sale of the discontinued PEO operation) and $0.2 from certain loan forgiveness related to TeamStaff’s acquisition of BrightLane in 2001. SG&A expenses related to Nursing Innovations, since the date of acquisition effective November 14, 2004, were $1.8 million. SG&A expenses related to RS Staffing, since the date of acquisition effective June 4, 2005 were $1.0 million. After adjusting for SG&A expenses in fiscal 2005 related to Nursing Innovations and RS Staffing and the write-offs related to the worker’s compensation receivable write-off and TeamStaff’s acquisition of BrightLane in 2001, expenses for the fiscal year decreased 8% from 2004 to 2005. SG&A expenses, as a percentage of revenue, were 25.3% and 31.2%, for the fiscal years ended September 30, 2005 and 2004, respectively.
Depreciation and amortization for the fiscal years ended September 30, 2005 and 2004 was $422,000 and $342,000, respectively. This increase is due to additional depreciation related to capital leases as well as fixed assets acquired as part of the acquisitions of Nursing Innovations and RS Staffing.
Other income, which is comprised of interest income and late fee income, for the fiscal years ended September 30, 2005 and 2004 was $228,000 and $270,000, respectively, representing a decrease of $42,000.
Interest expense for the fiscal years ended September 30, 2005 and 2004 was $211,000 and $81,000, respectively, representing an increase of $130,000. This increase is primarily a result of interest expense related to the revolving credit facility effective as of June 8, 2005, as well as interest expense from the notes payable related to the acquisition of RS Staffing effective as of June 4, 2005.
Income tax benefit from continuing operations for fiscal years ended September 30, 2005 and 2004 was $1.6 million and $1.7 million, respectively. These tax benefits are a result of losses from operations. Management believes that due to the acquisitions of RS Staffing and Nursing Innovations, two historically profitable companies, coupled with an improving business climate for temporary staffing, the Company will be able to utilize the recorded deferred tax asset.
Loss from continuing operations for the fiscal year ended September 30, 2005 was $2.6 million, or $(0.14) per fully diluted share, as compared to loss from continuing operations for the fiscal year ended September 30, 2004 of $2.7 million, or $(0.18) per fully diluted share.
Income from discontinued operations, net of tax, for the fiscal year ended September 30, 2005 was $127,000, or $0.00 per fully diluted share, as compared to loss from discontinued operations, net of
Table of Contentstax, for the fiscal year ended September 30, 2004 of $1.3 million, or $(0.08)($0.27) per fullybasic and diluted share. Income from operations from the discontinued business unit, net of tax, for the fiscal year ended September 30, 2005 was $126,000.share, respectively. Loss from operations from the discontinued business unit, net of tax, for the fiscal year ended September 30, 20042007, was $0.4$1.6 million. There was virtually no activityThis includes income from disposaloperations, net of tax, of the discontinued per diem business unit for fiscal year 2005. Loss on disposal, net of tax,$0.2 million, offset by the write-down to fair value of per diem intangible assets of $1.6 million.
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Net income for the fiscal year ended September 30,
2004,2008 was
$0.9 million. In fiscal 2005, the loss was due to previously unbilled legal fees, non-cancelable software licenses related to the PEO discontinued business unit and additional reserves posted for a settlement with CNA related to PEO workers’ compensation for periods prior to March 31, 2002, offset by income from the DSI Payroll Services discontinued business unit. In the first nine months of fiscal 2004, TeamStaff generated revenue from the PEO discontinued business unit for only the first six weeks, while certain costs associated with the operation of that business unit continued throughout the period. For fiscal 2004, the loss is attributable to the write-down of goodwill and fixed assets, salary, severance and stay bonus payouts to affected employees, accruals for losses from lease obligations in offices no longer used by TeamStaff’s continuing operations net of estimated sublease of unoccupied office space, investment banking fees and other expenses required to dispose of the PEO discontinued business unit, offset by income from the DSI Payroll Services discontinued business unitNet loss for the fiscal year ended September 30, 2005 was $2.5$1.1 million, or ($0.14)$0.24 per fullybasic and diluted share, as compared to a net loss of $4.1$4.7 million, or $(0.26)$(0.97) per fullybasic and diluted share, for the fiscal year ended September 30, 2004.
2007. This represents an improvement of $5.8 million in net income from fiscal 2007 to fiscal 2008.
Liquidity and Capital ResourcesResources; Commitments Our principal sources of cash to fund our working capital needs are cash generated from operating activities and borrowings under our revolving credit facility. Net cash provided by operating activities for the fiscal year ended September 30, 20062008 was $8.7$4.7 million. This increase in net cash was primarily driven by a decrease in days sales outstanding (“DSO”) from approximately 40 days to 17 days during fiscal 2008 due to an enhanced and more efficient payment processing system implemented by the government. This decrease in DSOs increased our cash position by approximately $3 million. Also contributing to net cash provided by operating activities is income from continuing operations of $1.2 million comparedand $0.35 million in cash received from Zurich related to the reduction in collateral requirements on outstanding workers’ compensation claims. Net cash used in operating activities of $2.2 million for the fiscal year ended September 30, 2005. On March 3, 2006, Zurich reduced the collateral requirements on outstanding workers’ compensation claims and released $2.25 million in trust account funds back to TeamStaff. As a result of this, TeamStaff satisfied its remaining obligation to CNA under the settlement agreement by paying the remaining settlement amount of $1.5 million plus accrued interest in full. On May 31, 2006, the Company sold substantially all of the assets of its DSI Payroll Services division to CompuPay, Inc. for $9.0 million in cash, $0.25 million of which has been placed in escrow for potential post-closing contingencies. On November 30, 2006, CompuPay released $125,000 of the escrow to TeamStaff and is scheduled to release the remaining $125,000 on May 31, 2007. There were also working capital requirements and further determinations that resulted in a purchase price adjustment of $248,677 on September 11, 2006.2007 was $1.4 million. Losses from continuing operations contributed toof $3.4 million were the other usesprimary use of cash during the fiscal year ended September 30, 2006. Use2007. This use was offset by $1.2 million in cash received from Zurich related to the reduction in collateral requirements on outstanding workers’ compensation claims and $0.25 million in escrow release related to the sale of the discontinued DSI business unit.
We continue to have relatively low capital investment requirements. Net cash
inprovided by investing activities for the fiscal year ended September 30,
2005 includes increased accounts receivable2008 was $0.1 million as a result of
$1.8 million primarily due toproceeds from the
operationssale of
Nursing Innovations subsequent to its acquisitionour Per Diem division, offset in
November 2004part by cash used for the purchases of furniture, technology equipment and
RS Staffing subsequent to its acquisition in June 2005, increased accrued payroll and other accrued expenses of $1.2 million and losses in continuing operations, offset by a decrease of $1.8 million in restricted cashsoftware related to the
releaserelocation of
the letter of credit requirement from Zurich for TeamStaff’s workers’ compensation policy.TeamStaff GS administrative offices to Loganville, Georgia. Cash used in investing activities for the fiscal year ended September 30, 20062007 was $1.8$0.2 million, compared to $5.0 million for the fiscal year ended September 30, 2005. Use of cash in fiscal 2006 was primarily for the one-year earn out of $2.0 million to Roger Staggs and Barry Durham, former owners of RS Staffing Services as part of the acquisition. Use of cash in fiscal 2005 was primarily for the purchase of certaintechnology equipment, expenses related to the implementation of the assets of Nursing Innovations for $1.9 million including acquisition expensesa new front office computer system and the capital stock purchaseredesign of RS Staffing Services for $3.25 million plus acquisition expenses, less acquiredour traveler website.
Net cash
of $0.7 million.Cash used in financing activities for the fiscal year ended September 30, 20062008 was $6.0$0.2 million, comparedprimarily as a result of repayments on capital lease obligations and fees related to cashthe new credit facility with Sovereign Business Capital. Cash provided by financing activities of $5.4 million for the fiscal year ended September 30, 2005. Use2007 was negligible.
Loan Facilities
Prior Facility
In connection with the acquisition of
cash for fiscal 2006 includes payment of $1.5 million plus accrued interest
Table of Contentsof $150,000 to the former owners ofTeamStaff GS, formerly known as RS Staffing Services, in satisfaction of a note payable as part of the acquisition and payment of the outstanding balance on the revolving line of creditTeamStaff secured financing with PNC Bank in the amountform of $4.0 million.
Effective June 8, 2005, TeamStaff, Inc. entered into a $7.0 million revolving credit facility (“PNC Credit Facility”). The PNC Credit Facility was provided by PNC Bank effective on June 8, 2005 to (i) provide for the acquisition of RS Staffing;Staffing Services; (ii) refinance an outstanding senior loan facility; and (iii) provide ongoing working capital. Effective February 13, 2006, TeamStaff entered into an amendment to the revolving credit note, increasing the revolving credit facilityPNC Credit Facility to $8.0 million. Revolving credit advances bearunder the PNC Credit Facility accrued interest at either a PNC Bank internal rate that approximates the Prime Rate plus 25 basis points or LIBOR plus 275 basis points, whichever is higher. The facility hasPNC Credit Facility had a three-year life and containscontained term and line of credit borrowing options. The facility isPNC Credit Facility was subject to certain restrictive covenants. For the period ended September 30, 2006, PNC Bank amended the covenants to replace the debt serviceincluding a fixed charge coverage ratio with a minimum combinedif the Company failed to maintain invested cash and line availability requirement. For the fiscal year ended September 30, 2006, TeamStaffminimum requirements. The PNC Credit Facility was in compliance with all loan covenants. The facility is subject to acceleration upon non-payment or various other standard default clauses. In addition, the Company granted PNC Bank a lien and security interest on all of its assets.
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New Facility
On March 28, 2008, TeamStaff and its wholly-owned subsidiaries, TeamStaff Rx and TeamStaff GS entered into an Amended and Restated Loan and Security Agreement dated as of March 28, 2008 (the “Loan Agreement”) with Business Alliance Capital Company (“BACC”), a division of Sovereign Bank (the “Lender”). Pursuant to the Loan Agreement, the Lender (i) acquired by assignment from PNC all right, title and interest of PNC under the PNC Credit Facility, the PNC note and related loan documentation, and (ii) restructured the PNC Credit Facility into a $3,000,000 three (3) year revolving credit facility. Effective April 1, 2008, BACC changed its name to Sovereign Business Capital. The outstanding principal and interest balance under the PNC Credit Facility, related fees and certain expenses related to the execution and closing of the Loan Agreement were paid in full with $0.6 million in proceeds drawn from the Loan Agreement on April 2, 2008. Fees associated with this facility approximate $150,000, which will be amortized over the life of the Loan Agreement.
Under the Loan Agreement, the Lender agreed to provide a revolving credit facility to the Company in an aggregate amount of up to $3,000,000, subject to the further terms and conditions of the Loan Agreement. The loan is secured by a first priority lien on all of the Company’s assets.
The Company’s ability to request loan advances under the Loan Agreement is subject to computation of the Company’s advance limit and compliance with the covenants and conditions of the loan. The loan is for a term of 36 months and matures on March 31, 2011. Interest on the loan accrues on the daily unpaid balance of the loan advances at a per annum rate of one-quarter (.25%) percentage points above the Prime Rate in effect from time to time, but not less than five and one-half percent (5.5%) per annum. The Loan Agreement requires compliance with certain customary covenants including a debt service coverage ratio and restrictions on the Company’s ability to, among other things, dispose of certain assets, engage in certain transactions, incur indebtedness and pay dividends. As of
fiscal year ended September 30,
2006, there2008, TeamStaff was
no debtin compliance with all loan covenants. The Loan Agreement also provides for customary events of default following which, the Lender may, at its option, accelerate the amounts outstanding under the
Credit Facility and $5.5 million of unused availability under the line, based on billed accounts receivable.Loan Agreement.
Availability under the PNC line of creditLoan Agreement is directly related to the successful assignment of certain accounts receivable. Certain government accounts of RS Staffing ServicesTeamStaff GS are required to execute ‘‘Acknowledgements“Acknowledgements of Assignment’’. As of September 30, 2006 approximately 97% were executed.Assignment.” There can be no assurance that the remaining 3% of RS Staffingevery TeamStaff GS government accountsaccount will execute the documentation to effectuate the assignment and secure availability. The failure of government third parties to sign the required documentation could result in a decrease in availability under the Loan Agreement.
As of September 30,
2006, these accounts represented only 0.75% of the total availability under the line of credit.During the first fiscal quarter of 2005,2008, TeamStaff entered into Securities Purchase Agreements with several accredited investors for the private sale under Section 4(2) of the Securities Act of 1933 and/or Regulation D of securities for an aggregate purchase price of $4.3 million. TeamStaff received net proceeds of approximately $4.0 million, after payment of commissions and related offering expenses.
As of September 30, 2006, TeamStaff had unrestricted cash and cash equivalents of $2.2$5.2 million and net accounts receivable of $8.7$12.9 million. TeamStaff also had $5.5At September 30, 2008, the amount of the accounts receivable associated with the DVA retroactive billings approximates $9.3 million. This includes $7.6 million of unused availability under the revolving credit facility provided by PNC Bank.that was unbilled at September 30, 2008. As of September 30, 2006,2008, there was no debt outstanding under the Loan Agreement and unused availability (as defined) totaled $1.8 million, net of required collateral reserves per the Loan Agreement for certain payroll and tax liabilities. As of September 30, 2008, TeamStaff had working capital of $4.4$2.4 million. ManagementThe Company believes itsthat, along with cash on hand, the availability under the existing cash, liquidity provided by the Company’s revolving line of credit and funds generated by operations will beprovide sufficient to support cash needs for at leastliquidity over the next twelve months.
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![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Obligations (Amounts in thousands) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Payments Due By Period |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Total | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Less than 1 year | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1-3 years | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4-5 years |
Long-term debt (1) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 1,808 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 1,561 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 198 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 49 | |
Operating leases (2) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,860 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 523 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,141 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 196 | |
Pension liability (3) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 598 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 210 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 351 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 37 | |
Total Obligations | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 4,266 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 2,294 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 1,690 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 282 | |
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Contractual Obligations | | | | | | | | | | | | | | | | |
| | | | | | Payments Due By Period | |
Obligations | | | | | | Less than | | | 1-3 | | | 4-5 | |
(Amounts in thousands) | | Total | | | 1 Year | | | Years | | | Years | |
Long Term Debt (1) | | $ | 1,697 | | | $ | 1,569 | | | $ | 128 | | | $ | — | |
Operating Leases (2) | | | 1,605 | | | | 481 | | | | 759 | | | | 365 | |
Pension Liability (3) | | | 70 | | | | 70 | | | | — | | | | — | |
Severence Liability (4) | | | 74 | | | | 74 | | | | — | | | | — | |
| | | | | | | | | | | | |
Total Obligations | | $ | 3,446 | | | $ | 2,194 | | | $ | 887 | | | $ | 365 | |
| | | | | | | | | | | | |
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(1) | | Represents bank line of credit, the maximum amount of notes payable related to acquisition of RS StaffingTeamStaff GS, and capital lease obligations. |
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(2) | | Represents lease payments net of sublease income. |
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(3) | | Represents pension liabilityliabilities for the former CEOChief Executive Officer and former CFO.Chief Financial Officer. |
|
(4) | | Represents severance payments related to former employees. |
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Employment Agreements
As described in greater detail under the caption “Executive Compensation and Related Information – Employment Agreements with Named Executive Officers”, during fiscal 2008, we entered into employment agreements with our Chief Executive Officer and Chief Financial Officer. Subsequent to the year ended September 30, 2008, we entered into employment agreements with our President of TeamStaff GS and with our President of TeamStaff Rx. The material terms and conditions of each of these employment agreements are summarized in greater detail under the caption “Executive Compensation and Related Information – Employment Agreements with Other Executive Officers”. The summaries of each of the foregoing agreements are incorporated herein by reference.
Off-Balance Sheet Arrangements
We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating parts of our business that are not consolidated into our financial statements. We do not have any arrangements or relationships with entities that are not consolidated into our financial statements that are reasonably likely to materially affect our liquidity or the availability of our capital resources. We have entered into various agreements by which we may be obligated to indemnify the other party with respect to certain matters. Generally, these indemnification provisions are included in contracts arising in the normal course of business under which we customarily agree to hold the indemnified party harmless against losses arising from a breach of representations related to such matters as intellectual property rights. Payments by us under such indemnification clauses are generally conditioned on the other party making a claim. Such claims are generally subject to challenge by us and to dispute resolution procedures specified in the particular contract. Further, our obligations under these arrangements may be limited in terms of time and/or amount and, in some instances, we may have recourse against third parties for certain payments made by us. It is not possible to predict the maximum potential amount of future payments under these indemnification agreements due to the conditional nature of our obligations and the unique facts of each particular agreement. Historically, we have not made any payments under these agreements that have been material individually or in the aggregate. As of our most recent fiscal year end we were not aware of any obligations under such indemnification agreements that would require material payments.
Effects of Inflation
Inflation and changing prices have not had a material effect on TeamStaff’s net revenues and results of operations, as TeamStaff has been able to modify its prices and cost structure to respond to inflation and changing prices.
Recently Issued Accounting Pronouncements Affecting the CompanyEffective October 1, 2005,
In June 2006, the
Company’s 2000 Employee Stock Option Plan and 2000 Non-Executive Director Stock Option Plan are accounted for in accordance with the recognition and measurement provisions of Statement of Financial Accounting Standards
(‘‘FAS’’)Board issued Interpretation No.
123 (revised 2004),
Table48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold of ContentsShare-Based Payment (‘‘FAS 123(R)’’), which replaces FAS No. 123, Accounting for Stock-Based Compensation, and supercedes Accounting Principles Board Opinion (‘‘APB’’) No. 25, Accounting for Stock Issued to Employees, and related interpretations. FAS 123 (R) requires compensation costs related to share-based payment transactions, including employee stock options,more-likely-than-not to be recognizedsustained upon examination. Measurement of the tax uncertainty occurs if the recognition threshold has been met. This Interpretation also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. TeamStaff conducts business solely in the financial statements.US and, as a result, files income tax returns for US, New Jersey and various other states and jurisdictions. In addition,the normal course of business the Company adheresis subject to examination by taxing authorities. At present, there are no ongoing income tax audits or unresolved disputes with the guidance set forth within Securities and Exchange Commission (‘‘SEC’’) Staff Accounting Bulletin (‘‘SAB’’) No. 107,various tax authorities that the Company currently files or has filed with. Given the Company’s substantial net operating loss carryforwards, which providesare subject to a full valuation allowance, as well as the Staff’s views regardinghistorical operating losses in prior periods, the interaction between SFAS No. 123(R) and certain SEC rules and regulations and provides interpretations with respect to the valuationadoption of share-based payments for public companies.
Prior toFIN 48 on October 1, 2005, the Company accounted for similar transactions in accordance with APB No. 25 which employed the intrinsic value method2007 did not have any effect on our financial position, results of measuring compensation cost. Accordingly, compensation expense was not recognized for fixed stock options if the exercise price of the option equaledoperations or exceeded the fair value of the underlying stock at the grant date.
While FAS No. 123 encouraged recognition of the fair value of all stock-based awards on the date of grant as expense over the vesting period, companies were permitted to continue to apply the intrinsic value-based method of accounting prescribed by APB No. 25 and disclose certain pro-forma amounts as if the fair value approach of SFAS No. 123 had been applied. In December 2002, FAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of SFAS No. 123, was issued, which, in addition to providing alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation, required more prominent pro-forma disclosures in both the annual and interim financial statements. The Company complied with these disclosure requirements for all applicable periods prior to October 1, 2005.
In adopting FAS 123(R), the Company applied the modified prospective approach to transition. Under the modified prospective approach, the provisions of FAS 123 (R) are to be applied to new awards and to awards modified, repurchased, or cancelled after the required effective date. Additionally, compensation cost for the portion of awards for which the requisite service has not been rendered that are outstandingcash flows as of the required effectiveadoption date shall be recognized asand for the requisite service is rendered on or after the required effective date. The compensation cost for that portion of awards shall be based on the grant-date fair value of those awards as calculated for either recognition or pro-forma disclosures under FAS 123.
year ended September 30, 2008.
In September 2006, the
SEC staff issued Staff Accounting Bulletin No. 108, ‘‘Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.’’ SAB 108 was issued in order to eliminate the diversity of practice surrounding how public companies quantify financial statement misstatements.Traditionally, there have been two widely recognized methods for quantifying the effects of financial statement misstatements: the ‘‘roll-over’’ method and the ‘‘iron curtain’’ method. The rollover method focuses primarily on the impact of a misstatement on the income statement – including the reversing effect of prior year misstatements – but its use can lead to the accumulation of misstatements in the balance sheet. The iron-curtain method, on the other hand, focuses primarily on the effect of correcting the period-end balance sheet with less emphasis on the reversing effects of prior year errors on the income statement.
In SAB 108, the SEC staff established an approach that requires quantification of financial statement misstatements based on the effects of the misstatements on each of the company’s financial statements and the related financial statement disclosures. This model is commonly referred to as a ‘‘dual approach’’ because it requires quantification of errors under both the iron curtain and the rollover methods.
SAB 108 permits existing public companies to initially apply its provisions either by (i) restating prior financial statements as if the ‘‘dual approach’’ had always been used or (ii) recording the cumulative effect of initially applying the ‘‘dual approach’’ as adjustments to the carrying values of assets and liabilities as of January 1, 2006 with an offsetting adjustment recorded to the opening balance of retained earnings.
Table of ContentsWe will adopt the provisions of SAB 108 in connection with the preparation of our annual financial statements for the year ending after December 31, 2006. We are in the process of evaluating the impact, if any, on our financial statements of initially applying the provisions of SAB 108.
On September 15, 2006, the Financial Accounting Standard BoardFASB issued SFAS No. 157, ‘‘Fair“Fair Value Measurement’’, that provides enhanced guidance for usingMeasurements” (“SFAS 157”). SFAS 157 defines fair value, to measure assets and liabilities. The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use ofestablishes a framework for measuring fair value in any new circumstances.
This Statementaccordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, with earlier application encouraged. Any amounts recognized upon adoption as a cumulative effect adjustment will be recorded to the opening balance of retained earnings in the year of adoption. The Company expects to adopt SFAS No. 157 in the first quarter of fiscal 2009 and interim periods within those fiscal years. Earlier application is encouraged, provideddoes not believe that the adoption of this standard will have a material effect on the consolidated financial statements.
30
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure, on an item-by-item basis, specified financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected are required to be reported in earnings at each reporting
entity has not yet issued financial statements for that fiscal year, including financial statements for an interim period within that fiscal year. The Company will adopt this pronouncementdate. SFAS No. 159 is effective for fiscal
yearyears beginning
October 1, 2008. We are currently evaluatingafter November 15, 2007, the
impactprovisions of
adopting this pronouncement on our financial statements.In September 2006, the Financial Accounting Standards Board issued SFAS 158 ‘‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans-an amendment of FASB Statements No. 87, 88, 106 and 132(R).’’ SFAS 158 requires an employer and sponsors one or more single employer defined benefit plans to recognize the funded status of a benefit plan; recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that may arise during the period; measure defined benefit plan assets and obligations as of the employer’s fiscal year; and, enhances footnote disclosure.
For fiscal years ending after December 15, 2006 employers with equity securities that trade on a public marketwhich are required to initially recognize the funded status of a defined benefit postretirement plan andbe applied prospectively. The Company expects to provide the enhanced footnote disclosures. For fiscal years ending after December 15, 2008 employers are required to measure plan assets and benefit obligations. We are currently evaluating the impact of adopting this pronouncement on our financial statements.
FSP FAS 123(R)-5 was issued on October 10, 2006. The FSP provides that instruments that were originally issued as employee compensation and then modified, and that modification is made to the terms of the instrument solely to reflect an equity restructuring that occurs when the holders are no longer employees, no change in the recognition or the measurement (due to a change in classification) of those instruments will result if both of the following conditions are met: (a). There is no increase in fair value of the award (or the ratio of intrinsic value to the exercise price of the award is preserved, that is, the holder is made whole), or the antidilution provision is not added to the terms of the award in contemplation of an equity restructuring; and (b). All holders of the same class of equity instruments (for example, stock options) are treated in the same manner. The provisions in this FSP shall be appliedadopt SFAS No. 159 in the first reporting period beginning after the date the FSP is posted to the FASB website. We will adopt this FSP from its effective date. We currently doquarter of fiscal 2009 and does not believe that itsthe adoption of this standard will have any impacta material effect on ourthe consolidated financial statements.
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ITEM 7a | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities”. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable users of the financial statements to better understand the effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for interim periods beginning after November 15, 2008, with early application encouraged. The Company currently does not believe that the adoption of this standard will have a material effect on the consolidated financial statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
TeamStaff does not undertake trading practices in securities or other financial instruments and therefore does not have any material exposure to interest rate risk, foreign currency exchange rate risk, commodity price risk or other similar risks, which might otherwise result from such practices. TeamStaff is not materially subject to fluctuations in foreign exchange rates, commodity prices or other market rates or prices from market sensitive instruments. TeamStaff has a material interest rate risk with respect to our prior workers’ compensation programs. In connection with TeamStaff’s prior workers’ compensation programs, prepayments of future claims were deposited into trust funds for possible future payments of these claims in accordance with the policies. The interest income resulting from these prepayments is for the benefit of TeamStaff, and is used to offset workers’ compensation expense. If interest rates in these
periods’periods decrease, TeamStaff’s workers’ compensation expense would increase because TeamStaff would be entitled to less interest income on the deposited funds. Further, and as discussed elsewhere in this filing, TeamStaff, Inc. has
an $8.0a $3.0 million revolving credit facility by
PNC Bank.Sovereign Business Capital. Revolving credit advances bear interest at
either the Prime Rate plus 25 basis
points or
Table of ContentsLIBOR plus 275 basis points, whichever is higher.points. The facility has a three-year life and contains term and line of credit borrowing options. The facility is subject to certain restrictive covenants, including minimum combined cash and line availability.a fixed charge coverage ratio. The facility is subject to acceleration upon non-payment or various other standard default clauses. Material increases in the Prime or LIBOR rate could have a material adverse effect on our results of operations, the status of the Revolving Credit Facilityrevolving credit facility as well as interest costs.
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ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA |
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
See attached Financial Statements beginning on page F-1 attached to this
reportReport on Form 10-K.
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ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None.
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ITEM 9A. | CONTROLS AND PROCEDURES |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures:The Company maintainsProcedures
Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) as of the end of the period covered by this report, have concluded that, are designedbased on the evaluation of these controls and procedures, our disclosure controls and procedures were effective at the reasonable assurance level to ensure that information required to be disclosed by us in the Company’sreports that we file or submit under the Exchange Act reports is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’sour management, including itsour Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of ‘‘disclosure controls and procedures’’ in Rule 13a-15(e). In designing and evaluating the disclosure controls and procedures,disclosure.
31
Our management,
recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in designing and evaluating the controls and procedures.Based on their evaluation, as of September 30, 2006, the Company’sincluding our Chief Executive Officer and Chief Financial Officer, have concludeddoes not expect that the Company’sour disclosure controls and procedures wereor our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. Our management, however, believes our disclosure controls and procedures are in fact effective to ensureprovide reasonable assurance that allthe objectives of the control system are met.
Management’s Report on Internal Control over Financial Reporting
Our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The company’s internal control over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material information requiredeffect on the financial statements.
Management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2008. In making this evaluation, management used the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under the framework in Internal Control—Integrated Framework, our management has concluded that our internal control over financial reporting was effective as of September 30, 2008.
This annual report does not include an attestation report of our independent registered public accounting firm regarding our internal control over financial reporting. Management’s report was not subject to be filedattestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report on Form 10-K has been made knownannual report.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to
them.future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Controls:Control over Financial Reporting
There
have beenwas no
changeschange in
the Company’sour system of internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act)
that occurred during
the Company’sour fiscal year
ended September 30, 2008 that
havehas materially affected, or
areis reasonably likely to materially affect,
the Company’sour internal control over financial reporting.
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ITEM 9B. | OTHER INFORMATION |
ITEM 9B. OTHER INFORMATION
None.
On September 1, 2006, pursuant to our Non-Executive Director Stock Option Plan, we granted our non-executive directors options to purchase shares of our common stock at an exercise price of $1.29 per share, which represents the closing selling price per share of our common stock on the NASDAQ National Market on September 1, 2006. Six non-executive directors were each granted 5,000 options. The options are governed by our standard form stock option agreement, a copy of which is filed as an exhibit to this Annual Report on Form 10-K, and the terms of our Non-Executive Director Stock Option Plan, as amended. The options vest after one year, are exercisable for a period of five years (subject to earlier termination under certain circumstances) and were granted on a non-discretionary basis pursuant to our Non-Executive Director Stock Option Plan.
The staff of the Securities and Exchange Commission (the ‘‘Staff’’) completed a review of the Company’s periodic reports and issued a letter (the ‘‘Comment Letter’’) dated July 11, 2006,32
Table of Contentscommenting on certain aspects of the Company’s Annual Report on Form 10-K for the year ended September 30, 2005 and Quarterly Reports on Form 10-Q for the quarters ended December 31, 2005 and March 31, 2006. The Company responded to the Staff’s Comment Letter on August 8, 2006. The Company received a response from the Staff dated August 24, 2006 with additional comments related to its response. The Company responded on September 20, 2006. The Company received a response from the Staff dated September 20, 2006 stating that they completed their review and do not have any further comments.
Table of ContentsPART III
ITEM 10. DIRECTORS, AND EXECUTIVE OFFICERSThe executive officers AND CORPORATE GOVERNANCE
Directors and directorsExecutive Officers
Our Board is presently comprised of
TeamStaff as of December 19, 2006 are as follows:![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
NAME | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | AGE | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | OFFICE |
T. Stephen Johnson | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 56 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Chairman of the Board of Directors Class 1 |
Karl W. Dieckmann | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 78 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Vice-Chairman Class 2 |
Ron Aldrich | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 63 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Director Class 2 |
Peter Black | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 34 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Director Class 1 |
Martin Delaney | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 63 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Director Class 3 |
Ben J. Dyer | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 58 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Director Class 1 |
T. Kent Smith | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 50 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | President, Chief Executive Officer, Director Class 2 |
Rick J. Filippelli | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 50 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Vice President, Finance, Chief Financial Officer |
James D. Houston | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 47 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Vice President, General Counsel |
|
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Board of Directors
Our boardseven members and is classified into three classes, which are each elected in staggered three-year terms. Class 1 consists of T. Stephen Johnson Ben J. Dyer and Peter Black, and the term expires in 2009; Class 2 consists of Karl Dieckmann, T. Kent SmithFrederick G. Wasserman and Ron Aldrich,William H. Alderman, and the term expires in 20072010 and Class 3 consists of Martin Delaney and Rick J. Filippelli, and the term expires in 2008.
Ron Aldrich 2011. No family relationship exists among any of our directors or executive officers.
The charts below list our directors and executive officers as of December 19, 2008 and are followed by biographic information about them.
Directors
| | | | | | | | | | |
Name | | Age | | Positions | | Class |
| | | | | | | | | | |
T. Stephen Johnson | | | 58 | | | Chairman of the Board of Directors | | | 1 | |
| | | | | | | | | | |
Karl W. Dieckmann | | | 80 | | | Vice Chairman | | | 2 | |
| | | | | | | | | | |
William H. Alderman | | | 45 | | | Director | | | 2 | |
| | | | | | | | | | |
Peter Black | | | 36 | | | Director | | | 1 | |
| | | | | | | | | | |
Martin Delaney | | | 65 | | | Director | | | 3 | |
| | | | | | | | | | |
Rick J. Filippelli | | | 52 | | | President, Chief Executive Officer and Director | | | 3 | |
| | | | | | | | | | |
Frederick G. Wasserman | | | 54 | | | Director | | | 2 | |
Executive Officers
| | | | | | |
Name | | Age | | Positions |
| | | | | | |
Rick J. Filippelli | | | 52 | | | President, Chief Executive Officer and Director |
| | | | | | |
Cheryl Presuto | | | 44 | | | Chief Financial Officer, Controller |
| | | | | | |
Dale West | | | 53 | | | President, TeamStaff Rx |
| | | | | | |
Kevin Wilson | | | 43 | | | President, TeamStaff Government Solutions, Inc. |
Biographical Information
William H. Aldermanjoined the Board of Directors in May 2005.January 2007. Mr. AldrichAlderman has more than thirty-sevenover 15 years of leadership experience providing investment banking services across multiple industries, with a particular expertise in health care organizations throughoutfinancings, and mergers and acquisitions in the United States. He served for nineteen years asaerospace and defense industry. Since March 2001, Mr. Alderman has been the President and CEO of three multi-hospital Catholic Systems (a 3400 bed system based in Aston Pennsylvania, a regional system located in Urbana, Illinois and a regional system based in Melville, Long Island, New York). He was also President and CEO of Mercy Hospital in Urbana, Illinois for five years from 1977 to 1982. Mr. Aldrich was instrumental in the formation of Catholic Health Initiatives which integrated three large Catholic Systems (including Franciscan Health System) in 1996. With 126 Health Care Organizations in 21 states, it was the largest not-for-profit health care merger to occur in the United States. Mr. Aldrich has also served on the Boards of Directors of five Catholic Health Systems. From 1992 to 1993Alderman & Company where he served as Chairpersonrepresents some of the Catholic Health Associationworld’s most respected aerospace and defense companies. Mr. Alderman started his career at Bankers Trust Company and has held senior positions in investment management and corporate development at GE Capital, Aviation Sales Company, and most recently as Managing Director of the United States. He currently serves on the Boardsaviation investment banking practice of Bon Secours Health System, Franciscan Ministries Foundation, St. Vincent’s Hospital Foundation,Fieldstone. Mr. Alderman received a MBA from J.L. Kellogg Graduate School of Management in 1989 and is also a graduate of Kenyon College and the BoardTaft School. Mr. Alderman is currently a director of Trustees of the University of Florida Foundation.Breeze-Eastern Corp.
33
Peter Blackjoined the Board of Directors in March 2005. For the past
sixnine years, Mr. Black has been an Investment Analyst and Portfolio Manager at Wynnefield Capital, Inc., where he is responsible for researching and identifying small-cap value investments. Mr. Black has initiated investments on Wynnefield’s behalf that span multiple industries. Prior to joining Wynnefield, Mr. Black was an investment banker in the mergers and acquisition departments of UBS Securities and SG Cowen & Co. Mr. Black is a graduate of Boston College and received his MBA from Fordham University. Wynnefield Capital, Inc., through certain of its investment funds, is the owner of approximately
12%14% of our outstanding shares of common stock.
Mr. Black is currently a director of Underground Solutions, Inc.
Martin J. Delaneyjoined the Board of Directors in July 1998. Mr. Delaney was hired as a Senior Vice-President of TeamStaff effective January 5, 2005. Mr. Delaney is an attorney and a prominent healthcare executive who began his hospital management career in 1971 as an Assistant Administrator at Nassau County Medical Center. He has been a director of a large regional Health Maintenance Organization on Long Island, the Hospital Association of New York State, the Greater New York Hospital Association, and chairman of the Nassau-Suffolk Hospital Council. He has been President, CEO and a director of Winthrop University Hospital, Winthrop South Nassau University Health Care Systems, and the Long Island Health Network. He has a graduate degree in health care management from The George Washington University and a law degree from St. John’s University. He has been admitted to practice in New York State and federal courts.
Table of ContentsKarl W. Dieckmann, a Director of TeamStaff since April 1990, had been Chairman of the Board from November 1991 until September 2001 and has been Vice Chairman since September 2001. From 1980 to 1988, Mr. Dieckmann was the Executive Vice President of Science Management Corporation and managed the Engineering, Technology and Management Services Groups. From 1948 to 1980, Mr. Dieckmann was employed by the Allied Signal Corporation (now Honeywell Corporation) in various capacities including President, Semet Solvay Division; Executive Vice President, Industrial Chemicals Division; Vice President Technical −– Fibers Division; Group General Manager −– Fabricated Products Division; and General Manager −– Plastics Division, as well as various positions with the Chemicals Division.
Ben
Rick J. Dyer joined theFilippelliwas appointed as our Chief Executive Officer, President and a member of our Board of Directors in
December 2002.January 2007. Mr.
Dyer is currently President of investment banking firm Jackson Capital, a General Partner of the early stage technology fund Cordova Intellimedia Ventures LP, and President of Innovations Publishing, LLC, an Atlanta based research company which provides a subscription-based online catalog of emerging private ventures across the Southeastern US. In the 1980s Mr. DyerFilippelli also served as
chairmanVice President from September 2003 to January 2007 and
CEOas Chief Financial Officer of
Comsell, Inc.TeamStaff from September 2003 to October 2007. Prior to joining TeamStaff, Mr. Filippelli spent approximately two years as Chief Financial Officer of Rediff.com, a publicly traded global information technology company. From 1985 through 2001, Mr. Filippelli held various financial positions including that of Chief Financial Officer with Financial Guaranty Insurance Company (“FGIC”), a
pioneering multimedia developmentsubsidiary of GE Capital. Prior to joining FGIC, Mr. Filippelli spent six years in public accounting including three years with the Big 4 firm
of Ernst and
was president andYoung. Mr. Filippelli holds a
directorBachelor of
the de novo Enterprise National Bank. Mr. Dyer founded Intellimedia Sports, Inc.Science degree in
1992 to create the ESPN-branded sports instruction category in the CD-ROM industry. He was earlier a founder of Peachtree Software, Inc. and served as its PresidentAccounting from
1977 to September 1983. He currently serves on a number of private boards including FundRaisingInfo.com and Atlanta Bancorporation. He has concentrated his community activities on higher education and has been president of the Georgia Tech Alumni Association, a director of the Georgia Tech Foundation, chairman of the Alumni Advisory Board for Tech’s School of Industrial & Systems Engineering, and chairman of the Georgia Tech Research Corporation. He is currently a Senior Fellow of the Center for Entrepreneurship and Corporate Growth at Emory University’s Goizueta Business SchoolBrooklyn College and is
a Certified Public Accountant as well as a member of the
External Advisory CouncilAmerican Institute of
the Georgia Tech Research Institute. Mr. Dyer is one of twenty-four members of the Georgia Technology Hall of Fame. Mr. Dyer holds a Bachelors degree in Industrial Engineering from Georgia Tech and an MBA in finance from Georgia State University.Certified Public Accountants.
T. Stephen Johnsonhas been Chairman of the Board of TeamStaff since September 2001. He has served as Chairman of T. Stephen Johnson & Associates, Inc., financial services consulting firm, and its related entities since inception in 1986. Mr. Johnson is a long-time banking consultant and Atlanta entrepreneur who has advised and organized dozens of community banks throughout the Southeast. He is Chairman Emeritus of Netbank, the largest and most successful Internet-only bank, as well as Chairman and principal owner of Bank Assets, Inc., a provider of benefit programs for directors and officers of financial institutions. Mr. Johnson is Chairman of the Board of Directo, Inc. a company specializing in providing financial services for un-banked individuals and Chairman of Atlanta Financial Corporation.
T. Kent Smith was appointed as our Chief Executive Officer, President and a member of our
Frederick Wassermanjoined the Board of Directors on June 18, 2003. Fromin January 20002007. Mr. Wasserman is currently a financial management consultant. Until December 31, 2006, Mr. Wasserman was the Chief Operating/Financial Officer for Mitchell & Ness Nostalgia Co., a privately-held manufacturer and distributor of licensed sportswear and authentic team apparel. Prior to January 2003,Mitchell & Ness, Mr. SmithWasserman served as the President of HoneyBaked Ham Company andGoebel of North America, a U.S. subsidiary of the German specialty gift maker, from 2001 to 2005. Mr. Wasserman also served as the Chief ExecutiveFinancial Officer of Goebel North America in 2001. Prior to Goebel, Mr. Wasserman served as both the Heavenly Ham Company.Interim President and full-time Chief Financial Officer of Papel Giftware from 1995 to 2001. Mr. Wasserman spent the first 13 years of his career in the public accounting profession. Mr. Wasserman also serves as a director of Acme Communications, Inc., Allied Defense Group, Inc., Breeze Eastern Corporation, Gilman + Ciocia, Inc., Crown Crafts, Inc. and AfterSoft Group, Inc.
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Cheryl Presutowas appointed to the position of Chief Financial Officer in October 2007. She also serves as the Company’s Controller, a position she has held since August 2004. Ms. Presuto previously served as TeamStaff’s Accounting Manager since January 2002. Prior to joining TeamStaff, Ms. Presuto spent four years with the newspaper division of Gannett, Inc., where she served as Accounting Manager and Assistant Controller. Prior to joining Gannett, Ms. Presuto held various accounting and consulting positions. Ms. Presuto holds a Bachelor of Science degree in Accounting from Fairleigh Dickinson University where she graduated summa cum laude.
Dale Westwas appointed as the President of TeamStaff Rx in September 2008. Previously, Ms. West was an independent consultant in the healthcare staffing sector from February 2008 to May 2008. From August, 1998 to 1999, Mr. Smiththrough July, 2002, Ms. West was the Senior Vice President of Organization Serv.RNNetwork, Inc. a healthcare staffing company and from July, 2002 through December, 2005, Ms. West served as the President of RNNetwork, Inc. Ms. West also was an owner and original founder of RNNetwork. At RNNetwork, Ms. West was responsible for overseeing all aspects of the travel nurse business. RNNetwork was acquired by CompHealth Group in January 2005. Previously, Ms. West worked at Hospital Staffing Services, Inc. from September, 1995 to August, 1998 as Director of Sales. Prior to that, Ms. West worked as Director of Operations at Allied Health Services, Inc. from 1992 to 1995.
Kevin Wilsonwas appointed as the President of TeamStaff GS in October 2008. Previously, Mr.
SmithWilson served
as the Director of TeamStaff GS from June 2007 through September 2008. From January 2004 to June 2007, Mr. Wilson served as the Director of Strategic Alliances of Varec, Inc., where he was responsible for business development in
various executive positionsthe domestic and foreign defense markets. Prior to his tenure at Varec, Inc., from March 1997 to January 2004, Mr. Wilson was the Program Manager for
Norrella multiyear defense services contract with Endress Hauser Systems & Gauging. Mr. Wilson also worked at Tracer Research Corporation from
1987January 1990 to
1998, including Senior Vice President, Service Operations, Vice President and Chief Information Officer and Vice President, Finance & Strategic Planning.March 1997, where he was Project Manager for the United States Air Force, Air Combat Command professional services contract. Mr.
Smith received a Masters in Business Administration from the University of Virginia and is a graduate of Vanderbilt University.Other Executive Officers
Rick J. Filippelli assumed his current position as Vice President and Chief Financial Officer of TeamStaff in September 2003. Prior to joining TeamStaff, Mr. Filippelli spent approximately two years as Chief Financial Officer of Rediff.com, a publicly traded global information technology company. From 1985 through 2001 Mr. Filippelli held various financial positions including that of Chief Financial Officer with Financial Guaranty Insurance Company (‘‘FGIC’’), a subsidiary of GE Capital. Prior to joining FGIC, Mr. Filippelli spent six years in public accounting including three years with the Big 4
Table of Contentsfirm of Ernst and Young. Mr. FilippelliWilson holds a BS in AccountingBusiness Marketing from Brooklyn College and is a Certified Public Accountant as well as a member of the American Institute of Certified Public Accountants.
James D. Houston has been Vice President, Business and Legal Affairs, General Counsel and Northwest Missouri State University.
Corporate Secretary of TeamStaff since May, 2005. Mr. Houston has spent most of his career acting as the chief legal officer for several public and private companies. From 1999 through 2005, several companies engaged Mr. Houston through his own independent consulting firm. Mr. Houston was general counsel for SITA and division counsel for the Strategic and Global Licensing Division of SAS Institute, Inc. from 1997 through 1999. Prior to joining SAS Institute, Mr. Houston spent six years as an independent legal consultant after having worked as an associate for the national law firms Adams, Duque and Hazeltine and Keck, Mahin and Cate from 1987 through 1991. Mr. Houston holds a Juris Doctorate from Boston University School of Law and a B.A. in Political Science and Philosophy from Long Island University. He is admitted to practice law in New York and California.Management Resources and Compensation Committee Interlocks and Insider Participation in Compensation Decisions
Karl W. Dieckmann (Chair), Rocco Marano and Steven Johnson, served on the Management Resources and Compensation Committee during the fiscal year commencing October 1, 2005 until April 27, 2006. Mr. Marano resigned his position on the Committee effective April 27, 2006. Mr. Ron Aldrich replaced Mr. Marano on the Committee. There are no interlocks between TeamStaff’s Directors and Directors of other companies and at all times members of the Management Resources and Compensation Committee satisfied the independence requirements of Section 4200(a) (15) of the NASDAQ Marketplace Rules.
Governance
Meetings of the Board of DirectorsDirectors; Independence and Committees During the fiscal year ended September 30,
2006,2008, the Board of Directors met on
9 occasions, 616 occasions. Our Board of
which were by telephone conference call. Our board of directorsDirectors determined that
from October 1, 2005 to January 1, 2006for the fiscal year ended September 30, 2008, Messrs.
Aldrich,Alderman, Black,
Dyer, Dieckmann, Johnson and
MaranoWasserman satisfied the independence requirements within the meaning of Section 4200(a) (15) of the NASDAQ Marketplace Rules.
From January 1, 2006 to April 27, 2006 Messrs. Aldrich, Black, Dyer, Dieckmann, Marano and Johnson satisfied the independence requirements within the meaning of Section 4200(a) (15) of the NASDAQ Marketplace Rules. From and after April 27, 2006, to the end of the Company’s 2006 fiscal year, Messrs. Aldrich, Black, Dyer, Dieckmann and Johnson satisfied the independence requirements within the meaning of Section 4200(a) (15) of the NASDAQ Marketplace Rules. As of September 30, 2006 through and including the date of this filing, Messrs. Aldrich, Black, Dyer, Dieckmann and Johnson satisfied the independence requirements within the meaning of Section 4200(a) (15) of the NASDAQ Marketplace Rules.The Board of Directors has four
standing committees: Audit
Committee, Management Resources and Compensation
Committee, Executive
Committee and Nominating and Corporate Governance
Committees.Committee. Each of these committees has a written charter approved by the Board of Directors. These charters, and the Company’s corporate governance guidelines, are available at the Company’s website,www.teamstaff.com(click on Investors, then on Corporate Governance).
For the fiscal year ended September 30,
2006, the members of the committees, and2008, a
general description of the duties of the Committees,
their members and number of times each Committee met were as follows:
Audit Committee.A copy of the Audit Committee’s Amended and Restated Charter may be viewed on our website atwww.teamstaff.com. TeamStaff’s Audit Committee acts to:(i) review with management the finances, financial condition and interim financial statements of TeamStaff; (ii) review with TeamStaff’s independent auditors the year-end financial statements; and (iii) review implementation with the independent auditors and management any action recommended by the independent auditors and
(iv) the retention and termination of TeamStaff’s independent auditors.
During the fiscal year ended September 30, 2006, the Audit Committee met on 5 occasions, all of which were by telephone conference call.The Audit Committee adopted a written charter governing its actions effective June 14, 2000. Effective May 27, 2003, the Audit Committee adopted an Amended and Restated Charter which was filed as an exhibit to our Proxy Statement prepared in connection with our Annual Meeting of
Table of ContentsShareholders held on August 12, 2003. A copy of the Audit Committee’s Amended and Restated Charter may be reviewed on our website at www.teamstaff.com. From October 1, 2005 through April 27, 2006,2007 to the present, members of our Audit Committee was comprised of Rocco J. Marano (Chair & Financial Expert)were and are Mr. Wasserman (Chair), PeterMr. Black Karl W. Dieckmann and Ben J. Dyer. On April 27, 2006, Mr. Marano announced his resignationDieckmann. Mr. Wasserman is also designated as a member of the Board of Directors of TeamStaff, Inc. From April 27, 2006 to September 30, 2006, our Audit Committee was comprised of Ben J. Dyer (Chair & Financial Expert), Peter Black, Karl Dieckmann and Ron Aldrich. At all times duringExpert. During the 2008 fiscal year, all of the members of our Audit Committee were ‘‘independent’’“independent” within the definition of that term as provided by Rule 4200(a)(15) of the NASDAQNasdaq Marketplace Rules. From the end of fiscal year to the present, all of the members of our Audit Committee are ‘‘independent’’“independent” within the meaningdefinition of that term as provided by Rule 4200(a)(15) of the NASDAQNasdaq Marketplace Rules. During the fiscal year ended September 30, 2008, this Audit Committee met on five occasions, three of which were by telephone conference call.
35
Management Resources and Compensation Committee.The charter governing the activities of the Management Resources and Compensation Committee (sometimes referred to as the “Compensation Committee”) may be viewed online on our website atwww.teamstaff.com.The Management Resources and Compensation Committee functions include negotiation and review of all employment agreements of executive officers of TeamStaff and administration of TeamStaff’s
2006 Long Term Incentive Plan, its 2000 Employee Stock Option Plan and Non-Executive Director Stock Option Plan.
Karl W. Dieckmann is the chairman of the Committee. From October 1,
20052007 to
April 27, 2006,the present, the members of the Management Resources and Compensation
Committee’s membersCommittee were
Karl W.and are Mr. Black (Chair), Mr. Dieckmann
(Chair), Rocco Marano and
T. StephenMr. Johnson.
From April 27, 2006 to the present, the members are Karl W. Dieckmann (Chair), T. Stephen Johnson and Ron Aldrich. At all times members of the Management Resources and Compensation Committee satisfied the independence requirements
within the meaning of Section 4200(a) (15) of the
NASDAQNasdaq Marketplace Rules. During the fiscal year ended September 30,
2006, the2008, this committee met on
2 occasions.Nominating and Corporate Governance Committee. The two occasions, both of which were by telephonic conference call.
Nominating and Corporate Governance Committee functions include the review of all candidates for a position on the board of directors including existing directors for renomination and reports its findings with recommendations to the Board.. The
Nominating and Corporate Governance Committee solicits candidates on behalf of TeamStaff to fill any vacancy on the Board. The Nominating and Corporate Governance Committee performs such other duties and assignments as directed by the Chairman or the Board but shall have no power to add or remove a director without the approval of the Board. Our Board of Directors has adopted a charter governing the activities of the Nominating and Corporate Governance Committee
which may be viewed online on our
Web sitewebsite at
www.teamstaff.com.www.teamstaff.com. Pursuant to its charter, the Nominating and Corporate Governance Committee’s tasks include reviewing and recommending to the Board issues relating to the Board’s composition and structure; establishing criteria for membership and evaluating corporate policies relating to the recruitment of Board members; implementing and monitoring policies regarding principles of corporate governance in order to ensure the Board’s compliance with its fiduciary duties to the company and its shareholders; and making recommendations regarding proposals submitted by shareholders.
From October 1, 2005 to April 27, 2006, theThe Nominating and Corporate Governance Committee
functions also include the review of all candidates for a position on the board of directors including existing directors for renomination and reports its findings with recommendations to the Board. The Nominating and Corporate Governance Committee solicits candidates on behalf of TeamStaff to fill any vacancy on the Board. From October 1, 2007 to the present, the members
were Ben J. Dyer (Chair), Karl W. Dieckmann and Ron Aldrich. From and after April 27, 2006,of the Nominating and Corporate Governance Committee members were and are
Ron AldrichMr. Alderman (Chair),
Karl W.Mr. Dieckmann and
Martin Delaney.Mr. Johnson. At all times Messrs.
Dyer,Alderman, Dieckmann and
AldrichJohnson satisfied the independence requirements
within the meaning of Section 4200(a) (15) of the
NASDAQNasdaq Marketplace Rules. During the fiscal year ended September 30,
2006, the2008, this committee met on
3two occasions,
allone of which
werewas by
telephonetelephonic conference call.
Executive Committee.Committee. The Board of Directors created an Executive Committee effective September 4, 2001. Executive
committeeCommittee members are
currently Mr. Karl W. Dieckmann
and Mr. T. Stephen
Johnson and T. Kent Smith.Johnson. Mr. T. Stephen Johnson serves as its chairman. This committee did not meet during the fiscal year ended September 30,
2006.2008.
No member of the Board of Directors or any committee failed to attend at least, or participateparticipated in fewer than, 75% of the meetings of the Board or anyof a committee on which such member serves.
Management Resources and Compensation Committee Interlocks and Insider Participation in Compensation Decisions
TableMr. Peter Black (Chair), Mr. Karl W. Dieckmann and Mr. T. Stephen Johnson served on the Management Resources and Compensation Committee for the fiscal year ended September 30, 2008. There are no interlocks between TeamStaff’s Directors and directors of Contentsother companies and at all times members of the Management Resources and Compensation Committee satisfied the independence requirements of Section 4200(a) (15) of the Nasdaq Marketplace Rules.
Nominating and Corporate Governance Matters
Our Nominating and Corporate Governance Committee considers candidates for election to our Board of Directors, whether recommended by security holders or otherwise, in accordance with the following criteria. The Nominating and Corporate Governance Committee applies the following general criteria to all candidates:
Nominees shall have a reputation for integrity, honesty and adherence to high ethical standards.
Nominees should have demonstrated business acumen, experience and the ability to exercise sound judgment in matters that relate to current and long term objectives of the Company and should be willing and able to contribute positively to TeamStaff’s decision-making process.
Nominees should have a commitment to understand the Company and its industries and to regularly attend and participate in meetings of the Board and its committees.
36
Nominees should have the interest and ability to understand the sometimes conflicting interests of the various constituencies of the Company, which include shareholders, employees, customers, governmental units, creditors and the general public, and to act in the interests of all shareholders.
Nominees should not have, nor appear to have, a conflict of interest that would impair the nominees’ ability to represent the interests of all the Company’s shareholders and to fulfill the responsibilities of a director.
Nominees shall not be discriminated against on the basis of race, religion, national origin, sex, disability or any other basis proscribed by applicable law.
The re-nomination of existing directors is not to be viewed as automatic, but is based on continuing qualification under the various criteria set forth above. In addition, the Nominating and Corporate Governance Committee considers the existing director’s performance on the Board and any committee thereof. The Nominating and Corporate Governance Committee also considers the backgrounds and qualifications of the directors considered as a group. The Nominating and Corporate Governance Committee strives to ensure that the Board, when taken as a whole, provides a significant breadth of experience, knowledge and abilities that shall assist the Board in fulfilling its responsibilities.
Procedure to be Followed by Shareholders in Submitting Director Candidate Recommendations
Any shareholder who desires the Nominating and Corporate Governance Committee to consider one or more candidates for nomination as a director should, either by personal delivery or by United States mail, postage prepaid, deliver a written recommendation addressed to the Chairman, TeamStaff, Inc. Nominating and Corporate Governance Committee at 1 Executive Drive, Suite 130, Somerset, New Jersey 08873, not later than (i) with respect to an election to be held at an annual meeting of shareholders, 90 days prior to the anniversary date of the immediately preceding annual meeting or if an annual meeting has not been held in the preceding year, 90 days prior the first Tuesday in April; and (ii) with respect to an election to be held at a special meeting of shareholders for the election of directors, the close of business on the tenth day following the date on which notice of such meeting is first given to shareholders. Each written recommendation should set forth: (a) the name and address of the shareholder making the recommendation and of the person or persons recommended; (b) the consent of such person(s) to serve as a director(s) of the Company if nominated and elected; and (c) a description of how the person(s) satisfy the General Criteria for consideration as a candidate referred to below in the section entitled ‘‘Nominating and Corporate Governance Matters.’’
Additional Criteria for Notice of Shareholder Nominees
In accordance with our By-Laws, any shareholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors at a meeting only if written notice of such shareholder’s intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Company in accordance with the terms described in the preceding paragraph. Each such notice shall set forth: (a) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the shareholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; (d) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission (“SEC”); and (e) the consent of each nominee to serve as a director of the Company if so elected.
37
Shareholder Communications with the Board
Any shareholder may communicate with the Board of Directors in writing through the Company’s Corporate Secretary (at TeamStaff, Inc., 1 Executive Drive, Suite 130, Somerset, New Jersey 08873) provided that the communication identifies the shareholder and the number and type of securities held by that shareholder. The Secretary reviews such communications, and forwards them to the Board of Directors unless the Secretary, in consultation with the Chief Executive Officer, determines that the communication is inappropriate for the Board’s consideration (for example, if it relates to a personal grievance or is unrelated to Company business). The Secretary maintains a permanent written record of all such shareholder communications received by the Secretary. This process was unanimously approved by the Nominating and Corporate Governance Committee of the Board of Directors (which is comprised of independent directors).
On June 20, 2003, TeamStaff distributed a company-wide Code of Ethics and Business Conduct and Code of Ethics for
our Chief Executive Officer, Chief Financial Officer and Controller. Additionally, both the Codes were posted on TeamStaff’s internal intranet website and are available on TeamStaff’s Internet web address,
www.teamstaff.com. These Codes were adopted by TeamStaff’s Board of Directors, and provide employees with a confidential method of reporting suspected Code violations.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own, directly or indirectly, more than 10% of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities we issue. Officers, directors and greater than 10% shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms that they file. Based solely on a review of the copies of such reports received by us, we believe that all Section 16(a) filing requirements applicable to our officers, directors and 10% shareholders were complied with during the 2008 fiscal year.
ITEM 11. EXECUTIVE COMPENSATION AND RELATED INFORMATION
Compensation Discussion and Analysis
The
following provides certain summary information concerning compensation during the years ended September 30, 2006, 2005, and 2004 paid to or earned by TeamStaff’s Chief Executive Officer and each of the executive officers of TeamStaff who received in excess of $100,000 in compensation during the last fiscal year.![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ANNUAL COMPENSATION | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | LONG TERM COMPENSATION |
NAME AND PRINCIPAL POSTION | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | YEAR | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | SALARY | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | BONUS | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | OTHER | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | OPTIONS | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | RESTRICTED STOCK |
T. Kent Smith | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2006 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 250,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 50,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 60,000 | |
Chief Executive Officer | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 250,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 170,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 100,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2004 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 250,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 100,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | |
Rick J. Filippelli | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2006 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 224,988 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 50,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 50,000 | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 224,988 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 138,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2004 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 224,988 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 70,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 50,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | |
James Houston | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2006 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 180,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 30,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 30,000 | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 48,461 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 14,700 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | -0- | |
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TeamStaff provides normal and customary life and health insurance benefits to all of its employees including executive officers. TeamStaff has a 401(k) plan that is voluntary.
CompensationBoard of Directors,
Effective commencing as of January 1, 2004, the Chairman, Vice Chairman and Chairman of the Audit Committee each receive $3,000 per month. The Chairman of the Nominating and Corporate Governance Committee receives $2,500 per month. All other non-employee directors receive $1,667 per month. All non-employee Board members receive $1,500 for each in-person Board meeting attended and $750 for each telephonic Board meeting in which they participate. All committee members receive $600 for each in-person meeting attended and $300 for each telephonic committee meeting in which they participate. The Chairman of each committee receives $1,000 for each in-person committee meeting attended and $500 for each telephonic meeting in which he participates. Non-employee Directors also receive $1,000 for each in-person meeting with Company executives that do not constitute Board or Committee meetings. On November 18, 2004 the non-employee director cash compensation terms were amended to provide that non-committee members would be compensated in the same manner as committee members for any committee meeting they attend or telephonic meeting in which they participate at the written request of the committee Chairman. Additionally non-employee directors will receive $1,000 per day for their attendance at continuing education or other seminars they attend in connection with their service as a TeamStaff director. Non-employee Board members also receive reimbursement of their Board-related travel, cell phone and similar expenses.
Under the Company’s Non-Executive Director Stock Option Plan, directors 1) receive 5,000 options upon joining the Board; 2) receive 5,000 options on September 1st of each year thereafter (subject to downward adjustment for less than a full year’s service); and 3) for one year after joining the Board are entitled to purchase restricted stock from TeamStaff at a price equal to 80% of the closing bid price on the date of purchase up to an aggregate purchase price of $50,000. Our shareholders previously approved this option plan.
Table of ContentsEmployment Agreements
On June 30, 2005 TeamStaff entered into a two-year employment agreement with Mr. T. Kent Smith, its President and Chief Executive Officer. The term of the agreement commenced on October 1, 2005 and terminates on September 30, 2007. The material terms of Mr. Smith’s employment agreement provide for a base salary of $250,000 per annum and standard Company executive benefits as provided under his prior agreement. In addition, Mr. Smith is eligible to receive a bonus equal to up to 70% of his base salary upon satisfaction of performance-based criteria. Mr. Smith will be considered for future salary increases as may be determined by the Management Resources and Compensation Committee and senior management share responsibility for establishing, implementing and continually monitoring our executive compensation program, with the Board making the final determination with respect to executive compensation. The goal of our executive compensation program is to motivate and incentivize, as well as provide a competitive total compensation package to our executive management team through a combination of base salary, annual cash incentive bonuses, long-term equity incentive compensation and broad-based benefits programs. This Compensation Discussion and Analysis explains our compensation objectives, policies and practices with respect to our Chief Executive Officer, Chief Financial Officer and certain of our other most highly-compensated executive officers as determined in accordance with applicable SEC rules, which are collectively referred to herein as the Named Executive Officers.
Objectives of Our Executive Compensation Program
Our executive compensation program is designed to achieve the following objectives:
attract and retain talented and experienced executives necessary to achieve our strategic objectives in the highly competitive and dynamic industry in which we compete;
motivate and reward executives whose knowledge, skills and performance are critical to our success;
align the interests of our executives and stockholders by motivating executives to increase stockholder value;
to increase our long-term profitability and, accordingly, increase stockholder value;
provide a competitive compensation package in which a significant portion of total compensation is determined by corporate and individual results and the creation of shareholder value; and foster a shared commitment among executives by coordinating their corporate and individual goals.
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Our Executive Compensation Program
Our executive compensation consists of base salary, cash incentive bonuses, long-term equity incentive compensation and broad-based benefits programs. Consistent with the emphasis we place on performance-based incentive compensation, cash incentive bonuses and long-term equity incentive compensation in the form of stock options constitute a significant portion of our total executive compensation. We structured cash incentive bonuses to be primarily tied to the achievement of predetermined Company and individual performance goals, which are established at the beginning of each year (or in the case of Named Executive Officers who have commenced employment during the applicable fiscal year, at the time of or shortly following their engagement by our Company), on an individualized basis.
Within the context of the Boardoverall objectives of Directors. Mr. Smith willour compensation program, we determined the specific amounts of compensation to be eligiblepaid to participateeach of our executives in 2008 based on a number of factors including:
our understanding of the amount of compensation generally paid by similarly situated companies to their executives with similar roles and responsibilities;
our executives’ performance during the fiscal year in general and as measured against predetermined Company and individual performance goals;
| • | | the roles and responsibilities of our executives; |
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| • | | the individual experience and skills of, and expected contributions from, our executives; |
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| • | | the amounts of compensation being paid to our other executives; |
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| • | | our executives’ historical compensation and performance at our Company; and |
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| • | | any contractual commitments we have made to our executives regarding compensation. |
Each of the primary elements of our executive compensation is discussed in detail below, including a description of the particular element and how it fits into our overall executive compensation program. In the descriptions below, we highlight particular compensation objectives that we have designed our executive compensation program to address. However, it should be noted that we have designed the various elements of our compensation program to complement each other and thereby collectively serve all of our executive compensation objectives. Accordingly, whether or not specifically mentioned below, we believe that each element of our executive compensation program, to a greater or lesser extent, serves each of our compensation objectives.
To understand the Company’s incentive stock ownership plan as may be determined byposition within the marketplace for management talent and to assist it in making compensation decisions that will help us attract and retain a strong management team, the Management Resources and Compensation Committee ofreviews national compensation survey data, peer financial performance and compensation information, the Board of Directors. The agreement also includes provisionsCompany’s financial performance both against its internal financial targets and its designated peer group, and internal compensation comparability among senior executives.
In order to assist the Committee in designing an overall effective compensation plan to reach its goals, the Committee retained BDO Seidman, LLP as an outside compensation consultant in 2006 to evaluate its programs and to assist it in establishing future guidelines for
payment of all compensation otherwise payable under the agreement in the event that Mr. Smith is terminated without causebase salaries and
one year of severance in all circumstances other
than for termination ‘‘for cause.’’ In the event that there is a change of control of TeamStaff and Mr. Smith’s employment is terminated (or his position is changed), Mr. Smith will be entitled to acceleration of all incentive compensation, all compensation otherwise due under the agreement and an additional twelve (12) months of his then in-effect base salary. A ‘‘change of control’’ is defined generally to constitute a change of 20% of more of the beneficial ownershipelements of the Company’s
outstanding Common Stock, orexecutive compensation program. Although the Committee has not subsequently retained a
changecompensation consultant, the Committee utilized the recommendations of BDO Seidman, in
two thirdsconjunction with its business judgment based on its review of
the Board of Directors, subject to certain exceptions.On June 30, 2005 TeamStaff entered into a twenty seven month employment agreement with Mr. Rick J. Filippelli,other publicly available data, in determining executive compensation for 2008. In conducting its Vice President and Chief Financial Officer. The term of the agreement commenced on June 30, 2005 and terminates on September 30, 2007. The material terms of Mr. Filippelli’s employment agreement provide for a base salary of $225,000 per annum, a potential bonus of up to 70% and standard Company executive benefits, upon substantially the same terms as provided for Mr. Smith. The Management Resources and Compensation Committee of the Board of Directors will consider Mr. Filippelli for future compensation increases as may be determined. Mr. Filippelli will be eligible to participate in the Company’s incentive stock ownership plan as may be determined byanalysis, the Management Resources and Compensation Committee ofreviewed compensation data from the Board of Directors. The agreement also includes provisions for payment of all compensation otherwise payable under the agreementfollowing issuers that compete in the event that Mr. Filippelli is terminated without cause and one year of severance in all circumstances other than for termination ‘‘for cause.’’ In the event that there is a change of control of TeamStaff and Mr. Filippelli’s employment is terminated (or his position is changed), Mr. Filippelli will be entitled to acceleration of all incentive compensation, all compensation otherwise due under the agreement and an additional twelve (12) months of his then in-effect base salary. A ‘‘change of control’’ is defined generally to constitute a change of 20% ofor more of our industry segments: AMN Healthcare Services, Inc., Cross Country Healthcare, Inc. and Medical Staffing Network Holdings, Inc.
Key Events Affecting Compensation Decisions in 2008
During fiscal 2008, the
beneficial ownership of the Company’s outstanding Common Stock, or a change in two thirds of the Board of Directors, subject to certain exceptions.Change in Control Agreement
On October 31, 2006, TeamStaff entered into a Change in Control Agreement with James D. Houston, its Vice President of Business and Legal Affairs and General Counsel. The Change in Control Agreement supplemented and amended Mr. Houston’s Severance Agreement dated October 11, 2005. The severance agreement includes provisions for payment of all compensation otherwise payable pursuant to Mr. Houston’s employment in the event that Mr. Houston is terminated without cause and six months of severance in all circumstances other than for termination ‘‘for cause.’’ In the event that there is a change of control of TeamStaff and Mr. Houston’s employment is terminated (or his position is changed), Mr. Houston will be entitled to acceleration of all incentive compensation, all compensation otherwise due pursuant to his employment and an additional twelve (12) months of his then in-effect base salary. A ‘‘change of control’’ is defined generally to constitute a change of 30% of more of the beneficial ownership of the Company’s outstanding Common Stock, or a change in two thirds of the Board of Directors, subject to certain exceptions.
Table of Contentsfollowing significant events transpired which were considered by our Management Resources and Compensation Committee Report onin making compensation decisions for our Named Executive Compensation
This report is submitted byOfficers:
We reported income from continuing operations throughout the Management Resources and Compensation Committee2008 fiscal year for the first time since fiscal 2003.
Completion in January 2008 of the Boarddisposition of Directorsour per diem nurse staffing business located in Memphis, Tennessee pursuant to which we received a cash purchase price of TeamStaff, Inc. (‘‘TeamStaff’’$447,000 for the acquired business and related assets.
39
In March 2008, we entered into a $3,000,000 amended and restated loan and security agreement (the “Loan Agreement”) with Business Alliance Capital Company (“BACC”), a division of Sovereign Business Capital (the “Lender”).
DuringUnder the
fiscal year ended September 30, 2006,Loan Agreement, the
Management ResourcesLender agreed to provide a revolving credit facility to the Company in an aggregate amount of up to $3,000,000, subject to the further terms and
Compensation Committee was responsible for reviewing TeamStaff’s stock optionconditions of the Loan Agreement. The loan is secured by a first priority lien on all of the Company’s assets. Previously in 2005, the Company and
long term incentive plansPNC Bank, National Association (“PNC”) had entered into a $8,000,000 revolving credit facility (“PNC Loan Facility”). Pursuant to the Loan Agreement, the Lender (i) acquired by assignment from PNC all right, title and
reviewing and approving compensation matters concerning the executive officers and senior managementinterest of
TeamStaff. Further, the Management Resources and Compensation Committee balances compensation among TeamStaff’s executive officers and senior management.Overview and Philosophy. TeamStaff uses its compensation program to achieve the following objectives:
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| • | To provide compensation, as determined by the Management Resources and Compensation Committee, that attracts, motivates and retains the talented, high caliber officers and employees necessary to achieve TeamStaff’s strategic objectives; |
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| • | To align the interest of officers with the success of TeamStaff; |
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| • | To align the interest of officers with stockholders by including long-term equity incentives; and |
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| • | To increase the long-term profitability of TeamStaff and, accordingly, increase stockholder value. |
CompensationPNC under the executivePNC Loan Facility, the PNC note and related loan documentation, and (ii) restructured the PNC Loan Facility into a $3,000,000 three (3) year revolving credit facility. The loan is for a term of 36 months and matures on March 31, 2011. Interest on the loan accrues on the daily unpaid balance of the loan advances at a per annum rate of one-quarter (.25%) percentage point above the Prime Rate in effect from time to time, but not less than five and one-half percent (5.5%) per annum.
These events and transactions have strengthened our company and positioned us for future growth. For additional information regarding these transactions, see “Business” in Part I of this Annual Report. The successful completion of these transactions was taken into consideration in compensation
program is comprised of cash compensation in the form of base salary and bonus compensation. Executives are also granted severance plans providing various benefits upon termination of employment without cause and, in some cases (including the Chief Executive Officer), a change of control of TeamStaff. In addition, the compensation program includes various other benefits, including medical and insurance plans and TeamStaff’s 401(k) Plan. These plans are generally available to all employees of TeamStaff.The principal factors that the Management Resources and Compensation Committee considered with respect to each officer’s compensation package for fiscal year ended September 30, 2006 are summarized below. The Management Resources and Compensation Committee may apply different or additional factors in making decisions with respect to executive compensation in future years, at its discretion.
Base Salary. Compensation levels for each of TeamStaff’s officers, including the Chief Executive Officer, are generally set within the range of salaries that the Management Resources and Compensation Committee believes is paid to officers with comparable qualifications, experience and responsibilities at similar companies. In setting compensation levels, the Management Resources and Compensation Committee takes into account such factors as (i) TeamStaff’s past performance and future expectations, (ii) individual performance and experience and (iii) past salary levels. The Management Resources and Compensation Committee does not assign relative weights or ranking to these factors, but instead makes a determination based upon the consideration of all of these factors as well as the progress made with respect to TeamStaff’s long-term goals and strategies. Base salary, while reviewed annually, is only adjusted as deemed necessary2008, both by the Management Resources and Compensation Committee in determining totalits decisions relating to executive officer compensation for each officer. Base salary levels for each of TeamStaff’s officers, other thanand by the Chief Executive Officer are also based in part upon evaluations and recommendations made by the Chief Executive Officer.
Equity Incentives.his decisions relating to other executives. The Management Resources and Compensation Committee believes that stock participation aligns officers’ interests with those of the stockholders. In addition, the Management Resources and our senior management team achieved highly positive results during fiscal 2008.
Compensation Committee believes that equity ownership by officers helps to balance the short-term focus of annual incentive compensation with a longer-term view and may help to retain key executive officers. Long-term incentive compensation, generally granted in the form of stock options and grants of restricted stock, allows the officers to share in any appreciation in the value of TeamStaff’s common stock.In making stock option and restricted stock grants, the Management Resources and Compensation Committee considers general corporate performance, individual contributions to TeamStaff’s financial,
Decisions
Table of Contentsoperational and strategic objectives, the Chief Executive Officer’s recommendations, level of seniority and experience, existing levels of stock ownership, previous grants of restricted stock or options, vesting schedules of outstanding restricted stock or options and the current stock price. During the fiscal year ended September 30, 2006, the Management Resources and Compensation Committee did not grant any stock options, and made grants of restricted stock as further described in the section entitled ‘‘Restricted Stock Grants in Last Fiscal Year.’’
Other Benefits. TeamStaff also has various broad-based employee benefit plans. Executive officers participate in these plans on the same terms as eligible, non-executive employees, subject to any legal limits on the amounts that may be contributed or paid to executive officers under these plans. TeamStaff offers a 401(k) plan, which allows employees to invest in a wide array of funds on a pre-tax basis. TeamStaff also maintains insurance and other benefit plans for its employees, including the executive officers of TeamStaff.
Chief Executive Officer Compensation.
In the fiscal year ended September 30, 2006, T. Kent Smith, TeamStaff’s Chief Executive Officer, received a base salary at the annual rate of $250,000, which was the same as his base salary during the prior fiscal year. TeamStaff employed Mr. Smith as its Chief Executive Officer in June 2003 and paid an aggregate amount of $250,000 to him as base salary for his services as Chief Executive Officer during the period October 1, 2004 through September 30, 2005. Mr. Smith’s compensation is determined pursuant to an employment agreement dated June 18, 2003, which provides for base compensation of $250,000 per annum and a bonus, in the discretion of the Management Resources and Compensation Committee, of up to 50 % of his base salary. Pursuant to his employment agreement, Mr. Smith also was awarded options to purchase 400,000 shares of Common Stock exercisable at $3.00 per share and subject to certain vesting requirements. Mr. Smith’s base salary is believed by the Management Resources and Compensation Committee to be consistent with the range of salary levels received by executives in a similar capacity in companies of comparable size. During the period between October 1, 2004 and September 30, 2005, Mr. Smith was awarded a bonus of $70,000 in light of the success he achieved inclosing the favorable acquisition of RS Staffing Services, Inc. In accordance with the terms of his employment agreement, Mr. Smith was awarded a total bonus of $170,000 for the fiscal year ended September 30, 2005 (including the $70,000 previously mentioned). Mr. Smith was awarded options to purchase 100,000 shares of Common Stock exercisable at $2.08 per share and subject to certain vesting requirements during the fiscal year ended September 30, 2005. During the period between October 1, 2005 and September 30, 2006, Mr. Smith was awarded a bonus of $50,000 in light of the success he achieved in closing the sale of the DSI Payroll Services division. Mr. Smith was not awarded any other additional bonus for the fiscal year ended September 30, 2006. Mr. Smith was awarded 60,000 shares of restricted stock with a market value of $1.70 per share on the grant date of April 27, 2006. The restricted stock is subject to a certain vesting requirements.
On June 30, 2005 TeamStaff, Inc. (‘‘TeamStaff’’) entered into a two-year employment agreement with Mr. T. Kent Smith, its President and Chief Executive Officer. The Compensation Committee and the Board determined that the Company desired to retain Mr. Smith’s services and desired to set the terms of his new agreement in advance of the termination of the then-existing agreement. The term of the new agreement commenced on October 1, 2005. The material terms of Mr. Smith’s employment agreement provide for a base salary of $250,000 per annum and standard Company executive benefits. In addition, Mr. Smith is eligible to receive a bonus equal to up to 70% of his base salary upon satisfaction of performance-based criteria. Mr. Smith will be considered for future salary increases as may be determined by the Management Resources and Compensation Committee of the Board of Directors. Mr. Smith will be eligible to participate in the Company’s incentive stock ownership plan as may be determined by the Management Resources and Compensation Committee of the Board of Directors. The agreement also includes provisions for payment of all compensation otherwise payable under the agreement in the event that Mr. Smith is terminated without cause and one year of severance in all circumstances other than for termination ‘‘for cause.’’ In the event that there is a change of control of TeamStaff and Mr. Smith’s employment is terminated (or his position is changed), Mr. Smith will be entitled to acceleration of all incentive compensation, all compensation otherwise
Table of Contentsdue under the agreement and an additional twelve (12) months of his then in-effect base salary. A ‘‘change of control’’ is defined generally to constitute a change of 20% of more of the beneficial ownership of the Company’s outstanding Common Stock, or a change in two thirds of the Board of Directors, subject to certain exceptions. The term of the agreement commences on October 1, 2005 and terminates on September 30, 2007.
Compensation of Executive Officers Other Than the CEO During Fiscal Year 2006
For the fiscal year ended September 30, 2006, executive officers other than the Chief2008, our Named Executive OfficerOfficers received base salaries and bonuses which the Management Resources and Compensation Committee believes reflected industry standards, prevailing compensation practices in similar companies with which TeamStaff competes for executive talent, the seniority and skill level of the executive officer, TeamStaff’s performance, and each executive officer’s contribution thereto. Base salaries and bonuses paid to our named executive officersNamed Executive Officers for the fiscal yearyears ended September 30, 20062008 and 2007 are as set forth in the table provided under the heading ‘‘Executive“Executive Compensation −— Summary Compensation Table.’’”
Base Salary
Our approach is to pay our executives a base salary that is competitive with those of other executive officers in our peer group of competitive companies. We believe that a competitive base salary is a necessary element of any compensation program that is designed to attract and retain talented and experienced executives. We also believe that attractive base salaries can motivate and reward executives for their overall performance. The base salary of each Named Executive Officer is reviewed annually, and may be adjusted in accordance with the terms of such executive officer’s employment agreement, where applicable, and certain performance criteria, including, without limitation: (i) individual performance and experience; (ii) our performance as a company; (iii) the functions performed by the executive officer; (iv) past salary; and (v) changes in the compensation peer group in which we compete for executive talent. Discretion is used to determine the weight given to each of the factors listed above and such weight may vary from individual to individual and the Management Resources and Compensation Committee may decline to assign relative weight or ranking to these factors, in its discretion. Evaluations of base salary are made regardless of whether a Named Executive Officer has entered into an employment agreement with us, and annual adjustments, if any, to the base salary of our Named Executive Officers are analyzed within the context of the terms and conditions of such employment agreements. Although evaluations of and recommendations as to base salary are made by the Management Resources and Compensation Committee and senior management, the ultimate determination is made by the Board of Directors. Salary levels for each of our Named Executive Officers, other than the Chief Executive Officer, were also based in part upon evaluations and recommendations made by the Chief Executive Officer.
To the extent that we have entered into employment agreements with our Named Executive Officers, the base salaries of such individuals reflect the initial base salaries that we negotiated with them at the time of their initial employment or promotion and our subsequent adjustments to these amounts to reflect market increases, the growth and stage of development of our company, our executives’ performance and increased experience, any changes in our executives’ roles and responsibilities and other factors. The initial base salaries that we negotiated with our executives were based on our understanding of base salaries for comparable positions at similarly situated companies at the time, the individual experience and skills of, and expected contribution from, each executive, the roles and responsibilities of the executive, the base salaries of our existing executives and other factors. We have entered into employment agreements with our Chief Executive Officer and Chief Financial Officer, the terms of which are summarized below.
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During the fiscal year ended September 30, 2007, the base salary of Mr. Filippelli averaged $253,932, reflecting an increase following his appointment as President and Chief Executive Officer. During the fiscal year ended September 30, 2008, the base salary of Mr. Filippelli averaged $280,000, representing an increase of approximately 9% over his 2007 base salary, which is consistent with our employment agreement with Mr. Filippelli. During the fiscal year ended September 30, 2008, the base salary of Ms. Presuto averaged $175,000. Ms. Presuto was not a named executive officer for our 2007 fiscal year.
Cash Incentive Bonuses
Consistent with our emphasis on performance incentive compensation programs, our executives are eligible to receive cash incentive bonuses primarily based upon their performance as measured against predetermined company and individual goals covering operations, business development and commercialization, and corporate and financial achievements. These goals are recommended by senior management to the Management Resources and Compensation Committee, and then by the Management Resources and Compensation Committee to the Board of Directors, at the beginning of each year. The goals are ultimately set by the Board of Directors. If a Named Executive Officer joined our Company during a particular year, these performance goals are established at the time of or shortly following such executive’s employment. The primary objective of our cash incentive bonuses is to motivate and reward our Named Executive Officers for meeting our short-term objectives using a performance-based compensation program with objectively determinable goals that are specifically tailored for each executive. In addition, we may reserve a portion of each executive’s annual cash incentive bonus to be paid at our discretion based on the executive’s overall performance. We maintain this discretionary portion of the annual cash incentive bonuses in order to motivate our executives’ overall performance and their performance relating to matters that are not addressed in the predetermined performance goals that we set. We believe that every important aspect of executive performance is not capable of being specifically quantified in a predetermined objective goal. For example, events outside of our control may occur after we have established the executives’ performance goals for the year that require our executives to focus their attention on different or other strategic objectives.
We establish the target amount of our cash incentive bonuses at a level that represents a meaningful portion of our executives’ currently paid out cash compensation, and set additional threshold and maximum performance levels above and below these target levels. In establishing these levels, in addition to considering the incentives that we want to provide to our executives, we also consider the bonus levels for comparable positions at similarly situated companies, our historical practices and any contractual commitments that we have relating to executive bonuses.
Overall, the targets for the performance measures were set at levels that we believed to be achievable with strong performance by our executives. Although we cannot always predict the different events that will impact our business during an upcoming year, we set our performance goals for the target amount of annual incentive cash bonuses at levels that we believe will be achieved by our executives a majority of the time. Our maximum and threshold levels for these performance goals are determined in relation to our target levels, are intended to provide for correspondingly greater or lesser incentives in the event that performance is within a specified range above or below the target level, and are correspondingly easier or harder to achieve. We set the performance goals for the maximum amount at a level that we believe will be achieved in some years, but will not be achieved a majority of the time. At the end of each year, the Management Resources and Compensation Committee evaluates the performance of each executive officer and provides to the Board its recommendation for the amount of the cash incentive bonus to be paid to each such executive for that year, with the Board making the final determination as to the amount of the cash incentive bonus.
Under his employment agreement, Mr. Filippelli will also be entitled to a cash bonus of up to 70% of his annual base salary in the discretion of the Board of Directors as recommended by the Management Resources and Compensation Committee, subject to certain performance and EBITDA requirements, as well as up to an additional $60,000 for exceeding certain performance and EBITDA requirements.
Under her employment agreement, Ms. Presuto will also be entitled to a cash bonus of up to 50% of her annual base salary in the discretion of the Board of Directors as recommended by the Management Resources and Compensation Committee, subject to certain performance and EBITDA requirements, as well as up to an additional $30,000 for exceeding certain performance and EBITDA requirements.
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For our 2008 fiscal year, Mr. Filippelli received a bonus of $196,000 which amount was earned under his employment agreement. For our 2008 fiscal year, Ms. Presuto received a bonus of $87,500 which amount was earned under her employment agreement. As noted above, the amount of the bonus paid to each Named Executive Officer also reflects the extent to which such executive achieved the milestones established at the beginning of the year, plus the amount of the discretionary bonus that is based on our assessment of their overall performance during the year. For our 2007 fiscal year, Mr. Filippelli received a bonus of $185,500 which amount was earned under his employment agreement. Ms. Presuto was not a named executive officer for our 2007 fiscal year.
Long-Term Equity Incentive Compensation
We believe that long-term company performance is best achieved through an ownership culture that encourages long-term performance by our executive officers through the use of stock-based awards. We grant stock options and restricted stock awards in order to provide certain executive officers with a competitive total compensation package and to reward them for their contribution to our long-term growth in value and the long-term price performance of our common stock. Grants of equity-based awards are designed to align the executive officer’s interest with that of our shareholders. To assist us in retaining executives and encouraging them to seek long-term appreciation in the value of our stock, the benefits of the awards generally are not immediately realizable by the grantee as the awards vest over a specified period, usually three years, and therefore an employee must remain with us for a specified period to enjoy the full potential economic benefit of an award. We may consider as one of a number of factors the level of an executive officer’s realizable compensation from awards granted in prior years when making decisions with respect to awards to be granted to that executive officer for the most recently ended fiscal year.
Based on the stage of our development and the incentives we are trying to provide to our executives, we have currently chosen to use restricted stock awards. Our decisions regarding the amount and type of long-term equity incentive compensation and relative weighting of these awards among total executive compensation have also been based on our understanding of market practices of similarly situated companies and our negotiations with our executives in connection with their initial employment or promotion by us.
The Management Resources and Compensation Committee periodically reviews the number of vested and unvested
optionsequity awards held by
executive officersNamed Executive Officers and makes
stockadditional grants to these executives to provide greater incentives to continue employment with TeamStaff and to strive to increase
stockholdershareholder value. Stock options typically have been granted to executive officers when the executive first joins TeamStaff, in connection with a significant change in responsibilities and, occasionally, to achieve equity within a peer group. During the fiscal year ended September 30,
2006,2008, the Management Resources and Compensation Committee made grants of restricted stock to executive officers, as described in the section entitled
‘‘Executive“Executive Compensation
−– Restricted Stock Grants in Last Fiscal Year.
’’” The primary factors upon which specific grants made by the Management Resources and Compensation Committee during fiscal year
20062008 were based are the executive’s past performance, anticipated future contribution, consistency within the executive’s peer group, prior option grants to the executive officer, the percentage of outstanding equity owned by the executive, the level of vested and unvested options, competitive market practices and the executive’s responsibilities and performance. The Management Resources and Compensation Committee does not set specific target levels for options or restricted stock granted to named executive officers or for the
CEOChief Executive Officer but seeks to be competitive with similar companies.
Tax Deductibility
Stock option awards provide our executive officers with the right to purchase shares of our common stock at a fixed exercise price based on the market price of our common stock on the date of grant and are exercisable for a period of up to ten years, subject to continued employment with our company. Stock options are earned on the basis of continued service to us and generally vest over three years, beginning with one-third vesting one year after the date of grant with the balance then vesting in equal monthly installments over the following two year period. Such vesting is intended as an incentive to such executive officers to remain with us and to provide a long-term incentive. Restricted stock awards are also subject to vesting requirements as determined by our Management Resources and Compensation Committee. For the restricted stock awards granted to our Named Executive Compensation. Section 162(m)Officers during the 2008 fiscal year, these awards vest as follows: one-third of the Code limitsrestricted shares vest on the tax deduction to TeamStaff to $1 million for compensation paid to anydate of grant, and the remaining shares vest in two equal annual installments on September 30, 2008 and 2009, upon satisfaction of the performance targets and other key objectives established by the Management Resources and Compensation Committee.
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Options are generally exercisable for a limited period of time after termination of employment (other than termination for cause) if vested, subject to certain rights that were negotiated in connection with the employment agreements we entered into with our Named Executive Officers. We do not require that any portion of the shares acquired be held until retirement, we do not have a policy prohibiting a director or executive officer from hedging the economic risks of his or her stock ownership and we do not have any minimum stock ownership requirements for executive officers unless certain requirementsand directors. Equity-linked compensation awards are met.made pursuant to our 2006 Long Term Incentive Plan (the “2006 Plan”). See “Payments Upon Termination or Change-in-Control” for a discussion of the change-in-control provisions related to stock options and restricted stock awards. The exercise price of each stock option granted under the 2006 Plan is based on the fair market value of our common stock on the grant date and the Management Resources and Compensation Committee has considered theseset the exercise price of the options granted to our Named Executive Officers other than our Chief Executive Officer at a price greater than the fair market value in order to reinforce the incentive nature of the award.
In addition to periodically granting performance-based stock options, we also granted options to certain of our Named Executive Officers at the time of their hiring as an incentive to accept employment with us.
We granted Mr. Filippelli 32,500 shares of restricted stock in connection with the approval of the formal letter agreement, dated as of February 14, 2007, modifying his employment agreement following his appointment as President and Chief Executive Officer. Such restricted shares granted to Mr. Filippelli were subject to the following vesting schedule: (i) 7,500 shares vested on the grant date, (ii) 12,500 shares were to vest on September 30, 2008, subject to certain performance based vesting requirements, and (iii) 12,500 shares were to vest on September 30, 2009 subject to certain performance based vesting requirements. In connection with a new employment agreement with Mr. Filippelli, dated as of April 17, 2008, 25,000 unvested shares were cancelled and 41,250 shares of restricted stock were granted. Such restricted shares granted to Mr. Filippelli were subject to the regulations. Itfollowing vesting schedule: (i) 13,750 shares vested on the grant date, (ii) 13,750 shares vested on September 30, 2008, which were subject to certain performance based vesting requirements, and (iii) 13,750 shares will vest on September 30, 2009 subject to certain performance based vesting requirements.
In connection with an employment agreement with Ms. Presuto, dated as of July 30, 2008, 30,000 shares of restricted stock were granted. Such restricted shares granted to Ms. Presuto were subject to the following vesting schedule: (i) 10,000 shares vested on the grant date, (ii) 10,000 shares vested on September 30, 2008, which were subject to certain performance based vesting requirements, and (iii) 10,000 shares will vest on September 30, 2009 subject to certain performance based vesting requirements.
Awards granted under our equity compensation plans are based on a number of factors, including: (i) the grantee’s position with us; (ii) his or her performance and responsibilities; (iii) the extent to which he or she already holds an equity stake with us; (iv) equity participation levels of comparable executives at other companies in the compensation peer group; (v) general corporate performance; (vi) the Chief Executive Officer’s recommendations; (vii) the current stock price; and (viii) individual contribution to the success of our financial performance. However, the plans do not provide any formulated method for weighing these factors, and a decision to grant an award is based primarily upon the evaluation by the Management Resources and Compensation Committee’s present intention that, so longCommittee, in consultation with senior management and the Board of Directors, of the past as it is consistent with its overall compensation objectives, substantially allwell as the anticipated future performance and responsibilities of the individual in question. Awards to executive compensation be deductible for United States federal income tax purposes. Theofficers are first reviewed and approved by the Management Resources and Compensation Committee, believes that any compensation deductions attributablewhich then makes a recommendation for final approval by our Board of Directors. Option grants to options or restricted stock grantedexecutives other than the Chief Executive Officer are approved by the Management Resources and Compensation Committee based upon recommendations made by the Chief Executive Officer based upon the individual executive’s performance and market data relating to option grants to individuals occupying similar positions at comparably situated companies.
See the tabular disclosure presented below under the employee stock optionheading “Executive Compensation Tables — Grants of Plan-Based Awards in 2008” for a summary of the equity awards granted to our Named Executive Officers during fiscal 2008.
Other Compensation
We maintain broad-based benefits that are provided to all employees, including health insurance, life and disability insurance and a 401(k) plan. Executive officers participate in these plans currently qualifyon the same terms as eligible, non-executive employees, subject to any legal limits on the amounts that may be contributed or paid to executive officers under these plans. Generally, we do not provide any special reimbursement for an exceptionperquisites, such as country clubs, corporate aircraft, living or security expenses, for our employees or for any executive officers.
Pension Benefits.We do not offer qualified or non-qualified defined benefit plans to our executive officers or employees. In the future, we may elect to adopt qualified or non-qualified defined benefit plans if we determine that doing so is in our best interests.
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Nonqualified Deferred Compensation.None of our Named Executive Officers participates in or has account balances in non-qualified defined contribution plans or other deferred compensation plans maintained by us. To date, we have not had a significant reason to offer such non-qualified defined contribution plans or other deferred compensation plans. In the future, we may elect to provide our executive officers or other employees with non-qualified defined contribution or deferred compensation benefits if we determine that doing so is in our best interests.
Severance and Change of Control Arrangements.As discussed more fully in the section below entitled “Payments Upon Termination or Change in Control”, certain of our executive officers are entitled to certain benefits upon the termination of their respective employment agreements. The severance agreements are intended to mitigate some of the risk that our executive officers may bear in working for a company competing in a highly competitive and dynamic industry, such as ours.
Perquisites.The Company generally does not provide its named executive officers with perquisites.
Policies Regarding Tax Deductibility of Compensation.Within our performance-based compensation program, we aim to compensate the Named Executive Officers in a manner that is tax-effective for us. Section 162(m) of the Internal Revenue Code restricts the ability of publicly-held companies to take a federal income tax deduction for compensation paid to certain of their executive officers to the disallowanceextent that compensation exceeds $1.0 million per covered officer in any fiscal year. However, this limitation does not apply to compensation that is performance-based. We consider these requirements in our compensation determinations. The non-performance-based compensation paid in cash to our executive officers in the 2008 fiscal year did not exceed the $1.0 million limit per officer, and we do not anticipate that the non-performance-based compensation to be paid in cash to our executive officers in 2008 will exceed that limit. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, our Management Resources and Compensation Committee has not adopted a policy requiring all compensation to be deductible. Our Management Resources and Compensation Committee intends to continue to evaluate the effects of the compensation limits of Section 162(m) and to grant compensation awards in the future in a manner consistent with the best interests of our company and our stockholders.
Subsequent to the fiscal year ended September 30, 2008, we entered into employment agreements with Kevin Wilson, the President of our TeamStaff GS subsidiary and Dale West, the President of our TeamStaff Rx subsidiary. Due to the timing of such appointments, these persons are not considered named executive officers for the purpose of this Compensation Disclosure and Analysis and the additional disclosures that follow in Item 11 of this Annual Report on Form 10-K. However, we have presented a summary of the material terms and conditions of our employment agreements with these officers below under Section 162(m)the caption “Executive Compensation and Related Information – Employment Agreements with Other Executive Officers”.
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Summary of Executive Compensation
The following table sets forth certain information concerning all cash and non-cash compensation awarded to, earned by or paid to our Chief Executive Officer and our Chief Financial Officer (the “Named Executive Officers”), during the fiscal year ended September 30, 2008:
SUMMARY COMPENSATION TABLE
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | Change in Pension | | | | | | | |
| | | | | | | | | | | | | | | | | | Value and | | | | | | | |
| | | | | | | | | | | | | | | | | | Nonqualified Deferred | | | | | | | |
| | | | | | | | | | | | | | Stock | | | Compensation | | | All Other | | | | |
Name and Principal | | | | | | Salary | | | Bonus | | | Awards | | | Earnings | | | Compensation | | | | |
Position | | Year | | | ($)(1) | | | ($)(2) | | | ($)(3) | | | ($) | | | ($)(4) | | | Total ($) | |
|
Rick J. Filippelli, President and Chief Executive Officer | | | 2008 | | | $ | 280,000 | | | $ | 196,000 | | | $ | 100,796 | | | $ | — | | | $ | 4,495 | | | $ | 581,291 | |
| | | 2007 | | | $ | 253,920 | | | $ | 185,500 | | | $ | 60,433 | | | $ | — | | | $ | 3,199 | | | $ | 503,052 | |
Cheryl Presuto, Chief Financial Officer | | | 2008 | | | $ | 175,000 | | | $ | 87,500 | | | $ | 57,433 | | | $ | — | | | $ | 3,394 | | | $ | 323,327 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | By | |
(1) | | “Salary” is comprised of the cash salary paid to the Named Executive Officers during fiscal 2008 and 2007. |
|
(2) | | “Bonus” is comprised of cash awards made to the Named Executive Officers in the discretion of the Company’s Board of Directors as recommended by the Management Resources and Compensation Committee, subject to certain performance and EBITDA requirements. |
|
(3) | | “Stock Awards” reflect the portion of restricted stock grants awarded to Named Executives Officers under the
Board Company’s 2006 Long Term Incentive Plan that was recognized by the Company as a compensation expense in fiscal year 2008 and 2007 in accordance with the provisions of Directorsrevised Statement of TeamStaff, Inc.Financial Accounting Standards (“SFAS”) No. 123, (“FAS 123R”) Share-Based Payment. |
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(4) | | “All Other Compensation” consists of compensation received from employer matching contributions to the Company’s 401(k) Plan, long term disability insurance premiums and life insurance premiums paid by the Company for each Named Executive Officer. |
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![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Karl W. Dieckmann
T. Stephen Johnson
Rocco Marano (October 1, 2005 − April 27, 2006)
Ron Aldrich (April 27, 2006 − September 30, 2006) |
This report
Additional Information.The Summary Compensation Table above quantifies the amount or value of the different forms of compensation earned by or awarded to our Named Executive Officers in fiscal 2008 and provides a dollar amount for total compensation. Descriptions of the material terms of each Named Executive Officer’s employment agreement and related information is provided under “Employment Agreements with Named Executive Officers” below. The agreements provide the general framework and some of the specific terms for the compensation of the Named Executive Officers. Approval of the Management Resources and Compensation Committee
does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other filing by us under the Securities Act of 1933, as amended, and/or the
Securities Exchange ActBoard of
1934, as amended, exceptDirectors is required prior to our entering into employment agreements with its executive officers or amendments to those agreements. However, many of the decisions relating to compensation for a specific year are made by the Management Resources and Compensation Committee and are implemented without changes to the
extent we specifically incorporate this reportgeneral terms of employment set forth in those agreements. For a discussion of the salary, bonus and equity compensation of our Named Executive Officers for fiscal 2008 and the decisions made by
reference therein.
the Management Resources and Compensation Committee relating to 2008 compensation, see “Compensation Discussion and Analysis” above. In addition, the Named Executive Officers earned or were paid the other benefits listed in the Summary Compensation Table and described in footnotes to the table. We have determined that Ms. Dale West, the President of ContentsOption/SAR TeamStaff Rx was not a Named Executive Officer for fiscal 2008 in light of the fact that she commenced employment with us on September 19, 2008. Similarly, Mr. Kevin Wilson, the President of TeamStaff GS is not considered a Named Executive Officer as his appointment to such position was made in October 2008, subsequent to our 2008 fiscal year end.
Grants in Last Fiscal YearOPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
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![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Name | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | No. of Securities Underlying Options Granted | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Percentage of Total Options Granted in Fiscal Year | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Exercise of Base Price Per Share | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Expiration Date |
T. Kent Smith | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Rick J. Filippelli | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
James Houston | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
The following table sets forth certain information with respect to the named executive officers concerning exercisegrants of stock options and SARs during the last fiscal year and the value of unexercised options and SARs held as ofplan-based awards for the year ended September 30, 2006.
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
2008 to the Named Executive Officers. ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
NAME | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | SHARES ACQUIRED ON EXERCISE | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | VALUE REALIZED | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS/SARS AS OF SEPTEMBER 30, 2006 EXERCISABLE/ UNEXERCISABLE | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | VALUE OF UNEXERCISED IN-THE-MONEY OPTIONS AS OF SEPTEMBER 30, 2006 EXERCISABLE/ UNEXERCISABLE(1) |
T. Kent Smith | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 500,000/0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 0/$0 | |
Rick J. Filippelli | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 100,000/0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 0/$0 | |
James Houston | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0/0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 0/$0 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
GRANTS OF PLAN-BASED AWARDS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Estimated Future Payments | | | Estimated Future Payments | | | | | | | | | | | | | |
| | | | | | Under Non-Equity Incentive | | | Under Equity Incentive Plan | | | | | | | | | | | | | |
| | | | | | Plan Awards | | | Awards | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | All Other | | | All Other | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock | | | Option | | | Exercise | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Awards: | | | Awards: | | | or Base | | | Grant Date | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Number of | | | Number of | | | Price of | | | Fair Value of | |
| | | | | | Thresh- | | | | | | | Maxi- | | | Thresh- | | | | | | | Maxi- | | | Shares of | | | Securities | | | Option | | | Stock and | |
| | | | | | old | | | Target | | | mum | | | old | | | Target | | | mum | | | Stock or | | | Underlying | | | Awards | | | Option | |
Name | | Grant Date | | | ($) | | | ($) | | | ($) | | | (#) | | | (#) | | | (#) | | | Units (#) | | | Options (#) | | | ($/Sh) | | | Awards ($) | |
Rick J. Filippelli | | | 4/17/2008 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 41,250 | (1) | | | | | | | | | | $ | 115,500 | |
Cheryl Presuto | | | 7/30/2008 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 30,000 | (2) | | | | | | | | | | $ | 64,200 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | |
(1) | (1) Based upon a closing sales price of | The restricted shares granted to Mr. Filippelli vest as follows: (i) 13,750 shares vest on the Common Stock at $1.28 per sharegrant date; (ii) 13,750 shares will vest on September 30, 2006.2008, subject to certain performance based vesting requirements; and (iii) 13,750 shares will vest on September 30, 2009 subject to certain performance based vesting requirements. |
|
(2) | | The restricted shares granted to Ms. Presuto vest as follows: (i) 10,000 shares vest on the grant date; (ii) 10,000 shares will vest on September 30, 2008, subject to certain performance based vesting requirements; and (iii) 10,000 shares will vest on September 30, 2009 subject to certain performance based vesting requirements. |
46
Additional Information.For information regarding the effect on the vesting and treatment of these stock awards on the death, disability or termination of employment of a Named Executive Officer or a change in control of our company, see “Potential Payments and Other Benefits Upon Termination of Employment or a Change in Control” and “Employment Agreements with Named Executive Officers” below. Each award of Restricted Stock to our Named Executive Officers in fiscal 2008 represents an award of Common Stock that is subject to certain restrictions, including restrictions on transferability. These Restricted Stock Awards were granted under our 2006 Plan. The restrictions lapse in accordance with the terms of the award agreement. Holders of shares of Restricted Stock have voting power and the right to receive dividends, if any, that are declared on those shares which are vested. The grants of Restricted Stock made to our Named Executive Officers vest as described in the footnotes to the above table. The 2006 Plan is administered by the Management Resources and Compensation Committee. The committee has authority to interpret the plan provisions and make all required determinations under those plans. This authority includes making required proportionate adjustments to outstanding awards upon the occurrence of certain corporate events such as reorganizations, mergers and stock splits. Awards granted under the 2006 Plan are generally only transferable to a beneficiary of a Plan participant upon his or her death. However, the committee may establish procedures for the transfer of awards to other persons or entities, provided that such transfers comply with applicable laws.
Discussion of Summary Compensation and Grants of Plan-Based Awards Tables
Our executive compensation policies and practices, pursuant to which the compensation set forth in
Last Fiscal YearOnthe Summary Compensation table and the Grants of Plan Based Awards table was paid or awarded, are described above under “Compensation Discussion and Analysis.” A summary of certain material terms of our compensation plans and arrangements is set forth below.
Outstanding Equity Awards
The following table sets forth certain information with respect to outstanding equity awards at September 30, 2008 with respect to the Named Executive Officers.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | | Stock Awards | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (i) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | (h) | | | Equity | |
| | | | | | | | | | | | | Equity | | | Incentive Plan | |
| | | | | | | | | | | | | | | | | (f) | | | (g) | | | Incentive Plan | | | Awards: | |
| | (b) | | | (c) | | | | | | | | | | | Number | | | Market | | | Awards: | | | Market or | |
| | Number of | | | Number of | | | | | | | | | | | of Shares | | | Value of | | | Number of | | | Payout Value of | |
| | Securities | | | Securities | | | | | | | | | | | or Units | | | Shares or | | | Unearned | | | Unearned | |
| | Underlying | | | Underlying | | | | | | | | | | | of Stock | | | Units of | | | Shares, Units or | | | Shares, Units or | |
| | Unexercised | | | Unexercised | | | (d) | | | | | | | That | | | Stock That | | | Other Rights | | | Other Rights | |
| | Options | | | Options | | | Option Exercise | | | (e) | | | Have Not | | | Have Not | | | That Have Not | | | That Have Not | |
(a) | | (#) | | | (#) | | | Price | | | Option Expiration | | | Vested | | | Vested | | | Vested | | | Vested | |
Name | | Exercisable | | | Unexercisable | | | ($) | | | Date | | | (#)(1) | | | ($)(2) | | | (#)(3) | | | ($)(2) | |
|
Rick Filippelli | | | 12,500 | | | | — | | | $ | 9.20 | | | | 5/21/09 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 4,167 | | | $ | 28,335 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 13,750 | | | $ | 38,500 | |
Cheryl Presuto | | | 4,500 | | | | — | | | $ | 7.84 | | | | 11/04/09 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 1,667 | | | $ | 11,336 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 10,000 | | | $ | 21,400 | |
| | |
(1) | | Represents unvested portion of stock award granted on April 27, 2006 with a three year vesting schedule. |
|
(2) | | The market or payout value of stock awards reported in Columns (g) and (i) is computed by multiplying the number of shares of stock reported in Column (f) and (h) by the closing market price of our Common Stock on the last trading day of fiscal 2008. |
|
(3) | | Represents unvested portion of stock award granted to Mr. Filippelli on April 27, 2008 and Ms. Presuto on July 30, 2008 as part of their employment agreements. These unvested shares are subject to certain performance criteria for the fiscal year ended September 30, 2009. |
47
Additional Information.Each stock option grant reported in the table above was granted under, and is subject to, our 2000 Employee Plan. The option expiration date shown above is the normal expiration date, and the last date that the options may be exercised. For each Named Executive Officer, the unexercisable options shown above are also unvested. Unvested shares are generally forfeited if the Named Executive Officer’s employment terminates, except to the extent otherwise provided in an employment agreement. For information regarding the effect on vesting of options on the death, disability or termination of employment of a Named Executive Officer or a change in control of our company, see “Payments Upon Termination or Change in Control” below. If a Named Executive Officer’s employment is terminated by us for cause, options (including the vested portion) are generally forfeited. The exercisable options shown above, and any unexercisable options shown above that subsequently become exercisable, will generally expire earlier than the normal expiration date if the Named Executive Officer’s employment terminates, except as otherwise specifically provided in the Named Executive Officer’s employment agreement. For a description of the material terms of the Named Executive Officer’s employment agreements, see “Employment Agreements With Named Executive Officers” above.
Restricted Stock Awards granted our Named Executive Officers were granted under the 2006 Plan. The stock awards held by our Named Executive Officers are subject to accelerated or continued vesting in connection with a change in control and upon certain terminations of employment, as described in more detail above under “Potential Payments and Other Benefits Upon Termination of Employment or a Change in Control.” For information regarding the effect on vesting on the death, disability or termination of employment of a Named Executive Officer or a change in control of our company, see “Payments Upon Termination or Change in Control” below. This table does not reflect prior grants of restricted stock awards that are fully vested.
Options Exercised and Stock Vested
None of our Named Executive Officers exercised any stock options during the 2008 fiscal year. The following table shows the vesting of restricted stock awards for the year ended September 30, 2008, for each of our Named Executive Officers.
| | | | | | | | | | | | | | | | |
| | Option Awards | | | Stock Awards | |
| | Number of Shares | | | Value Realized | | | | Number of Shares | | | Value Realized | |
| | Acquired on | | | on Exercise | | | Acquired on | | | on Vesting | |
Name | | Exercise (#) | | | ($) | | | Vesting (#) | | | ($)(1) | |
|
Rick J. Filippelli | | | — | | | | — | | | | 31,666 | | | $ | 83,252 | |
Cheryl Presuto | | | — | | | | — | | | | 21,666 | | | $ | 50,415 | |
| | |
(1) | | Amounts reflect the aggregate dollar amount realized upon vesting by multiplying the number of shares of stock vested by the market value of the underlying shares on the vesting date. |
Employment Agreements with Named Executive Officers
The following are summaries of the employment agreements with our Named Executive Officers. The agreements provide the general framework and some of the specific terms for the compensation of the Named Executive Officers. See “Payments Upon Termination or Change-in-Control” below for a discussion of payments due to our Named Executive Officers upon the termination of his employment or a change-in-control of our company.
Rick J. Filippelli
On June 30, 2005 TeamStaff entered into a twenty seven month employment agreement with Mr. Rick J. Filippelli, its Vice President and Chief Financial Officer. The term of the agreement commenced on June 30, 2005 and was scheduled to terminate on September 30, 2007. TeamStaff entered into a formal letter agreement dated and effective as of February 14, 2007 with Mr. Filippelli following his appointment on January 10, 2007 as President and Chief Executive Officer, which modified certain terms of his 2005 employment agreement. However, on April 17, 2008, we entered into a new employment agreement with Mr. Filippelli, the material terms of which are summarized below. The following description of this employment is qualified in its entirety by reference to the full text of such agreement. The employment agreement supersedes and replaces the letter agreement that the Company entered into with Mr. Filippelli dated as of February 14, 2007.
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• The employment agreement is for an initial term expiring September 30, 2009. Under the employment agreement, Mr. Filippelli will receive a base salary of $280,000. The term of the agreement is effective as of October 1, 2007. In the event we decide not to renew the agreement or if we and Mr. Filippelli are unable to reach agreement on the terms of a new agreement prior to the expiration date, Mr. Filippelli will be entitled to the severance payment described below.
• Mr. Filippelli may receive a bonus in the sole discretion of the Management Resources and Compensation Committee of the Board of Directors. Mr. Filippelli will have an opportunity to earn a cash bonus of up to 70% of his base salary for each fiscal year of employment. The bonus will be based on performance targets and other key objectives established by the Management Resources and Compensation Committee.
• Grant of 41,250 shares of restricted common stock (after giving effect to the company’s 1 for 4 reverse split of its common stock which was effective as of April 21, 2008). The vesting schedule applicable to the restricted stock is as follows: 33.3% of the restricted shares vest on the date of the agreement, and the remaining shares vest in two equal annual installments on September 30, 2008 and 2009, upon satisfaction of the performance targets and other key objectives established by the Management Resources and Compensation Committee. However, in the event of a change in control, the conditions to the vesting of the restricted stock awards shall be deemed void and all such shares shall be immediately and fully vested and delivered to the Mr. Filippelli.
• In the event of the termination of employment by us without “cause” or by Mr. Filippelli for “good reason,” as those terms are defined in the employment agreement, or in the event his employment is terminated due to his disability, he would be entitled to: (a) a severance payment of 12 months of base salary; (b) continued participation in our health and welfare plans for a period not to exceed 12 months from the termination date; and (c) all compensation accrued but not paid as of the termination date. In addition, in the event of termination for disability, Mr. Filippelli would also receive a pro-rata bonus, as described below.
• In the event of the termination of his employment due to his death, Mr. Filippelli’s estate would be entitled to receive: (a) all compensation accrued but not paid as of the termination date; (b) continued participation in our health and welfare plans for a period not to exceed 12 months from the termination date; and (c) payment of a “Pro Rata Bonus”, which is defined as an amount equal to the maximum bonus Mr. Filippelli had an opportunity to earn multiplied by a fraction, the numerator of which shall be the number of days from the commencement of the fiscal year to the termination date, and the denominator of which shall be the number of days in the fiscal year in which the Mr. Filippelli was terminated.
• If Mr. Filippelli’s employment is terminated by us for “cause” or by him without “good reason,” he is not entitled to any additional compensation or benefits other than his accrued and unpaid compensation.
• In the event that within 180 days of a “Change in Control” as defined in the employment agreement, (a) Mr. Filippelli is terminated, or (b) his status, title, position or responsibilities are materially reduced and Mr. Filippelli terminates his employment, we shall pay and/or provide to Mr. Filippelli, the following compensation and benefits:
(A) we shall pay Mr. Filippelli, in lieu of any other payments due hereunder, (i) the accrued compensation; (ii) the continuation benefits; and (iii) as severance, base salary for a period of 12 months, payable in equal installments on each of the company’s regular pay dates for executives during the twelve months commencing on the first regular executive pay date following the approvaltermination date; and
(B) The conditions to the vesting of any outstanding incentive awards (including restricted stock, stock options and granted performance shares or units) granted to Mr. Filippelli under any of our plans, or under any other incentive plan or arrangement, shall be deemed void and all such incentive awards shall be immediately and fully vested and exercisable. Further, any such options shall be deemed amended to provide that in the event of termination after a change of control, the options shall remain exercisable for the duration of their term.
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• In addition, upon the effective date of an event constituting a change of control, we shall pay Mr. Filippelli, in one lump sum within 5 upon the first day of the month immediately following such event, an amount equal to his then current base salary. Mr. Filippelli shall be entitled to such payment whether or not his employment with the company continues after the change of control.
• Notwithstanding the foregoing, if the payments due in the event of a change in control would constitute an “excess parachute payment” as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the aggregate of such credits or payments under the employment agreement and other agreements shall be reduced to the largest amount as will result in no portion of such aggregate payments being subject to the excise tax imposed by Section 4999 of the Code. The priority of the reduction of excess parachute payments shall be in the discretion of Mr. Filippelli.
• Pursuant to the employment agreement, Mr. Filippelli is subject to customary confidentiality, non-solicitation of employees and non-competition obligations that survive the termination of such agreement.
Cheryl Presuto
On July 30, 2008, we entered into an employment agreement with our Chief Financial Officer, Cheryl Presuto, the material terms of which are summarized below. The following description of this employment agreement is qualified in its entirety by reference to the full text of such agreement.
• The employment agreement is for an initial term expiring September 30, 2009. Under the employment agreement, Ms. Presuto will receive a base salary of $175,000. The term of the agreement is effective as of October 1, 2007. In the event the Company decides not to renew the agreement or if the Company and Ms. Presuto are unable to reach agreement on the terms of a new agreement prior to the expiration date, Ms. Presuto will be entitled to the severance payment described below.
• Ms. Presuto may receive a bonus in the sole discretion of the Management Resources and Compensation Committee of the Board of Directors. Ms. Presuto will have an opportunity to earn a cash bonus of up to 50% of her base salary for each fiscal year of employment. The bonus will be based on performance targets and other key objectives established by the Management Resources and Compensation Committee.
• Grant of 30,000 shares of restricted common stock. The vesting schedule applicable to the restricted stock is as follows: one-third of the restricted shares vest on the date of the agreement, and the remaining shares vest in two equal annual installments on September 30, 2008 and 2009, upon satisfaction of the performance targets and other key objectives established by the Management Resources and Compensation Committee. However, in the event of a change in control (as defined in the employment agreement), the conditions to the vesting of the restricted stock awards shall be deemed void and all such shares shall be immediately and fully vested and delivered to Ms. Presuto.
• In the event of the termination of employment by us without “cause” or by Ms. Presuto for “good reason,” as those terms are defined in the employment agreement, or in the event her employment is terminated due to her disability, she would be entitled to: (a) a severance payment of 12 months of base salary; (b) continued participation in our health and welfare plans for a period not to exceed 12 months from the termination date; and (c) all compensation accrued but not paid as of the termination date. In addition, in the event of termination for disability, she would also receive a pro-rata bonus, as described below.
• In the event of the termination of her employment due to her death, Ms. Presuto’s estate would be entitled to receive: (a) all compensation accrued but not paid as of the termination date; (b) continued participation in our health and welfare plans for a period not to exceed 18 months from the termination date; and (c) payment of a “Pro Rata Bonus”, which is defined as an amount equal to the maximum bonus Ms. Presuto had an opportunity to earn multiplied by a fraction, the numerator of which shall be the number of days from the commencement of the fiscal year to the termination date, and the denominator of which shall be the number of days in the fiscal year in which she was terminated.
• If Ms. Presuto’s employment is terminated by us for “cause” or by her without “good reason,” she is not entitled to any additional compensation or benefits other than her accrued and unpaid compensation.
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• In the event that within 180 days of a “Change in Control” as defined in the employment agreement, (a) Ms. Presuto is terminated, or (b) her status, title, position or responsibilities are materially reduced and she terminates her employment, the Company shall pay and/or provide to her, the following compensation and benefits:
(A) The Company shall pay Ms. Presuto, in lieu of any other payments due hereunder, (i) the accrued compensation; (ii) the continuation benefits; and (iii) as severance, base salary for a period of 12 months, payable in equal installments on each of the Company’s 2006 Long Term Incentive Plan byregular pay dates for executives during the twelve months commencing on the first regular executive pay date following the termination date; and
(B) The conditions to the vesting of any outstanding incentive awards (including restricted stock, stock options and granted performance shares or units) granted to Ms. Presuto under any of the Company’s shareholders,plans, or under any other incentive plan or arrangement, shall be deemed void and all such incentive awards shall be immediately and fully vested and exercisable. Further, any such options shall be deemed amended to provide that in the event of termination after a change of control, the options shall remain exercisable for the duration of their term.
• In addition, upon the effective date of an event constituting a change of control, the Company shall pay Ms. Presuto, in one lump sum upon the first day of the month immediately following such event, an amount equal to her then current base salary. Ms. Presuto shall be entitled to such payment whether or not her employment with the Company continues after the change of control.
• Notwithstanding the foregoing, if the payments due in the event of a change in control would constitute an “excess parachute payment” as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the aggregate of such credits or payments under the employment agreement and other agreements shall be reduced to the largest amount as will result in no portion of such aggregate payments being subject to the excise tax imposed by Section 4999 of the Code. The priority of the reduction of excess parachute payments shall be in the discretion of Ms. Presuto.
• Pursuant to the employment agreement, Ms. Presuto is subject to customary confidentiality, non-solicitation of employees and non-competition obligations that survive the termination of such agreements.
Employment Agreements with Other Executive Officers
Subsequent to the year ended September 30, 2008, we entered into employment agreements with Kevin Wilson, the President of our TeamStaff GS subsidiary and Dale West, the President of our TeamStaff Rx subsidiary and such persons are not considered named executive officers for the purpose of this Compensation Disclosure and Analysis. The material terms and conditions of each of these employment agreements are summarized below. The following descriptions of these employment agreements are qualified in their entirety by reference to the full text of such agreements.
Kevin Wilson
On October 3, 2008, we entered into an employment agreement with Mr. Kevin Wilson, the President of our TeamStaff GS subsidiary. The employment agreement is for an initial term expiring September 30, 2010. Under the employment agreement, Mr. Wilson will receive a base salary of $200,000. The term of the agreement is effective as of October 1, 2008. Mr. Wilson may receive a bonus in the sole discretion of the Management Resources and Compensation Committee of the Board of Directors madeand will have an opportunity to earn a cash bonus of up to 70% of his base salary for each fiscal year of employment. The bonus will be based on performance targets and other key objectives established by the Chief Executive Officer. Thirty percent of the bonus shall be based on achieving revenue targets, sixty percent shall be based on achieving EBITDA targets, and ten percent shall be based on achieving corporate goals established by the Chief Executive Officer. Additional terms of his agreement are as follows:
• Grant of 30,000 shares of restricted common stock. The vesting schedule applicable to the restricted stock is as follows: one-third of the restricted shares vest on the date of the agreement; one-third vest on September 30, 2009, upon satisfaction of performance targets and other key objectives established by the Chief Executive Officer for fiscal 2009; and one-third vest on September 30, 2010, upon the satisfaction of the performance targets determined for fiscal 2010. However, in the event of a change in control (as defined in the employment agreement), the conditions to the vesting of the restricted stock awards shall be deemed void and all such shares shall be immediately and fully vested.
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• In the event of the termination of employment by us without “cause” or by Mr. Wilson for “good reason,” as those terms are defined in the employment agreement, or in the event his employment is terminated due to his disability, he would be entitled to: (a) a severance payment of 6 months of base salary; (b) continued participation in our health and welfare plans for a period not to exceed 6 months from the termination date; and (c) all compensation accrued but not paid as of the termination date. In addition, in the event of termination for disability, he would also receive a pro-rata bonus, as described below.
• In the event of the termination of his employment due to his death, Mr. Wilson’s estate would be entitled to receive: (a) all compensation accrued but not paid as of the termination date; (b) continued participation in our health and welfare plans for a period not to exceed 6 months from the termination date; and (c) payment of a “Pro Rata Bonus”, which is defined as an amount equal to the lesser of (i) $75,000, and (ii) the Targeted Bonus multiplied by a fraction, the numerator of which shall be the number of days from the commencement of the fiscal year to the termination date, and the denominator of which shall be the number of days in the fiscal year in which his employment was terminated. If his employment is terminated by us for “cause” or by him without “good reason,” he is not entitled to any additional compensation or benefits other than his accrued and unpaid compensation.
• In the event that within 90 days of a “Change in Control” as defined in the employment agreement, (a) Mr. Wilson is terminated, or (b) his status, title, position or responsibilities are materially reduced and he terminates his employment, we shall pay and/or provide to him the following recommendationscompensation and benefits: (A) (i) the accrued compensation; (ii) the continuation benefits; and (iii) as severance, base salary for a period of 6 months, payable in equal installments on each of the Company’s regular pay dates for executives during the six months commencing on the first regular executive pay date following the termination date; and (B) The conditions to the vesting of any outstanding incentive awards (including restricted stock, stock options and granted performance shares or units) granted to Mr. Wilson shall be deemed void and all such awards shall be immediately and fully vested.
• In addition, in the event the Company serves a “Notice of Retention” and Mr. Wilson diligently performs his duties during the “Retention Period” (as those terms are defined in the employment agreement), the Company shall pay him, in one lump sum on the first day of the month immediately following the month in which the Retention Period ends, an amount equal to 50% of his then current base salary. In the event the Company fails to serve a Notice of Retention, the Company shall pay him in one lump sum on the first day of the month immediately following the change of control, an amount equal to 50% of his then current base salary.
• Notwithstanding the foregoing, if the payments due in the event of a change in control would constitute an “excess parachute payment” as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the aggregate of such credits or payments under the employment agreement and other agreements shall be reduced to the largest amount as will result in no portion of such aggregate payments being subject to the excise tax imposed by Section 4999 of the Code.
• Pursuant to the employment agreement, Mr. Wilson is subject to customary confidentiality, non-solicitation of employees and non-competition obligations that survive the termination of such agreements.
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Dale West
On December 3, 2008, we entered into an employment agreement with respectMs. Dale West, the President of our TeamStaff Rx subsidiary. The employment agreement is for an initial term expiring September 30, 2010. Under the employment agreement, Ms. West will receive a base salary of $200,000. The term of the agreement is effective as of October 1, 2008. Ms. West may receive a bonus in the sole discretion of the Management Resources and Compensation Committee of the Board of Directors and will have an opportunity to awardsearn a cash bonus (“Targeted Bonus”) of up to 70% of her base salary for each fiscal year of employment. The bonus will be based on performance targets and other key objectives established by the Chief Executive Officer. Thirty percent (30%) of the bonus shall be based on achieving revenue targets, sixty percent (60%) shall be based on achieving EBITDA targets, and ten percent (10%) shall be based on achieving corporate goals established by the Chief Executive Officer. Additional terms of her agreement are as follows:
• Grant of 30,000 shares of restricted common stock. The vesting schedule applicable to the restricted stock which were ratifiedis as follows: one-half vest on September 30, 2009, upon satisfaction of performance targets and approvedother key objectives established by the Board. AsChief Executive Officer for 2009; and one-half vest on September 30, 2010, upon the satisfaction of the performance targets determined for 2010. However, in the event of a change in control (as defined in the employment agreement), the conditions to the vesting of the restricted stock awards shall be deemed void and all such shares shall be immediately and fully vested.
• Ms. West will be eligible to receive a quarterly stock bonus equal to $12,500 of the Company’s common stock at April 27, 2006, the closing priceend of TeamStaff Common Stockeach calendar quarter of employment for satisfaction of performance criteria and other key objectives established by the Chief Executive Officer, provided that the first two quarterly bonuses shall be deemed earned if she is continuously employed by the Company during such quarters and shall not be conditioned on the achievement of any other performance criteria. Such shares of common stock will be valued on the last trading day of each quarter and shall be deemed vested and earned on the first business day following the close of the quarter.
• In the event of the termination of employment by us without “cause” or by Ms. West for “good reason,” as those terms are defined in the employment agreement, or in the event her employment is terminated due to her disability, she would be entitled to: (a) a severance payment of 6 months of base salary; (b) continued participation in our health and welfare plans for a period not to exceed 6 months from the termination date; and (c) all compensation accrued but not paid as of the termination date. In addition, in the event of termination for disability, she would also receive a pro-rata bonus, as described below.
• In the event of the termination of her employment due to her death, Ms. West’s estate would be entitled to receive: (a) all compensation accrued but not paid as of the termination date; (b) continued participation in our health and welfare plans for a period not to exceed 6 months from the termination date; and (c) payment of a “Pro Rata Bonus”, which is defined as an amount equal to the lesser of (i) $75,000, and (ii) the Targeted Bonus multiplied by a fraction, the numerator of which shall be the number of days from the commencement of the fiscal year to the termination date, and the denominator of which shall be the number of days in the fiscal year in which she was $1.70.terminated. If her employment is terminated by us for “cause” or by her without “good reason,” she is not entitled to any additional compensation or benefits other than her accrued and unpaid compensation.
• In the event that within 90 days of a “Change in Control” as defined in the employment agreement, (a) Ms. West’s employment is terminated, or (b) her status, title, position or responsibilities are materially reduced and she terminates her employment, the Company shall pay and/or provide to her, the following compensation and benefits: (A) (i) the accrued compensation; (ii) the continuation benefits; and (iii) as severance, base salary for a period of 6 months, payable in equal installments on each of the Company’s regular pay dates for executives during the six months commencing on the first regular executive pay date following the termination date; and (B) the conditions to the vesting of any outstanding incentive awards (including restricted stock, stock options and granted performance shares or units) granted to Ms. West shall be deemed void and all such awards shall be immediately and fully vested.
• In addition, in the event the Company serves a “Notice of Retention” and Ms. West diligently performs her duties during the “Retention Period” (as those terms are defined in the employment agreement), the Company shall pay her, in one lump sum on the first day of the month immediately following the month in which the Retention Period ends, an amount equal to 50% of her then current base salary. In the event the Company fails to serve a Notice of Retention, the Company shall pay her in one lump sum on the first day of the month immediately following the Change in Control, an amount equal to 50% of her then current base salary.
• Notwithstanding the foregoing, if the payments due in the event of a Change in Control would constitute an “excess parachute payment” as defined in Section 280G of the Code, the aggregate of such credits or payments under the employment agreement and other agreements shall be reduced to the largest amount as will result in no portion of such aggregate payments being subject to the excise tax imposed by Section 4999 of the Code.
• Pursuant to the employment agreement, Ms. West is subject to customary confidentiality, non-solicitation of employees and non-competition obligations that survive the termination of such agreements. In addition, Ms. West was provided an advance to reimburse her for living expenses not to exceed $3,200 in any month or $36,000 in the aggregate.
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![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Shares | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Vesting Period | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Fair Market Value |
T. Kent Smith | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 60,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3 years | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $102,000 |
Rick Filippelli | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 50,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3 years | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ 85,000 |
James D. Houston | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 30,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3 years | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ 51,000 |
Peter Rosen | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 20,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3 years | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $34,000 |
Tim Nieman | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 20,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3 years | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ 34,000 |
Greg Haygood | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 20,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3 years | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ 34,000 |
Cheryl Presuto | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 20,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3 years | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ 34,000 |
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Stock Option Plans
2000 Employee Stock Option Plan In the fiscal year 2000, the Board of Directors and shareholders approved the adoption of the 2000 Employees Stock OptionEmployee Plan (the ‘‘2000 Plan’’) to provide for the grant of options to purchase up to 1,714,286 shares of TeamStaff’s common stock to all employees, including senior management. The 2000 Employee Plan replacesreplaced the 1990 Employee Plan and Senior Management Plans, both of which expired. Under the terms of the approved 2000 Employee Plan, options granted there under may be designated as options which qualify for incentive stock option treatment (‘‘ISOs’’(“ISOs”) under Section 422A of the Code, or options which do not so qualify (‘‘Non-ISO’s’’(“Non-ISO’s”). As of September 30, 2006,2008, there were 753,00017,000 options outstanding under the 2000 Employee Plan.
Table of ContentsThe 2000 Employee Plan is administered by the Management Resources and Compensation Committee designated by the Board of Directors. The Management Resources and Compensation Committee has the discretion to determine the eligible employees to whom, and the times and the price at which, options will be granted; whether such options shall be ISOs or Non-ISOs; the periods during which each option will be exercisable; and the number of shares subject to each option. The Committee has full authority to interpret the 2000 Employee Plan and to establish and amend rules and regulations relating thereto.
Under the 2000
Employee Plan, the exercise price of an option designated, as an ISO shall not be less than the fair market value of the common stock on the date the option is granted. However, in the event an option designated as an ISO is granted to a ten percent (10%) shareholder (as defined in the 2000
Employee Plan), such exercise price shall be at least 110% of such fair market value. Exercise prices of Non-ISO options may be less than such fair market value.
The aggregate fair market value of shares subject to options granted to a participant, which are designated as ISOs and which become exercisable in any calendar year shall not exceed $100,000.
The Management Resources and Compensation Committee may, in its sole discretion, grant bonuses or authorize loans to or guarantee loans obtained by an optionee to enable such optionee to pay the exercise price or any taxes that may arise in connection with the exercise or cancellation of an option. The Management Resources and Compensation Committee can also permit the payment of the exercise price in the common stock of the
CorporationCompany held by the optionee for at least six months prior to exercise.
2000 Non-Executive Director Option Plan In fiscal
year 2000, the Board of Directors and stockholders approved the adoption of the 2000 Non-Executive Director
Stock Option Plan (the
‘‘“2000 Non-Executive Director
Plan’’Plan”) to provide for the grant of options to non-employee directors of TeamStaff. Under the terms of the
2000 Non-Executive Director Plan, each non-executive director is automatically granted an option to purchase 5,000 shares upon joining the Board and each September lst, pro rata, based on the time the director has served in such capacity during the previous year. The
Directors’2000 Non-Executive Director Plan also provides that directors, upon joining the Board, and for one (1) year thereafter, will be entitled to purchase restricted stock from TeamStaff at a price equal to 80% of the closing bid price on the date of purchase up to an aggregate purchase price of $50,000. The
2000 Non-Executive Director Plan replaced the previous
Director Plandirector plan that expired in April 2000.
Under the 2000 Non-Executive Director Plan, the exercise price for options granted under the 2000 Non-Executive Director Plan shall be 100% of the fair market value of the common stock on the date of grant. Until otherwise provided in the Stock Optionsuch Plan, the exercise price of options granted under the 2000 Non-Executive Director Plan must be paid at the time of exercise, either in cash, by delivery of shares of common stock of TeamStaff or by a combination of each. The term of each option commences on the date it is granted and unless terminated sooner as provided in the 2000 Non-Executive Director Plan, expires five (5) years from the date of grant. The Compensation Committee has no discretion to determine which non-executive director or advisory board member will receive options or the number of shares subject to the option, the term of the option or the exercisability of the option. However, the Compensation Committee will make all determinations of the interpretation of the 2000 Non-Executive Director Plan. Options granted under the 2000 Non-Executive Director Plan are not qualified for incentive stock option treatment. As of September 30, 2006,2008, there were 140,00015,625 options held by directors outstanding under the 2000 Non-Executive Director Plan.
Effective January 19, 2007, the 2000 Non-Executive Director Plan was suspended due to a change in the compensation terms for non-employee Board members. For additional information regarding our director compensation policy, see below under the caption “Director Compensation”.
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2006 Long Term Incentive Plan The Board of Directors adopted the 2006 Long-Term Incentive Plan
(the ‘‘2006 Plan’’) on January 17, 2006. The shareholders approved the 2006
Long Term Incentive Plan at the annual meeting on April 27, 2006. The Company reserved an aggregate of 5,000,000 shares of common stock for issuance under the 2006
Long Term Incentive Plan. The maximum number of shares of common stock that may be delivered to participants under the 2006 Long-Term Incentive Plan equals the sum of: (a) 5,000,000 shares of common stock; (b) any shares subject to awards granted under the 2000 Employee
Stock Option Plan and the 2000
Table of ContentsNon-Executive Director Stock Option Plan (collectively, the ‘‘2000 Plans’’“2000 Plans”), which are forfeited, expired, canceled or settled in cash without delivery of such shares to the participant or otherwise is terminated without a share issuance; (c) any shares tendered by participants or withheld in payment of the exercise price of options or to satisfy withholding taxes under the 2000 Plans; and (d) any shares repurchased with the proceeds of options exercised under the 2000 Plans.
Administration. As of September 30, 2008, there were 214,166 shares of common stock granted pursuant to awards under the 2006 Long Term Incentive Plan.
Administration. The 2006
Long Term Incentive Plan is administered by the
Management Resources and Compensation
Committee (the ‘‘committee’’).Committee. The 2006
Long Term Incentive Plan authorizes the
committeeCompensation Committee to select those participants to whom awards may be granted, to determine whether and to what extent awards are granted, to determine the number of shares of common stock or other considerations to be covered by each award, to determine the terms and conditions of awards, to amend the terms of outstanding awards, and to take any other action consistent with the terms of the 2006
Long Term Incentive Plan as the
committeeCommittee deems appropriate.
Terms and Conditions of Awards.Awards. The
committeeCompensation Committee is authorized to make any type of award to a participant that is consistent with the provisions of the Plan. Awards may consist of options, stock appreciation rights, restricted stock, restricted stock units, performance shares, cash awards or any combination of these types of awards.
Subject to the terms of the
2006 Long Term Incentive Plan, the
committeeCompensation Committee determines the provisions, terms and conditions of each award. The
committeeCommittee may grant awards subject to vesting schedules or restrictions and contingencies in the company’s favor. However, the awards may be subject to acceleration such that they become fully vested, exercisable and released from any restrictions or contingencies upon the occurrence of a change of control (as defined in the Plan). The
committeeCommittee may provide that stock-based awards earn dividends or dividend equivalents, which may be paid in cash or shares or may be credited to an account designated in the name of the participants. Participants may also be required or permitted to defer the issuance of shares or cash settlements under awards including under other deferred compensation arrangements of the company. Each option granted under the Plan will be designated as either an incentive stock option or a non-statutory stock option. No option or stock appreciation right may be granted with a term of more than 10 years from the date of grant.
Performance shares or cash awards will depend on achievement of performance goals based on one or more performance measures determined by the
committeeCommittee over a performance period as prescribed by the
committeeCommittee of not less than one year and not more than five years. Performance goals may be established on a corporate-wide basis or as to one or more business units, divisions or subsidiaries, and may be in either absolute terms or relative to the performance of one or more comparable companies on an index covering multiple companies.
‘‘Performance measures’’“Performance measures” means criteria established by the
committeeCommittee from time to time prior to granting the performance shares or cash awards.
Exercise Price.Price. The Plan authorizes the
committeeCompensation Committee to grant options and stock appreciation rights at an exercise price of not less than 100% of the fair market value of the shares on the date of grant. The
committeeCommittee has the right to provide post-grant reduction in exercise price to reflect any floating index as specified in an award agreement. The exercise price is generally payable in cash, check, surrender of pre-owned shares of common stock, broker-dealer exercise and sale, or by such other means determined by the
committee.Committee.
Option Repricing Prohibited.Prohibited. The exercise price for any outstanding option or stock appreciation right may not be decreased after the date of grant, nor may any outstanding option or stock appreciation right be surrendered as consideration for the grant of a new option or stock appreciation right with a lower exercise price.
Shareholder Return Performance Presentation55
Set forth herein
Pension Benefits
None of our Named Executive Officers or former executive officers are covered by a pension plan or other similar benefit plan that provides for payments or other benefits at, following, or in connection with retirement.
Nonqualified Deferred Compensation
None of our Named Executive Officers or former executive officers are covered by a defined contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified.
Payments Upon Termination or Change-in-Control
The discussion and tables below reflect the estimated benefits that would be paid or accrue to each of the Named Executive Officers in the event of the following hypothetical scenarios:
| • | | termination without cause, or constructive (“good reason”) termination (including upon the occurrence of a change in control of a company; |
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| • | | termination for cause; |
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| • | | upon an executive’s disability; or |
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| • | | in the event of the executive’s death. |
Background and Assumptions.In this section, we provide estimates of amounts that may become payable to our Named Executive Officers under their employment agreements as a result of a termination of employment under specific circumstances, as well as estimates regarding the value of other benefits they may become entitled to receive as a result of such termination. For example, such other benefits typically include, with respect to outstanding equity awards, continuation or acceleration of vesting. For a detailed description of the applicable provisions of the employment agreements of our Named Executive Officers, see “Employment Agreements with Named Executive Officers” below. Under those agreements, the amount and types of payment and other benefits vary depending on whether the termination is as a result of death or disability, is with or without cause, is a line graph comparingresignation for good reason and/or is in connection with a change in control. As prescribed by applicable SEC rules, in estimating the total returns (assuming reinvestmentamount of dividends)any potential payments to Named Executive Officers under their employment agreements and the value of TeamStaff’sother benefits they may become entitled to receive, we have assumed that the applicable triggering event (i.e., termination of employment or change in control) occurred on September 30, 2008, that the price per share of Common Stock is $2.47, the closing price per share on September 30, 2008, the last trading day of our 2008 fiscal year. We have also treated the right to continue to vest in awards as accelerated to September 30, 2008 for purposes of this disclosure only.
Rick J. Filippelli
Death or Disability.Pursuant to the terms of his employment agreement, if Mr. Filippelli’s employment is terminated as a result of his death, Mr. Filippelli or his estate, as applicable, would receive any accrued but unpaid compensation, continued participation in our health and welfare plans for a period not to exceed 12 months from the termination date and payment of a “Pro Rata Bonus”, which is defined as an amount equal to the maximum bonus Mr. Filippelli had an opportunity to earn multiplied by a fraction, the numerator of which shall be the number of days from the commencement of the fiscal year to the termination date, and the denominator of which shall be the number of days in the fiscal year in which Mr. Filippelli was terminated. If Mr. Filippelli’s employment is terminated as a result of disability, Mr. Filippelli or his estate, as applicable, would receive any accrued but unpaid compensation, a severance payment of 12 months of base salary, continued participation in our health and welfare plans for a period not to exceed 12 months from the termination date and a pro rata bonus as described above.
Further, in the event of a termination due to his death or disability, Mr. Filippelli’s (or his estate’s or legal representative’s) right to purchase shares of common stock pursuant to any stock option or stock option plan to the Standardextent vested as of the termination date shall remain exercisable for a period of twelve months following such date, but in no event after the expiration of the exercise period.
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Cause.If Mr. Filippelli’s employment is terminated for cause or he terminates his employment with out good reason, he would be entitled to his base salary and Poor Industrial Average,expense reimbursement through the date of termination, and he shall have no further entitlement to any other compensation or benefits. All stock options that have not been exercised as of the date of termination for cause shall be deemed to have expired as of such date, otherwise, options vested as of the date of termination may be exercised for a period of three months thereafter.
Without Cause or for Good Reason.If Mr. Filippelli’s employment is terminated by the company without cause, or by him for good reason, or if either (1) we fail to timely notify him or our intent to renew his agreement or (2) after providing such notice, we fail to reach an industry composite consistingagreement on a new employment agreement with him prior to the expiration date, then we would be obligated to pay Mr. Filippelli his accrued but unpaid compensation, a severance payment of 12 months of base salary and continued participation in our health and welfare plans for a period not to exceed 12 months from the termination date.
Change of Control.Upon the effective date of a group“change of four peer issuers selectedcontrol” (as defined in good faithMr. Filippelli’s employment agreement), we would be obligated to pay him, in one lump sum payment an amount equal to his then current base salary. He would be entitled to such payment whether or not his employment with the Company continues after the change of control. In addition, in the event of a change of control, if within 180 days of a change of control, Mr. Filippelli is terminated, or his status, title, position or responsibilities are materially reduced and Mr. Filippelli terminates his employment, we would be required to pay and/or provide him with: (i) accrued but unpaid compensation; (ii) continuation benefits; and (iii) severance pay equal to base salary for a period of 12 months payable in equal installments on each of the Company’s regular pay dates for executives. In addition, all incentive awards, including restricted stock, stock options and granted performance shares or units shall be immediately and fully invested. Further, any such options shall be deemed amended to provide that in the event of termination after a change of control, the options shall remain exercisable for the duration of their term. Notwithstanding the foregoing, if the payments due in the event of a change in control would constitute an “excess parachute payment” as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the aggregate of such credits or payments under the employment agreement and other agreements shall be reduced to the largest amount as will result in no portion of such aggregate payments being subject to the excise tax imposed by TeamStaff. TeamStaff’sSection 4999 of the Code. The priority of the reduction of excess parachute payments shall be in the discretion of Mr. Filippelli.
Employee Covenants.In his employment agreement, Mr. Filippelli agreed to keep confidential and not disclose any confidential or proprietary information owned by, or received by or on behalf of, us or any of our affiliates, during the term of the agreement or at any time thereafter. He also agreed to return such confidential and proprietary information to us immediately in the event of any termination of employment. Mr. Filippelli also agreed, during the term of the agreement and for a period of one year thereafter, to not in any manner enter into or engage in any business that is engaged in any business directly competitive with our business anywhere in the world, with limited exceptions. Moreover, Mr. Filippelli agreed, during the term of the agreement and for a period of 12 months thereafter, to not, directly or indirectly, without our prior written consent: (i) solicit or induce any employee of us or any of our affiliates to leave such employ; or (ii) solicit the business of any customer with respect to products or services that compete directly with the products or services provided or supplied by us.
Cheryl Presuto
Payments and benefits due to Ms. Presuto upon the termination of her employment or in the event of a change of control are the same as described above for Mr. Filippelli.
2000 Employee Plan
Corporate Transactions.Notwithstanding any contrary waiting period in any stock option agreement issued pursuant to the 2000 Employee Plan, but subject to any determination by our Board of Directors to provide otherwise, each outstanding option shall, except as otherwise provided in the stock option agreement, become exercisable in full for the aggregate number of shares covered thereby and shall vest unconditionally on the first day following the occurrence of any of the following: (a) the approval by our stockholders of an approved transaction; (b) a control purchase; or (c) a board change, as each such term is defined in the 2000 Employee Plan.
Termination of Employment.If a grantee’s employment or service is terminated for cause, any unexercised option shall terminate effective immediately upon such termination of employment or service. Except as otherwise provided by in an award agreement, if a grantee’s employment or service terminates on account of death or disability, then any unexercised option, to the extent exercisable on the date of such termination of employment or service, may be exercised, in whole or in part, within the first twelve (12) months after such termination of employment or service (but only during the option term) by his or her personal representative or by the person to whom the option is transferred by will or the applicable laws of descent and distribution.
Except as otherwise provided by the Committee in the award agreement, if a grantee’s employment or service terminates for any reason other than for cause, death, disability or pursuant to a change of control, then any unexercised option, to the extent exercisable immediately before the grantee’s termination of employment or service, may be exercised in whole or in part, not later than three (3) months after such termination of employment or service (but only during the option term); and, to the extent that any such option was not exercisable on the date of such termination of employment or service, it will immediately terminate.
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2006 Long Term Incentive Plan
Termination and Change in Control Provisions. Unless the Management Resources and Compensation Committee determines otherwise at the time of grant with respect to a particular award granted under the 2006 Long Term Incentive Plan, in the event of a termination of service for any reason other than for cause or a termination of service in connection with a Change in Control as defined in such Plan: (i) any options and stock appreciation rights outstanding as of the date such Change in Control occurs, and which are not then exercisable and vested, will become fully exercisable and vested; (ii) the restrictions and deferral limitations applicable to any restricted stock outstanding as of the date such Change in Control occurs will lapse, and such restricted stock will become free of all restrictions and limitations and become fully vested and transferable; (iii) all performance awards outstanding as of the date such Change in Control occurs will be considered to be earned and payable in full, or at such other level as may be specified in the applicable award agreement between the participant and the Company, and any deferral or other restriction will lapse and such performance awards will be immediately settled or distributed; and (iv) the restrictions and deferral limitations and other conditions applicable to any other awards outstanding as of the date such Change in Control occurs will lapse, and such other awards will become free of all restrictions, limitations or conditions and become fully vested and transferable.
Termination by Reason of Death or Disability. Unless otherwise determined by the Committee, if a participant’s service is terminated by reason of death or disability, any option held by such person will vest in full and remain exercisable until (i) in the case of a Nonstatutory Stock Option, the first anniversary of such termination of service and (ii) in the case of an Incentive Stock Option, the earlier of (A) the first anniversary of such termination or (B) the expiration of the stated term of such option.
Termination by Reason of Retirement. Unless otherwise determined by the Committee, if a participant’s service is terminated by reason of retirement (as defined in such Plan, any option held by such person may thereafter be exercised by such person to the extent it was exercisable at the time of such termination or on such accelerated basis as the Committee may determine, until the earlier of (i) the third anniversary of such termination of service or (ii) the expiration of the stated term of such option.
Other Terminations. Unless otherwise determined by the Committee: (i) if a participant is terminated for cause all options held by such person will immediately terminate; (ii) if a participant is terminated by the Company for any reason other than death, disability, retirement or for cause, any option held by such person may, to the extent it was exercisable at the time of termination, be exercised until the earlier of (A) 90 days from the date of such termination or (B) the expiration of the stated term of the option; and (iii) if a person voluntarily terminates his or her service with the Company (other than for retirement), any option held by such person may, to the extent it was exercisable at the time of termination, be exercised until the earlier of (A) 30 days from the date of such termination or (B) the expiration of the stated term of the option.
2000 Non-Executive Director Plan
Corporate Transactions.Notwithstanding any contrary installment period with respect to any option and unless the Board of Directors determines otherwise, each outstanding option granted under the 2000 Non-Executive Director Plan shall become exercisable in full for the aggregate number of shares covered thereby in the event: (i) the Board of Directors (or, if approval of the stockholders is required as a matter of law, the stockholders of the Company) shall approve (a) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of shares of common stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of common stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, or (b) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, or (c) the adoption of any plan for the
58
liquidation or dissolution of the Company; or (ii) any person, corporation or other entity (a) shall purchase any common stock (or securities convertible into the Company’s common stock) for cash, securities or any other consideration pursuant to a tender offer or exchange offer, without the prior consent of the Board of Directors, or (b) shall become the “beneficial owner” (as such term is listed for tradingdefined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the then outstanding securities of the Company ordinarily having the right to vote in the NASDAQ National Marketelection of Directors; or (iii) during any period of two consecutive years or less, individuals who at the beginning of such period constitute the entire Board of Directors shall cease for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company’s stockholders, of each new director was approved by a vote of at least a majority of the directors then still in office.
Termination of Service.In the event of the termination of service of a non-executive director, options shall terminate on the earlier of the expiration date or the date seven months following the date of termination of service as a director. If termination of service is due to director’s death, the option shall terminate on the earlier of the expiration date or twelve months following the date of death.
Termination Scenario Summary Tables
Potential Payments on Termination (without cause or following change-in-control)
As of Year Ended September 30, 2008(1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination Without Cause (2) | | | Termination Following Change-in-Control (3) | |
| | | | | | Estimated | | | Estimated | | | | | | | | | | | Estimated | | | Estimated | | | | |
| | | | | | value of | | | value of | | | | | value of | | | value of | | | | |
| | Cash | | | continued | | | accelerated | | | | | | | Cash | | | continued | | | accelerated | | | | |
| | Payments | | | benefits | | | equity awards | | | | | | | Payments | | | benefits | | | equity awards | | | | |
Name of Executive Officer | | ($) (4) | | | ($) (5) | | | ($) (6) | | | Total ($) | | | ($)(4) | | | ($)(5) | | | ($)(6) | | | Total ($) | |
|
Rick J. Filippelli | | $ | 280,000 | | | $ | 16,034 | | | $ | 50,490 | | | $ | 346,524 | | | $ | 560,000 | | | $ | 16,034 | | | $ | 50,490 | | | $ | 626,524 | |
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Cheryl Presuto | | $ | 175,000 | | | $ | 14,257 | | | $ | 31,311 | | | $ | 220,568 | | | $ | 350,000 | | | $ | 14,257 | | | $ | 31,311 | | | $ | 395,568 | |
NOTES
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(1) | Assumes | This table provides information for each continuing Named Executive Officer. All references to base salary and annual target bonus refer to the amounts described above under “Summary of Executive Employment Agreements and Compensatory Terms.” |
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(2) | | If we terminate the executive without cause, or the executive resigns for good reason as defined in his executive employment agreement (as described above), the executive will be entitled to receive the compensation as shown in the table |
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(3) | | If we terminate the executive’s employment without cause, or if the executive resigns for good reason as defined in his executive employment agreement, in either case within 180 days following a change of control, then the executive will be entitled to receive in lieu of other termination compensation the amounts listed as shown in the table, plus any accrued but not yet paid salary. In addition, upon the effective date of a change of control, the executive will also be entitled to receive in 12 equal monthly payments an amount equal to his then current base salary. Notwithstanding the foregoing, if the payments due in the event of a change in control would constitute an “excess parachute payment” as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the aggregate of such credits or payments under the employment agreement and other agreements shall be reduced to the largest amount as will result in no portion of such aggregate payments being subject to the excise tax imposed by Section 4999 of the Code. The priority of the reduction of excess parachute payments shall be in the discretion of the named executive officer. |
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(4) | | Cash payments consist of severance payments (which may include payment of bonuses) as determined under the Named Executive Officer’s employment agreement. |
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(5) | | The estimated value of continued benefits in effect on the termination date for a period of up to 12 months. |
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(6) | | Estimated value of accelerated vesting of stock options represents the expense as calculated in accordance with FAS123(R). For the purposes of this tabular presentation, we have assumed that the performance-based vesting conditions of the restricted stock awards granted to the Named Executive Officers have not occurred and that following termination of employment for the reasons contemplated in this table, such awards remain unvested but outstanding. The fair market value of the investment in TeamStaff’s Common Stock and each index was $100 onrestricted stock awards as of September 30, 20012008 was $2.47 based on the closing price of the company’s common stock as reported on the Nasdaq National Market on such date. |
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Potential Payments on Disability or Death
As of Year Ended September 30, 2008
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Disability (1) | | | Death (2) | |
| | Cash | | | | | | | | | | | | | | Cash | | | | | | | | | | |
| | Payments | | | Estimated | | | Estimated | | | | | | | Payments | | | Estimated | | | Estimated | | | | |
| | (includes | | | value of | | | value of | | | | | | | (includes | | | value of | | | value of | | | | |
| | base salary | | | continued | | | accelerated | | | | | | | bonus | | | continued | | | accelerated | | | | |
| | and bonus) | | | benefits | | | equity awards | | | | | | | only) | | | benefits | | | equity awards | | | | |
Name of Executive Officer | | ($) (3) | | | ($) (4) | | | ($) (5) | | | Total ($) | | | ($) (3) | | | ($) (4) | | | ($) (5) | | | Total ($) | |
|
Rick J. Filippelli | | $ | 476,000 | | | $ | 16,034 | | | $ | 50,490 | | | $ | 542,524 | | | $ | 196,000 | | | $ | 16,034 | | | $ | 50,490 | | | $ | 262,524 | |
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Cheryl Presuto | | $ | 262,500 | | | $ | 14,257 | | | $ | 31,311 | | | $ | 308,068 | | | $ | 87,500 | | | $ | 14,257 | | | $ | 31,311 | | | $ | 133,068 | |
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(1) | | In the event the executive becomes physically or mentally disabled such that he is unable to perform his duties for a period of 180 consecutive days, we may terminate the executive’s employment, unless otherwise prohibited by law. In the event of termination due to disability, we will continue the executive’s base salary (less any short term disability payments the executive receives from our company) in accordance with the terms of his employment agreement. In the event the executive becomes disabled, options will vest in full and remain exercisable (i) in the case of nonstatutory stock options until the first anniversary of such termination, and (ii) in the case of an incentive stock options, the earlier of (A) the first anniversary of the date of death and (B) the expiration of the stated term of the incentive stock option; provided, however, that if the executive dies within such period, notwithstanding the expiration of such period, any unexercised stock option may thereafter be exercised (i) in the case of nonstatutory stock options for a period of one year from the date of death, and (ii) in the case of an incentive stock options, until the earlier of the (A) first anniversary of the date of death and (B) the expiration of the stated term of the incentive stock option. In the event of an executive’s disability, any unvested shares of restricted stock will immediately become fully vested. |
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(2) | | An executive’s employment will terminate automatically upon death. We will pay the executive’s accrued compensation through the date of death and his pro rated bonus for the fiscal year in which his death occurred, to his stated beneficiary. Upon the executive’s death, options will vest in full and remain exercisable (i) in the case of nonstatutory stock options until the first anniversary of such termination, and (ii) in the case of an incentive stock options, the earlier of the first anniversary of the date of death and the and the expiration of the stated term of the incentive stock option. In the event of an executive’s death, any unvested shares of restricted stock will immediately become fully vested. |
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(3) | | Cash payments consist of severance payments (which may include payment of bonuses) as determined under the Named Executive Officer’s employment agreement. |
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(4) | | The estimated value of continued benefits in effect on the termination date for a period of up to 12 months. |
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(5) | | Estimated value of accelerated vesting of stock options represents the expense as calculated in accordance with FAS123(R). For the purposes of this tabular presentation, we have assumed that the performance-based vesting conditions of the restricted stock awards granted to the Named Executive Officers have not occurred and that dividends were reinvested at years endedfollowing termination of employment for the reasons contemplated in this table, such awards remain unvested but outstanding. The fair market value of the restricted stock awards as of September 30th.30, 2008 was $2.47 based on the closing price of the company’s common stock as reported on the Nasdaq National Market on such date. |
Director Compensation
Effective January 19, 2007, the Board of Directors changed the compensation terms for non-employee Board members. The Board agreed to forego all cash compensation in lieu of restricted stock grants. Each non-employee Board member will receive an initial grant under the Company’s 2006 Long-Term Incentive Plan of 3,750 shares of restricted stock following the 2007 annual meeting of shareholders. Additionally, for each Board committee on which such non-employee Board member serves, the Board member will receive a grant of 625 shares of restricted stock following the 2007 annual meeting of shareholders. Fifty percent (50%) of all such shares of restricted stock shall vest when the volume-weighted average share price of the Company’s common stock over any 20 consecutive trading days exceeds the price on the date of grant by 20%, with the remaining fifty percent (50%) vesting one year thereafter. Future annual grants shall be determined by the Company’s Compensation Committee. Non-employee Board members also receive reimbursement of their Board-related travel, cell phone and similar expenses.
Effective as of October 1, 2007, our Board determined to reinstitute a cash compensation policy for non-executive directors. Accordingly, our non-executive directors are compensated as follows.
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) • | | The annual director fee for our non-executive directors is $15,000; |
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| • | | the Chairman of Board and the Audit Committee Chairman shall receive an additional $3,500 per year; |
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| • | | the Vice Chairman of the Board, Chairman of the Management Resources and Compensation Committee and Chairman of the Nominating and Corporate Governance Committee shall each receive an additional $2,500 per year; |
60
| • | | each non-executive director shall be awarded an annual grant of 3,750 shares of restricted common stock pursuant to the Company’ 2006 Long Term Incentive Policy following the Company’s annual meeting of shareholders held in 2008, provided that such award shall vest as follows: (A) 50% of the Award shall vest when the volume-weighted average share price over any 20 consecutive trading days exceeds the price per share of common stock on the date of grant by 20%; and (B) 50% of the Award shall vest one year from the vesting specified in (A) above; |
|
| • | | each non-executive director shall be eligible for an additional annual grant of 1,250 shares of restricted stock for each committee membership held by a non-executive director following the Company’s annual meeting to be held in 2008, with such under the Company’s 2006 Long Term Incentive Plan, with such additional award to be fully vested on the date of grant; |
|
| • | | Reasonable and customary expenses incurred in attending the board and committee meetings are reimbursable. |
A summary of non-executive director compensation for the year ended September 30, 2008 is as follows:
Summary of Non-Executive Director Compensation
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | Change in | | | | | | | |
| | | | | | | | | | | | | | | | | | Pension Value | | | | | | | |
| | | | | | | | | | | | | | Non-Equity | | | and Nonqualified | | | | | | | |
| | Fees Earned | | | Stock | | | Option | | | Incentive Plan | | | Deferred | | | All Other | | | | |
| | or Paid in | | | Awards | | | Awards | | | Compensation | | | Compensation | | | Compensation | | | | |
Name (1) (3) (4) | | Cash ($) | | | ($) (2) | | | ($) | | | ($) | | | Earnings ($) | | | ($) | | | Total ($) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
T. Stephen Johnson | | $ | 18,500 | | | $ | 8,175 | | | | | | | | | | | | | | | $ | 1,057 | | | $ | 27,732 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Karl W. Dieckmann | | $ | 17,500 | | | $ | 10,900 | | | | | | | | | | | | | | | $ | 1,683 | | | $ | 30,083 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
William H. Alderman | | $ | 17,500 | | | $ | 2,725 | | | | | | | | | | | | | | | $ | 417 | | | $ | 20,642 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Peter Black | | $ | 17,500 | | | $ | 5,450 | | | | | | | | | | | | | | | $ | — | | | $ | 22,950 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Martin J. Delaney | | $ | 16,750 | | | $ | — | | | | | �� | | | | | | | | | | $ | 523 | | | $ | 17,273 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Frederick G. Wasserman | | $ | 18,500 | | | $ | 2,725 | | | | | | | | | | | | | | | $ | — | | | $ | 21,225 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
(1) | | As of September 30, 2008, each director had the following number of Director Plan options outstanding: Mr Johnson – 3,750; Mr. Dieckmann – 3,750; Mr. Alderman – 0; Mr. Black – 3,125; Mr. Delaney – 2,500; Mr. Wasserman – 0 |
|
(2) | Industry composite for ‘‘Peer Group’’, which includes companies related | Grant date fair value of restricted stock awards on the date of grant was based on a fair market value of our common stock as reported on the Nasdaq National Market. The closing price of our common stock on October 3, 2007 was $0.84 (pre-split basis) and on May 30, 2008 was $2.18. Restricted stock awards are subject to both our medical staffingvesting requirements as described in the narrative disclosure above. |
|
(3) | | On October 3, 2007, the Board of Directors granted an aggregate of 30,000 shares of restricted stock to the non-executive directors as follows: Mr. Johnson – 5,000 shares; Mr. Dieckmann – 6,250 shares; Mr. Alderman – 4,375 shares; Mr. Black – 5,000 shares; Mr. Delaney – 5,000 shares; and office administration/technical professional staffing, includes Cross Country Healthcare, Medical Staffing Network Holdings, Mr. Wasserman – 4,375 shares. |
|
(4) | | On Assignment, ATC Healthcare, AMN Healthcare ServicesMay 30, 2008, the Board of Directors granted an aggregate of 36,250 shares of restricted stock to the non-executive directors as follows: Mr. Johnson – 7,500 shares; Mr. Dieckmann – 8,750 shares; Mr. Alderman – 5,000 shares; Mr. Black – 6,250 shares; Mr. Delaney – 3,750 shares; and KForce. The industry composite has been determined in good faith by management to represent entities that compete with TeamStaff in certain of its significant business segments. Management does not believe there are any publicly held entities that compete with all TeamStaff’s business segments.Mr. Wasserman – 5,000 shares. |
Report of The Management Resources And Compensation Committee of The Board Of Directors
The following report has been submitted by the Management Resources and Compensation Committee of the Board of Directors:
The Management Resources and Compensation Committee of the Board of Directors has reviewed and discussed our Compensation Discussion and Analysis with management. Based on this review and discussion, the Management Resources and Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in our annual report on Form 10-K for the fiscal year ended September 30, 2008, as filed with the SEC.
The foregoing report was submitted by the Management Resources and Compensation Committee of the Board and shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A promulgated by the SEC or Section 18 of the Exchange Act.
| | | | |
| Peter Black, Chair Karl W. Dieckmann T. Stephen Johnson
| |
61
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERSHAREHOLDER MATTERS The following table sets forth certain information as of December 19, 20062008 with respect to each director, each of the named executive officers as defined in Item 402(a) (3), and directors and executive officers of TeamStaff as a group, and to the persons known by TeamStaff to be the beneficial owner of more than five percent of any class of TeamStaff’s voting securities. At December 19, 2006,2008, TeamStaff had 19,278,2664,842,704 shares of common stock outstanding. The figures stated below are based upon Schedule 13G,13D, Schedule 13G/A,13D/As, Form 3, and Form 4’s4s filed with the Securities and Exchange Commission by the named persons.
| | | | | | | | |
| | Number of Shares | | | Percent of Company’s | |
Name | | Currently Owned (1) | | | Outstanding Stock | |
William H. Alderman (2) | | | 5,688 | | | | * | |
c/o TeamStaff, Inc. | | | | | | | | |
1 Executive Drive | | | | | | | | |
Somerset, NJ 08873 | | | | | | | | |
Peter Black (3)(13)(14)(15)(16) | | | 13,500 | | | | * | |
c/o TeamStaff, Inc. | | | | | | | | |
1 Executive Drive | | | | | | | | |
Somerset, NJ 08873 | | | | | | | | |
Martin J. Delaney (4) | | | 17,432 | | | | * | |
c/o TeamStaff, Inc. | | | | | | | | |
1 Executive Drive | | | | | | | | |
Somerset, NJ 08873 | | | | | | | | |
Karl W. Dieckmann (5) | | | 35,231 | | | | * | |
c/o TeamStaff, Inc. | | | | | | | | |
1 Executive Drive | | | | | | | | |
Somerset, NJ 08873 | | | | | | | | |
Rick J. Filippelli (6) | | | 55,833 | | | | 1.13 | % |
c/o TeamStaff, Inc. | | | | | | | | |
1 Executive Drive | | | | | | | | |
Somerset, NJ 08873 | | | | | | | | |
T. Stephen Johnson (7) | | | 77,877 | | | | 1.58 | % |
c/o TeamStaff, Inc. | | | | | | | | |
1 Executive Drive | | | | | | | | |
Somerset, NJ 08873 | | | | | | | | |
Frederick G. Wasserman (8) | | | 9,063 | | | | * | |
c/o TeamStaff, Inc. | | | | | | | | |
1 Executive Drive | | | | | | | | |
Somerset, NJ 08873 | | | | | | | | |
Cheryl Presuto (9) | | | 27,833 | | | | * | |
c/o TeamStaff, Inc. | | | | | | | | |
1 Executive Drive | | | | | | | | |
Somerset, NJ 08873 | | | | | | | | |
Table of Contents![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
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Name | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Number of Shares Currently Owned (1) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Percent of Company’s Outstanding Stock |
Ronald Aldrich (2) c/o TeamStaff, Inc. 1545 Peachtree Street, NE Atlanta, GA 30309 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 7,500 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Peter Black (3)(13)(14) c/o TeamStaff, Inc. 1545 Peachtree Street, NE Atlanta, GA 30309 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 7,500 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Martin J. Delaney (4) c/o TeamStaff, Inc. 1545 Peachtree Street, NE Atlanta, GA 30309 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 57,235 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Karl W. Dieckmann (5) c/o TeamStaff, Inc. 1545 Peachtree Street, NE Atlanta, GA 30309 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 105,924 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Ben J. Dyer (6) c/o TeamStaff, Inc. 1545 Peachtree Street, NE Atlanta, GA 30309 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 43,126 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Rick J. Filippelli (7) c/o TeamStaff, Inc. 1545 Peachtree Street, NE Atlanta, GA 30309 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 100,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
James D. Houston (8) c/o TeamStaff, Inc. 1545 Peachtree Street, NE Atlanta, GA 30309 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
T. Stephen Johnson (9) c/o TeamStaff, Inc. 1545 Peachtree Street, NE Atlanta, GA 30309 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 284,011 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1.47% |
T. Kent Smith (10) c/o TeamStaff, Inc. 1545 Peachtree Street, NE Atlanta, GA 30309 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 500,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2.59% |
Bernard J. Korman (11) 2129 Chestnut Street Philadelphia, PA 19103 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2,300,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 11.93% |
Nationwide Financial Services (12) One Nationwide Plaza Mail Stop 01-12-13 Columbus, OH 43215 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2,256,488 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 11.70% |
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Table of Contents![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
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Name | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Number of Shares Currently Owned (1) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Percent of Company’s Outstanding Stock |
Wynnefield Capital Management, LLC (13) 450 Seventh Ave New York, NY 10123 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,740,875 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 9.03% |
Wynnefield Capital Inc. (14) 450 Seventh Ave New York NY 10123 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 599,625 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3.11% |
Hummingbird Value Fund (15) 460 Park Avenue, 12th Flr. New York NY 10022 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 698,995 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3.63% |
Hummingbird Microcap Value Fund (16) 460 Park Avenue, 12th Flr. New York NY 10022 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 636,115 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3.30% |
All officers and directors as a group (9) persons (2, 3, 4, 5, 6, 7, 8, 9, 10, 13, 14) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3,445,796 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 17.87% |
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| | | | | | | | |
| | Number of Shares | | | Percent of Company’s | |
Name | | Currently Owned (1) | | | Outstanding Stock | |
Kevin Wilson (10) | | | 10,000 | | | | * | |
c/o TeamStaff, Inc. | | | | | | | | |
1 Executive Drive | | | | | | | | |
Somerset, NJ 08873 | | | | | | | | |
Dale West (11) | | | 0 | | | | * | |
c/o TeamStaff, Inc. | | | | | | | | |
1 Executive Drive | | | | | | | | |
Somerset, NJ 08873 | | | | | | | | |
Bernard J. Korman (12) | | | 729,146 | | | | 14.77 | % |
2129 Chestnut Street | | | | | | | | |
Philadelphia, PA 19103 | | | | | | | | |
Wynnefield Capital Management, LLC (13) | | | 760,950 | | | | 15.41 | % |
450 Seventh Ave | | | | | | | | |
New York, NY 10123 | | | | | | | | |
Wynnefield Capital Inc. (14) | | | 428,072 | | | | 8.67 | % |
450 Seventh Ave | | | | | | | | |
New York NY 10123 | | | | | | | | |
Wynnefield Capital Profit Sharing Plan (15) | | | 25,000 | | | | * | |
450 Seventh Ave | | | | | | | | |
New York NY 10123 | | | | | | | | |
Channel Partnership II, LP (16) | | | 12,500 | | | | * | |
450 Seventh Ave | | | | | | | | |
New York NY 10123 | | | | | | | | |
Hummingbird Value Fund (17) | | | 145,060 | | | | 2.94 | % |
460 Park Avenue, 12th Flr. | | | | | | | | |
New York NY 10022 | | | | | | | | |
Hummingbird Microcap Value Fund (18) | | | 129,340 | | | | 2.62 | % |
460 Park Avenue, 12th Flr. | | | | | | | | |
New York NY 10022 | | | | | | | | |
All officers and directors as a group | | | 1,478,978 | | | | 29.95 | % |
(10) persons (2, 3, 4, 5, 6, 7, 8, 9, 10, 11 13,14, 15, 16) | | | | | | | | |
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* | | Less than 1 percent. |
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1. | | Ownership consists of sole voting and investment power except as otherwise noted. |
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2. | | Includes 4,063 unvested shares of restricted stock which may vest within 60 days. Excludes 4,063 shares of restricted stock which are unvested and subject to vesting requirements. Includes 1,250 shares of restricted stock that are vested. |
|
3. | | Includes options to purchase 7,5003,125 shares of TeamStaff’s common stock and excludesstock. Includes 4,375 unvested options to purchase 5,000 shares of TeamStaff’s common stock. |
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3. | Includes options to purchase 7,500restricted stock which may vest within 60 days. Excludes 4,375 shares of TeamStaff’s commonrestricted stock which are unvested and excludes unvested optionssubject to purchase 5,000vesting requirements. Includes 2,500 shares of TeamStaff’s common stock.restricted stock that are vested. Mr. Black is a member of the Company’s Board of Directors and is an Investment Analyst and Portfolio Manager at Wynnefield Capital, Inc. Mr. Black expressly disclaims beneficial ownership of the securities owned by Wynnefield Capital and its affiliates. |
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4. | | Includes options to purchase 15,0002,500 shares of TeamStaff’s common stock and excludesstock. Includes 4,375 unvested options to purchase 5,000 shares of TeamStaff’s common stock.restricted stock which may vest within 60 days. Excludes 4,375 shares of restricted stock which are unvested and subject to vesting requirements. |
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5. | | Includes options to purchase 20,0003,750 shares of TeamStaff’s common stock. Includes 5,000 unvested shares of restricted stock and excludes unvested options to purchasewhich may vest within 60 days. Excludes 5,000 shares of common stock.restricted stock which are unvested and subject to vesting requirements. Includes 5,000 shares of restricted stock that are vested. |
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6. | | Includes options to purchase 20,000 shares of TeamStaff’s common stock and excludes unvested options to purchase 5,000 shares of TeamStaff’s common stock. |
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7. | Includes options to purchase 100,00012,500 shares of TeamStaff’s common stock. Excludes 50,000 unvestedIncludes 43,333 shares of restricted stock. |
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8. | stock which are vested. Excludes 30,000 unvested17,917 shares of restricted stock. |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) stock which are unvested and subject to vesting requirements. |
9. |
7. | | Includes an aggregate of 147,79036,947 shares owned by or on behalf of certain of the holder’s family members and as to which shares the listed holder expressly disclaims beneficial ownership. Includes options to purchase 20,0003,750 shares of TeamStaff’s common stock, and excludesstock. Includes 4,375 unvested options to purchase 5,000 shares of TeamStaff’s common stock.restricted stock which may vest within 60 days. Excludes 4,375 shares of restricted stock which are unvested and subject to vesting requirements. Includes 3,750 shares of restricted stock that are vested. |
63
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10.8. | | Includes 4,063 unvested shares of restricted stock which may vest within 60 days. Excludes 4,063 shares of restricted stock which are unvested and subject to vesting requirements. Includes 1,250 shares of restricted stock that are vested. |
|
9. | | Includes options to purchase 500,0004,500 shares of TeamStaff’s common stock. Excludes 60,000 unvestedIncludes 23,333 shares of restricted stock.stock which are vested. Excludes 11,667 shares of restricted stock which are unvested and subject to vesting requirements. |
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10. | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Excludes 20,000 shares of restricted stock which are unvested and subject to vesting requirements. |
|
11. | | Excludes 30,000 shares of restricted stock which are unvested and subject to vesting requirements. |
|
12. | | Beneficial ownership is based on Schedule 13D filed with the Securities and Exchange Commission. |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) SEC. |
12. | Nationwide Financial Services obtained these shares in connection with the acquisition of BrightLane completed as of August 31, 2001. |
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13. | | Beneficial ownership is based upon Schedule 13G,13D, Schedule 13G/A,13D/As, Form 3, and Form 4’s4s filed |
Table of Contents![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| with the Securities and Exchange Commission.SEC. Mr. Peter Black, one of our directors, is an affiliate of Wynnefield Capital and its affiliated entities. Mr. Black expressly disclaims beneficial ownership of the securities owned by Wynnefield Capital and its affiliates. |
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14. | | Beneficial ownership is based upon Schedule 13G,13D, Schedule 13G/13D/A, Form 3, and Form 4’s4s filed with the Securities and Exchange Commission.SEC. Mr. Peter Black, one of our directors, is an affiliate of Wynnefield Capital and its affiliated entities. Mr. Black expressly disclaims beneficial ownership of the securities owned by Wynnefield Capital and its affiliates. |
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15. | | Beneficial ownership is based upon Schedule 13D, Schedule 13D/A, Form 3, and Form 4s filed with the SEC. Mr. Peter Black, one of our directors, is an affiliate of Wynnefield Capital and its affiliated entities. Mr. Black expressly disclaims beneficial ownership of the securities owned by Wynnefield Capital and its affiliates. |
|
16. | | Beneficial ownership is based upon Schedule 13D, Schedule 13D/A, Form 3, and Form 4s filed with the SEC. Mr. Peter Black, one of our directors, is an affiliate of Wynnefield Capital and its affiliated entities. Mr. Black expressly disclaims beneficial ownership of the securities owned by Wynnefield Capital and its affiliates. |
|
17. | | Beneficial ownership is based upon Schedule 13D filed with the Securities and Exchange Commission. Includes 118,750 shares issuable upon exercise of warrants to purchase common stock. |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) SEC. |
16. |
18. | | Beneficial ownership is based upon Schedule 13D filed with the Securities and Exchange Commission. Includes 118,750 shares issuable upon exercise of warrants to purchase common stock.SEC. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than ten percent of our equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Based solely on our review of copies of such reports and representations from our executive officers and directors, we believe that our executive officers and directors complied with all Section 16(a) filing requirements during the fiscal year ended September 30, 2006, except for the following Form 4’s, which were filed late:
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| 1. | With respect to certain grants of restricted stock made on April 27, 2006, which filings were made on or about July 12, 2006: Mr. Smith (grant of 60,000 shares of restricted stock); Mr. Filippelli (grant of 50,000 shares of restricted stock); Mr. Houston (grant of 30,000 shares of restricted stock); and |
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| 2. | With respect to certain grants of options to purchase 5,000 shares each relative to annual director option grants made on September 1, 2006, which filings were made on or about September 14, 2006: Mr. Aldrich, Mr. Black, Mr. Delaney, Mr. Dieckmann, Mr. Dyer and Mr. Johnson. |
The Company does not believe the late filings to constitute material events, since in the case of restricted stock the price of Company stock on the date of filing ($1.26) did not exceed the market price on the grant date ($1.70). Further, in the case of board options, the price of Company stock on the date of filing ($1.33) did not materially exceed the market price on the grant date ($1.29). Moreover, board options are granted annually on September 1. The Company has instituted additional controls to ensure timely Form 4 filings as well as Sarbanes-Oxley compliance in the future with respect to such Form 4 filings.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS For information concerning employment and severance agreements with, and compensation of, the Corporation’sCompany’s present executive officers and directors, see ‘‘Executive“Executive Compensation.’’” The Directors’ Plan provides that directors, upon joining the Board, and for one year thereafter, will be entitled to purchase restricted stock from TeamStaff at a price equal to 80% of the closing bid price on the date of purchase up to an aggregate purchase price of $50,000.
Approval for Related Party Transactions
Although we have not adopted a formal policy relating to the approval of proposed transactions that we may enter into with any of our executive officers, directors and principal stockholders, including their immediate family members and affiliates, our Audit Committee, all of the members of which are independent, reviews the terms of any and all such proposed material related party transactions. The results of this review are then communicated to the entire Board of Directors, which has the ultimate authority as to whether or not we enter into such transactions. We will not enter into any material related party transaction without the prior consent of our Audit Committee and our Board of Directors. In approving or rejecting the proposed related party transaction, our Audit Committee and our Board of Directors shall consider the relevant facts and circumstances available and deemed relevant to them, including, but not limited to the risks, costs and benefits to us, the terms of the transaction, the availability of other sources for comparable services or products, and, if applicable, the impact on a director’s independence. We shall approve only those agreements that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as our Audit Committee and our Board of Directors determine in the good faith exercise of their discretion.
64
Independence of our Board of Directors and its Committees
The listing rules established by the Nasdaq Stock Market, LLC require that a majority of the members of a listed company’s board of directors qualify as “independent” as affirmatively determined by the board, meaning that each independent director has no direct or indirect material relationship with a company other than as a director and/or a stockholder. Our Board of Directors consults with legal counsel to ensure that our Board’s determination with respect to the definition of “independent” is consistent with current Nasdaq listing rules.
Our Board of Directors reviewed all relevant transactions or relationships between each director, or any of his family members, and our company and has affirmatively determined that each of our directors, other than Rick Filippelli (our Chief Executive Officer) and Martin Delaney (who served as Senior Vice President of the Company from January 1, 2005 to December 31, 2005) are independent directors under the applicable guidelines noted above. Our Board of Directors has four committees: the Audit Committee, the Management Resources and Compensation Committee, the Nominating and Corporate Governance Committee and the Executive Committee. All of the members of our Audit, Nominating and Corporate Governance and Management Resources and Compensation Committees meet the standards for independence required under current Nasdaq Stock Market listing rules, SEC rules, and applicable securities laws and regulations.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The following table presents the total fees
paidbilled for professional audit and non-audit services rendered by our independent auditors for the audit of our annual financial statements for the years ended September 30,
20062008 and September 30,
2005,2007, and fees billed for other services rendered by our independent auditors during those periods.
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![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | Fiscal Years Ended September 30, | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Fiscal Years Ended September 30, | | 2008 | | 2007 (5) | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 |
Audit Fees (1) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 180,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 132,000 | | | $ | 170,000 | | $ | 137,000 | |
| |
Audit-Related Fees (2) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 94,000 | | | — | | 1,000 | |
| |
Tax Fees (3) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 149,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 198,000 | | | 106,000 | | 99,000 | |
| |
All Other Fees (4) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 10,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,000 | | | 13,000 | | 26,000 | |
| | | | | | |
| |
Total | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 340,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 425,000 | | | $ | 289,000 | | $ | 263,000 | |
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(1) | | Audit services consist of audit work performed in the examination of financial statements, as well as work that generally only the independent auditor can reasonably be expected to provide, including comfort letters, statutory audits, and attest services and consultation regarding financial accounting and/or reporting standards. |
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(2) | | Audit-related services consist of assurance and related services that are traditionally performed by the independent auditor, including due diligence related to mergers and acquisitions and special procedures required to meet certain regulatory requirements. |
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(3) | | Tax services consist of all services performed by the independent auditor’s tax personnel, except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning, and tax advice. |
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(4) | | Other services consist of those service not captured in the other categories.categories, principally audit services for the Company’s 401(k) plan. |
|
(5) | | The Company changed auditors on July 11, 2007. Interim fees billed by our current auditors through September 30, 2007 were $59,000 and $9,000 for audit and tax service fees, respectively. |
Our Audit Committee has determined that the services provided by our independent auditors and the fees paid to them for such services has not compromised the independence of our independent auditors.
65
Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of the independent auditor. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by the independent auditor. Prior to engagement of the independent auditor for the next year’s audit, management will submit a detailed description of the audit and permissible non-audit services expected to be rendered during that year for each of four categories of services provided by the independent auditor to the Audit Committee for approval. The four categories of services provided by the independent auditor are as defined in the footnotes to the fee table set forth above. In addition, management will also provide to the Audit Committee for its approval a fee proposal for the services proposed to be rendered by the independent auditor. Prior to the engagement of the independent auditor, the Audit Committee will approve both the description of audit and permissible non-audit services proposed to be rendered by the independent auditor and the budget for all such services. The fees are budgeted and the Audit Committee requires the independent auditor and management to report actual fees versus the budget periodically throughout the year by category of service.
During the year, circumstances may arise when it may become necessary to engage the independent auditor for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires separate pre-approval before engaging the independent auditor. To ensure prompt handling of unexpected matters, the Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report any pre-approval decisions to the Audit Committee at its next scheduled meeting.
Table of ContentsITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K(a) 1. Financial Statements
The financial statements and schedules of TeamStaff are included in Part II, Item 8 of this report beginning on page F-1 and including page S-1.
2. All other schedules have been omitted since the required information is not applicable or because the information required is included in the Consolidated Financial Statements or the notes thereto.
3. Exhibit List
The exhibits designated with an asterisk (*) are filed herewith. All other exhibits have been previously filed with the Commission and, pursuant to 17 C.F.R. Secs. 20l.24 and 240.12b-32, are incorporated by reference to the document referenced in brackets following the descriptions of such exhibits.
EXHIBIT NO. DESCRIPTION
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(a)(1) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Financial Statements |
|
| | The financial statements and schedules of TeamStaff are included in Part II, Item 8 of this report beginning on page F-1 and including page S-1. |
|
(a)(2) | | Financial Statement Schedules |
|
| | Valuation of qualifying accounts. See Schedule I annexed to the financial statements. All other schedules have been omitted since the required information is not applicable or because the information required is included in the Consolidated Financial Statements or the notes thereto. |
|
(a)(3) | | Exhibits |
|
| | The exhibits designated with an asterisk (*) are filed herewith. All other exhibits have been previously filed with the Commission and, pursuant to 17 C.F.R. Secs. 20l.24 and 240.12b-32, are incorporated by reference to the document referenced in brackets following the descriptions of such exhibits. The exhibits designated with a number sign (#) indicates a management contract or compensation plan or arrangement. |
| | |
Exhibit No. | | Description |
| | |
2.1 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Agreement and Plan of Merger by and among TeamStaff, Inc., TeamSub, Inc and BrightLane.com, Inc., dated as of March 6, 2001, as amended by Amendment No. 1 dated as of March 21, 2001 and Amendment No. 2 dated as of April 6, 2001 (filed as Appendix A to the Proxy Statement/prospectus filed on August 7, 2001, SEC File no. 333-61730, as part of Registrant’s Registration Statement on Form S-4). |
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2.2.1 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Form of Asset Purchase Agreement between TeamStaff, Inc and Gevity HR, Inc. dated as of November 14, 2003 (filed as Exhibit 2 to Form 8-K dated November 14, 2003). |
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2.3 | | Asset Purchase Agreement, dated as of January 29, 2008, by and among Temps, Inc., TeamStaff, Inc. and TeamStaff Rx, Inc. (previously filed as Exhibit 2.1 to the Current Report on Form 8-K filed by the Company on February 5, 2008). |
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3.1 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Amended and Restated Certificate of Incorporation (filed as Exhibit A to Definitive Proxy Statement dated May 1, 2000 as filed with the Securities and Exchange Commission). |
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3.2 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Form of Form of Certificate of Designation of Series A Preferred Stock (filed as Exhibit 3.1 to Form 8-K dated April 6, 2001). |
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| | |
Exhibit No. | | Description |
|
3.3 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Amended By-Laws of Registrant adopted as of May 15, 2001 (filed as Exhibit 3.4 to the Registration Statement on Form S-4 File No. 333-61730). |
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3.4 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Amended and restated by-lawsBy-Laws of Registrant adopted as of August 29, 2001 (filed as Exhibit 3.5 to the Registrant’s Form S-3 filed on December 19,27, 2001). |
4.1 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
3.5 | — | Amendment to By-Laws of Registrant adopted November 8, 2007 (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on November 13, 2007). |
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3.6 | | Amendment to Amended and Restated Certificate of Incorporation of the Common Stock Certificate (Exhibit 4.1Company (filed as Exhibit B to RegistrationDefinitive Proxy Statement on Form S-18, File No. 33-46246-NY)dated March 13, 2008 as filed with the Securities and Exchange Commission). |
4.2 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
4.1# | — | 2000 Employee Stock Option Plan (filed as Exhibit B to the Proxy Statement dated as of March 8, 2000 with respect to the Annual meeting of Shareholders held on April 13, 2000). |
4.3 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
4.2# | — | 2000 Non-Executive Director Stock Option Plan (filed as Exhibit B to the Proxy Statement dated as of March 8, 2000 with respect to the Annual meeting of Shareholders held on April 13, 2000). |
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4.3# | | 2006 Long Term Incentive Plan (filed as Exhibit 10.1 to the Form 10-Q filed on May 15, 2006). |
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10.1 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Lease dated May 30, 1997 for office space at 300 Atrium Drive, Somerset, New Jersey (Exhibit 10.6.1 to Form 10-K for the fiscal year ended September 30, 1997). |
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10.2 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Form of Stock Purchase Agreement dated as of April 6, 2001 between TeamStaff, Inc. and BrightLane.com, Inc. with respect to purchase of Series A Preferred Stock (filed as Exhibit 10.1 to Form 8-K dated April 6, 2001). |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Table of Contents![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.3 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Form of Escrow Agreement between TeamStaff, Inc. and BrightLane Shareholders with respect to the placement of 150,000 shares into escrow by the BrightLane shareholders (filed as Appendix B to the proxy statement/prospectus filed on August 7, 2001 SEC File No. 333.61730). |
10.4 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Form of Severance Agreement dated as of May 22, 2002 between the Registrant and Donald Kappauf (filed as Exhibit 10.12 to the Form 10-K filed on February 10, 2003). |
10.510.4 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Form of Severance Agreement dated as of May 22, 2002 between the Registrant and Donald Kelly (filed as Exhibit 10.13 to the Form 10-K filed on February 10, 2003). |
10.6 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Form of Employment Agreement made as of June 18, 2003 between TeamStaff, Inc. and T. Kent Smith (filed as Exhibit 10.16 to the Form 10-K filed on December 23, 2004). |
10.7 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Form of Securities Purchase Agreement dated as of November 5, 2004 including Form of Warrant (filed as Exhibit 10.1 to the Form 8-K filed on November 12, 2004). |
10.8 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.5 | — | Form of Asset Purchase Agreement by and among Nursing Innovations, Inc., Vitriarc, Inc., and William L. Booth and TeamstaffTeamStaff Rx, Inc. dated as of November 5, 2004 (filed as Exhibit 10.1 to the Form 8-K filed on November 18, 2004). |
10.9 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.6 | — | Form of Agreement for Sale of Goodwill dated as of November 5, 2004 by and between William Lee Booth and TeamStaff Rx, Inc. (filed as Exhibit 10.2 to the Form 8-K filed on November 18, 2004). |
10.10 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.7 | — | Form of Client Transfer Agreement as of November 14, 2004, by and among Nursing Innovations, Inc., Vitriarc, Inc., and William L. Booth and TeamStaff Rx Inc. (filed as Exhibit 10.3 to the Form 8-K filed on November 18, 2004). |
10.11 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.8# | — | Form of Employee Incentive Stock Option Certificate and Agreement (filed as Exhibit 10.13 to the Form 10-K filed on December 23, 2004). |
10.12 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.9# | — | Form of Employee Non-Qualified Stock Option Certificate and Agreement (filed as Exhibit 10.14 to the Form 10-K filed on December 23, 2004). |
10.13 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.10# | — | Form of 2000 Director Plan Non-Qualified Stock Option Agreement (filed as Exhibit 10.15 to the Form 10-K filed on December 23, 2004). |
67
10.14 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Form of Employee Incentive Stock Option Certificate and Agreement dated as of June 18, 2003 between TeamStaff, Inc. and T. Kent Smith. (filed as Exhibit 10.16 to the Form 10-K filed on December 23, 2004). |
10.15Exhibit No. | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) Description |
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10.11 | — | Form of Lease for our business premises located at 18167 U.S. Highway 19N, Suite 400, Clearwater, Fl 33764 (filed as Exhibit 10.1 to Form 8-K dated February 29, 2005). |
10.16 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.12 | — | Form of Stock Purchase Agreement among TeamStaff, Inc. and the Shareholders of RS Staffing Services, Inc. dated as of May 26, 2005 (filed as Exhibit 10.1 to Form 8-K dated June 8, 2005). |
10.16.1 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.12.1 | — | Form of Note dated June 8, 2005 issued by TeamStaff, Inc. to Roger Staggs (filed as Exhibit 10.2 to the Form 10-Q filed on August 12, 2005). |
10.16.2 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.12.2 | — | Form of Note dated June 8, 2005 issued by Team Staff, Inc. to Barry Durham (filed as Exhibit 10.2 to the Form 10-Q filed on August 12, 2005). |
10.16.3 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Form of Employment Agreement between TeamStaff, Inc. and Roger Staggs, dated as of June 8, 2005 |
10.16.410.13 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Form of Employment Agreement between TeamStaff, Inc. and Barry Durham, dated as of June 8, 2005. |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Table of Contents![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.17 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Form of Revolving Credit Agreement, Promissory Notes and related documents between TeamStaff, Inc. and PNC Bank, NA, dated as of June 8, 2005 (filed as Exhibits 10.4 and 10.5 to the Form 10-Q filed on August 12, 2005). |
10.18 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Form of Employment Agreement between TeamStaff, Inc. and T. Kent Smith, dated as of June 30, 2005 (filed as Exhibit 10.1 to the Form 8-K filed on July 14, 2005). |
10.1910.14# | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Form of Employment Agreement between TeamStaff, Inc. and Rick J. Filippelli, dated as of June 30, 2005 (filed as Exhibit 10.2 to the Form 8-K filed on July 14, 2005). |
10.20 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.15 | — | Form of Settlement Agreement between TeamStaff, Inc. and the CNA Entities dated as of October 10, 2005 (filed as Exhibit 10.1 to the Form 8-K filed on October 20, 2005). |
10.21 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.16 | — | Form of Lease dated as of November 18, 2005 between TeamStaff, Inc. and One Peachtree Pointe Associates, LLC (file as Exhibit 10.1 to the Form 10-Q filed on February 14, 2006). |
10.22 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.17# | — | TeamStaff, Inc. 2006 Long Term Incentive Plan (filed as Exhibit 10.1 to the Form 10-Q filed on May 15, 2006). |
10.23 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.18# | — | Form Notice of Restricted Stock Bonus Award and Restricted Stock Agreement (filed as Exhibit 10.2 to the Form 10-Q filed on May 15, 2006). |
10.24 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.19 | — | Form of Asset Purchase Agreement, Exhibits and Schedules re: sale of DSI Payroll Services to CompuPay, Inc. (filed as Exhibit 10.1 to the Form 8-K filed on June 1, 2006). |
10.25 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.20 | — | Form of Settlement Agreement and Exhibits (Stock Purchase Agreement and Lock-Up Agreement re: |
| | TeamStaff, Inc. and Atomic Fusion filed as Exhibit 10-1 to the Form 8-K filed on June 6, 2006). |
10.26* | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.21# | — | Form of Director Stock Option Agreement for options granted September 1, 2006.2006 (filed as Exhibit 10.20 to the Form 10-K filed on December 21, 2005). |
10.27* | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.22 | — | Form of Change in ControlAmendment to Revolving Credit and Security Agreement dated December 13, 2006 between TeamStaff, Inc. and PNC Bank, N.A. (filed as Exhibit 10.1 to the Form 10-Q filed on February 14, 2007). |
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10.23 | | Lease, dated as of December 4, 2006, for our business premises located at 6555 Quince Road, Suite 303, Memphis, Tennessee (filed as Exhibit 10.2 to the Form 10-Q filed on February 14, 2007). |
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10.24# | | Form of Separation Agreement with T. Kent Smith dated as of January 17, 2007 (filed as Exhibit 99.1 to the Form 8-K filed on February 1, 2007). |
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10.25# | | Separation Agreement with T. Kent Smith dated as of January 19, 2007 (filed as Exhibit 99.1 to the Form 8-K filed on February 1, 2007). |
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10.26# | | Form of Letter of Agreement with Rick Filippelli dated as of January 10, 2007 (filed as Exhibit 99.1 to the Form 8-K filed on February 20, 2007). |
68
| | |
Exhibit No. | | Description |
|
10.27# | | Form of Letter of Agreement with James D. Houston dated October 31, 2006as of January 10, 2007 (filed as Exhibit 99.2 to the Form 8-K filed on February 20, 2007). |
21.0* | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
10.28# | — | Form of Agreement and Release with James Houston dated as of May 11, 2007 (filed as Exhibit 10.29 to the Form 10-Q filed on May 15, 2007). |
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10.29 | | Lease, dated as of April 13, 2007, for our business premises located at 1 Executive Drive, Suite 130, Somerset, New Jersey (filed as Exhibit 10.1 to the Form 10-Q filed August 14, 2007). |
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10.30 | | Lease dated as of March 27, 2008 between TeamStaff Government Solutions, Inc. and West Walton Properties, Inc. (filed as Exhibit 10.1 to the Form 10-Q filed May 15, 2008). |
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10.31 | | Amended and Restated Loan and Security Agreement dated March 28, 2008 between TeamStaff, Inc. and Business Alliance Capital Company, a division of Sovereign Bank. (filed as Exhibit 10.2 to the Form 10-Q filed May 15, 2008). |
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10.32 | | Amended and Restated Revolving Credit Master Promissory Note dated March 28, 2008 between TeamStaff, Inc. and Business Alliance Capital Company, a division of Sovereign Bank. (filed as Exhibit 10.3 to the Form 10-Q filed May 15, 2008). |
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10.33# | | Employment Agreement between the Company and Rick Filippelli dated as of April 17, 2008 (filed as Exhibit 10.1 to Current Report on Form 8-K filed on April 22, 2008). |
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10.34# | | Employment Agreement between the Company and Cheryl Presuto dated as of July 30, 2008 (filed as Exhibit 10.1 to Current Report on Form 8-K filed on August 4, 2008). |
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10.35# | | Employment Agreement between the Company and Kevin Wilson dated October 3, 2008 (filed as Exhibit 10.1 to Current Report on From 8-K filed on October 8, 2008). |
| | |
10.36# | | Employment Agreement between the Company and Dale West dated December 3, 2008 (filed as Exhibit 10.1 to Current Report on Form 8-K filed on December 9, 2008). |
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14 | | Code of Ethics (Exhibit 14.1 to Annual Report on Form 10-K for the fiscal year ended September 30, 2003). |
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16.1 | | Letter from Lazar Levine & Felix LLP to the Registrant filed with the SEC dated July 17, 2007 (filed as Exhibit 16.1 to Current Report on Form 8-K dated July 17, 2007). |
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21* | | Subsidiaries of Registrants. |
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23.1* | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Consent of Lazar Levine and Felix LLP.WithumSmith+Brown, A Professional Corporation. |
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31.1* | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Certification of Chief Executive Officer pursuant to Section17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a). |
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31.2* | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Certification of Chief Financial Officer pursuant to Section17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a). |
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32.1* | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | —Certification of Chief Executive Officer and Chief Financial Officer pursuant to 17 CFR 240.13a-14(b) or 17 CFR 240.15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code |
(c) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Exhibits. See Item (a)(3) above. |
(d) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Valuation of qualifying accounts. See Schedule I annexed to the financial statements. |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) Code. |
69
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
TEAMSTAFF, INC.
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | /s/ T. Kent Smith
T. Kent Smith
President and Chief Executive Officer | | | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | TEAMSTAFF, INC.
| |
| /s/ Rick Filippelli
| |
| Rick Filippelli | |
| Chief Executive Officer
Vice President, Finance and (Principal Executive Officer) | |
|
| /s/ Cheryl Presuto | |
| Cheryl Presuto | |
| Chief Financial Officer (Principal Accounting Officer) | |
Dated: December
19, 200623, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| | | | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
/s/ T. Stephen Johnson T. Stephen Johnson | | Chairman of the Board | | December 19, 200623, 2008 |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | |
T. Stephen Johnson |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
/s/ Karl W. Dieckmann Karl W. Dieckmann | | Vice-Chairman of the Board | | December 19, 200623, 2008 |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | |
Karl W. Dieckmann |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
/s/ Ron Aldrich | | Director | | December 19, 2006 |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Ron Aldrich |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
/s/ Peter Black Peter Black | | Director | | December 19, 200623, 2008 |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | |
Peter Black |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
/s/ Martin J. Delaney | | Director | | December 19, 2006 |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Martin J. Delaney | | Director | | December 23, 2008 |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | |
/s/ Ben J. DyerFrederick G. WassermanFrederick G. Wasserman | | Director | | December 19, 200623, 2008 |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | |
Ben J. Dyer/s/ William H. AldermanWilliam H. Alderman | | Director | | December 23, 2008 |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | |
/s/ T. Kent SmithRick J. FilippelliRick J. Filippelli | | President, Chief Executive Officer and Director | | December 19, 200623, 2008 |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | |
T. Kent Smith |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
/s/ Rick FilippelliCheryl PresutoCheryl Presuto | | Chief Financial Officer (Principal Accounting OfficerOfficer) | | December 19, 2006 |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Rick Filippelli |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) 23, 2008 |
70
TeamStaff, Inc. and Subsidiaries Index to Consolidated Financial Statements![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
F-1
REPORT OF INDEPENDENT REGISTERED INDEPENDENT PUBLIC ACCOUNTANTSACCOUNTING FIRM To the Board of Directors and Shareholders of
TeamStaff, Inc.
Somerset, NJWe have audited the accompanying consolidated balance sheets of TeamStaff, Inc. and Subsidiaries as of September 30,
20062008 and
2005,2007, and the related consolidated statements of operations and comprehensive
loss,income (loss), shareholders’ equity and cash flows for
each of the
three years
in the period ended September 30, 2006.then ended. Our audits also included the
consolidated financial statement schedule
as listed in
Part IV, Item 15.the index. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements and schedule based on our audits.
We
performedconducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement.
The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of TeamStaff, Inc. and Subsidiaries as of September 30, 20062008 and 2005,2007, and the consolidated results of its operations and its cash flows for each of the three years in the periodthen ended, September 30, 2006, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the relatedconsolidated financial statement schedule referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | /s/ Lazar Levine & Felix LLP
Lazar Levine & Felix LLP |
/s/ WithumSmith+Brown, A Professional CorporationWithumSmith+Brown, A Professional Corporation
Morristown, New York, NYJersey
December 15, 200622, 2008
F-2
Table of ContentsTEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2006 AND 2005
(AMOUNTS IN THOUSANDS)![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
| | | | | | | | | |
| | | September 30, | | September 30, | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | 2008 | | 2007 | |
ASSETS | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | September 30, 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | September 30, 2005 | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | |
CURRENT ASSETS: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | |
Cash and cash equivalents | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 2,157 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 1,304 | | | $ | 5,213 | | $ | 592 | |
Accounts receivable, net of allowance for doubtful accounts of $44 and $8 as of September 30, 2006 and September 30, 2005, respectively | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 8,712 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 8,890 | | |
Deferred tax asset | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 634 | | |
Accounts receivable, net of allowance for doubtful accounts of $2 and $17 as of September 30, 2008 and September 30, 2007, respectively | | | 12,892 | | 8,279 | |
Prepaid workers’ compensation | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,094 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,461 | | | 562 | | 468 | |
Assets held for sale | | | — | | 490 | |
Other current assets | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 923 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,146 | | | 607 | | 642 | |
| | | | | | |
Total current assets | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 12,886 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 13,435 | | | 19,274 | | 10,471 | |
| | | | | | |
| | |
EQUIPMENT AND IMPROVEMENTS: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | |
Furniture and equipment | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3,333 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2,723 | | | 3,299 | | 3,276 | |
Computer equipment | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 556 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 516 | | | 619 | | 561 | |
Computer software | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 898 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,250 | | | 1,166 | | 995 | |
Leasehold improvements | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 177 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 177 | | | 20 | | 41 | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4,964 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4,666 | | | | | | |
| | | 5,104 | | 4,873 | |
| | |
Less accumulated depreciation and amortization | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (4,085 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (3,819 | | | | (4,409 | ) | | | (4,132 | ) |
| | | | | | |
Equipment and improvements, net | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 879 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 847 | | | 695 | | 741 | |
DEFERRED TAX ASSET, net of current portion | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 17,848 | | |
| | | | | | |
| | |
TRADENAME | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4,569 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4,569 | | | 4,569 | | 4,569 | |
| | |
GOODWILL | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 11,986 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 9,911 | | | 10,305 | | 10,305 | |
OTHER ASSETS: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | |
Prepaid workers’ compensation, net of current portion | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 350 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2,200 | | |
Other assets | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 106 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 236 | | |
Total other assets | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 456 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2,436 | | |
ASSETS HELD FOR SALE | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,008 | | |
| | |
OTHER ASSETS | | | 151 | | 82 | |
| | | | | | |
| | |
TOTAL ASSETS | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 30,776 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 50,054 | | | $ | 34,994 | | $ | 26,168 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | | |
The accompanying notes
to consolidated financial statementsare an integral part of these consolidated balance sheets
Table of ContentsTEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2006 AND 2005
(AMOUNTS IN THOUSANDS)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
LIABILITIES AND SHAREHOLDERS’ EUQITY | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | September 30, 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | September 30, 2005 |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
CURRENT LIABILITIES: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Bank line of credit | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 4,006 | |
Notes payable | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,500 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,543 | |
Current portion of captial lease obligations | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 61 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 70 | |
Accrued workers’ compensation | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2,050 | |
Accrued payroll | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,687 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,463 | |
Accrued pension liability | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 210 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 294 | |
Accounts payable | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3,207 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,537 | |
Accrued expenses and other current liabilities | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,818 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,866 | |
Total current liabilities | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 8,483 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 12,829 | |
CAPITAL LEASE OBLIGATIONS, net of current portion | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 247 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 72 | |
NOTES PAYABLE, net of current portion | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,500 | |
ACCRUED PENSION LIABILITY, net of current portion | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 388 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 578 | |
LIABILITIES FROM DISCONTINUED OPERATIONS | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 454 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 763 | |
Total liabilities | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 9,572 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 15,742 | |
COMMITMENTS AND CONTINGENCIES SHAREHOLDERS’ EQUITY: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Preferred stock, $.10 par value; authorized 5,000 shares; 0 issued and outstanding | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Common Stock, $.001 par value; authorized 40,000 shares; issued 19,285 at September 30, 2006 and September 30, 2005; outstanding 19,278 at September 30, 2006 and September 30, 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 19 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 19 | |
Additional paid-in capital | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 68,684 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 68,615 | |
Accumulated deficit | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (47,387 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (34,140 | |
Accumulated comprehensive loss | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (88 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (158 | |
Treasury stock, 7 shares at cost at September 30, 2006 and September 30, 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (24 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (24 | |
Total shareholders’ equity | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 21,204 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 34,312 | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 30,776 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 50,054 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets
Table of ContentsTEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | For the Years Ended September 30, |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2004 |
REVENUES | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 74,968 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 51,179 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 32,856 | |
DIRECT EXPENSES | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 62,457 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 42,053 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 26,880 | |
Gross profit | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 12,511 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 9,126 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 5,976 | |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 14,037 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 12,941 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 10,258 | |
DEPRECIATION AND AMORTIZATION | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 381 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 422 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 342 | |
Loss from operations | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (1,907 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (4,237 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (4,624 | |
OTHER INCOME (EXPENSE) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Interest income | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 76 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 48 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 38 | |
Interest expense | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (539 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (211 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (81 | |
Other income | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 160 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 180 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 232 | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (303 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 17 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 189 | |
Loss from continuing operations before tax | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (2,210 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (4,220 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (4,435 | |
INCOME TAX (EXPENSE) BENEFIT | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (16,017 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,604 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,686 | |
Loss from continuing operations | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (18,227 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (2,616 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (2,749 | |
INCOME (LOSS) FROM DISCONTINUED OPERATIONS | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Income (loss) from operations, net of tax (expense) benefit of $(265), $(70), and $253, respectively | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 427 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 126 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (403 | |
Income (loss) from disposal, net of tax (expense) benefit of $(2,825), $0, and $575, respectively | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4,553 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (927 | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4,980 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 127 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (1,330 | |
Net loss | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (13,247 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (2,489 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (4,079 | |
OTHER COMPREHENSIVE INCOME (EXPENSE) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Minimum pension liability adjustment, net of tax | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 70 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 153 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (38 | |
COMPREHENSIVE LOSS | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (13,177 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (2,336 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (4,117 | |
EARNINGS PER SHARE – BASIC & DILUTED | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Loss from continuing operations | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.95 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.14 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.18 | |
Income (loss) from discontinued operations | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0.26 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0.00 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (0.08 | |
Net loss | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.69 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.14 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.26 | |
WEIGHTED AVERAGE BASIC SHARES OUTSTANDING | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 19,278 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 18,206 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 15,714 | |
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 19,278 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 18,206 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 15,714 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
The accompanying notes to consolidated financial statements
are an integral part of these consolidated financial statements
F-3
Table of ContentsTEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITYBALANCE SHEETS
FOR THE YEARS ENDED SEPTEMBER 30, 2006, 2005, AND 2004
(AMOUNTS IN THOUSANDS)![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Common Stock | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Additional Paid-In Capital | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Accumulated Retained Earnings Deficit | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Treasury Stock | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Other Comprehensive Loss | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Total Shareholder’s Equity |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Shares | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Amount | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Shares | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Amount |
BALANCE, September 30, 2003 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 16,267 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 16 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 65,256 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ($27,572 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 553 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ($2,317 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ($273 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 35,110 | |
Common stock retirement from treasury | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (546 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (2,293 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (546 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2,293 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Minimum pension liability adjustment | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (38 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (38 | |
Net loss | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (4,079 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (4,079 | |
BALANCE, September 30, 2004 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 15,721 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 16 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 62,963 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (31,651 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 7 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (24 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (311 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 30,993 | |
Common stock issued in connection with private stock offering, net of expense | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2,392 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3,455 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3,457 | |
Common stock issued in connection with acquisition of RS Staffing Services | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,207 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,749 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,750 | |
Warrants granted in connection with private stock offering | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 498 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 498 | |
Minimum pension liability adjustment | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 153 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 153 | |
Return of shares related to forgiveness of shareholder note | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (35 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (50 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (50 | |
Net loss | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (2,489 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (2,489 | |
BALANCE, September 30, 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 19,285 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 19 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 68,615 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (34,140 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 7 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (24 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (158 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 34,312 | |
Minimum pension liability adjustment | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 70 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 70 | |
Expense related to Director stock options | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 17 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 17 | |
Expense related to Restricted Stock grants | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 52 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 52 | |
Net loss | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (13,247 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (13,247 | |
BALANCE, September 30, 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 19,285 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 19 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 68,684 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ($47,387 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 7 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ($24 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ($88 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 21,204 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| | | | | | | | |
| | September 30, | | | September 30, | |
| | 2008 | | | 2007 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
| | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | |
Notes payable | | $ | 1,500 | | | $ | 1,500 | |
Current portion of capital lease obligations | | | 69 | | | | 63 | |
Accrued payroll | | | 10,585 | | | | 1,581 | |
Accrued pension liability | | | 70 | | | | 280 | |
Accounts payable | | | 2,578 | | | | 3,727 | |
Accrued expenses and other current liabilities | | | 2,008 | | | | 1,756 | |
Liabilities from discontinued operations | | | 66 | | | | 263 | |
| | | | | | |
Total current liabilities | | | 16,876 | | | | 9,170 | |
| | | | | | | | |
CAPITAL LEASE OBLIGATIONS, net of current portion | | | 128 | | | | 183 | |
| | | | | | | | |
ACCRUED PENSION LIABILITY, net of current portion | | | — | | | | 66 | |
| | | | | | | | |
OTHER LONG TERM LIABILITY, net of current portion | | | 104 | | | | 155 | |
| | | | | | |
Total Liabilities | | | 17,108 | | | | 9,574 | |
| | | | | | |
| | | | | | | | |
COMMITMENTS AND CONTINGENCIES | | | | | | | | |
| | | | | | | | |
SHAREHOLDERS’ EQUITY: | | | | | | | | |
Preferred stock, $.10 par value; authorized 5,000 shares; none issued and outstanding | | | �� | | | | — | |
Common Stock, $.001 par value; authorized 40,000 shares; issued 4,874 and 4,823 at September 30, 2008 and September 30, 2007, respectively; outstanding 4,843 and 4,821 at September 30, 2008 and September 30, 2007, respectively | | | 5 | | | | 5 | |
Additional paid-in capital | | | 68,844 | | | | 68,726 | |
Accumulated deficit | | | (50,934 | ) | | | (52,080 | ) |
Accumulated comprehensive loss | | | (5 | ) | | | (33 | ) |
Treasury stock, 2 shares at cost at September 30, 2008 and September 30, 2007 | | | (24 | ) | | | (24 | ) |
| | | | | | |
Total shareholders’ equity | | | 17,886 | | | | 16,594 | |
| | | | | | |
| | | | | | | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 34,994 | | | $ | 26,168 | |
| | | | | | |
The accompanying notes to consolidated financial statements
are an integral part of these consolidated financial statements
F-4
Table of ContentsTEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(AMOUNTS IN THOUSANDS)![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
THOUSANDS, EXCEPT PER SHARE DATA) ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | For the Years Ended September 30, |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2004 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Net loss | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (13,247 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (2,489 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (4,079 | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities, net of acquired businesses: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Depreciation and amortization | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 381 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 422 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 369 | |
Compensation expense related to director stock option grants | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 17 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Compensation expense related to employee restricted stock grants | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 52 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Deferred income taxes | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 18,482 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (1,575 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,444 | |
Provision for doubtful accounts | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 36 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 30 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 12 | |
Gain on sale of DSI Payroll Services division | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (4,553 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Changes in operating assets and liabilities, net of acquired businesses: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Decrease (increase) in accounts receivable | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 142 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (1,764 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,946 | |
Decrease (increase) in other current assets | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 822 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (35 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 55 | |
Decrease (increase) in other assets | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,969 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,248 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (3,705 | |
(Decrease) increase in accounts payable, accrued expenses and other current liabilities | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (203 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,242 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (3,390 | |
(Decrease) increase in pension liability | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (274 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (556 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (296 | |
Decrease (increase) in restricted cash | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,800 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (536 | |
Cash flow from discontinued operations | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 5,035 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (515 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4,620 | |
Net cash provided by (used in) operating activities | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 8,659 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (2,192 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (3,560 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Purchase of equipment, leasehold improvements and software | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (146 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (87 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (18 | |
Payment for acquisition of RS Staffing Services, net of cash acquired | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (2,075 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (2,847 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Payment for acquisition of Nursing Innovations | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (1,866 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Cash flow from discontinued operations | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 419 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (160 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2,366 | |
Net cash (used in) provided by investing activities | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (1,802 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (4,960 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2,348 | |
CASH FLOWS FROM FINANCING ACTIVITIES: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Borrowings on revolving line of credit | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 58,434 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 32,084 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Payment on revolving line of credit | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (62,440 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (28,078 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Repayments on capital lease obligations | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (95 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (238 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (69 | |
Principal payments on notes payable | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (1,775 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (178 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Payment of bank line of credit acquired from RS Staffing Services | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (2,560 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Proceeds from capital lease | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 50 | |
Net proceeds from issuance of common stock, net of expense | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3,956 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Net comprehensive income (loss) on pension | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 70 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 153 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (38 | |
Cash flow from discontinued operations | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (198 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 257 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Net cash (used in) provided by financing activities | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (6,004 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 5,396 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (57 | |
Net increase (decrease) in cash and cash equivalents | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 853 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (1,756 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (1,269 | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,304 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3,060 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4,329 | |
CASH AND CASH EQUIVALENTS AT END OF YEAR | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 2,157 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 1,304 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 3,060 | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Cash paid during the year for: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Interest | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 539 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 222 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 81 | |
Income taxes | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 194 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 212 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 60 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| | | | | | | | |
| | For the Years Ended | |
| | September 30, | | | September 30, | |
| | 2008 | | | 2007 | |
REVENUES | | $ | 73,285 | | | $ | 66,882 | |
| |
DIRECT EXPENSES | | | 61,224 | | | | 55,852 | |
| | | | | | |
| |
Gross profit | | | 12,061 | | | | 11,030 | |
| |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | | | 11,029 | | | | 12,714 | |
| |
DEPRECIATION AND AMORTIZATION | | | 311 | | | | 349 | |
| | | | | | |
| | | | | | | | |
Income (loss) from operations | | | 721 | | | | (2,033 | ) |
| |
OTHER INCOME (EXPENSE) | | | | | | | | |
Interest income | | | 40 | | | | 74 | |
Interest expense | | | (159 | ) | | | (197 | ) |
Settlement of prior periods’ payroll tax contingencies | | | 716 | | | | — | |
Other income, net | | | 148 | | | | 145 | |
Legal expense related to pre-acquisition activity of acquired company | | | (218 | ) | | | (1,486 | ) |
| | | | | | |
| | | 527 | | | | (1,464 | ) |
| | | | | | |
Income (loss) from continuing operations before taxes | | | 1,248 | | | | (3,497 | ) |
| |
INCOME TAX (EXPENSE) BENEFIT | | | (60 | ) | | | 123 | |
| | | | | | |
| |
Income (loss) from continuing operations | | | 1,188 | | | | (3,374 | ) |
| | | | | | |
| |
LOSS FROM DISCONTINUED OPERATIONS | | | | | | | | |
Loss from operations, net of tax benefit of $0 and $14 for 2008 and 2007, respectively | | | (42 | ) | | | (1,612 | ) |
Income from disposal, net of tax benefit of $43 for 2007 | | | — | | | | 293 | |
| | | | | | |
| |
Loss from discontinued operations | | | (42 | ) | | | (1,319 | ) |
| | | | | | |
| |
Net income (loss) | | | 1,146 | | | | (4,693 | ) |
| |
OTHER COMPREHENSIVE INCOME | | | | | | | | |
Minimum pension liability adjustment, net of tax of $0 | | | 28 | | | | 55 | |
| | | | | | |
| |
COMPREHENSIVE INCOME (LOSS) | | $ | 1,174 | | | $ | (4,638 | ) |
| | | | | | |
| |
EARNINGS (LOSS) PER SHARE — BASIC & DILUTED | | | | | | | | |
Income (loss) from continuing operations | | $ | 0.25 | | | $ | (0.70 | ) |
Loss from discontinued operations | | | (0.01 | ) | | | (0.27 | ) |
| | | | | | |
Net earnings (loss) per share | | $ | 0.24 | | | $ | (0.97 | ) |
| | | | | | |
| | | | | | | | |
WEIGHTED AVERAGE BASIC SHARES OUTSTANDING | | | 4,866 | | | | 4,822 | |
| | | | | | |
| | | | | | | | |
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING | | | 4,875 | | | | 4,822 | |
| | | | | | |
Table of ContentsSUPPLEMENTAL DISCLOSURE OF NON CASH FINANCING ACTIVITY:
For the fiscal year ended September 30, 2006:
During the twelve months ended September 30, 2006, the company recorded $396,000 in notes payable related to the funding of the RS Staffing workers’ compensation insurance policy renewal. The policy and note was cancelled after six months, effective March 15, 2006, and refinanced with a new carrier for the final six months of the policy term. The company recorded $232,000 in notes payable related to this renewal.
The Company recorded $303,000 in capital leases during the twelve months ended September 30, 2006.
The accompanying notes to consolidated financial statements
are an integral part of these consolidated financial statements
F-5
Table of ContentsTEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007
(AMOUNTS IN THOUSANDS)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Additional | | | | | | | | | | | | | | | Other | | | Total | |
| | Common Stock | | | Paid-In | | | Accumulated | | | Treasury Stock | | | Comprehensive | | | Shareholders’ | |
| | Shares | | | Amount | | | Capital | | | Deficit | | | Shares | | | Amount | | | Loss | | | Equity | |
BALANCE, September 30, 2006 | | | 4,821 | | | $ | 5 | | | $ | 68,698 | | | $ | (47,387 | ) | | | 2 | | | $ | (24 | ) | | $ | (88 | ) | | $ | 21,204 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Minimum pension liability adjustment | | | | | | | | | | | | | | | | | | | | | | | | | | | 55 | | | | 55 | |
Return of shares related to forgiveness of shareholder note | | | (9 | ) | | | | | | | (50 | ) | | | | | | | | | | | | | | | | | | | (50 | ) |
Return of shares related to settlement | | | | | | | | | | | (71 | ) | | | | | | | | | | | | | | | | | | | (71 | ) |
Expense related to director stock options | | | | | | | | | | | 7 | | | | | | | | | | | | | | | | | | | | 7 | |
Expense related to employee restricted stock grants | | | 10 | | | | | | | | 142 | | | | | | | | | | | | | | | | | | | | 142 | |
Net loss | | | | | | | | | | | | | | | (4,693 | ) | | | | | | | | | | | | | | | (4,693 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
BALANCE, September 30, 2007 | | | 4,823 | | | | 5 | | | | 68,726 | | | | (52,080 | ) | | | 2 | | | | (24 | ) | | | (33 | ) | | | 16,594 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Minimum pension liability adjustment | | | | | | | | | | | | | | | | | | | | | | | | | | | 28 | | | | 28 | |
Return of shares related to settlement | | | | | | | | | | | (41 | ) | | | | | | | | | | | | | | | | | | | (41 | ) |
Expense related to director restricted stock grants | | | 21 | | | | | | | | 30 | | | | | | | | | | | | | | | | | | | | 30 | |
Expense related to employee restricted stock grants | | | | | | | | | | | 129 | | | | | | | | | | | | | | | | | | | | 129 | |
Fractional shares related to reverse stock split | | | (1 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | — | |
Net income | | | | | | | | | | | | | | | 1,146 | | | | | | | | | | | | | | | | 1,146 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
BALANCE, September 30, 2008 | | | 4,843 | | | $ | 5 | | | $ | 68,844 | | | $ | (50,934 | ) | | | 2 | | | $ | (24 | ) | | $ | (5 | ) | | $ | 17,886 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
F-6
TEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
| | | | | | | | |
| | For the Years Ended | |
| | September 30, | |
| | 2008 | | | 2007 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | |
Net income (loss) | | $ | 1,146 | | | $ | (4,693 | ) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities, net of divested businesses: | | | | | | | | |
Depreciation and amortization | | | 311 | | | | 349 | |
Settlement of prior periods’ payroll tax contingencies | | | (716 | ) | | | — | |
Compensation expense related to director stock option grants | | | 30 | | | | 7 | |
Compensation expense related to employee restricted stock grants | | | 188 | | | | 142 | |
(Recovery of) provision for doubtful accounts | | | (11 | ) | | | 126 | |
Loss on retirement of property, plant and equipment | | | 8 | | | | — | |
Gain on sale of DSI Payroll Services Division | | | — | | | | (202 | ) |
Changes in operating assets and liabilities, net of divested businesses: | | | | | | | | |
Accounts receivable | | | (4,602 | ) | | | (65 | ) |
Other current assets | | | (59 | ) | | | 857 | |
Other assets | | | 70 | | | | 374 | |
Accounts payable, accrued payroll, accrued expenses and other current liabilities | | | 8,764 | | | | 535 | |
Other long term liabilities | | | (51 | ) | | | (29 | ) |
Pension liability | | | (276 | ) | | | (252 | ) |
Cash flow from discontinued operations | | | (120 | ) | | | 1,476 | |
| | | | | | |
Net cash provided by (used in) operating activities | | | 4,682 | | | | (1,375 | ) |
| | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
Purchase of equipment, leasehold improvements and software | | | (251 | ) | | | (246 | ) |
Cash flow from discontinued operations | | | 357 | | | | 61 | |
| | | | | | |
Net cash provided by (used in) investing activities | | | 106 | | | | (185 | ) |
| | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
Repayments on capital lease obligations | | | (49 | ) | | | (52 | ) |
Net comprehensive income on pension | | | 28 | | | | 55 | |
Loan fees | | | (146 | ) | | | — | |
Cash flows from discontinued operations | | | — | | | | (8 | ) |
| | | | | | |
Net cash used in financing activities | | | (167 | ) | | | (5 | ) |
| | | | | | |
| | | | | | | | |
Net increase (decrease) in cash and cash equivalents | | | 4,621 | | | | (1,565 | ) |
| | | | | | | | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | | | 592 | | | | 2,157 | |
| | | | | | |
| | | | | | | | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | | $ | 5,213 | | | $ | 592 | |
| | | | | | |
| | | | | | | | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | | | |
Cash paid during the period for interest | | $ | 159 | | | $ | 197 | |
| | | | | | |
Cash paid during the period for income taxes | | $ | 86 | | | $ | 71 | |
| | | | | | |
SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIES:
The Company recorded $0 and $39,000 in capital leases during the years ended September 30, 2008 and 2007, respectively. During 2007, a current asset was reduced by a return of common shares valued at $50,000.
The accompanying notes are an integral part of these consolidated financial statements
F-7
TEAMSTAFF, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2006, 20052008 AND 20042007 (1)ORGANIZATION AND BUSINESSBUSINESS:: TeamStaff, Inc., a New Jersey corporation
(‘‘TeamStaff’’(“TeamStaff” or the
‘‘Company’’“Company”), was founded in 1969 as a payroll service company and evolved into a national provider of payroll and temporary and permanent medical and administrative staffing services.
Effective October 23, 2007, TeamStaff’s corporate headquarters is in Somerset, New Jersey. Previously, the Company’s corporate headquarters was located in Atlanta, Georgia. TeamStaff has offices located in Clearwater,
Florida; Memphis, Tennessee; Monroe, Georgia; Atlanta, Georgia;Florida and
Somerset, New Jersey.Loganville, Georgia.
When we use the term
‘‘TeamStaff,’’“TeamStaff,” or the
‘‘Company’’“Company” we mean TeamStaff and its subsidiaries. Currently, we operate only through the parent corporation, TeamStaff, Inc., and
our TeamStaff Rx, Inc.
(including its Nursing Innovations division)(“TeamStaff Rx”) and
TeamStaff Government Solutions, Inc. (“Teamstaff GS”), two wholly-owned subsidiaries of TeamStaff Inc. On February 12, 2008, the Company announced the name change of RS Staffing Services, Inc.
wholly-owned subsidiaries., a Loganville Georgia-based provider of medical and office administration/technical professionals acquired in June 2005, to TeamStaff Government Solutions, Inc. The name change reflects the subsidiary’s expanding service offerings in providing staffing for government logistical support positions through its LogWorld GSA Schedule, as well as providing medical and office administration/technical professionals through nationwide FSS contracts. TeamStaff’s other wholly-owned subsidiaries include DSI Staff ConnXions Northeast, Inc., DSI Staff ConnXions Southwest, Inc., TeamStaff Solutions, Inc., TeamStaff I, Inc., TeamStaff II, Inc., TeamStaff III, Inc., TeamStaff IV, Inc., TeamStaff
V, Inc., TeamStaff VI, Inc., TeamStaff Insurance Services, Inc., TeamStaff VIII,
Inc., Employer Support Services, Inc., TeamStaff IX, Inc., Digital Insurance Services, Inc., HR2, Inc. and BrightLane.com, Inc. As a result of the sale of our Professional Employer Organization
(‘‘PEO’’(“PEO”) business in fiscal year 2004 and other Company business changes, these
‘‘other’’“other” subsidiaries are not actively operating.
References in this filing to “TeamStaff,” the “Company,” “we,” “us” and “our” refer to TeamStaff, Inc. and its wholly owned subsidiaries.
TeamStaff provides specialized medical, nursing,
logistics and administrative staffing
services. TeamStaff providesservices by supplying allied healthcare and nursing professionals,
logistics and administrative personnel through
threetwo staffing
units.subsidiaries. The Company’s TeamStaff Rx subsidiary,
a Joint Commission on Accreditation of Healthcare Organizations (“JCAHO”) certified healthcare staffing firm, operates throughout the United States and specializes in providing
travel allied medical employees and nurses,
especially ‘‘travel’’ staff (typically on a thirteen-week assignment basis)
., as well as permanent placement services. Allied medical staff includes MRI technicians, mammographers,
physical therapists, occupational therapists, dosimetrists, ultrasound staff and physicists. TeamStaff Rx places temporary employees for
over 200 client facilities. TeamStaff Rx’s Nursing Innovations unit provides travel nursing, per diem nursing, temporary-to-permanent nursing and permanent nursing placement services. Nursing Innovations places temporary employees at over 130approximately 225 client facilities. The Company’s
RS StaffingTeamStaff GS subsidiary specializes in providing medical,
office administration, logistics, and
office administration/technical professionals through
nationwideFederal Supply Schedule
(“FSS”) contracts with both the
United States General Services Administration
(“GSA”) and
United States Department of Veterans
Affairs. RS StaffingAffairs (“DVA”). TeamStaff GS places temporary employees at
over 75approximately 40 facilities.
TeamStaff was organized under the laws of the State of New Jersey on November 25, 1969 and maintains its principal executive office at 1 Executive Drive, Suite 130, Somerset, New Jersey 08873 where its telephone number is (877) 523-9897.
(2)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Presentation-Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of TeamStaff, Inc. and its subsidiaries, all of which are wholly owned. All
significant intercompany balances and transactions have been eliminated in the consolidated financial statements.
All references to common stock, options, share based arrangements, exercise price, fair values and related data within this Form 10-K have been retroactively amended so as to incorporate the effect of the one-to-four reverse stock split effective April 21, 2008.
Use of Estimates-Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include valuation of goodwill and other intangible assets, expected settlement amount of accounts receivable, measurement of prepaid workers’ compensation, valuation allowances established against accounts receivable and deferred tax assets, measurement of payroll tax contingencies, accounts payable and accrued expenses. Actual results could differ from those estimates. As disclosed in Note 10, the Company reduced liabilities established for certain prior period payroll tax contingencies by $0.7 million in fiscal 2008 based on resolution of such matters with the Internal Revenue Service.
F-8
Revenue Recognition-RecognitionFrom October 1, 2005 through May 31, 2006, TeamStaff operated two different lines of business from which it derived substantially all of its revenue: temporary and permanent staffing and payroll services. Effective May 31, 2006, TeamStaff sold substantially all of the assets of its DSI Payroll
Table of ContentsServices division (see Note 4), and as a result, as of September 30, 2006 TeamStaff operated in only one segment, which is the temporary and permanent medical and administrative staffing business.
TeamStaff accounts for its revenues in accordance with EITF 99-19,Reporting Revenues Gross as a Principal Versus Net as an Agent,and SAB 104, Revenue Recognition. TeamStaff recognizes all amounts billed to its temporary staffing customers as gross revenue because, among other things, TeamStaff is the primary obligor in the temporary staffing arrangement,arrangement; TeamStaff has pricing latitude,latitude; TeamStaff selects temporary employees for a given assignment from a broad pool of individuals,individuals; TeamStaff is at risk for the payment of its direct costs,costs; and TeamStaff assumes a significant amount of other risks and liabilities as an employer of its temporary employees, and therefore, is deemed to be a principal in regard to these services. TeamStaff also recognizes as gross revenue and as unbilled receivables, on an accrual basis, any such amounts that relate to services performed by temporary employees which have not yet been billed to the customer as of the end of the accounting period.
Revenues related to retroactive billings in 2008 (see Note 10) from an agency of the Federal government are recognized when: (1) the Company develops and calculates an amount for such prior period services and has a contractual right to bill for such amounts under its arrangements and (2) there are no remaining unfulfilled conditions for approval of such billings. The related direct costs, principally comprised of salaries and benefits, are recognized to match the recognized reimbursements from the Federal agency; upon approval, wages are processed for payment to the employees.
During the year ended September 30, 2008, TeamStaff recognized revenues of $10.8 million and direct costs of $10.2 million related to these non-recurring arrangements. At September 30, 2008, the amount of the remaining accounts receivable with the DVA approximates $9.3 million and accrued liabilities for salaries to employees and related benefits totaled $8.7 million. Accounts receivable includes $7.6 million that was unbilled to the DVA at September 30, 2008.
Staffing (whether medical or administrative) revenue is recognized as service is rendered. TeamStaff bills its clients based on an hourly rate. The hourly rate is intended to cover TeamStaff’s direct labor costs of the temporary employees, plus an estimate
to coverfor overhead expenses and a profit margin. Additionally, commissions from permanent placements are included in revenue
related to Medical Staffing.as placements are made. Commissions from permanent placements result from the successful placement of a medical staffing employee to a customer’s workforce as a permanent employee.
In connection with The Company also reviews the status of such placements to assess the Company’s discontinued payroll services operation, payroll services revenue was recognized as service was rendered and consisted primarily of administrative service fees charged to clients for the processing of paychecks as well as preparing quarterly and annual payroll related reports. These amounts are reflected as part of income (loss) from discontinued operations in the consolidated financial statements.
In connection with its discontinued operation, TeamStaff’s professional employer organization division revenues were derived from its PEO division billings, net of worksite employee payroll costs (net method), which included payroll taxes, benefit costs, workers’ compensation charges and administrative fees. The net method was used because TeamStaff was not generally responsible for the output and quality of work performed by the worksite employees. These amounts are reflected as part of income (loss) from discontinued operations in the consolidated financial statements.
future performance obligations under such contracts.
Direct costs of services are reflected in TeamStaff’s
StatementConsolidated Statements of Operations as
‘‘direct expenses’’“direct expenses” and are reflective of the type of revenue being generated. Direct costs of the temporary staffing business include wages, employment related taxes and reimbursable expenses.
Payroll services’ direct costs include salaries and supplies associated with the processing of the payroll service.Concentrations of Credit Risk-Risks Financial instruments that potentially subject TeamStaff to concentrations of credit risk consist principally of cash and accounts receivable. TeamStaff maintains substantially all its cash balances in a limited number of financial institutions. The balances are insured by the Federal Deposit Insurance Corporation up to
$100,000.$250,000 (effective October 3, 2008 through December 31, 2009). At times the deposits in banks may exceed the amount of insurance provided on such deposits. TeamStaff monitors the financial health of these banking institutions.
Historically, the Company has not experienced any losses on deposits.
TeamStaff’s customer base consists of
over 400approximately 265 client companies as of September 30,
2006. Substantially all2008. All of the customers of
our TeamStaff Rx
Inc. and Nursing Innovations subsidiary are engaged in the healthcare industry. Substantially all of the business of
RS Staffing Services, Inc.TeamStaff GS is accomplished through
FSS contracts with the
General Services AdministrationGSA and
Veterans Affairs.DVA. Credit, when given, is generally granted on an unsecured basis.
Cash Equivalents-
For purposes of the statements of cash flows, TeamStaff considers all liquid investments purchased with a maturity of three months or less to be cash equivalents.
Restricted Cash-
TeamStaff had restricted cash related to collateral for a letter of credit to Zurich for its workers’ compensation program. Effective March 31, 2005, Zurich withdrew the requirement for a letter of
Table of Contentscredit and $1.8 million of restricted cash held in the form of a certificate of deposit at SunTrust Bank was released to TeamStaff. As of September 30, 2006, the company had no restricted cash.
Allowance for Doubtful Accounts-
TeamStaff maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to pay. However, if the financial condition of TeamStaff’s customers were to deteriorate rapidly, resulting in nonpayment, TeamStaff’s accounts receivable balances could grow and TeamStaff could be required to provide for additional allowances, which would decrease net incomeoperating results in the period that such determination was made.
Cash Equivalents
For purposes of the Consolidated Statements of Cash Flows, TeamStaff considers all liquid investments purchased with a maturity of three months or less to be cash equivalents.
F-9
Allowance for Doubtful Accounts
Accounts receivable are unsecured and carried at fair value, which is net of an allowance for doubtful accounts. The allowance for doubtful accounts is determined based on a specific identification methodology. Generally an account receivable is deemed uncollectible based upon the aging of the receivable and/or specific identification. Interest is not typically charged on past due accounts and specific identification takes into account the Company’s assessment of the default risk based upon recent events in the customer’s business, economic status and changes in credit status. With respect to receivables owed by agencies of the U.S. Government, the Company believes that the risk of loss on these accounts is minimal. (See Note 14).
Before accounts are deemed uncollectible, demand letters are sent and, if that does not result in payment, the receivable is placed for collection with a collection agency. The Company’s last attempt at collection would be legal action, depending upon the customer’s financial situation. If the Company is unsuccessful at collection after these steps, the receivable is written-off.
TeamStaff has financial instruments,
none of which are held for trading purposes.principally accounts receivable, accounts payable, notes payable and accrued expenses. TeamStaff estimates that the fair value of all financial instruments at September 30,
20062008 and
2005,2007 does not differ materially from the aggregate carrying values of these financial instruments recorded in the accompanying
consolidated balance sheets.
The estimated fair value amounts have been determined by TeamStaff using available market information and appropriate valuation methodologies. Considerable judgment is necessarily required in interpreting market data to develop the estimates of fair value, and, accordingly, the estimates are not necessarily indicative of the amounts that TeamStaff could realize in a current market exchange.Equipment and Improvements-Improvements Equipment and improvements are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful asset lives (3 to 5 years) and the shorter of the initial lease term or estimated useful life for leasehold improvements.
During 2008, the Company retired fixed assets with a carrying value of $20,000 and accumulated depreciation of $12,000 that resulted in a loss of $8,000 (included in other income, net).
The Company’s advertising expenses consist primarily of online advertising, health care professional trade magazines and other various print media, promotional material and direct mail marketing. The Company expenses advertising costs as they are incurred. Total advertising costs were
$0.3$0.6 million
in each of theand $0.4 million for fiscal years ended September 30,
2006, 2005,2008 and
2004.2007, respectively.
Occupancy Lease Commitments-Commitments The Company has occupancy leases with various payment terms to include a fixed payment schedule over the lease term, variable payment schedule over the lease term, or a lease that may have
a rent
escalations, an abatement
period or
‘‘rent holiday’’ period.“rent holiday” periods. The Company records occupancy expense using the straight-line method over the lease term, regardless of actual payment terms.
Acquired Intangible Assets-
Acquired intangible assets consist of trade name of $4.6 million at September 30, 2006 and 2005. TeamStaff determined that no impairment of its tradename existed as of September 30, 2006. TeamStaff will continue to review annually its remaining indefinite life intangible assets for possible impairment or loss of value.
Impairment of Goodwill-
Goodwill is assigned to specific reporting units and, in accordance with SFAS 142, is reviewed for possible impairment at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount may be greater than its fair value. All goodwill is attributable to the staffing services reporting units. TeamStaff determined that no impairment of its remaining goodwill existed as of September 30, 2006. TeamStaff will continue to review annually its remaining goodwill for possible impairment or loss of value.
Table of ContentsGoodwill-
(Amounts in thousands)
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Balance as of September 30, 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 9,911 | |
Additional consideration for acquisition | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2,075 | |
Balance as of September 30, 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 11,986 | |
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$1.7 million of goodwill was recorded as part of the acquisition of the assets of Nursing Innovations on November 14, 2004, all of which is deductible for tax purposes. $8.6 million of goodwill was recorded as part of the acquisition of the stock of RS Staffing Services, effective as of June 4, 2005, none of which is deductible for tax purposes. (See Note 3)
Long-Lived Assets-Assets
TeamStaff reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Management of TeamStaff believes that no suchnegative events or changes in circumstances have occurred thoughthrough September 30, 2006.2008 and 2007. If such events or changes in circumstances are present, a loss is recognized to the extent that the carrying value of the asset is in excess of the sum of the undiscounted cash flows expected to result from the use of the asset and its eventual disposition.
During 2007, in connection with the Company’s decision to exit the Nursing Innovation per diem operations, an unrealized loss of $1.6 million was recognized to reduce the carrying value of goodwill to its net realizable value, which approximated the amount realized in 2008.
Acquired Intangible Assets
Acquired intangible assets consist of trade name of $4.6 million at September 30, 2008 and 2007. TeamStaff determined that no impairment of its trade name existed as of September 30, 2008 and 2007. TeamStaff will continue to annually test and review its remaining indefinite life intangible assets for possible impairment or loss of value.
F-10
Goodwill
Goodwill is assigned to specific reporting units and, in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, is reviewed for possible impairment at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount may be greater than its fair value. All goodwill is attributable to continuing staffing services reporting units. TeamStaff determined that no impairment of its remaining goodwill existed as of September 30, 2008 and 2007. TeamStaff will continue to annually review its remaining goodwill for possible impairment or loss of value.
Goodwill of $1.5 million was reclassified in 2007 to the discontinued operation (See Note 4) and was unchanged in 2008.
Workers’ Compensation-Compensation For the remaining open years through November 17, 2003, the date of sale of its discontinued PEO business, TeamStaff applies loss-development factors to workers’ compensation incurred losses in order to estimate fully developed losses as well as other formula driven methodologies supplied by its current third party
administrator.administrator (See Note 10)
.
TeamStaff accounts for income taxes in accordance with
Statement of Financial Accounting StandardsSFAS No. 109,
‘‘Accounting“Accounting for Income Taxes.
’’” Under SFAS No. 109, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reflected on the
consolidated balance sheet when it is determined that it is more likely than not that the asset will be realized. SFAS No. 109 also requires that deferred tax assets
bybe reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax asset will not be realized.
At September 30, 2008 and 2007, the Company recorded a 100% valuation allowance against its net deferred tax assets (See Note 5)
.
Reclassifications-ReclassificationsCertain reclassifications have been made to prior years amounts to conform to the current year presentation. These changes include a portion of goodwill related topresentation and the acquisition of RS Staffing Services in June 2005 reclassified as trade name, the reclassificationeffects of the payroll services segment from continuing operationsreverse stock split. As discussed in Note 4, the Nursing Innovations per diem business unit was reclassified in 2007 to discontinued operations as a resultand assets and liabilities held for sale.
Stock-Based Compensation
The Company follows the guidance of
the sale of DSI Payroll Services to CompuPay effective May 31, 2006 (See Note 4) and a change in the presentation of cash flows to begin the reconciliation with net loss rather than net loss from continuing operations.Stock-Based Compensation-
The Company’s 2006 Long Term Incentive Plan (the ‘‘2006 Plan’’), which is shareholder approved, permits the grant of stock options, stock appreciation rights, restricted stock, performance awards or other stock unit awards (collectively, ‘‘Awards’’) of up to 5,000,000 shares of common stock to all employees and non-employee directors. All Awards under the 2006 Plan are granted at the fair market value of the common stock at the grant date. See Note 11 Shareholders’ Equity for a full description of the 2006 Plan.
Table of ContentsThe Company’s 2000 Employee Stock Option Plan (the ‘‘2000 Plan’’), which is shareholder approved, permits the grant of options to purchase up to 1,714,286 shares of common stock to all employees as stock compensation. All stock options under the 2000 Plan are granted at the fair market value of the common stock at the grant date. Employee stock options vest ratably over a two year period and expire 5 years from the grant date.
The Company’s 2000 Non-Executive Director Stock Option Plan (the ‘‘Director Plan’’), which is shareholder approved, permits the grant of options to non-employee directors of TeamStaff. Under the terms of the Director Plan, each non-executive director is automatically granted an option to purchase 5,000 shares upon joining the Board and each September lst, pro rata, based on the time the director has served in such capacity during the previous year. The Director Plan also provides that directors, upon joining the Board, and for one (1) year thereafter, will be entitled to purchase restricted stock from TeamStaff at a price equal to 80% of the closing bid price on the date of purchase up to an aggregate purchase price of $50,000.
Effective October 1, 2005, the Company’s plans are accounted for in accordance with the recognition and measurement provisions of Statement of Financial Accounting Standards (‘‘FAS’’)SFAS No. 123 (revised 2004), Share-Based Payment (‘‘“Share-Based Payment” (“FAS 123(R)’’”), which replaces FAS No. 123, Accounting for Stock-Based. Compensation and supersedes Accounting Principles Board Opinion (‘‘APB’’) No. 25, Accounting for Stock Issued to Employees, and related interpretations. FAS 123 (R) requires compensation costs related to share-based payment transactions, including employee stock options, to be recognized in the financial statements. In addition, the Company adheres to the guidance set forth within Securities and Exchange Commission (‘‘SEC’’) Staff Accounting Bulletin (‘‘SAB’’) No. 107, which provides the Staff’s views regarding the interaction between SFAS No. 123(R) and certain SEC rules and regulations and provides interpretations with respect to the valuation of share-based payments for public companies.
Prior to October 1, 2005, the Company accounted for similar transactions in accordance with APB No. 25 which employed the intrinsic value method of measuring compensation cost. Accordingly, compensation expense was not recognized for fixed stock options if the exercise price of the option equaled or exceeded the fair value of the underlying stock at the grant date.
While FAS No. 123 encouraged recognition of the fair value of all stock-based awards on the date of grant as expense over the vesting period, companies were permitted to continue to apply the intrinsic value-based method of accounting prescribed by APB No. 25 and disclose certain pro-forma amounts as if the fair value approach of SFAS No. 123 had been applied. In December 2002, FAS No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of SFAS No. 123, was issued, which, in addition to providing alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation, required more prominent pro-forma disclosures in both the annual and interim financial statements. The Company complied with these disclosure requirements for all applicable periods prior to October 1, 2005.
In adopting FAS 123(R), the Company applied the modified prospective approach to transition. Under the modified prospective approach, the provisions of FAS 123 (R) are to be applied to new awards and to awards modified, repurchased, or cancelled after the required effective date. Additionally, compensation cost for the portion of awards for(for which the requisite service has not been renderedrendered) that are outstanding as of the required effective date shall beare recognized as the requisite service is rendered on or after the required effective date.rendered. The compensation cost for that portion of awards shall be based on the grant-date fair value of those awards as calculated for either recognition or pro-forma disclosurespurposes under FAS 123.
123(R). Stock option compensation expense in 20062007 is the estimated fair value of options granted amortized on a straight-line basis over the requisite service period for the entire portion of the award. As a result of the adoption of FAS 123 (R),123(R) in the Company’s results for the fiscal year ended September 30, 20062007, results of operations includeshare-based compensation expense for options totaling approximately $7,000. There was no share-based compensation expense totaling approximately $17,000. Such amounts have been included in the Consolidated Statements of Operations within operating expenses. The Company recognized related tax benefits associated with its share-based compensation arrangements totaling approximately $6,000for options for the fiscal year ended September 30, 2006.2008. As of
Table of ContentsSeptember 30, 2006, approximately $12,000 of2008, there was no remaining unrecognized compensation expense related to non-vested stock option awards is expected to be recognized during the next fiscal year.
The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. During 2006,recognized.
From time to time, the Company
took into consideration guidance under SFAS 123R and SEC Staff Accounting Bulletin No. 107 (SAB 107) when reviewing and updating assumptions. The expected volatility is based upon historical volatility of our stock and other contributing factors. The expected term is based upon observation of actual time elapsed between date of grant and exercise of options for all employees. Previously such assumptions were determined based on historical data.The weighted average assumptions made in calculating the fair values of options are as follows:
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| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Fiscal years ended September 30, |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2004 |
Weighted Average Grant Fair Value | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 0.43 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 0.84 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 1.21 | |
Expected term (in years) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4 | |
Expected volatility | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 33.8 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 47 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 68 | |
Expected dividend yield | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0 | |
Risk-free interest rate | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4.56 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3.56 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3.68 | |
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During the twelve months ended September 30, 2006, TeamStaff granted awards of restricted stock under its 2006 LTIP. An aggregate of 220,000 restricted shares were awarded at the closing price on the award date of $1.70. The restricted shares vest over a three-year period, one-third each year beginning on April 27, 2007. As of September 30, 2006, approximately $322,000 of unrecognized compensation costs related to non-vestedgrants restricted stock awards to non-employee directors and employees under existing plans. The Company recognizes non cash compensation expense over the various vesting periods. Certain awards vest upon satisfaction of certain performance criteria. In accordance with FAS 123(R) the Company will not recognize expense on the performance based shares until it is expected toprobable that these conditions will be recognized over a weighted average period of 2.6 years.
The following table addresses the additional disclosure requirements of 123(R)achieved. Such charges could be material in the period of adoption. The table illustrates the effect on net income and earnings per share as if the fair value recognition provisions of FAS No. 123 had been applied to all outstanding and unvested awards in the prior year comparable period.
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(Amounts in thousands, except per share data) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2004 |
Net loss, as reported | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (2,489 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (4,079 | |
Add: Total stock-based employee compensation expense included in reported net loss, net of related tax effects | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (294 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (250 | |
Pro forma net loss | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (2,783 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (4,329 | |
Loss per share: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Basic and diluted – as reported | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.14 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.26 | |
Basic and diluted – pro forma | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.15 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.28 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Earnings (Loss) Per Share-Share
Basic earnings
(loss) per share is calculated by dividing income
available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is calculated by dividing income(loss) available to common shareholders by the weighted average number of common shares outstanding
forand restricted stock grants that vested or are likely to vest during the
periodperiod. Diluted earnings (loss) per share is calculated by dividing income (loss) available to common shareholders by the weighted average number of basic common shares outstanding, adjusted to reflect potentially dilutive securities.
Table of ContentsIn accordance with SFAS 128, the following table reconciles basic Diluted shares outstanding to fully diluted shares outstanding.
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Years Ended September 30, |
(Amounts in thousands, except per share data) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2004 |
Weighted average number of common shares outstanding – Basic | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 19,278 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 18,206 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 15,714 | |
Incremental shares for assumed conversions of stock options/warrants | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Weighted average number of common and equivalent shares outstanding – Diluted | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 19,278 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 18,206 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 15,714 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Stock options and warrants outstanding at September 30, 2006, 2005, and 2004 to purchase 1,491,000, 1,942,000, and 1,252,941for 2008 include the effects of 9,000 shares of common stock respectivelyequivalents attributable to unvested time-based awards.
There were not includedno differences between basic shares outstanding and fully diluted shares outstanding in 2007 as the computationeffect of Diluted EPS as they834,500 common stock equivalents were antidilutive due to losses from continuing operations in each of the three years.anti dilutive.
F-11
Accumulated Comprehensive LossIncome (Loss) and Minimum Pension Liability Adjustment-Adjustment A minimum pension liability adjustment is required when the actuarial present value of accumulated benefit obligation exceeds the plan assets and accrued pension liabilities. The minimum pension liability adjustment, net of income taxes, is recorded as a component of
‘‘Accumulated“Accumulated comprehensive
loss’’loss” on the balance sheet and is reflected in the Statement of Comprehensive
LossIncome (Loss) as
‘‘Minimum“Minimum pension liability adjustment, net of
tax’’tax”. The Company used a discount rate of 3.0%
each to calculate the projected benefit obligation and the periodic benefit cost calculation for the
twelve months ended September 30, 2006.respective years presented. The Company recorded a
gainreduction in the net liability from such adjustment, net of tax of
$70,000$28,000 and
$153,000$55,000 for the
twelve monthsyears ended September 30,
20062008 and
2005,2007, respectively. The
Company recorded a loss from such adjustment, net of tax of $38,000 for the twelve months ended September 30, 2004. At September 30, 2006, 2005 and 2004, accumulated comprehensive loss on the
consolidated balance
sheetsheets reflects the cumulative balance due to the minimum pension liability adjustment.
(3) Recent Accounting StandardsRECENT ACCOUNTING STANDARDS:
In
SAB 108, the SEC staff established an approach that requires quantification of financial statement misstatements based on the effects of the misstatements on each of the company’s financial statements and the related financial statement disclosures. This model is commonly referred to as a ‘‘dual approach’’ because it requires quantification of errors under both the iron curtain and the rollover methods.SAB 108 permits existing public companies to initially apply its provisions either by (i) restating prior financial statements as if the ‘‘dual approach’’ had always been used or (ii) recording the cumulative effect of initially applying the ‘‘dual approach’’ as adjustments to the carrying values of assets and liabilities as of January 1, 2006 with an offsetting adjustment recorded to the opening balance of retained earnings.
We will adopt the provisions of SAB 108 in connection with the preparation of our annual financial statements for the year ending after December 31, 2006. We are in the process of evaluating the impact, if any, on our financial statements of initially applying the provisions of SAB 108.
On September 15,June 2006, the Financial Accounting StandardStandards Board issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold of more-likely-than-not to be sustained upon examination. Measurement of the tax uncertainty occurs if the recognition threshold has been met. This Interpretation also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. TeamStaff conducts business solely in the U.S. and, as a result, files income taxes returns for U.S., New Jersey and various other states and jurisdictions. In the normal course of business the Company is subject to examination by taxing authorities. At present, there are no ongoing income tax audits or unresolved disputes with the various tax authorities that the Company currently files or has filed with. Given the Company’s substantial net operating loss carryforwards, which are subject to a full valuation allowance, as well as the historical operating losses in prior periods, the adoption of FIN 48 on October 1, 2007 did not have any effect on our financial position, results of operations or cash flows as of the adoption date and for the year ended September 30, 2008.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157
‘‘Fair Value Measurements’’ that provides enhanced guidance for usingdefines fair value,
to measure assets and liabilities. The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use ofestablishes a framework for measuring fair value in
any new circumstances.This Statementaccordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, with earlier application encouraged. Any amounts recognized upon adoption as a cumulative effect adjustment will be recorded to the opening balance of retained earnings in the year of adoption. The Company expects to adopt SFAS No. 157 in the first quarter of fiscal 2009 and interim periods within those fiscal years. Earlier application is encouraged, provideddoes not believe that the adoption of this standard will have a material effect on the consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”).SFAS No. 159 permits entities to choose to measure, on an item-by-item basis, specified financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected are required to be reported in earnings at each reporting
entity has not yet issued financial statements for that fiscal year, including financial statements for an interim period within that fiscal year. The Company will adopt this pronouncementdate. SFAS No. 159 is effective for fiscal
yearyears beginning
October 1, 2008. We are currently evaluatingafter November 15, 2007, the
impactprovisions of
adopting this pronouncement on our financial statements.
Table of ContentsIn September 2006, the Financial Accounting Standards Board issued SFAS 158 ‘‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans-an amendment of FASB Statements No. 87, 88, 106 and 132(R).’’ SFAS 158 requires an employer and sponsors one or more single employer defined benefit plans to recognize the funded status of a benefit plan; recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that may arise during the period; measure defined benefit plan assets and obligations as of the employer’s fiscal year; and, enhances footnote disclosure.
For fiscal years ending after December 15, 2006 employers with equity securities that trade on a public marketwhich are required to initially recognize the funded status of a defined benefit postretirement plan andbe applied prospectively. The Company expects to provide the enhanced footnote disclosures. For fiscal years ending after December 15, 2008 employers are required to measure plan assets and benefit obligations. We are currently evaluating the impact of adopting this pronouncement on our financial statements.
FSP FAS 123(R)-5 was issued on October 10, 2006. The FSP provides that instruments that were originally issued as employee compensation and then modified, and that modification is made to the terms of the instrument solely to reflect an equity restructuring that occurs when the holders are no longer employees, no change in the recognition or the measurement (due to a change in classification) of those instruments will result if both of the following conditions are met: (a). There is no increase in fair value of the award (or the ratio of intrinsic value to the exercise price of the award is preserved, that is, the holder is made whole), or the antidilution provision is not added to the terms of the award in contemplation of an equity restructuring; and (b). All holders of the same class of equity instruments (for example, stock options) are treated in the same manner. The provisions in this FSP shall be appliedadopt SFAS No. 159 in the first reporting period beginning after the date the FSP is posted to the FASB website. We will adopt this FSP from its effective date. We currently doquarter of fiscal 2009 and does not believe that itsthe adoption of this standard will have any impacta material effect on ourthe consolidated financial statements.
(3) BUSINESS COMBINATIONS:
Acquisition of RS Staffing Services, Inc.:
On June 8, 2005 TeamStaff, Inc. completed its acquisition of RS Staffing Services, Inc., a privately held Georgia corporation, pursuant
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities”. The new standard is intended to
the terms of a Stock Purchase Agreement dated as of May 26, 2005. RS Staffing, headquartered in Monroe, GA, specializes in providing medicalimprove financial reporting about derivative instruments and
office administration/technical professionals through nationwide Schedule contracts with both the General Services Administration (‘‘GSA’’) and Veterans Affairs (‘‘VA’’). Closinghedging activities by requiring enhanced disclosures to enable users of the
transaction was completedfinancial statements to better understand the effects on an entity’s financial position, financial performance, and cash flows. It is effective for
accounting purposes as of June 4, 2005. TeamStaff acquired all of the capital stock of RS Staffingfinancial statements issued for
a purchase price of $8 million consisting of $3.25 million in cash, $3 million in a 2-year note, and $1.75 million in TeamStaff common stock (1,206,896 shares). The shares are restricted shares and can only be sold in accordanceinterim periods beginning after November 15, 2008, with
the provisions of Rule 144 of the Securities Act of 1933. The Sellers guaranteed a minimum net worth of $1.4 million and any amounts above or below this amount after a finalized accounting at one year post acquisition, were subject to a purchase price adjustment. As a result, for the quarter ended June 30, 2006, a downward purchase price adjustment in the amount of approximately $132,000 was made and deducted from the amount due under the first installment of the note payable. In addition, there was a one-year earn out of up to $2.0 million based upon the achievement of specified performance targets for the business. The performance targets were met and the Company made payment of the full amount on August 14, 2006. Principals of RS Staffing, namely Roger Staggs and Barry Durham, initially continued as management of RS pursuant to employment agreements with each of them. Barry Durham resigned his position effective as of December, 2005. Roger Staggs’ employment agreement expired on June 4, 2006 and was not renewed. The acquisition agreement also provided for mutual indemnification for breaches of representations and warranties. Further, the note issued by TeamStaff as part of the purchase price bears interest at 5% per annum, of which one half has been paid and the remainder is payable in June 2007, and is secured by a lien on certain assets of the business, subordinate to any liens granted in connection with financing for the transaction.early application encouraged. The Company
paid $1.5 millioncurrently does not believe that the adoption of
the note payable plus accrued interest of $150,000this standard will have a material effect on
June 8, 2006. In connection with the
acquisition, TeamStaff obtained financing from PNC Bank, National Association.
Table of ContentsThe following table summarizes the revised estimated fair values of the assets acquired and liabilities assumed:
(Amounts in thousands)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Current assets | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 5,865 | |
Property, plant, and equipment | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 204 | |
Goodwill | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 8,590 | |
Tradename | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 370 | |
Other assets | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 75 | |
Total assets acquired | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 15,104 | |
Current liabilities | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4,680 | |
Long term liabilities | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 39 | |
Total liabilities assumed | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4,719 | |
Net assets acquired | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 10,385 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Included in Goodwill is $330,000 of expenses directly related to the acquisition.
Acquisition of Certain Assets of Nursing Innovations, Inc.:
On November 14, 2004, TeamStaff’s medical staffing subsidiary, TeamStaff Rx, Inc. acquired the assets of the staffing business of Nursing Innovations, Inc., a Memphis, Tennessee-based provider of travel and per diem nurses. The terms of the agreement provided for TeamStaff Rx to acquire certain assets from Nursing Innovations and its primary shareholder. The combined purchase price was approximately $1.8 million, of which $180,000 was held in an escrow account for a period of one year to provide security for the sellers’ indemnification obligations. The purchase price was subject to downward adjustment based upon the percentage of former Nursing Innovations business that successfully transferred to TeamStaff Rx. Subsequent to the balance sheet date, it was determined that no additional purchase price adjustment was due after the first year and on November 18, 2005, the Company authorized the release of the $180,000 of funds held in escrow to the sellers. In addition, there are certain deferred purchase price provisions which may increase the total purchase price based upon the performance of the former Nursing Innovations business during the two years following closing of the transaction. It was determined that no additional purchase price was due for both years of the two year earn-out period.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed:
(Amounts in thousands)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Property, plant and equipment | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 185 | |
Goodwill | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,681 | |
Total assets acquired | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,866 | |
Total liabilities assumed | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Net assets acquired | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 1,866 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Included in Goodwill is $66,000 of expenses directly related to the acquisition.
The following unaudited pro forma information presents a summary of consolidated financial resultsstatements.
(4)DISCONTINUED OPERATIONS:
Sale of operations of the Company and acquired companies as if the acquisitions had occurred on October 1, 2003, the beginning of the earliest period presented.
Table of Contents![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Years Ended September 30, |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2004 |
(amounts in thousands) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | |
Revenues | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 82,794 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 84,102 | |
Net loss | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (2,318 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (3,527 | |
Loss per share – basic and diluted | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.12 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.18 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
The number of common shares outstanding used to calculate pro forma loss per share have been adjusted to include 2,392,000 shares issued as the source of financing for the Nursing Innovations acquisition and 1,206,896 shares issued as part of the RS Staffing Services acquisition, as if these shares had been outstanding as of the earliest period presented.
These proforma results for the fiscal year ended September 30, 2005 include $175,000 of additional expense recorded by RS Staffing, prior to acquisition, predominately related to outstanding former employee claims, as well as $300,000 of non recurring incentives paid to its owners, prior to the acquisition. This table also does not reflect cost savings of approximately $115,000 and $417,000 for the twelve months ended September 30, 2005 and 2004, respectively, that would have potentially been eliminated due to cost synergies between the companies as part of the acquisition.
(4) DISCONTINUED OPERATIONS:
Effective November 17, 2003, TeamStaff sold certain of the assets of the subsidiaries through which it operated its professional employer organization (‘‘PEO’’) business to Gevity HR, Inc. (‘‘Gevity’’) for the sum of $9.5 million in cash, $2.5 million of which had been placed in escrow.
On April 23, 2004, TeamStaff and Gevity agreed that TeamStaff’s share of the $2.5 million placed in escrow was $2.25 million. That amount was released from escrow for TeamStaff’s benefit. When added to the $7.0 million previously paid by Gevity, the total purchase price paid was $9.25 million. Concurrently, TeamStaff settled obligations to Gevity related to payroll for TeamStaff’s internal employees under a co-employment arrangement of $1.2 million, and settled obligations predominantly related to PEO client payments received by TeamStaff during the period following the sale, offset in part by invoices paid by TeamStaff on Gevity’s behalf, totaling $1.1 million. Additionally, effective May 2, 2004, TeamStaff sold certain of the assets of TeamStaff Solutions, Inc., the subsidiary through which it operated its temporary technical staffing business, to Metro Tech Consulting Services, Inc. for the sum of $65,000.
Net revenues for the PEO segment for fiscal years ended September 30, 2006, 2005, and 2004 were $0, $0, and $12.1 million, respectively.
Effective May 31, 2006, the Company sold substantially all of the assets of its DSI Payroll Services division to CompuPay, Inc. for $9.0 million. The general terms of the transaction were an all-cash sale for $9.0 million, subject to an escrow of $250,000 for potential post-closing contingencies. On November 30, 2006, CompuPay released $125,000 of the escrow to TeamStaff and is scheduled to releasereleased the remaining escrow on May 31, 2007. The agreement called for minimum working capital requirements that resulted inFor the year ended September 30, 2007, the Company recognized a gain of $293,000, comprised of a purchase price adjustment of $248,677, which$249,000 and tax benefit of $44,000.
F-12
Sale of Nursing Innovations Division
Effective January 27, 2008, TeamStaff, Inc. completed the sale of its per diem nurse staffing business located in Memphis, Tennessee and operating under the name of Nursing Innovations, to Temps, Inc. Under the terms of the definitive Asset Purchase Agreement, dated as of January 29, 2008 (“Asset Purchase Agreement”), the Company received a cash purchase price of $447,000 for the acquired business and related assets. Of the purchase price, $90,000 was
paidescrowed for a period of six months from the closing date. Payment to TeamStaff
on September 11, 2006. The sale also included a transition agreement whereby CompuPay would sublease certain office space at DSI’s current location from TeamStaff,was subject to the downward adjustment for the amount of pre-closing accounts receivables uncollected by the purchaser during such six-month period. Temps, Inc.
, among other standard agreements. released approximately $89,000 escrow to Teamstaff in the fourth quarter of 2008.
Net revenues for the DSI Payroll Services divisionNursing Innovations per diem operations for fiscal years ended September 30, 2006, 2005,2008 and 20042007 were $3.5 million, $4.6$0.7 million and $4.4$2.7 million, respectively.
TableCondensed financial statement information and results of Contentsdiscontinued operations are as follows:
| | | | | | | | |
| | For the Fiscal Years Ended | |
| | September 30, | | | September 30, | |
(Amounts in thousands) | | 2008 | | | 2007 | |
Revenues | | $ | 674 | | | $ | 2,705 | |
Direct expenses | | | 556 | | | | 2,149 | |
Selling, general and administrative expenses | | | 160 | | | | 533 | |
Writedown of intangible assets | | | — | | | | 1,513 | |
Other expense | | | — | | | | 122 | |
| | | | | | |
Net loss | | $ | (42 | ) | | $ | (1,612 | ) |
| | | | | | |
The following chart details assets and liabilities from all discontinued operations:
| | | | | | | | |
| | September 30, | | | September 30, | |
| | 2008 | | | 2007 | |
ASSETS | | | | | | | | |
Accounts receivable | | $ | — | | | $ | 257 | |
| | | | | | |
Total current assets | | | — | | | | 257 | |
| | | | | | |
Fixed assets | | | — | | | | 222 | |
Accumulated depreciation | | | — | | | | (156 | ) |
| | | | | | |
Net fixed assets | | | — | | | | 66 | |
| | | | | | |
Goodwill and intangibles | | | — | | | | 167 | |
| | | | | | |
Total assets | | $ | — | | | $ | 490 | |
| | | | | | |
| | | | | | | | |
LIABILITIES | | | | | | | | |
Current portion capital leases | | $ | — | | | $ | 9 | |
Accrued expenses and other current liabilities | | | 66 | | | | 223 | |
| | | | | | |
Total current liabilities | | | 66 | | | | 232 | |
| | | | | | |
Long term capital leases | | | — | | | | 31 | |
| | | | | | |
Total liabilities | | $ | 66 | | | $ | 263 | |
| | | | | | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
F-13
Activity in the liabilities of discontinued operations is as follows: ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | For Fiscal Years Ended September 30, |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 |
ASSETS | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Accounts receivable | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 580 | |
Other current assets | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 9 | |
Total current assets | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 589 | |
Fixed assets | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 637 | |
Accumulated depreciation | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (218 | |
Net fixed assets | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 419 | |
Total assets | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 1,008 | |
LIABILITIES | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Current portion capital leases | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 50 | |
Accrued payroll | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 49 | |
Accrued expenses and other current liabilities | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 454 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 516 | |
Total current liabilities | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 454 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 615 | |
Long term capital leases | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 148 | |
Total liabilities | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 454 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 763 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
| | | | | | | | | | | | | | | | |
Liability Balances | | September 30, | | | Expensed | | | Paid This | | | September 30, | |
(Amounts in thousands) | | 2006 Balance | | | This Period | | | Period | | | 2007 Balance | |
Current portion capital leases | | $ | 8 | | | $ | 1 | | | $ | — | | | $ | 9 | |
Accrued expenses and other current liabilities | | | 454 | | | | 120 | | | | (351 | ) | | | 223 | |
Capital leases | | | 40 | | | | — | | | | (9 | ) | | | 31 | |
| | | | | | | | | | | | |
Total | | $ | 502 | | | $ | 121 | | | $ | (360 | ) | | $ | 263 | |
| | | | | | | | | | | | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | | | | | | | | | | | | | |
Liability Balances (amounts in thousands) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | September 30, 2005 Balance | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Expensed This Year | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Paid This Year | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | September 30, 2006 Balance | |
| | | September 30, | | Expensed | | Paid This | | September 30, | |
| | | 2007 Balance | | This Period | | Period | | 2008 Balance | |
Current portion capital leases | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 50 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (50 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | — | | | $ | 9 | | $ | — | | $ | (9 | ) | | $ | — | |
Accrued payroll | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 49 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (49 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | |
Accrued expenses and other current liabilities | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 516 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 654 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (716 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 454 | | | 223 | | 42 | | | (199 | ) | | 66 | |
Long term capital leases | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 148 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (148 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | |
Capital leases | | | 31 | | — | | | (31 | ) | | — | |
| | | | | | | | | | |
Total | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 763 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 654 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (963 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 454 | | | $ | 263 | | $ | 42 | | $ | (239 | ) | | $ | 66 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | | | | | | |
(5)INCOME TAXESTAXES::Deferred
In the fourth quarter of the year ended September 30, 2006, after an assessment of all available evidence (including historical and forecasted operating results), management concluded that realization of the Company’s net operating loss carryforwards (which includes those amounts acquired in previous years’ business combinations, collectively “NOLs”), tax assetscredits and liabilities are determined based on temporary differences between income and expenses reported for financial reporting and tax reporting. The Company is required to record a valuation allowance to reduce its netother deferred tax assets, to the amount that it believes iscould not be considered more likely than not. Accordingly, for the years ended September 30, 2008 and 2007, the Company did not to be realized. In assessingrecord a tax benefit for net operating losses. Based on similar assessments, the need for aCompany increased the valuation allowance the Company historically had considered all positive and negative evidence, including scheduled reversals ofestablished on deferred tax liabilities, prudentassets by approximately $0.6 million and feasible$0.8 million in 2008 and 2007, respectively. The primary reason for the NOL in 2008 relates to the realized tax planning strategies and recent financial performance.loss (unrealized in 2007) on the sale of the discontinued operation’s assets (see Note 4). The Company determined thatincrease in the negative evidence, including historic and current taxable losses, as well as uncertaintiesvaluation allowance of approximately $0.6 million related to the abilitynet operating loss was offset by a decrease of approximately $1.1 million, representing adjustments to utilize certain Federalstate NOLs and state net loss carryforwards, outweighed any objectively verifiable positive factors, andother fully reserved deferred tax assets. Based on an assessment performed as such, concluded thatof September 30, 2008, the Company has maintained a full valuation allowance against theremaining NOLs and other deferred tax asset was necessary.assets; as the realization of such amounts, at that date, could not be considered more likely than not. In fiscal 2006, the deferred tax asset was reduced by $16.9 with a corresponding adjustmentprospective periods, there may be reductions to the provision for income taxes. The net carrying value ofvaluation allowance to the deferred tax asset is $0 at September 30, 2006. The establishment of the deferred tax asset allowance does not precludeextent that the Company from reversing a portionconcludes that it is more likely that not that all or all of the allowance in future periods if the Company believes the positive evidence is sufficient enough to utilize at least a portion of the deferred tax asset, nor does it limitassets can be utilized (subject to annual limitations and prior to the abilityexpiration of such NOLs), to utilizeoffset future periods’ taxable income.
In the year ended September 30, 2008, the Company recorded tax expense of $60,000 related to certain estimated states’ taxes due. The income tax benefit of $123,000 for 2007 is attributable to an overaccrual of estimated state taxes at September 30, 2006 against amounts computed in the preparation of various income tax returns.
At September 30, 2008 the Company had net operating losses
of approximately $28.3 million, $14.4 million and $8.5 million for
U.S, New Jersey and other states’ tax
return purposes,
respectively, and unutilized tax credits approximate $1.1 million. As a result of previous business combinations and changes in its ownership, there is a substantial amount of U.S. NOLs that are subject to
loss carry-forwardannual limitations
on utilization. The U.S. NOLs begin to expire in 2021 and
periods permitted by tax law.The company has available $28.3 in net operating loss carry forwards thatcontinue to expire at various dates through 2025.
2028.
Table of ContentsAn analysis of TeamStaff’s deferred tax asset and liability is as follows-follows:
| | | | | | | | |
| | Years Ended September 30, | |
(Amounts in thousands) | | 2008 | | | 2007 | |
Deferred income tax asset: | | | | | | | | |
Net operating loss carry forwards and tax credits | | $ | 12,102 | | | $ | 11,362 | |
Workers’ compensation reserves | | | (160 | ) | | | (130 | ) |
Occupancy leases | | | 55 | | | | 41 | |
Pension | | | 28 | | | | 117 | |
Deferred rent | | | 37 | | | | 78 | |
Accrued liabilities | | | 235 | | | | 215 | |
Stock based compensation | | | 68 | | | | 40 | |
Fixed and intangible assets | | | (997 | ) | | | 102 | |
Other items, net | | | 1 | | | | 18 | |
Valuation allowance | | | (11,369 | ) | | | (11,843 | ) |
| | | | | | |
| | $ | — | | | $ | — | |
| | | | | | |
(Amounts in thousands)F-14
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Years Ended September 30, |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 |
Deferred income tax asset: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Net operating loss carry forwards and tax credits | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 16,856 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 18,620 | |
Workers’ compensation reserves | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (459 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (527 | |
Occupancy leases | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 124 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 143 | |
Pension | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 153 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 207 | |
Deferred rent | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 76 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 41 | |
Accrued liabilities | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 150 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 83 | |
Other items, net | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (49 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (85 | |
Valuation allowance | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (16,851 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 18,482 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
The significant components of the provisionexpense (benefit) for income taxes from continuing operations are summarized as follows-
(Amounts in thousands)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | | | | | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Years Ended September 30, | | Years Ended September 30, | |
(Amounts in thousands) | | | 2008 | | 2007 | |
Current expense (benefit) | | | $ | 60 | | $ | (123 | ) |
Deferred expense (benefit) | | | — | | — | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2004 | | | | | |
Current (benefit) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (834 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (1,634 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (242 | | |
Deferred expense (benefit) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 16,851 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 30 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (1,444 | | |
Total expense (benefit) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 16,017 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (1,604 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (1,686 | | | $ | 60 | | $ | (123 | ) |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | | |
The following table indicates the significant
elements contributing to the differencedifferences between the Federal statutory rates and TeamStaff’s effective tax rate for continuing
operations-(Amounts in thousands)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | | | | | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Years Ended September 30, | | Years Ended September 30, | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2004 | |
(Amounts in thousands) | | | 2008 | | 2007 | |
Federal statutory rate | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (746 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (1,435 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (1,508 | | | $ | 424 | | $ | (1,189 | ) |
State taxes, net of federal income tax benefit | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (88 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (169 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (178 | | | 60 | | | (123 | ) |
Valuation allowance | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 16,851 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | | (424 | ) | | 1,189 | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 16,017 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (1,604 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (1,686 | | | | | | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | $ | 60 | | $ | (123 | ) |
| | | | | | |
Prior Facility
In connection with the acquisition of TeamStaff GS, formerly known as RS Staffing Services, Inc. (see Note 3), TeamStaff secured financing with PNC Bank National Association in the form of a $7.0 million revolving credit facility.facility (“PNC Credit Facility”). The credit facilityPNC Credit Facility was provided by PNC Bank effective on June 8, 2005 to (i) provide for the acquisition of RS Staffing;Staffing Services; (ii) refinance an outstanding senior loan facility; and (iii) provide ongoing working capital. Effective February 13, 2006, TeamStaff entered into an amendment to the revolving credit note, increasing the revolving credit facilityPNC Credit Facility to $8.0 million. Revolving credit advances under the credit facility bearPNC Credit Facility accrued interest at either a PNC bankBank internal rate that approximatesapproximated the Prime Rate plus 25 basis points or LIBOR plus 275 basis points, whichever iswas higher. The facility hasPNC Credit Facility had a three-year life and containscontained term and line of credit borrowing options. The facility isPNC Credit Facility was subject to certain restrictive covenants.For the period ended September 30, 2006, PNC Bank amended the covenants to replace the debt serviceincluding a fixed charge coverage ratio with a minimum combinedif the Company failed to maintain invested cash and line availability requirement. For the fiscal year ended September 30, 2006, TeamStaffminimum requirements. The PNC Credit Facility was in compliance with all loan covenants. The facility is subject to acceleration upon non-payment or various other standard default clauses. In addition, the Company granted PNC Bank a lien and security interest on all of its assets.
New Facility
On March 28, 2008, TeamStaff and its wholly-owned subsidiaries, TeamStaff Rx and TeamStaff GS entered into an Amended and Restated Loan and Security Agreement dated as of March 28, 2008 (the “Loan Agreement”) with Business Alliance Capital Company (“BACC”), a division of Sovereign Bank (the “Lender”). Pursuant to the Loan Agreement, the Lender (i) acquired by assignment from PNC all right, title and interest of PNC under the PNC Credit Facility, the PNC note and related loan documentation, and (ii) restructured the PNC Credit Facility into a $3,000,000 three (3) year revolving credit facility. Effective April 1, 2008, BACC changed its name to Sovereign Business Capital. The outstanding principal and interest balance under the PNC Credit Facility, related fees and certain expenses related to the execution and closing of the Loan Agreement were paid in full with $0.6 million in proceeds drawn from the Loan Agreement on April 2, 2008. Fees associated with this facility was paid offapproximate $150,000, which will be amortized over the life of the Loan Agreement.
Under the Loan Agreement, the Lender agreed to provide a revolving credit facility to the Company in an aggregate amount of up to $3,000,000, subject to the further terms and conditions of the Loan Agreement. The loan is secured by a first priority lien on all of the Company’s assets.
The Company’s ability to request loan advances under the Loan Agreement is subject to computation of the Company’s advance limit and compliance with the
proceedscovenants and conditions of the loan. The loan is for a term of 36 months and matures on March 31, 2011. Interest on advances accrues on the daily unpaid balance of the loan advances at a per annum rate of one-quarter (.25%) percentage points above the Prime Rate in effect from
time to time, but not less than five and one-half percent (5.5%) per annum. The Loan Agreement requires compliance with certain customary covenants including a debt service coverage ratio and restrictions on the
saleCompany’s ability to, among other things, dispose of
DSI Payroll Services on May 31, 2006certain assets, engage in certain transactions, incur indebtedness and
the line has not
Table of Contentsbeen drawn upon since that date.pay dividends. As of fiscal year ended September 30, 2006,2008, TeamStaff was in compliance with all loan covenants. The Loan Agreement also provides for customary events of default following which, the Lender may, at its option, accelerate the amounts outstanding under the Loan Agreement. As of September 30, 2008, there was no debt outstanding under the Credit FacilityLoan Agreement and $5.5 million ofdefined unused availability undertotaled $1.8 million, net of required collateral reserves per the line, based on billed accounts receivable.Loan Agreement for certain payroll and tax liabilities. The interest rate effectiveon the facility at September 30, 20062008 was 8.5%5.5%.
In connection with the acquisition of RS Staffing, TeamStaff issued two promissory notes to the former owners of RS Staffing as part of the acquisition price, in the aggregate principal amount of $3.0 million. The notes bear interest at 5% per annum, and are subordinate to the financing provided by PNC Bank described above. One half of the principal and interest was due on June 8, 2006 and payment was made in the amount of $1.65 million. The remaining principal and interest is due in June 2007.F-15
Long-term debt from continuing operations at September 30, 2006 and 2005 consists of the following-
(Amounts in thousands)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 |
Notes payable | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 1,500 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 3,043 | |
Less – current portion | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (1,500 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (1,543 | |
Long-term debt | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 1,500 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
(7)CAPITAL LEASES:
The
companyCompany leases certain office equipment under non-cancelable capital lease agreements that expire at various dates through
2011.fiscal year 2012. Terms range from 36 to 63 months. Interest rates range from
1.0%7.5% to
13.3%10.1%. As of September 30,
2006,2008 and 2007, the
companyCompany has recorded $1.0 million in gross capital leases and accumulated depreciation of
$0.7$0.8 million.
(8)OTHER CURRENT ASSETSASSETS:: (9)ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES: Included in accrued expenses and other current liabilities at September 30, 20062008 was $0.6 million in accrued bonus and incentives and $0.5 million in accrued income taxes.benefits. Included in accrued expenses and other current liabilities at September 30, 2007 was $0.4 million in accrued bonus and incentives and $0.4 million in accrued benefits.
Table of Contents(10)COMMITMENTS AND CONTINGENCIESCONTINGENCIES::
Potential Contractual Billing Adjustments
At September 30, 2008, TeamStaff GS is seeking approval from the Federal government for gross profit on retroactive billing rate increases associated with certain government contracts at which it has employees staffed on contract assignments. These adjustments are due to changes in the contracted wage determination rates for these contract employees. A wage determination is the listing of wage rates and fringe benefit rates for each classification of laborers whom the Administrator of the Wage and Hour Division of the U.S. Department of Labor (“DOL”) has determined to be prevailing in a given locality. Contractors performing services for the Federal government under certain contracts are required to pay service employees in various classes no less than the wage rates and fringe benefits found prevailing in these localities. An audit by the DOL at one of the facilities revealed that notification, as required by contract, was not provided to TeamStaff GS in order to effectuate the wage increases in a timely manner. Wages for contract employees currently on assignment have been adjusted prospectively to the prevailing rate and hourly billing rates to the DVA have been increased accordingly. During the year ended September 30, 2008, TeamStaff recognized nonrecurring revenues of $10.8 million and direct costs of $10.1 million. At September 30, 2008, the amount of the remaining accounts receivable with the DVA approximate $9.3 million. TeamStaff has recognized revenue based on amounts that are contractually due under its arrangements with the Federal agencies and is currently in the process of negotiating a final amount related to gross profit on these adjustments. As such, there may be additional revenues recognized in future periods once the approval for such additional amounts are obtained. The range of revenue (and gross profit) are estimated to be between $0.4 million and $0.7 million. At present, the Company expects to collect such amounts in the fiscal quarter ending March 31, 2009. Because these amounts are subject to government review, no assurances can be given that we will receive any additional billings from our government contracts or that if additional amounts are received, that the amount will be within the range specified above.
Leases-F-16
Leases
Rent expense, net of sublease income, under all operating leases in fiscal year ended September 30,
2006,2008, was
$0.7 million,$542,000, of which
$0.5 million$507,000 is attributed to continuing operations and
$0.2 million$35,000 is attributed to discontinued operations. Rent expense, net of sublease income, under all operating leases in
the fiscal year ended September 30,
2005,2007, was
$1.1$0.6 million, of which
$0.7$0.5 million was attributed to continuing operations and
$0.4$0.1 million was attributed to discontinued operations.
Rent expense net of sublease income, under all operating leases in fiscal year endedAt September 30,
2004, was $2.6 million, of which $0.8 million was attributed to continuing operations and $1.8 million was attributed to discontinued operations.The PEO office space located in Boca Raton, Florida has been subleased by GevityHR, Inc for a2008 there is one remaining lease term as of September 30, 2006, of 9 months for approximately $142,000. A portion of the office space located in Somerset, New Jersey has been subleased by CompuPay, Inc. for a remaining lease term as of September 30, 2006, of 8 months for $95,000.
occupancy sublease.
Workers’ Compensation Policy-Prepaid Workers’ Compensation:
Compensation
TeamStaff’s current workers’ compensation insurance program is provided by Zurich American Insurance
Company.Company (“Zurich”). This program covers TeamStaff’s temporary employees and its corporate employees. The program is managed by Cedar Hill and GAB Robins provides claims handling services. This program is a fully insured, guaranteed cost program that contains no deductible or retention feature. The premium for the program is paid monthly based upon actual payroll and is subject to a policy year-end audit.
As part of the Company’s discontinued PEO operations, TeamStaff had a workers’ compensation program with Zurich, American Insurance Company, which originally covered the period from March 22, 2002 through March 31,November 17, 2003, inclusive. The Company subsequently renewedPayments for the policy with Zurich for the period from April 1, 2003, through March 31, 2004, inclusive. The renewal program was collateralized by a letter of credit inuring to the benefit of Zurich, and cash held in a trust account by a third party. Effective March 31, 2005, Zurich withdrew the requirement for a letter of credit and $1.8 million of restricted cash held in the form of a certificate of deposit at SunTrust Bank was released to TeamStaff. Payments were made to the trust monthly based on projected claims for the year.policy period. Interest on all assets held in the trust is credited to TeamStaff. Payments for claims and claims expenses are made from the trust. Assets inFrom time-to-time, trust assets have been refunded to the trust may be adjusted from time to timeCompany based on program experience.Zurich’s overall assessment of claims experience and historical and projected settlements. In conjunction withMarch 2008, Zurich reduced the sale of its PEO assetscollateral requirements on outstanding workers’ compensation claims and released $350,000 in trust account funds back to GevityHR, Inc., TeamStaff requestedthe Company. In fiscal years ended September 30, 2007 and received a pro rata cancellation of the policy as of November 17, 2003. On March 3, 2006, Zurich reduced the collateral requirements on outstanding workers’ compensation claims and released $2.25 million and $1.19 million, respectively, in trust account funds back to TeamStaff.the Company. The final amount of trust funds that could be refunded to the Company is subject to a number of uncertainties (e.g. claim settlements and experience, health care costs and the extended statutory filing periods for such claims); however, based on a third party’s study of claims experience, TeamStaff estimates that ofat September 30, 2008, the remaining prepaid asset an additional approximately $1.0of $0.4 million in return premiums willis expected to be received within the next twelve months. This is reflected on theTeamStaff’s balance sheet atas of September 30, 20062008 as a current asset.asset, in addition to approximately $0.2 million related to current policy deposits.
Table of ContentsAs of September 30, 20062008 and 20052007 the adequacy of the workers’ compensation reserves (which are offset against the trust fund balances in prepaid assets) was determined, in management’s opinion, to be reasonable. In determining our reserves we rely in part upon information regarding loss data received from our workers’ compensation insurance carriers that may include loss data for claims incurred during prior policy periods. In addition, these reserves are for claims that have not been sufficiently developed, due to their relatively young age, and such variables as timing of payments and investment returns thereon are uncertain or unknown, therefore actual results may vary from current estimates. TeamStaff will continue to monitor the development of these reserves, the actual payments made against the claims incurred, the timing of these payments, the interest accumulated in TeamStaff’s prepayments and adjust the related reserves as deemed appropriate.
Accrued Workers’ Compensation:F-17
As was previously reported in TeamStaff’s Exchange Act filing on Form 8-K, filed on October 20, 2005, the Company settled certain disputed workers’ compensation insurance premium and loss claims totaling nearly $4.4 million for $2.05 million payable over two (2) years (subject to certain prepayment requirements), and was fully reserved as of the Company’s June 30, 2005 balance sheet. The settlement was entered on or about October 10, 2005. In or about January, 2001, TeamStaff purchased from Transportation Insurance Company (‘‘TPIC’’), Transcontinental Insurance Company (‘‘TCIC’’), Continental Casualty Company (‘‘CCC’’), CNA Claimplus, Inc. (‘‘ClaimPlus’’) and North Rock Insurance Company Limited (‘‘North Rock’’) (together, the ‘‘CNA Entities’’) a workers’ compensation insurance program to provide workers’ compensation insurance and claims services for TeamStaff’s professional employee operations nationwide (the ‘‘Program’’). The Program provided TeamStaff with workers’ compensation insurance coverage and claims services for all covered claims incurred during the period from January 22, 2001 to January 22, 2002 (the ‘‘Initial Policy Term’’). TeamStaff secured its obligations under the Program through its February 5, 2001 purchase of an Exposure Buyback Policy numbered EBP 006/001 from North Rock (the ‘‘Exposure Buyback Policy’’), also covering the period from January 22, 2001 to January 22, 2002. On or around January 22, 2002, TeamStaff purchased from TCIC and RSKCo an extension of the Program (the ‘‘Program Extension’’). The Program Extension provided TeamStaff with workers’ compensation insurance coverage and claims services for all covered claims incurred during the period from January 22, 2002 to March 22, 2002 (the ‘‘Extended Policy Term’’).
TeamStaff contested the CNA Entities’ accounting of the amount due and owing under the Program, the Program Extension and the Exposure Buyback Policy, and of the ultimate losses projected to be due from TeamStaff. TeamStaff additionally asserted that the CNA Entities committed certain errors in claims management which unjustifiably increased the losses incurred under the Program and the Program Extension, and inappropriately included certain non-recoverable items in the premium calculations for both the Program and the Program Extension, thereby entitling TeamStaff to a credit against the amounts ultimately due and owing under the Program, the Program Extension and the Exposure Buyback Policy. The CNA Entities maintained that there was due and owing from TeamStaff the sum of $1,824,975 in premiums, deductibles, claims services fees, losses and allocated loss adjustment expenses under the Program and the Program Extension, and $835,596 in premiums and losses under the Exposure Buyback Policy. The CNA Entities projected that TeamStaff would be liable for an additional $1,181,301 of losses under the Program and the Program Extension, and an additional $556,176 of losses under the Exposure Buyback Policy. The aggregate amounts totaled $4,398,048.
The settlement fully and completely resolved, without litigation, all of the issues addressed above on the material terms described below and in the Agreement, without admitting and, in fact, expressly denying, the allegations and claims each party could have made against the other. Under the settlement, TeamStaff agreed to pay the CNA Entities the sum of $2,050,000, plus interest at a rate of 6.0%, as follows: (1) $300,000 upon execution of the Agreement; (2) $250,000 every 90 days thereafter, plus interest on the unpaid sum at a rate of 6.0% from the date of the preceding payment, for a total of eight (8) payments. TeamStaff made the first $250,000 payment on or about January 20, 2006. The $300,000 payment made at execution was in settlement of the outstanding premiums, deductibles, claims services fees, losses and allocated loss adjustment expenses due and owing under the Program,
Table of Contentsthe Program Extension and the Exposure Buyback Policy. The second through eighth payments were in settlement of liabilities that become due and/or may become due under the Program, the Program Extension and the Exposure Buyback Policy, including but not limited to, premiums, deductibles, claims services fees, losses and allocated loss adjustment expenses. It was also agreed that the payment schedule would be accelerated by and in the amount of any and all payments TeamStaff receives from Zurich North American in settlement of the receivable TeamStaff is carrying from its prior years’ workers’ compensation insurance programs, up and to the then outstanding balance due the CNA Entities.
As a result of the release of $2.25 million by Zurich on March 3, 2006, TeamStaff satisfied its remaining obligation to CNA under the settlement agreement by paying the remaining settlement amount of $1.5 million plus accrued interest in full.
TeamStaff has received notices from the
IRSInternal Revenue Service (“IRS”) claiming taxes, interest and penalties due related to payroll taxes predominantly from its former PEO
operations.operations which were sold in fiscal 2003. TeamStaff has also received notices from the IRS reporting overpayments of taxes. Management believes that these notices are predominantly the result of misapplication of payroll tax payments between its legal entities. If not resolved favorably, the Company may incur interest and penalties. Until the sale of certain assets
as described in Note 4,related to the former PEO operations, TeamStaff operated through 17 subsidiaries, and management believes that the IRS has not correctly identified payments made through certain of the different entities, therefore leading to the notices. To date, TeamStaff has been working with the IRS to resolve these discrepancies and has had certain interest and penalty claims abated. TeamStaff has also received notices from the Social Security Administration claiming variances in wage reporting compared to IRS transcripts. TeamStaff believes the notices from the Social Security Administration are directly related to the IRS notices received. TeamStaff has retained the services of Ernst & Young LLP as a consultant to assist
it in resolving certain of these matters with the IRS and Social Security Administration. TeamStaff believes that after the IRS applies all the funds correctly, any significant interest and penalties will be abated; however, there can be no assurance that each of these matters will be resolved favorably.
In settling various years for specific subsidiaries with the IRS, the Company has received refunds for those specific periods; however, as the process of settling and concluding on other periods and subsidiaries is not yet completed and the potential exists for related penalties and interest, such amounts ($2.1 million at September 30, 2008) have been recorded in accounts payable.
Based on an assessment of periods settled and the status of open periods under review by the IRS, management reduced its estimated liability by $0.7 million in 2008. Such amount, accounted for as a change in estimate, is included as a component of other income (expense) in the accompanying 2008 statement of operations. Management believes that the ultimate resolution of these remaining payroll tax matters will not have a significant adverse effect on its financial position or future results of operations.
Legal ProceedingsIn July 2000,
RS Staffing Services, Inc.
On April 17, 2007, a Federal Grand Jury subpoena was issued by the Northern District of Illinois to the Company’s wholly-owned subsidiary, TeamStaff made claims for indemnification againstGS, formerly known as RS Staffing Services, requesting production of certain documents dating back to 1997, prior to the selling shareholderstime the Company acquired RS Staffing Services. The subpoena stated that it was issued in connection with an investigation of possible violations of Federal criminal laws and related crimes concerning procurement at the DVA. According to the cover letter accompanying the subpoena, the U.S. Department of Justice, Antitrust Division (“DOJ”), along with the DVA, Office of the Inspector General, are responsible for the current criminal investigation. RS Staffing Services provides temporary staffing at certain DVA hospitals that may be part of the investigation. The return date for documents called for by the subpoena was May 17, 2007. In connection with the same investigation, agents with the DVA, Office of Inspector General, executed a search warrant at the Monroe, Georgia offices of RS Staffing Services.
The government has advised TeamStaff Companies (the Sellers), which werethat the DOJ has no intent to charge TeamStaff or any of its subsidiaries or employees in connection with the Federal investigation of contract practices at various government owned/contractor operated facilities. TeamStaff remains committed to cooperate with the DOJ’s continued investigation of other parties.
The Company originally acquired
by TeamStaffRS Staffing Services in
January 1999. The claims consistedJune 2005. As part of
various potential liabilities and expenses incurred based on breachesthe purchase price of
representations and warranties contained in the acquisition,
agreement. The Sellers disputed these claims and attemptedthe Company issued to
assert claimsthe former owners of
their own.RS Staffing Services a $3.0 million promissory note, of which $1.5 million was paid in June 2006. On
January 12, 2001, TeamStaff entered intoMay 31, 2007, the Company sent a
settlement agreementnotice of indemnification claim to the former owners for costs that have been incurred in connection with the
Sellers. Underinvestigation. Effective June 1, 2007, the
settlementCompany and former owners of RS Staffing Services reached an agreement
to extend the
Sellers agreeddue date from June 8, 2007 to
be liable and responsible for certain potential liabilities estimated at approximately $0.5 million and agreed that 55,000 shares of TeamStaff common stock, which had been held in escrow since the acquisition, were to be cancelled. TeamStaff also agreed to release 29,915 escrow shares to the Sellers. TeamStaff retains 75,000 shares in escrow to provide security for the Seller’s obligations. Each party agreed to release each other from all other claims under the acquisition agreements. No third parties have contacted TeamStaff seeking payment in the last fiscal year for these potential liabilities. In the event that TeamStaff incurs liability to third partiesDecember 31, 2008 with respect to the
claims, TeamStaff would declare an eventremaining $1.5 million note payable and accrued interest payable on June 8, 2007. As of
default underSeptember 30, 2008, the
settlement agreementamount has not been settled. The Company recognized expenses related to legal representation and
seek collection from the Sellers.TeamStaff’s subsidiary, BrightLane, was a party to a suit brought by one of its former shareholders (Atomic Fusion, Inc. v. BrightLane.com, Inc. Civil Action No ONS02246OE, Fulton County State Court, Georgia) (the ‘‘Action’’).. Incosts incurred in connection with TeamStaff’s acquisitionthe investigation in the amount of BrightLane,$0.2 million and $1.5 million during the former shareholdersfiscal years ended September 30, 2008 and 2007, respectively, as a component of BrightLane were requiredother income (expense). Cumulative costs related to place approximately 158,000 shares in escrowthis matter approximate $1.7 million. Pursuant to provide indemnification for any claims made by TeamStaff under the acquisition agreement (the ‘‘BrightLane Escrow Shares’’), subjectwith RS Staffing Services, the Company has notified the former owners of RS Staffing Services that it is the Company’s intention to a $0.3 million threshold. In August, 2004, a trial was held on Atomic Fusion’s breachexercise its right to setoff the payment of contract claim before a jury. The jury returned a verdict in Atomic Fusion’s favor,
Tablesuch expenses against the remaining principal and accrued interest due to the former owners of Contentsawarding $534,246 in damages and $116,849 in attorney’s fees, for a total verdict of $651,095, including interest and costs (the ‘‘Judgment’’). The Judgment continued to accrue interest. BrightLane filed a motion for judgment notwithstanding the verdict, which was denied by the court. Atomic Fusion appealed the summary judgment granted in favor of BrightLane on several issues, including Atomic Fusion’s fraud cause of action. BrightLane opposed that appeal, and also filed a motion to dismiss that appeal. RS Staffing Services.
The Company
believed that it hadwill pursue the recovery as a right of offset in future periods. Management has a good faith
defenses relative to successor liability on the Judgment. BrightLane was no longer an operating entity and had minimal assets.On June 2, 2006, TeamStaff, Inc., and its wholly owned subsidiary, BrightLane, Inc., executed a settlement agreement (the ‘‘Settlement Agreement’’), effective June 2, 2006 (the ‘‘Execution Date’’), to settle the Action. TeamStaff believedbelief that the Settlement Agreement was in the best interests of its shareholders as it ended the on-going litigation with certainty, and releasedCompany will recover such amounts; however, generally accepted accounting principles preclude the Company from recording an offset to the obligationsnote payable to continue to pay ongoingthe former owners of RS Staffing Services until the final amount of the claim is settled and expensive legal feesdeterminable. At present, no assurances can be given that the former owners of RS Staffing Services would not pursue action against us or that the Company will be successful in the offset of such amounts against the outstanding debt. Accordingly, the Company has expensed costs incurred related to the Action.investigation through September 30, 2008.
F-18
Other Matters
On October 2, 2008, the United States Equal Employment Opportunity Commission (“EEOC”) issued a subpoena to TeamStaff GS regarding the alleged wrongful termination of certain employees who were employed at a federal facility staffed by TeamStaff GS temporary contract employees. The
Settlement Agreement fullywrongful termination is alleged to have occurred when the former employees were terminated because they could not satisfy English proficiency requirements imposed by the Federal government. TeamStaff GS has produced all documents that it believed were required by the subpoena and
finally settled the Judgment, the claims set forth in the Action, and any and all allegations, appeals, charges, complaints or potential legal action between and among Atomic Fusion, BrightLane and TeamStaff relatedhas submitted its position statement to the
Action. Approximately $0.3 million related to the Settlement are reflected as a charge against discontinued operations.The general terms of the Settlement are as follows:
1. Dismissal of Claims. Contemporaneously with payment of the Initial Payment provided for in the Settlement Agreement (described below), Atomic Fusion filed a Dismissal with Prejudice in the Action and in the Georgia Court of Appeals. The Dismissal (a) Dismissed the Lawsuit, with prejudice; and (b) dismissed all appeals by Plaintiff related to the Lawsuit, with prejudice.
2. Payment. TeamStaff will pay to Atomic Fusion the aggregate sum of $550,000 (the ‘‘Settlement Proceeds’’) as follows: (a) Payment of $250,000 was made upon execution of the Settlement Agreement (the ‘‘Initial Payment’’); and (b) Two equal payments of $150,000 (each, a ‘‘Payment’’), the first due on June 4, 2007 (the ‘‘2007 Payment Date’’) and the second due on June 2, 2008 (the ‘‘2008 Payment Date’’) (hereinafter referred to as the ‘‘Payments’’EEOC. It is unclear, at present, if or singularly with particularity, the ‘‘2007 Payment’’ and the ‘‘2008 Payment’’); (c) Atomic Fusion was granted contingent title to, and possession of, 150,000 shares of TeamStaff stock (the ‘‘Shares’’) consisting of the BrightLane Escrow Shares at $1.74 per Share (the ‘‘Issue Price’’) to secure the unpaid portion of the Settlement Proceeds of $300,000. TeamStaff delivered the Shares; (d) At each Payment Date, Atomic Fusion has the option to retain 75,000 Shares at the Issue Price (TeamStaff liable for the difference of $19,500, in cash payable on each Payment Date), or to request that TeamStaff make the respective Payment, whereupon Atomic Fusion will convey the Shares back to TeamStaff (each, an ‘‘Election’’); (e) The amount of Shares to which the 2007 Payment Election applies is 75,000 Shares. The amount of Shares to which the 2008 Payment Election applies is 75,000 Shares. Atomic Fusion must give notice of intention at least ten (10) days prior to each Payment Date whether Atomic Fusion will retain the Shares, or request the Payment and repurchase of the Shares by TeamStaff. If no notice is given, Atomic Fusion will be deemed to have elected the Payment, whereupon TeamStaff will make, and Atomic Fusion will receive, the Payment, and Atomic Fusion will immediately convey the Shares to TeamStaff. Once made, the Election is irrevocable; (f) The Shares are subject to a stock purchase agreement and a lockup agreement and are not tradable during the Restricted Period (as defined in the Lock-Up Agreement) unless there is a default in Payment of the Settlement Proceeds (a ‘‘Default’’). If there is a Default, Atomic Fusion can, with seventy-two (72) business hours notice and opportunity to cure, accelerate the entire indebtedness (without further proceeding) and take all right, title and interest in and to the Shares at the then-current market price, subject to SEC Rule 144. In the event of such a Default and Atomic Fusion taking the stock upon the occurrence of such a Default, TeamStaff shall be liable for any deficiency between the then-current market price and any Payment due (giving full credit for any Payment made and/or consideration reflected by retention of Shares at the Issue Price); and (g) Atomic Fusion agreed to be bound under the provisions of SEC Rule 144 (as to time restrictions as well as volume restrictions on sale). The SEC Rule 144 holding period will commence when the Lock-Up Agreement expires.
EEOC will respond.
As a commercial enterprise and employer,
we are subject to various claims and
with respect to its employment-related businesseslegal actions in
particular, TeamStaff is engaged in litigation from time to time during the ordinary course of
business
Table of Contentsin connection withbusiness. These matters can include professional liability, employment-relations issues, workers’ compensation, tax, payroll and other matters. Generally, TeamStaffemployee-related matters and inquiries and investigations by governmental agencies regarding our employment practices. We are not aware of any pending or threatened litigation that we believe is entitledreasonably likely to indemnificationhave a material adverse effect on our results of operations, financial position or repayment from its former PEO clients for claims brought by worksite employees related to their employment. However, there can be no assurance that the client employer will have funds or insurance in amounts to cover any damages or awards, and as co-employer, TeamStaff may be subject to liability. Additionally, incash flows.
In connection with its medical staffing business, TeamStaff is exposed to potential liability for the acts, errors or omissions of its temporary medical employees. The professional liability insurance policy provides up to $5,000,000 aggregate coverage with a $2,000,000 per occurrence limit. Although TeamStaff believes the liability insurance is reasonable under the circumstances to protect it from liability for such claims, there can be no assurance that such insurance will be adequate to cover all potential claims.
TeamStaff is engaged in no other litigation, the effect of which would be anticipated to have a material adverse impact on TeamStaff’s
financial condition or results of
operations.operations, financial position or cash flows.
Employment AgreementsOn June 30, 2005 TeamStaff entered
From time-to-time, we enter into
a two-year employment
agreementagreements with
Mr. T. Kent Smith, its President and Chief Executive Officer. The term of the agreement commenced on October 1, 2005 and terminates on September 30, 2007. The material terms of Mr. Smith’s employment agreementcertain key executives which provide for
a base salaryfixed compensation, criterion for earning bonuses and other incentives and, in certain instances, issuance of
$250,000 per annum and standard Company executive benefits as provided under his prior agreement. In addition, Mr. Smith is eligible to receive a bonus equal to up to 70% of his base salary upon satisfaction of performance-based criteria. Mr. Smith will be considered for future salary increases as may be determinedshare based equity grants. These agreements generally continue until terminated by the
Management Resources and Compensation Committee of the Board of Directors. Mr. Smith will be eligible to participate in the Company’s incentive stock ownership plan as may be determined by the Management Resources and Compensation Committee of the Board of Directors. The agreement also includes provisions for payment of all compensation otherwise payable under the agreement in the event that Mr. Smith is terminated without cause and one year of severance in all circumstances other than for termination ‘‘for cause.’’ In the event that there is a change of control of TeamStaff and Mr. Smith’s employment is terminated (or his position is changed), Mr. Smith will be entitled to acceleration of all incentive compensation, all compensation otherwise due under the agreement and an additional twelve (12) months of his then in-effect base salary. A ‘‘change of control’’ is defined generally to constitute a change of 20% of more of the beneficial ownership of the Company’s outstanding Common Stock,employee or
a change in two thirds of the Board of Directors
subject toor, upon the occurrence of defined certain
exceptions.On Juneevents or circumstances (including a defined change in control), and provide for salary continuance for specified periods of generally no more than a year.
During the fiscal year ended September 30, 2005 TeamStaff2008, the Company terminated certain executives, management and staff personnel, and as a result, incurred severance related expenses of approximately $0.2 million (included in selling, general and administrative expense); at September 30, 2008 the remaining liability from these arrangements was approximately $74,000, which is included in accrued expenses. During the fiscal year ended September 30, 2007, the Company terminated certain officers and executives, and as a result, incurred severance related expenses of approximately $0.7 million (included in selling, general and administrative expense); at September 30, 2007 the remaining liability from these arrangements was approximately $11,000, which is included in accrued expenses.
See Note 15 for a discussion of employment agreements entered into
a twenty seven month employment agreement with Mr. Rick J. Filippelli, its Vice President and Chief Financial Officer. The term of the agreement commenced on June 30, 2005 and terminates onsubsequent to September 30,
2007. The material terms of Mr. Filippelli’s employment agreement provide for a base salary of $225,000 per annum, a potential bonus of up to 70% and standard Company executive benefits, upon substantially the same terms as provided for Mr. Smith. The Management Resources and Compensation Committee of the Board of Directors will consider Mr. Filippelli for future compensation increases as may be determined. Mr. Filippelli will be eligible to participate in the Company’s incentive stock ownership plan as may be determined by the Management Resources and Compensation Committee of the Board of Directors. The agreement also includes provisions for payment of all compensation otherwise payable under the agreement in the event that Mr. Filippelli is terminated without cause and one year of severance in all circumstances other than for termination ‘‘for cause.’’ In the event that there is a change of control of TeamStaff and Mr. Filippelli’s employment is terminated (or his position is changed), Mr. Filippelli will be entitled to acceleration of all incentive compensation, all compensation otherwise due under the agreement and an additional twelve (12) months of his then in-effect base salary. A ‘‘change of control’’ is defined generally to constitute a change of 20% of more of the beneficial ownership of the Company’s outstanding Common Stock, or a change in two thirds of the Board of Directors, subject to certain exceptions.Change in Control Agreement
On October 31, 2006, TeamStaff entered into a Change in Control Agreement with James D. Houston, its Vice President of Business and Legal Affairs and General Counsel. The Change in
2008.
Table of ContentsControl Agreement supplemented and amended Mr. Houston’s Severance Agreement dated October 11, 2005. The severance agreement includes provisions for payment of all compensation otherwise payable pursuant to Mr. Houston’s employment in the event that Mr. Houston is terminated without cause and six months of severance in all circumstances other than for termination ‘‘for cause.’’ In the event that there is a change of control of TeamStaff and Mr. Houston’s employment is terminated (or his position is changed), Mr. Houston will be entitled to acceleration of all incentive compensation, all compensation otherwise due pursuant to his employment and an additional twelve (12) months of his then in-effect base salary. A ‘‘change of control’’ is defined generally to constitute a change of 30% of more of the beneficial ownership of the Company’s outstanding Common Stock, or a change in two thirds of the Board of Directors, subject to certain exceptions.
Government Assignment of Contracts
Availability
of funds under the
PNCSovereign line of credit is directly related to the successful assignment of certain accounts receivable. Certain government accounts of
RS Staffing ServicesTeamStaff GS are required to execute
‘‘Acknowledgements“Acknowledgements of Assignment.
’’” There can be no assurance that every
RS StaffingTeamStaff GS government account will execute the documentation to effectuate the assignment and secure availability. The failure of government third parties to sign the required documentation could result in a decrease in availability under the
existing line of credit.
Related Party Transactions
TeamStaff entered into a one year, automatically renewable marketing agreement with Directo, Inc. effective as of February 1, 2004. Directo provides financial and direct deposit services to companies and their employees. Pursuant to the terms of the agreement, TeamStaff is compensated based on its sales of Directo pay card services. TeamStaff offered these services primarily through its payroll services division and as a result of the sale of the division on May 31, 2006 (See Note 4), this agreement was terminated. For the fiscal years ended September 30, 2006, 2005 and 2004, TeamStaff has not earned any commissions from its sales of Directo’s services. T. Stephen Johnson, TeamStaff’s Chairman, is also Chairman of Directo. TeamStaff’s entry into the marketing agreement with Directo was approved by the disinterested members of the Board.
During the year ended September 30, 2004, the company shared a portion of its leased office space in Alpharetta, Georgia with an affiliated entity of the Chairman of the Board of Directors, T. Stephen Johnson & Associates, Inc. As part of the agreement, TeamStaff shared the cost of a receptionist, phone service, and leased common area furniture.
(11)SHAREHOLDERS’ EQUITY:
Stock Warrants
During the fiscal year ended September 30,
2004, TeamStaff paid $28,000 in shared costs. TeamStaff was responsible for payment of the monthly lease obligation and T. Stephen Johnson & Associates reimbursed TeamStaff in the amount of $34,000 in fiscal year ended September 30, 2004 for their prorated portion of the space. The Company no longer uses these facilities.(11) SHAREHOLDERS’ EQUITY:
Stock Warrants-
The following is a summary of the outstanding warrants to purchase TeamStaff’s common stock at September 30, 2006:
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![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Exercise Period From | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Exercise Period To | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Exercise Price Per Common Share | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Number of Shares of Common Stock Reserved |
November 2004 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | November 2007 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2.50 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 598,000 | |
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During the fiscal year ending September 30, 2006,2008, TeamStaff granted no warrants, 26,000149,500 warrants expired unexercised and no warrants were exercised. During the fiscal year endingended September 30, 2005,2007, TeamStaff issued 598,000granted no warrants, as part of a private placement offering. During 2005, no warrants expired unexercised and no warrants were exercised. During the fiscal year endingAt September 30, 2004, TeamStaff granted2008, there are no warrants and 21,428 warrants expired unexercised. During 2004, no warrants were exercised.outstanding.
F-19
Table of Contents2000 Employee Stock Option Plan During 2000, the Board of Directors and shareholders approved the adoption of the 2000 Employees Stock Option Plan (the
‘‘2000 Plan’’“2000 Plan”) to provide for the grant of options to purchase up to 1,714,286 shares of TeamStaff’s common stock to all employees, including senior management. The 2000 Plan replaces the 1990 Employee Plan and Senior Management Plans, both of which expired. Under the terms of the 2000 Plan, options granted thereunder may be designated as options which qualify for incentive stock option treatment
(‘‘ISOs’’(“ISOs”) under Section 422A of the Code, or options which do not so qualify
(‘‘Non-ISO’s’’(“Non-ISO’s”). As of September 30,
2006,2008 and 2007, there were
753,00017,000 and 37,250 options,
respectively, outstanding under the 2000 Plan.
The 2000 Plan is administered by the Management Resources and Compensation Committee
designated byof the Board of
Directors. Directors (“The
Management Resources andCompensation Committee”). The Compensation Committee has the discretion to determine the eligible employees to whom, and the times and the price at which, options will be granted; whether such options shall be ISOs or Non-ISOs, subject to applicable law; the periods during which each option will be exercisable; and the number of shares subject to each option. The
Compensation Committee has full authority to interpret the 2000 Plan and to establish and amend rules and regulations relating thereto.
Under the 2000 Plan, the exercise price of an option designated as an ISO shall not be less than the fair market value of the common stock on the date the option is granted. However, in the event an option designated as an ISO is granted to a ten percent (10%) shareholder, as defined, such exercise price shall be at least 110% of such fair market value. Exercise prices of Non-ISO options may be less than such fair market value.
The aggregate fair market value of shares subject to options granted to a participant, which are designated as ISOs and which become exercisable in any calendar year shall not exceed $100,000.
The
Management Resources and Compensation Committee may, in its sole discretion, grant bonuses or authorize loans to or guarantee loans obtained by an optionee to enable such optionee to pay the exercise price or any taxes that may arise in connection with the exercise or cancellation of an option. The
Management Resources and Compensation Committee can also permit the payment of the exercise price in the common stock of the
CorporationCompany held by the optionee for at least six months prior to exercise.
Non-Executive Director Plan In fiscal year 2000, the Board of Directors and stockholders approved the adoption of the 2000 Non-Executive Director Stock Option Plan (the ‘‘“2000 Director Plan’’Plan”) to provide for the grant of options to non-employee directors of TeamStaff. Under the terms of the 2000 Director Plan, each non-executive director is automatically granted an option to purchase 5,000 shares upon joining the Board and each September lst, pro rata, based on the time the director has served in such capacity during the previous year. However, the granting of options to non-employee directors was suspended for fiscal 2007 and 2008. The Directors’2000 Director Plan also provides that directors, upon joining the Board, and for one (1) year thereafter, will be entitled to purchase restricted stock from TeamStaff at a price equal to 80% of the closing bid price on the date of purchase up to an aggregate purchase price of $50,000. For fiscal years 2008, 2007, 2006 and 2005 there were no purchases of discounted restricted stock. The 2000 Director Plan replaced the previous Director Plan that expired in April 2000. As of September 30, 2006,2008 and 2007, there were 140,00015,625 and 21,875 options, respectively, held by directors outstanding underoutstanding.
Under the
Director Plan.Under the2000 Director Plan, the exercise price for options granted under the Director Plan shall be 100% of the fair market value of the common stock on the date of grant. Until otherwise provided, the exercise price of options granted under the 2000 Director Plan must be paid at the time of exercise, either in cash, by delivery of shares of common stock of TeamStaff or by a combination of each. The term of each option commences on the date it is granted and unless terminated sooner as provided in the 2000 Director Plan, expires five (5) years from the date of grant. The Compensation Committee has no discretion to determine which non-executive director will receive options or the number of shares subject to the option, the term of the option or the exercisability of the option. However, the
Table of Contents Compensation Committee will make all determinations of the interpretation of the 2000 Director Plan. Options granted under the 2000 Director Plan are not qualified for incentive stock option treatment.
Effective January 19, 2007, the Board of Directors approved to change the compensation terms for non-executive Board members. At that time, the Board agreed to forego all cash compensation in lieu of restricted stock grants. Each non-employee Board member received an initial grant under the Company’s 2006 Long Term Incentive Plan of 15,000 shares of restricted stock following the 2007 annual meeting of shareholders. Additionally, for each Board committee on which such non-employee Board member serves, the Board member received a grant of 2,500 shares of restricted stock following the 2007 annual meeting of shareholders. On October 3, 2007, 120,000 shares of restricted stock were issued. Fifty percent (50%) of all such shares of restricted stock shall vest when the volume-weighted average share price of the Company’s common stock over any twenty consecutive trading days exceeds the price on the date of grant by 20%, with the remaining fifty percent (50%) vesting one year thereafter. In accordance with FAS 123(R) the Company will not recognize expense on 120,000 shares of this award until it is probable that these performance and market conditions will be achieved. Such charges could be material in future periods. Future annual grants shall be determined by the Compensation Committee. Non-employee Board members also receive reimbursement of their Board travel, cell phone and similar expenses.
F-20
Effective as of October 1, 2007, the Board of Directors determined to reinstitute a cash compensation policy for non-employee directors. Accordingly, our non-executive directors are compensated as follows:
The annual director fee for our non-executive directors is $15,000;
the Chairman of Board and the Audit Committee Chairman shall receive an additional $3,500 per year;
the Vice Chairman of the Board, Chairman of the Management Resources and Compensation Committee and Chairman of the Nominating and Corporate Governance Committee shall each receive an additional $2,500 per year;
each non-executive director was awarded an annual grant of 3,750 shares of restricted common stock pursuant to the Company’ 2006 Long Term Incentive Policy following the Company’s annual meeting of shareholders held in 2008, provided that such award shall vest as follows: (A) 50% of the Award shall vest when the volume-weighted average share price over any 20 consecutive trading days exceeds the price per share of common stock on the date of grant by 20%; and (B) 50% of the Award shall vest one year from the vesting specified in (A) above;
each non-executive director was awarded an additional annual grant of 1,250 shares of restricted stock for each committee membership held by a non-executive director following the Company’s annual meeting to be held in 2008, with such under the Company’s 2006 Long Term Incentive Plan, with such additional award to be fully vested on the date of grant;
Reasonable and customary expenses incurred in attending the board and committee meetings are reimbursable.
The fair value of previously issued options at the date of grant historically was estimated using the Black-Scholes option pricing model. The Company took into consideration guidance under SFAS 123R and SEC Staff Accounting Bulletin No. 107 when reviewing and updating assumptions. The expected volatility was based upon historical volatility of our stock and other contributing factors. The expected term was based upon observation of actual time elapsed between date of grant and exercise of options for all employees. Previously such assumptions were determined based on historical data.
The following tables summarize the activity in TeamStaff’s
various stock option plans for the years ended September 30,
2006, 2005,2008 and
2004:![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | | | | | | | | | | | | | |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Number of Shares | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Weighted Average Exercise Price | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Weighted Average Remaining Contractual Term | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Aggregate Instrinsic Value | | Weighted | | | |
Options outstanding, September 30, 2003 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,409,472 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 3.97 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | |
| | | Average | | Aggregate | |
| | | Weighted | | Remaining | | Pretax | |
| | | Number of | | Average | | Contractual | | Intrinsic | |
| | | Shares | | Exercise Price | | Term | | Value | |
Options outstanding, September 30, 2006 | | | 223,250 | | $ | 10.60 | | 2.6 | | $ | 0 | |
Granted | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 225,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 2.24 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | — | | — | |
Exercised | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | — | | — | |
Cancelled | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (407,531 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 4.81 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | | (164,125 | ) | | $ | 10.72 | |
Options outstanding, September 30, 2004 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,226,941 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 3.59 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3.6 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 0 | | |
| | | | |
Options outstanding, September 30, 2007 | | | 59,125 | | $ | 8.80 | | 2.2 | | $ | 0 | |
Granted | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 315,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 1.89 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | — | | — | |
Exercised | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | — | | — | |
Cancelled | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (223,941 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 4.27 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | | | (26,500 | ) | | $ | 9.47 | |
Options outstanding, September 30, 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,318,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 3.07 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3.4 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 0 | | |
Granted | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 30,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 1.29 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | |
Exercised | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | |
Cancelled | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (455,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 3.98 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | |
Options outstanding, September 30, 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 893,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 2.65 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2.6 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 0 | | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | |
Options outstanding, September 30, 2008 | | | 32,625 | | $ | 8.09 | | 1.8 | | $ | 0 | |
| | | | |
As of September 30,
2006, 2005,2008 and
2004, 863,000, 1,283,0002007, 32,625 and
759,94159,125 options, respectively,
had vested and were exercisable.
As
The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of September 30, 2006, 863,000 options were exercisable at a weighted averagethe fiscal year and the exercise price, times the number of $2.67.shares) that would have been received by the option holders had all option holders exercised their in the money options on those dates. This amount changes based on the fair market value of the Company’s stock.
F-21
2006 Long Term Incentive Plan (“2006 Plan”)
The Board of Directors adopted the 2006
Long-Term Incentive Plan
(the ‘‘2006 Plan’’) on January 17, 2006. The shareholders approved the 2006 Plan at the annual meeting on April 27, 2006. The Company reserved an aggregate of 5,000,000 shares of common stock for issuance under the 2006 Plan. The maximum number of shares of common stock that may be delivered to participants under the 2006
Long-Term Incentive Plan equals the sum of: (a) 5,000,000 shares of common stock; (b) any shares subject to awards granted under the 2000
Employee Stock Option Plan and the 2000
Non-Executive Director
Stock Option Plan (collectively, the
‘‘2000 Plans’’“2000 Plans”), which are forfeited, expired, canceled or settled in cash without delivery of such shares to the participant or otherwise is terminated without a share issuance; (c) any shares tendered by participants or withheld in payment of the exercise price of options or to satisfy withholding taxes under the 2000 Plans; and (d) any shares repurchased with the proceeds of options exercised under the 2000 Plans.
Administration.
Administration. The 2006 Plan is administered by the
Management Resources and Compensation
Committee (the ‘‘committee’’).Committee. The 2006 Plan authorizes the
committeeCompensation Committee to select those participants to whom awards may be granted, to determine whether and to what extent awards are granted, to determine the number of shares of common stock or other considerations to be covered by each award, to determine the terms and conditions of awards, to amend the terms of outstanding awards, and to take any other action consistent with the terms of the 2006 Plan as the
committeeCompensation Committee deems appropriate.
Terms and Conditions of Awards.Awards. The committeeCompensation Committee is authorized to make any type of award to a participant that is consistent with the provisions of the Plan. Awards may consist of options, stock appreciation rights, restricted stock, restricted stock units, performance shares, cash awards or any combination of these types of awards.
Table of ContentsSubject to the terms of the 2006 Plan, the committeeCompensation Committee determines the provisions, terms and conditions of each award. The committeeCompensation Committee may grant awards subject to vesting schedules or restrictions and contingencies in the company’s favor. However, the awards may be subject to acceleration such that they become fully vested, exercisable and released from any restrictions or contingencies upon the occurrence of a change of control (as defined in the 2006 Plan). The committeeCompensation Committee may provide that stock-based awards earn dividends or dividend equivalents, which may be paid in cash or shares or may be credited to an account designated in the name of the participants. Participants may also be required or permitted to defer the issuance of shares or cash settlements under awards including under other deferred compensation arrangements of the company. Each option granted under the 2006 Plan will be designated as either an incentive stock option or a non-statutory stock option. No option or stock appreciation right may be granted with a term of more than 10 years from the date of grant.
Performance shares or cash awards will depend on achievement of performance goals based on one or more performance measures determined by the
committeeCompensation Committee over a performance period as prescribed by the
committeeCompensation Committee of not less than one year and not more than five years. Performance goals may be established on a corporate-wide basis or as to one or more business units, divisions or subsidiaries, and may be in either absolute terms or relative to the performance of one or more comparable companies on an index covering multiple companies.
‘‘Performance measures’’“Performance measures” means criteria established by the
committeeCompensation Committee from time to time prior to granting the performance shares or cash awards.
Exercise Price.Price. The
2006 Plan authorizes the
committeeCompensation Committee to grant options and stock appreciation rights at an exercise price of not less than 100% of the fair market value of the shares on the date of grant. The
committeeCompensation Committee has the right to provide post-grant reduction in exercise price to reflect any floating index as specified in an award agreement. The exercise price is generally payable in cash, check, surrender of pre-owned shares of common stock, broker-dealer exercise and sale, or by such other means determined by the
committee.Compensation Committee.
Option Repricing Prohibited.Prohibited. The exercise price for any outstanding option or stock appreciation right may not be decreased after the date of grant, nor may any outstanding option or stock appreciation right be surrendered as consideration for the grant of a new option or stock appreciation right with a lower exercise price.
A summary of activity in restricted stock is as follows:
| | | | | | | | |
| | | | | | Weighted | |
| | Number of | | | Average Grant- | |
| | Shares | | | Date Fair Value | |
Restricted stock outstanding, September 30, 2006 | | | 55,000 | | | $ | 6.80 | |
Granted | | | 57,500 | | | $ | 4.28 | |
Issued | | | (10,000 | ) | | $ | 4.92 | |
Cancelled | | | (47,500 | ) | | $ | 5.88 | |
| | | | | | |
Restricted stock outstanding, September 30, 2007 | | | 55,000 | | | $ | 5.32 | |
Granted | | | 147,500 | | | $ | 2.58 | |
Issued | | | (21,250 | ) | | $ | 3.32 | |
Cancelled | | | (28,334 | ) | | $ | 4.58 | |
| | | | | | |
Restricted stock outstanding, September 30, 2008 | | | 152,916 | | | $ | 3.09 | |
| | | | | | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
F-22
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Number Of Shares | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Weighted Average Grant-Date Fair Value |
Restricted stock outstanding, September 30, 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Granted | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 220,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 1.70 | |
Cancelled | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Restricted stock outstanding, September 30, 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 220,000 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 1.70 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Treasury Stock
During the year ended September 30, 2008, TeamStaff granted awards of restricted stock under its 2006 Plan. An aggregate of 147,500 restricted shares were awarded to employees and 2005, TeamStaff didnon-employee directors at the closing price on the award dates. Of this award, 47,500 shares vested immediately, resulting in a charge of $115,000; 23,750 shares vested at September��30, 2008 based upon satisfaction of certain performance criteria, resulting in a charge of $59,000 (included in accrued expenses); and 76,250 shares will vest upon satisfaction of certain performance criteria. In addition, $44,000 related to prior periods’ grants was recognized as an expense. In accordance with FAS 123(R) the Company will not repurchase anyrecognize expense on 76,250 shares of its common stock.these awards until it is probable that these performance conditions will be achieved. Such charges could be material in future periods. During the fiscal year ended September 30, 2008, 28,334 unvested shares were cancelled. As of September 30, 2004,2008, approximately $23,000 of unrecognized compensation costs related to non-vested non-performance based restricted stock awards is expected to be recognized during fiscal 2009.
During the year ended September 30, 2007, TeamStaff retiredgranted awards of restricted stock under its 2006 Long Term Incentive Plan (“the 2006 Plan”). An aggregate of 57,500 restricted shares were awarded at the closing price on the award dates and 17,500 shares were subsequently cancelled. The shares will vest according to the following schedule: (a) 15,000 shares vested immediately on February 14, 2007, resulting in a totalcharge of 574,470$64,000; (b) 12,500 shares will vest on September 30, 2008 subject to certain performance based vesting requirements, and (c) 12,500 shares will vest on September 30, 2009 subject to certain performance based vesting requirements. In addition, $78,000 related to prior periods’ grants was recognized as an expense. In accordance with FAS 123(R) the Company will not recognize expense on 25,000 shares of treasury stock.this award until it is probable that these performance conditions will be achieved. Such charges could be material in future periods. During the fiscal year ended September 30, 2007, 47,500 unvested shares were cancelled.
TableAt September 30, 2008 the Company had reserved 6,479,521 shares of Contentscommon stock for issuance under various option, shares and warrant plans and arrangements.
(12)QUARTERLY FINANCIAL DATA (UNAUDITED):![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
(Amounts in thousands, except per share data) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | First Quarter | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Second Quarter | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Third Quarter | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Fourth Quarter |
Fiscal 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Net revenues | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 19,426 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 18,452 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 18,752 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 18,338 | |
Gross profit | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3,253 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3,057 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3,201 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3,000 | |
Loss from continuing operations (1) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (405 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (457 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (261 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (17,104 | |
Income (loss) from discontinued operations net of tax (2) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 387 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 245 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4,455 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (107 | |
Net (loss) income | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (18 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (212 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 4,194 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (17,211 | |
Income (loss) per share – Basic and Diluted | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 0.00 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.01 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 0.22 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.89 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
| | | | | | | | | | | | | | | | |
(Amounts in thousands, except per share data) | | First Quarter | | | Second Quarter | | | Third Quarter | | | Fourth Quarter | |
Fiscal Year 2008 | | | | | | | | | | | | | | | | |
Net revenues (1) | | $ | 15,459 | | | $ | 17,307 | | | $ | 17,788 | | | $ | 22,731 | |
Gross profit | | | 2,775 | | | | 2,928 | | | | 3,315 | | | | 3,043 | |
Income from operations | | | 129 | | | | 146 | | | | 275 | | | | 171 | |
Income from continuing operations | | | 36 | | | | 75 | | | | 571 | | | | 506 | |
Loss from discontinued operations | | | (1 | ) | | | (11 | ) | | | (30 | ) | | | — | |
Net income | | | 35 | | | | 64 | | | | 541 | | | | 506 | |
Net earnings per share — Basic and Diluted | | $ | 0.01 | | | $ | 0.01 | | | $ | 0.11 | | | $ | 0.11 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | First Quarter | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Second Quarter | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Third Quarter | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Fourth Quarter |
Fiscal 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Net revenues | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 8,897 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 9,854 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 12,427 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 20,001 | |
Gross profit | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,671 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,983 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2,071 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3,401 | |
Loss from continuing operations | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (730 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (725 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (928 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (233 | |
Income (loss) from discontinued operations net of tax | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 151 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 104 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (322 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (194 | |
Net loss | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (579 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (621 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (1,250 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (39 | |
Loss per share – Basic and Diluted | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.03 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.04 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.07 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.00 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | First Quarter | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Second Quarter | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Third Quarter | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Fourth Quarter |
Fiscal 2004 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Net revenues | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 8,452 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 7,783 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 8,578 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 8,043 | |
Gross profit | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,359 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,325 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,649 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 1,643 | |
Loss from continuing operations | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (912 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (841 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (641 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (355 | |
Loss from discontinued operations net of tax | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (935 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (143 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (215 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (37 | |
Net loss | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (1,847 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (984 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (856 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (392 | |
Loss per share – Basic and Diluted | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.12 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.06 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.05 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (0.03 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
| | | | | | | | | | | | | | | | |
| | First Quarter | | | Second Quarter | | | Third Quarter | | | Fourth Quarter | |
Fiscal Year 2007 | | | | | | | | | | | | | | | | |
Net revenues | | $ | 16,720 | | | $ | 17,045 | | | $ | 16,613 | | | $ | 16,504 | |
Gross profit | | | 2,539 | | | | 2,481 | | | | 2,976 | | | | 3,034 | |
(Loss) income from operations | | | (810 | ) | | | (1,026 | ) | | | (240 | ) | | | 43 | |
Loss from continuing operations (2) | | | (698 | ) | | | (1,011 | ) | | | (1,291 | ) | | | (374 | ) |
Income (loss) from discontinued operations (net of tax) (3) | | | 185 | | | | 10 | | | | 48 | | | | (1,562 | ) |
Net loss | | | (513 | ) | | | (1,001 | ) | | | (1,243 | ) | | | (1,936 | ) |
Loss per share — Basic and Diluted | | $ | (0.10 | ) | | $ | (0.21 | ) | | $ | (0.26 | ) | | $ | (0.40 | ) |
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(1) | | Revenues for the 2nd, 3rd and 4th quarter of fiscal 2008 include retroactive billings for Teamstaff GS in the amount of $1.5 million, $2.1 million and $7.2 million, respectively, described in Note 10. |
|
(2) | | Loss from continuing operations in the 3rd and 4th quarter of fiscal year 2007 includes charges of $1.5 million for Teamstaff GS legal costs described in Note 10. |
|
(3) | | Loss from discontinued operations, net of tax, in the 4th quarter of fiscal 2006year 2007 of $17.1$1.6 million includes a charge of $1.5 million for the establishmentwritedown of deferred tax asset valuation allowance of $16.9 millionassets to fair market value for Nursing Innovations per diem as described in Note 5. |
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(2) | Income from discontinued operations, net of tax, in the 3rd quarter of fiscal 2006 of $4.4 million includes gain from the sale of DSI Payroll services as described in Note 4. |
F-23
(13)EMPLOYEE BENEFIT PLANS:During the fiscal year ended
As of September 30,
2006,2008, TeamStaff and its subsidiaries
maintained threecurrently maintain a defined contribution
and a supplemental pension
plans for the benefit of its non-worksite and former worksite employees.TeamStaff previously maintained The TeamStaff Retirement Savings Plan. Gevity HR, Inc. assumed this plan effective as of November 17, 2003, as part of Gevity’s purchase of the PEO operating segment from TeamStaff. This plan was designed to qualify as a multiple employer plan as described in Section 413(c) of the Internal Revenue Code, and TeamStaff was an adopting employer under that plan. TeamStaff received favorable determination letters regarding the tax-qualified status of the plan assumed by Gevity on June 25, 1999 and November 23, 2003. Gevity assumed responsibility for obtaining an audit of and filing the Form 5500 Annual Report for the TeamStaff plan assumed by Gevity as of November 17, 2003.
RS Staffing Services, Inc. previously maintained a 401(k) retirement plan for the benefit of its internal and staffing employees (the ‘‘RS Staffing Plan’’). Employees were eligible to participate upon meeting certain length of service and minimum compensation requirements. RS Staffing did not provide a discretionary matching contribution. Effective January 1, 2006, the Company terminated the RS
Table of ContentsStaffing Plan. RS Staffing employees who were eligible for the TeamStaff 401(k) Plan adopted in 2004 were given the opportunity to roll their money over into the Plan. The RS Staffing Plan is closed and all filings pursuant to the RS Staffing Plan have been completed and there are no further assets residing in the RS Staffing Plan.
As of January 1, 2004, TeamStaff adopted the TeamStaff 401(k) Plan (the ‘‘Plan)“401(k) Plan”) for the benefit of its eligible internal and temporary staffing employees and all assets attributable to TeamStaff’s internal and staffing employees under the plan assumed by Gevity were ultimately transferred to the Plan. Because Plan participants have their own account, manage their own plan investments and make their own investment decisions from a broad range of investment options, TeamStaff believes that it is afforded protection from liability for participants’ investment decisions under Section 404(c) of the Code under the prior plan assumed by Gevity and the Plan.
employees. Any TeamStaff corporate employee and any TeamStaff Rx temporary staffing employee, is eligible for participation in the 401(k) Plan upon completing three monthsone year of service with TeamStaff. TeamStaff providesmay provide a discretionary matching contribution of 25% of each of the first 4% of a participant’s elective contributions under the 401 (k) Plan. TeamStaff recorded related expense for this matching of $35,000$18,000 and $27,000 respectively, in fiscal 2006, $76,000 in fiscal 2005,2008 and $99,000 in fiscal 2004.2007. A participant is always fully vested in his or her elective contributions.
A participant’s interestcontributions and vest in TeamStaff discretionaryCompany matching contributions vests in accordance with the following schedule:
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![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Years of Service: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Vested Interest: |
Less than 1 Year of Service | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0 | |
1 Year, but less than 2 Years | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 25 | |
2 Years, but less than 3 Years | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 50 | |
3 Years, but less than 4 Years | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 75 | |
4 Years or more | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 100 | |
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Because calendar year 2004 was the first plan year of the Plan, a Form 5500 Annual Report and plan audit was not due for the Plan until calendar year 2005. Principal Financial Group, the Plan’s record keeper (‘‘Principal’’) undertook compliance testing for calendar year 2004. Initially, the Company did not pass the ‘‘coverage test’’ for the 2004 Plan Year. Compliance testing for the 2004 Plan year was thereafter completed and the Plan failed Actual Deferral Percentage and Actual Contribution Percentage (‘‘ADP/ACP’’) testing. Checks were given back to employees where required to correct the failed test.
Effective January 1, 2006 TeamStaff amended the Plan to allow employees who were acquired as a part of the RS Staffing acquisition to be eligible for the Plan, with the exception of RS Staffing contract employees. In addition, the Plan was amended effective January 1, 2006 to no longer allow eligibility into the Plan for Highly Compensated Employees (‘‘HCE’’). For 2006, HCE’s included any employee that grossed $95,000 in 2005, or were a 5% owner or greater in 2005 or 2006. Because of this amendment, ADP/ACP testing for the Plan will not be required in future years. TeamStaff received a favorable IRS Determination Letter on the Plan in 2006. In 2006 the Plan was further amended to allow for eligibility into the Plan after one year of service with enrollment on a semi-yearly entry date. The average benefits test for the 2005 Plan year was completed in March of 2006 and was passed. The 2005 5500 filing was completed, and as of the time of this report the Plan audit is in process.
Effective October 1, 2000, TeamStaff adopted a non-qualified, supplemental retirement plan covering certain corporate officers of TeamStaff (the ‘‘SERP’’“SERP”). Under the terms of the SERP, a participant received a benefit sufficient to provide lump sum annual payments equal to approximately one-third of the participant’s base salary on the date the participant became a participant. Payment of benefits was to commence when the participant reached 65 years of age. The benefit under the SERP was subject to a seven-year vesting schedule (0%,0%,20%,40%, 60%, 80%, 100%), based on the participant’s original date of employment with TeamStaff and was contingent on the participant’s reaching age 55; provided, however, a participant’s benefit became fully vested upon a change of control, as defined in
Table of Contentsthe SERP, if within two years of the change of control there was a material change in the participant’s job title or responsibilities or if the participant’s employment was terminated by TeamStaff for any reason other than conviction for theft or embezzlement from TeamStaff. Additionally, if a participant retired by means of total disability (as defined in the SERP), the participant’s benefit became fully vested and benefit payments would have commenced as of the disability retirement date. The SERP did not provide a death benefit. At inception, TeamStaff’s former Chief Executive Officer and its former Chief Financial Officer were the only SERP participants.
SERP participants were also
are provided with a split dollar life insurance policy
(‘‘Policy’’(“Policy”), insuring the life of the participant until the participant reached age 65. Although the participant was the owner of the Policy, TeamStaff paid all Policy premiums. Each participant collaterally assigned the Policy to TeamStaff to secure repayment of the premiums through either its cash surrender value or the Policy proceeds. The participant’s right to the Policy vested in accordance with the same schedule as the SERP and with similar change of control provisions. Upon the participant’s 65
th birthday (and in certain other circumstances provided by the Policy agreement), TeamStaff was to release the collateral assignment of the Policy provided the participant released TeamStaff from all obligations the
CorporationCompany may have had with respect to the participant (including those under the SERP).
The following table illustrates TeamStaff’s changes in benefit costs and pension benefit obligations for the fiscal years endingended September 30, 20062008 and September 30, 20052007 under the SERP.SERP:
| | | | | | | | |
| | Fiscal Year | |
(Amounts in thousands) | | 2008 | | | 2007 | |
Change in benefit obligation | | | | | | | | |
Benefit obligation at beginning of year | | $ | 346 | | | $ | 598 | |
Service cost | | | — | | | | — | |
Interest Cost | | | 4 | | | | 28 | |
Benefits paid | | | (280 | ) | | | (280 | ) |
Actuarial loss | | | — | | | | — | |
| | | | | | |
Benefit obligation at end of year | | $ | 70 | | | $ | 346 | |
| | | | | | |
| | | | | | | | |
Change in plan assets | | | | | | | | |
Company contribution | | $ | 280 | | | $ | 280 | |
Benefits paid | | | (280 | ) | | | (280 | ) |
| | | | | | |
Fair value of plan assets at end of year | | $ | — | | | $ | — | |
| | | | | | |
| | | | | | | | |
Reconciliation of funded status | | | | | | | | |
Funded status | | $ | (70 | ) | | $ | (346 | ) |
Unrecognized net actuarial (gain)/loss | | | 28 | | | | 55 | |
| | | | | | |
Net amount recognized | | $ | (42 | ) | | $ | (291 | ) |
| | | | | | |
| | | | | | | | |
Amounts recognized in the consolidated balance sheets consist of: | | | | | | | | |
Accrued benefit liability | | $ | (70 | ) | | $ | (346 | ) |
Accumulated other comprehensive income | | | 28 | | | | 55 | |
| | | | | | |
Net amount recognized | | $ | (42 | ) | | $ | (291 | ) |
| | | | | | |
| | | | | | | | |
Discount rate used to determine benefit cost and obligations: | | | 3.00 | % | | | 3.00 | % |
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F-24
| | | | | | | | |
| | 2008 | | | 2007 | |
| | | | | | | | |
Components of net periodic benefit cost are as follows: | | | | | | | | |
Interest cost | | $ | 4 | | | $ | 28 | |
Recognized actuarial loss | | | 9 | | | | 43 | |
| | | | | | |
Net periodic benefit cost | | | 13 | | | | 71 | |
Settlement charges | | | 38 | | | | 57 | |
| | | | | | |
Total benefit cost | | $ | 51 | | | $ | 128 | |
| | | | | | |
| | | | | | | | |
Other disclosure items at end of year: | | | | | | | | |
Projected benefit obligation | | $ | 70 | | | $ | 346 | |
| | | | | | |
Fair value of plan assets | | | — | | | | — | |
| | | | | | |
Increase in minimum liability included in other comprehensive income | | $ | (46 | ) | | $ | (100 | ) |
| | | | | | |
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(Amounts in thousands) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Fiscal Year |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 |
Change in benefit obligation | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Benefit obligation at beginning of year | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 872 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 1,428 | |
Service cost | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Interest Cost | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 20 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 32 | |
Benefits paid | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (294 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (588 | |
Actuarial (gain)/loss | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Benefit obligation at end of year | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 598 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 872 | |
Change in plan assets | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Employer contribution | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 294 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 588 | |
Benefits paid | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (294 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (588 | |
Fair value of plan assets at end of year | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | — | |
Reconciliation of funded status | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Funded status | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (598 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (872 | |
Unrecognized net actuarial (gain)/loss | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 147 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 263 | |
Net amount recognized | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (451 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (609 | |
Amounts recognized in the statement of financial position consist of: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Accrued benefit liability | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (598 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (872 | |
Accumulated other comprehensive income | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 147 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 263 | |
Net amount recognized | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (451 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (609 | |
Assumptions used to determine benefit obligations at September 30: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Discount rate used to determine net periodic benefit costs | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3.00 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3.00 | |
Discount rate used to determine benefit obligations | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3.00 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 3.00 | |
Components of net periodic benefit cost | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Service cost | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | — | |
Interest cost | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 19 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 32 | |
Amortization of prior service cost | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Recognized actuarial (gain)/loss | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 36 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 63 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Table of Contents![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
(Amounts in thousands) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Fiscal Year |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 2005 |
Net periodic benefit cost | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 55 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 95 | |
Curtailment charges | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Settlement charges | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 82 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 193 | |
Total benefit cost | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 137 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 288 | |
Other disclosure items at end of year: | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Accumulated benefit obligation | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 598 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 872 | |
Fair value of plan assets | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | — | |
Increase in minimum liability included in other comprehensive income | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (117 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (255 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
For unfunded plans, contributions to the planSERP are the benefit payments made to participants. TeamStaff Inc. made $294,000 in benefit payments of $280,000 during each of fiscal 2006, $588,000 during fiscal 2005years 2008 and $776,000 during fiscal 2004. The following benefit2007. Benefit payments of $70,000 are expected to be paid in future fiscal years:
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif)
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
Fiscal year ending | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | Pension Benefits |
2007 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 209,605 | |
2008 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 209,605 | |
2009 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 70,590 | |
2010 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 70,590 | |
2011 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 70,590 | |
2012 and thereafter | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | 0 | |
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
During fiscal year 2004, TeamStaff Inc. and plan participants agreed on optional payment forms effectively accelerating benefit payments. Beginning in fiscal year 2004 and ending in fiscal 2011, this plan will settleyear 2009, the SERP settles liabilities by paying benefit obligations to participants. Each quarter, a settlement charge will be recognized in accordance with SFAS No. 88 to account for settling of liabilities. A settlement charge of $82,000, $193,000$38,000 and $276,000$57,000 was recognized during fiscal 2006, 20052008 and 2004,2007, respectively.
During fiscal 2003, two events were recognized as curtailments under
The FASB issued SFAS No.
88. Donald Kelly158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” which was
relieved of his duties as Chief Financial Officer. A curtailment charge related to this event of $254,000 was recognized duringadopted in the
second quarter of fiscal
2003. Donald Kappauf relinquished his positions as President and Chief Executive Officer. A curtailment charge related to this event of $445,000 was taken duringyear ended September 30, 2007 with no effect on the
third quarter of fiscal 2003. TeamStaff is not aware of any other events that might constitute settlement or curtailment under SFAS No. 88. Total curtailment during fiscal 2003 was $699,000.Company’s consolidated financial statements.
(14) ECONOMIC DEPENDENCY: A major customer is defined as a customer from which the Company derives at least 10% of its sales. For fiscal year ended September 30, 2006, one RS Staffing Services customer represents 10% or more of the Company’s overall consolidated revenues. For fiscal year ended September 30, 2006, RS Staffing Services had three customers who each individually comprised greater than 10% of the division’s revenue, and collectively comprised 49.9% of the division’s revenue. For the fiscal year ended September 30, 2006, RS Staffing Services2008, Teamstaff GS generated approximately 92.1%77.3% of itsthe Company’s overall consolidated revenues from agencies of the United States Government. Through its FSS contracts primarily with the DVA, the Company had two specific customers who totaled 31% and 14% of the Company’s overall consolidated revenues.
For the fiscal year ended September 30,
2006, the Nursing Innovations division of TeamStaff Rx had two customers who each individually comprised greater than 10% of the division’s revenue and collectively comprised 37.6% of the division’s revenue.For fiscal year ended September 30, 2005, no one customer represented 10% or more2007, Teamstaff GS generated approximately 63.6% of the Company’s overall consolidated revenues. Since the date of acquisition effective June 4, 2005 to September 30, 2005, RS Staffing Services had three customers who each individually comprised greater than 10% of the division’s revenue, and collectively comprised 50.1% of the division’s revenue.
Table of ContentsSince the date of acquisition effective June 4, 2005 to September 30, 2005, RS Staffing Services generated approximately 94% of its revenues from agencies of the United States Government. SinceThrough its FSS contracts primarily with the DVA, the Company had two specific customers who totaled 17% and 10% of the Company’s overall consolidated revenues.
Accounts receivable from agencies of the United States Government totaled $11.3 million and $5.7 million at September 30, 2008 and 2007, respectively. As discussed in Note 10, included in revenue derived from the Federal government are retroactive adjustments that totaled $10.8 million. $9.3 million of this revenue is included in accounts receivable at September 30, 2008. Such revenue is not expected to recur in future periods.
F-25
(15) SUBSEQUENT EVENTS:
Subsequent to the year ended September 30, 2008, we entered into employment agreements with Kevin Wilson, the President of our TeamStaff GS subsidiary and Dale West, the President of our TeamStaff Rx division. The following are summaries of these employment agreements. The following descriptions of these employment agreements are qualified in their entirety by reference to the full text of such agreements.
Kevin Wilson
On October 3, 2008, we entered into an employment agreement with Mr. Kevin Wilson, the President of TeamStaff GS. The employment agreement is for an initial term expiring September 30, 2010. Under the employment agreement, Mr. Wilson will receive a base salary of $200,000. The term of the agreement is effective as of October 1, 2008. Mr. Wilson may receive a bonus in the sole discretion of the Management Resources and Compensation Committee of the Board of Directors and will have an opportunity to earn a cash bonus of up to 70% of his base salary for each fiscal year of employment. The bonus will be based on performance targets and other key objectives established by the Chief Executive Officer. Thirty percent of the bonus shall be based on achieving revenue targets, sixty percent shall be based on achieving EBITDA targets, and ten percent shall be based on achieving corporate goals established by the Chief Executive Officer. Additional terms of his agreement are as follows:
• Grant of 30,000 shares of restricted common stock. The vesting schedule applicable to the restricted stock is as follows: one-third of the restricted shares vest on the date of acquisition effective November 14, 2004 tothe agreement; one-third vest on September 30, 2005,2009, upon satisfaction of performance targets and other key objectives established by the Nursing Innovations divisionChief Executive Officer for fiscal 2009; and one-third vest on September 30, 2010, upon the satisfaction of the performance targets determined for fiscal 2010. However, in the event of a change in control (as defined in the employment agreement), the conditions to the vesting of the restricted stock awards shall be deemed void and all such shares shall be immediately and fully vested.
• In the event of the termination of employment by us without “cause” or by Mr. Wilson for “good reason,” as those terms are defined in the employment agreement, or in the event his employment is terminated due to his disability, he would be entitled to: (a) a severance payment of 6 months of base salary; (b) continued participation in our health and welfare plans for a period not to exceed 6 months from the termination date; and (c) all compensation accrued but not paid as of the termination date. In addition, in the event of termination for disability, he would also receive a pro-rata bonus, as described below.
• In the event of the termination of his employment due to his death, Mr. Wilson’s estate would be entitled to receive: (a) all compensation accrued but not paid as of the termination date; (b) continued participation in our health and welfare plans for a period not to exceed 6 months from the termination date; and (c) payment of a “Pro Rata Bonus”, which is defined as an amount equal to the lesser of (i) $75,000, and (ii) the Targeted Bonus multiplied by a fraction, the numerator of which shall be the number of days from the commencement of the fiscal year to the termination date, and the denominator of which shall be the number of days in the fiscal year in which his employment was terminated. If his employment is terminated by us for “cause” or by him without “good reason,” he is not entitled to any additional compensation or benefits other than his accrued and unpaid compensation.
• In the event that within 90 days of a “Change in Control” as defined in the employment agreement, (a) Mr. Wilson is terminated, or (b) his status, title, position or responsibilities are materially reduced and he terminates his employment, we shall pay and/or provide to him the following compensation and benefits: (A) (i) the accrued compensation; (ii) the continuation benefits; and (iii) as severance, base salary for a period of 6 months, payable in equal installments on each of the Company’s regular pay dates for executives during the six months commencing on the first regular executive pay date following the termination date; and (B) The conditions to the vesting of any outstanding incentive awards (including restricted stock, stock options and granted performance shares or units) granted to Mr. Wilson shall be deemed void and all such awards shall be immediately and fully vested.
• In addition, in the event the Company serves a “Notice of Retention” and Mr. Wilson diligently performs his duties during the “Retention Period” (as those terms are defined in the employment agreement), the Company shall pay him, in one lump sum on the first day of the month immediately following the month in which the Retention Period ends, an amount equal to 50% of his then current base salary. In the event the Company fails to serve a Notice of Retention, the Company shall pay him in one lump sum on the first day of the month immediately following the change of control, an amount equal to 50% of his then current base salary.
• Notwithstanding the foregoing, if the payments due in the event of a change in control would constitute an “excess parachute payment” as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the aggregate of such credits or payments under the employment agreement and other agreements shall be reduced to the largest amount as will result in no portion of such aggregate payments being subject to the excise tax imposed by Section 4999 of the Code.
• Pursuant to the employment agreement, Mr. Wilson is subject to customary confidentiality, non-solicitation of employees and non-competition obligations that survive the termination of such agreements.
F-26
Dale West
On December 3, 2008, we entered into an employment agreement with Ms. Dale West, the President of our TeamStaff Rx had two customers who each individually comprised greater than 10%division. The employment agreement is for an initial term expiring September 30, 2010. Under the employment agreement, Ms. West will receive a base salary of $200,000. The term of the division’s revenue and collectively comprised 24.2%agreement is effective as of October 1, 2008. Ms. West may receive a bonus in the sole discretion of the division’s revenue.Management Resources and Compensation Committee of the Board of Directors and will have an opportunity to earn a cash bonus (“Targeted Bonus”) of up to 70% of her base salary for each fiscal year of employment. The bonus will be based on performance targets and other key objectives established by the Chief Executive Officer. Thirty percent (30%) of the bonus shall be based on achieving revenue targets, sixty percent (60%) shall be based on achieving EBITDA targets, and ten percent (10%) shall be based on achieving corporate goals established by the Chief Executive Officer. Additional terms of her agreement are as follows:
• Grant of 30,000 shares of restricted common stock. The vesting schedule applicable to the restricted stock is as follows: one-half vest on September 30, 2009, upon satisfaction of performance targets and other key objectives established by the Chief Executive Officer for 2009; and one-half vest on September 30, 2010, upon the satisfaction of the performance targets determined for 2010. However, in the event of a change in control (as defined in the employment agreement), the conditions to the vesting of the restricted stock awards shall be deemed void and all such shares shall be immediately and fully vested.
• Ms. West will be eligible to receive a quarterly stock bonus equal to $12,500 of the Company’s common stock at the end of each calendar quarter of employment for satisfaction of performance criteria and other key objectives established by the Chief Executive Officer, provided that the first two quarterly bonuses shall be deemed earned if she is continuously employed by the Company during such quarters and shall not be conditioned on the achievement of any other performance criteria. Such shares of common stock will be valued on the last trading day of each such quarter and shall be deemed vested and earned on the first business day following the close of the quarter.
• In the event of the termination of employment by us without “cause” or by Ms. West for “good reason,” as those terms are defined in the employment agreement, or in the event her employment is terminated due to her disability, she would be entitled to: (a) a severance payment of 6 months of base salary; (b) continued participation in our health and welfare plans for a period not to exceed 6 months from the termination date; and (c) all compensation accrued but not paid as of the termination date. In addition, in the event of termination for disability, she would also receive a pro-rata bonus, as described below.
• In the event of the termination of her employment due to her death, Ms. West’s estate would be entitled to receive: (a) all compensation accrued but not paid as of the termination date; (b) continued participation in our health and welfare plans for a period not to exceed 6 months from the termination date; and (c) payment of a “Pro Rata Bonus”, which is defined as an amount equal to the lesser of (i) $75,000, and (ii) the Targeted Bonus multiplied by a fraction, the numerator of which shall be the number of days from the commencement of the fiscal year to the termination date, and the denominator of which shall be the number of days in the fiscal year in which she was terminated. If her employment is terminated by us for “cause” or by her without “good reason,” she is not entitled to any additional compensation or benefits other than her accrued and unpaid compensation.
• In the event that within 90 days of a “Change in Control” as defined in the employment agreement, (a) Ms. West’s employment is terminated, or (b) her status, title, position or responsibilities are materially reduced and she terminates her employment, the Company shall pay and/or provide to her, the following compensation and benefits: (A) (i) the accrued compensation; (ii) the continuation benefits; and (iii) as severance, base salary for a period of 6 months, payable in equal installments on each of the Company’s regular pay dates for executives during the six months commencing on the first regular executive pay date following the termination date; and (B) the conditions to the vesting of any outstanding incentive awards (including restricted stock, stock options and granted performance shares or units) granted to Ms. West, shall be deemed void and all such awards shall be immediately and fully vested.
• In addition, in the event the Company serves a “Notice of Retention” and Ms. West diligently performs her duties during the “Retention Period” (as those terms are defined in the employment agreement), the Company shall pay her, in one lump sum on the first day of the month immediately following the month in which the Retention Period ends, an amount equal to 50% of her then current base salary. In the event the Company fails to serve a Notice of Retention, the Company shall pay her in one lump sum on the first day of the month immediately following the Change in Control, an amount equal to 50% of her then current base salary.
• Notwithstanding the foregoing, if the payments due in the event of a Change in Control would constitute an “excess parachute payment” as defined in Section 280G of the Code , the aggregate of such credits or payments under the employment agreement and other agreements shall be reduced to the largest amount as will result in no portion of such aggregate payments being subject to the excise tax imposed by Section 4999 of the Code.
• Pursuant to the employment agreement, Ms. West is subject to customary confidentiality, non-solicitation of employees and non-competition obligations that survive the termination of such agreements. In addition, Ms. West was provided an advance to reimburse her for living expenses not to exceed $3,200 in any month or $36,000 in the aggregate.
F-27
TEAMSTAFF, INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED SEPTEMBER 30, 2006, 2005,2008 AND 20042007
(Amounts in thousands)
| | | | | | | | | | | | | | | | |
(a) | | (b) | | | (c) | | | (d) | | | (e) | |
| | | | | | Additions | | | | | | | |
| | | | | | Charged to | | | | | | | |
| | Balance at | | | (reversed from) | | | | | | | |
| | Beginning of | | | Costs and | | | Deductions — | | | Balance at End | |
Description | | Year | | | Expenses | | | Net Adjustments | | | of Year | |
| | | | | | | | | | | | | | | | |
Year Ended September 30, 2008 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Allowance for doubtful accounts on trade receivables | | $ | 17 | | | $ | (11 | ) | | $ | (4 | ) | | $ | 2 | |
| | | | | | | | | | | | | | | | |
Deferred tax valuation allowance | | $ | 11,843 | | | $ | — | | | $ | (474 | ) | | $ | 11,369 | |
| | | | | | | | | | | | | | | | |
Year Ended September 30, 2007 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Allowance for doubtful accounts on trade receivables | | $ | 44 | | | $ | 126 | | | $ | (153 | ) | | $ | 17 | |
| | | | | | | | | | | | | | | | |
Deferred tax valuation allowance | | $ | 11,053 | | | $ | 790 | | | $ | — | | | $ | 11,843 | |
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S-1
![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) |
(a) Description | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (b) Balance at Beginning of Year | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (c) Additions Charged to (reversed from) Costs and Expenses | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (d) Deductions – Net Write-Offs | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | (e) Balance at End of Year |
Year Ended September 30, 2006 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Allowance for doubtful accounts on trade receivables | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 8 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 98 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (62 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 44 | |
Deferred tax valuation allowance | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 16,851 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 16,851 | |
Year Ended September 30, 2005 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Allowance for doubtful accounts on trade receivables | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 4 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 15 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (11 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 8 | |
Year Ended September 30, 2004 | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | | |
Allowance for doubtful accounts on trade receivables | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 48 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | (44 | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | — | | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | ![](https://capedge.com/proxy/10-K/0000950136-06-010475/spacer.gif) | $ | 4 | |
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EXHIBIT INDEX | | |
Exhibit No. | | Description |
| | |
2.1 | | Agreement and Plan of Merger by and among TeamStaff, Inc., TeamSub, Inc and BrightLane.com, Inc., dated as of March 6, 2001, as amended by Amendment No. 1 dated as of March 21, 2001 and Amendment No. 2 dated as of April 6, 2001 (filed as Appendix A to the Proxy Statement/prospectus filed on August 7, 2001, SEC File no. 333-61730, as part of Registrant’s Registration Statement on Form S-4). |
| | |
2.2.1 | | Form of Asset Purchase Agreement between TeamStaff, Inc and Gevity HR, Inc. dated as of November 14, 2003 (filed as Exhibit 2 to Form 8-K dated November 14, 2003). |
| | |
2.3 | | Asset Purchase Agreement, dated as of January 29, 2008, by and among Temps, Inc., TeamStaff, Inc. and TeamStaff Rx, Inc. (previously filed as Exhibit 2.1 to the Current Report on Form 8-K filed by the Company on February 5, 2008). |
| | |
3.1 | | Amended and Restated Certificate of Incorporation (filed as Exhibit A to Definitive Proxy Statement dated May 1, 2000 as filed with the Securities and Exchange Commission). |
| | |
3.2 | | Form of Certificate of Designation of Series A Preferred Stock (filed as Exhibit 3.1 to Form 8-K dated April 6, 2001). |
| | |
3.3 | | Amended By-Laws of Registrant adopted as of May 15, 2001 (filed as Exhibit 3.4 to the Registration Statement on Form S-4 File No. 333-61730). |
| | |
3.4 | | Amended and restated By-Laws of Registrant adopted as of August 29, 2001 (filed as Exhibit 3.5 to the Registrant’s Form S-3 filed on December 27, 2001). |
| | |
3.5 | | Amendment to By-Laws of Registrant adopted November 8, 2007 (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on November 13, 2007). |
| | |
3.6 | | Amendment to Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit B to Definitive Proxy Statement dated March 13, 2008 as filed with the Securities and Exchange Commission). |
| | |
4.1# | | 2000 Employee Stock Option Plan (filed as Exhibit B to the Proxy Statement dated as of March 8, 2000 with respect to the Annual meeting of Shareholders held on April 13, 2000). |
| | |
4.2# | | 2000 Non-Executive Director Stock Option Plan (filed as Exhibit B to the Proxy Statement dated as of March 8, 2000 with respect to the Annual meeting of Shareholders held on April 13, 2000). |
| | |
4.3# | | 2006 Long Term Incentive Plan (filed as Exhibit 10.1 to the Form 10-Q filed on May 15, 2006). |
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10.1 | | Lease dated May 30, 1997 for office space at 300 Atrium Drive, Somerset, New Jersey (Exhibit 10.6.1 to Form 10-K for the fiscal year ended September 30, 1997). |
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10.2 | | Form of Stock Purchase Agreement dated as of April 6, 2001 between TeamStaff, Inc. and BrightLane.com, Inc. with respect to purchase of Series A Preferred Stock (filed as Exhibit 10.1 to Form 8-K dated April 6, 2001). |
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10.3 | | Form of Escrow Agreement between TeamStaff, Inc. and BrightLane Shareholders with respect to the placement of 150,000 shares into escrow by the BrightLane shareholders (filed as Appendix B to the proxy statement/prospectus filed on August 7, 2001 SEC File No. 333.61730). |