Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact:
At Hall, Kinion & Associates, Inc.
Investor Contact:
Martin Kropelnicki
Vice President & CFO
(415) 895-2200
HALL KINION ANNOUNCES THIRD QUARTER
FINANCIAL RESULTS
Novato, CA – October 29, 2003 —Hall, Kinion & Associates, Inc. (NASDAQ: HAKI), The Talent Source®, announced today financial results for the third quarter ended September 28, 2003.
For the third quarter 2003, net revenues were $41.7 million, compared with revenues of $31.9 million in the third quarter 2002. Gross profit for the quarter was $12.1 million, or 29.0 percent of net revenues versus $10.8 million or 33.7 percent of net revenues, for the same period a year ago. The third quarter net income was $228,000, or $0.02 per diluted share, versus net income of $244,000, or $0.02 per diluted share, for the third quarter of 2002. The 2003 third quarter net income includes net restructuring costs of $340,000 related to FAS 146 adjustment for forecasted sublease income, offset by income of $696,000 due to a change in estimate for the executive bonus liability. In addition, the Company did not book any taxes against the operating profits incurred in the third quarter of 2003, since it will report a loss for the full year. The 2003 third quarter’s operating results included the financial results of OnStaff®, which was acquired in August 2002.
For the nine-month period ended September 28, 2003, net revenues were $123.3 million versus $81.3 million, for the comparable nine-month period a year ago. Gross profit for the nine-month period ended September 28, 2003 was $36.1 million, compared to $27.7 million, for the comparable nine-month period a year ago. The net loss for the nine-month period ended September 28, 2003, was $3.5 million or a loss of $0.27 per diluted share, compared with a net loss of $3.0 million or a loss of $0.23 per diluted share, in the comparable nine-month period a year ago.
“During the third quarter, the Company experienced two distinct trends from its two operating divisions, Technology and OnStaff,” stated Brenda Rhodes, Chairman and CEO. “We saw an established trend in the gradual increases in our working contractors during the quarter in our Technology division. In particular, our Healthcare and Government verticals both recorded continual growth during the quarter and are expected to hold solid during the fourth quarter. We are pleased with the results of our sales and recruiting staffs in these areas.”
Hall, Kinion & Associates, Inc.
October 29, 2003/Page 2 of 4
“The 3rd quarter also saw the much anticipated bubble bursting of our mortgage refinance boom. We were encouraged by the collapsible model of OnStaff as management adjusted the model to fit the comedown in the refinance business in order to remain profitable. We are further encouraged as we have seen the stabilization of job orders and run rate in the past 4 weeks. We continue to see demand in non-refinance areas utilizing similiar processing skills,” Ms. Rhodes remarked.
Hall, Kinion & Associates will hold a conference call concerning this announcement today, Wednesday, October 29, 2003. The conference call will begin at 8:00 a.m. PST/ 11:00 a.m. EST and will last for approximately one hour. To participate on the call, dial in (703) 871-3085 or (888) 747-3510 at least five minutes prior to the start time. Investors have the opportunity to listen to the conference call live on the Internet at the Company’s Web site athttp://www.hallkinion.com. Investors should go to the Web site a few minutes early, as it may be necessary to download audio software to hear the conference call. A replay of the conference call will be available for 14 days via phone at (888) 266-2081, passcode #288752 through November 12, 2003.
About Hall, Kinion & Associates
Hall, Kinion & Associates, Inc., The Talent Source for specialized professionals, delivers world-class talent on a contract and full-time basis to high-demand sectors. The Company finds, evaluates and places industry-specific Technology and Corporate Professionals.
Founded in 1991, Hall Kinion® completed its initial public offering in 1997. The Company operates two divisions, both of which provide consultants and direct-hire talent: The Technology Professional Division places highly-skilled experts in positions ranging from software engineering to CTO into technology, financial services, healthcare, government and energy sectors. The Corporate Professional Services Division (OnStaff) places specialists at all levels into real estate, financial services and healthcare sectors. For the most current corporate and financial information, visit the Company’s Web site athttp://www.hallkinion.com.
About OnStaff
OnStaff is a premier national specialty Staffing firm placing temporary and full-time professionals in the Title, Escrow, Mortgage, Financial Services and Healthcare industries. The Company operates industry-specific recruiting and placement Web sites including:www.titleboard.com,www.escrowboard.com,www.bankingboard.com andMediCenter.com. OnStaff’s Web site address ishttp://www.onstaff.com. OnStaff is a wholly owned subsidiary of Hall, Kinion & Associates, Inc.
The statements contained in this release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, including statements regarding Hall Kinion’s expectations, beliefs, hopes, intentions, models or strategies regarding the future. All forward-looking statements included in this release are based upon information available to Hall Kinion as of the date thereof, and Hall Kinion assumes no obligation to update any such forward-looking statement. Actual results could differ materially from Hall Kinion’s current expectations. Factors that could cause or contribute to such differences include, but are not limited to the rate of hiring and productivity of sales and sales support personnel; the availability of qualified professionals; changes in the relative mix between contract and permanent placement services; changes in the pricing of Hall Kinion’s services; the timing and rate of entrance into or exit from new geographic markets and the addition and closing of offices; the structure and timing of acquisitions, changes in demand for professionals; changes in the economic outlook for the high technology industry and general economic factors. Please refer to the discussion of risk factors and other factors included in Hall Kinion’s Report on Form 10-K for the year ended December 29, 2002 and other filings made with the Securities & Exchange Commission (“SEC”).
This press release speaks only as of the date it was issued and readers are cautioned that changes in general economic, business or other conditions or in the business condition, financial results or operations of Hall Kinion may have occurred since such date. Hall Kinion undertakes no duty to update the information appearing in the press release. Also, subsequent press releases may have been issued, subsequent public conference calls may have been held or documents containing later or additional information may have been filed with the SEC or NASDAQ or otherwise become available or come into existence.
FINANCIAL TABLES FOLLOW
Hall, Kinion & Associates, Inc.
October 29, 2003/Page 3 of 4
Hall, Kinion & Associates, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
| | | Sept. 28, | | | Dec. 29, | |
| | | 2003
| | | 2002
| |
Assets | | | | | | | | |
Current Assets: | | | | | | | | |
Cash and cash equivalents | | $ | 2,755 | | | $ | 8,571 | |
Accounts receivable, net | | | 20,908 | | | | 17,804 | |
Prepaid expenses and other current assets | | | 2,240 | | | | 1,554 | |
Deferred income taxes | | | 3,925 | | | | 3,925 | |
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Total current assets | | | 29,828 | | | | 31,854 | |
Property and equipment, net | | | 5,710 | | | | 7,511 | |
Goodwill | | | 11,806 | | | | 11,849 | |
Intangible assets, net | | | 10,201 | | | | 10,859 | |
Deferred income taxes and other assets | | | 12,929 | | | | 12,833 | |
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Total assets | | $ | 70,474 | | | $ | 74,906 | |
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Liabilities and Stockholders’ Equity | | | | | | | | |
Current Liabilities: | | | | | | | | |
Line of credit | | $ | — | | | $ | 10,000 | |
Accounts payable and accrued expenses | | | 10,865 | | | | 11,108 | |
Reserve for restructure costs | | | 2,424 | | | | 3,014 | |
Income taxes payable | | | 794 | | | | 816 | |
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Total current liabilities | | | 14,083 | | | | 24,938 | |
Line of credit | | | 10,904 | | | | — | |
Accrued compensation and deferred rent | | | 2,725 | | | | 3,046 | |
Reserve for non-current restructuring costs | | | 2,466 | | | | 3,155 | |
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Total liabilities | | | 30,178 | | | | 31,139 | |
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Stockholders’ equity: | | | | | | | | |
Common stock | | | 84,713 | | | | 85,036 | |
Stockholder notes receivable | | | (500 | ) | | | (800 | ) |
Accumulated other comprehensive loss | | | (101 | ) | | | (103 | ) |
Accumulated deficit | | | (43,816 | ) | | | (40,366 | ) |
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Total stockholders’ equity | | | 40,296 | | | | 43,767 | |
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Total liabilities and stockholders’ equity | | $ | 70,474 | | | $ | 74,906 | |
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Hall, Kinion & Associates, Inc.
October 29, 2003/Page 4 of 4
Hall, Kinion & Associates, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
| | | Three Months Ended
| | | Nine Months Ended
| |
| | | Sept. 28,
2003
| | | Sept. 29,
2002
| | | Sept. 28,
2003
| | | Sept. 29,
2002
| |
Net revenues: | | | | | | | | | | | |
Contract services | | $ | 40,623 | | | $ | 30,630 | | | $ | 119,875 | | | $ | 77,267 | |
Permanent placement | | | 1,085 | | | | 1,313 | | | | 3,423 | | | | 4,005 | |
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Total net revenues | | | 41,708 | | | | 31,943 | | | | 123,298 | | | | 81,272 | |
Cost of contract services | | | 29,606 | | | | 21,168 | | | | 87,213 | | | | 53,554 | |
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Gross profit | | | 12,102 | | | | 10,775 | | | | 36,085 | | | | 27,718 | |
| | | | 29.02 | % | | | 33.73 | % | | | 29.27 | % | | | 34.11 | % |
Operating expenses: | | | | | | | | | | | | |
Selling, general and administrative | | | 11,383 | | | | 10,819 | | | | 36,362 | | | | 33,501 | |
Restructuring costs, net | | | 340 | | | | (876 | ) | | | 2,906 | | | | (876 | ) |
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Total operating expenses | | | 11,723 | | | | 9,943 | | | | 39,268 | | | | 32,625 | |
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Income (loss) from operations | | | 379 | | | | 832 | | | | (3,183 | ) | | | (4,907 | ) |
Interest expense | | | (163 | ) | | | (67 | ) | | | (404 | ) | | | (76 | ) |
Interest income | | | 2 | | | | 58 | | | | 32 | | | | 311 | |
Other income / (expense) | | | 10 | | | | 9 | | | | 105 | | | | 43 | |
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Net income (loss) before income taxes | | | 228 | | | | 832 | | | | (3,450 | ) | | | (4,629 | ) |
Income tax provision (benefit) | | | — | | | | (588 | ) | | | — | | | | 1,634 | |
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Net income (loss) | | $ | 228 | | | $ | 244 | | | $ | (3,450 | ) | | $ | (2,995 | ) |
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Net income (loss) per share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.02 | | | $ | 0.02 | | | $ | (0.27 | ) | | $ | (0.23 | ) |
Diluted | | $ | 0.02 | | | $ | 0.02 | | | $ | (0.27 | ) | | $ | (0.23 | ) |
Shares used in per share calculations: | | | | | | | | | | | | |
Shares Outstanding—Basic | | | 12,582 | | | | 12,556 | | | | 12,594 | | | | 13,054 | |
Shares Outstanding—Diluted | | | 12,753 | | | | 12,627 | | | | 12,594 | | | | 13,054 | |
