Exhibit 99.2
KFORCE INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2018
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As Reported | | Pro Forma Adjustments | | | | Pro Forma |
| Revenue | | $ | 1,418,353 | | $ | 98,214 | | (a) | | $ | 1,320,139 |
| Direct costs | | 999,745 | | 75,926 | | (a) | | 923,819 |
| Gross profit | | 418,608 | | 22,288 | | | | 396,320 |
| Selling, general and administrative expenses | | 329,126 | | 15,661 | | (a) | | 313,465 |
| Depreciation and amortization | | 7,831 | | 724 | | (a) | | 7,107 |
| Income from operations | | 81,651 | | 5,903 | | | | 75,748 |
| Other expense, net | | 4,498 | | (13) | | (a) | | 4,511 |
| Income before income taxes | | 77,153 | | 5,916 | | | | 71,237 |
| Income tax expense | | 19,173 | | 1,551 | | (b) | | 17,622 |
| Net income | | $ | 57,980 | | $ | 4,365 | | | | $ | 53,615 |
| Earnings per share – basic | | $ | 2.34 | | | | | | $ | 2.17 |
| Earnings per share – diluted | | $ | 2.30 | | | | | | $ | 2.12 |
| Weighted average shares outstanding – basic | | 24,738 | | | | | | 24,738 |
| Weighted average shares outstanding – diluted | | 25,251 | | | | | | 25,251 |
See the accompanying notes to the unaudited pro forma condensed consolidated financial statements.
KFORCE INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2017
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As Reported | | Pro Forma
Adjustments | | | | Pro Forma |
| Revenue | | $ | 1,357,940 | | $ | 92,241 | | (a) | | $ | 1,265,699 |
| Direct costs | | 949,884 | | 67,391 | | (a) | | 882,493 |
| Gross profit | | 408,056 | | 24,850 | | | | 383,206 |
| Selling, general and administrative expenses | | 331,172 | | 16,444 | | (a) | | 314,728 |
| Depreciation and amortization | | 8,255 | | 779 | | (a) | | 7,476 |
| Income from operations | | 68,629 | | 7,627 | | | | 61,002 |
| Other expense, net | | 4,535 | | (1) | | (a) | | 4,536 |
| Income before income taxes | | 64,094 | | 7,628 | | | | 56,466 |
| Income tax expense | | 30,809 | | 4,545 | | (b) | | 26,264 |
| Net income | | $ | 33,285 | | $ | 3,083 | | | | $ | 30,202 |
| Earnings per share – basic | | $ | 1.32 | | | | | | $ | 1.20 |
| Earnings per share – diluted | | $ | 1.30 | | | | | | $ | 1.18 |
| Weighted average shares outstanding – basic | | 25,222 | | | | | | 25,222 |
| Weighted average shares outstanding – diluted | | 25,586 | | | | | | 25,586 |
See the accompanying notes to the unaudited pro forma condensed consolidated financial statements.
KFORCE INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2016
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As Reported | | Pro Forma
Adjustments | | | | Pro Forma |
| Revenue | | $ | 1,319,706 | | $ | 82,427 | | (a) | | $ | 1,237,279 |
| Direct costs | | 911,207 | | 60,765 | | (a) | | 850,442 |
| Gross profit | | 408,499 | | 21,662 | | | | 386,837 |
| Selling, general and administrative expenses | | 340,742 | | 15,773 | | (a) | | 324,969 |
| Depreciation and amortization | | 8,701 | | 729 | | (a) | | 7,972 |
| Income from operations | | 59,056 | | 5,160 | | | | 53,896 |
| Other expense, net | | 3,101 | | (10) | | (a) | | 3,111 |
| Income before income taxes | | 55,955 | | 5,170 | | | | 50,785 |
| Income tax expense | | 23,182 | | 1,932 | | (b) | | 21,250 |
| Net income | | $ | 32,773 | | $ | 3,238 | | | | $ | 29,535 |
| Earnings per share – basic | | $ | 1.26 | | | | | | $ | 1.13 |
| Earnings per share – diluted | | $ | 1.25 | | | | | | $ | 1.12 |
| Weighted average shares outstanding – basic | | 26,099 | | | | | | 26,099 |
| Weighted average shares outstanding – diluted | | 26,274 | | | | | | 26,274 |
See the accompanying notes to the unaudited pro forma condensed consolidated financial statements.
KFORCE INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2018
(IN THOUSANDS)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | As Reported | | Pro Forma
Adjustments | | | | Pro Forma |
| ASSETS | | | | | | | | |
| Current assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 112 | | $ | 106,416 | | (c) | | $ | 106,528 |
| Trade receivables, net of allowance of $2,800 | | 234,895 | | (19,396) | | (d) | | 215,499 |
| Income tax refund receivable | | 319 | | — | | | | 319 |
| Prepaid expenses and other current assets | | 13,136 | | (732) | | (d) | | 12,404 |
| Total current assets | | 248,462 | | 86,288 | | | | 334,750 |
| Fixed assets, net | | 35,818 | | (477) | | (d) | | 35,341 |
| Other assets, net | | 36,957 | | (2,678) | | (d) | | 34,279 |
| Deferred tax assets, net | | 9,751 | | (3,361) | | (d) | | 6,390 |
| Intangible assets, net | | 2,952 | | (2,814) | | (d) | | 138 |
| Goodwill | | 45,968 | | (18,973) | | (e) | | 26,995 |
| Total assets | | $ | 379,908 | | $ | 57,985 | | | | $ | 437,893 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable and other accrued liabilities | | $ | 38,606 | | $ | (4,264) | | (d) | | $ | 34,342 |
| Accrued payroll costs | | 45,262 | | (5,660) | | (d) | | 39,602 |
| Other current liabilities | | 1,632 | | (16) | | (d) | | 1,616 |
| Income taxes payable | | 4,858 | | — | | | | 4,858 |
| Total current liabilities | | 90,358 | | (9,940) | | | | 80,418 |
| Long-term debt – credit facility | | 71,800 | | — | | | | 71,800 |
| Long-term debt – other | | 1,359 | | — | | | | 1,359 |
| Other long-term liabilities | | 48,060 | | (3,520) | | (d) | | 44,540 |
| Total liabilities | | 211,577 | | (13,460) | | | | 198,117 |
| Commitments and contingencies | | | | | | | | |
| Stockholders’ equity: | | | | | | | | |
| Preferred stock, $0.01 par; 15,000 shares authorized, none issued and outstanding | | — | | — | | | | — |
| Common stock, $0.01 par; 250,000 shares authorized, 71,856 issued and outstanding | | 719 | | — | | | | 719 |
| Additional paid-in capital | | 447,337 | | 1,095 | | (f) | | 448,432 |
| Accumulated other comprehensive income | | 1,296 | | — | | | | 1296 |
| Retained earnings | | 237,308 | | 70,350 | | (f) | | 307,658 |
| Treasury stock, at cost; 45,822 shares | | (518,329) | | — | | | | (518,329) |
| Total stockholders’ equity | | 168,331 | | 71,445 | | | | 239,776 |
| Total liabilities and stockholders’ equity | | $ | 379,908 | | $ | 57,985 | | | | $ | 437,893 |
See the accompanying notes to the unaudited pro forma condensed consolidated financial statements.
KFORCE INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| | | | | |
| (a) | Pro forma adjustments reflect the elimination of the revenues and costs of Kforce Government Holdings, Inc. ("KGH"), including its wholly-owned subsidiary, Kforce Government Solutions, Inc. ("KGS") for the respective period. These adjustments include certain reasonable allocations of costs incurred by Kforce Inc. and its subsidiaries that are necessary for and associated with the revenue-producing activities of KGH and KGS. These adjustments do not reflect any general corporate overhead costs. |
| (b) | This adjustment represents the estimated income tax effect of the pro forma adjustments. The tax effect of the pro forma adjustments was calculated using the historical statutory rates in the U.S. and permanent differences attributable to KGH and KGS for the periods presented. |
| (c) | This adjustment reflects the receipt of proceeds of $115.0 million, less approximately $8.6 million of transaction costs including legal, advisory and other professional fees and transaction bonuses. |
| (d) | These adjustment reflects the elimination of assets and liabilities attributable to the disposition. |
| (e) | This adjustment reflects the elimination of the amount of goodwill allocated to KGH and KGS. |
| (f) | These adjustments reflect the estimated net gain on sale of approximately $70.4 million and $1.1 million of accelerated stock-based compensation expense triggered by a change in control of KGS as of April 1, 2019. These amounts have not been reflected in the unaudited pro forma condensed consolidated statements of operations as these charges are attributable to the sale and are nonrecurring in nature. No adjustment has been made to the sale proceeds to give effect to any potential post-closing adjustments under the terms of the Stock Purchase Agreement. |
