Exhibit 99.2
KFORCE INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 2014
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| Historical | Pro Forma Adjustments | Pro Forma | ||||||||||||
Net service revenues | $ | 305,312 | $ | 23,288 | (a) | $ | 282,024 | |||||||
Direct costs of services | 214,213 | 15,715 | (a) | 198,498 | ||||||||||
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Gross profit | 91,099 | 7,573 | 83,526 | |||||||||||
Selling, general and administrative expenses | 78,210 | 4,527 | (b) | 73,683 | ||||||||||
Depreciation and amortization | 2,363 | — | 2,363 | |||||||||||
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Income from operations | 10,526 | 3,046 | 7,480 | |||||||||||
Other expense | 365 | 27 | (c) | 338 | ||||||||||
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Income before income taxes | 10,161 | 3,019 | 7,142 | |||||||||||
Income tax expense | 3,912 | 1,187 | (e) | 2,725 | ||||||||||
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Net income | $ | 6,249 | $ | 1,832 | $ | 4,417 | ||||||||
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Earnings per share – basic | $ | 0.19 | $ | 0.13 | ||||||||||
Earnings per share – diluted | $ | 0.19 | $ | 0.13 | ||||||||||
Weighted average shares outstanding – basic | 32,969 | 32,969 | ||||||||||||
Weighted average shares outstanding – diluted | 33,168 | 33,168 | ||||||||||||
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, 2013
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| Historical | Pro Forma Adjustments | Pro Forma | ||||||||||||
Net service revenues | $ | 1,151,887 | $ | 78,159 | (a) | $ | 1,073,728 | |||||||
Direct costs of services | 782,275 | 52,923 | (a) | 729,352 | ||||||||||
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Gross profit | 369,612 | 25,236 | 344,376 | |||||||||||
Selling, general and administrative expenses | 323,933 | 15,989 | (b) | 307,944 | ||||||||||
Goodwill impairment | 14,510 | — | 14,510 | |||||||||||
Depreciation and amortization | 9,846 | — | 9,846 | |||||||||||
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Income from operations | 21,323 | 9,247 | 12,076 | |||||||||||
Other expense (income): | ||||||||||||||
Interest expense | 1,302 | 77 | (c) | 1,225 | ||||||||||
Other (income) expense | (77 | ) | 1 | (d) | (78 | ) | ||||||||
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Income before income taxes | 20,098 | 9,169 | 10,929 | |||||||||||
Income tax expense | 9,311 | 3,676 | (e) | 5,635 | ||||||||||
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Net income | $ | 10,787 | $ | 5,493 | $ | 5,294 | ||||||||
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Earnings per share – basic | $ | 0.32 | $ | 0.16 | ||||||||||
Earnings per share – diluted | $ | 0.32 | $ | 0.16 | ||||||||||
Weighted average shares outstanding – basic | 33,511 | 33,511 | ||||||||||||
Weighted average shares outstanding – diluted | 33,643 | 33,643 | ||||||||||||
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, 2012
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| Historical | Pro Forma Adjustments | Pro Forma | ||||||||||||
Net service revenues | $ | 1,082,479 | $ | 76,992 | (a) | $ | 1,005,487 | |||||||
Direct costs of services | 734,546 | 49,645 | (a) | 684,901 | ||||||||||
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Gross profit | 347,933 | 27,347 | 320,586 | |||||||||||
Selling, general and administrative expenses | 322,436 | 16,496 | (b) | 305,940 | ||||||||||
Goodwill impairment | 69,158 | — | 69,158 | |||||||||||
Depreciation and amortization | 10,789 | — | 10,789 | |||||||||||
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(Loss) income from operations | (54,450 | ) | 10,851 | (65,301 | ) | |||||||||
Other expense: | ||||||||||||||
Interest expense | 1,009 | 55 | (c) | 954 | ||||||||||
Other expense | 107 | 4 | (d) | 103 | ||||||||||
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(Loss) income from continuing operations before income taxes | (55,566 | ) | 10,792 | (66,358 | ) | |||||||||
Income tax (benefit) expense | (19,854 | ) | 4,373 | (e) | (24,227 | ) | ||||||||
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(Loss) income from continuing operations | (35,712 | ) | 6,419 | (42,131 | ) | |||||||||
Income from discontinued operations, net of income taxes | 22,009 | — | 22,009 | |||||||||||
Net (loss) income | $ | (13,703 | ) | $ | 6,419 | $ | (20,122 | ) | ||||||
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(Loss) earnings per share – basic: | ||||||||||||||
From continuing operations | $ | (1.00 | ) | $ | (1.18 | ) | ||||||||
From discontinued operations | $ | 0.62 | $ | 0.62 | ||||||||||
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(Loss) earnings per share – basic | $ | (0.38 | ) | $ | (0.56 | ) | ||||||||
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(Loss) earnings per share – diluted: | ||||||||||||||
From continuing operations | $ | (1.00 | ) | $ | (1.18 | ) | ||||||||
From discontinued operations | $ | 0.62 | $ | 0.62 | ||||||||||
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(Loss) earnings per share – diluted | $ | (0.38 | ) | $ | (0.56 | ) | ||||||||
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Weighted average shares outstanding – basic | 35,791 | 35,791 | ||||||||||||
Weighted average shares outstanding – diluted | 35,791 | 35,791 | ||||||||||||
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, 2011
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| Historical | Pro Forma Adjustments | Pro Forma | ||||||||||||
Net service revenues | $ | 1,004,747 | $ | 68,711 | (a) | $ | 936,036 | |||||||
Direct costs of services | 687,000 | 44,235 | (a) | 642,765 | ||||||||||
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Gross profit | 317,747 | 24,476 | 293,271 | |||||||||||
Selling, general and administrative expenses | 274,072 | 14,596 | (b) | 259,476 | ||||||||||
Depreciation and amortization | 12,505 | — | 12,505 | |||||||||||
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Income from operations | 31,170 | 9,880 | 21,290 | |||||||||||
Other expense: | ||||||||||||||
Interest expense | 1,196 | 36 | (c) | 1,160 | ||||||||||
Other expense | 60 | — | 60 | |||||||||||
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Income from continuing operations before income taxes | 29,914 | 9,844 | 20,070 | |||||||||||
Income tax expense | 10,858 | 3,872 | (e) | 6,986 | ||||||||||
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Income from continuing operations | 19,056 | 5,972 | 13,084 | |||||||||||
Income from discontinued operations, net of income taxes | 8,100 | — | 8,100 | |||||||||||
Net income | $ | 27,156 | $ | 5,972 | $ | 21,184 | ||||||||
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Earnings per share – basic: | ||||||||||||||
From continuing operations | $ | 0.50 | $ | 0.35 | ||||||||||
From discontinued operations | $ | 0.22 | $ | 0.21 | ||||||||||
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Earnings per share – basic | $ | 0.72 | $ | 0.56 | ||||||||||
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Earnings per share – diluted: | ||||||||||||||
From continuing operations | $ | 0.49 | $ | 0.34 | ||||||||||
From discontinued operations | $ | 0.21 | $ | 0.21 | ||||||||||
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Earnings per share – diluted | $ | 0.70 | $ | 0.55 | ||||||||||
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Weighted average shares outstanding – basic | 37,835 | 37,835 | ||||||||||||
Weighted average shares outstanding – diluted | 38,831 | 38,831 | ||||||||||||
See the accompanying notes to the unaudited pro forma condensed consolidated financial statements.
KFORCE INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET AS OF MARCH 31, 2014
(IN THOUSANDS)
| Historical | Pro Forma Adjustments | Pro Forma | ||||||||||||
| ASSETS | ||||||||||||||
Current Assets: | ||||||||||||||
Cash and cash equivalents | $ | 816 | $ | 12,495 | (f) | $ | 13,311 | |||||||
Trade receivables, net of allowances of $2,053 | 187,844 | (13,732 | ) | (g) | 174,112 | |||||||||
Income tax refund receivable | 5,274 | — | 5,274 | |||||||||||
Deferred tax assets, net | 4,350 | — | 4,350 | |||||||||||
Prepaid expenses and other current assets | 11,811 | (325 | ) | (g) | 11,486 | |||||||||
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Total current assets | 210,095 | (1,562 | ) | 208,533 | ||||||||||
Fixed assets, net | 36,194 | (161 | ) | (g) | 36,033 | |||||||||
Other assets, net | 30,642 | (81 | ) | (g) | 30,561 | |||||||||
Deferred tax assets, net | 21,629 | — | 21,629 | |||||||||||
Intangible assets, net | 4,834 | — | 4,834 | |||||||||||
Goodwill | 48,900 | (4,886 | ) | (h) | 44,014 | |||||||||
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Total assets | $ | 352,294 | $ | (6,690 | ) | $ | 345,604 | |||||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
Current Liabilities: | ||||||||||||||
Accounts payable and other accrued liabilities | $ | 28,241 | (603 | ) | (g) | $ | 27,638 | |||||||
Accrued payroll costs | 58,821 | (4,105 | ) | (g) | 54,716 | |||||||||
Other current liabilities | 1,098 | — | 1,098 | |||||||||||
Income taxes payable | 3,811 | — | 3,811 | |||||||||||
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Total current liabilities | 91,971 | (4,708 | ) | 87,263 | ||||||||||
Long-term debt – credit facility | 61,216 | (61,216 | ) | (f) | — | |||||||||
Long-term debt – other | 1,133 | — | 1,133 | |||||||||||
Other long-term liabilities | 36,571 | (1,514 | ) | (g) | 35,057 | |||||||||
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Total liabilities | 190,891 | (67,438 | ) | 123,453 | ||||||||||
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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, 69,679 issued | 697 | — | 697 | |||||||||||
Additional paid-in capital | 406,170 | 648 | (i) | 406,818 | ||||||||||
Accumulated other comprehensive loss | 282 | — | 282 | |||||||||||
Retained earnings | 50,462 | 60,100 | (i) | 110,562 | ||||||||||
Treasury stock, at cost; 35,757 shares | (296,208 | ) | — | (296,208 | ) | |||||||||
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Total stockholders’ equity | 161,403 | 60,748 | 222,151 | |||||||||||
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Total liabilities and stockholders’ equity | $ | 352,294 | $ | (6,690 | ) | $ | 345,604 | |||||||
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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
(IN THOUSANDS)
| (a) | This adjustment reflects the elimination of the revenues and cost of services of Kforce Healthcare, Inc. (“KHI”) sold to RCM Acquisition, Inc. (“Purchaser”). |
| (b) | This adjustment reflects the elimination of the selling, general and administrative expenses of KHI, inclusive of certain reasonable allocations of costs incurred by Kforce Inc. and its subsidiaries that are necessary for and associated with revenue producing activities of KHI. This adjustment does not reflect any general corporate overhead costs. |
| (c) | This adjustment represents an elimination of interest expense based on the proportion of assets sold to the total assets of Kforce Inc. and its subsidiaries. |
| (d) | This adjustment reflects the elimination of other expenses of KHI. |
| (e) | 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 any permanent differences attributable to KHI for the periods presented. |
| (f) | This adjustment reflects the receipt of proceeds of $119,000, less approximately $45,300 which represents: (i) transaction costs including legal, advisory and other professional fees and transaction bonuses; (ii) the estimated difference in the working capital requirement in the Stock Purchase Agreement and working capital as of March 31, 2014; and (iii) estimated taxes on the disposition of KHI. The net proceeds on the disposition of KHI first reduced outstanding borrowings per a requirement under our Credit Facility Agreement. |
| (g) | This adjustment reflects the elimination of assets and liabilities attributable to the disposition. |
| (h) | This adjustment reflects the elimination of the amount of goodwill allocated to KHI. |
| (i) | This adjustment reflects the estimated net gain of approximately $60,100 arising from the transaction. The estimated gain has not been reflected in the unaudited pro forma condensed consolidated statements of operations as it is considered to be 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. |
