EXHIBIT 99.1
TEAMSTAFF REPORTS THIRD QUARTER RESULTS; ANNUAL SHAREHOLDER
MEETING TO BE HELD ON AUGUST 12
Wednesday August 6, 5:23 pm ET
SOMERSET, N.J., Aug. 6 /PRNewswire-FirstCall/ -- TeamStaff, Inc. (Nasdaq: TSTF -
News), one of the nation's leading Business Process Outsourcers and Professional
Employer Organizations (PEOs), today reported revenue and earnings results for
the fiscal quarter ending June 30, 2003.
"The financial results for TeamStaff's third quarter of fiscal 2003 are
disappointing and reflect what may be one of the toughest years in TeamStaff's
history," said TeamStaff's newly-appointed President and CEO, T. Kent Smith. "A
series of occurrences, many of them one-time events, has contributed to making
this last year a very difficult one. However, based on the analysis I made
before joining the organization and my assessment to date, I believe that
TeamStaff has all the elements for strong and healthy future growth."
TeamStaff's revenues for the three months ended June 30, 2003 and 2002 were
$38,478,000 and $46,874,000, respectively, which represents a year-over-year
decrease of $8,396,000, or 17.9%. Decreased revenues in TeamStaff's Medical
Staffing division accounted for approximately $4,614,000 less revenue, while our
PEO division accounted for approximately $3,654,000 less revenue. TeamStaff's
Medical Staffing business, TeamStaff Rx, has, on a percentage-of-revenue basis,
been our fastest growing business segment over the last few years. However, in
comparison to the third fiscal quarter 2002, revenue for this segment decreased
by 25%.
TeamStaff's revenues for the nine months ended June 30, 2003 and 2002 were
$118,795,000 and $136,097,000, respectively, which represents a decrease of
$17,302,000, or 12.7%. Decreased revenues in TeamStaff's Medical Staffing
division accounted for approximately $10,583,000 less revenue while our PEO
division accounted for approximately $6,608,000 less revenue. This loss in PEO
business was somewhat offset by revenue generated by our acquisition of the
assets of Corporate Staffing Concepts in January of 2002, which resulted in
increased PEO division revenue of $1,100,000 for the nine months ended June 30,
2003 compared to the same period last year.
Intangible impairment write-down for the three months ended June 30, 2003 is
$1,200,000 for the remaining value of its PEO marketing relationship with a
major financial institution. TeamStaff has received written notice from that
financial institution terminating the marketing agreement as of October 14,
2003. Goodwill impairment write-down for the nine months ended June 30, 2003 is
$20,396,000. Intangible impairment write-down for the nine months ended June 30,
2003 is $6,900,000. The decision to test for impairment was based on a variety
of factors, including, but not limited to, the overall downturn in the nation's
economy, the relatively recent substantial decrease in the number of PEO
worksite employees, the poor performance of the marketing agreement established
at the time of the BrightLane acquisition, the reduced valuations of individual
PEOs by various market analysts and the associated market downgrade in the PEO
industry in general.
Net loss for the quarter ended June 30, 2003 was $(2,264,000), or $(0.14) per
fully diluted share, as compared to net income of $2,038,000, or $0.13 per fully
diluted share, for the quarter ended June 30, 2002. This decrease is primarily
due to the severance accrual recorded for the former President and Chief
Executive Officer, the intangible asset write-down for the PEO marketing
relationship, and the fiscal year 2002 settlement of certain of TeamStaff's
prior workers' compensation programs. Net loss for the nine months ended June
30, 2003 was $(28,136,000) or $(1.79) per fully diluted share, as compared to
net income of $3,109,000 or $0.19 per fully diluted share for the same period
last year. This decrease is predominantly due to the after-tax write-down of
impaired goodwill and the PEO marketing relationship of $(25,353,000), or
$(1.61) per fully diluted share. Additional losses resulted from increased
workers' compensation reserves, increased state unemployment taxes, the accrual
for TeamStaff's potential obligations to its former Chief Executive Officer and
Chief Financial Officer under their severance agreements and under its SERP, and
the decreased performance of TeamStaff's Medical Staffing division.
Further commenting on TeamStaff's performance, Mr. Smith stated, "While this
quarter's performance obviously was less than stellar and was negatively
affected, in part, by a number of one-time items, underlying the fiscal
year-to-date results are some very positive trends in all our divisions. The
decline in the Medical Staffing division hours appears to have bottomed out and
we are also seeing an increase in the number of PEO worksite employees. Our
Payroll Services division revenue continues to improve with an improving economy
and its profitability should increase once our new front-end web interface has
been implemented, which will allow us to service our customers in a more
convenient and cost-efficient manner. In the meantime, we have substantially
lowered overhead cost by an annualized $2.4 million and we are continuing to
identify other opportunities to lower expenses."
Mr. Smith added, "Since joining TeamStaff just over a month ago, I have become
steadily more assured that I have made the right decision and I am focusing my
energies in those areas that I believe can have the greatest impact on
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TeamStaff's growth and profitability. One key element on which I have
concentrated on is the sales and marketing of TeamStaff's services, especially
in our Medical Staffing division, TeamStaff Rx. TeamStaff Rx is one of the
industry's strongest and one of TeamStaff's highest-potential business segments.
We have identified significant opportunities to further expand our Medical
Staffing business and take advantage of the growing demands we are seeing in the
marketplace."
Mr. Smith continued, "This past quarter, our PEO division completed its
consolidation onto a single, web-enabled operating platform. This should result
in increased operating efficiencies and reduced expense. Additionally, the
client self-service components of our new system should provide us an advantage
over many of our competitors when we are marketing our PEO services."
Mr. Smith concluded, "TeamStaff now is in the process of enhancing its sales and
marketing capabilities across all of its divisions, which, when coupled with the
substantial improvements that have been made in our technology, I believe will
result in our emerging from this rebuilding period with a very attractive
company."
TeamStaff, Inc. will be holding its annual meeting of shareholders at the
Marriott Hotel in Somerset, New Jersey, on Tuesday, August 12, 2003 at 9:00 a.m.
Shareholders of record as of June 16, 2003 have been mailed an annual report and
proxy materials.
About TeamStaff
Headquartered in Somerset, NJ, TeamStaff serves over 3,000 clients and over
45,000 employees throughout the United States as a full service provider of
employer outsourcing and staffing solutions. Through its Professional Employer
Organization, TeamStaff provides small and medium sized businesses throughout
the nation with a better way to employ their people by delivering off-site,
full-service human resource outsourcing solutions.
TeamStaff's comprehensive employer services include employment administration,
benefits management, government compliance, recruiting and selection, employer
liability management, training and development and performance management tools.
TeamStaff's PEO ranks as one of the top PEOs in the nation.
In addition to its Professional Employer Organization, TeamStaff operates two
other employer-outsourcing services. Through TeamStaff Rx, TeamStaff provides
temporary and permanent medical staffing services throughout the country and is
the largest provider of medical imaging personnel in its field.
TeamStaff also operates DSI, its niche payroll service bureau offering payroll
services and payroll tax processing to over 700 clients and 30,000 employees,
mostly in the construction industries in New York and New Jersey.
For more information, visit the TeamStaff web site at www.teamstaff.com .
The statements contained in this press release that are not historical facts are
forward-looking statements that involve a number of risks and uncertainties.
Therefore, the actual results of future events described in such forward-looking
statements could differ materially from those stated in such forward-looking
statements. Among those factors that could cause actual results to differ
materially are: (i) regulatory and tax developments; (ii) changes in direct
costs and operating expenses; (iii) the estimated costs and effectiveness of
capital projects and investments in technology infrastructure; (iv) ability to
effectively implement its e-business strategy and operating efficiency
initiatives; (v) the effectiveness of sales and marketing efforts, including the
company's marketing arrangements with other companies: and (vi) changes in the
competitive environment in the PEO industry. These factors are described in
further detail in TeamStaff's filings with the Securities and Exchange
Commission.
For further information, please contact: T. Kent Smith, President & CEO of
TeamStaff, Inc., +1-732-748-1700; or Christi Mottola, Managing Partner of
Coffin, Mottola Communications, +1-949-851-1109, cmottola@aol.com, for
TeamStaff, Inc.
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TEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE
FOR THE THREE MONTHS ENDED
MONTHS ENDED June 30,
June 30, 2002
2003 AS RESTATED
Unaudited Unaudited
REVENUES $38,478,000 $46,874,000
DIRECT EXPENSES 32,162,000 35,964,000
Gross profit 6,316,000 10,910,000
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 7,935,000 7,554,000
INTANGIBLE IMPAIRMENT WRITE DOWN 1,200,000 --
DEPRECIATION AND AMORTIZATION 293,000 355,000
Income ( loss) from
operations (3,112,000) 3,001,000
OTHER INCOME (EXPENSE)
Interest and other income 136,000 299,000
Interest and other expense (11,000) (60,000)
125,000 239,000
Income (loss) before income
tax (2,987,000) 3,240,000
INCOME TAX BENEFIT (EXPENSE) 723,000 (1,202,000)
Net income (loss) $(2,264,000) $2,038,000
EARNINGS (LOSS) PER SHARE - BASIC &
DILUTED $(0.14) $0.13
BASIC AVERAGE SHARES OUTSTANDING 15,683,844 15,993,332
DILUTED AVERAGE SHARES OUTSTANDING 15,683,844 16,201,579
TEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE
FOR THE NINE MONTHS ENDED
MONTHS ENDED June 30,
June 30, 2002
2003 AS RESTATED
Unaudited Unaudited
REVENUES $118,795,000 $136,097,000
DIRECT EXPENSES 100,376,000 109,699,000
Gross profit 18,419,000 26,398,000
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 22,408,000 21,291,000
GOODWILL IMPAIRMENT WRITE DOWN 20,396,000 --
INTANGIBLE IMPAIRMENT WRITE DOWN 6,900,000 --
DEPRECIATION AND AMORTIZATION 952,000 1,017,000
Income ( loss) from
operations (32,237,000) 4,090,000
OTHER INCOME (EXPENSE)
Interest and other income 464,000 887,000
Interest and other expense (182,000) (92,000)
282,000 795,000
Income (loss) before tax (31,955,000) 4,885,000
INCOME TAX BENEFIT (EXPENSE) 3,819,000 (1,776,000)
Net income (loss) $(28,136,000) $3,109,000
EARNINGS (LOSS) PER SHARE - BASIC &
DILUTED $(1.79) $0.19
BASIC AVERAGE SHARES OUTSTANDING 15,742,981 16,023,712
DILUTED AVERAGE SHARES OUTSTANDING 15,742,981 16,221,953
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TEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE NINE MONTHS ENDED
JUNE 30,
2003 2002
AS RESTATED
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income $(28,136,000) $3,109,000
Adjustments to reconcile net
(loss) income to net
cash (used) provided by
operating activities:
Deferred income taxes (1,481,000) 300,000
Depreciation and amortization 951,000 1,016,000
Pension amortization 612,000 44,000
Provision for doubtful accounts 333,000 403,000
Forgiveness of receivable from
shareholder -- 90,000
Changes in operating assets and
liabilities:
Decrease (increase) in accounts
receivable 4,982,000 (1,023,000)
Decrease (increase) in other
current assets 1,116,000 (1,279,000)
Goodwill impairment write down 20,396,000 --
Intangible impairment write down 6,900,000 --
(Increase) decrease in other
assets (4,003,000) 154,000
(Decrease) in accounts payable,
accrued payroll, accrued
expenses and other current
liabilities (5,465,000) (438,000)
Increase in pension liability 430,000 200,000
(Increase) in restricted cash (885,000) --
Net cash (used
in) provided by
operating
activities (4,250,000) 2,576,000
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment, leasehold
improvements and software (1,135,000) (1,802,000)
Acquisitions of businesses, net of
cash acquired -- (848,000)
Earn out provision on prior
acquisition (250,000) --
Net cash (used
in) investing
activities (1,385,000) (2,650,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments on capital lease
obligations (39,000) (39,000)
Net proceeds from the exercise of
stock options and warrants -- 130,000
Repurchase of common shares (782,000) (780,000)
Net comprehensive expense on
pension (133,000) (59,000)
Net cash (used in)
financing
activities (954,000) (748,000)
Net (decrease) in cash and cash
equivalents (6,589,000) (822,000)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 12,455,000 13,725,000
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $5,866,000 $12,903,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for
interest $119,000 $92,000
Cash paid during the period for
income taxes $370,000 $1,034,000
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TEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, SEPTEMBER 30,
2003 2002
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $5,866,000 $12,455,000
Restricted cash 1,014,000 129,000
Accounts receivable, net of
allowance for doubtful accounts of
$482,000 and $262,000 at June 30,
2003 and September 30, 2002 19,207,000 24,522,000
Current deferred tax asset -- 1,791,000
Prepaid workers' compensation 2,802,000 2,341,000
Other current assets 2,761,000 2,547,000
Total current assets 31,650,000 43,785,000
EQUIPMENT AND IMPROVEMENTS
Furniture and equipment 3,352,000 3,321,000
Computer equipment 2,521,000 2,411,000
Leasehold improvements 391,000 358,000
6,264,000 6,090,000
Accumulated depreciation and
amortization (4,854,000) (4,289,000)
1,410,000 1,801,000
DEFERRED TAX ASSET 12,276,000 6,680,000
AMORTIZED INTANGIBLE ASSETS, net of
accumulated amortization
of $1,820,000 and $822,000 at June
30, 2003 and September 30, 2002 2,339,000 2,375,000
INDEFINITE LIFE INTANGIBLE ASSETS 4,209,000 11,109,000
GOODWILL 7,100,000 27,167,000
OTHER ASSETS 936,000 1,049,000
TOTAL ASSETS $59,920,000 $93,966,000
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TEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, SEPTEMBER 30,
2003 2002
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $38,000 $59,000
Accounts payable 2,201,000 3,832,000
Accrued payroll 14,779,000 16,669,000
Accrued expenses and other current
liabilities 4,877,000 6,793,000
Total current liabilities 21,895,000 27,353,000
LONG-TERM DEBT, net of current
portion 129,000 147,000
ACCRUED PENSION LIABILITY 1,701,000 1,271,000
OTHER LONG TERM LIABILITIES 428,000 456,000
Total liabilities 24,153,000 29,227,000
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, $.10 par value;
authorized 5,000,000 shares; 0
issued and outstanding -- --
Common Stock, $.001 par value;
authorized 40,000,000 shares;
issued 16,256,642 and
16,229,142; outstanding
15,675,172
and 15,906,886 16,000 16,000
Additional paid-in capital 65,279,000 65,200,000
Retained (deficit) earnings (26,823,000) 1,313,000
Accumulated comprehensive losses (275,000) (142,000)
Treasury Stock, 581,470 and 330,256
shares at cost (2,430,000) (1,648,000)
Total shareholders' equity 35,767,000 64,739,000
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $59,920,000 $93,966,000
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