<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30. 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------- ----------
------------------------------
COMMISSION FILE NUMBER 0-26058
kforce.com, Inc.
(Exact name of registrant as specified in its charter)
FLORIDA 59-3264661
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
120 WEST HYDE PARK PLACE
SUITE 150
TAMPA, FLORIDA 33606
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP-CODE)
Registrant's telephone number, including area code: (813) 251-1700
------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) had been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
As of August 9, 2000 the registrant had 42,909,019 shares of common stock, $.01
par value per share, issued and outstanding.
===============================================================================
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
kforce.com, Inc.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS) (UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------- ------------
(UNAUDITED)
<S> <C> <C>
Assets:
Current Assets:
Cash and cash equivalents $ 1,209 $ 7,919
Trade receivables, net of allowance for doubtful accounts of $5,550 and
$4,417, respectively 128,218 112,545
Income tax receivable 14,002 23,038
Deferred tax asset, current 3,546 3,546
Prepaid expenses and other current assets 5,484 3,669
-------- --------
Total current assets 152,459 150,717
Receivables from related parties, less current portion 958 960
Furniture and equipment, net 24,624 27,758
Other assets, net 23,387 21,060
Goodwill, net of accumulated amortization of $11,085 and $9,452, respectively 94,881 95,692
-------- --------
Total assets $296,309 $296,187
======== ========
</TABLE>
<PAGE> 3
Liabilities and Shareholders' Equity:
<TABLE>
<S> <C> <C>
Current Liabilities:
Accounts payable and other accrued liabilities $ 17,120 $ 24,180
Accrued payroll costs 34,289 31,922
Bank overdrafts 4,370 5,824
Income taxes payable 1,320 --
Current portion of capital lease obligations -- 481
Current portion of payables to related parties -- 2,000
---------- ----------
Total current liabilities 57,099 64,407
Bank line of credit 5,537 --
Capital lease obligations, less current portion -- --
Other long-term liabilities, less current portion 14,452 13,575
---------- ----------
Total liabilities 77,088 77,982
---------- ----------
Commitments and contingencies -- --
Shareholders' Equity:
Preferred stock, par value $.01; 15,000 shares authorized, none issued and outstanding -- --
Common stock, par value $.01; 250,000 shares authorized,
46,960 and 46,687 issued and outstanding, respectively 470 467
Additional paid-in-capital 190,334 187,262
Retained earnings 46,058 46,646
Cumulative translation adjustment (236) (170)
Less reacquired stock at cost; 2,679 and 2,613 shares, respectively (17,405) (16,000)
---------- ----------
Total shareholders' equity 219,221 218,205
---------- ----------
Total liabilities and shareholders' equity $ 296,309 $ 296,187
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 4
kforce.com, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net service revenues $ 197,661 $ 189,390 $ 392,724 $ 373,485
Direct costs of services 106,043 108,182 212,905 213,445
---------- ---------- ---------- ----------
Gross profit 91,618 81,208 179,819 160,040
Selling, general and administrative expenses 85,381 77,721 174,691 139,279
Depreciation and amortization expense 3,744 2,785 7,448 5,221
Other (income) expense, net (586) (293) (1,269) (1,058)
---------- ---------- ---------- ----------
Income before income taxes 3,079 995 (1,051) 16,598
Provision for (benefit from) income taxes 1,272 663 (463) 7,138
---------- ---------- ---------- ----------
Net income $ 1,807 $ 332 $ (588) $ 9,460
========== ========== ========== ==========
Comprehensive Income(Loss):
Foreign currency translation (61) (207) (66) (207)
---------- ---------- ---------- ----------
Comprehensive Income $ 1,746 $ 125 $ (654) $ 9,253
========== ========== ========== ==========
Net income per share-Basic $ .04 $ 0.01 $ (.01) $ 0.21
========== ========== ========== ==========
Weighted average shares outstanding-Basic 44,267 44,802 44,225 45,433
========== ========== ========== ==========
Net income per share-Diluted $ .04 $ 0.01 $ (.01) $ 0.21
========== ========== ========== ==========
Weighted average shares outstanding-Diluted 44,969 45,223 44,225 46,012
========== ========== ========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 5
kforce.com, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999
-------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (588) $ 9,460
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 7,448 5,221
Provision for losses on accounts and notes receivable 2,482 2,183
Deferred taxes (103)
Loss on asset sales/disposals 68 --
(Increase) decrease in operating assets:
Trade receivables, net (18,004) (20,184)
Prepaid expenses and other current assets (1,498) (713)
Other assets, net 649 821
Increase (decrease) in operating liabilities:
Accounts payable and other accrued liabilities (7,778) 6,501
Accrued payroll costs 3,680 (10,505)
Bank overdrafts (1,454) --
Accrued merger, restructuring and integration expense -- (3,287)
Income taxes 10,524 (2,707)
Other long-term liabilities 660 1,635
-------- --------
Cash used in operating activities (3,811) (11,678)
-------- --------
Cash flows from investing activities:
Capital expenditures (2,351) (7,388)
Acquisitions, net of cash acquired and earnout settlements (1,221) (8,575)
Proceeds from sale of furniture and equipment 84 --
Proceeds from the sale of short-term investments -- 12,000
Increase in cash surrender value of life insurance policies (3,018) (3,305)
-------- --------
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C>
Cash used in investing activities (6,506) (7,268)
-------- --------
Cash flows from financing activities:
Proceeds from bank line of credit 5,537 --
Payments on capital lease obligations (481) (674)
Payments on notes payable to related parties (2,000) --
Payments on receivables from related parties -- 14
Issuance of notes receivable from related parties -- (216)
Proceeds from exercise of stock options 2,501 1,441
Repurchase of treasury stock (1,884) (8,665)
-------- --------
Cash provided by (used in) financing activities 3,673 (8,100)
-------- --------
Decrease in cash and cash equivalents (6,644) (27,046)
Cumulative translation adjustment (66) (207)
Cash and cash equivalents at beginning of period 7,919 68,821
-------- --------
Cash and cash equivalents at end of period $ 1,209 $ 41,568
======== ========
Supplemental Cash Flows Information
Cash paid (received) during the period for:
Income taxes $(10,987) $ 10,003
Interest 448 --
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 7
kforce.com, Inc.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(AMOUNTS IN THOUSANDS) (UNAUDITED)
<TABLE>
<CAPTION>
COMMON ADDITIONAL CUMULATIVE RETAINED REACQUIRED
STOCK PAID-IN TRANSLATION EARNINGS STOCK TOTAL
CAPITAL ADJUSTMENT
Shares Amounts Shares Amounts
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDERS' EQUITY:
Balance at December 31, 1999 46,687 $ 467 $187,262 $ (170) $ 46,646 2,613 $ (16,000) $ 218,205
Exercise of stock options 273 3 2,498 2,501
Tax benefit of employee stock options 168 168
Foreign currency translation adjustment (66) (66)
Net loss (588) (588)
Sale of treasury stock 406 (72) 479 885
Repurchase of common stock 138 (1,884) (1,884)
------ ------ -------- ------- -------- ------ ---------- ----------
Balance at June 30, 2000 46,960 $ 470 $190,334 $ (236) $ 46,058 2,679 $ (17,405) $ 219,221
====== ====== ======== ======= ======== ====== ========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 8
kforce.com, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation. The Consolidated Financial Statements include the
accounts of kforce.com, Inc. (the "Company") and its subsidiaries.
Interim Financial Information. The Consolidated Financial Statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC") and, in management's opinion, include all adjustments
necessary for a fair statement of results for such interim periods. Certain
information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to SEC rules or regulations; however,
the Company believes that the disclosures made are adequate to make the
information presented not misleading.
Revenue Recognition. Net service revenues consist of sales, net of credits and
discounts. The Company recognizes Flexible Billings based on hours worked by
assigned personnel on a weekly basis. Search Fees are recognized in contingency
search engagements upon the successful completion of the assignment. Revenue
from search fees is shown on the Consolidated Statements of Operations net of
amounts written off for adjustments due to placed candidates not remaining in
employment for the guarantee period.
Cash and Cash Equivalents. The Company classifies all highly-liquid investments
with an initial maturity of three months or less as cash equivalents.
Self-insurance. The Company offers an employee benefit program for all eligible
employees for which it is self-insured for a portion of the cost. The Company is
liable for claims up to $125 per claim and aggregate claims up to a defined
yearly payment limit. All full-time employees and salaried consultants are
eligible to participate in the program. Self-insurance costs are accrued using
estimates to approximate the liability for reported claims and claims incurred
but not reported.
Income Taxes. The Company accounts for income taxes under the principles of
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" ("SFAS 109"). SFAS 109 requires an asset and liability approach to the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of differences between the carrying amounts and the tax bases of
other assets and liabilities. The tax effects of deductions attributable to
employees' disqualifying dispositions of shares obtained from incentive stock
options are reflected in additional paid-in capital.
Foreign Currency Translation. Foreign currency translation adjustments arise
primarily from activities of the Company's Canadian operations. Results of
operations are translated using the weighted average exchange rates during the
period, while assets and liabilities are translated into U.S. dollars using
current rates. Resulting foreign currency translation adjustments are recorded
in Shareholder's Equity.
Earnings Per Share. Options to purchase 3,032 and 2,408 shares of common stock
were not included in the computation of diluted earnings per share during the
six months ended June 30, 2000 and 1999, respectively, because these options
were anti-dilutive.
<PAGE> 9
NOTE B -- SEGMENT ANALYSIS
In 1998, the Company adopted Statement of Accounting Standards No. 131,
"Disclosures about Segments of Enterprise and Related Information" ("SFAS 131").
SFAS 131 supersedes SFAS 14, "Financial Reporting for Segments of a Business
Enterprise," replacing the "industry segment" approach with the "management"
approach of determining reportable segments of an organization. The management
approach designates the internal organization that is used by management for
making operation decisions and addressing performance as the source of
determining the Company's reportable segments. Beginning in 1997, the Company
revised its organizational structure to provide internal reporting following its
four functional service offerings, including: Information Technology, Finance
and Accounting, Human Resources and Operating Specialties.
The Company generates only sales and gross profit information on a functional
basis. As such, asset information by segment is not disclosed. Substantially all
operations and long-lived assets are located in the U.S.
For the three months ended June 30, 2000 and 1999:
<TABLE>
<CAPTION>
Information Finance & Human Operating
Technology Accounting Resources Specialty TOTAL
----------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
2000
Sales $111,767 $ 55,829 $ 6,107 $ 23,958 $197,661
Gross Profit 47,747 33,022 1,981 8,868 91,618
1999
Sales 114,404 51,886 4,505 18,595 189,390
Gross Profit 45,609 28,094 1,563 5,942 81,208
</TABLE>
For the six months ended June 30, 2000 and 1999:
<TABLE>
<CAPTION>
Information Finance & Human Operating
Technology Accounting Resources Specialty TOTAL
----------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
2000
Sales $220,513 $113,098 $ 11,453 $ 47,660 $392,724
Gross Profit 91,866 66,068 3,792 18,093 179,819
1999
Sales 230,439 101,733 9,097 32,216 373,485
Gross Profit 90,341 55,700 2,962 11,037 160,040
</TABLE>
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements,
particularly with respect to the Liquidity and Capital Resources section of
Management's Discussion and Analysis of Financial Condition and Results of
Operations. Additional written or oral forward-looking statements may be made by
the Company from time to time, in filings with the SEC or otherwise. Such
forward-looking statements are within the meaning of that term in Section 27A of
the Securities Act of 1933 and Section 21 E of the Securities Exchange Act of
1934. Such statements may include, but not be limited to, projections of
revenue, income, losses, cash flows, capital expenditures, plans for future
operations, financing needs or plans, plans relating to products or services of
the Company, estimates concerning the effects of litigation or other disputes,
as well as assumptions to any of the foregoing. In addition, when used in this
discussion the words "anticipate", "estimates", "expects", "intends", "plans",
and variations thereof and similar expressions are intended to identify forward
looking statements.
Forward-looking statements are inherently subject to risks and uncertainties,
some of which can not be predicted. Future events and actual results could
differ materially from those set forth in or underlying the forward looking
statements. Readers are cautioned not to place undue reliance on any forward
looking statements contained in this report which speak only as of the date of
this report. The Company undertakes no obligation to publicly publish the
results of any adjustments to these forward looking statements that may be made
to reflect events on or after the date of this report or to reflect the
occurrence of unexpected events.
Results of Operations
The following table sets forth certain items in the Company's consolidated
statements of operations, as a percentage of net service revenues, for the
indicated periods:
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Flexible billings 76.0% 79.9% 76.4% 80.3%
Search Fees 24.0 20.1 23.6 19.7
Net service revenues 100.0 100.0 100.0 100.0
Gross profit 46.4 42.9 45.8 42.9
Selling, general, and administrative expenses 43.2 41.0 44.5 37.3
Income before taxes 1.6 0.5 (0.3) 4.4
Net income 0.9 0.2 (0.1) 2.5
</TABLE>
Results of Operations for Each of the Three and Six Months Ended June 30, 2000
and 1999
Net service revenues. Net service revenues increased 4.4% and 5.2%,
respectively, to $197.7 million and $392.7 million for the three and six month
periods ending June 30, 2000 as compared to $189.4 and $373.5 million for the
same periods in 1999. These increases were primarily comprised of a $1.0 million
decrease and a $0.1 million increase in Flexible Billings and increases of $9.3
million and $19.2 million in Search Services for the three and six month periods
ending June 30, 2000, as described below.
Flexible Billings decreased 0.7% to $150.3 million and remained constant at
$299.9 million for the three and six month periods ending June 30, 2000,
respectively, as compared to $151.2 million and $299.9 million for the same
periods in 1999. The decrease in Flexible Billings for the three months ended
June 30, 2000 and the unchanged level for the six months, as compared to the
same periods in 1999, are primarily attributable to decreases in the number of
hours billed of approximately 5% and 3%, respectively, partially offset by
increases in average billing rates of approximately 3% and 2%.
Search Services increased 24.3% and 26.1%, respectively to $47.4 million and
$92.8 million for the three and six month periods ended June 30, 2000 as
compared to $38.2 and $73.6 million for the same periods in 1999. The increase
in revenue for both the three and six month periods ended June 30, 2000 is
primarily the result of increases in both the number of placements made
(increases of approximately 13% and 14%, respectively) and the average fee for
these placements (increases of approximately 10% and 11%, respectively).
Gross profit. Gross profit increased 12.8% and 12.4%, respectively, to $91.6
million and $179.8 million during the three and six month periods ended June 30,
2000 as compared to $81.2 million and $160.0 million for the same periods in
1999. Gross profit as a percentage of net service revenues increased to 46.4%
and 45.8%, respectively, for the three and six month periods ending June 30,
2000 as compared to 42.9% for both the three and six month periods in 1999. The
increase in the gross profit percentage
<PAGE> 11
for both the three and six month periods in 2000 is primarily attributable to a
change in revenue mix, with Search Services, which has a higher gross profit
margin, comprising 24.0% and 23.6% of total revenue for the three and six month
periods ended June 30, 2000 as compared to 20.1% and 19.7% for the same periods
in 1999. Gross profit margin on Flexible Billings improved slightly to 29.4% and
29.0% for the three and six month periods, compared to 28.5% and 28.8% for the
prior year.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 9.9% and 25.4%, respectively to $85.4 million
and $174.7 million for the three and six month periods ended June 30, 2000 as
compared to $77.7 million and $139.3 million for the same periods in 1999.
Selling, general and administrative expenses as a percentage of net service
revenues increased to 43.2% and 44.5%, respectively, for the three and six month
periods ended June 30, 2000 compared to 41.0% and 37.3% for the same periods in
1999. The increase in selling, general and administrative expense as a
percentage of net service revenues in the three and six month periods ended June
30, 2000 resulted primarily from 1) increased advertising and marketing related
to the Company's efforts to expand its brand-name recognition and increase the
exposure of its online interactive career management and recruitment resource 2)
investments in future growth, including leadership development, increasing the
number of sales consultants and development of educational services, emerging
technologies and operating specialties 3) restructuring of the Company's back
office operations and 4) incremental costs incurred during the three months
ended June 30, 2000 of approximately $1.7 million related to termination costs
for non-revenue producing employees and to a decision to have a third party
developer construct and own the Company's new Tampa, FL headquarters building.
Depreciation and amortization expense. Depreciation and amortization expense
increased 34.4% and 42.7%, respectively, to $3.7 million and $7.4 million for
the three and six month periods ended June 30, 2000 compared to $2.8 million and
$5.2 million for the same periods in 1999. Depreciation and amortization expense
as a percentage of net service revenues increased to 1.9% for both the three and
six month periods ended June 30, 2000 as compared to 1.5% and 1.4%, for the each
of the periods in 1999. The increase as a percentage of net service revenues for
both periods in 2000 as compared to the same periods in 1999 is due primarily to
additional depreciation on computer hardware related to the Company's online
interactive career management activities and the automation/reengineering of the
Company's back office operations during the last half of 1999 and early 2000.
Other (income) expense, net. Other (income) expense, net, increased 100.0% and
19.9% for the three and six months ended June 30, 2000 compared to the same
periods in 1999. The increase in other income during both periods in 2000 as
compared to 1999 was due primarily to an increase in miscellaneous income,
partially offset by a decrease in interest income and an increase in interest
expense resulting from the increased cash requirements to fund operations and
for the Company's repurchases of common stock.
Income Before Taxes. Income before taxes increased 209.4% and decreased 106.3%
for the three and six months ended June 30, 2000 to $3.1 million and a $1.1
million loss, respectively, as compared to income of $1.0 million and $16.6
million for the same periods in 1999, primarily as a result of the factors
discussed above regarding revenues and selling, general and administrative
expenses.
Provision for income taxes. The provision for income taxes increased 91.9% and
decreased 106.5%, respectively, to $1.3 million and ($0.5) million for the three
and six month periods ended June 30, 2000 compared to $0.7 million and $7.1
million for the same periods in 1999. The effective tax rate was 44.1% for the
six months ended June 30, 2000 compared to 43.0% for the same period in 1999.
The increase in the tax rate in 2000 as compared to 1999 is primarily due to the
effect of non-deductible expenses which remained relatively unchanged in dollar
amount from 1999 to 2000, resulting in an increase in the effective tax rate as
the amount of reported pretax income decreased.
Net Income. Net income increased 444.3% to $1.8 million in the three months
ended June 30, 2000 and decreased 106.2% to ($0.6) million for the six months
ended June 30, 2000 as compared to the $0.3 million and $9.5 million for the
same periods in 1999. The changes are primarily a result of the factors
discussed above related to selling, general and administrative expenses,
partially offset by the increase in revenue during 2000.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2000, the Company's sources of liquidity included $1.2 million in
cash and cash equivalents, and $94.2 million in additional net working capital.
In addition, as of June 30, 2000, there was $5.5 million outstanding on the
Company's $35 million Revolving Line of Credit Agreement with Bank of America,
N.A. (the "Line of Credit") which became effective May 4, 2000. The Line of
Credit provides for a maximum revolving credit facility of $35 million (based on
the Company's eligible receivables). Under its terms, prepayments on the Line of
Credit are allowed at any time, with any remaining unpaid balance due two years
from closing. Borrowings under the Line of Credit are secured by all of the
assets of the Company and its subsidiaries. Interest rates on the outstanding
balance are to be calculated based on: (i) the London Interbank Offered Rate
("LIBOR") plus (ii) from 1.75% to 3.00% based on certain financial ratios of the
Company. Fees payable by the Company in connection with the Line of Credit also
vary with these financial ratios. The terms of the Line of Credit also include
certain financial covenants related to quarterly minimum requirements for
EBITDA, fixed charge coverage ratio and tangible net worth and maximum
requirements for leverage ratio. There are also certain limitations on
investments and acquisitions, dividends and repurchases of
<PAGE> 12
the Company's stock. In addition, the Company is pursuing various lease
financing alternatives for the construction of a new Tampa headquarters
building. One of these alternatives may require a cash payment at the inception
of the lease of approximately $2.5 million.
During the six months ended June 30, 2000, cash flow used by operations was $3.8
million, resulting primarily from an increase in accounts receivable and a
decrease in accounts payable and other accrued liabilities, partially offset by
depreciation and amortization charges, refunds of prior income tax payments and
an increase in accrued payroll costs. The increase in accounts receivable
reflects the increased volume of business during the first six months of 2000.
The decrease in accounts payable and other accrued liabilities and the increase
in accrued payroll costs are primarily due to the timing of payment of these
liabilities.
For the six months ended June 30, 2000, cash flow used in investing activities
was $6.5 million, resulting primarily from an increase of $3.0 million in the
value of assets in the Company's deferred compensation plan, the use of
approximately $1.2 million for contingent earnout payments on prior acquisitions
and $2.4 million in capital expenditures.
During the six months ended June 30, 2000, cash flow provided by financing
activities was $3.7 million primarily from $5.5 million of borrowing under the
Company's Line of Credit, offset by $2.5 million in payments on notes and
capital lease obligations.
On March 11, 1999, the Company announced that its board of directors had
authorized the repurchase of up to $50 million of its common stock on the open
market, from time to time, depending on market conditions. As of June 30 and
August 9, 2000, the Company has repurchased approximately 2.1 million and 3.5
million shares for approximately $17.0 million and $23.1 million. If additional
shares of stock are repurchased, there may be a material impact on the Company's
cash flow requirements in the next twelve months.
The Company believes that cash flow from operations and borrowings under its
Line of Credit, or other credit facilities that may become available to the
Company in the future will be adequate to meet the working capital requirements
of current operations for at least the next twelve months. However, there is no
assurance (i) that the Company will be able to obtain financing in amounts
sufficient to meet its operating requirements or at terms which are satisfactory
and which allow the Company to remain competitive, or (ii) that the Company will
be able to meet the financial covenants contained in the Line of Credit. The
Company's estimate of the period that existing resources will fund its working
capital requirements is a forward-looking statement that is subject to risks and
uncertainties. Actual results could differ from those indicated as a result of a
number of factors, including the use of such resources for possible acquisitions
and the announced stock repurchase plan.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to a variety of risks, including foreign currency
fluctuations and changes in interest rates on its borrowings. The Company does
not engage in trading market risk sensitive instruments for speculative or
hedging purposes. The Company does not believe that changes in interest rates or
foreign currency are material to its operations.
<PAGE> 13
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held May 5, 2000.
a) To amend the Company's Articles of Incorporation changing the
name of the Company from Romac International, Inc. to
kforce.com, Inc.
For 26,407,040: Against 4,072,362: Abstain 15,969.
b) To amend the Company's Stock Incentive Plan: (i) changing the
composition of the Stock Incentive Committee, (ii) modifying
the terms of Individual option agreements under the plan to
satisfy various Internal Revenue Code requirements, and (iii)
modifying the option price of grants under the plan to satisfy
various Internal Revenue Code requirements.
For 23,442,117: Against 5,236,759: Abstain 1,816,495.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. 1 - Financial Data Schedule for the six months ended June
30, 2000 (for SEC use only).
(b) Reports:
Current Report on Form 8-K was filed during the quarter ended
June 30, 2000 as follows :
Form 8-K dated May 12, 2000 (filed on May 16, 2000)
regarding the change in the registrant's name from
Romac International, Inc. to kforce.com, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
kforce.com, Inc.
(Registrant)
By: /s/ William L. Sanders
---------------------------------------
William L. Sanders, Vice President,
Chief Financial Officer
By: /s/ Jim R. Vonier
---------------------------------------
Jim R. Vonier, Chief Accounting Officer
Date: August 10, 2000
