Hall Kinion Expresses Strong Disappointment in Kforce's
Announcement Today and Releases Its Unaudited Fourth Quarter and
2003 Year-End Results NOVATO, Calif., March 11
/PRNewswire-FirstCall/ -- Hall, Kinion & Associates, Inc. , The
Talent Source(R),expresses strong disappointment in Kforce Inc.'s
announcement today undermining the proposed merger. In its Form
10-K filed today with the Securities and Exchange Commission,
Kforce stated that its has notified Hall Kinion(R) that it believes
certain conditions exist or will exist in the future that
constitute a material adverse effect on Hall Kinion. It also stated
that Kforce had failed to confirm its intention to recommend the
merger to the Kforce shareholders, as requested by Hall Kinion. The
failure by Kforce to confirm its recommendation is a violation of
the merger agreement. Hall Kinion adamantly denies that any
conditions exist that would permit Kforce to terminate the merger
agreement. The merger agreement contains provisions requiring a
party to provide written notice of an alleged breach of the
agreement and also provides for an opportunity to cure any alleged
breach. Hall Kinion has not received from Kforce a formal notice of
alleged breach of the material adverse effect provisions of the
merger agreement. Given the Kforce statements, the outcome of the
merger is uncertain. We are continuing discussions with Kforce
representatives. "We have a valid and binding contract with Kforce.
We do not believe that we are in breach of the agreement, and we
expect Kforce to live up to its obligations to complete the merger
on the terms negotiated. We plan to take all steps necessary to
protect our rights under the merger agreement," said Brenda Rhodes,
CEO of Hall Kinion. For the fourth quarter of 2003, net revenues
were $33.6 million, compared with net revenues of $39.2 million in
the fourth quarter of 2002. Gross profit for the fourth quarter of
2003 was $9.2 million or 27.4% of net revenues, versus $12.0
million or 30.6% of net revenues, for the fourth quarter of 2002.
The fourth quarter of 2003 net loss was $15.1 million, or a loss of
$1.20 per share versus a net loss of $17.7 million, or a loss of
$1.39 per share, for the fourth quarter of 2002. The fourth quarter
and fiscal year ended December 28, 2003 results include an income
tax provision of $14.2 million, of which $14.0 million results from
a 100% valuation allowance recorded against the Company's deferred
tax assets. For the year ended December 28, 2003, net revenues were
$156.9 million, compared with net revenues of $120.4 million for
the year ended December 29, 2002. Gross profit for fiscal year 2003
was $45.3 million or 28.9% of net revenues, versus $39.7 million or
32.9% of net revenues, for fiscal year2002. Net loss for fiscal
year 2003 was $18.6 million, or a loss of $1.47 per share compared
with a net loss of $20.6 million, or a loss of $1.66 per share, for
fiscal year 2002. The foregoing results are unaudited and the
Company expects to file its audited financials in its Form 10-K on
or around March 29, 2004. 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 at http://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: http://www.titleboard.com/ , http://www.escrowboard.com/
, http://www.bankingboard.com/ and MediCenter.com . OnStaff's Web
site address is http://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. Condensed
Consolidated Statements of Operations (in thousands, except per
share amounts) Three Months Ended Twelve Months Ended Dec. 28, Dec.
29, Dec. 28, Dec. 29, 2003 2002 2003 2002 (Unaudited) (Unaudited)
Net revenues: Contract services $32,965 $38,378 $152,840 $115,644
Permanent placement 656 779 4,079 4,784 Total net revenues 33,621
39,157 156,919 120,428 Cost of contract services 24,404 27,191
111,616 80,744 Gross profit 9,217 11,966 45,303 39,684 Operating
expenses: Operating expenses 10,245 13,906 46,607 47,407 Impairment
of goodwill 15,478 15,478 Restructuring costs (income) (114) 870
2,792 (6) Total operating expenses 10,131 30,254 49,399 62,879 Loss
from operations (914) (18,288) (4,096) (23,195) Other expense, net
(28) (601) (295) (323) Loss before income taxes (942) (18,889)
(4,391) (23,518) Income taxes provision (benefit) 14,181 (1,236)
14,181 (2,870) Net loss $(15,123) $(17,653) $(18,572) $(20,648) Net
loss per share: Basic $(1.20) $(1.39) $(1.47) $(1.66) Diluted
$(1.20) $(1.39) $(1.47) $(1.66) Shares used in per share
calculations: Shares Outstanding - Basic 12,586 12,681 12,592
12,475 Shares Outstanding - Diluted 12,586 12,681 12,592 12,475
Hall, Kinion & Associates, Inc. Condensed Consolidated Balance
Sheets (in thousands) Dec. 28, Dec. 29, 2003 2002 (Unaudited)
Current Assets: Cash and cash equivalents $4,517 $8,571 Accounts
receivable, net 15,787 17,804 Prepaid expenses and other current
assets 2,653 1,554 Property held for sale 1,593 Deferred income tax
3,925 Total current assets 24,550 31,854 Property and equipment,
net 3,501 7,511 Goodwill 15,390 11,849 Intangible assets, net 9,982
10,859 Deferred income taxes and other assets 1,620 12,833 Total
assets $55,043 $74,906 Liabilities and stockholders' equity Current
Liabilities: Line of credit $8,528 $10,000 Accounts payable and
accrued expenses 16,844 14,836 Income taxes payable 150 102 Total
current liabilities 25,522 24,938 Long-term debt and other
non-current obligations 4,228 6,201 Total liabilities 29,750 31,139
Commitments and contingencies Stockholders' Equity: Common stock
84,716 85,036 Stockholder notes receivable (400) (800) Accumulated
other comprehensive loss (85) (103) Accumulated deficit (58,938)
(40,366) Total stockholders' equity 25,293 43,767 Total liabilities
and stockholders' equity $55,043 $74,906 DATASOURCE: Hall, Kinion
& Associates, Inc. CONTACT: investors, Martin Kropelnicki, Vice
President & CFO of Hall, Kinion & Associates, Inc.,
+1-415-895-2200 Web site: http://www.onstaff.com/ Web site:
http://www.hallkinion.com/
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