Hall, Kinion & Associates (NASDAQ:HAKI)
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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/