EX-99.1 3 file002.txt PRESS RELEASE 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 4 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. 5 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 6 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 7 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 8 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 9