x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FLORIDA | 59-3264661 | |
State or other jurisdiction of incorporation or organization | IRS Employer Identification No. |
1001 EAST PALM AVENUE, TAMPA, FLORIDA | 33605 | |
Address of principal executive offices | Zip Code |
TITLE OF EACH CLASS | NAME OF EACH EXCHANGE ON WHICH REGISTERED | |
Common Stock, $0.01 par value | The NASDAQ Stock Market LLC (NASDAQ Global Select Market) |
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
Emerging growth filer | ¨ |
Document | Parts Into Which Incorporated | |
Portions of Proxy Statement for the Annual Meeting of Shareholders scheduled to be held April 23, 2019 (“Proxy Statement”) | Part III |
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• | the number of billing days in a particular quarter; |
• | the seasonality of our clients’ businesses; |
• | increased holidays and vacation days taken, which is usually highest in the fourth quarter of each calendar year; and |
• | increased costs as a result of certain annual U.S. state and federal employment tax resets that occur at the beginning of each calendar year, which negatively impacts our gross profit and overall profitability in the first fiscal quarter of each calendar year. |
Period | Total Number of Shares Purchased (1)(2) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||
October 1, 2018 to October 31, 2018 | — | $ | — | — | $ | 100,000,000 | |||||||
November 1, 2018 to November 30, 2018 | 26,107 | $ | 31.57 | 19,048 | $ | 99,399,824 | |||||||
December 1, 2018 to December 31, 2018 | 317,087 | $ | 29.81 | 216,708 | $ | 92,940,594 | |||||||
Total | 343,194 | $ | 29.95 | 235,756 | $ | 92,940,594 |
(1) | Includes 7,059 shares of stock received upon vesting of restricted stock to satisfy tax withholding requirements for the period November 1, 2018 to November 30, 2018. |
(2) | Includes 100,379 shares of stock received upon vesting of restricted stock to satisfy tax withholding requirements for the period December 1, 2018 to December 31, 2018. |
Years Ended December 31, | |||||||||||||||||||
2018 (1) | 2017(1) | 2016 (2) | 2015 | 2014 (3) | |||||||||||||||
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) | |||||||||||||||||||
Revenue | $ | 1,418,353 | $ | 1,357,940 | $ | 1,319,706 | $ | 1,319,238 | $ | 1,217,331 | |||||||||
Gross profit | 418,608 | 408,056 | 408,499 | 414,114 | 374,581 | ||||||||||||||
Selling, general and administrative expenses | 329,126 | 331,172 | 340,742 | 330,034 | 314,966 | ||||||||||||||
Depreciation and amortization | 7,831 | 8,255 | 8,701 | 9,831 | 9,894 | ||||||||||||||
Other expense, net | 4,498 | 4,535 | 3,101 | 2,577 | 1,764 | ||||||||||||||
Income from continuing operations, before income taxes | 77,153 | 64,094 | 55,955 | 71,672 | 47,957 | ||||||||||||||
Income tax expense | 19,173 | 30,809 | 23,182 | 28,848 | 18,559 | ||||||||||||||
Income from continuing operations | 57,980 | 33,285 | 32,773 | 42,824 | 29,398 | ||||||||||||||
Income from discontinued operations, net of tax | — | — | — | — | 61,517 | ||||||||||||||
Net income | $ | 57,980 | $ | 33,285 | $ | 32,773 | $ | 42,824 | $ | 90,915 | |||||||||
Earnings per share – basic, continuing operations | $ | 2.34 | $ | 1.32 | $ | 1.26 | $ | 1.53 | $ | 0.94 | |||||||||
Earnings per share – diluted, continuing operations | $ | 2.30 | $ | 1.30 | $ | 1.25 | $ | 1.52 | $ | 0.93 | |||||||||
Earnings per share – basic | $ | 2.34 | $ | 1.32 | $ | 1.26 | $ | 1.53 | $ | 2.89 | |||||||||
Earnings per share – diluted | $ | 2.30 | $ | 1.30 | $ | 1.25 | $ | 1.52 | $ | 2.87 | |||||||||
Weighted average shares outstanding – basic | 24,738 | 25,222 | 26,099 | 27,910 | 31,475 | ||||||||||||||
Weighted average shares outstanding – diluted | 25,251 | 25,586 | 26,274 | 28,190 | 31,691 | ||||||||||||||
Dividends declared per share | $ | 0.60 | $ | 0.48 | $ | 0.48 | $ | 0.45 | $ | 0.41 | |||||||||
As of December 31, | |||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
(IN THOUSANDS) | |||||||||||||||||||
Working capital | $ | 158,104 | $ | 161,726 | $ | 135,353 | $ | 122,270 | $ | 125,246 | |||||||||
Total assets | $ | 379,908 | $ | 384,304 | $ | 365,421 | $ | 351,822 | $ | 363,922 | |||||||||
Total outstanding borrowings on credit facility | $ | 71,800 | $ | 116,523 | $ | 111,547 | $ | 80,472 | $ | 93,333 | |||||||||
Total long-term liabilities | $ | 121,219 | $ | 166,308 | $ | 160,332 | $ | 124,449 | $ | 130,351 | |||||||||
Stockholders’ equity | $ | 168,331 | $ | 134,277 | $ | 121,736 | $ | 139,627 | $ | 139,388 |
(1) | The TCJA was enacted in December 2017, which reduced the U.S. federal corporate tax rate from 35.0% to 21.0% in 2018. As a result, we revalued our net deferred income tax assets and recorded $5.4 million of additional income tax expense during the year ended December 31, 2017. |
(2) | During 2016, Kforce incurred approximately $6.0 million in severance costs associated with realignment activities focused on further streamlining our organization, which were recorded in SG&A. |
(3) | During 2014, Kforce disposed of Kforce Healthcare, Inc. (“KHI”), a wholly-owned subsidiary of Kforce Inc. The results of operations for KHI have been presented as discontinued operations for the year ended December 31, 2014. |
• | Executive Summary – An executive summary of our results of operations for 2018. |
• | Results of Operations – An analysis of Kforce’s consolidated results of operations for the three years presented in the consolidated financial statements. To assist the reader in understanding our business as a whole, certain metrics are presented for each of our segments. |
• | Liquidity and Capital Resources – An analysis of our cash flows, credit facility, off-balance sheet arrangements, stock repurchases, contractual obligations and commitments. |
• | Critical Accounting Estimates – A discussion of the accounting estimates that are most critical to aid in fully understanding and evaluating our reported financial results and that require management’s most difficult, subjective or complex judgments. |
• | New Accounting Standards – A discussion of recently issued accounting standards and the potential impact on our consolidated financial statements. |
• | Revenue increased 4.4% to $1.42 billion in 2018 from $1.36 billion in 2017. Revenue increased 9.1% and 9.7% for Tech and GS, respectively, and decreased 9.3% for FA. |
• | Flex revenue increased 4.5% to $1.36 billion in 2018 from $1.30 billion in 2017. Flex revenue increased 9.4% and 6.5% for Tech and GS, respectively, and decreased 9.9% for FA. |
• | Direct Hire revenue decreased 4.2% to $45.7 million in 2018 from $47.7 million in 2017. |
• | Flex gross profit margin decreased 40 basis points to 26.8% in 2018 from 27.2% in 2017. Flex gross profit margin increased 10 basis points for FA and decreased 10 basis points and 430 basis points for Tech and GS, respectively. Our GS business is operating in a cost competitive environment and, as such, has experienced reduced profitability in certain of its more recently awarded contracts. |
• | SG&A expenses as a percentage of revenue for the year ended December 31, 2018 decreased to 23.2% from 24.4% in 2017. The 120 basis point decrease was primarily driven by increased leverage as a result of enhancements to our performance-based compensation plans; improved associate productivity; reduced costs as a result of previous realignment activities; and a continued focus on expense discipline. |
• | Net income for the year ended December 31, 2018 increased 74.2% to $58.0 million from $33.3 million in 2017 and diluted earnings per share for the year ended December 31, 2018 increased to $2.30 from $1.30 per share in 2017, primarily driven by the factors noted above as well as the reduction in our effective tax rate due to the enactment of the TCJA. |
• | During 2018, Kforce repurchased 553 thousand shares of common stock on the open market at a total cost of approximately $15.7 million. On October 26, 2018, the Board approved an increase in our stock repurchase authorization bringing the then available authorization to $100.0 million. |
• | In the second half of 2018, the Board approved a 50% increase to the quarterly dividend, bringing it to $0.18 per share, up from $0.12 per share in the first half of 2018. The Firm declared and paid dividends totaling $0.60 per share during the year ended December 31, 2018, resulting in a total cash payout of $14.9 million. |
• | The total amount outstanding under our Credit Facility decreased $44.7 million to $71.8 million as of December 31, 2018 as compared to $116.5 million as of December 31, 2017. |
• | Cash provided by operating activities was $87.7 million during the year ended December 31, 2018 compared to $29.3 million for 2017 primarily due to increasing levels of profitability and improved collections of our accounts receivable. |
• | Implementing new and upgrading existing technologies that we believe will allow us to more effectively and efficiently serve our clients, consultants and candidates and improve the scalability of our organization. We completed the deployment of a new time and expense application for our consultants and clients as well as a new expense application for our associates. In addition, we continue to make enhancements to our business and data intelligence capabilities as well as our customer relationship management system. We expect these initiatives to benefit us in 2019 and beyond. |
• | Improving our alignment of revenue-generating talent to the markets, products, industries and clients that present the greatest opportunity for profitable revenue growth. |
• | Executing a Kforce brand refresh to reinforce our core values with a consistent message and identity. |
December 31, | ||||||||
2018 | 2017 | 2016 | ||||||
Revenue by segment: | ||||||||
Tech | 69.8 | % | 66.8 | % | 66.9 | % | ||
FA | 22.1 | 25.5 | 25.6 | |||||
GS | 8.1 | 7.7 | 7.5 | |||||
Total Revenue | 100.0 | % | 100.0 | % | 100.0 | % | ||
Revenue by type: | ||||||||
Flex | 95.6 | % | 95.6 | % | 95.0 | % | ||
Direct Hire | 3.2 | 3.5 | 3.8 | |||||
Product | 1.2 | 0.9 | 1.2 | |||||
Total Revenue | 100.0 | % | 100.0 | % | 100.0 | % | ||
Gross profit | 29.5 | % | 30.0 | % | 31.0 | % | ||
Selling, general and administrative expenses | 23.2 | % | 24.4 | % | 25.8 | % | ||
Depreciation and amortization | 0.6 | % | 0.6 | % | 0.7 | % | ||
Income from operations | 5.8 | % | 5.1 | % | 4.5 | % | ||
Income before income taxes | 5.4 | % | 4.7 | % | 4.2 | % | ||
Net income | 4.1 | % | 2.5 | % | 2.5 | % |
2018 | Increase (Decrease) | 2017 | Increase (Decrease) | 2016 | |||||||||||||
Tech | |||||||||||||||||
Flex revenue | $ | 971,310 | 9.4 | % | $ | 887,675 | 2.8 | % | $ | 863,434 | |||||||
Direct Hire revenue | 18,779 | (5.3 | )% | 19,836 | (1.0 | )% | 20,043 | ||||||||||
Total Tech revenue | $ | 990,089 | 9.1 | % | $ | 907,511 | 2.7 | % | $ | 883,477 | |||||||
FA | |||||||||||||||||
Flex revenue | $ | 286,939 | (9.9 | )% | $ | 318,294 | 3.6 | % | $ | 307,245 | |||||||
Direct Hire revenue | 26,909 | (3.3 | )% | 27,841 | (8.3 | )% | 30,356 | ||||||||||
Total FA revenue | $ | 313,848 | (9.3 | )% | $ | 346,135 | 2.5 | % | $ | 337,601 | |||||||
GS | |||||||||||||||||
Flex revenue | $ | 98,214 | 6.5 | % | $ | 92,241 | 11.9 | % | $ | 82,427 | |||||||
Product revenue | 16,202 | 34.4 | % | 12,053 | (25.6 | )% | 16,201 | ||||||||||
Total GS revenue | $ | 114,416 | 9.7 | % | $ | 104,294 | 5.7 | % | $ | 98,628 | |||||||
Total Flex revenue | $ | 1,356,463 | 4.5 | % | $ | 1,298,210 | 3.6 | % | $ | 1,253,106 | |||||||
Total Direct Hire revenue | 45,688 | (4.2 | )% | 47,677 | (5.4 | )% | 50,399 | ||||||||||
Total Product revenue | 16,202 | 34.4 | % | 12,053 | (25.6 | )% | 16,201 | ||||||||||
Total Revenue | $ | 1,418,353 | 4.4 | % | $ | 1,357,940 | 2.9 | % | $ | 1,319,706 |
Year-Over-Year Revenue Growth Rates | |||||||||||||||
(Per Billing Day) | |||||||||||||||
Q4 2018 | Q3 2018 | Q2 2018 | Q1 2018 | Q4 2017 | |||||||||||
Billing days | 62 | 63 | 64 | 64 | 61 | ||||||||||
Tech Flex | 9.0 | % | 10.3 | % | 9.8 | % | 6.7 | % | 5.4 | % | |||||
FA Flex | (11.7 | )% | (11.8 | )% | (9.4 | )% | (7.9 | )% | 0.3 | % | |||||
GS Flex | (13.3 | )% | (0.6 | )% | 18.2 | % | 24.5 | % | 27.9 | % | |||||
Total Flex | 2.3 | % | 4.2 | % | 5.6 | % | 4.2 | % | 5.5 | % | |||||
Total Firm | 2.8 | % | 4.2 | % | 5.4 | % | 3.7 | % | 5.1 | % |
Year Ended December 31, | Year Ended December 31, | ||||||||||||||
2018 vs. 2017 | 2017 vs. 2016 | ||||||||||||||
Tech | FA | Tech | FA | ||||||||||||
Key Drivers - Increase (Decrease) | |||||||||||||||
Volume - hours billed | $ | 18,284 | $ | (44,912 | ) | $ | 9,710 | $ | 3,915 | ||||||
Bill rate | 62,036 | 13,298 | 14,563 | 7,053 | |||||||||||
Billable expenses | 3,315 | 259 | (32 | ) | 81 | ||||||||||
Total change in Flex revenue | $ | 83,635 | $ | (31,355 | ) | $ | 24,241 | $ | 11,049 |
2018 | Increase (Decrease) | 2017 | Increase (Decrease) | 2016 | ||||||||||
Tech | 13,145 | 2.1 | % | 12,878 | 1.1 | % | 12,735 | |||||||
FA | 8,241 | (14.1 | )% | 9,595 | 1.3 | % | 9,474 | |||||||
Total Flex hours billed | 21,386 | (4.8 | )% | 22,473 | 1.2 | % | 22,209 |
Year Ended December 31, | Year Ended December 31, | ||||||||||||||
2018 vs. 2017 | 2017 vs. 2016 | ||||||||||||||
Tech | FA | Tech | FA | ||||||||||||
Key Drivers - Increase (Decrease) | |||||||||||||||
Volume - number of placements | $ | (1,743 | ) | $ | (3,280 | ) | $ | (861 | ) | $ | (2,118 | ) | |||
Placement fee | 686 | 2,348 | 654 | (397 | ) | ||||||||||
Total change in Direct Hire revenue | $ | (1,057 | ) | $ | (932 | ) | $ | (207 | ) | $ | (2,515 | ) |
2018 | Increase (Decrease) | 2017 | Increase (Decrease) | 2016 | ||||||||||
Tech | 1,039 | (8.8 | )% | 1,139 | (4.4 | )% | 1,191 | |||||||
FA | 2,077 | (11.8 | )% | 2,355 | (7.0 | )% | 2,531 | |||||||
Total number of placements | 3,116 | (10.8 | )% | 3,494 | (6.1 | )% | 3,722 |
2018 | Increase (Decrease) | 2017 | Increase (Decrease) | 2016 | |||||||||||||
Tech | $ | 18,070 | 3.8 | % | $ | 17,410 | 3.4 | % | $ | 16,836 | |||||||
FA | $ | 12,957 | 9.6 | % | $ | 11,826 | (1.4 | )% | $ | 11,994 | |||||||
Total average placement fee | $ | 14,662 | 7.4 | % | $ | 13,646 | 0.8 | % | $ | 13,543 |
2018 | Increase (Decrease) | 2017 | Increase (Decrease) | 2016 | ||||||||||
Tech | 28.0 | % | (1.1 | )% | 28.3 | % | (2.4 | )% | 29.0 | % | ||||
FA | 34.8 | % | 1.8 | % | 34.2 | % | (4.2 | )% | 35.7 | % | ||||
GS | 28.1 | % | (9.6 | )% | 31.1 | % | (4.6 | )% | 32.6 | % | ||||
Total gross profit percentage | 29.5 | % | (1.7 | )% | 30.0 | % | (3.2 | )% | 31.0 | % |
• | The 30 basis point decrease for Tech was due to a lower mix of Direct Hire revenue and a slight decline in Flex gross profit percentage. |
• | The 60 basis point increase for FA was due to a higher mix of Direct Hire revenue and a slight increase in Flex gross profit percentage. |
• | The 300 basis point decrease for GS was due to a large decrease in Flex gross profit, offset by a higher mix of Product revenue to Flex revenue. |
2018 | Increase (Decrease) | 2017 | Increase (Decrease) | 2016 | ||||||||||
Tech | 26.6 | % | (0.4 | )% | 26.7 | % | (2.2 | )% | 27.3 | % | ||||
FA | 28.6 | % | 0.4 | % | 28.5 | % | (3.1 | )% | 29.4 | % | ||||
GS | 22.7 | % | (15.9 | )% | 27.0 | % | 2.7 | % | 26.3 | % | ||||
Total Flex gross profit percentage | 26.8 | % | (1.5 | )% | 27.2 | % | (1.8 | )% | 27.7 | % |
Year Ended December 31, | Year Ended December 31, | ||||||||||||||
2018 vs. 2017 | 2017 vs. 2016 | ||||||||||||||
Tech | FA | Tech | FA | ||||||||||||
Key Drivers - Increase (Decrease) | |||||||||||||||
Volume - hours billed | $ | 22,356 | $ | (8,929 | ) | $ | 6,620 | $ | 3,244 | ||||||
Bill rate | (1,029 | ) | 481 | (5,137 | ) | (2,801 | ) | ||||||||
Total change in Flex gross profit | $ | 21,327 | $ | (8,448 | ) | $ | 1,483 | $ | 443 |
2018 | % of Revenue | 2017 | % of Revenue | 2016 | % of Revenue | |||||||||||||||
Compensation, commissions, payroll taxes and benefits costs | $ | 274,767 | 19.4 | % | $ | 280,721 | 20.7 | % | $ | 286,261 | 21.7 | % | ||||||||
Other (1) | 54,359 | 3.8 | % | 50,451 | 3.7 | % | 54,481 | 4.1 | % | |||||||||||
Total SG&A | $ | 329,126 | 23.2 | % | $ | 331,172 | 24.4 | % | $ | 340,742 | 25.8 | % |
2018 | Increase (Decrease) | 2017 | Increase (Decrease) | 2016 | |||||||||||||
Fixed asset depreciation (includes capital leases) | $ | 6,303 | (9.2 | )% | $ | 6,939 | 4.2 | % | $ | 6,660 | |||||||
Capitalized software amortization | 1,183 | 21.8 | % | 971 | (32.9 | )% | 1,448 | ||||||||||
Intangible asset amortization | 345 | — | % | 345 | (41.8 | )% | 593 | ||||||||||
Total Depreciation and amortization | $ | 7,831 | (5.1 | )% | $ | 8,255 | (5.1 | )% | $ | 8,701 |
Years Ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Net income | $ | 57,980 | $ | 33,285 | $ | 32,773 | ||||||
Non-cash provisions and other | 22,643 | 29,134 | 21,093 | |||||||||
Changes in operating assets/liabilities | 7,100 | (33,080 | ) | (14,043 | ) | |||||||
Net cash provided by operating activities | 87,723 | 29,339 | 39,823 | |||||||||
Capital expenditures | (5,170 | ) | (5,846 | ) | (12,420 | ) | ||||||
Free cash flow | 82,553 | 23,493 | 27,403 | |||||||||
Proceeds from sale of Global's assets | 1,000 | 1,000 | — | |||||||||
Change in debt | (44,723 | ) | 4,976 | 31,075 | ||||||||
Repurchases of common stock | (22,187 | ) | (14,622 | ) | (46,013 | ) | ||||||
Cash dividends | (14,871 | ) | (12,144 | ) | (12,447 | ) | ||||||
Other | (2,039 | ) | (3,806 | ) | (33 | ) | ||||||
Change in cash and cash equivalents | $ | (267 | ) | $ | (1,103 | ) | $ | (15 | ) |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Net income | $ | 57,980 | $ | 33,285 | $ | 32,773 | |||||
Depreciation and amortization | 8,265 | 8,508 | 8,796 | ||||||||
Stock-based compensation expense | 8,797 | 7,600 | 6,705 | ||||||||
Interest expense, net | 4,455 | 5,039 | 3,050 | ||||||||
Income tax expense | 19,173 | 30,809 | 23,182 | ||||||||
Adjusted EBITDA | $ | 98,670 | $ | 85,241 | $ | 74,506 |
Years Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Cash provided by (used in): | |||||||||||
Operating activities | $ | 87,723 | $ | 29,339 | $ | 39,823 | |||||
Investing activities | (4,170 | ) | (4,846 | ) | (12,420 | ) | |||||
Financing activities | (83,820 | ) | (25,596 | ) | (27,418 | ) | |||||
Change in cash and cash equivalents | $ | (267 | ) | $ | (1,103 | ) | $ | (15 | ) |
2018 | 2017 | 2016 | |||||||||
Open market repurchases | $ | 16,069 | $ | 12,276 | $ | 44,109 | |||||
Repurchase of shares related to tax withholding requirements for vesting of restricted stock | 6,118 | 2,346 | 1,904 | ||||||||
Total cash flow impact of common stock repurchases | $ | 22,187 | $ | 14,622 | $ | 46,013 | |||||
Cash paid in current year for settlement of prior year repurchases | $ | 3,323 | $ | 935 | $ | 1,012 |
2018 (1) | 2017 | ||||||||||
Shares | $ | Shares | $ | ||||||||
Open market repurchases | 553 | $ | 15,727 | 526 | $ | 12,239 |
(1) | On October 26, 2018, our Board approved an increase in our stock repurchase authorization bringing the then available authorization to $100.0 million. |
Payments due by period | ||||||||||||||||||||
Total | Less than 1 year | 1-3 Years | 3-5 Years | More than 5 years | ||||||||||||||||
Credit facility (1) | $ | 80,699 | $ | 2,380 | $ | 5,187 | $ | 73,132 | $ | — | ||||||||||
Operating lease obligations | 21,988 | 6,994 | 9,908 | 3,887 | 1,199 | |||||||||||||||
Capital lease obligations | 944 | 764 | 177 | 3 | — | |||||||||||||||
Purchase obligations (2) | 16,293 | 10,619 | 5,393 | 281 | — | |||||||||||||||
Notes and interest payable (3) | 2,211 | 1,005 | 1,206 | — | — | |||||||||||||||
Deferred compensation plans liability (4) | 30,706 | 1,791 | 4,827 | 4,016 | 20,072 | |||||||||||||||
Supplemental Executive Retirement Plan (5) | 17,760 | — | 13,351 | — | 4,409 | |||||||||||||||
Liability for unrecognized tax positions (6) | — | — | — | — | — | |||||||||||||||
Total | $ | 170,601 | $ | 23,553 | $ | 40,049 | $ | 81,319 | $ | 25,680 |
(1) | Our credit facility matures May 25, 2022. Our weighted average interest rate as of December 31, 2018 was utilized to forecast the expected future interest rate payments. These payments are inherently uncertain due to fluctuations in interest rates and outstanding borrowings that will occur over the remaining term of the credit facility. |
(2) | Purchase obligations include agreements to purchase goods and services that are enforceable, legally binding and specify all significant terms. |
(3) | Our notes payable as of December 31, 2018 are classified in Other current liabilities if payable within the next year or in Long-term debt - other if payable after the next year in the accompanying Consolidated Balance Sheets. The interest rate on the notes range from 2.58% to 2.80% and expire between November 2020 and October 2021. |
(4) | Kforce maintains various non-qualified deferred compensation plans pursuant to which eligible management and highly-compensated key employees may elect to defer all or part of their compensation to later years. These amounts are included in the accompanying Consolidated Balance Sheets and classified as Accounts payable and other accrued liabilities and Other long-term liabilities, as appropriate, and are payable based upon the elections of the plan participants (e.g. retirement, termination of employment, change-in-control). Amounts payable upon the retirement or termination of employment may become payable during the next five years if covered employees schedule a distribution, retire or terminate during that time. |
(5) | There is no funding requirement associated with our Supplemental Executive Retirement Plan (“SERP”) and, as a result, no contributions have been made through the year ended December 31, 2018. Kforce does not currently anticipate funding our SERP during 2019. Kforce has included the total undiscounted projected benefit payments, as determined at December 31, 2018, in the table above. |
(6) | Kforce’s liability for unrecognized tax positions as of December 31, 2018 was $0.9 million. This balance has been excluded from the table above due to the significant uncertainty with respect to the timing and amount of settlement, if any. |
/s/ Deloitte & Touche LLP |
Tampa, Florida |
February 22, 2019 |
YEARS ENDED DECEMBER 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Revenue | $ | $ | $ | ||||||||
Direct costs | |||||||||||
Gross profit | |||||||||||
Selling, general and administrative expenses | |||||||||||
Depreciation and amortization | |||||||||||
Income from operations | |||||||||||
Other expense, net | |||||||||||
Income before income taxes | |||||||||||
Income tax expense | |||||||||||
Net income | |||||||||||
Other comprehensive income (loss): | |||||||||||
Defined benefit pension plans, net of tax | ( | ) | ( | ) | |||||||
Change in fair value of interest rate swap, net of tax | |||||||||||
Comprehensive income | $ | $ | $ | ||||||||
Earnings per share – basic | $ | $ | $ | ||||||||
Earnings per share – diluted | $ | $ | $ | ||||||||
Weighted average shares outstanding – basic | |||||||||||
Weighted average shares outstanding – diluted | |||||||||||
Dividends declared per share | $ | $ | $ |
DECEMBER 31, | |||||||
2018 | 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Trade receivables, net of allowances of $2,800 and $2,333, respectively | |||||||
Income tax refund receivable | |||||||
Prepaid expenses and other current assets | |||||||
Total current assets | |||||||
Fixed assets, net | |||||||
Other assets, net | |||||||
Deferred tax assets, net | |||||||
Intangible assets, net | |||||||
Goodwill | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and other accrued liabilities | $ | $ | |||||
Accrued payroll costs | |||||||
Other current liabilities | |||||||
Income taxes payable | |||||||
Total current liabilities | |||||||
Long-term debt – credit facility | |||||||
Long-term debt – other | |||||||
Other long-term liabilities | |||||||
Total liabilities | |||||||
Commitments and contingencies (Note 14) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.01 par; 15,000 shares authorized, none issued and outstanding | |||||||
Common stock, $0.01 par; 250,000 shares authorized, 71,856 and 71,494 issued and outstanding, respectively | |||||||
Additional paid-in capital | |||||||
Accumulated other comprehensive income | |||||||
Retained earnings | |||||||
Treasury stock, at cost; 45,822 and 45,167 shares, respectively | ( | ) | ( | ) | |||
Total stockholders’ equity | |||||||
Total liabilities and stockholders’ equity | $ | $ |
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||
Balance, December 31, 2015 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||
Issuance for stock-based compensation and dividend equivalents, net of forfeitures | — | ( | ) | — | — | |||||||||||||||||||||||||
Exercise of stock options | — | — | — | ( | ) | |||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||
Income tax benefit from stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||
Employee stock purchase plan | — | — | — | — | ( | ) | ||||||||||||||||||||||||
Dividends ($0.48 per share) | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||
Defined benefit pension plans, net of tax benefit of $89 | — | — | — | ( | ) | — | — | — | ( | ) | ||||||||||||||||||||
Repurchases of common stock | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||
Balance, December 31, 2016 | ( | ) | ||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||
Cumulative effect of new accounting standard (Note 13) | — | — | — | ( | ) | — | — | |||||||||||||||||||||||
Issuance for stock-based compensation and dividend equivalents, net of forfeitures | — | ( | ) | — | — | |||||||||||||||||||||||||
Exercise of stock options | — | — | — | — | — | |||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||
Employee stock purchase plan | — | — | — | — | ( | ) | ||||||||||||||||||||||||
Dividends ($0.48 per share) | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||
Defined benefit pension plans, net of tax benefit of $207 | — | — | — | ( | ) | — | — | — | ( | ) | ||||||||||||||||||||
Change in fair value of interest rate swap, net of tax of $189 | — | — | — | — | — | — | ||||||||||||||||||||||||
Repurchases of common stock | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||
Balance, December 31, 2017 | ( | ) |
Balance, December 31, 2017 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||
Cumulative effect of new accounting standard (Note 1), net of tax of $63 | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||
Issuance for stock-based compensation and dividend equivalents, net of forfeitures | — | ( | ) | — | — | |||||||||||||||||||||||||
Exercise of stock options | — | — | — | ( | ) | |||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||
Employee stock purchase plan | — | — | — | — | ( | ) | ||||||||||||||||||||||||
Dividends ($0.60 per share) | — | — | — | — | ( | ) | — | — | ( | ) | ||||||||||||||||||||
Defined benefit pension plan, net of tax of $314 | ||||||||||||||||||||||||||||||
Change in fair value of interest rate swap, net of tax of $107 | — | — | — | — | — | — | ||||||||||||||||||||||||
Repurchases of common stock | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||
Balance, December 31, 2018 | $ | $ | $ | $ | $ | ( | ) | $ |
YEARS ENDED DECEMBER 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | $ | ||||||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||
Deferred income tax provision, net | |||||||||||
Provision for bad debt | |||||||||||
Depreciation and amortization | |||||||||||
Stock-based compensation expense | |||||||||||
Defined benefit pension plans expense | |||||||||||
Loss on deferred compensation plan investments, net | |||||||||||
Gain on sale of Global's assets | ( | ) | |||||||||
Other | |||||||||||
(Increase) decrease in operating assets | |||||||||||
Trade receivables, net | ( | ) | ( | ) | ( | ) | |||||
Income tax refund receivable | ( | ) | |||||||||
Prepaid expenses and other current assets | ( | ) | ( | ) | ( | ) | |||||
Other assets, net | ( | ) | ( | ) | |||||||
Increase (decrease) in operating liabilities | |||||||||||
Accounts payable and other accrued liabilities | ( | ) | ( | ) | |||||||
Accrued payroll costs | ( | ) | |||||||||
Income taxes payable | ( | ) | ( | ) | |||||||
Other long-term liabilities | ( | ) | ( | ) | |||||||
Cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | ( | ) | ( | ) | ( | ) | |||||
Proceeds from sale of Global's assets | |||||||||||
Cash used in investing activities | ( | ) | ( | ) | ( | ) | |||||
Cash flows from financing activities: | |||||||||||
Proceeds from credit facility | |||||||||||
Payments on credit facility | ( | ) | ( | ) | ( | ) | |||||
Payments on other financing arrangements | ( | ) | ( | ) | ( | ) | |||||
Repurchases of common stock | ( | ) | ( | ) | ( | ) | |||||
Cash dividends | ( | ) | ( | ) | ( | ) | |||||
Payments of loan financing fees | ( | ) | ( | ) | |||||||
Proceeds from exercise of stock options, net of shares tendered in payment of exercise | |||||||||||
Proceeds from other financing arrangements | |||||||||||
Cash used in financing activities | ( | ) | ( | ) | ( | ) | |||||
Change in cash and cash equivalents | ( | ) | ( | ) | ( | ) | |||||
Cash and cash equivalents at beginning of year | |||||||||||
Cash and cash equivalents at end of year | $ | $ | $ |
• | Level 1 inputs are unadjusted, quoted market prices in active markets for identical assets or liabilities. |
• | Level 2 inputs are observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets. |
• | Level 3 inputs include unobservable inputs that are supported by little, infrequent or no market activity and reflect management’s own assumptions about inputs used in pricing the asset or liability. |
Tech | FA | GS | Total | ||||||||||||
2018 | |||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||
Gross profit | $ | $ | $ | $ | |||||||||||
Operating and other expenses | |||||||||||||||
Income before income taxes | $ | ||||||||||||||
2017 | |||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||
Gross profit | $ | $ | $ | $ | |||||||||||
Operating and other expenses | |||||||||||||||
Income before income taxes | $ | ||||||||||||||
2016 | |||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||
Gross profit | $ | $ | $ | $ | |||||||||||
Operating and other expenses | |||||||||||||||
Income before income taxes | $ |
Tech | FA | GS | Total | ||||||||||||
2018 | |||||||||||||||
Revenue by type: | |||||||||||||||
Flex revenue | $ | $ | $ | $ | |||||||||||
Direct Hire revenue | |||||||||||||||
Product revenue | |||||||||||||||
Total Revenue | $ | $ | $ | $ | |||||||||||
2017 | |||||||||||||||
Revenue by type: | |||||||||||||||
Flex revenue | $ | $ | $ | $ | |||||||||||
Direct Hire revenue | |||||||||||||||
Product revenue | |||||||||||||||
Total Revenue | $ | $ | $ | $ | |||||||||||
2016 | |||||||||||||||
Revenue by type: | |||||||||||||||
Flex revenue | $ | $ | $ | $ | |||||||||||
Direct Hire revenue | |||||||||||||||
Product revenue | |||||||||||||||
Total Revenue | $ | $ | $ | $ |
DECEMBER 31, | |||||||||
USEFUL LIFE | 2018 | 2017 | |||||||
Land | $ | $ | |||||||
Building and improvements | 3-40 years | ||||||||
Furniture and equipment | 1-20 years | ||||||||
Computer equipment | 1-5 years | ||||||||
Leasehold improvements | 3-7 years | ||||||||
Less accumulated depreciation | ( | ) | ( | ) | |||||
Total Fixed assets, net | $ | $ |
YEARS ENDED DECEMBER 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Current tax expense: | |||||||||||
Federal | $ | $ | $ | ||||||||
State | |||||||||||
Deferred tax expense (1) | |||||||||||
Total Income tax expense | $ | $ | $ |
YEARS ENDED DECEMBER 31, | ||||||||
2018 | 2017 | 2016 | ||||||
Federal income tax rate | % | % | % | |||||
State income taxes, net of Federal tax effect | ||||||||
Non-deductible compensation and meals and entertainment | ||||||||
Tax credits | ( | ) | ( | ) | ( | ) | ||
Valuation allowance on foreign tax credit | ||||||||
Enactment of TCJA | ||||||||
Other | ( | ) | ( | ) | ||||
Effective tax rate | % | % | % |
DECEMBER 31, | |||||||
2018 | 2017 | ||||||
Deferred tax assets: | |||||||
Accounts receivable reserves | $ | $ | |||||
Accrued liabilities | |||||||
Deferred compensation obligation | |||||||
Stock-based compensation | |||||||
Pension and post-retirement benefit plans | |||||||
Goodwill and intangible assets | |||||||
Foreign tax credit | |||||||
Other | |||||||
Deferred tax assets | |||||||
Deferred tax liabilities: | |||||||
Prepaid expenses | ( | ) | ( | ) | |||
Fixed assets | ( | ) | ( | ) | |||
Goodwill and intangible assets | ( | ) | |||||
Other | ( | ) | ( | ) | |||
Deferred tax liabilities | ( | ) | ( | ) | |||
Valuation allowance | ( | ) | ( | ) | |||
Deferred tax assets, net | $ | $ |
DECEMBER 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Unrecognized tax benefits, beginning | $ | $ | $ | ||||||||
Additions for prior year tax positions | |||||||||||
Additions for current year tax positions | |||||||||||
Lapse of statute of limitations | ( | ) | ( | ) | ( | ) | |||||
Reductions for tax positions of prior years | ( | ) | ( | ) | |||||||
Unrecognized tax benefits, ending | $ | $ | $ |
Technology | Finance and Accounting | Government Solutions | Total | ||||||||||||
Goodwill, gross amount | $ | $ | $ | $ | |||||||||||
Accumulated impairment losses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Goodwill, carrying value | $ | $ | $ | $ |
DECEMBER 31, | |||||||
2018 | 2017 | ||||||
Accounts payable | $ | $ | |||||
Accrued liabilities | |||||||
Total Accounts payable and other accrued liabilities | $ | $ |
DECEMBER 31, | |||||||
2018 | 2017 | ||||||
Payroll and benefits | $ | $ | |||||
Payroll taxes | |||||||
Health insurance liabilities | |||||||
Workers’ compensation liabilities | |||||||
Total Accrued payroll costs | $ | $ |
DECEMBER 31, | |||||
2018 | 2017 | ||||
Discount rate | % | % | |||
Rate of future compensation increase | % | % |
DECEMBER 31, | ||||||||
2018 | 2017 | 2016 | ||||||
Discount rate | % | % | % | |||||
Rate of future compensation increase | % | % | % |
DECEMBER 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Service cost | $ | $ | $ | ||||||||
Interest cost | |||||||||||
Net periodic benefit cost | $ | $ | $ |
DECEMBER 31, | |||||||
2018 | 2017 | ||||||
Projected benefit obligation, beginning | $ | $ | |||||
Service cost | |||||||
Interest cost | |||||||
Actuarial experience and changes in actuarial assumptions | ( | ) | |||||
Projected benefit obligation, ending | $ | $ |
PROJECTED ANNUAL BENEFIT PAYMENTS | |||
2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
2024-2027 | |||
Thereafter |
Assets/(Liabilities) Measured at Fair Value: | Asset/(Liability) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||
At December 31, 2018 | |||||||||||||||
Recurring basis: | |||||||||||||||
Interest rate swap derivative instrument | $ | $ | $ | $ | |||||||||||
Contingent consideration liability | $ | ( | ) | $ | $ | $ | ( | ) | |||||||
At December 31, 2017 | |||||||||||||||
Recurring basis: | |||||||||||||||
Interest rate swap derivative instrument | $ | $ | $ | $ | |||||||||||
Contingent consideration liability | $ | ( | ) | $ | $ | $ | ( | ) |
Number of Restricted Stock | Weighted Average Grant Date Fair Value | Total Intrinsic Value of Restricted Stock Vested | ||||||||
Outstanding at December 31, 2015 | $ | |||||||||
Granted (1) | $ | |||||||||
Forfeited/Canceled | ( | ) | $ | |||||||
Vested | ( | ) | $ | $ | ||||||
Outstanding at December 31, 2016 | $ | |||||||||
Granted | $ | |||||||||
Forfeited/Canceled | ( | ) | $ | |||||||
Vested (2) | ( | ) | $ | $ | ||||||
Outstanding at December 31, 2017 | $ | |||||||||
Granted | $ | |||||||||
Forfeited/Canceled | ( | ) | $ | |||||||
Vested | ( | ) | $ | $ | ||||||
Outstanding at December 31, 2018 | $ |
(1) | The increase in shares granted during the year ended December 31, 2016 was due to a change in the grant date practice for our annual LTI awards. Kforce has historically granted these annual awards on the first business day of the year following the end of the performance period; however, for the performance period ending December 31, 2016 and thereafter, the grant date was shifted to the last day of the performance period. This administrative change resulted in |
(2) | The increase in shares vested during the year ended December 31, 2017 was due to a shift in the vesting date of our outstanding annual LTI awards from January 2, 2018 and January 4, 2018 to December 31, 2017 as a tax planning strategy. |
2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | |||||||||||||||||||||
Capital leases | |||||||||||||||||||||||||||
Present value of payments | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
Interest | |||||||||||||||||||||||||||
Total Capital lease payments | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
Operating lease payments | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
Total Lease payments | $ | $ | $ | $ | $ | $ | $ |
Three Months Ended | |||||||||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||||||
2018 | |||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||
Gross profit | |||||||||||||||
Net income | |||||||||||||||
Earnings per share-basic | $ | $ | $ | $ | |||||||||||
Earnings per share-diluted | $ | $ | $ | $ | |||||||||||
2017 | |||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||
Gross profit | |||||||||||||||
Net income | |||||||||||||||
Earnings per share-basic | $ | $ | $ | $ | |||||||||||
Earnings per share-diluted | $ | $ | $ | $ |
2018 | 2017 | 2016 | |||||||||
Cash paid during the year for: | |||||||||||
Income taxes | $ | $ | $ | ||||||||
Interest, net | $ | $ | $ | ||||||||
Non-Cash Financing and Investing Transactions: | |||||||||||
Unsettled repurchases of common stock | $ | $ | $ | ||||||||
Employee stock purchase plan | $ | $ | $ | ||||||||
Equipment acquired under capital leases | $ | $ | $ | ||||||||
Receivable for sale of Global's assets | $ | $ | $ | ||||||||
Shares tendered in payment of exercise price of stock options | $ | $ | $ |
(a) | The following documents are filed as part of this Report: |
(b) | Exhibits. The exhibits listed on the Exhibit Index are incorporated by reference into this Item 15(b) and are a part of this report. |
Consolidated Financial Statements: | |
Consolidated Financial Statement Schedule: | |
COLUMN A | COLUMN B | COLUMN C | COLUMN D | COLUMN E | ||||||||||||||
DESCRIPTION | BALANCE AT BEGINNING OF PERIOD | CHARGED TO COSTS AND EXPENSES | CHARGED TO OTHER ACCOUNTS | DEDUCTIONS | BALANCE AT END OF PERIOD | |||||||||||||
Accounts receivable reserves (1) | 2016 | $ | ( | ) | $ | |||||||||||||
2017 | $ | ( | ) | ( | ) | $ | ||||||||||||
2018 | $ | ( | ) | $ | ||||||||||||||
Deferred tax assets valuation allowance | 2016 | $ | $ | |||||||||||||||
2017 | $ | $ | ||||||||||||||||
2018 | $ | $ |
(1) |
Exhibit Number | Description | |
3.1 | Amended and Restated Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 33-91738) filed with the SEC on April 28, 1995. | |
Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-4/A (File No. 333-111566) filed with the SEC on February 9, 2004, as amended. | ||
Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-4/A (File No. 333-111566) filed with the SEC on February 9, 2004, as amended. | ||
Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Registration Statement on Form S-4/A (File No. 333-111566) filed with the SEC on February 9, 2004, as amended. | ||
Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on May 17, 2000. | ||
Articles of Amendment to Articles of Incorporation, incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-26058) filed with the SEC on March 29, 2002. | ||
Amended & Restated Bylaws, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on April 29, 2013. | ||
Form of Stock Certificate, incorporated by reference to the Registrant’s Registration Statement on Form S-3 (File No. 333-158086) filed with the SEC on March 18, 2009. | ||
Credit Agreement, dated May 25, 2017, between Kforce Inc. and its subsidiaries and Wells Fargo Bank, N.A. and the other lenders thereto, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on May 25, 2017. | ||
Employment Agreement, dated as of December 31, 2006, between the Registrant and David L. Dunkel, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on January 8, 2007. | ||
Amendment to Employment Agreement, dated as of December 24, 2008, between Kforce Inc. and David L. Dunkel, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on December 29, 2008. | ||
Employment Agreement, dated as of December 31, 2006, between the Registrant and Joseph J. Liberatore, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on January 8, 2007. | ||
Amendment to Employment Agreement, dated as of December 24, 2008, between Kforce Inc. and Joseph J. Liberatore, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on December 29, 2008. | ||
Employment Agreement, dated as of July 1, 2003, between the Registrant and Howard Sutter, incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-26058) filed with the SEC on March 11, 2009. | ||
Amendment to Employment Agreement, dated as of December 30, 2008, between Kforce Inc. and Howard Sutter, incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-26058) filed with the SEC on March 11, 2009. | ||
Kforce Inc. 2013 Stock Incentive Plan, incorporated by reference to the Registrant’s Registration Statement on Form S-8 (File No. 333-188631) filed with the SEC on May 15, 2013. | ||
Kforce Inc. 2016 Stock Incentive Plan, incorporated by reference to the Registrant’s Registration Statement on Form S-8 (File No. 333-211008) filed with the SEC on April 29, 2016. | ||
Exhibit Number | Description | |
Kforce Inc. 2017 Stock Incentive Plan, incorporated by reference to the Registrant’s Registration Statement on Form S-8 (File No. 000-26058) filed with the SEC on April 28, 2017. | ||
Form of Restricted Stock Award Agreement under the 2016 Stock Incentive Plan, incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-26058) filed with the SEC on February 23, 2018. | ||
Amended and Restated Employment Agreement, dated as of January 1, 2013, between Kforce Inc. and David M. Kelly, incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-26058) filed with the SEC on January 3, 2013. | ||
Form of Restricted Stock Award Agreement under the 2013 Stock Incentive Plan, incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-26058) filed with the SEC on October 30, 2013. | ||
Amended and Restated Kforce Inc. Directors’ Restricted Stock Unit Deferral Plan, dated November 15, 2017, incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-26058) filed with the SEC on February 23, 2018. | ||
Amended and Restated Employment Agreement, dated as of January 1, 2013, between Kforce Inc. and Kye L. Mitchell, incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-26058) filed with the SEC on November 2, 2016. | ||
Employment Agreement, dated February 8, 2016, between Kforce Inc. and Robert W. Edmund, incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-26058) filed with the SEC on February 23, 2018. | ||
Form of Restricted Stock Award Agreement under the 2017 Stock Incentive Plan, incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-26058) filed with the SEC on February 23, 2018. | ||
Amended and Restated Employment Agreement, dated as of January 1, 2013, between Kforce Inc. and Andrew G. Thomas, filed electronically herewith. | ||
List of Subsidiaries. | ||
Consent of Deloitte & Touche LLP. | ||
Certification by the Chief Executive Officer of Kforce Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
Certification by the Chief Financial Officer of Kforce Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
Certification by the Chief Executive Officer of Kforce Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
Certification by the Chief Financial Officer of Kforce Inc. pursuant to 18 U.S.C. Section 2350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
101.1 | The Consolidated Financial Statements and Schedule listed in Part IV, Item 15 of this Form 10-K are formatted in XBRL. | |
* | Management contract or compensatory plan or arrangement. |
KFORCE INC. | ||||||
Date: February 22, 2019 | By: | /s/ DAVID L. DUNKEL | ||||
David L. Dunkel | ||||||
Chairman of the Board, Chief Executive Officer and Director |
Date: February 22, 2019 | By: | /s/ DAVID L. DUNKEL | ||||
David L. Dunkel | ||||||
Chairman of the Board, Chief Executive Officer and Director | ||||||
(Principal Executive Officer) | ||||||
Date: February 22, 2019 | By: | /s/ DAVID M. KELLY | ||||
David M. Kelly | ||||||
Senior Vice President and Chief Financial Officer | ||||||
(Principal Financial Officer) | ||||||
Date: February 22, 2019 | By: | /s/ JEFFREY B. HACKMAN | ||||
Jeffrey B. Hackman | ||||||
Senior Vice President, Finance and Accounting | ||||||
(Principal Accounting Officer) | ||||||
Date: February 22, 2019 | By: | /s/ JOHN N. ALLRED | ||||
John N. Allred | ||||||
Director | ||||||
Date: February 22, 2019 | By: | /s/ RICHARD M. COCCHIARO | ||||
Richard M. Cocchiaro | ||||||
Director | ||||||
Date: February 22, 2019 | By: | /s/ ANN E. DUNWOODY | ||||
Ann E. Dunwoody | ||||||
Director | ||||||
Date: February 22, 2019 | By: | /s/ MARK F. FURLONG | ||||
Mark F. Furlong | ||||||
Director |
Date: February 22, 2019 | By: | /s/ RANDALL A. MEHL | ||||
Randall A. Mehl | ||||||
Director | ||||||
Date: February 22, 2019 | By: | /s/ ELAINE D. ROSEN | ||||
Elaine D. Rosen | ||||||
Director | ||||||
Date: February 22, 2019 | By: | /s/ N. JOHN SIMMONS | ||||
N. John Simmons | ||||||
Director | ||||||
Date: February 22, 2019 | By: | /s/ RALPH E. STRUZZIERO | ||||
Ralph E. Struzziero | ||||||
Director | ||||||
Date: February 22, 2019 | By: | /s/ HOWARD W. SUTTER | ||||
Howard W. Sutter | ||||||
Vice Chairman and Director | ||||||
Date: February 22, 2019 | By: | /s/ A. GORDON TUNSTALL | ||||
A. Gordon Tunstall | ||||||
Director |
KFORCE INC. | ||||
By: | /s/ David M. Kelly | |||
Dave M. Kelly | ||||
Chief Financial Officer | ||||
/s/ Andrew G. Thomas | ||||
Andrew G. Thomas | ||||
KFORCE INC. | |
By: | /s/ David M. Kelly |
Dave M. Kelly | |
Chief Financial Officer | |
/s/ Andrew G. Thomas | |
Andrew G. Thomas | |
Name of Subsidiary | Jurisdiction of Incorporation or Formation | |
KFAH, LLC | Florida | |
KFAH II, LLC | Florida | |
Kforce.com, Inc. | Florida | |
Romac International, Inc. | Florida | |
Kforce Flexible Solutions, LLC | Florida | |
Kforce Staffing Solutions of California, LLC | Florida | |
Kforce Global Solutions, Inc. | Pennsylvania | |
Kforce Government Solutions, Inc. | Pennsylvania | |
Kforce Government Holdings, Inc. | Florida | |
Kforce Services Corporation | Florida | |
TraumaFX Solutions, Inc. | Florida | |
KGS Training Technologies, Inc. | Florida |
/s/ Deloitte & Touche LLP |
Tampa, Florida |
February 22, 2019 |
/s/ DAVID L. DUNKEL | |
David L. Dunkel, | |
Chief Executive Officer | |
(Principal Executive Officer) |
/s/ DAVID M. KELLY | |
David M. Kelly, | |
Senior Vice President, Chief Financial Officer | |
(Principal Financial Officer) |
/s/ DAVID L. DUNKEL | |
David L. Dunkel, | |
Chief Executive Officer | |
(Principal Executive Officer) |
/s/ DAVID M. KELLY | |
David M. Kelly, | |
Senior Vice President, Chief Financial Officer | |
(Principal Financial Officer) |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Feb. 20, 2019 |
Jun. 30, 2018 |
|
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | KFORCE INC | ||
Entity Central Index Key | 0000930420 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 25,848,178 | ||
Entity Public Float | $ 786,439,764 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Trade receivables, allowances | $ 2,800 | $ 2,333 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 15,000,000 | 15,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, shares issued (in shares) | 71,856,000 | 71,494,000 |
Treasury stock, shares (in shares) | 45,822,000 | 45,167,000 |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Dividends declared per share (in dollars per share) | $ 0.60 | $ 0.48 | $ 0.48 |
Accounting Standards Update 2014-09 | |||
Tax effect of new accounting standard | $ 63 | ||
Accumulated Other Comprehensive Income (Loss) | |||
Defined benefit pension plans, tax expense (benefit) | 314 | $ (207) | $ (89) |
Interest rate swap, tax | $ 107 | $ 189 |
Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 | |||||||||||
Accounting Policies [Abstract] | |||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements have been prepared in conformity with GAAP and the rules of the SEC. Principles of Consolidation The consolidated financial statements include the accounts of Kforce Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. References in this document to “Kforce,” “the Company,” “we,” “the Firm,” “management,” “our” or “us” refer to Kforce Inc. and its subsidiaries, except where the context indicates otherwise. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most important of these estimates and assumptions relate to the following: allowance for doubtful accounts; income taxes; self-insured liabilities for workers’ compensation and health insurance; obligations for pension plans and goodwill and any related impairment. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates. Revenue Recognition All of our revenue and trade receivables are generated from contracts with customers and substantially all of our revenues are derived from U.S. domestic operations. The following section describes the accounting policies that we believe have significant judgment, or changes in judgment, as a result of adopting Topic 606. Revenue is recognized when control of the promised goods or services is transferred to our customers at an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services. Revenue is recorded net of sales or other transaction taxes collected from clients and remitted to taxing authorities. For substantially all of our revenue transactions, we have determined that gross reporting of revenues as a principal versus net as an agent is the appropriate accounting treatment because Kforce: (i) is primarily responsible for fulfilling the promise to provide the specified good or service to the customer, (ii) has discretion in selecting and assigning the temporary workers to particular jobs and establishing the bill rate, and (iii) bears the risk and rewards of the transaction, including credit risk if the customer fails to pay for services performed. Flex Revenue Flex revenue is recognized over time as temporary staffing services are provided by our consultants at the contractually established bill rates, net of applicable variable consideration. Reimbursements of travel and out-of-pocket expenses ("billable expenses") are also recorded within Flex revenue when incurred and the equivalent amount of expense is recorded in Direct costs in the Consolidated Statements of Operations and Comprehensive Income. Certain temporary staffing services are provided under time-and-material and fixed-price arrangements. For time-and-materials contracts, we recognize revenue in the amount of consideration to which we have the right to invoice when it corresponds directly to the services transferred to the customer satisfied over time. For fixed-price contracts, which are most frequently utilized in our GS segment, revenue is recognized over time using the input method based on costs incurred as a proportion of estimated total costs. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Management uses significant judgments when estimating the total labor hours expected to complete the contract performance obligation. Direct Hire Revenue Direct Hire revenue is recognized at the agreed upon rate at the point in time when the performance obligation is considered complete. Our policy requires the following criteria to be met in order for the performance obligation to be considered complete: (i) the candidate accepted the position; (ii) the candidate resigned from their current employer; and (iii) the agreed upon start date falls within the following month. Since the client has accepted the candidate and can direct the use of and obtains the significant risk and rewards of the placement, we consider this point as the transfer of control to our client. Product Revenue Revenue for our product business, which accounts for approximately 1% of total revenue for each of the years ended December 31, 2018, 2017 and 2016, is recognized after the transfer of control to the customer, which typically occurs upon delivery. Variable Consideration Transaction prices for Flex revenue include variable consideration, such as customer rebates and discounts. Management evaluates the facts and circumstances of each contract to estimate the variable consideration using the most likely amount method which utilizes management’s expectation of the volume of services to be provided over the applicable period. Direct Hire revenue is recorded net of a fallout reserve. Direct Hire fallouts occur when a candidate does not remain employed with the client through the respective contingency period (typically 90 days or less). Management uses the expected value method to estimate the fallout reserve based on a combination of past experience and current trends. Variable consideration reduces revenue, but may be constrained to the extent that it is probable a significant reversal will not occur. These balances are recorded in Accounts payable and other accrued liabilities in the Consolidated Balance Sheets. Under Topic 605, the Direct Hire fallout reserve was recorded as a Trade receivables allowance and under Topic 606, it is recorded within Accounts payable and other accrued liabilities in the Consolidated Balance Sheets. As of December 31, 2018 and 2017, the Direct Hire fallout reserve was $0.6 million and $0.5 million, respectively. Payment Terms Our payment terms and conditions vary by arrangement, although terms are typically less than 90 days. Generally, the timing between the satisfaction of the performance obligation and the payment is not significant and we do not currently have any significant financing components. Unsatisfied Performance Obligations We do not disclose the value of unsatisfied performance obligations for contracts if either the original expected length is one year or less or if revenue is recognized at the amount to which we have the right to invoice for services performed. Contract Balances We record accounts receivable when our right to consideration becomes unconditional. Other than our trade receivable balance, we do not have any material contract assets as of January 1, 2018 and December 31, 2018. We record a contract liability when we receive consideration from a customer prior to transferring goods or services to the customer or if we have an unconditional right and services have been performed. We recognize the contract liability as revenue after we have transferred control of the goods or services to the customer. Contract liabilities are recorded within Accounts payable and other accrued liabilities if expected to be recognized in less than one year and Other long-term liabilities, if over one year, in the Consolidated Balance Sheets. We do not have any material contract liabilities as of January 1, 2018 and December 31, 2018. Cost of Services Direct costs are composed of all related costs of employment for consultants, including compensation, payroll taxes, certain fringe benefits and subcontractor costs. Direct costs exclude depreciation and amortization expense (except for the product business), which is presented on a separate line in the accompanying Consolidated Statements of Operations and Comprehensive Income. Associate and field management compensation, payroll taxes and fringe benefits are included in selling, general and administrative expenses (“SG&A”), along with other customary costs such as administrative and corporate costs. Commissions Our associates make placements and earn commissions as a percentage of gross profit for Flex or Direct Hire revenues pursuant to a commission plan. The amount of associate commissions paid increases as volume increases. Commissions are accrued at an amount equal to the percent of total expected commissions payable to total revenue or gross profit for the commission-plan period, as applicable. We generally expense sales commissions and any other incremental costs of obtaining a contract as incurred because the amortization period is typically less than one year. Stock-Based Compensation Stock-based compensation is measured using the grant-date fair value of the award of equity instruments. The expense is recognized over the requisite service period. Effective January 1, 2017, the Firm changed its accounting policy regarding forfeitures and elected to recognize as incurred. Income Taxes Income taxes are recorded using the asset and liability approach for deferred tax assets and liabilities and the expected future tax consequences of differences between carrying amounts and the tax basis of assets and liabilities. A valuation allowance is recorded unless it is more likely than not that the deferred tax asset can be utilized to offset future taxes. Effective January 1, 2017, excess tax benefits or deficiencies of deductions attributable to employees’ vesting of restricted stock are reflected in Income tax expense in the accompanying Consolidated Statements of Operations and Comprehensive Income. Management evaluates tax positions taken or expected to be taken in our tax returns and records a liability for uncertain tax positions. We recognize tax benefits from uncertain tax positions when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense in the accompanying Consolidated Statements of Operations and Comprehensive Income. Cash and Cash Equivalents All highly liquid investments with original maturity dates of three months or less at the time of purchase are classified as cash equivalents. Cash and cash equivalents consist of cash on hand with banks, either in commercial accounts or overnight interest-bearing money market accounts and at times may exceed federally insured limits. Cash and cash equivalents are stated at cost, which approximates fair value because of the short-term nature of these instruments. Trade Receivables and Related Reserves Trade receivables are recorded net of allowance for doubtful accounts. The allowance for doubtful accounts is determined based on factors including recent write-off and delinquency trends, a specific analysis of significant receivable balances that are past due, the concentration of trade receivables among clients and higher-risk sectors, and the current state of the U.S. economy. Trade receivables are written off after all reasonable collection efforts have been exhausted. Trade accounts receivable reserves as a percentage of gross trade receivables was 1.0% at December 31, 2018 and 2017. Fixed Assets Fixed assets are carried at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The cost of leasehold improvements is amortized using the straight-line method over the lesser of the estimated useful lives of the assets or the terms of the related leases. Upon sale or disposition of our fixed assets, the cost and accumulated depreciation are removed and any resulting gain or loss, net of proceeds, is reflected within SG&A in the Consolidated Statements of Operations and Comprehensive Income. Leases Leases for our field offices, which are located throughout the U.S., range from three to seven-year terms, although a limited number of leases contain short-term renewal provisions that range from month-to-month to one year. For leases that contain escalations of the minimum rent, we recognize the related rent expense on a straight-line basis over the lease term. We record any difference between the straight-line rent amounts and amounts payable under the leases as a deferred rent liability in Accounts payable and other accrued liabilities or Other long-term liabilities, as appropriate, in the Consolidated Balance Sheets. The Company records incentives provided by landlords for leasehold improvements in Accounts payable and other accrued liabilities or Other long-term liabilities, as appropriate, in the Consolidated Balance Sheets and records a corresponding reduction in rent expense on a straight-line basis over the lease term. Goodwill and Other Intangible Assets Goodwill Management has determined that the reporting units for the goodwill analysis is consistent with our reporting segments. We evaluate goodwill for impairment either through a qualitative or quantitative approach annually, or more frequently if an event occurs or circumstances change that indicate the carrying value of a reporting unit may not be recoverable. If we perform a quantitative assessment that indicates the carrying amount of a reporting unit exceeds its fair market value, an impairment loss is recognized to reduce the carrying amount to its fair market value. Kforce determines the fair market value of each reporting unit based on a weighting of the present value of projected future cash flows (the “income approach”) and the use of comparative market approaches under both the guideline company method and guideline transaction method (collectively, the “market approach”). Fair market value using the income approach is based on estimated future cash flows on a discounted basis. The market approach compares each reporting unit to other comparable companies based on valuation multiples derived from operational and transactional data to arrive at a fair value. Factors requiring significant judgment include, among others, the assumptions related to discount rates, forecasted operating results, long-term growth rates, the determination of comparable companies, and market multiples. Changes in economic and operating conditions or changes in Kforce’s business strategies that occur after the annual impairment analysis may impact these assumptions and result in a future goodwill impairment charge, which could be material to our consolidated financial statements. Other Intangible Assets Identifiable intangible assets arising from certain of Kforce’s acquisitions include non-compete and employment agreements, contractual relationships, client contracts, technology, and GS’s Data Confidence trademark. Our trade names and trademarks, and derivatives thereof, including GS’s Data Confidence trademark, are important to our business and are registered with the U.S. Patent and Trademark Office. For definite-lived intangible assets, amortization is computed using the straight-line method over the period of expected benefit, which ranges from one to fifteen years. The impairment evaluation for indefinite-lived intangible assets is conducted on an annual basis or more frequently if events or changes in circumstances indicate that an asset may be impaired. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of long-lived assets is measured by a comparison of the carrying amount of the asset group to the future undiscounted net cash flows expected to be generated by those assets. If an analysis indicates the carrying amount of these long-lived assets exceeds the fair value, an impairment loss is recognized to reduce the carrying amount to its fair market value, as determined based on the present value of projected future cash flows. Capitalized Software Kforce purchases, develops and implements software to enhance the performance of our technology infrastructure. Direct internal costs, such as payroll and payroll-related costs, and external costs incurred during the development stage are capitalized and classified as capitalized software. Capitalized software development costs and the associated accumulated amortization are classified as Other assets, net in the accompanying Consolidated Balance Sheets. Amortization is computed using the straight-line method over the estimated useful lives of the software, which range from one to seven years. Workers’ Compensation Kforce retains the economic burden for the first $250 thousand per occurrence in workers’ compensation claims except: (1) in states that require participation in state-operated insurance funds and (2) for Kforce Government Solutions, Inc. which is fully insured for workers’ compensation claims. Workers’ compensation includes ongoing health care and indemnity coverage for claims and may be paid over numerous years following the date of injury. Workers’ compensation expense includes insurance premiums paid, claims administration fees charged by Kforce’s workers’ compensation administrator, premiums paid to state-operated insurance funds and an estimate for Kforce’s liability for IBNR claims and for the ongoing development of existing claims. Management estimates its workers’ compensation liability based upon historical claims experience, actuarially determined loss development factors, and qualitative considerations such as claims management activities. Health Insurance Except for certain fully insured health insurance lines of coverage, Kforce retains the risk of loss for each health insurance plan participant up to $350 thousand in claims annually. Additionally, for all claim amounts exceeding $350 thousand, Kforce retains the risk of loss up to an aggregate annual loss of those claims of $700 thousand. For its partially self-insured lines of coverage, health insurance costs are accrued using estimates to approximate the liability for reported claims and IBNR claims, which are primarily based upon an evaluation of historical claims experience, actuarially-determined completion factors and a qualitative review of our health insurance exposure including the extent of outstanding claims and expected changes in health insurance costs. Defined Benefit Pension Plan The unfunded status of its defined benefit pension plan is recorded as a liability in its Consolidated Balance Sheets. Because our plan is unfunded as of December 31, 2018, actuarial gains and losses may arise as a result of the actuarial experience of the plan, as well as changes in actuarial assumptions in measuring the associated obligation as of year-end, or an interim date if any re-measurement is necessary. The net after-tax impact of unrecognized actuarial gains and losses related to our defined benefit pension plan is recorded in Accumulated other comprehensive income (loss) in our consolidated financial statements. Amortization of a net unrecognized gain or loss in accumulated other comprehensive income (loss) is included as a component of net periodic benefit cost if, as of the beginning of the year, that net gain or loss exceeds 10% of the projected benefit obligation. If amortization is required, the minimum amortization shall be that excess divided by the average remaining service period of active plan participants. The interest cost component of the net periodic benefit cost is included in Other expense, net in the Consolidated Statements of Operations and Comprehensive Income. Earnings per Share Basic earnings per share is computed as net income divided by the weighted average number of common shares outstanding (“WASO”) during the period. WASO excludes unvested shares of restricted stock. Diluted earnings per share is computed by dividing net income by diluted WASO. Diluted WASO includes the dilutive effect of unvested shares of restricted stock using the treasury stock method, except where the effect of including potential common shares would be anti-dilutive. For the years ended December 31, 2018, 2017 and 2016, there were 513 thousand, 364 thousand, and 175 thousand common stock equivalents, respectively, included in the diluted WASO. For the years ended December 31, 2018, 2017 and 2016, there were nil, 527 thousand and 32 thousand, respectively, of anti-dilutive common stock equivalents. Treasury Stock The Board may authorize share repurchases of our common stock. Shares repurchased under Board authorizations are held in treasury for general corporate purposes, including issuances under the 2009 Employee Stock Purchase Plan. Treasury shares are accounted for under the cost method and reported as a reduction of stockholders’ equity in the accompanying consolidated financial statements. Derivative Instrument Our interest rate swap derivative instrument has been designated as a cash flow hedge and is recorded at fair value on the Consolidated Balance Sheets. The effective portion of the gain or loss on the derivative instrument is recorded as a component of Accumulated other comprehensive income (loss), net of tax, and reclassified into earnings when the hedged item affects earnings and into the line item of the hedged item. Any ineffective portion of the gain or loss is recognized immediately into Other expense, net on the Consolidated Statements of Operations and Comprehensive Income. Cash flows from the derivative instrument are classified in the Consolidated Statements of Cash Flows in the same category as the hedged item. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy uses a framework which requires categorizing assets and liabilities into one of three levels based on the inputs used in valuing the asset or liability.
Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Fair value measurements include, but are not limited to: the impairment testing of goodwill, other intangible assets and other long-lived assets; stock-based compensation; the interest rate swap and contingent consideration liability. The carrying values of cash and cash equivalents, trade receivables, other current assets and accounts payable and other accrued liabilities approximate fair value because of the short-term nature of these instruments. Using available market information and appropriate valuation methodologies, Management has determined the estimated fair value measurements; however, considerable judgment is required in interpreting data to develop the estimates of fair value. New Accounting Standards Recently Adopted Accounting Standards In May 2014, the FASB issued authoritative guidance regarding revenue from contracts with customers, which specifies that revenue should be recognized when control of the promised goods or services is transferred to our customers at an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services. Topic 606 is effective for annual and interim reporting periods beginning after December 15, 2017. We adopted Topic 606 using the modified retrospective transition method for all contracts that were not completed as of January 1, 2018. The cumulative impact of adopting Topic 606 was recorded as a reduction to the opening balance of retained earnings of $0.2 million, net of tax, as of January 1, 2018 with the offset recorded as a contract liability. The adjustment is related to a change in the revenue recognition pattern for the performance obligations under certain GS contracts including standard warranty revenues related to our product business and a contract that provides our customer with a material right to a future discount. As of and for the year ended December 31, 2018, the consolidated financial statements were not materially impacted as a result of the application of Topic 606 compared to Topic 605. The comparative information continues to be reported under the accounting standards in effect for the period presented. Accounting Standards Not Yet Adopted In August 2018, the FASB issued authoritative guidance regarding customer's accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. These amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, and defer these costs over the noncancelable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised. This amendment also requires entities to present cash flows, capitalized costs and amortization expense in the same financial statement line items as the service costs incurred for such hosting arrangements. The guidance is effective for fiscal periods beginning after December 15, 2019 with retrospective application or prospective to all implementation costs incurred after the date of adoption. We plan to early adopt this standard in the first quarter of 2019 and expect certain presentation changes, which are not expected to be material to the consolidated financial statements. In August 2018, the FASB issued authoritative guidance regarding changes to the disclosure requirement for defined benefit plans including additions and deletions to certain disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. The guidance is effective for fiscal periods beginning after December 15, 2020. The adoption of this guidance will modify our disclosures and is not expected to have a material effect on our consolidated financial statements. In August 2018, the FASB issued authoritative guidance regarding changes to the disclosure requirements for fair value measurement. The amendments on changes in unrealized gains and losses, the weighted average and range of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The guidance is effective for fiscal periods beginning after December 15, 2019. The adoption of this guidance will modify our disclosures and is not expected to have a material effect on our consolidated financial statements. In February 2018, the FASB issued authoritative guidance regarding the reclassification of certain stranded tax effects from accumulated other comprehensive income to retained earnings as a result of the change in tax rates related to the Tax Cuts and Jobs Act. The guidance is effective for fiscal periods beginning after December 15, 2018 and should be applied either in the period of adoption or retrospectively. Kforce will adopt this standard using the period of adoption method with an adjustment of approximately $168 thousand to retained earnings on January 1, 2019. In August 2017, the FASB issued authoritative guidance targeting improvements to accounting for hedging activities by simplifying the rules around hedge accounting and improving the disclosure requirements. The guidance is effective for annual periods beginning after December 15, 2018. The hedge accounting guidance should be implemented using a modified retrospective approach for any hedges that exist on the date of adoption, while the presentation and disclosure requirements must be applied prospectively. Kforce will adopt this standard in the first quarter of 2019; it will modify our disclosures but is not expected to have a material effect on our consolidated financial statements. In June 2016, the FASB issued authoritative guidance on accounting for credit losses on financial instruments, including trade receivables. The guidance requires the application of a current expected credit loss model, which measures credit losses based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for annual periods beginning after December 15, 2019. The guidance requires companies to apply the requirements using a modified retrospective approach. We are currently evaluating the potential impact on our consolidated financial statements, especially with respect to our disclosures. In February 2016, the FASB issued authoritative guidance regarding the accounting for leases, and has since issued subsequent updates to the initial guidance. The amended guidance requires the recognition of assets and liabilities for operating leases with terms longer than 12 months. The guidance is effective for annual periods beginning after December 15, 2018. We will adopt this standard in the first quarter of 2019 utilizing the optional transition method in the period of adoption without retrospective application to comparative periods. We anticipate recording approximately $17.6 million and $21.0 million in right-of-use assets and lease liabilities, respectively, on our consolidated balance sheets on January 1, 2019. We will take advantage of the package of practical expedients permitted in the new standard as well as the practical expedients for short term leases and not separating lease and nonlease components.
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Segments | Reportable Segments Kforce’s reportable segments are as follows: (1) Tech; (2) FA; and (3) GS. Historically, and for the year ended December 31, 2018, Kforce has generated only sales and gross profit information on a segment basis. We do not report total assets or income from continuing operations separately by segment as our operations are largely combined. For the years ended December 31, 2017 and 2016, our Tech segment included the results of operations for Global, a wholly-owned subsidiary located in Manila, Philippines. During the year ended December 31, 2017, Kforce completed the sale of Global’s assets. This sale did not meet the definition of discontinued operations. Kforce recorded a $3.3 million gain on sale of Global’s assets, which was recorded in Selling, general and administrative expenses within the accompanying Consolidated Statements of Operations and Comprehensive Income for the year ended December 31, 2017. The following table provides information concerning the operations of our segments for the years ended December 31 (in thousands):
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue Disaggregation of Revenue The following table provides information about disaggregated revenue by segment and revenue type for the years ended December 31, 2018, 2017 and 2016 (in thousands): GS Flex revenue includes 41.9% and 34.3% of revenue recognized from fixed-price contracts for the years ended December 31, 2018 and 2017, respectively.
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Fixed Assets |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed Assets | Fixed Assets The following table presents major classifications of fixed assets and related useful lives (in thousands):
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The Tax Cuts and Jobs Act was enacted in December 2017, which reduced the U.S. federal corporate tax rate from 35.0% to 21.0% effective January 1, 2018. As a result, we revalued our net deferred income tax assets and recorded $5.4 million of additional Income tax expense in the Consolidated Statement of Operations and Comprehensive Income for the year ended December 31, 2017. The provision for income taxes from continuing operations consists of the following (in thousands):
(1) Includes the impact of TCJA for the year ended December 31, 2017. The provision for income taxes from continuing operations shown above varied from the statutory federal income tax rate for those periods as follows:
The 2018 effective tax rate was favorably impacted by the TCJA. The 2017 effective tax rate was unfavorably impacted due to the revaluation of our net deferred tax assets as a result of TCJA. The 2016 effective tax rate was unfavorably impacted by certain one-time non-cash adjustments. Deferred tax assets and liabilities are composed of the following (in thousands):
At December 31, 2018, Kforce had approximately $3.4 million of state tax net operating losses (“NOLs”) which will be carried forward to be offset against future state taxable income. The state tax NOLs expire in varying amounts through 2037. In evaluating the realizability of Kforce’s deferred tax assets, management assesses whether it is more likely than not that some portion, or all, of the deferred tax assets, will be realized. Management considers, among other things, the ability to generate future taxable income (including reversals of deferred tax liabilities) during the periods in which the related temporary differences will become deductible. The valuation allowance includes a foreign tax credit, which we expect may not be realizable as a result of reduction in our foreign income. Kforce is periodically subject to IRS audits, as well as state and other local income tax audits for various tax years. During 2018, the IRS commenced an audit for the tax year ended December 31, 2016. No adjustments have been proposed to date. During 2018, the Company also received a notice of examination by the North Carolina Department of Revenue for the years ended December 31, 2016, 2015 and 2014. No adjustments have been proposed to date. The Company has not received a notice of examination by any other jurisdictions for any other tax year open under statute. Although Kforce has not experienced any material liabilities in the past due to income tax audits, Kforce can make no assurances concerning any future income tax audits. Uncertain Income Tax Positions The following table presents a reconciliation of the beginning and ending balance of unrecognized tax benefits for the years ended (in thousands):
As of December 31, 2018, the amount of unrecognized tax benefit that would impact the effective tax rate, if recognized, is $0.7 million. Kforce does not expect any significant changes to its uncertain tax positions in the next 12 months. Kforce and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states. Global files income tax returns in the Philippines. With a few exceptions, Kforce is no longer subject to federal, state, local, or non-U.S. income tax examinations by tax authorities for years before 2016.
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Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill The following table presents the gross amount and accumulated impairment losses for each of our reporting units as of December 31, 2018, 2017 and 2016 (in thousands):
There was no impairment expense related to goodwill for each of the years ended December 31, 2018, 2017 and 2016. Throughout 2018, we considered the qualitative and quantitative factors associated with each of our reporting units and determined that there was no indication that the carrying values of any of our reporting units were likely impaired. Management performed its annual impairment assessment of the carrying value of goodwill as of December 31, 2018. For each of our reporting units, we assessed qualitative factors to determine whether the existence of events or circumstances indicated that it was more likely than not that the fair value of the reporting units was less than its carrying amount. We concluded that it was more likely than not that the fair value of these reporting units was more than their carrying amounts at December 31, 2018. Kforce performed a quantitative analysis for each reporting unit and compared the carrying value for each to the respective estimated fair values as of December 31, 2017. Discounted cash flows, which serve as the primary basis for the income approach, were based on a discrete financial forecast developed by management. Cash flows beyond the discrete forecast period of five years were estimated using a terminal value calculation, which incorporated historical and forecasted financial trends and also considered long-term earnings growth rates for publicly-traded peer companies, as well as the risk-free rate of return. The market approach consists of: (1) the guideline company method and (2) the guideline transaction method. The guideline company method applies pricing multiples derived from publicly-traded guideline companies that are comparable to the reporting unit to determine its value. The guideline transaction method applies pricing multiples derived from recently completed acquisitions that we believe are reasonably comparable to the reporting unit to determine fair value. Kforce concluded there were no indications of impairment for its reporting units for the year ended December 31, 2017. As of December 31, 2016, for our Technology and Finance and Accounting reporting units, we assessed qualitative factors to determine whether the existence of events or circumstances indicated that it was more likely than not that the fair value of the reporting units was less than its carrying amount. Based on the qualitative assessments, management determined that it was not more likely than not that the fair values of the reporting units were less than the carrying values. As of December 31, 2016, for our Government Solutions reporting unit, we performed a quantitative analysis and compared the carrying value to the estimated fair value, using a similar approach as described above noting no indications of impairment. Other Intangible Assets Our other intangible assets balance includes an indefinite-lived trademark of $2.2 million as of December 31, 2018 and 2017 and is recorded in Intangible assets, net in the accompanying Consolidated Balance Sheets. As of December 31, 2018 and 2017, our definite-lived intangible assets balance of $0.7 million and $1.1 million, respectively, included accumulated amortization of $27.9 million and $27.5 million, respectively. There was no impairment expense related to our other intangible assets during the years ended December 31, 2018, 2017 and 2016.
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Accounts Payable and Other Accrued Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Other Accrued Liabilities | Accounts Payable and Other Accrued Liabilities Accounts payable and other accrued liabilities consisted of the following (in thousands):
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Accrued Payroll Costs |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Payroll Costs | Accrued Payroll Costs Accrued payroll costs consisted of the following (in thousands):
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Employee Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans 401(k) Savings Plans The Firm maintains various qualified defined contribution 401(k) retirement savings plans for eligible employees. Assets of these plans are held in trust for the sole benefit of employees and/or their beneficiaries. Employer matching contributions are discretionary and are funded annually as approved by the Board. Kforce accrued matching 401(k) contributions of $1.8 million and $1.6 million as of December 31, 2018 and 2017, respectively. The plans held a combined 146 thousand and 167 thousand shares of Kforce’s common stock as of December 31, 2018 and 2017, respectively. Employee Stock Purchase Plan Kforce’s employee stock purchase plan allows all eligible employees to enroll each quarter to purchase Kforce’s common stock at a 5% discount from its market price on the last day of the quarter. Kforce issued 19 thousand, 25 thousand, and 34 thousand shares of common stock at an average purchase price of $28.93, $20.65, and $19.37 per share during the years ended December 31, 2018, 2017 and 2016, respectively. All shares purchased under the employee stock purchase plan were settled using Kforce’s treasury stock. Deferred Compensation Plans The Firm maintains various non-qualified deferred compensation plans, pursuant to which eligible management and highly compensated key employees, as defined by IRS regulations, may elect to defer all or part of their compensation to later years. These amounts are classified in Accounts payable and other accrued liabilities if payable within the next year or in Other long-term liabilities if payable after the next year, upon retirement or termination of employment in the accompanying Consolidated Balance Sheets. At December 31, 2018 and 2017, amounts related to the deferred compensation plans included in Accounts payable and other accrued liabilities were $1.8 million and $2.9 million, respectively, and $28.9 million was included in Other long-term liabilities at December 31, 2018 and 2017 in the Consolidated Balance Sheets. For the years ended December 31, 2018, 2017 and 2016, we recognized compensation expense for the plans of $876 thousand, $722 thousand and $881 thousand, respectively. Kforce maintains a Rabbi Trust and holds life insurance policies on certain individuals to assist in the funding of the deferred compensation liability. If necessary, employee distributions are funded through proceeds from the sale of assets held within the Rabbi Trust. The balance of the assets within the Rabbi Trust, including the cash surrender value of the Company-owned life insurance policies, was $29.1 million and $31.4 million as of December 31, 2018 and 2017, respectively, and is recorded in Other assets, net in the accompanying Consolidated Balance Sheets. As of December 31, 2018, the life insurance policies had a cumulative face value of $213.1 million. Kforce had no realized gains or losses attributable to investments in trading securities for the years ended December 31, 2018, 2017 and 2016. Supplemental Executive Retirement Plan Kforce maintains a SERP for the benefit of certain executive officers. The primary goals of the SERP are to create an additional wealth accumulation opportunity, restore lost qualified pension benefits due to government limitations and retain our covered executive officers. The SERP is a non-qualified benefit plan and does not include elective deferrals of covered executive officers’ compensation. Normal retirement age under the SERP is defined as age 65; however, certain conditions allow for early retirement as early as age 55 or upon a change in control. Vesting under the plan is defined as 100% upon a participant’s attainment of age 55 and 10 years of service and 0% prior to a participant’s attainment of age 55 and 10 years of service. Full vesting also occurs if a participant with five years or more of service is involuntarily terminated by Kforce without cause or upon death, disability or a change in control. The SERP will be funded entirely by Kforce, and benefits are taxable to the covered executive officer upon receipt and will be deductible by Kforce when paid. Benefits payable under the SERP upon the occurrence of a qualifying distribution event, as defined, are targeted at 45% of the covered executive officers’ average salary and bonus, as defined, from the three years in which the covered executive officer earned the highest salary and bonus during the last 10 years of employment, which is subject to adjustment for retirement prior to the normal retirement age and the participant’s vesting percentage. The benefits under the SERP are reduced for a participant that has not reached age 62 with 10 years of service or age 55 with 25 years of service with a percentage reduction up to the normal retirement age. Benefits under the SERP are based on the lump sum present value but may be paid over the life of the covered executive officer or 10-year annuity, as elected by the covered executive officer upon commencement of participation in the SERP. None of the benefits earned pursuant to the SERP are attributable to services provided prior to the effective date of the plan. For purposes of the measurement of the benefit obligation as of December 31, 2018, Kforce has assumed that all participants will elect to take the lump sum present value option based on historical trends. Actuarial Assumptions Due to the SERP being unfunded as of December 31, 2018 and 2017, it is not necessary for Kforce to determine the expected long-term rate of return on plan assets. The following table presents the weighted average actuarial assumptions used to determine the actuarial present value of projected benefit obligations at:
The following table presents the weighted average actuarial assumptions used to determine net periodic benefit cost for the years ended:
The discount rate was determined using the Moody’s Aa long-term corporate bond yield as of the measurement date with a maturity commensurate with the expected payout of the SERP obligation. This rate is also compared against the Citigroup Pension Discount Curve and Liability Index to ensure the rate used is reasonable and may be adjusted accordingly. This index is widely used by companies throughout the U.S. and is considered to be one of the preferred standards for establishing a discount rate. The assumed rate of future compensation increases is based on a combination of factors, including the historical compensation increases for its covered executive officers and future target compensation levels for its covered executive officers taking into account the covered executive officers’ assumed retirement date. The periodic benefit cost is based on actuarial assumptions that are reviewed on an annual basis; however, management monitors these assumptions on a periodic basis to ensure that they accurately reflect current expectations of the cost of providing retirement benefits. Net Periodic Benefit Cost The following table presents the components of net periodic benefit cost for the years ended (in thousands):
Changes in Benefit Obligation The following table presents the changes in the projected benefit obligation for the years ended (in thousands):
There were no payments made under the SERP during the years ended December 31, 2018 and 2017, respectively. The projected benefit obligation is recorded in Other long-term liabilities in the accompanying Consolidated Balance Sheets. The accumulated benefit obligation is the actuarial present value of all benefits attributed to past service, excluding future salary increases. The accumulated benefit obligation as of December 31, 2018 and 2017 was $15.0 million and $14.3 million, respectively. Contributions There is no requirement for Kforce to fund the SERP and, as a result, no contributions have been made to the SERP through the year ended December 31, 2018. Kforce does not currently anticipate funding the SERP during the year ending December 31, 2019. Estimated Future Benefit Payments Undiscounted benefit payments by the SERP, which reflect the anticipated future service of participants, expected to be paid are as follows during the years ended December 31 (in thousands):
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Credit Facility |
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Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Credit Facility | Credit Facility On May 25, 2017, the Firm entered into a credit agreement with Wells Fargo Bank, National Association, as administrative agent, Wells Fargo Securities, LLC, as lead arranger and bookrunner, Bank of America, N.A., as syndication agent, Regions Bank and BMO Harris Bank, N.A., as co-documentation agents, and the lenders referred to therein (the “Credit Facility”). Under the Credit Facility, the Firm has a maximum borrowing capacity of $300.0 million, which may, subject to certain conditions and the participation of the lenders, be increased up to an aggregate additional amount of $150.0 million (the “Commitment”), which is available to the Firm in the form of revolving credit loans, swingline loans, and letters of credit. Letters of credit and swingline loans under the Credit Facility are subject to sublimits of $10.0 million. The maturity date of the Credit Facility is May 25, 2022. Borrowings under the Credit Facility are secured by substantially all of the tangible and intangible assets of the Firm, excluding the Firm’s corporate headquarters and certain other designated executed collateral. Revolving credit loans under the Credit Facility bears interest at a rate equal to: (a) the Base Rate (as described below) plus the Applicable Margin (as described below); or (b) the LIBOR Rate plus the Applicable Margin. Swingline loans under the Credit Facility bears interest at a rate equal to the Base Rate plus the Applicable Margin. The Base Rate is the highest of: (i) the Wells Fargo Bank, National Association prime rate; (ii) the federal funds rate plus 0.50%; or (iii) one-month LIBOR plus 1.00%, and the LIBOR Rate is reserve-adjusted LIBOR for the applicable interest period, but not less than zero. The Applicable Margin is based on the Firm’s total leverage ratio. The Applicable Margin for Base Rate loans ranges from 0.25% to 0.75% and the Applicable Margin for LIBOR Rate loans ranges from 1.25% to 1.75%. The Firm will pay a quarterly non-refundable commitment fee equal to the Applicable Margin on the average daily unused portion of the Commitment (swingline loans do not constitute usage for this purpose). The Applicable Margin for the commitment fee is based on the Firm’s total leverage ratio and ranges between 0.20% and 0.35%. The Firm is subject to certain affirmative and negative covenants including (but not limited to), the maintenance of a fixed charge coverage ratio of no less than 1.25 to 1.00 and the maintenance of a total leverage ratio of no greater than 3.25 to 1.00. The numerator in the fixed charge coverage ratio is defined pursuant to the Credit Facility as earnings before interest expense, income taxes, depreciation and amortization, stock-based compensation expense and other permitted items pursuant to our Credit Facility (disclosed as “Consolidated EBITDA”), less cash paid for capital expenditures, income taxes and dividends. The denominator is defined as Kforce’s fixed charges such as interest expense and principal payments paid or payable on outstanding debt other than borrowings under the Credit Facility. The total leverage ratio is defined pursuant to the Credit Facility as total indebtedness divided by Consolidated EBITDA. Our ability to make distributions or repurchases of equity securities could be limited if an event of default has occurred. Furthermore, our ability to repurchase equity securities could be limited if: (a) the total leverage ratio is greater than 2.75 to 1.00; and (b) the Firm’s availability, inclusive of unrestricted cash, is less than $25.0 million. At December 31, 2018, Kforce was not limited in making distributions and executing repurchases of our equity securities. As of December 31, 2018 and 2017, $71.8 million and $116.5 million was outstanding, respectively. Kforce had $3.2 million of outstanding letters of credit at December 31, 2018 and 2017 which, pursuant to the Credit Facility, reduces the availability.
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Derivative Instrument and Hedging Activity |
12 Months Ended |
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Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instrument and Hedging Activity | Derivative Instrument and Hedging Activity Kforce is exposed to interest rate risk as a result of our corporate borrowing activities. The Firm uses an interest rate swap derivative as a risk management tool to mitigate the potential impact of rising interest rates on variable rate debt. On April 21, 2017, Kforce entered into a forward-starting interest rate swap agreement with Wells Fargo Bank, N.A. The Swap rate is 1.81%, which is added to our interest rate margin to determine the fixed rate that the Firm will pay to the counterparty during the term of the Swap based on the notional amount of the Swap. The Swap was effective May 31, 2017 and matures April 29, 2022. The notional amount of the Swap is $65.0 million for the first three years and decreases to $25.0 million for years four and five. The Swap has been designated as a cash flow hedge and was effective as of December 31, 2018. The change in the fair value of the Swap was recorded as a component of Accumulated other comprehensive income (loss), net of tax, in the Consolidated Statements of Operations and Comprehensive Income. As of December 31, 2018 and 2017, the fair value of the Swap asset was $0.9 million and $0.5 million, respectively, and is recorded in Other assets, net within the accompanying Consolidated Balance Sheets.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Kforce’s interest rate swap is measured at fair value using readily observable inputs, such as the LIBOR interest rate, which are considered to be Level 2 inputs. Refer to Note 11 - “Derivative Instrument and Hedging Activity” in the Notes to the Consolidated Financial Statements, included in this report for a complete discussion of the Firm’s derivative instrument. Our contingent consideration liability relates to a non-significant business acquisition within our GS reporting segment, which is measured on a recurring basis and recorded at fair value using the discounted cash flow method. The inputs used to calculate the fair value of the contingent consideration liability are considered to be Level 3 inputs due to the lack of relevant market activity and significant management judgment. An increase in future cash flows may result in a higher estimated fair value while a decrease in future cash flows may result in a lower estimated fair value of the contingent consideration liability. Remeasurements to fair value are recorded in Other expense, net within the Consolidated Statements of Operations and Comprehensive Income. For the years ended December 31, 2018 and 2017, approximately $4 thousand and $565 thousand of income, respectively, was recognized due to the remeasurement of our contingent consideration liability. The contingent consideration liability is recorded in Other long-term liabilities within the Consolidated Balance Sheets and the estimated fair value as of December 31, 2018 and 2017 was $187 thousand and $191 thousand, respectively. Certain assets, in specific circumstances, are measured at fair value on a non-recurring basis utilizing Level 3 inputs such as goodwill, other intangible assets and other long-lived assets. For these assets, measurement at fair value in periods subsequent to their initial recognition would be applicable if one or more of these assets were determined to be impaired. The following table sets forth by level, within the fair value hierarchy, estimated fair values on a recurring basis at December 31, 2018 and 2017 were as follows (in thousands):
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Stock Incentive Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Incentive Plans | Stock Incentive Plans On April 18, 2017, the Kforce shareholders approved the 2017 Stock Incentive Plan (“2017 Plan”). The 2017 Plan allows for the issuance of stock options, stock appreciation rights, restricted stock (including restricted stock awards (“RSAs”) and restricted stock units (“RSUs”)) and other stock-based awards. The aggregate number of shares of common stock that are subject to awards under the 2017 Plan is approximately 3.0 million shares. The 2017 Plan terminates on April 18, 2027. Prior to the effective date of the 2017 Plan, the Company granted stock awards to eligible participants under our 2016 Stock Incentive Plan and 2013 Stock Incentive Plan (collectively the “Prior Plans”). No additional awards may be granted pursuant to the Prior Plans; however, awards outstanding as of the effective date will continue to vest in accordance with the terms of the Prior Plans. In March 2016, the FASB issued authoritative guidance regarding the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liability, and classification in the statement of cash flows. This guidance was effective for us on January 1, 2017. An entity is allowed to make a policy election as to whether it will include an estimate for awards expected to be forfeited or whether it will account for forfeitures as incurred. The Firm elected to change its policy on accounting for forfeitures and to recognize as incurred. This policy election was applied using a modified retrospective approach with a cumulative-effect adjustment to retained earnings as of the effective date. The impact to the beginning balance of retained earnings was $0.5 million, which is net of taxes of $0.3 million, on January 1, 2017. During the years ended December 31, 2018, 2017 and 2016, stock-based compensation expense was $8.8 million, $7.6 million, and $6.7 million, respectively. The related tax benefit for the years ended December 31, 2018, 2017 and 2016 was $2.2 million, $3.0 million, and $2.8 million, respectively. Restricted Stock Restricted stock (including RSAs and RSUs) are granted to executives and management either: for awards related to Kforce’s annual long-term incentive (“LTI”) compensation program, or as part of a compensation package in order to retain directors, executives and management. The LTI award amounts are generally based on total shareholder return performance goals. The LTI restricted stock granted during the year ended December 31, 2018 will vest ratably over a period between three to four years. Other restricted stock granted during the year ended December 31, 2018 will vest ratably over a period of between one to ten years. RSAs contain the same voting rights as other common stock as well as the right to forfeitable dividends in the form of additional RSAs at the same rate as the cash dividend on common stock and containing the same vesting provisions as the underlying award. RSUs contain no voting rights, but have the right to forfeitable dividend equivalents in the form of additional RSUs at the same rate as the cash dividend on common stock and containing the same vesting provisions as the underlying award. The distribution of shares of common stock for each RSU, pursuant to the terms of the Kforce Inc. Director’s Restricted Stock Unit Deferral Plan, can be deferred to a date later than the vesting date if an appropriate election was made. In the event of such deferral, vested RSUs have the right to dividend equivalents. The following table presents the restricted stock activity for the years ended December 31, 2018, 2017 and 2016 (in thousands, except per share amounts):
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Lease Commitments Kforce leases office space and operating assets under operating and capital leases expiring at various dates, with some leases cancelable upon 30 to 90 days’ notice and with some leases containing escalation in rent clauses. In addition to rental payments, certain leases require payments for taxes, insurance and maintenance costs. Future minimum lease payments, inclusive of accelerated lease payments, under non-cancelable capital and operating leases are summarized as follows (in thousands):
The present value of the minimum lease payments for capital lease obligations has been classified in Other current liabilities and Long-term debt – other in the accompanying Consolidated Balance Sheets, according to their respective maturities. Rental expense under operating leases was $7.7 million for each of the years ended December 31, 2018, 2017 and 2016. Purchase Commitments Kforce has various commitments to purchase goods and services in the ordinary course of business. These commitments are primarily related to software and online application licenses and hosting. As of December 31, 2018, these purchase commitments amounted to approximately $16.3 million and are expected to be paid as follows: $10.6 million in 2019; $3.2 million in 2020; $2.2 million in 2021; and $0.3 million in 2022. Letters of Credit Kforce provides letters of credit to certain vendors in lieu of cash deposits. At December 31, 2018, Kforce had letters of credit outstanding for workers’ compensation and other insurance coverage totaling $2.8 million, and for facility lease deposits totaling $0.3 million. Litigation We are involved in legal proceedings, claims and administrative matters that arise in the ordinary course of our business. We have made accruals with respect to certain of these matters, where appropriate, that are reflected in our consolidated financial statements but are not, individually or in the aggregate, considered material. For other matters for which an accrual has not been made, we have not yet determined that a loss is probable, or the amount of loss cannot be reasonably estimated. While the ultimate outcome of the matters cannot be determined, we currently do not expect that these proceedings and claims, individually or in the aggregate, will have a material effect on our financial position, results of operations, or cash flows. The outcome of any litigation is inherently uncertain, however, and if decided adversely to us, or if we determine that settlement of particular litigation is appropriate, we may be subject to liability that could have a material adverse effect on our financial position, results of operations, or cash flows. Kforce maintains liability insurance in amounts and with such coverage and deductibles as management believes is reasonable. The principal liability risks that Kforce insures against are workers’ compensation, personal injury, bodily injury, property damage, directors’ and officers’ liability, errors and omissions, cyber liability, employment practices liability and fidelity losses. There can be no assurance that Kforce’s liability insurance will cover all events or that the limits of coverage will be sufficient to fully cover all liabilities. Legal costs incurred in connection with loss contingencies are expensed as incurred. Employment Agreements Kforce has employment agreements with certain executives that provide for minimum compensation, salary and continuation of certain benefits for a six-month to a three-year period after their employment ends under certain circumstances. Certain of the agreements also provide for a severance payment ranging from one to three times annual salary and one-half to three times average annual bonus if such an agreement is terminated without good cause by Kforce or for good reason by the executive subject to certain post-employment restrictive covenants. At December 31, 2018, our liability would be approximately $32.6 million if, following a change in control, all of the executives under contract were terminated without good cause by the employer or if the executives resigned for good reason and $14.1 million if, in the absence of a change in control, all of the executives under contract were terminated by Kforce without good cause or if the executives resigned for good reason.
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Quarterly Financial Data (Unaudited) |
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Quarterly Financial Data (Unaudited) | Quarterly Financial Data (Unaudited) The following table provides quarterly information for the years ended December 31, 2018 and 2017 (in thousands, except per share amounts):
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Supplemental Cash Flow Information |
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Supplemental Cash Flow Information | Supplemental Cash Flow Information The following table provides information regarding supplemental cash flows for the years ended December 31 (in thousands):
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Schedule II Valuation and Qualifying Accounts and Reserves Supplemental Schedule |
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Schedule II Valuation and Qualifying Accounts and Reserves Supplemental Schedule | SCHEDULE II KFORCE INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS AND RESERVES SUPPLEMENTAL SCHEDULE (IN THOUSANDS)
(1) The beginning balance for 2018 was adjusted by $475 thousand due to the adoption of ASC 606 and the reclassification of the Direct Hire fallouts as a contract liability effective January 1, 2018. Refer to Note 1 – “Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements, included in Item 8. Financial Statements and Supplementary Data of this report for a complete discussion of the adoption of ASC 606.
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||
Basis of Presentation | The consolidated financial statements have been prepared in conformity with GAAP and the rules of the SEC. | ||||||||||
Principles of Consolidation | The consolidated financial statements include the accounts of Kforce Inc. and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. References in this document to “Kforce,” “the Company,” “we,” “the Firm,” “management,” “our” or “us” refer to Kforce Inc. and its subsidiaries, except where the context indicates otherwise. | ||||||||||
Use of Estimates | The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most important of these estimates and assumptions relate to the following: allowance for doubtful accounts; income taxes; self-insured liabilities for workers’ compensation and health insurance; obligations for pension plans and goodwill and any related impairment. Although these and other estimates and assumptions are based on the best available information, actual results could be materially different from these estimates. | ||||||||||
Revenue Recognition | All of our revenue and trade receivables are generated from contracts with customers and substantially all of our revenues are derived from U.S. domestic operations. The following section describes the accounting policies that we believe have significant judgment, or changes in judgment, as a result of adopting Topic 606. Revenue is recognized when control of the promised goods or services is transferred to our customers at an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services. Revenue is recorded net of sales or other transaction taxes collected from clients and remitted to taxing authorities. For substantially all of our revenue transactions, we have determined that gross reporting of revenues as a principal versus net as an agent is the appropriate accounting treatment because Kforce: (i) is primarily responsible for fulfilling the promise to provide the specified good or service to the customer, (ii) has discretion in selecting and assigning the temporary workers to particular jobs and establishing the bill rate, and (iii) bears the risk and rewards of the transaction, including credit risk if the customer fails to pay for services performed. Flex Revenue Flex revenue is recognized over time as temporary staffing services are provided by our consultants at the contractually established bill rates, net of applicable variable consideration. Reimbursements of travel and out-of-pocket expenses ("billable expenses") are also recorded within Flex revenue when incurred and the equivalent amount of expense is recorded in Direct costs in the Consolidated Statements of Operations and Comprehensive Income. Certain temporary staffing services are provided under time-and-material and fixed-price arrangements. For time-and-materials contracts, we recognize revenue in the amount of consideration to which we have the right to invoice when it corresponds directly to the services transferred to the customer satisfied over time. For fixed-price contracts, which are most frequently utilized in our GS segment, revenue is recognized over time using the input method based on costs incurred as a proportion of estimated total costs. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Management uses significant judgments when estimating the total labor hours expected to complete the contract performance obligation. Direct Hire Revenue Direct Hire revenue is recognized at the agreed upon rate at the point in time when the performance obligation is considered complete. Our policy requires the following criteria to be met in order for the performance obligation to be considered complete: (i) the candidate accepted the position; (ii) the candidate resigned from their current employer; and (iii) the agreed upon start date falls within the following month. Since the client has accepted the candidate and can direct the use of and obtains the significant risk and rewards of the placement, we consider this point as the transfer of control to our client. Product Revenue Revenue for our product business, which accounts for approximately 1% of total revenue for each of the years ended December 31, 2018, 2017 and 2016, is recognized after the transfer of control to the customer, which typically occurs upon delivery. Variable Consideration Transaction prices for Flex revenue include variable consideration, such as customer rebates and discounts. Management evaluates the facts and circumstances of each contract to estimate the variable consideration using the most likely amount method which utilizes management’s expectation of the volume of services to be provided over the applicable period. Direct Hire revenue is recorded net of a fallout reserve. Direct Hire fallouts occur when a candidate does not remain employed with the client through the respective contingency period (typically 90 days or less). Management uses the expected value method to estimate the fallout reserve based on a combination of past experience and current trends. Variable consideration reduces revenue, but may be constrained to the extent that it is probable a significant reversal will not occur. These balances are recorded in Accounts payable and other accrued liabilities in the Consolidated Balance Sheets. Under Topic 605, the Direct Hire fallout reserve was recorded as a Trade receivables allowance and under Topic 606, it is recorded within Accounts payable and other accrued liabilities in the Consolidated Balance Sheets. As of December 31, 2018 and 2017, the Direct Hire fallout reserve was $0.6 million and $0.5 million, respectively. Payment Terms Our payment terms and conditions vary by arrangement, although terms are typically less than 90 days. Generally, the timing between the satisfaction of the performance obligation and the payment is not significant and we do not currently have any significant financing components. Unsatisfied Performance Obligations We do not disclose the value of unsatisfied performance obligations for contracts if either the original expected length is one year or less or if revenue is recognized at the amount to which we have the right to invoice for services performed. Contract Balances We record accounts receivable when our right to consideration becomes unconditional. Other than our trade receivable balance, we do not have any material contract assets as of January 1, 2018 and December 31, 2018. We record a contract liability when we receive consideration from a customer prior to transferring goods or services to the customer or if we have an unconditional right and services have been performed. We recognize the contract liability as revenue after we have transferred control of the goods or services to the customer. Contract liabilities are recorded within Accounts payable and other accrued liabilities if expected to be recognized in less than one year and Other long-term liabilities, if over one year, in the Consolidated Balance Sheets. We do not have any material contract liabilities as of January 1, 2018 and December 31, 2018. Cost of Services Direct costs are composed of all related costs of employment for consultants, including compensation, payroll taxes, certain fringe benefits and subcontractor costs. Direct costs exclude depreciation and amortization expense (except for the product business), which is presented on a separate line in the accompanying Consolidated Statements of Operations and Comprehensive Income. Associate and field management compensation, payroll taxes and fringe benefits are included in selling, general and administrative expenses (“SG&A”), along with other customary costs such as administrative and corporate costs.
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Commissions | Our associates make placements and earn commissions as a percentage of gross profit for Flex or Direct Hire revenues pursuant to a commission plan. The amount of associate commissions paid increases as volume increases. Commissions are accrued at an amount equal to the percent of total expected commissions payable to total revenue or gross profit for the commission-plan period, as applicable. We generally expense sales commissions and any other incremental costs of obtaining a contract as incurred because the amortization period is typically less than one year. | ||||||||||
Stock-Based Compensation | Stock-based compensation is measured using the grant-date fair value of the award of equity instruments. The expense is recognized over the requisite service period. Effective January 1, 2017, the Firm changed its accounting policy regarding forfeitures and elected to recognize as incurred. | ||||||||||
Income Taxes | Income taxes are recorded using the asset and liability approach for deferred tax assets and liabilities and the expected future tax consequences of differences between carrying amounts and the tax basis of assets and liabilities. A valuation allowance is recorded unless it is more likely than not that the deferred tax asset can be utilized to offset future taxes. Effective January 1, 2017, excess tax benefits or deficiencies of deductions attributable to employees’ vesting of restricted stock are reflected in Income tax expense in the accompanying Consolidated Statements of Operations and Comprehensive Income.Management evaluates tax positions taken or expected to be taken in our tax returns and records a liability for uncertain tax positions. We recognize tax benefits from uncertain tax positions when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense in the accompanying Consolidated Statements of Operations and Comprehensive Income. | ||||||||||
Cash and Cash Equivalents | All highly liquid investments with original maturity dates of three months or less at the time of purchase are classified as cash equivalents. Cash and cash equivalents consist of cash on hand with banks, either in commercial accounts or overnight interest-bearing money market accounts and at times may exceed federally insured limits. Cash and cash equivalents are stated at cost, which approximates fair value because of the short-term nature of these instruments. | ||||||||||
Trade Receivables and Related Reserves | Trade receivables are recorded net of allowance for doubtful accounts. The allowance for doubtful accounts is determined based on factors including recent write-off and delinquency trends, a specific analysis of significant receivable balances that are past due, the concentration of trade receivables among clients and higher-risk sectors, and the current state of the U.S. economy. Trade receivables are written off after all reasonable collection efforts have been exhausted. | ||||||||||
Fixed Assets | Fixed assets are carried at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The cost of leasehold improvements is amortized using the straight-line method over the lesser of the estimated useful lives of the assets or the terms of the related leases. Upon sale or disposition of our fixed assets, the cost and accumulated depreciation are removed and any resulting gain or loss, net of proceeds, is reflected within SG&A in the Consolidated Statements of Operations and Comprehensive Income. | ||||||||||
Leases | Leases for our field offices, which are located throughout the U.S., range from three to seven-year terms, although a limited number of leases contain short-term renewal provisions that range from month-to-month to one year. For leases that contain escalations of the minimum rent, we recognize the related rent expense on a straight-line basis over the lease term. We record any difference between the straight-line rent amounts and amounts payable under the leases as a deferred rent liability in Accounts payable and other accrued liabilities or Other long-term liabilities, as appropriate, in the Consolidated Balance Sheets. The Company records incentives provided by landlords for leasehold improvements in Accounts payable and other accrued liabilities or Other long-term liabilities, as appropriate, in the Consolidated Balance Sheets and records a corresponding reduction in rent expense on a straight-line basis over the lease term.
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Goodwill and Other Intangible Assets | Goodwill Management has determined that the reporting units for the goodwill analysis is consistent with our reporting segments. We evaluate goodwill for impairment either through a qualitative or quantitative approach annually, or more frequently if an event occurs or circumstances change that indicate the carrying value of a reporting unit may not be recoverable. If we perform a quantitative assessment that indicates the carrying amount of a reporting unit exceeds its fair market value, an impairment loss is recognized to reduce the carrying amount to its fair market value. Kforce determines the fair market value of each reporting unit based on a weighting of the present value of projected future cash flows (the “income approach”) and the use of comparative market approaches under both the guideline company method and guideline transaction method (collectively, the “market approach”). Fair market value using the income approach is based on estimated future cash flows on a discounted basis. The market approach compares each reporting unit to other comparable companies based on valuation multiples derived from operational and transactional data to arrive at a fair value. Factors requiring significant judgment include, among others, the assumptions related to discount rates, forecasted operating results, long-term growth rates, the determination of comparable companies, and market multiples. Changes in economic and operating conditions or changes in Kforce’s business strategies that occur after the annual impairment analysis may impact these assumptions and result in a future goodwill impairment charge, which could be material to our consolidated financial statements. Other Intangible Assets Identifiable intangible assets arising from certain of Kforce’s acquisitions include non-compete and employment agreements, contractual relationships, client contracts, technology, and GS’s Data Confidence trademark. Our trade names and trademarks, and derivatives thereof, including GS’s Data Confidence trademark, are important to our business and are registered with the U.S. Patent and Trademark Office. For definite-lived intangible assets, amortization is computed using the straight-line method over the period of expected benefit, which ranges from one to fifteen years. The impairment evaluation for indefinite-lived intangible assets is conducted on an annual basis or more frequently if events or changes in circumstances indicate that an asset may be impaired.
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Impairment of Long-Lived Assets | Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of long-lived assets is measured by a comparison of the carrying amount of the asset group to the future undiscounted net cash flows expected to be generated by those assets. If an analysis indicates the carrying amount of these long-lived assets exceeds the fair value, an impairment loss is recognized to reduce the carrying amount to its fair market value, as determined based on the present value of projected future cash flows. | ||||||||||
Capitalized Software | Kforce purchases, develops and implements software to enhance the performance of our technology infrastructure. Direct internal costs, such as payroll and payroll-related costs, and external costs incurred during the development stage are capitalized and classified as capitalized software. Capitalized software development costs and the associated accumulated amortization are classified as Other assets, net in the accompanying Consolidated Balance Sheets. Amortization is computed using the straight-line method over the estimated useful lives of the software, which range from one to seven years. | ||||||||||
Workers' Compensation | Kforce retains the economic burden for the first $250 thousand per occurrence in workers’ compensation claims except: (1) in states that require participation in state-operated insurance funds and (2) for Kforce Government Solutions, Inc. which is fully insured for workers’ compensation claims. Workers’ compensation includes ongoing health care and indemnity coverage for claims and may be paid over numerous years following the date of injury. Workers’ compensation expense includes insurance premiums paid, claims administration fees charged by Kforce’s workers’ compensation administrator, premiums paid to state-operated insurance funds and an estimate for Kforce’s liability for IBNR claims and for the ongoing development of existing claims.Management estimates its workers’ compensation liability based upon historical claims experience, actuarially determined loss development factors, and qualitative considerations such as claims management activities. | ||||||||||
Health Insurance | Except for certain fully insured health insurance lines of coverage, Kforce retains the risk of loss for each health insurance plan participant up to $350 thousand in claims annually. Additionally, for all claim amounts exceeding $350 thousand, Kforce retains the risk of loss up to an aggregate annual loss of those claims of $700 thousand. For its partially self-insured lines of coverage, health insurance costs are accrued using estimates to approximate the liability for reported claims and IBNR claims, which are primarily based upon an evaluation of historical claims experience, actuarially-determined completion factors and a qualitative review of our health insurance exposure including the extent of outstanding claims and expected changes in health insurance costs. | ||||||||||
Defined Benefit Pension Plan | The unfunded status of its defined benefit pension plan is recorded as a liability in its Consolidated Balance Sheets. Because our plan is unfunded as of December 31, 2018, actuarial gains and losses may arise as a result of the actuarial experience of the plan, as well as changes in actuarial assumptions in measuring the associated obligation as of year-end, or an interim date if any re-measurement is necessary. The net after-tax impact of unrecognized actuarial gains and losses related to our defined benefit pension plan is recorded in Accumulated other comprehensive income (loss) in our consolidated financial statements.Amortization of a net unrecognized gain or loss in accumulated other comprehensive income (loss) is included as a component of net periodic benefit cost if, as of the beginning of the year, that net gain or loss exceeds 10% of the projected benefit obligation. If amortization is required, the minimum amortization shall be that excess divided by the average remaining service period of active plan participants. The interest cost component of the net periodic benefit cost is included in Other expense, net in the Consolidated Statements of Operations and Comprehensive Income. | ||||||||||
Earnings Per Share | Basic earnings per share is computed as net income divided by the weighted average number of common shares outstanding (“WASO”) during the period. WASO excludes unvested shares of restricted stock. Diluted earnings per share is computed by dividing net income by diluted WASO. Diluted WASO includes the dilutive effect of unvested shares of restricted stock using the treasury stock method, except where the effect of including potential common shares would be anti-dilutive. | ||||||||||
Treasury Stock | The Board may authorize share repurchases of our common stock. Shares repurchased under Board authorizations are held in treasury for general corporate purposes, including issuances under the 2009 Employee Stock Purchase Plan. Treasury shares are accounted for under the cost method and reported as a reduction of stockholders’ equity in the accompanying consolidated financial statements. | ||||||||||
Derivative Instrument | Our interest rate swap derivative instrument has been designated as a cash flow hedge and is recorded at fair value on the Consolidated Balance Sheets. The effective portion of the gain or loss on the derivative instrument is recorded as a component of Accumulated other comprehensive income (loss), net of tax, and reclassified into earnings when the hedged item affects earnings and into the line item of the hedged item. Any ineffective portion of the gain or loss is recognized immediately into Other expense, net on the Consolidated Statements of Operations and Comprehensive Income. Cash flows from the derivative instrument are classified in the Consolidated Statements of Cash Flows in the same category as the hedged item. | ||||||||||
Fair Value Measurements | Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy uses a framework which requires categorizing assets and liabilities into one of three levels based on the inputs used in valuing the asset or liability.
Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Fair value measurements include, but are not limited to: the impairment testing of goodwill, other intangible assets and other long-lived assets; stock-based compensation; the interest rate swap and contingent consideration liability. The carrying values of cash and cash equivalents, trade receivables, other current assets and accounts payable and other accrued liabilities approximate fair value because of the short-term nature of these instruments. Using available market information and appropriate valuation methodologies, Management has determined the estimated fair value measurements; however, considerable judgment is required in interpreting data to develop the estimates of fair value.
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New Accounting Standards | Recently Adopted Accounting Standards In May 2014, the FASB issued authoritative guidance regarding revenue from contracts with customers, which specifies that revenue should be recognized when control of the promised goods or services is transferred to our customers at an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services. Topic 606 is effective for annual and interim reporting periods beginning after December 15, 2017. We adopted Topic 606 using the modified retrospective transition method for all contracts that were not completed as of January 1, 2018. The cumulative impact of adopting Topic 606 was recorded as a reduction to the opening balance of retained earnings of $0.2 million, net of tax, as of January 1, 2018 with the offset recorded as a contract liability. The adjustment is related to a change in the revenue recognition pattern for the performance obligations under certain GS contracts including standard warranty revenues related to our product business and a contract that provides our customer with a material right to a future discount. As of and for the year ended December 31, 2018, the consolidated financial statements were not materially impacted as a result of the application of Topic 606 compared to Topic 605. The comparative information continues to be reported under the accounting standards in effect for the period presented. Accounting Standards Not Yet Adopted In August 2018, the FASB issued authoritative guidance regarding customer's accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. These amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, and defer these costs over the noncancelable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised. This amendment also requires entities to present cash flows, capitalized costs and amortization expense in the same financial statement line items as the service costs incurred for such hosting arrangements. The guidance is effective for fiscal periods beginning after December 15, 2019 with retrospective application or prospective to all implementation costs incurred after the date of adoption. We plan to early adopt this standard in the first quarter of 2019 and expect certain presentation changes, which are not expected to be material to the consolidated financial statements. In August 2018, the FASB issued authoritative guidance regarding changes to the disclosure requirement for defined benefit plans including additions and deletions to certain disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. The guidance is effective for fiscal periods beginning after December 15, 2020. The adoption of this guidance will modify our disclosures and is not expected to have a material effect on our consolidated financial statements. In August 2018, the FASB issued authoritative guidance regarding changes to the disclosure requirements for fair value measurement. The amendments on changes in unrealized gains and losses, the weighted average and range of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The guidance is effective for fiscal periods beginning after December 15, 2019. The adoption of this guidance will modify our disclosures and is not expected to have a material effect on our consolidated financial statements. In February 2018, the FASB issued authoritative guidance regarding the reclassification of certain stranded tax effects from accumulated other comprehensive income to retained earnings as a result of the change in tax rates related to the Tax Cuts and Jobs Act. The guidance is effective for fiscal periods beginning after December 15, 2018 and should be applied either in the period of adoption or retrospectively. Kforce will adopt this standard using the period of adoption method with an adjustment of approximately $168 thousand to retained earnings on January 1, 2019. In August 2017, the FASB issued authoritative guidance targeting improvements to accounting for hedging activities by simplifying the rules around hedge accounting and improving the disclosure requirements. The guidance is effective for annual periods beginning after December 15, 2018. The hedge accounting guidance should be implemented using a modified retrospective approach for any hedges that exist on the date of adoption, while the presentation and disclosure requirements must be applied prospectively. Kforce will adopt this standard in the first quarter of 2019; it will modify our disclosures but is not expected to have a material effect on our consolidated financial statements. In June 2016, the FASB issued authoritative guidance on accounting for credit losses on financial instruments, including trade receivables. The guidance requires the application of a current expected credit loss model, which measures credit losses based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for annual periods beginning after December 15, 2019. The guidance requires companies to apply the requirements using a modified retrospective approach. We are currently evaluating the potential impact on our consolidated financial statements, especially with respect to our disclosures. In February 2016, the FASB issued authoritative guidance regarding the accounting for leases, and has since issued subsequent updates to the initial guidance. The amended guidance requires the recognition of assets and liabilities for operating leases with terms longer than 12 months. The guidance is effective for annual periods beginning after December 15, 2018. We will adopt this standard in the first quarter of 2019 utilizing the optional transition method in the period of adoption without retrospective application to comparative periods. We anticipate recording approximately $17.6 million and $21.0 million in right-of-use assets and lease liabilities, respectively, on our consolidated balance sheets on January 1, 2019. We will take advantage of the package of practical expedients permitted in the new standard as well as the practical expedients for short term leases and not separating lease and nonlease components.
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Reportable Segments (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operations of Segments | The following table provides information concerning the operations of our segments for the years ended December 31 (in thousands):
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Revenue (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table provides information about disaggregated revenue by segment and revenue type for the years ended December 31, 2018, 2017 and 2016 (in thousands):
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Fixed Assets (Tables) |
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Major Classifications of Fixed Assets and Related Useful Lives | The following table presents major classifications of fixed assets and related useful lives (in thousands):
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Income Taxes (Tables) |
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Income Tax Expense (Benefit), Continuing Operations | The provision for income taxes from continuing operations consists of the following (in thousands):
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Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation | The provision for income taxes from continuing operations shown above varied from the statutory federal income tax rate for those periods as follows:
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Components of Deferred Tax Assets and Liabilities | Deferred tax assets and liabilities are composed of the following (in thousands):
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Income Tax Uncertainties | The following table presents a reconciliation of the beginning and ending balance of unrecognized tax benefits for the years ended (in thousands):
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Goodwill and Other Intangible Assets (Tables) |
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Summary of the Gross Amount and Accumulated Impairment Losses of Goodwill | The following table presents the gross amount and accumulated impairment losses for each of our reporting units as of December 31, 2018, 2017 and 2016 (in thousands):
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Accounts Payable and Other Accrued Liabilities (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Payable and Accrued Liabilities | Accounts payable and other accrued liabilities consisted of the following (in thousands):
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Accrued Payroll Costs (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accrued Payroll Costs | Accrued payroll costs consisted of the following (in thousands):
|
Employee Benefit Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Actuarial Assumptions Used to Determine the Actuarial Present Value of Projected Benefit Obligations | The following table presents the weighted average actuarial assumptions used to determine the actuarial present value of projected benefit obligations at:
|
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Actuarial Assumptions Used to Determine Net Periodic Benefit Cost | The following table presents the weighted average actuarial assumptions used to determine net periodic benefit cost for the years ended:
|
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Components of Net Periodic Benefit Cost | The following table presents the components of net periodic benefit cost for the years ended (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the Benefit Obligation | The following table presents the changes in the projected benefit obligation for the years ended (in thousands):
|
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Projected Annual Benefit Payment | Undiscounted benefit payments by the SERP, which reflect the anticipated future service of participants, expected to be paid are as follows during the years ended December 31 (in thousands):
|
Fair Value Measurements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table sets forth by level, within the fair value hierarchy, estimated fair values on a recurring basis at December 31, 2018 and 2017 were as follows (in thousands):
|
Stock Incentive Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restricted Stock Activity | The following table presents the restricted stock activity for the years ended December 31, 2018, 2017 and 2016 (in thousands, except per share amounts):
|
Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Future Minimum Lease Payments for Capital and Operating Lease | Future minimum lease payments, inclusive of accelerated lease payments, under non-cancelable capital and operating leases are summarized as follows (in thousands):
|
Quarterly Financial Data (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Quarterly Financial Information | The following table provides quarterly information for the years ended December 31, 2018 and 2017 (in thousands, except per share amounts):
|
Supplemental Cash Flow Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of Supplemental Cash Flow Information | The following table provides information regarding supplemental cash flows for the years ended December 31 (in thousands):
|
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Jan. 01, 2018 |
|
Disaggregation of Revenue [Line Items] | ||||
Contingency period (or less) | 90 days | |||
Required payment period (typically less) | 90 days | |||
Contract assets | $ 0 | $ 0 | ||
Contract liabilities | $ 0 | $ 0 | ||
Product | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, as a percent | 1.00% | 1.00% | 1.00% | |
Direct Hire revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Contract with customer, refund liability | $ 600 | $ 500 |
Summary of Significant Accounting Policies - Trade Receivables and Related Reserves (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Accounting Policies [Abstract] | ||
Accounts receivable reserves as percentage of gross accounts receivable | 1.00% | 1.00% |
Summary of Significant Accounting Policies - Leases (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Operating Leased Assets [Line Items] | |
Short-term office lease, maximum term | 1 year |
Minimum | |
Operating Leased Assets [Line Items] | |
Term of lease contract | 3 years |
Maximum | |
Operating Leased Assets [Line Items] | |
Term of lease contract | 7 years |
Summary of Significant Accounting Policies - Goodwill and Other Intangible Assets (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Cost allocation period for definite-lived intangible assets | 1 year |
Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Cost allocation period for definite-lived intangible assets | 15 years |
Summary of Significant Accounting Policies - Capitalized Software (Details) - Computers and Software |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Minimum | |
Property, Plant and Equipment [Line Items] | |
Amortization period | 1 year |
Maximum | |
Property, Plant and Equipment [Line Items] | |
Amortization period | 7 years |
Summary of Significant Accounting Policies - Workers' Compensation (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Accounting Policies [Abstract] | |
Economic burden for worker's compensation claim per occurrence | $ 250,000 |
Summary of Significant Accounting Policies - Health Insurance (Details) |
12 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
Accounting Policies [Abstract] | |
Health insurance maximum risk of loss liability per employee insurance plan (up to) | $ 350,000 |
Health insurance maximum aggregate amount of risk of loss liability for employee insurance plans (up to) | $ 700,000 |
Summary of Significant Accounting Policies - Earnings per Share (Details) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Accounting Policies [Abstract] | |||
Common stock equivalents (in shares) | 513,000 | 364,000 | 175,000 |
Antidilutive common stock equivalents (in shares) | 0 | 527,000 | 32,000 |
Reportable Segments - Additional Information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Segment Reporting Information [Line Items] | |||
Gain on sale of Global's asset | $ 0 | $ 3,148 | $ 0 |
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Kforce Global Solutions, Inc. | Technology | |||
Segment Reporting Information [Line Items] | |||
Gain on sale of Global's asset | $ 3,300 |
Reportable Segments - Operations of Segments (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Segment Reporting Information [Line Items] | |||||||||||
Revenue | $ 357,984 | $ 355,452 | $ 358,624 | $ 346,293 | $ 342,586 | $ 341,053 | $ 340,309 | $ 333,992 | $ 1,418,353 | $ 1,357,940 | $ 1,319,706 |
Gross profit | $ 106,556 | $ 104,381 | $ 107,483 | $ 100,188 | $ 102,627 | $ 104,375 | $ 103,919 | $ 97,135 | 418,608 | 408,056 | 408,499 |
Operating and other expenses | 341,455 | 343,962 | 352,544 | ||||||||
Income before income taxes | 77,153 | 64,094 | 55,955 | ||||||||
Tech | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 990,089 | 907,511 | 883,477 | ||||||||
Gross profit | 277,388 | 257,118 | 255,842 | ||||||||
FA | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 313,848 | 346,135 | 337,601 | ||||||||
Gross profit | 109,099 | 118,479 | 120,551 | ||||||||
GS | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenue | 114,416 | 104,294 | 98,628 | ||||||||
Gross profit | $ 32,121 | $ 32,459 | $ 32,106 |
Revenue - Additional Information (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Flex revenue | GS | Fixed-price Contract | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, as a percent | 41.90% | 34.30% |
Fixed Assets - Additional Information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Property, Plant and Equipment [Line Items] | |||
Fixed assets, gross | $ 67,900 | $ 71,565 | |
Accumulated depreciation and amortization | 32,082 | 31,885 | |
Depreciation and amortization | 6,300 | 6,900 | $ 6,700 |
Assets Held under Capital Leases | |||
Property, Plant and Equipment [Line Items] | |||
Fixed assets, gross | 2,300 | 3,500 | |
Accumulated depreciation and amortization | $ 1,400 | $ 2,100 |
Income Taxes - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2018 |
|
Operating Loss Carryforwards [Line Items] | ||
Adjustment of deferred tax (asset) liability | $ 5.4 | |
Unrecognized tax benefits that would impact effective tax rate | $ 0.7 | |
State | ||
Operating Loss Carryforwards [Line Items] | ||
State tax net operating losses | $ 3.4 |
Income Taxes - Income Tax Expense (Benefit), Continuing Operations (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Current tax expense: | |||
Federal | $ 12,730 | $ 15,060 | $ 16,677 |
State | 5,454 | 3,244 | 3,829 |
Deferred tax expense | 989 | 12,505 | 2,676 |
Total Income tax expense | $ 19,173 | $ 30,809 | $ 23,182 |
Income Taxes - Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Federal income tax rate | 21.00% | 35.00% | 35.00% |
State income taxes, net of Federal tax effect | 5.70% | 3.80% | 6.80% |
Non-deductible compensation and meals and entertainment | 1.00% | 0.70% | 1.20% |
Tax credits | (2.20%) | (2.20%) | (2.10%) |
Valuation allowance on foreign tax credit | 0.00% | 2.50% | 0.00% |
Enactment of TCJA | 0.00% | 9.10% | 0.00% |
Other | (0.60%) | (0.80%) | 0.50% |
Effective tax rate | 24.90% | 48.10% | 41.40% |
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred tax assets: | ||
Accounts receivable reserves | $ 738 | $ 611 |
Accrued liabilities | 1,825 | 1,953 |
Deferred compensation obligation | 5,545 | 5,423 |
Stock-based compensation | 723 | 598 |
Pension and post-retirement benefit plans | 3,471 | 3,767 |
Goodwill and intangible assets | 0 | 526 |
Foreign tax credit | 1,630 | 1,632 |
Other | 344 | 289 |
Deferred tax assets | 14,276 | 14,799 |
Deferred tax liabilities: | ||
Prepaid expenses | (190) | (251) |
Fixed assets | (1,277) | (1,482) |
Goodwill and intangible assets | (1,057) | 0 |
Other | (254) | (17) |
Deferred tax liabilities | (2,778) | (1,750) |
Valuation allowance | (1,747) | (1,733) |
Deferred tax assets, net | $ 9,751 | $ 11,316 |
Income Taxes - Income Tax Uncertainties (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits, beginning | $ 1,127 | $ 1,115 | $ 788 |
Additions for prior year tax positions | 41 | 50 | 454 |
Additions for current year tax positions | 0 | 29 | 0 |
Lapse of statute of limitations | (248) | (67) | (102) |
Reductions for tax positions of prior years | (14) | 0 | (25) |
Unrecognized tax benefits, ending | $ 906 | $ 1,127 | $ 1,115 |
Goodwill and Other Intangible Assets - Summary of the Gross Amount and Accumulated Impairment Losses of Goodwill (Detail) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Goodwill [Line Items] | |||
Gross amount | $ 280,753 | $ 280,753 | $ 280,753 |
Accumulated impairment losses | (234,785) | (234,785) | (234,785) |
Carrying value | 45,968 | 45,968 | 45,968 |
Technology | |||
Goodwill [Line Items] | |||
Gross amount | 156,391 | 156,391 | 156,391 |
Accumulated impairment losses | (139,357) | (139,357) | (139,357) |
Carrying value | 17,034 | 17,034 | 17,034 |
Finance and Accounting | |||
Goodwill [Line Items] | |||
Gross amount | 19,766 | 19,766 | 19,766 |
Accumulated impairment losses | (11,760) | (11,760) | (11,760) |
Carrying value | 8,006 | 8,006 | 8,006 |
Government Solutions | |||
Goodwill [Line Items] | |||
Gross amount | 104,596 | 104,596 | 104,596 |
Accumulated impairment losses | (83,668) | (83,668) | (83,668) |
Carrying value | $ 20,928 | $ 20,928 | $ 20,928 |
Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Goodwill And Other Intangible Assets [Line Items] | |||
Goodwill impairment | $ 0 | $ 0 | $ 0 |
Discrete forecast period | 5 years | ||
Intangible assets, net | $ 2,952,000 | 3,297,000 | |
Finite-lived intangible assets, net | 700,000 | 1,100,000 | |
Amortization of intangible assets | 27,900,000 | 27,500,000 | |
Impairment expense | 0 | 0 | $ 0 |
Trademarks and Trade Names | |||
Goodwill And Other Intangible Assets [Line Items] | |||
Intangible assets, net | $ 2,200,000 | $ 2,200,000 |
Accounts Payable and Other Accrued Liabilities - Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accounts payable | $ 22,900 | $ 21,591 |
Accrued liabilities | 15,706 | 13,282 |
Total Accounts payable and other accrued liabilities | $ 38,606 | $ 34,873 |
Accrued Payroll Costs - Components of Accrued Payroll Costs (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Payroll and benefits | $ 39,690 | $ 37,788 |
Payroll taxes | 1,842 | 5,270 |
Health insurance liabilities | 2,714 | 2,596 |
Workers’ compensation liabilities | 1,016 | 1,232 |
Total Accrued payroll costs | $ 45,262 | $ 46,886 |
Employee Benefit Plans - Actuarial Assumptions Used to Determine the Actuarial Present Value of Projected Benefit Obligations (Details) - Weighted Average |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Defined Benefit Plan Disclosure [Line Items] | ||
Discount rate | 4.00% | 3.25% |
Rate of future compensation increase | 2.90% | 2.90% |
Employee Benefit Plans - Weighted Average Actuarial Assumptions Used To Determine Net Periodic Benefit Cost (Details) - Weighted Average |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Defined Benefit Plan Disclosure [Line Items] | |||
Discount rate | 3.25% | 4.00% | 4.00% |
Rate of future compensation increase | 2.90% | 3.60% | 4.00% |
Employee Benefit Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Retirement Benefits [Abstract] | |||
Service cost | $ 1,353 | $ 319 | $ 1,310 |
Interest cost | 468 | 537 | 453 |
Net periodic benefit cost | $ 1,821 | $ 856 | $ 1,763 |
Employee Benefit Plans - Changes in the Benefit Obligation (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||
Projected benefit obligation, beginning | $ 14,409 | $ 13,436 | |
Service cost | 1,353 | 319 | $ 1,310 |
Interest cost | 468 | 537 | 453 |
Actuarial experience and changes in actuarial assumptions | (1,195) | 117 | |
Projected benefit obligation, ending | $ 15,035 | $ 14,409 | $ 13,436 |
Employee Benefit Plans - Projected Annual Benefit Payment (Details) |
Dec. 31, 2018
USD ($)
|
---|---|
Retirement Benefits [Abstract] | |
2019 | $ 0 |
2020 | 0 |
2021 | 13,351,000 |
2022 | 0 |
2023 | 0 |
2024-2027 | 0 |
Thereafter | $ 4,409,000 |
Derivative Instrument and Hedging Activity (Details) - Designated as Hedging Instrument - Interest Rate Swap - USD ($) |
May 31, 2021 |
May 31, 2020 |
May 31, 2019 |
Dec. 31, 2018 |
May 31, 2018 |
Dec. 31, 2017 |
May 31, 2017 |
---|---|---|---|---|---|---|---|
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Derivative interest rate | 1.81% | ||||||
Derivative notional amount | $ 65,000,000 | $ 65,000,000.0 | |||||
Derivative asset | $ 900,000 | $ 500,000 | |||||
Forecast | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Derivative notional amount | $ 25,000,000 | $ 25,000,000.0 | $ 65,000,000 |
Fair Value Measurements - Additional Information (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration liability | $ 187 | $ 191 |
Other Expense | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration liability remeasurement | $ 4 | $ 565 |
Commitments and Contingencies - Summary of Future Minimum Lease Payments for Capital and Operating Lease (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Present value of payments | |
2019 | $ 721 |
2020 | 154 |
2021 | 18 |
2022 | 3 |
2023 | 0 |
Thereafter | 0 |
Total | 896 |
Interest | |
2019 | 43 |
2020 | 4 |
2021 | 1 |
2022 | 0 |
2023 | 0 |
Thereafter | 0 |
Total | 48 |
Total Capital lease payments | |
2019 | 764 |
2020 | 158 |
2021 | 19 |
2022 | 3 |
2023 | 0 |
Thereafter | 0 |
Total | 944 |
Operating lease payments | |
2019 | 6,994 |
2020 | 6,177 |
2021 | 3,731 |
2022 | 2,142 |
2023 | 1,745 |
Thereafter | 1,199 |
Total | 21,988 |
Total Lease payments | |
2019 | 7,758 |
2020 | 6,335 |
2021 | 3,750 |
2022 | 2,145 |
2023 | 1,745 |
Thereafter | 1,199 |
Total Lease payments | $ 22,932 |
Quarterly Financial Data (Unaudited) - Summary of Quarterly Financial Information (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue | $ 357,984 | $ 355,452 | $ 358,624 | $ 346,293 | $ 342,586 | $ 341,053 | $ 340,309 | $ 333,992 | $ 1,418,353 | $ 1,357,940 | $ 1,319,706 |
Gross profit | 106,556 | 104,381 | 107,483 | 100,188 | 102,627 | 104,375 | 103,919 | 97,135 | 418,608 | 408,056 | 408,499 |
Net income | $ 16,356 | $ 16,177 | $ 16,272 | $ 9,175 | $ 6,140 | $ 10,099 | $ 11,144 | $ 5,902 | $ 57,980 | $ 33,285 | $ 32,773 |
Earnings per share – basic (in dollars per share) | $ 0.66 | $ 0.65 | $ 0.66 | $ 0.37 | $ 0.25 | $ 0.40 | $ 0.44 | $ 0.23 | $ 2.34 | $ 1.32 | $ 1.26 |
Earnings per share – diluted (in dollars per share) | $ 0.65 | $ 0.64 | $ 0.65 | $ 0.37 | $ 0.24 | $ 0.40 | $ 0.44 | $ 0.23 | $ 2.30 | $ 1.30 | $ 1.25 |
Supplemental Cash Flow Information - Details of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Cash paid during the year for: | |||
Income taxes | $ 13,442 | $ 24,330 | $ 21,324 |
Interest, net | 3,814 | 3,518 | 2,101 |
Non-Cash Financing and Investing Transactions: | |||
Unsettled repurchases of common stock | 556 | 898 | 935 |
Employee stock purchase plan | 549 | 522 | 669 |
Equipment acquired under capital leases | 0 | 937 | 1,153 |
Receivable for sale of Global's assets | 0 | 1,979 | 0 |
Shares tendered in payment of exercise price of stock options | 0 | $ 0 | $ 63 |
Proceeds from income tax refunds | $ 6,800 |
Label | Element | Value |
---|---|---|
Accounting Standards Update 2016-09 [Member] | Additional Paid-in Capital [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 769,000 |
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