Kforce, Inc. · NYSE:KFRC
Kforce — Merger or Acquisition (October 2006)
30 slides from Kforce's merger presentation, October 2006
Slide 1: Kforce Government Practice
KFORCE mm GOVERNMENT PRACTICE Great People — Great Results”
Slide 2: Forward Looking Statements
Forward Looking Statements Certain of the above statements are forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Slide 3: Kforce Government Practice Ready for Success
Kforce Government Practice Ready for Success 3
Slide 4: Kforce Strategy Timeline
Kforce Strategy Timeline Vista PCCI Bradson Pre-Vista 02/05 02/06 10/06 Staff augmentation Entry into Prime solutions contract Prime solutions contract only Government sector relationships in relationships in Government Tech sector Government Finance & Minimal Government Completely Accounting Sector
Slide 5: Strategic Business Drivers
Strategic Business Drivers • Achieve scale necessary for strong organic growth • Expand into service area that has high needs, high barriers to entry, and Kforce has substantial expertise and infrastructure. • Expand service offering & cross selling opportunities – Enter/expand government practice i
Slide 6: Organizational Structure
Organizational Structure William Sanders President Kforce Government Holdings, Inc. Patrick Moneymaker CEO KGS Bradson Larry Grant David Halstead President President 6
Slide 7: Patrick Moneymaker
Patrick Moneymaker Pat has served as CEO of Ocean Systems Engineering Corp (OSEC), a privately held company based in Carlsbad, CA until its recent acquisition in 2006. OSEC provides full spectrum engineering services for the Dept of Defense that includes software development, C4I systems integration
Slide 8: Federal Government Market
Federal Government Market • Federal Government is single largest employer in US – 60% of employees are over 45 years old – 50% are within 5 years of being eligible to retire • Government is world’s largest buyer of Technology at approximately $65 billion in 2006 • Government Finance and Accounting S
Slide 9: Kforce Government Solutions
Kforce Government Solutions 9
Slide 10: Larry Grant
Larry Grant Larry Grant presently serves as President, Kforce Government Solutions Technology Business. Prior to KGS, Larry served as Southern Regional Director, Defense and Intelligence Solutions with General Dynamics. Prior to General Dynamics, Mr. Grant had a distinguished 20-year career with the
Slide 11: KGS Overview
KGS Overview • Headquartered in Fairfax, VA and providing Technology services to the Federal Government for 35 years • Offers industry award-winning Data Confidence Center of Excellence • Clients include: – Department Homeland Security - FDIC – Drug Enforcement Administration (DEA) - US State Depart
Slide 12: KGS Revenue and EBITDA
KGS Revenue and EBITDA (Amounts in 000’s; Unaudited) $40,000 $30,000 $20,000 $10,000 Fcst $0 2002 2003 2004 2005 2006 Fcst Revenue $29,766 $31,832 $31,698 $32,218 $29,067 EBITDA $3,352 $2,871 $3,473 $3,596 $2,047 EBITDA 11.26% 9.02% 10.96% 11.16% 7.04% Margin Revenue Growth 6.94% (0.42)% 1.64% (9.78
Slide 13: Bradson Corporation
Bradson Corporation Great People — Great Results”
Slide 14: David Halstead
David Halstead David has been appointed the President of Bradson. He has an impressive record of building and sustaining business in the federal government marketplace. Prior to this acquisition, David directed Bradson’s operations and business development strategies for its DoD, Homeland Security,
Slide 15: Bradson Overview
Bradson Overview • Has provided Finance & Accounting Professional Services to the Federal Government for 20+ years – Accounting, Budgeting, and Financial Mgmt (>80%) – Acquisition, Business, and Program Mgmt • Highly Profitable ($30.6M Revenue, $11.1M EBITDA) • Two GSA schedule contracts, to include
Slide 16: Bradson Customer Overview
Bradson Customer Overview Defense Advanced Research Projects Agency (DARPA) Defense Threat Reduction Agency (DTRA) Impressive Customer List Defense Logistics Agency (DLA) National Geospatial Intelligence Agency (NGA) 9 Department of Defense 9 Department of Homeland Security TRICARE Management Activi
Slide 17: Federal Environment and Bradson Complexities
Federal Environment and Bradson Accounting, Budgeting, Summary of Key Laws and Reform and Financial Management Initiatives • Chief Financial Officers (CFO) Act • Numerous Operational, Day-To-Day Requirements, plus… • Federal Financial Management Improvement Act • Federal Managers’ Financial Integrit
Slide 18: Bradson Organizational Overview
Bradson Organizational Overview BRADSON Staff Staff Education Education 85% • 3% PhD / JD • 32% Master’s 3% 3% 32% • 50% Bachelor’s 9% 3% 15% • 3% Associate’s • 9% Some College • 3% HS Diploma 50% PhD/JD MA/MS BA/BS AA/AS SC HS 18
Slide 19: Bradson Organizational Overview
Bradson Organizational Overview BRADSON DOD BRADSON DODClearances Clearances 94% Cleared 33% 6% 5% • 5% Top Secret / 11% Sensitive Compartmented Information • 11% TS • 45% Secret 45% • 33% Interim Secret • 6% No Clearance Top Secret/SCI Top Secret Secret Interim Secret No Clearance 19
Slide 20: Bradson Revenue and EBITDA
Bradson Revenue and EBITDA (Amounts in 000’s; Unaudited) $40,000 $30,000 $20,000 $10,000 Fcst $0 2002 2003 2004 2005 2006 Fcst Revenue $10,013 $13,224 $16,252 $21,556 $30,576 EBITDA $2,347 $4,044 $5,370 $7,344 $11,137 EBITDA 23.44% 30.58% 33.04% 34.07% 36.42% Margin Revenue Growth 32.07% 22.90% 32.6
Slide 21: Financial Overview
Financial Overview 21
Slide 22: Transaction EBITDA Multiples
Transaction EBITDA Multiples (Amounts in 000’s; Unaudited) Purchase Price $73,000 Net Present Value of Tax Benefit 13,000 Purchase Price less Tax Benefit $60,000 2006 Forecast EBITDA $11,137 EBITDA Multiples: 2006 Forecast EBITDA 6.57x 2006 Forecast EBITDA less NPV of Tax Benefit 5.40x 22
Slide 23: Proforma 2006 Government Revenue Distribution
Proforma 2006 Government Revenue Distribution (Unaudited) $31m Total Govt: 27% $113 Million Bradson $53m Staffing 47% KGS $29m 26% Staffing KGS Bradson 23
Slide 24: Proforma Annual Revenue Distribution
Proforma Annual Revenue Distribution (Unaudited) $60m , 7% Total Direct Revenue: $201m $969 Million 21% Gov’t HLS $455m Tech 46% FA $253m 26% Tech FA HLS Direct Gov't 24
Slide 25: Proforma Combined Balance Sheet
Proforma Combined Balance Sheet (Amounts in 000’s; Unaudited) As of June 30, 2006 AR Gross Balance $142,183 Bank Debt 106,000 Total Equity 240,935 Working Capital 88,588 Trailing Twelve Months EBITDA 70,428 25
Slide 26: Q4 Outlook
Q4 Outlook • Transaction should increase 4th Quarter revenues by approximately $7.5 million • Transaction costs expected to be minimal • Transaction expected to be accretive in 2007 26
Slide 27: Conclusion
Conclusion • Kforce Government Practice has experienced, proven management • Government sector provides opportunity for leverage in both Technology and Finance & Accounting • Government platform acquisition now complete and focused on organic growth • Positive government workforce demographics provi
Slide 28: Attachment A
Attachment A 28
Slide 29: EBITDA Reconciliation
EBITDA Reconciliation (Amounts in 000’s; Unaudited) KGS 2002 2003 2004 2005 2006 EBITDA $ 3,352 $ 2,871 $ 3,473 $ 3,596 $ 2,047 Depreciation and Amortization (183) (182) (170) (157) (7) Interest Income (Expense) and Other (189) (43) (44) (116) (110) Earnings Before Income Taxes $ 2,980 $ 2,646 $ 3,2
Slide 30: TTM EBITDA Reconciliation
TTM EBITDA Reconciliation (Amounts in 000’s; Unaudited) Kforce EBITDA $ 61,098 Depreciation and Amortization (11,680) Interest Expense and Other (2,693) Earnings Before Income Taxes $ 46,725 Bradson EBITDA $ 9,330 Depreciation and Amortization (71) Interest Expense and Other 123 Earnings Before Inco