Slide 1: Kforce Government Practice
IKKFORCE w= GOVERNMENT PRACTICE
Slide 2: Forward Looking Statements
2 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 Securitie
Slide 3: Pre-Vista to Bradson
Pre-Vista Bradson 10/06 Staff augmentation only Minimal Government exposure Spot market model or subcontractor to prime vendors Entry into Government sector Completely subcontract staffing Enhanced Kforce Tech footprint in Metro DC market Prime solutions contract relationships in Goverment Tech sect
Slide 4: Strategic Business Drivers
5 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
Slide 5: Kforce Inc. Government Leadership Structure
Kforce Inc. William Sanders President Kforce Government Holdings, Inc. Patrick Moneymaker CEO KGS Bradson Larry Grant David Halstead President President KFORCE = CovERNMENT PRACTICE
Slide 6: Patrick Moneymaker
7 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 integrati
Slide 7: Federal Government Market
8 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
Slide 8: Larry Grant
10 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
Slide 9: KGS Overview
11 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 Dep
Slide 10: KGS Revenue and EBITDA
12 (43.07)% 3.56% 20.96% (14.35)% EBITDA Growth KGS Revenue and EBITDA $0 $10,000 $20,000 $30,000 $40,000 Revenue $29,766 $31,832 $31,698 $32,218 $29,067 EBITDA $3,352 $2,871 $3,473 $3,596 $2,047 2002 2003 2004 2005 2006 Fcst (9.78)% 1.64% (0.42)% 6.94% Revenue Growth 11.16% 7.04% 10.96% 9.02% 11.26
Slide 11: David Halstead
14 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 Securit
Slide 12: Bradson Overview
15 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 incl
Slide 13: Bradson Customers: Defense, Homeland Security, Civilian Agencies
16 - Defense - Homeland Security - Civilian Agencies Chemical Biological Defense Program (CBDP) U.S. International Trade Commission (USITC) General Services Administration, Federal Supply Service (GSA FSS) Architect of the Capitol (AOC) Department of the Interior, Bureau of Land Management (DOI BLM)
Slide 14: Federal Environment and Bradson
17 Summary of Key Laws and Reform Initiatives • Chief Financial Officers (CFO) Act • Federal Financial Management Improvement Act • Federal Managers’ Financial Integrity Act • Government Management Reform Act • Clinger Cohen Act • Government Performance and Results Act • OMB Circular A 123, Manageme
Slide 15: Bradson Staff Education
18 BRADSON Staff Education Bradson Organizational Overview 85% • 3% PhD / JD • 32% Master’s • 50% Bachelor’s 15% • 3% Associate’s • 9% Some College • 3% HS Diploma 3% 32% 50% 3% 3% 9% PhD/JD MA/MS BA/BS AA/AS SC HS
Slide 16: Bradson DoD Clearances
19 BRADSON DOD Clearances Bradson Organizational Overview 94% Cleared • 5% Top Secret / Sensitive Compartmented Information • 11% TS • 45% Secret • 33% Interim Secret • 6% No Clearance 5% 11% 45% 33% 6% Top Secret/SCI Top Secret Secret Interim Secret No Clearance
Slide 17: Bradson Revenue and EBITDA
20 51.65% 36.75% 32.79% 72.28% EBITDA Growth Bradson Revenue and EBITDA $0 $10,000 $20,000 $30,000 $40,000 Revenue $10,013 $13,224 $16,252 $21,556 $30,576 EBITDA $2,347 $4,044 $5,370 $7,344 $11,137 2002 2003 2004 2005 2006 Fcst 41.84% 32.64% 22.90% 32.07% Revenue Growth 36.42% 34.07% 33.04% 30.58% 2
Slide 18: Transaction EBITDA Multiples
22 Transaction EBITDA Multiples 5.40x 2006 Forecast EBITDA less NPV of Tax Benefit 6.57x 2006 Forecast EBITDA EBITDA Multiples : $11,137 2006 Forecast EBITDA $60,000 Purchase Price less Tax Benefit 13,000 Net Present Value of Tax Benefit $73,000 Purchase Price (Amounts in 000’s; Unaudited)
Slide 19: Proforma 2006 Government Revenue Distribution
23 Bradson KGS Staffing $29m 26% $53m 47% $31m 27% Staffing KGS Bradson Bradson KGS Staffing Proforma 2006 Government Revenue Distribution Total Govt: $113 Million (Unaudited)
Slide 20: Proforma Annual Revenue Distribution
24 HLS FA Tech Direct Gov’t Proforma Annual Revenue Distribution $60m , 7% $253m 26% $455m 46% $201m 21% Tech FA HLS Direct Gov't HLS FA Tech Direct Gov’t Total Revenue: $969 Million (Unaudited)
Slide 21: Proforma Combined Balance Sheet
25 Proforma Combined Balance Sheet As of June 30, 2006 AR Gross Balance 142,183 $ Bank Debt 122,000 Total Equity 240,935 Working Capital 88,588 Trailing Twelve Months EBITDA 70,428 (Amounts in 000’s; Unaudited)
Slide 22: Q4 Outlook
26 Q4 Outlook • Transaction should increase 4 Quarter revenues by approximately $7.5 million • Transaction costs expected to be minimal • Transaction expected to be accretive in 2007 th
Slide 23: Conclusion
27 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 pr
Slide 24: EBITDA Reconciliation
29 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,
Slide 25: TTM EBITDA Reconciliation
30 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 Earnings Before Incom