TeamStaff Reports Fourth Quarter and Fiscal 2007 Results; Posts Fourth Quarter Income...

TeamStaff Reports Fourth Quarter and Fiscal 2007 Results; Posts Fourth Quarter
Income From Operations

SOMERSET, N.J., Jan. 15 /PRNewswire-FirstCall/ -- TeamStaff, Inc. (Nasdaq:
TSTF), a national provider of healthcare and administrative staffing services,
today announced its financial results for the quarter ended September 30,
2007. TeamStaff's revenues from continuing operations for the three months
ended September 30, 2007 were $16.5 million as compared to $ 17.4 million in
the comparable quarter last year. Income from operations for the three months
ended September 30, 2007 was $0.04 million as compared to a loss of $0.58
million in the comparable quarter last year. This represents an improvement
of $0.6 million over the prior year. Loss from continuing operations was
$.374 million or ($.02) per share compared to $17.2 million or ($.89) per
share in the comparable quarter last year. The current quarter results
include approximately $0.4 million or ($0.02) per share in legal expense
resulting from the government investigation related to pre-acquisition
activity in our RS Staffing Services subsidiary. Fourth quarter 2006 included
a deferred tax valuation allowance of $16.9 million or ($0.87) per share.
Commenting on the Company's initiatives and performance, TeamStaff's
President and CEO, Rick J Filippelli, stated, "We continue to execute on our
plan as evidenced by our return to operating profitability in the fourth
quarter of fiscal 2007. Over the last three quarters gross margins have
improved 300 basis points, SG&A costs have decreased 11% despite almost
doubling our sales and marketing expenses and we implemented a new front end
system which is expected to improve our operating efficiency. Additionally, we
have continued to build and strengthen our management team. In March we hired
Terry Merlin who has twelve years of medical staffing experience to lead our
TeamStaff Rx travel allied and travel nursing subsidiary. In June we hired
Kevin Wilson with fifteen years of government contracting experience to lead
our RS Staffing Services government staffing subsidiary. Most recently, we
promoted Cheryl Presuto to Chief Financial Officer. Cheryl has been with
TeamStaff for six years and has fifteen years of financial experience
including three as TeamStaff's Controller. As we entered fiscal 2008, we are
in the process of selling our Memphis, Tennessee per diem operation. Per diem
staffing is non-strategic to our travel and government business. This sale
will provide additional liquidity and enable management to focus on our core
businesses. We initiated a Corporate branding campaign which will promote
consistency and brand recognition as well as increase TeamStaff's visibility
in the marketplace. Additionally, we are expanding our reach within the
government sector beyond Department of Veterans Affairs opportunities by
bidding on Department of Defense staffing contracts afforded to large
businesses. Based on our initiatives and execution, we believe the Company is
positioned for profitability in fiscal 2008."
TeamStaff's gross profit was $3.0 million, or 18.4% of revenues, in the
fourth quarter of fiscal 2007 as compared to $2.8 million, or 16.1% of
revenues, in the fourth quarter of fiscal 2006. The improvement in gross
profit is a direct result of recent sales, pricing and direct cost control
initiatives.
SG&A expenses were $2.9 million in the fourth quarter of fiscal 2007
compared to $3.3 million in the comparable quarter last year. SG&A expenses
decreased by approximately twelve percent.
Other expense was $0.4 million and $0.03 million for the three months
ended September 30, 2007 and 2006, respectively. The increase in other expense
relates to RS Staffing legal fees.
Cash and cash equivalents were $0.6 million at September 30, 2007.
Availability at September 30, 2007 under the Company's revolving credit
facility was approximately $5.5 million. The Company believes that, along
with its cash on hand, the availability under the existing revolving line of
credit, and extended or successor facilities, will provide sufficient
liquidity over the next twelve months.
Full Year Results
TeamStaff's revenues from continuing operations for the twelve months
ended September 30, 2007 were $66.9 million as compared to $71.6 million last
year. TeamStaff's gross profit was $11.0 million, or 16.5% of revenues, for
the twelve months ended September 30, 2007 as compared to $11.8 million, or
16.4% of revenues, for the twelve months ended September 30, 2006.
SG&A expenses were $12.7 million and $13.8 million for the twelve months
ended September 30, 2007 and 2006, respectively. Adjusted for the $0.7
million of severance included in fiscal 2007, SG&A expenses for the current
fiscal year decreased by approximately $1.8 million or thirteen percent.
Other expense was $1.5 million and $0.3 million for the twelve months
ended September 30, 2007 and 2006, respectively. The increase in other expense
relates to RS Staffing legal fees.
Loss from continuing operations was $3.4 million or ($0.17) per share for
the twelve months of fiscal 2007 and includes $1.5 million or ($0.08) per
share in legal fees. This compares to a loss of $18.5 million or ($0.96) per
share for the twelve months of fiscal 2006. Fiscal 2006 included a deferred
tax valuation allowance expense of $16.9 million or ($0.87) per share. Net
loss, including the results from discontinued operations, was $4.7 million or
($0.24) per share for the twelve months of fiscal 2007 and includes a loss of
$1.6 million or ($0.08) per share related to the expected disposition of the
per diem division. This compares to a net loss of $13.2 million or $(0.69)
per share for the twelve months of fiscal 2006. In fiscal 2006, the net loss
includes $5.1 million or $0.26 per share of net income related to the
profitable operations and sale of the DSI Payroll Services division.
As a result of TeamStaff's sale of its DSI Payroll Services ("DSI")
division that was completed on May 31, 2006 and the probable sale of the
Nursing Innovations per diem business, all results reported in this release
have been reclassified to show DSI, Nursing Innovations per diem, and certain
corporate expenses as discontinued operations. Approximately 90 percent of
TeamStaff's revenues are derived from medical staffing.
About TeamStaff, Inc.
Headquartered in Somerset, New Jersey, TeamStaff serves clients and their
employees throughout the United States as a full-service provider of medical
and administrative staffing. TeamStaff's TeamStaff Rx subsidiary is a leading
provider of travel nursing and travel allied healthcare professionals.
TeamStaff Rx operates throughout the US and specializes in the supply of
travel allied medical employees and travel nurses, typically placed on 13 week
assignments. TeamStaff's RS Staffing Services subsidiary specializes in
providing medical and office administration/technical professionals through
nationwide Federal Supply Schedule contracts with both the United States
General Services Administration and the United States Department of Veterans
Affairs. For more information, visit the TeamStaff web site at
www.teamstaff.com.
This press release contains "forward-looking statements" as defined by the
Federal Securities Laws. TeamStaff's actual results could differ materially
from those described in such forward-looking statements as a result of certain
risk factors and uncertainties, including but not limited to: our ability to
continue to recruit qualified temporary and permanent healthcare professionals
and administrative staff at reasonable costs; our ability to retain qualified
temporary healthcare professionals and administrative staff for multiple
assignments at reasonable costs; our ability to attract and retain sales and
operational personnel; our ability to enter into contracts with hospitals,
healthcare facility clients, affiliated healthcare networks, physician
practice groups and the United States government on terms attractive to us and
to secure orders related to those contracts; our ability to demonstrate the
value of our services to our healthcare and other facility clients; changes in
the timing of hospital, healthcare facility clients', physician practice
groups' and U.S. Government orders for and our placement of temporary and
permanent healthcare professionals and administrative staff; our ability to
successfully bid on government contract opportunities, to win the bids and
then to fully implement the contracts once awarded; the process of government
contracting in general including, but not limited to, the protest process, and
the on-time commencement of government contracts awarded; the general level of
patient occupancy at our hospital, healthcare facility clients' and physician
practice groups' facilities; the overall level of demand for services offered
by temporary and permanent healthcare staffing providers; the ability of our
hospital, healthcare facility and physician practice group clients to retain
and increase the productivity of their permanent staff; the variation in
pricing of the healthcare facility contracts under which we place temporary
and permanent healthcare professionals; our ability to successfully implement
our strategic growth, acquisition and integration strategies; our ability to
successfully integrate completed acquisitions into our current operations; our
ability to manage growth effectively; our ability to leverage our cost
structure; the performance of our management information and communication
systems; the effect of existing or future government legislation and
regulation; our ability to grow and operate our business in compliance with
these legislation and regulations; the impact of medical malpractice and other
claims asserted against us; the disruption or adverse impact to our business
as a result of a terrorist attack; our ability to carry out our business
strategy; the loss of key officers and management personnel that could
adversely affect our ability to remain competitive; other regulatory and tax
developments; the effect of recognition by us of an impairment to goodwill;
the effect of adjustments by us to accruals for self-insured retentions and
other one-time events and other important factors disclosed previously and
from time-to-time in TeamStaff's filings with the U.S. Securities Exchange
Commission. These factors are described in further detail in TeamStaff's
filings with the U.S. Securities and Exchange Commission. The information in
this release should be considered accurate only as of the date of the release.
TeamStaff expressly disclaims any current intention to update any forecasts,
estimates or other forward-looking statements contained in this press release.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: Statements in this press release regarding TeamStaff, Inc.'s business
which are not historical facts are "forward-looking statements" that involve
risks and uncertainties. For a discussion of such risks and uncertainties
which could cause actual results to differ from those contained in the
forward-looking statements, see "Risk Factors" in the Company's Annual Report
or Form 10-K for the most recently ended fiscal year.

TEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

For the Three Months
Ended September 30,
2007 2006
(unaudited) (unaudited)

REVENUES $16,504 $17,431

DIRECT EXPENSES 13,470 14,629
Gross profit 3,034 2,802

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 2,904 3,290

DEPRECIATION AND AMORTIZATION 87 95
Income (loss) from operations 43 (583)

OTHER INCOME (EXPENSE)
Interest income 16 37
Interest expense (36) (56)
Other income 21 47
Legal expense related to pre-acquisition
activity of acquired company (433) -
(432) 28

Loss from continuing operations before
income tax (389) (555)

INCOME TAX BENEFIT (EXPENSE) 15 (16,641)
Loss from continuing operations (374) (17,196)

LOSS FROM DISCONTINUED OPERATIONS:
Loss from operations, net of tax benefit of
$0 and $8 for the quarters ended September
30, 2007 and 2006, respectively (1,653) (12)
Income (loss) from disposal, net of tax
benefit of $91 and $2 for the quarters ended
September 30, 2007 and 2006, respectively 91 (3)
Loss from discontinued operations (1,562) (15)
Net loss (1,936) (17,211)

(LOSS) EARNINGS PER SHARE - BASIC & DILUTED
Loss from continuing operations $(0.02) $(0.89)
Loss from discontinued operations (0.08) (0.00)
Net (loss) earnings per share $(0.10) $(0.89)

WEIGHTED AVERAGE BASIC AND DILUTED SHARES
OUTSTANDING 19,343 19,278

TEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

For the Years Ended September 30,
2007 2006

REVENUES $66,882 $71,644

DIRECT EXPENSES 55,852 59,859
Gross profit 11,030 11,785

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 12,714 13,812

DEPRECIATION AND AMORTIZATION 349 381
Loss from operations (2,033) (2,408)

OTHER INCOME (EXPENSE)
Interest income 74 76
Interest expense (197) (539)
Other income 145 160
Legal expense related to pre- acquisition
activity of acquired company (1,486) -
(1,464) (303)

Loss from continuing operations before
income tax (3,497) (2,711)

INCOME TAX BENEFIT (EXPENSE) 123 (15,826)
Loss from continuing operations (3,374) (18,537)

(LOSS) INCOME FROM DISCONTINUED OPERATIONS:
(Loss) income from operations, net of tax
benefit (expense) of $14 and $(456) for the
years ended September 30, 2007 and 2006,
respectively (1,612) 737
Income from disposal, net of tax benefit
(expense) of $43 and $(2,825) for the years
ended September 30, 2007 and 2006,
respectively 293 4,553
(Loss) income from discontinued operations (1,319) 5,290
Net loss (4,693) (13,247)

(LOSS) EARNINGS PER SHARE - BASIC & DILUTED
Loss from continuing operations $(0.17) $(0.96)
(Loss) income from discontinued operations (0.07) 0.27
Net (loss) earnings per share $(0.24) $(0.69)

WEIGHTED AVERAGE BASIC AND DILUTED SHARES
OUTSTANDING 19,288 19,278

TEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)

September 30, September 30,
ASSETS 2007 2006

CURRENT ASSETS:
Cash and cash equivalents $592 $2,157
Accounts receivable, net of allowance for
doubtful accounts of $17 and $44 as of
September 30, 2007 and 2006, respectively 8,279 8,340
Prepaid workers' compensation 468 1,094
Assets held for sale 490 -
Other current assets 642 923
Total current assets 10,471 12,514

EQUIPMENT AND IMPROVEMENTS:
Furniture and equipment 3,276 3,223
Computer equipment 545 448
Computer software 928 898
Leasehold improvements 124 167
4,873 4,736

Less accumulated depreciation and
amortization (4,132) (3,984)
Equipment and improvements, net 741 752

TRADENAME 4,569 4,569

GOODWILL 10,305 10,305

OTHER ASSETS:
Prepaid workers' compensation, net of
current portion - 350
Other assets 82 106
Total other assets 82 456

ASSETS HELD FOR SALE - 2,180

TOTAL ASSETS $26,168 $30,776

TEAMSTAFF, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT PAR VALUE OF SHARES)

September 30, September 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 2007 2006

CURRENT LIABILITIES:
Notes payable $1,500 $1,500
Current portion of capital lease obligations 63 52
Accrued payroll 1,581 1,687
Accrued pension liability 280 210
Accounts payable 3,727 3,207
Accrued expenses and other current liabilities 1,756 1,635
Liabilities from discontinued operations 263 -
Total current liabilities 9,170 8,291

CAPITAL LEASE OBLIGATIONS, net of current portion 183 207

ACCRUED PENSION LIABILITY, net of current portion 66 388

OTHER LONG TERM LIABILITY, net of current portion 155 184

LIABILITIES FROM DISCONTINUED OPERATIONS - 502

Total liabilities 9,574 9,572

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
Preferred stock, $.10 par value; authorized
5,000 shares; none issued and outstanding - -
Common Stock, $.001 par value; authorized
40,000 shares; issued 19,290 and 19,285 at
September 30, 2007 and September 30, 2006,
respectively; outstanding 19,283 and 19,278
at September 30, 2007 and September 30, 2006,
respectively 19 19
Additional paid-in capital 68,712 68,684
Accumulated deficit (52,080) (47,387)
Accumulated comprehensive loss (33) (88)
Treasury stock, 7 shares at cost at
September 30, 2007 and September 30, 2006 (24) (24)
Total shareholders' equity 16,594 21,204

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $26,168 $30,776

TeamStaff, Inc. and Subsidiaries
Consolidated Statements of Operations
Supplemental Schedule
(Amounts in Thousands, except per share data)

For the six months ended
September 30, March 31, Fiscal
2007 2007 2007
Unaudited Unaudited

Revenue $33,117 $33,765 $66,882
Gross Profit 6,010 5,020 11,030
Gross Profit % 18.1% 14.9% 16.5%

Selling, General, & Administrative
Expenses 6,035 6,679 12,714

Fee Income 60 93 153

Operating EBITDA 35 (1,566) (1,531)

Depreciation & Amortization 172 177 349

EBIT (137) (1,743) (1,880)

Legal Expense - Pre-acquisition
activity (1,486) - (1,486)
Interest Expense, Net (57) (74) (131)
Loss from continuing operations
before income tax (1,680) (1,817) (3,497)
Income Tax Benefit 15 108 123

Loss from Continuing Operations ($1,665) ($1,709) (3,374)

EPS from Continuing Operations ($0.08) ($0.09) ($0.17)

Weighted Average Basic and Diluted
Shares Outstanding 19,320 19,249 19,288

* EBITDA is defined as earnings before interest, taxes, depreciation and
amortization
** EBIT is defined as earnings before interest and taxes

This press release includes certain non-GAAP financial measures.
TeamStaff's management does not suggest that investors consider such non-GAAP
financial measures in isolation from, or as a substitute for, GAAP financial
measures, such as net income, cash flow data or other financial information
presented in the consolidated financial statements. EBITDA, a non-GAAP
financial measure, is defined as earnings before interest, income taxes,
depreciation and amortization. EBIT is defined as earnings before interest and
taxes. Items excluded from EBITDA and EBIT are significant components in
understanding and assessing financial performance. The Company believes it is
useful for management and investors to review both GAAP information and non-
GAAP financial measures to have a better understanding of the overall
performance of the Company's business and trends relating to its financial
condition and results of operations. Management believes that this
information provides greater insight into our Company's underlying operating
performance that facilitates a more meaningful comparison of its financial
results in different reporting periods. The Company has chosen to show the
six month comparison of fiscal 2007 results to highlight the progress the
Company has made in its turnaround efforts.
SOURCE TeamStaff, Inc.

Rick Filippelli, President and CEO of TeamStaff, Inc., 1-866- 352-5304; Donald
C. Weinberger, don@wolfeaxelrod.com, or Alisa Steinberg, media,
alisa@wolfeaxelrod.com, both of Wolfe Axelrod Weinberger Associates, LLC,
+1-212-370-4500