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Kforce Expects to Record a Non-Cash Impairment Charge in its Government Solutions Reporting Unit

Kforce Expects to Record a Non-Cash Impairment Charge in its Government Solutions Reporting Unit

Kforce Inchas announced that it expects to record a non-cash goodwill impairment charge in the second quarter of 2012 relating to goodwill arising out of acquisitions made by Kforce in 2006 and 2008 in its Government Solutions (GS) reporting unit. The non-cash impairment charge is estimated to be in the range of $60 million to $70 million on a pre-tax basis.

Joe Liberatore, Chief Financial Officer, said, "The non-cash impairment charge was identified in connection with an interim goodwill impairment assessment that was performed during the 2nd quarter of 2012, which indicated an impairment of the carrying value of GS likely existed. The interim goodwill impairment assessment was performed in conjunction with a reforecast of GS' results for the remainder of 2012 and beyond. GS revenues and pipeline continues to be adversely impacted by increasingly significant delays in the start-up of already executed and funded projects due to acute shortages of acquisition and contracting personnel within certain Federal Government agencies, uncertainty of funding levels of various Federal Government programs and agencies and the increasingly uncertain macro-economic and political environment. All of these factors have had an adverse effect on GS operations and forecasted cash flows, its enterprise value as well as overall equity values in the GS sector. Against this uncertain backdrop, revenues for our GS reporting unit for the second quarter are now expected to decline and may be approximately $21.5 million."

Mr. Liberatore continued, "We expect that the impairment charge will not result in any cash expenditures and will not affect Kforce's cash position, cash flow from operating activities, free cash flow, liquidity position and should not have any effect on current or future operations of Kforce. The impairment charge that will be recorded in the 2nd quarter of 2012 is an estimate and is subject to change once the second step of the impairment test is completed."

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