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The long-term goals, which were initiated in the year 2000,
are coming to fruition and are reflected in our 2005 financial
results. We feel that COMFORCE is now better positioned both
financially and strategically for even greater success. Our
innovation into new service offerings has given us the opportunity
to change our direction away from the commoditization which
has taken place in the more traditional sectors of the staffing
industry. Our new business process services have integrated
COMFORCE into tighter knit relationships with our client companies.
The results are evidenced in our 12.3% growth in sales in
2005 compared to 2004. The increase in fourth quarter 2005
revenues marked our tenth consecutive quarter of improved
year-over-year revenue growth.
Dynamic upgrades in our technological capabilities, made possible
through a $13.9 million investment in PeopleSoft® software
over the past several years, has further enhanced sales and
accelerated productivity. We believe the utilization of this
software has given us a competitive edge in winning new business
and expanding our services to current clients. In 2005 we
made the decision to purchase and begin implementation of
WebPas®, an integrated front office recruiting software,
throughout our national network. This software further refines
our servicing capabilities by accelerating response time to
our client requests.
Our picture brightens more by the continuing reduction of
our public debt and related interest costs. COMFORCE is now
poised for increased profitability based on a stronger financial
foundation. A few of the highlights which contributed to this
year’s results and support our optimism are:
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We are fully committed to improving our capital structure
and continue to work with our financial advisors in examining
refinancing alternatives that we believe best serve our
shareholders;
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Reduction of public debt through the repurchase and
exchange of $99.2 million of 15% PIK Debentures and 12%
Senior Notes, reducing our public debt to $46.3 down from
$138.8 million since June 30, 2000.
Record breaking sales in 2005 of $539.8 million were a 12.3%
increase over the $480.9 million for the year 2004. Operating
income also showed an upward trend to $15.6 million in 2005
from $14.1 million for 2004. The 3rd and 4th quarters sales
of 2005 rose 12.7% and 7.3%, respectively, over the comparable
period and broke all previous quarterly sales records.
These fine results were largely due to the continued growth
of our Human Capital Management segment, PrO Unlimited. There
has also been great enthusiasm in the marketplace for our
staffing vendor management (RightSourcing® Services),
and a resurgence of interest in the Information Technology
division, which sales grew by 31.8% in 2005. However, PrO
Unlimited’s 15.3% sales growth in ‘05 played a
major role in our performance and, combined with our RightSourcing
Services, are expected to have the greatest potential for
shaping our future.
Both of these business process services were born as solutions
to the thorniest of our client dilemmas. Most businesses and
medical facilities utilize multiple staffing vendors to access
a variety of specialized skills on an interim basis. The management
of this strategic function is a virtual nightmare for many
company administrators. The necessity for over 99% of American
companies to utilize contingent workers in order to remain
profitable and competitive has resulted in a $90 billion contingent
staffing industry which employs over 2.5 million employees
on any one day and approximately 12 million employees each
year.
Our PrO Unlimited subsidiary provides major employers a unique
end-to-end business process solution for the procurement,
engagement, tracking and management of their contingent workforce
including a solution to the utilization of 1099 Independent
Contractors as well as providing employer of record services
for professional self-sourced workers. PrO’s blend of
unmatched intellectual capital, streamlined processes and
unique proprietary technology gives it a leadership position
in the human capital management arena.
Hospitals primarily dedicated to patient care and faced with
a growing shortage of skilled medical professionals, particularly
nurses, aggressively seek assistance in the recruitment and
management of multiple staffing vendors through COMFORCE RightSourcing®
Services. This vendor management service streamlines, standardizes,
and simplifies processes. Utilizing sophisticated technology
and single contact coordination, commercial and medical establishments
alike can save millions in staffing costs.
We continually seek new avenues for business expansion. Providing
services to the federal government and the evolving information
technology sector are two of the specialized areas which have
opened up opportunities for additional business. The luxury
of being a service provider enables COMFORCE to respond immediately
to changing marketplace demands. There have been very few
challenges which we have not been able to meet head on.
The future always looms with unknowns, but we have great confidence
in our ability to overcome obstacles with the continued support
and loyalty of our shareholders, contract employees, corporate
staff and valued advisors. In response to this support, COMFORCE’s
mission is to fulfill our social responsibility by creating
jobs, continuing to set an example for ethical business practices
and to increase value to our shareholders. We will do our
utmost to continue our commitment to each of these goals and
to improving our capital structure for the future.
Sincerely,
John Fanning
Chief Executive Officer
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