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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended DECEMBER 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
Commission file number 0-26058
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
KFORCE INC. 401(k) RETIREMENT SAVINGS PLAN
1001 EAST PALM AVENUE
TAMPA, FL 33605
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
KFORCE INC.
1001 EAST PALM AVENUE
TAMPA, FL 33605
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KFORCE 401(K) RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
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PAGE
INDEPENDENT AUDITORS' REPORTS 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
as of December 31, 2001 and 2000 2
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2001 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULE:
Form 5500, Schedule H, Part IV, Line 4i - Assets Held for Investment Purposes
as of December 31, 2001 10
Schedules not filed herewith are omitted because of the absence of conditions
under which they are required.
INDEPENDENT AUDITORS' REPORT
To the Participants and Administrator of
Kforce 401(k) Retirement Savings Plan f/k/a kforce.com, Inc. 401(k)
Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Kforce 401(k) Retirement Savings Plan (the "Plan") as of December 31,
2001 and 2000, and the related statement of changes in net assets available for
benefits for the year ended December 31, 2001. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2001 and 2000, and the changes in net assets available for benefits for the year
ended December 31, 2001, in conformity with accounting principles generally
accepted in the United States of America.
Our 2001 audit was conducted for the purpose of forming an opinion on the basic
2001 financial statements taken as a whole. The supplemental schedule of Assets
Held for Investment Purposes as of December 31, 2001 is presented for the
purpose of additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedule is the
responsibility of the Plan's management. Such supplemental schedule has been
subjected to the auditing procedures applied in the audit of the basic 2001
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ DELOITTE & TOUCHE LLP
Certified Public Accountants
Tampa, Florida
May 10, 2002
KFORCE 401(K) RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2001 AND 2000
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2001 2000
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INVESTMENTS - At fair value (including $926,702 and $717,879
of participant loans at December 31, 2001 and 2000, respectively) $ 69,721,573 $ 66,635,438
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RECEIVABLES:
Employer contributions 40,265 874,170
Employee contributions 223,764 286,181
Accrued interest and dividends 18,507 16,104
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Total receivables 282,536 1,176,455
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CASH AND CASH EQUIVALENTS 66,420 68,467
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NET ASSETS AVAILABLE FOR BENEFITS $ 70,070,529 $ 67,880,360
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The accompanying notes are an integral part of these financial statements.
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KFORCE 401(K) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2001
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ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Interest and dividends $ 2,288,220
Loan interest 61,785
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2,350,005
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Contributions:
Participant 9,773,624
Employer 50,630
Rollovers from other qualified plans 810,346
Other 51,271
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Total contributions 10,685,871
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Net appreciation in fair value of investments 2,302,175
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Total additions 15,338,051
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Benefits paid to participants 13,142,092
Administrative expenses 5,790
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Total deductions 13,147,882
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NET INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 2,190,169
NET ASSETS AVAILABLE FOR BENEFITS, BEGINNING OF YEAR 67,880,360
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NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR $70,070,529
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The accompanying notes are an integral part of these financial statements.
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KFORCE 401(K) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF THE PLAN
The Kforce 401(k) Retirement Savings Plan (the "Plan") is sponsored by
Kforce Inc. (the "Plan Sponsor" or the "Company").
Effective January 1, 2001, the Plan was amended and restated to
incorporate changes made by the Uruguay Round Agreements Act, the
Uniformed Services Employment and Reemployment Rights Act of 1994, the
Small Business Job Protection Act of 1996, the Taxpayer Relief Act of
1997, the Internal Revenue Service Restructuring and Reform Act of
1998, and the Community Renewal Tax Relief Act of 2000 (collectively
referred to as "GUST Amendments"). The Plan Sponsor has submitted the
Plan for a determination letter that considers the changes in the
qualification requirements made by the GUST Amendments.
The following description of the Plan is provided for general
information purposes. Participants should refer to the Plan agreement
for a more complete description of the Plan provisions. The Plan is
subject to the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA").
GENERAL - The Plan is a defined contribution plan covering
substantially all full-time employees, except those that meet certain
exceptions. The Plan is administered by the Company. Merrill Lynch
Trust Company (the "Trustee") is the trustee and record keeper of the
Plan.
ELIGIBILITY - All employees are eligible to participate in the Plan
with the exception of the following:
- Employees who are leased employees under Internal Revenue Code
(the "Code") Section 414(n).
- Employees who are covered by a collective bargaining agreement
that does not provide for participation in the Plan.
- Employees who are nonresident aliens with no U.S. source earned
income.
- Individuals who are performing service as independent
contractors or consultants regardless of whether they are
subsequently determined to be common law employees.
- Employees who are not on the U.S. payroll.
- Employees who are assigned to perform services primarily for the
Emergency Response Staffing division of the Company.
CONTRIBUTIONS - Participants may contribute up to 15% of their
compensation for the year subject to the limitations provided in the
Code, which was $10,500 for 2001. Company matching and other
contributions are made at the discretion of the Board of Directors in
amounts not to exceed the maximum permitted as a deductible expense by
the Code. Company contributions, if any, are funded annually to
eligible participants remaining in the Plan at each year-end. Eligible
participants are employees who have completed at least 1,000 hours as
of the last day of the Plan year, or who have terminated employment
because of death, or total disability or after reaching age 55. No
Company matching or other contributions were made in 2001.
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All contributions to the Plan are deposited with the Trustee.
Contributions are then directed at the employee's discretion into the
investment options described below. Investment elections may be changed
by the employee at any time.
- Merrill Lynch Retirement Preservation Trust - A collective trust
which seeks to provide preservation of participant's
investments, liquidity, and current income that is typically
higher than money market funds. The fund invests primarily in a
broadly-diversified portfolio of Guaranteed Investment Contracts
and in obligations of U.S government and U.S. government agency
securities.
- MFS Total Return Fund - A fund which seeks above-average income
growth consistent with the prudent employment of capital and may
invest up to 20% of its total assets in high-yield securities,
as well as 20% of its total assets in foreign and emerging
market securities.
- Alliance Growth and Income Fund - A fund which seeks income and
capital appreciation by investing primarily in dividend-paying
common stock of high quality companies.
- Alliance Quasar Fund - A fund which seeks growth of capital by
investing principally in equity securities issued by
predominantly small companies within any industry which fund
management believes has capital appreciation potential.
- Templeton Foreign Fund - A fund which seeks long term capital
growth by investing primarily in stocks and debt obligations of
companies and governments outside the United States.
- Merrill Lynch Small Cap Value Fund, formerly the Merrill Lynch
Special Value Fund - A fund which seeks long-term growth of
capital by emphasizing securities of relatively small-market
capitalization companies, as well as emerging growth companies,
that fund management believe have special investment value,
regardless of size.
- Merrill Lynch Corporate Bond Fund - A fund which seeks capital
appreciation by investing primarily in investment grade
corporate fixed-income securities with a maximum remaining
maturity of 10 years.
- PIMCO Total Return Fund - A fund which seeks to maximize total
return, consistent with preservation of capital and prudent
investment management. Under normal circumstances, the fund
invests at least 65% of its assets in a diversified portfolio of
fixed-income securities of varying maturities.
- Merrill Lynch Equity Index Trust - A trust which seeks to
replicate the total return of the Standard & Poor's 500
Composite Stock Price Index (S&P 500 Index). This index is a
means to measure the performance of a broad base of large U.S.
corporations. The trust invests primarily in a portfolio of
equity securities (stocks) designed to substantially equal or
"match" the performance of this index, before expenses.
- Pioneer Growth Shares A Fund - A fund which seeks capital
appreciation; current income is incidental. The fund invests
primarily in equities.
- Fidelity Advisors Overseas Fund - A fund which seeks capital
growth by investing at least 65% of its total assets in foreign
securities. The fund manager intends to diversify investments
across various countries and regions. To determine geographic
allocation, fund management takes into consideration the size of
the market in each country relative to the size of the
international market as a whole.
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- Dreyfus Premier Small Cap Value Fund - This fund primarily
invests in stocks of micro-cap companies, which are
characterized as "growth" companies. The fund also invests in
companies with larger market capitalizations if the portfolio
managers believe they represent better prospects for capital
appreciation.
- John Hancock Small Cap Growth Fund - A fund which seeks
long-term capital appreciation by investing at least 80% of its
total assets in a diversified portfolio of common stocks or
similar securities (including preferred stocks and convertible
securities) of domestic and foreign emerging growth companies
with market capitalizations of less than $1 billion. Fund
management looks for shares of relatively unrecognized companies
experiencing rapid growth, and shares of established companies
offering the possibility of accelerating earnings due to new
management, products or opportunities. The fund may buy and sell
certain "derivative" instruments, contracts or options for the
purpose of hedging or increasing its return, when advisable and
consistent with the fund's investment objective, subject to
certain limitations.
- Lazard High Yield Portfolio Fund - A portfolio which seeks
maximum total return from a combination of capital appreciation
and current income by investing 80% in U.S. high-yielding, fixed
income securities rated, at the time of purchase, below
investment grade. It may also invest in mortgage-related
securities, asset-backed securities, zero coupon securities,
municipal securities, preferred stock and convertible securities
of U.S. and non-U.S. issuers. The portfolio may invest, to a
limited extent in companies in, or governments of, emerging
market countries.
- Fidelity Advisor Equity Growth Fund - A fund seeks to achieve
capital appreciation by investing at least 65% of its total
assets in common stocks, preferred stocks, and securities
convertible into common stock of companies with above average
growth characteristics. Growth may be measured by such factors
as earnings and revenue. The fund may invest in securities of
foreign issuers in addition to securities of domestic issuers.
- Retirement Cash Management Account - A self-directed investment
option permitting participants to invest in investments other
than those listed above (including investments in common stocks,
money market funds and mutual funds).
- Kforce Inc. Common Stock - An investment option permitting
participants to invest in Company common stock.
PARTICIPANT ACCOUNTS - Each participant's account is self-directed and
is credited with the participant's contributions, the Company's
matching and other contributions and Plan earnings. The benefit to
which a participant is entitled is the benefit that can be provided
from the participant's vested account. The participant's account
balance is reduced for any participant withdrawals, participant loans,
and applicable expenses. For those participants that were enrolled in
the Plan prior to 2001, a profit sharing account may be maintained by
the Trustee to account for previous years' profit sharing
contributions. The Plan document has been amended, and as such, profit
sharing contributions are no longer made.
ROLLOVERS - All employees who meet the Plan eligibility requirements
are eligible to make cash rollover contributions to the Plan from a
previous employer's qualified retirement plan or a conduit IRA.
-6-
VESTING - Participants are immediately vested in their contributions
plus actual earnings thereon. Company contributions and earnings vest
at 10%, 30%, and 60% after 2, 3, and 4 years of vesting service,
respectively. Company contributions become 100% vested upon:
- Normal retirement
- Total disability
- Death
- Completion of five years of vesting service
- Plan termination
IN-SERVICE WITHDRAWALS - Participants may request the following types
of in-service withdrawals from the Plan during any given calendar
month:
- Age 59 1/2
- Financial hardship
- Withdrawals from profit sharing account
PLAN TERMINATION - Although it has not expressed any intent to do so,
the Company has the right under the Plan to discontinue its
contributions at any time and to terminate the Plan subject to the
provisions of ERISA. In the event of Plan termination, participants
will become 100% vested in their accounts and the trust shall continue
until all Participants' accounts have been completely distributed to
each Participant (or their designated beneficiary) in accordance with
the Plan.
LOANS - Participants may borrow money from their vested account balance
for any reason. The maximum amount available for loans is the lesser of
$50,000 reduced by the participant's highest loan balance outstanding
in the twelve months prior to the date of the loan or 50% of the
participant's vested account balance. The minimum amount for a loan is
$500.
Loan repayments must have a definite repayment period not to exceed
five years unless the loan is for the purchase of a principal
residence, in which case the repayment period must not exceed 15 years.
Participant loans, including interest thereon, are taxable to the
participant upon default, as well as subject to applicable excise
penalties.
The loans are collateralized by the balance in the participant's
account and bear interest at any reasonable rate.
PAYMENT OF BENEFITS - On termination of service, a participant may
elect an immediate single-sum payment.
Additionally, participants of the Plan who were initially participants
of the Romac International, Inc. Employees' 401(k) Retirement Savings
Plan and the UQ 401(k) Plan prior to the merger of these plans into the
Plan, who have accounts greater than $5,000, may elect to receive equal
installments over a period not to exceed the participant's (or
participant's beneficiary's) life expectancy determined at the time of
distribution. An immediate distribution from the Plan is made and the
annuity is established with an outside third party.
At December 31, 2001, there were approximately $67,000 in distribution
payments that were processed and approved for payment by the Plan, but
not yet paid to participants. At December 31, 2000, there were
approximately $59,000 in distribution payments that were processed and
approved for payment by the Plan, but not yet paid to participants.
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FORFEITED ACCOUNTS - Nonvested balances resulting from Company
contributions will be forfeited upon the date the participant incurs
five consecutive one-year breaks in service or receives a distribution.
A one-year break in service is any year a participant works less than
500 hours. For terminated employees who receive a distribution but who
are re-employed during the five consecutive years following
termination, the forfeiture amount shall be restored to the
participant's account if the participant pays back the full amount of
the distribution within five years of the re-employment date.
Forfeited balances will be used first to fund any restorations and then
to reduce administrative expenses properly payable by the Plan. If any
forfeitures remain unallocated, they shall be used to reduce employer
matching contributions, if any, then to reduce employer qualified
nonelective contributions, and finally to increase the employer
matching contributions. Any remaining forfeitures shall be credited to
a suspense account to be used for future restorations. For the year
ended December 31, 2001, there were no matching contributions.
Additionally, no restorations were made out of forfeited funds for the
year ended December 31, 2001. Qualified nonelective contributions of
approximately $41,000 were made out of the forfeitures account during
the year ended December 31, 2001. The suspense account is maintained in
the Merrill Lynch Retirement Preservation Trust. Forfeited funds in the
suspense account at December 31, 2001 and 2000 were approximately
$684,000 and $461,000, respectively.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The Plan's financial statements are prepared in
accordance with accounting principles generally accepted in the United
States of America. Benefit payments are reported on a cash basis in
accordance with guidelines of the American Institute of Certified
Public Accountants.
USE OF ESTIMATES - The preparation of the financial statements in
conformity with accounting principles generally accepted in the United
States of America requires the use of estimates and assumptions that
affect the reported amounts of net assets available for benefits and
the related changes in the net assets available for benefits. Actual
results could differ from those estimates.
VALUATION OF INVESTMENTS - The Plan's investments are stated at fair
value, based on quoted market prices. Shares of mutual funds and
collective trusts are valued at the net asset value of shares held by
the Plan at year-end. Loans are carried at cost which approximates
market value.
CONTRIBUTIONS - Employee contributions are recorded when salary or
bonus is earned. Company contributions are recorded when authorized.
Purchases and sales of securities are recorded on a trade-date basis.
PAYMENT OF BENEFITS - Benefits are recorded when paid.
EXPENSES OF PLAN - Certain expenses incurred in the administration of
the Plan are paid by the Plan participants. The Company pays a portion
of the expenses for services necessary for the administration of the
Plan.
ACCOUNTING PRONOUNCEMENTS - In June 1998 the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards
("SFAS") No. 133, Accounting for Derivative Instruments and Hedging
Activities (SFAS No. 133). In June 2000, the FASB issued SFAS No. 138,
Accounting for Certain Derivative Instruments and Hedging Activities,
an amendment of SFAS No. 133, which amends certain provisions of SFAS
No. 133 and provides additional guidance. The Plan has adopted SFAS No.
133, as amended, as of January 1, 2001. The adoption of SFAS No. 133
did not have a material impact on the Plan's financial statements.
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3. TAX STATUS
The Plan obtained its latest favorable determination letter dated June
8, 1999, in which the Internal Revenue Service stated that the Plan, as
then designed, was in compliance with the applicable requirements of
the Code. The Plan has been amended and restated since receiving the
determination letter. However, the Company believes that the Plan is
currently designed and being operated in compliance with the applicable
requirements of the Code. Therefore, the Company believes that the Plan
was qualified and the related trust was tax exempt as of the financial
statement dates. Subsequent to December 31, 2001, the Plan filed for a
new determination letter.
4. PARTY-IN-INTEREST TRANSACTIONS
Plan investments include shares of a collective trust and mutual funds
managed by the Trustee and, therefore, these transactions qualify as
party-in-interest. Fees paid by the Plan participants for the
investment management services amounted to approximately $6,000 for the
year ended December 31, 2001.
5. INVESTMENTS
The following presents investments, at fair value, that represent 5% or
more of the Plan's net assets as of December 31, 2001 and 2000:
DECEMBER 31,
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DESCRIPTION OF INVESTMENT 2001 2000
Merrill Lynch Small Cap Value Fund $ 8,903,553 $ 6,990,622
Merrill Lynch Retirement Preservation Trust 7,833,795 7,475,054
Alliance Growth and Income Fund 20,054,388 21,850,986
Templeton Foreign Fund 6,675,510 7,372,017
Kforce Inc. common stock 9,326,812 4,945,380
MFS Total Return Fund 3,607,793 3,952,225
The Plan's investments, including gains and losses on investments
purchased, sold and held during the year, appreciated (depreciated) in
value as follows:
YEAR ENDED
DECEMBER 31,
2001
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Mutual funds and collective trusts $ (1,108,563)
Kforce Inc. common stock 5,474,698
Common stock investments (2,063,960)
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$ 2,302,175
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6. SUBSEQUENT EVENTS
Subsequent to December 31, 2001, the Plan was amended to reflect
certain provisions of the Economic Growth and Tax Relief Reconciliation
Act of 2001 ("EGTRRA").
******
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KFORCE 401(K) RETIREMENT SAVINGS PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4I
ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 2001
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IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSET CURRENT VALUE
Kforce Inc. Common Stock $ 9,326,812
Merrill Lynch Equity Index Trust * Collective Trust 2,887,798
Merrill Lynch Retirement Preservation Trust* Collective Trust 7,833,795
Pioneer Growth Shares A Fund Mutual Fund 705,029
Pimco Total Return Fund Mutual Fund 2,816,668
MFS Total Return Fund Mutual Fund 3,607,793
Alliance Growth And Income Fund Mutual Fund 20,054,388
Alliance Quasar Fund Mutual Fund 1,461,181
Templeton Foreign Fund Mutual Fund 6,675,510
Merrill Lynch Small Cap Value Fund* Mutual Fund 8,903,553
Dreyfus Premier Small Cap Value Fund Mutual Fund 113,083
Fidelity Advisor Overseas Fund Mutual Fund 25,089
John Hancock Small Cap Growth Fund Mutual Fund 72,478
Lazard High Yield Portfolio Fund Mutual Fund 23,537
Fidelity Advisor Equity Growth Fund Mutual Fund 309,869
Pending Settlement Fund N/A 7,754
Participant Loans* 926,702
Retirement Cash Management Account Self-Directed Option 3,970,534
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$ 69,721,573
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* Party-in-interest
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
Kforce Inc. 401(k) Retirement Savings Plan
(Registrant)
06/28/02 /s/ William L. Sanders
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(Date) William L. Sanders
Plan Administrator and Chief Financial Officer
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EXHIBIT INDEX
Number Exhibit
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23 Independent Auditors' Consent