UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of
The
Securities Exchange Act of 1934
Date of
Report (Date of earliest event
reported) January 6,
2009
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RESOURCES
CONNECTION, INC.
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Delaware
(State
or other jurisdiction
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0-32113
(Commission
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33-0832424
(IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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17101
Armstrong Avenue, Irvine, California
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92614
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code
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(714)
430-6400
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Not
applicable
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(Former
name or former address, if changed since last
report.)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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r
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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r
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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r
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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r
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
2.02 Results of Operations and Financial Condition.
On January 6, 2009, Resources
Connection, Inc. (“Resources” or “the Company”) issued a press release
announcing its financial results for the quarterly period ended November
29, 2008. A copy of the press release is attached hereto as Exhibit
99.1.
Within
the attached press release, the Company
makes reference to certain non-generally accepted accounting principles
(“non-GAAP”) financial measures, including consolidated EBITDA and adjusted
EBITDA. The Company believes that these
non-GAAP measures are useful to our investors because they are financial
measures used by management to assess the performance of our
Company. Accordingly, where these non-GAAP measures are provided, it
is done so that investors have the same financial data that management uses with
the belief that such information will assist the investment community in
assessing the underlying performance of the Company on a year over year and
sequential basis. Whenever such information is presented, the Company
has complied with the provisions of the rules under Regulation G and Item 2.02
of Form 8-K. In addition to the reasons described above, specific
reasons the Company’s management believes that the presentation of certain
non-GAAP financial measures provides useful information to investors regarding
the Company’s financial condition, results of operations and cash flows are as
follows:
The
non-GAAP measures presented in the attached press release are not in
accordance with, or an alternative for, GAAP and may be different from non-GAAP
measures used by other companies. In addition, these non-GAAP measures are not
based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have
limitations in that they do not reflect all of the amounts associated with the
Company’s results of operations as
determined in accordance with GAAP and that these measures should only be used
to evaluate the Company’s results of
operations in conjunction with the corresponding GAAP measures.
For its
internal budgeting process, the Company’s
management uses financial statements that include consolidated EBITDA and
adjusted EBITDA. The Company’s management also uses the foregoing non-GAAP
measures, in addition to other GAAP measures, in reviewing the financial results
of the Company.
The
information in Item 2.02 of this current report on Form 8-K, as well as Exhibit
99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, and shall not be incorporated by
reference into any registration statement or other document pursuant to the
Securities Act of 1933, as amended.
Item
9.01 Financial Statements and Exhibits.
(c)
Exhibits
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Exhibit
No.
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Description
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Exhibit
99.1
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Press Release issued January 6, 2009 |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| RESOURCES CONNECTION, INC. | |||
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Date: January
6, 2009
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|||
| By: |
/s/ Thomas
Christopoul
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Thomas
Christopoul
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|||
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Chief
Executive Officer
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EXHIBIT
INDEX
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Exhibit
No.
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Description
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Exhibit 99.1
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Press Release issued January 6, 2009 |
Immediate
Release
Media
Contact:
Jeff
Bellows, Managing Director, Public Relations
(US+)
1-617-897-0350 or jeff.bellows@resources-us.com
Analyst Contact:
Nate
Franke, Chief Financial Officer
(US+)
1-714-430-6500 or nate.franke@resources-us.com
Resources
Connection, Inc. Reports Second Quarter Fiscal 2009 Results
IRVINE, Calif., January 6,
2009 – Resources Connection, Inc. (NASDAQ: RECN), a multinational
professional services firm that provides to clients – through its operating
subsidiary, Resources Global Professionals (“Resources”) – accomplished
professionals in accounting and finance, risk management and internal audit,
information management, human capital, supply chain management and legal
services, today announced financial results for its fiscal second quarter ended
November 29, 2008.
Total
revenue for the second quarter of fiscal 2009 was $190.2 million versus $206.6
million for the second quarter in fiscal 2008. Revenues in the U.S. declined
11.0% quarter-over-quarter while international revenues improved 0.5% (7.4% on a
constant dollar basis).
“While
the global economic events occurring during our second quarter are without
precedent, our average weekly client service hours, excluding the holiday weeks,
were relatively consistent throughout the quarter. However, foreign exchange
rate changes from early in the second quarter through the end of the quarter
accounted for an approximate $3.3 million reduction in revenues”, said Thomas D.
Christopoul, President and CEO of Resources.
Total
revenue for the six months ended November 29, 2008 was $397.5 million, a
decrease of 0.8% from $400.8 million for the comparable period of fiscal 2008.
Revenues in the U.S. declined 5.5% versus the comparable prior year period while
international revenues improved 12.6% (12.1% on a constant dollar
basis).
Gross
margin improved 50 basis points to 39.0% in the second quarter of fiscal 2009
compared with 38.5% in the comparable period of fiscal 2008. Selling, general and
administrative expenses, which include stock compensation expense, were $54.4
million for the second quarter of fiscal 2009, down from $55.5 million in the
second quarter of fiscal 2008.
Net
income was $9.5 million for the second quarter ended November 29, 2008 compared
with $13.0 million for the quarter ended November 24, 2007; earnings per diluted
share were $0.21 per diluted share for the second quarter of fiscal 2009 versus
$0.27 per diluted share for the second quarter of the prior year. Net
income includes stock compensation expense of $3.7 million and $4.3 million, net
of tax, for the quarters ended November 29, 2008 and November 24, 2007,
respectively.
Adjusted
earnings before interest, taxes, depreciation, amortization and stock
compensation expense or “Adjusted EBITDA” for the second quarter of fiscal 2009
was $24.4 million or 12.8% of revenue versus $29.4 million or 14.2% of revenue
for the same quarter of fiscal 2008.
Net
income was $22.0 million for the six months ended November 29, 2008 compared
with $24.6 million for the six months ended November 24, 2007; earnings per
diluted share were $0.48 per diluted share for the first six months of fiscal
2009 versus $0.49 per diluted share for the first six months of the prior
year. Net income includes stock compensation expense of $7.4 million
and $8.8 million, net of tax for the six months ended November 29, 2008 and
November 24, 2007, respectively.
Adjusted
earnings before interest, taxes, depreciation, amortization and stock
compensation expense or “Adjusted EBITDA” for the first six months of fiscal
2009 was $53.7 million or 13.5% of revenue versus $55.8 million or 13.9% of
revenue for the same period of fiscal 2008.
“Given the external
environment, we are pleased to have been able to maintain our gross margin
trends,” said Don Murray, Executive Chairman of Resources. “The
flexibility of our business model, in which approximately 70% of our cash costs
are variable, has allowed Resources to remain profitable and continue to
generate cash flows from operations.”
“The current financial crisis
is a test of the resolve of our people,” said Christopoul. “Everyone
at Resources is working harder today to develop business and help our clients
through this difficult economic environment, while at the same time remaining
conservative with respect to discretionary costs. We continue to
believe that the enormous change taking place in the global markets will present
significant opportunities for us in the future; however, the timing of those
opportunities will vary as companies work through their strategies to offset
what will likely be a period of sustained economic contraction.”
ABOUT
RESOURCES GLOBAL PROFESSIONALS
Resources
Global Professionals, the operating subsidiary of Resources Connection, Inc.
(NASDAQ: RECN), is a multinational professional services firm that helps
business leaders execute internal initiatives. Partnering with business leaders,
we drive internal change across all parts of a global enterprise – finance and
accounting, information management, internal audit, human capital, legal
services and supply chain management.
Resources
Global was founded in 1996 within a Big Four accounting firm. Today, we are a
publicly traded company with over 3,700 professionals, from more than 80
practice offices, annually serving 2,400 clients around the world.
Headquartered
in Irvine, California, Resources Global has served 84 of the Fortune 100
companies.
The
Company is listed on the NASDAQ Global Select Market, the exchange’s highest
tier by listing standards. More information about Resources Global is available
at http://www.resourcesglobal.com.
Resources
will hold a conference call for interested analysts and investors at 5:00 p.m.,
ET today, January 6, 2009. This conference call will be available for
listening via a webcast on the Company’s website: http://www.resourcesglobal.com.
Certain
statements in this press release are “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Such forward-looking statements may
be identified by words such as “anticipates,” “believes,” “can,” “continue,”
“could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,”
“predicts,” “should,” or “will” or the negative of these terms or other
comparable terminology. In this press release, such statements
include our belief that the change taking place in the global markets will
present significant opportunities for us in the future but that the timing of
these opportunities will vary. Such statements and all phases of
Resources Connection’s operations are subject to known and unknown risks,
uncertainties and other factors, including seasonality, overall economic
conditions and other factors and uncertainties as are identified in our most
recent Annual Report on Form 10-K and our other public filings made with the
Securities and Exchange Commission (File No. 0-32113). Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. Resources Connection’s, and its
industry’s, actual results, levels of activity, performance or achievements may
be materially different from any future results, levels of activity, performance
or achievements expressed or implied by these forward-looking
statements. The Company undertakes no obligation to update the
forward-looking statements in this press release.
###
RESOURCES
CONNECTION, INC.
INCOME
STATEMENT
(in
thousands, except per share amounts)
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Quarter
Ended
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Six
Months Ended
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|||||||||||||||
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November
29,
2008
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November
24,
2007
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November
29,
2008
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November
24,
2007
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|||||||||||||
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(unaudited)
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(unaudited)
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|||||||||||||||
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Revenue
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$ | 190,233 | $ | 206,638 | $ | 397,538 | $ | 400,758 | ||||||||
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Direct
costs of services
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116,122 | 127,025 | 242,588 | 247,656 | ||||||||||||
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Gross
profit
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74,111 | 79,613 | 154,950 | 153,102 | ||||||||||||
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Selling,
general and administrative expenses (1)
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54,380 | 55,514 | 110,893 | 108,543 | ||||||||||||
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Operating
income before amortization and depreciation (1)
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19,731 | 24,099 | 44,057 | 44,559 | ||||||||||||
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Amortization
of intangible
assets
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275 | 84 | 657 | 338 | ||||||||||||
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Depreciation
expense
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2,263 | 2,007 | 4,603 | 3,882 | ||||||||||||
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Operating
income (1)
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17,193 | 22,008 | 38,797 | 40,339 | ||||||||||||
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Interest
income
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(380 | ) | (1,629 | ) | (896 | ) | (4,171 | ) | ||||||||
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Income
before provision for income taxes (1)
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17,573 | 23,637 | 39,693 | 44,510 | ||||||||||||
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Provision
for income taxes (2)
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8,097 | 10,601 | 17,725 | 19,892 | ||||||||||||
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Net
income (1) (2)
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$ | 9,476 | $ | 13,036 | $ | 21,968 | $ | 24,618 | ||||||||
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Diluted
net income per share
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$ | 0.21 | $ | 0.27 | $ | 0.48 | $ | 0.49 | ||||||||
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Diluted
shares
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45,859 | 48,754 | 45,945 | 50,226 | ||||||||||||
RESOURCES
CONNECTION, INC.
INCOME
STATEMENT
(in
thousands, except per share amounts)
EXPLANATORY
NOTES
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1.
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Includes
$4,635 and $5,262 of stock compensation expense for the three months ended
November 29, 2008 and November 24, 2007, respectively, and $9,599 and
$11,262 of stock compensation expense for the six months ended November
29, 2008 and November 24, 2007,
respectively.
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2.
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The
Company’s effective tax rate, absent the impact of the requirement to
recognize compensation expense related to employee stock option grants and
employee stock purchases, was 40.5% and 40.0% for both the three and six
months ended November 29, 2008 and November 24, 2007,
respectively. The Company’s effective tax rate, including the
impact of the requirement to recognize compensation expense related to
employee stock option grants and employee stock purchases, was 46.1% and
44.8% for the three months ended November 29, 2008 and November 24, 2007,
respectively, and 44.7% for both the six months ended November 29, 2008
and November 24, 2007, respectively. The Company cannot
recognize a potential tax benefit for certain stock option grants until
and unless the holder exercises his or her option and sells the shares. In
addition, the Company can only recognize a potential tax benefit for
employees’ acquisition and subsequent sale of shares purchased through the
Company’s Employee Stock Purchase Plan if the sale occurs within a certain
defined period. Further, under Statement of Financial
Accounting Standards 123 (R), “Share-Based Payment” (“SFAS 123(R)”),
certain potential tax benefits associated with incentive stock options
fully vested at the time of adoption of SFAS 123(R) will be recognized as
additional paid in capital when and if those options are
exercised.
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RESOURCES
CONNECTION, INC.
Reconciliation
of Net Income to Adjusted EBITDA
(in
thousands, except Adjusted EBITDA Margin)
|
Quarter
Ended
|
Six
Months Ended
|
|||||||||||||||
|
November
29,
2008
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November
24,
2007
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November
29,
2008
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November
24,
2007
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|||||||||||||
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(unaudited)
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(unaudited)
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|||||||||||||||
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Consolidated
EBITDA and Adjusted EBITDA
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||||||||||||||||
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Net
income
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$ | 9,476 | $ | 13,036 | $ | 21,968 | $ | 24,618 | ||||||||
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Adjustments:
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||||||||||||||||
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Amortization
of intangible assets
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275 | 84 | 657 | 338 | ||||||||||||
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Depreciation
expense
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2,263 | 2,007 | 4,603 | 3,882 | ||||||||||||
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Interest
income
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(380 | ) | (1,629 | ) | (896 | ) | (4,171 | ) | ||||||||
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Provision
for income taxes
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8,097 | 10,601 | 17,725 | 19,892 | ||||||||||||
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EBITDA
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19,731 | 24,099 | 44,057 | 44,559 | ||||||||||||
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Stock
compensation expense
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4,635 | 5,262 | 9,599 | 11,262 | ||||||||||||
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Adjusted
EBITDA
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$ | 24,366 | $ | 29,361 | $ | 53,656 | $ | 55,821 | ||||||||
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Revenue
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$ | 190,233 | $ | 206,638 | $ | 397,538 | $ | 400,758 | ||||||||
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Adjusted
EBITDA Margin
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12.8 | % | 14.2 | % | 13.5 | % | 13.9 | % |
RESOURCES
CONNECTION, INC.
Reconciliation
of Net Income to Adjusted EBITDA
(in
thousands, except Adjusted EBITDA Margin)
The
Company utilizes certain financial measures and key performance indicators that
are not defined by or calculated in accordance with generally accepted
accounting principles (“GAAP”) to assess our financial and operating
performance. A non-GAAP financial measure is defined as a numerical
measure of a company’s financial performance that (i) excludes amounts, or is
subject to adjustments that have the effect of excluding amounts, that are
included in the comparable measure calculated and presented in accordance with
GAAP in the statement of income; or (ii) includes amounts, or is subject to
adjustments that have the effect of including amounts, that are excluded from
the comparable measure so calculated and presented.
EBITDA, a
non-GAAP financial measure, is calculated as net income before amortization of
intangible assets, depreciation expense, interest income and income
taxes. Adjusted EBITDA, also a non-GAAP financial measure, is EBITDA
before stock compensation expense. Adjusted EBITDA Margin is
calculated by dividing Revenue by Adjusted EBITDA. We believe that
Adjusted EBITDA and Adjusted EBITDA Margin provide useful measures to our
investors because they are financial measures used by management to assess the
performance of our Company. Adjusted EBITDA and Adjusted EBITDA
Margin are not measurements of financial performance or liquidity under GAAP and
should not be considered in isolation or construed as substitutes for net income
or other cash flow data prepared in accordance with GAAP for purposes of
analyzing our profitability or liquidity. These measures should be
considered in addition to, and not as a substitute, or a superior measure to,
net income, earnings per share, cash flows or other measures of financial
performance prepared in accordance with GAAP.
RESOURCES
CONNECTION, INC.
SELECTED
BALANCE SHEET INFORMATION
(in
thousands)
|
November
29,
2008
|
May
31,
2008
|
|||||||
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(unaudited)
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||||||||
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Cash,
cash equivalents and short-term investments
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$ | 133,657 | $ | 106,814 | ||||
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Accounts
receivable, less allowances
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$ | 102,810 | $ | 126,669 | ||||
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Total
assets
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$ | 406,729 | $ | 410,502 | ||||
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Current
liabilities
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$ | 75,005 | $ | 91,424 | ||||
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Total
stockholders’ equity
|
$ | 326,482 | $ | 305,888 | ||||