Resources Connection, Inc. Reports Third Quarter Results
Resources Connection, Inc. Reports Third Quarter Results
Resources Connection, Inc. Reports Third Quarter Results
Costa Mesa, Calif., March 28, 2007 -- Resources Connection, Inc. (NASDAQ: RECN), a multinational professional services firm that provides to clients--through its operating subsidiary, Resources Global Professionals--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 third quarter ended February 28, 2007.
Total revenue for the third quarter of fiscal 2007 improved 17.0% to $187.5 million from $160.3 million for the same quarter in fiscal 2006. For the nine months ended February 28, 2007, revenue grew 14.4% to a record $535.4 million from $468.0 million for the comparable nine months of the prior fiscal year.
"Resources experienced good momentum in our business through the end of calendar 2006 as a result of strategic investments and successful hiring and that momentum has carried into 2007," said Chairman and CEO of Resources Global Professionals Donald Murray. "Our international expansion is broadening our reach and this improves client service around the globe and enables us to obtain assignments not available to primarily local competitors."
Effective June 1, 2006, the beginning of the Company's current fiscal 2007, Resources adopted SFAS 123®, which requires companies to estimate the fair value of share-based awards to employees on the date of the grant using an option-pricing model. Because SFAS 123® has been adopted prospectively, net income for the three months and nine months ended February 28, 2007 is not comparable to net income for the three months and nine months ended February 28, 2006.
Net income on a generally accepted accounting principles (GAAP) basis for the quarter ended February 28, 2007, was $13.1 million, or $0.26 per diluted share, reflecting the inclusion of non-cash stock-based compensation expense of $5.0 million on a pre-tax basis, and $1.0 million of tax benefits related to stock-based compensation. Non-GAAP net income for the third quarter of fiscal 2007, excluding stock-based compensation expense and the related income tax effect, was $17.1 million, or $0.33 per diluted share. Net income (on a GAAP basis) for the quarter ended February 28, 2006, prior to the adoption of SFAS 123®, was $13.8 million, or $0.27 per diluted share.
For the nine months ended February 28, 2007, net income on a GAAP basis was $38.7 million, or $0.77 per diluted share, including non-cash stock-based compensation expense of $14.4 million on a pre-tax basis and $2.3 million of tax benefits related to stock-based compensation. Non-GAAP net income for the first nine months of fiscal 2007, excluding stock-based compensation expense and the related income tax effect, was $50.8 million, or $0.99 per diluted share. Net income (on a GAAP basis) for the nine months ended February 28, 2006, prior to the adoption of SFAS 123®, was $44.9 million, or $0.87 per diluted share.
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. Working as members of client teams, Resources' professionals solve problems, execute client initiatives and transfer knowledge. Partnering with business leaders, Resources drives internal change across all parts of a global enterprisefinance 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, it is a publicly traded company with a market cap exceeding $1.5 billion. The Company's 3,900 professionals from more than 80 practice offices (including an additional 15 offices over the last year and a half), serve over 2,100 clients in more than 50 countries. Headquartered in Costa Mesa, California, Resources Global serves more than half of the Fortune Global 100.
The Company is listed on the NASDAQ Global Select Market. More information about Resources is available at http://www.resourcesglobal.com.
Resources Global was recently honored as one of America's 200 Best Small Companies by Forbes magazine. Selected for the fifth consecutive year, Resources placed #66 on the Forbes list. In September 2006, Resources was named #61 on Fortune magazine's list of 100 Fastest-Growing Companies and in June, Resources placed #21 on BusinessWeek's list of 100 Hot Growth Companies to watch.
Resources will hold a conference call for interested analysts and investors at 5:00 p.m., ET today, March 28, 2007. 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. 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 Resources Connection's Form 10-K for the year ended May 31, 2006 and Form 10-Qs for the quarters ended August 31, 2006 and November 30, 2006 (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.
The Non-GAAP Income Statement in this release excludes stock-based compensation expense from the following non-GAAP line items: non-GAAP selling, general and administrative expenses, non-GAAP operating income before amortization and depreciation, non-GAAP operating income, non-GAAP income before provision for income taxes, non-GAAP provision for income taxes, non-GAAP net income, non-GAAP net income per diluted share, and non-GAAP diluted shares used in net income per share calculation.
These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures and the Non-GAAP Income Statement are not based on any comprehensive set of accounting rules or principles. Resources believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Resources' results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Resources' results of operations in conjunction with the corresponding GAAP measures.
Resources believes that the presentation of non-GAAP selling, general and administrative expenses, non-GAAP operating income before amortization and depreciation, non-GAAP operating income, non-GAAP income before provision for income taxes, non-GAAP provision for income taxes, non-GAAP net income, non-GAAP net income per diluted share and non-GAAP diluted shares used in net income per share calculation, when presented in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations.
For its internal budgeting process, Resources' management uses financial statements that do not include stock-based compensation expense related to employee stock options and employee stock purchases, and the income tax effects thereof. Resources' management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Resources.
For additional information on the items excluded by Resources Connection, Inc. from one or more of its non-GAAP financial measures, and for additional information regarding these non-GAAP measures, we refer you to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission.
Press Contact:
Sarah Lazarus
CL-Media Relations LLC
(978) 369-4478
Sarah@cl-media.com
Company Contact:
Steve Giusto, Chief Financial Officer
(714) 430-6500
Steve.Giusto@resources-us.com