Resources Connection, Inc. Reports Fourth Quarter and Year-End Results for Fiscal 2010

Resources Connection, Inc. Reports Fourth Quarter and Year-End Results for Fiscal 2010

• Company reports fourth quarter earnings per share of $0.05, including contingent consideration and tax valuation allowance of $0.03 per share
  

• Fourth quarter gross margin improves to 41.4%
  
• Board of Directors announces regular quarterly dividend of $.04 per share
  
• Fourth quarter cash flow from operations and adjusted EBITDA improve to $6.8 million and $14.8 million, respectively

IRVINE, Calif., July 20, 2010 - 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, corporate advisory and strategic communications, information management, human capital, supply chain management and legal services, today announced financial results for its fiscal fourth quarter and year ended May 29, 2010.

Total revenue for the fourth quarter of fiscal 2010 was $133.9 million, up 6.9% and 1.4% on a sequential quarter and quarter-over-quarter basis, respectively. Revenues in the U.S. were up 8.9% and 7.4% sequentially and quarter-over-quarter, respectively, while international revenues increased 0.7% sequentially but declined 14.8% quarter-over-quarter (up 4.6% sequentially but down 19.2% quarter-over-quarter on a constant dollar basis).

Gross margin was 41.4% in the fourth quarter of fiscal 2010, up 280 basis points from the third quarter of fiscal 2010 and 320 basis points from 38.2% in the comparable period of fiscal 2009.  The improvement stems in part from the Sitrick Brincko acquisition. Selling, general and administrative expenses for the fourth quarter of fiscal 2010 were $43.0 million, down $1.1 million from the third quarter of fiscal 2010 amount of $44.1 million.

Cash flow from operations and adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, stock based compensation and contingent consideration expense) were $6.8 million and $14.8 million, respectively, for the fourth quarter of fiscal 2010.

"Our improvement this quarter across all significant metrics we track, including revenue, gross margin, adjusted EBITDA and cash flows, is a significant achievement by our offices around the world given the tough macroeconomic environment," said Tony Cherbak, chief operating officer.  "These results demonstrate the leveragability of our business model."

The Company's pre-tax income for the fourth quarter was $8.0 million, including a non-cash charge of $1.2 million related to the adjustment of the estimated fair value of contingent consideration and the employee portion of contingent consideration.  For the year ended May 29, 2010, the pre-tax loss was $1.1 million and the tax provision was $10.6 million.

The Company's net income for the fourth quarter ended May 29, 2010, was $2.3 million, or $0.05 per diluted share.  Included in the $0.05 net income per diluted share were non-cash charges of $0.03 per diluted share related to an increase in the estimated fair value of contingent consideration, the estimated employee portion of contingent consideration and newly established tax valuation allowances. This compares with a net loss for the fourth quarter ended May 30, 2009, of $6.3 million, or $0.14 per diluted share.

The Company also announced that its board of directors has approved the commencement of a regular quarterly dividend of $0.04 per share.  The first dividend will be payable to shareholders of record on August 18, 2010 and payable September 15, 2010.  The Company's board of directors will assess and approve future dividends quarterly.

"The board of directors is pleased to announce the inception of a regular $0.04 per share quarterly dividend," said Don Murray, chief executive officer of Resources.  "Given our track record of positive cash generation even in a difficult economic environment, we believe a regular dividend provides a consistent way to return capital to shareholders, while still maintaining an adequate capital base to invest, as opportunities present themselves, in opportunities for growth."

Total revenue for the year ended May 29, 2010 was $499.0 million, down 27.2% from $685.6 million for fiscal 2009.  Revenues in the U.S. in fiscal 2010 were down 23.5% from the prior year while international revenues in fiscal 2010 decreased 36.4% from the prior year (37.6% on a constant dollar basis).

The Company's net loss for the year ended May 29, 2010, was $11.7 million, or $0.26 per diluted share.  This compares with net income for the year ended May 30, 2009, of $17.8 million, or $0.39 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. Partnering with business leaders, we drive internal change across all parts of a global enterprise - finance and accounting, information management, internal audit, corporate advisory and strategic communications, 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 2,700 professionals, annually serving 1,800 clients around the world from more than 80 practice offices.  

Headquartered in Irvine, California, Resources Global has served 83 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, July 20, 2010.  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 the Company's beliefs regarding the payment of a regular dividend and its ability to maintain an adequate capital base to invest in opportunities for growth. 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.

Media Contact:
Michael Sitrick
(US+) 1-310-788-2850 or mike_sitrick@sitrick.com

Analyst Contact:
Nate Franke, Chief Financial Officer
(US+) 1-714-430-6500 or nate.franke@resources-us.com