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) October 1,
2009
RESOURCES
CONNECTION, INC.
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Delaware
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0-32113
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33-0832424
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(State
or other jurisdiction of
incorporation)
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(Commission
File Number)
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(IRS
Employer 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
(Former
name or former address, if changed since last report.)
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.
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.
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(c)
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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 October 1, 2009
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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.
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RESOURCES
CONNECTION, INC.
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|||
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Date: October
1, 2009
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By:
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/s/ Donald B. Murray | |
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Donald
B. Murray
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|||
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Chief
Executive Officer
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EXHIBIT
INDEX
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 First Quarter Results for Fiscal 2010
IRVINE, Calif., October 1,
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 first quarter ended
August 29, 2009.
Total
revenue for the first quarter of fiscal 2010 was $118.3 million, down 10.4% on a
sequential quarter basis and 42.9% from the fiscal 2009 first quarter. Revenues
in the U.S. were down 8.5% sequentially and 39.8% quarter-over-quarter while
international revenues decreased 15.6% sequentially and 50.5% quarter over
quarter (20.9% sequentially and 45.8% quarter-over-quarter on a constant dollar
basis).
Gross
margin was 38.2% in the first quarter of fiscal 2010 consistent with the fourth
quarter of fiscal 2009 and down 80 basis points from 39.0% in the comparable
period of fiscal 2009. Selling, general and administrative expenses
for the first quarter of fiscal 2010 was $51.6 million and includes
approximately $7.0 million of charges related to the resignation of two senior
executives during the quarter. The Company does not have plans to
hire additional individuals to replace them.
The
Company’s benefit for income taxes during the first quarter of fiscal 2010 was
$1.7 million as compared to an income tax provision of $9.6 million in the prior
year first quarter. The benefit rate in the current quarter of 19.4%
reflects the continuing impact of expense related to incentive stock options,
for which no tax deduction could be recorded during the quarter, and tax losses
in certain foreign jurisdictions for which a limited or no tax benefit was
recorded.
The
Company’s net loss determined in accordance with generally accepted accounting
principles (“GAAP”) for the first quarter ended August 29, 2009, was $7.2
million, or $0.16 per diluted share. This compares with GAAP net
income for the first quarter ended August 30, 2008, of $12.5 million, or $0.27
per diluted share.
“We
are refocusing on the basics of our business and taking unnecessary costs out of
the Company. We have continued to position ourselves with our clients
to help them solve problems and accomplish their internal business initiatives,”
stated Don Murray, CEO of Resources. “Our first quarter results are
reflective of a slowly recovering global economy and, to a lesser extent, the
seasonal impact of vacations.”
Tony
Cherbak, chief operating officer of Resources added, “While the timing and
strength of the global economic recovery is still uncertain, we are continuing
our focus on business development with new and existing clients. Our
strong balance sheet continues to position us well for the future.”
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 2,700 professionals, from more than 80
practice offices, annually serving 2,100 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, October 1, 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 global economy is slowly recovering but that the
timing and strength of the recovery is uncertain, our business development plans
and our belief that our strong balance sheet will continue to position us well
for the future. 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)
|
Quarter
Ended
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||||||||
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August 29, 2009
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August 29, 2008
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|||||||
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(unaudited)
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||||||||
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Revenue
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$ | 118,263 | $ | 207,305 | ||||
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Direct
costs of services
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73,124 | 126,466 | ||||||
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Gross
profit
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45,139 | 80,839 | ||||||
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Selling,
general and administrative expenses (1)
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51,637 | 56,513 | ||||||
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Operating
(loss) income before amortization and depreciation (1)
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(6,498 | ) | 24,326 | |||||
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Amortization
of intangible
assets
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393 | 382 | ||||||
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Depreciation
expense
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2,200 | 2,340 | ||||||
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Operating
(loss) income (1)
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(9,091 | ) | 21,604 | |||||
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Interest
income
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(179 | ) | (516 | ) | ||||
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(Loss)
income before provision for income taxes (1)
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(8,912 | ) | 22,120 | |||||
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(Benefit)
provision for income taxes (2)
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(1,726 | ) | 9,628 | |||||
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Net
(loss) income (1) (2)
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$ | (7,186 | ) | $ | 12,492 | |||
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Basic
net (loss) income per share
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$ | (0.16 | ) | $ | 0.28 | |||
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Diluted
net (loss) income per share
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$ | (0.16 | ) | $ | 0.27 | |||
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Basic
shares
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45,302 | 44,946 | ||||||
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Diluted
shares
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45,302 | 46,008 | ||||||
RESOURCES
CONNECTION, INC.
INCOME
STATEMENT
(in
thousands, except per share amounts)
EXPLANATORY
NOTES
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1.
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Selling,
general and administrative (“SG&A”) expenses for the three months
ended August 29, 2009 includes $7,000 of expenses related to the
resignation of two senior executives during the quarter, including the
acceleration of recognition of compensation expense for employee stock
option grants of $2,217. In addition, SG&A expenses include
$3,678 and $4,964 of expense for the three months ended August 29, 2009
and August 30, 2008, respectively, related to non-cash compensation
expense for all other employee stock option grants and employee stock
purchases.
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2.
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The
Company’s effective tax rate was a benefit of 19.4% for the three months
ended August 29, 2009 and a provision of 43.5% for the three months ended
August 30, 2008. For both fiscal periods, the accounting
treatment under generally accepted accounting principles for the cost
associated with incentive stock options and shares purchased through the
Employee Stock Purchase Plan has caused volatility in the Company’s
effective tax rate. In addition, during the first quarter of
fiscal 2010, the Company was unable to benefit or had limitations on the
benefit of tax losses in certain foreign
jurisdictions.
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RESOURCES
CONNECTION, INC.
Reconciliation
of Net Income to Adjusted EBITDA
(in
thousands, except adjusted EBITDA margin)
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Quarter
Ended
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||||||||
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August 29, 2009
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August 29, 2008
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|||||||
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(unaudited)
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||||||||
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Net
(loss) income
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$ | (7,186 | ) | $ | 12,492 | |||
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Adjustments:
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||||||||
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Amortization
of intangible assets
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393 | 382 | ||||||
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Depreciation
expense
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2,200 | 2,340 | ||||||
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Interest
income
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(179 | ) | (516 | ) | ||||
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(Benefit)
provision for income taxes
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(1,726 | ) | 9,628 | |||||
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EBITDA
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(6,498 | ) | 24,326 | |||||
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Stock-based
compensation expense
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5,895 | 4,964 | ||||||
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Adjusted
EBITDA (1)
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$ | (603 | ) | $ | 29,290 | |||
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Revenue
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$ | 118,263 | $ | 207,305 | ||||
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Adjusted
EBITDA Margin
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(0.5 | %) | 14.1 | % | ||||
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(1)
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Adjusted
EBITDA includes $4,791 of cash charges related to the resignation of two
senior executives during the
quarter.
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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 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.
Adjusted
EBITDA, a non-GAAP financial measure, is calculated as net income (loss) before
amortization of intangible assets, depreciation expense, interest income, income
taxes and stock-based 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)
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August 29, 2009
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May 30, 2009
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|||||||
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(unaudited)
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||||||||
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Cash,
cash equivalents and short-term investments
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$ | 156,773 | $ | 163,741 | ||||
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Accounts
receivable, less allowances
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$ | 61,940 | $ | 68,157 | ||||
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Total
assets
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$ | 394,677 | $ | 412,019 | ||||
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Current
liabilities
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$ | 50,079 | $ | 68,451 | ||||
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Total
stockholders’ equity
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$ | 340,242 | $ | 337,917 | ||||