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) July 15,
2009
RESOURCES
CONNECTION, INC.
|
Delaware
(State
or other jurisdiction
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0-32113
(Commission
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33-0832424
(IRS
Employer
|
|
of
incorporation)
|
File
Number)
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Identification
No.)
|
|
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)
|
|
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:
¨ Written communications pursuant to Rule
425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨ Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
2.02 Results of Operations and Financial Condition.
On
July 15, 2009, Resources Connection, Inc. (“Resources” or “the Company”) issued
a press release announcing its financial results for the quarterly
period and fiscal year ended May 30, 2009. 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 July 15,
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: July
15, 2009
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||
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By:
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/s/ Nathan
W. Franke
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|
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Nathan
W. Franke
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||
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Chief
Financial Officer
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||
EXHIBIT
INDEX
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Exhibit No .
|
Description
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|
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Exhibit
99.1
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Press
Release issued July 15,
2009
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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 Fourth Quarter and Year-End Results for Fiscal
2009
IRVINE, Calif., July 15, 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 fourth quarter and year ended May 30,
2009.
Total
revenue for the fourth quarter of fiscal 2009 was $132.0 million, down 44.2%
from $236.7 million for the fiscal 2008 fourth quarter. Revenues in the U.S.
were down 42.9% quarter-over-quarter while international revenues decreased
47.4% (37.5% on a constant dollar basis). The Company’s results for
the fourth quarter of fiscal 2008 (a 14-week quarter) included an extra week of
revenue and related expenses as compared to the fourth quarter of fiscal 2009 (a
13-week quarter).
Total
revenue for the year ended May 30, 2009 was $685.6 million, down 18.4% from
$840.3 million for fiscal 2008. Revenues in the U.S. were down 20.2% for fiscal
2009 and international revenues were down 13.5% (12.4% on a constant dollar
basis). The Company’s results for fiscal 2008 (a 53-week year) included an extra
week of revenue and related expenses as compared to fiscal 2009 (a 52-week
year).
Gross
margin was 38.2% in the fourth quarter of fiscal 2009 versus 39.4% in the
comparable period of fiscal 2008. Selling, general and administrative
expenses, which include stock-based compensation expense, were 38.6% of revenue
for the fourth quarter of fiscal 2009 compared to 26.1% for the same quarter in
fiscal 2008. Selling, general and administrative expenses for the
fourth quarter of fiscal 2009 include a restructuring charge of $3.6 million
related to severance payments and the consolidation of seven offices during the
quarter.
During
the fourth quarter, the Company also recorded tax charges aggregating $3.5
million, comprised of a valuation allowance of $2.4 million against deferred tax
assets in certain foreign locations and $1.1 million stemming from forgiveness
of intercompany debt as part of the Company’s capitalization of its French
subsidiary. On a per share basis, the restructuring and tax charges
impacted the Company’s loss per share by $0.05 and $0.08,
respectively.
The
Company’s net loss determined in accordance with generally accepted accounting
principles (“GAAP”) for the fourth quarter ended May 30, 2009, was $6.3 million,
or $0.14 per basic share. This compares with GAAP net income for the
fourth quarter ended May 31, 2008, of $15.9 million, or $0.35 per diluted
share.
Net
income determined in accordance with GAAP for the year ended May 30, 2009, was
$17.8 million, or $0.39 per diluted share. This compares with GAAP
net income for the year ended May 31, 2008, of $49.2 million, or $1.03 per
diluted share.
Adjusted
earnings before interest, taxes, depreciation, amortization and stock-based
compensation expense or “adjusted EBITDA” for the fourth quarter of fiscal 2009
was $3.4 million or 2.6% of revenue versus $36.5 million or 15.4% of revenue for
the same quarter of fiscal 2008. Adjusted EBITDA for the year ended
May 30, 2009 was $68.5 million or 10.0% of revenue versus $116.4 million or
13.9% of revenue in fiscal 2008.
“Given
the global economic climate, this has been the most challenging year in the
history of Resources,” said Thomas Christopoul, CEO of Resources. “We
continue to focus on the fundamentals of our business; that is helping our
clients drive change throughout their organizations. We are beginning
to hear more discussion about business transformation projects as companies look
to initiatives outside of liquidity and cost reduction efforts. However, the
macroeconomic environment is still causing many companies to approach project
work cautiously.”
Don
Murray, executive chairman of Resources added, “Despite the current environment,
Resources continues to generate positive operating cash flows and maintain a
healthy balance sheet. Our financial strength will position us well
as the world economy begins to recover.”
During
the three months ended May 30, 2009, the company purchased approximately 72,000
shares of its common stock for approximately $1.4 million or $19.48 per
share. The Company’s current board authorization for stock buybacks
has $35.6 million remaining.
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 2,800 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, July 15, 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 expectation that companies are looking to business transformation
projects and other initiatives outside of liquidity and cost reduction efforts,
our belief that the macroeconomic environment is causing many companies to
approach project work cautiously, our belief that we will continue to generate
positive operating cash flow and maintain a healthy balance sheet, and our
expectation that our financial strength will position us well as the world
economy begins to recover. 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
|
Year Ended
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|||||||||||||||
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May 30, 2009
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May 31, 2008
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May 30, 2009
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May 31, 2008
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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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$ | 132,049 | $ | 236,724 | $ | 685,576 | $ | 840,285 | ||||||||
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Direct
costs of services
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81,595 | 143,505 | 422,171 | 518,413 | ||||||||||||
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Gross
profit
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50,454 | 93,219 | 263,405 | 321,872 | ||||||||||||
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Selling,
general and administrative expenses (1)
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50,984 | 61,792 | 212,680 | 227,853 | ||||||||||||
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Operating
(loss) income before amortization and depreciation (1)
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(530 | ) | 31,427 | 50,725 | 94,019 | |||||||||||
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Amortization
of intangible assets
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455 | 565 | 1,383 | 1,114 | ||||||||||||
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Depreciation
expense
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2,110 | 2,370 | 8,898 | 8,452 | ||||||||||||
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Operating
(loss) income (1)
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(3,095 | ) | 28,492 | 40,444 | 84,453 | |||||||||||
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Interest
income
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(239 | ) | (480 | ) | (1,593 | ) | (5,603 | ) | ||||||||
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(Loss)
income before provision for income taxes (1)
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(2,856 | ) | 28,972 | 42,037 | 90,056 | |||||||||||
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Provision
for income taxes (2)
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3,428 | 13,070 | 24,273 | 40,871 | ||||||||||||
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Net
(loss) income (1) (2)
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$ | (6,284 | ) | $ | 15,902 | $ | 17,764 | $ | 49,185 | |||||||
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Basic
net (loss) income per share
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$ | (0.14 | ) | $ | 0.35 | $ | 0.39 | $ | 1.06 | |||||||
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Diluted
net (loss) income per share
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$ | (0.14 | ) | $ | 0.35 | $ | 0.39 | $ | 1.03 | |||||||
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Basic
shares
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45,066 | 45,167 | 45,018 | 46,545 | ||||||||||||
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Diluted
shares
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45,066 | 46,068 | 45,726 | 47,934 | ||||||||||||
RESOURCES
CONNECTION, INC.
INCOME
STATEMENT
(in
thousands, except per share amounts)
EXPLANATORY
NOTES
|
|
1.
|
Selling,
general and administrative (“SG&A”) expenses for the three months
ended May 30, 2009 includes $3,635 of restructuring charges related to
severance of personnel and the closing of seven offices during the
quarter. In addition, SG&A expenses include $3,979 and
$5,072 of expense for the three months ended May 30, 2009 and May 31,
2008, respectively, and $17,790 and $22,386 of expense for the years ended
May 30, 2009 and May 31, 2008, respectively, related to the requirement to
recognize compensation expense for employee stock option grants and
employee stock purchases.
|
|
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2.
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The
Company’s effective tax rate was 120% and 45.1% for the three months ended
May 30, 2009 and May 31, 2008, respectively and 57.7% and 45.4% for the
years ended May 30, 2009 and May 31, 2008,
respectively. Historically, the treatment under generally
accepted accounting standards of incentive stock options and shares
purchased through the Employee Stock Purchase Plan has caused volatility
in the Company’s effective tax rate. The following table
summarizes the primary components of the Company’s effective tax rate for
each period presented.
|
|
Quarter Ended
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Year Ended
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|||||||||||||||
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May 30, 2009
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May 31, 2008
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May 30, 2009
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May 31, 2008
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|||||||||||||
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Federal
and state rate, net of benefit
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(21.5 | )% | 41.4 | % | 42.0 | % | 40.5 | % | ||||||||
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Deferred
tax asset charges
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121.0 | % | — | 8.2 | % | — | ||||||||||
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Impact
of stock-based compensation
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20.5 | % | 3.7 | % | 7.5 | % | 4.9 | % | ||||||||
| 120.0 | % | 45.1 | % | 57.7 | % | 45.4 | % | |||||||||
RESOURCES
CONNECTION, INC.
Reconciliation
of Net Income to Adjusted EBITDA
(in
thousands, except per share amounts)
|
Quarter Ended
|
Year Ended
|
|||||||||||||||
|
May 30,
2009
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May 31,
2008
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May 30,
2009
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May 31,
2008
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|||||||||||||
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(unaudited)
|
(unaudited)
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|||||||||||||||
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Consolidated
EBITDA and Adjusted EBITDA
|
||||||||||||||||
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Net
(loss) income
|
$ | (6,284 | ) | $ | 15,902 | $ | 17,764 | $ | 49,185 | |||||||
|
Adjustments:
|
||||||||||||||||
|
Amortization
of intangible assets
|
455 | 565 | 1,383 | 1,114 | ||||||||||||
|
Depreciation
expense
|
2,110 | 2,370 | 8,898 | 8,452 | ||||||||||||
|
Interest
income
|
(239 | ) | (480 | ) | (1,593 | ) | (5,603 | ) | ||||||||
|
Provision
for income taxes
|
3,428 | 13,070 | 24,273 | 40,871 | ||||||||||||
|
EBITDA
|
(530 | ) | 31,427 | 50,725 | 94,019 | |||||||||||
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Stock-based
compensation expense
|
3,979 | 5,072 | 17,790 | 22,386 | ||||||||||||
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Adjusted
EBITDA
|
$ | 3,449 | $ | 36,499 | $ | 68,515 | $ | 116,405 | ||||||||
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Revenue
|
$ | 132,049 | $ | 236,724 | $ | 685,576 | $ | 840,285 | ||||||||
|
Adjusted
EBITDA Margin
|
2.6 | % | 15.4 | % | 10.0 | % | 13.9 | % | ||||||||
RESOURCES
CONNECTION, INC.
Reconciliation
of Net Income to Adjusted EBITDA
(in
thousands, except per share amounts)
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)
|
May 30, 2009
|
May 31, 2008
|
|||||||
|
(unaudited)
|
||||||||
|
Cash,
cash equivalents and short-term investments
|
$ | 163,741 | $ | 106,814 | ||||
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Accounts
receivable, less allowances
|
$ | 68,157 | $ | 126,669 | ||||
|
Total
assets
|
$ | 412,019 | $ | 410,502 | ||||
|
Current
liabilities
|
$ | 68,451 | $ | 91,424 | ||||
|
Total
stockholders’ equity
|
$ | 337,917 | $ | 305,888 | ||||