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
16,
2008
|
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)
|
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 (714)
430-6400
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Not
applicable
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(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:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under
the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement
communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o 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
16, 2008, Resources Connection, Inc. (“Resources” or “the Company”) issued a
press release announcing its financial results for the quarterly period and
fiscal year ended May 31, 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
|
| ExhibitNo. |
Description
|
| Exhibit 99.1 | Press Release issued July 16, 2008 |
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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Date:
July 16, 2008
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By:
/s/ Thomas Christopoul
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Thomas
Christopoul
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Chief
Executive Officer
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EXHIBIT
INDEX
| ExhibitNo. |
Description
|
| Exhibit 99.1 | Press Release issued July 16, 2008 |
RESOURCES
CONNECTION, INC.
SELECTED
BALANCE SHEET INFORMATION
(in
thousands)
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 Record Quarterly Revenue, Fiscal 2008
Results
IRVINE,
Calif., July 16, 2008
-
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 31, 2008.
Total
revenue for the fourth quarter of fiscal 2008 improved 18.1% to $236.7 million
from $200.5 million for the fourth quarter in fiscal 2007. Revenues in the
U.S.
were up 10.4% quarter-over-quarter while international revenues increased 42.5%
(29.4% on a constant dollar basis). Revenue for the fourth quarter of fiscal
2008 includes revenue of $5.7 million from Domenica B.V., a leading
Netherlands-based provider of actuarial services to pension and life insurance
companies, acquired by Resources on December 18, 2007. The Company’s results for
the fourth quarter of fiscal 2008 also include an extra week of revenue (a
14-week quarter) and related expenses as compared to the fourth quarter of
fiscal 2007 (a 13-week quarter).
Total
revenue for the year ended May 31, 2008 improved 14.2% to $840.3 million from
$735.9 million for fiscal 2007. Revenues in the U.S. were up 9.0% for fiscal
2008 and international revenues were up 31.0% (20.6% on a constant dollar
basis). Revenue for fiscal 2008 includes revenue of $9.9 million from Domenica
B.V. since December 18, 2007. The Company’s results for fiscal 2008 include an
extra week of revenue (a 53-week year) and related expenses as compared to
fiscal 2007 (a 52-week year).
Gross
margin was 39.4% in the fourth quarter of fiscal 2008 versus 39.5% in the
comparable period of fiscal 2007. Selling, general and administrative expenses,
which include stock compensation expense, were 26.1% of revenue for the fourth
quarter of fiscal 2008 compared to 25.7% for the same quarter in fiscal 2007.
On
a sequential quarterly basis, selling, general and administrative expenses
improved 230 basis points from 28.4% of revenue in the third quarter of fiscal
2008.
Net
income determined in accordance with generally accepted accounting principles
(“GAAP”) for the fourth quarter ended May 31, 2008, was $15.9 million, or $0.35
per diluted share, including non-cash stock-based compensation expense of $4.1
million net of tax. This compares with GAAP net income for the fourth quarter
ended May 31, 2007, of $16.1 million, or $0.32 per diluted share, including
non-cash stock-based compensation expense of $4.6 million net of tax.
RESOURCES
CONNECTION, INC.
SELECTED
BALANCE SHEET INFORMATION
(in
thousands)
Net
income determined in accordance with GAAP for the year ended May 31, 2008,
was
$49.2 million, or $1.03 per diluted share, including non-cash stock-based
compensation expense of $17.7 million net of tax. This compares with GAAP net
income for the year ended May 31, 2007, of $54.8 million, or $1.08 per diluted
share, including non-cash stock-based compensation expense of $16.7 million
net
of tax.
Adjusted
earnings before interest, taxes, depreciation, amortization and stock
compensation expense or “adjusted EBITDA” for the fourth quarter of fiscal 2008
was $36.5 million or 15.4% of revenue versus $33.3 million or 16.6% of revenue
for the same quarter of fiscal 2007. Adjusted EBITDA for the year ended May
31,
2008 was $116.4 million or 13.9% of revenue versus $117.0 million or 15.9%
of
revenue in fiscal 2007.
“We
are
all very pleased with the improvement of our financial metrics, especially
our
gross margin and adjusted EBITDA margin during the fourth quarter,” said Don
Murray, executive chairman of Resources. “These metrics are closer to the levels
that we have historically enjoyed.”
During
the three months ended May 31, 2008, the company purchased approximately 1.1
million shares of its common stock for approximately $21.0 million or $18.99
per
share.
Thomas
Christopoul, CEO of Resources, added, “Our results for the most recent quarter
and past fiscal year demonstrate the strength and durability of the Resources
business model globally. It’s especially gratifying to report these results
against the backdrop of the considerably challenging business environment
experienced over the past 12 months by our clients around the world.”
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 4,300 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, July 16, 2008. 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 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.
SELECTED
BALANCE SHEET INFORMATION
(in
thousands)
|
Quarter
Ended |
Year
Ended |
||||||||||||
|
May
31, 2008
|
May
26, 2007
|
May
31, 2008
|
May 26, 2007 | ||||||||||
|
(unaudited) |
(unaudited) |
||||||||||||
|
Revenue
|
$
|
236,724
|
$
|
200,516
|
$
|
840,285
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$
|
735,891
|
|||||
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Direct
costs of services
|
143,505
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121,354
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518,413
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447,363
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|||||||||
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Gross
profit
|
93,219
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79,162
|
321,872
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288,528
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|||||||||
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Selling,
general and administrative expenses (1)
|
61,792
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51,557
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227,853
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191,590
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|||||||||
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Operating
income before amortization and depreciation (1)
|
31,427
|
27,605
|
94,019
|
96,938
|
|||||||||
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Amortization
of
intangible
assets
|
565
|
392
|
1,114
|
1,472
|
|||||||||
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Depreciation
expense
|
2,370
|
1,759
|
8,452
|
6,122
|
|||||||||
|
Operating
income (1)
|
28,492
|
25,454
|
84,453
|
89,344
|
|||||||||
|
Interest
income
|
(480
|
)
|
(2,616
|
)
|
(5,603
|
)
|
(8,939
|
)
|
|||||
|
Income
before provision for income taxes (1)
|
28,972
|
28,070
|
90,056
|
98,283
|
|||||||||
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Provision
for income taxes (2)
|
13,070
|
12,012
|
40,871
|
43,518
|
|||||||||
|
Net
income (1) (2)
|
$
|
15,902
|
$
|
16,058
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$
|
49,185
|
$
|
54,765
|
|||||
|
Diluted
net income per share
|
$
|
0.35
|
$
|
0.32
|
$
|
1.03
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$
|
1.08
|
|||||
|
Diluted
shares
|
46,068
|
50,882
|
47,934
|
50,644
|
|||||||||
RESOURCES
CONNECTION, INC.
SELECTED
BALANCE SHEET INFORMATION
(in
thousands)
EXPLANATORY
NOTES
|
1.
|
Includes
$5,072 and $5,726 of expense for the three months ended May 31, 2008
and
May 26, 2007, respectively, and $22,386 and $20,107 of expense for
the
years ended May 31, 2008 and May 26, 2007, respectively, related
to the
mandatory requirement to recognize compensation expense for employee
stock
option grants and employee stock
purchases.
|
|
2.
|
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 41.4% and 38.7% for the three months
ended
May 31, 2008 and May 26, 2007, respectively and 40.5% and 39.6% for
the
years ended May 31, 2008 and May 26, 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 45.1% and 42.8% for the three months ended May
31,
2008 and May 26, 2007, respectively and 45.4% and 44.3% for the years
ended May 31, 2008 and May 26, 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 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.
|
RESOURCES
CONNECTION, INC.
SELECTED
BALANCE SHEET INFORMATION
(in
thousands)
|
Quarter
Ended |
Year
Ended |
||||||||||||
|
May
31, 2008
|
May
26, 2007
|
May
31, 2008
|
May 26, 2007 | ||||||||||
|
(unaudited)
|
(unaudited)
|
||||||||||||
|
Consolidated
EBITDA and Adjusted EBITDA
|
|||||||||||||
|
Net
Income
|
$
|
15,902
|
$
|
16,058
|
$
|
49,185
|
$
|
54,765
|
|||||
|
Adjustments:
|
|||||||||||||
|
Amortization
of intangible assets
|
565
|
392
|
1,114
|
1,472
|
|||||||||
|
Depreciation
expense
|
2,370
|
1,759
|
8,452
|
6,122
|
|||||||||
|
Interest
income
|
(480
|
)
|
(2,616
|
)
|
(5,603
|
)
|
(8,939
|
)
|
|||||
|
Provision
for income taxes
|
13,070
|
12,012
|
40,871
|
43,518
|
|||||||||
|
EBITDA
|
31,427
|
27,605
|
94,019
|
96,938
|
|||||||||
|
Stock
Compensation Expense
|
5,072
|
5,726
|
22,386
|
20,107
|
|||||||||
|
Adjusted
EBITDA
|
$
|
36,499
|
$
|
33,331
|
$
|
116,405
|
$
|
117,045
|
|||||
|
Revenue
|
$
|
236,724
|
$
|
200,516
|
$
|
840,285
|
$
|
735,891
|
|||||
|
Adjusted
EBITDA Margin
|
15.4
|
%
|
16.6
|
%
|
13.9
|
%
|
15.9
|
%
|
|||||
RESOURCES
CONNECTION, INC.
SELECTED
BALANCE SHEET INFORMATION
(in
thousands)
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) excluded
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 before
amortization of intangible assets, depreciation expense, interest income, income
taxes and 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)
|
May
31, 2008
|
May
26, 2007
|
||||||
|
(unaudited)
|
|||||||
|
Cash,
cash equivalents, short-term investments and long-term marketable
securities
|
$
|
106,814
|
$
|
223,095
|
|||
|
Accounts
receivable, less allowances
|
$
|
126,669
|
$
|
105,146
|
|||
|
Total
assets
|
$
|
410,502
|
$
|
464,461
|
|||
|
Current
liabilities
|
$
|
91,424
|
$
|
87,683
|
|||
|
Total
stockholders’ equity
|
$
|
305,888
|
$
|
363,299
|
|||