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) January 6,
2010
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)
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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.
On
January 6, 2010, Resources Connection, Inc. (“Resources” or “the Company”)
issued a press release announcing its financial results for the quarterly
period ended November 28, 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 January 6, 2010
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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: January
6, 2010
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|||
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By:
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/s/
Donald B. Murray
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Donald
B. Murray
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Chief
Executive Officer
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EXHIBIT
INDEX
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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 January 6, 2010
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Immediate
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
Resources
Connection, Inc. Reports Second Quarter Results for Fiscal 2010
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·
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Company
grows sequentially
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·
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Gross
margins steady
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·
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Closes
Sitrick Brincko acquisition at end of
quarter
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IRVINE, Calif., January 6,
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 second quarter ended November 28, 2009.
Total
revenue for the second quarter of fiscal 2010 was $121.5 million, up 2.7% on a
sequential quarter basis and down 36.1% from the fiscal 2009 second quarter.
Revenues in the U.S. were down 0.7% sequentially and 35.0% quarter-over-quarter
while international revenues increased 12.5% sequentially and declined 39.0%
quarter over quarter (up 7.9% sequentially but down 42.6% quarter-over-quarter
on a constant dollar basis).
“It is
gratifying to see sequential improvement in our quarterly revenue. Of
particular note is that our weekly revenue experienced the week before
Thanksgiving represents an increase of 17.6% from our ‘non-holiday’ 52 week low of
$8.5 million experienced last August,” said Tony Cherbak, chief operating
officer of Resources.
Gross
margin was 38.1% in the second quarter of fiscal 2010, relatively consistent
with the first quarter of fiscal 2010 and down 90 basis points from 39.0% in the
comparable period of fiscal 2009. Selling, general and administrative
expenses for the second quarter of fiscal 2010 were $44.2 million and includes
approximately $600,000 of charges related to the acquisition of Sitrick Brincko
Group.
The
Company’s pre-tax loss for the second quarter was $331,000. The Company’s
provision for income taxes during the second quarter was $1.6
million. For the six months ended November 28, 2009, the pre-tax loss
was $9.2 million and the tax benefit was $145,000.
The
Company’s net loss determined in accordance with generally accepted accounting
principles (“GAAP”) for the second quarter ended November 28, 2009, was $1.9
million, or $0.04 per diluted share. This compares with GAAP net
income for the second quarter ended November 29, 2008, of $9.5 million, or $0.21
per diluted share.
The
Company’s net loss determined in accordance with generally accepted accounting
principles (“GAAP”) for the first six months ended November 28, 2009, was $9.1
million, or $0.20 per diluted share. This compares with GAAP net
income for the first six months ended November 29, 2008, of $22.0 million, or
$0.48 per diluted share.
Cash flow
from (used in) operations, which excludes certain non-cash expenses which are
included in the statement of operations was $5.1 million for the second quarter
and $(5.5) million for the six months ended November 28, 2009.
“We
continue to be encouraged by the improving trends we see in our business,” said
Don Murray, CEO of Resources. “We are also excited about our acquisition of
Sitrick And Company, and Brincko Associates, which closed late in the quarter
and should provide opportunities to serve clients in new ways.”
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, 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, January 6, 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 that trends are improving in the business and that the acquisition
should provide opportunities to serve clients in new ways. 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)
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Quarter Ended
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Six Months Ended
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|||||||||||||||
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November 28,
2009
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November 29,
2008
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November 28,
2009
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November 29,
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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$ | 121,526 | $ | 190,233 | $ | 239,789 | $ | 397,538 | ||||||||
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Direct
costs of services
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75,172 | 116,122 | 148,296 | 242,588 | ||||||||||||
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Gross
profit
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46,354 | 74,111 | 91,493 | 154,950 | ||||||||||||
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Selling,
general and administrative expenses (1)
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44,243 | 54,380 | 95,880 | 110,893 | ||||||||||||
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Operating
(loss) income before amortization and depreciation (1)
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2,111 | 19,731 | (4,387 | ) | 44,057 | |||||||||||
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Amortization
of intangible assets
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438 | 275 | 831 | 657 | ||||||||||||
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Depreciation
expense
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2,171 | 2,263 | 4,371 | 4,603 | ||||||||||||
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Operating
(loss) income (1)
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(498 | ) | 17,193 | (9,589 | ) | 38,797 | ||||||||||
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Interest
income
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(167 | ) | (380 | ) | (346 | ) | (896 | ) | ||||||||
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(Loss)
income before provision for income taxes (1)
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(331 | ) | 17,573 | (9,243 | ) | 39,693 | ||||||||||
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(Benefit)
provision for income taxes (2)
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1,581 | 8,097 | (145 | ) | 17,725 | |||||||||||
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Net
(loss) income (1) (2)
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$ | (1,912 | ) | $ | 9,476 | $ | (9,098 | ) | $ | 21,968 | ||||||
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Basic
net (loss) income per share
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$ | (0.04 | ) | $ | 0.21 | $ | (0.20 | ) | $ | 0.49 | ||||||
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Diluted
net (loss) income per share
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$ | (0.04 | ) | $ | 0.21 | $ | (0.20 | ) | $ | 0.48 | ||||||
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Basic
shares
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45,540 | 45,061 | 45,420 | 45,015 | ||||||||||||
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Diluted
shares
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45,540 | 45,859 | 45,420 | 45,945 | ||||||||||||
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 six months ended
November 28, 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. SG&A expenses for the three months ended November
28, 2009 includes approximately $600,000 in costs related to the
acquisition of Sitrick and Company, and Brincko Associates, which closed
on November 20, 2009. In addition, SG&A expenses include $3,529 and
$4,635 of expense for the three months ended November 28, 2009 and
November 29, 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 (477.0)% for the three months ended
November 28, 2009 and a provision of 46.1% for the three months ended
November 29, 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 second 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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Six Months Ended
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|||||||||||||||
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November
28, 2009
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November
29, 2008
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November
28, 2009
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November
29,
2008
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|||||||||||||
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(unaudited)
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(unaudited)
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|||||||||||||||
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Consolidated
EBITDA and Adjusted EBITDA
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||||||||||||||||
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Net
(loss) income
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$ | (1,912 | ) | $ | 9,476 | $ | (9,098 | ) | $ | 21,968 | ||||||
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Adjustments:
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||||||||||||||||
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Amortization
of intangible assets
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438 | 275 | 831 | 657 | ||||||||||||
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Depreciation
expense
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2,171 | 2,263 | 4,371 | 4,603 | ||||||||||||
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Interest
income
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(167 | ) | (380 | ) | (346 | ) | (896 | ) | ||||||||
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(Benefit)
provision for income taxes
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1,581 | 8,097 | (145 | ) | 17,725 | |||||||||||
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EBITDA
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2,111 | 19,731 | (4,387 | ) | 44,057 | |||||||||||
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Stock-based
compensation expense
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3,529 | 4,635 | 9,424 | 9,599 | ||||||||||||
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Adjusted
EBITDA
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$ | 5,640 | $ | 24,366 | $ | 5,037 | $ | 53,656 | ||||||||
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Revenue
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$ | 121,526 | $ | 190,233 | $ | 239,789 | $ | 397,538 | ||||||||
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Adjusted
EBITDA Margin
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4.6 | % | 12.8 | % | 2.1 | % | 13.5 | % | ||||||||
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)
|
November 28, 2009
|
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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$ | 135,743 | $ | 163,741 | ||||
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Accounts
receivable, less allowances
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$ | 72,560 | $ | 68,157 | ||||
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Total
assets
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$ | 481,373 | $ | 412,019 | ||||
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Current
liabilities
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$ | 57,223 | $ | 68,451 | ||||
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Total
stockholders’ equity
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$ | 362,734 | $ | 337,917 | ||||