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) April 7,
2009
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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
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(Former
name or former address, if changed since last
report.)
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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.
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 April 7, 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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Date: April
7, 2009
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By:
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/s/ Thomas
Christopoul
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Thomas
Christopoul
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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 April 7, 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 Third Quarter Fiscal 2009 Results
IRVINE, Calif., April 7, 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 third quarter ended February 28,
2009.
Total
revenue for the third quarter of fiscal 2009 was $156.0 million versus $202.8
million for the third quarter in fiscal 2008, a decrease of 23.1%. Revenues in
the U.S. declined 24.0% quarter-over-quarter while international revenues
declined 20.6% (9.6% on a constant dollar basis).
“Our
current business, like many other professional services companies, continues to
be challenged by the negative macroeconomic environment around the world,” said
Thomas D. Christopoul, President and CEO of Resources. “While our
clients are approaching their business initiatives much more cautiously, we
believe that our value proposition to our clients remains compelling despite the
obvious uncertainty in the global economy.”
Total
revenue for the nine months ended February 28, 2009 was $553.5 million, a
decrease of 8.3% from $603.6 million for the comparable period of fiscal 2008.
Revenues in the U.S. declined 11.6% versus the comparable prior year period
while international revenues improved 1.0% (4.5% on a constant dollar
basis).
Gross
margin decreased 10 basis points to 37.2% in the third quarter of fiscal 2009
compared with 37.3% in the comparable period of fiscal 2008, primarily as a
result of decreased leverage on certain employee benefit costs. Selling, general and
administrative expenses, which include stock compensation expense, were $50.8
million for the third quarter of fiscal 2009, down from $57.5 million in the
third quarter of fiscal 2008.
Net
income was $2.1 million for the third quarter ended February 28, 2009 compared
with $8.7 million for the quarter ended February 23, 2008; earnings per diluted
share were $0.05 per diluted share for the third quarter of fiscal 2009 versus
$0.19 per diluted share for the third quarter of the prior year. Net
income includes stock compensation expense of $3.2 million and $4.8 million, net
of tax, for the quarters ended February 28, 2009 and February 23, 2008,
respectively.
Adjusted
earnings before interest, taxes, depreciation, amortization and stock
compensation expense or “Adjusted EBITDA” for the third quarter of fiscal 2009
was $11.4 million or 7.3% of revenue versus $24.1 million or 11.9% of revenue
for the same quarter of fiscal 2008.
Net
income was $24.0 million for the nine months ended February 28, 2009 compared
with $33.3 million for the nine months ended February 23, 2008; earnings per
diluted share were $0.53 per diluted share for the first nine months of fiscal
2009 versus $0.67 per diluted share for the first nine months of the prior
year. Net income includes stock compensation expense of $10.6 million
and $13.7 million, net of tax for the nine months ended February 28, 2009 and
February 23, 2008, respectively.
Adjusted
EBITDA for the first nine months of fiscal 2009 was $65.1 million or 11.8% of
revenue versus $79.9 million or 13.2% of revenue for the same period of fiscal
2008.
For the
nine months ended February 28, 2009, Resources generated $47.7 million in cash
from operations and as of February 28, 2009 had $146 million in cash and
short-term investments.
“Undoubtedly,
the economic climate will continue to challenge Resources,” said
Christopoul. “We remain convinced that our flexible business model,
combined with the strength of our balance sheet, gives us a distinct competitive
advantage. While our primary focus will always be on
growing revenue, we cannot ignore our infrastructure costs in this environment,
and we have executed a plan to consolidate certain offices over the next few
months. These actions are being taken in connection with our continued focus on
client development where we see substantial potential to shift additional share
of consulting spend from our traditional competitors.”
In March
2009, the Company commenced a plan to consolidate seven offices into existing,
larger market practices. In conjunction with this activity and other
personnel actions, the Company will record a charge during the fourth quarter of
approximately $3.4 million related to the estimated lease abandonment costs,
including leasehold improvements, and severance. On an annualized
basis, these actions, when combined with other cost reduction activities, should
produce cost savings of approximately $12 million.
“We
expect Resources to continue to provide superior value to our clients, balanced
rewards to our employees and a solid return on investment to our shareholders,”
said Don Murray, Executive Chairman of Resources. “I am very thankful
that our employees and consultants continue to demonstrate their unparalleled
commitment to our culture and our value proposition at this critical juncture in
the company’s history.”
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 3,200 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, April 7, 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 expectations concerning economic conditions, our beliefs regarding
the value that we will deliver to our clients and the investment return that we
will deliver to our shareholders, our belief that there will be a substantial
potential to shift additional share of consulting spend from our traditional
competitors, our expectation of $12 million in costs savings annually as a
result of our cost reduction initiatives and our belief that our flexible
business model and the strength of our balance sheet gives us a distinct
competitive advantage. Such statements and all phases of Resources
Connection’s operations are subject to known and unknown risks, uncertainties
and other factors, including overall economic conditions and other factors and
uncertainties as are identified in our most recent Annual Report on Form 10-K
and our other public filings made with the Securities and Exchange Commission
(File No. 0-32113). Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date
hereof. Resources Connection’s, and its industry’s, actual results,
levels of activity, performance or achievements may be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements. The Company undertakes
no obligation to update the forward-looking statements in this press
release.
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RESOURCES
CONNECTION, INC.
INCOME
STATEMENT
(in
thousands, except per share amounts)
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Quarter
Ended
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Nine
Months Ended
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February
28, 2009
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February
23, 2008
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February
28, 2009
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February
23, 2008
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(unaudited)
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(unaudited)
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Revenue
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$ | 155,989 | $ | 202,803 | $ | 553,527 | $ | 603,561 | ||||||||
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Direct
costs of services
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97,988 | 127,252 | 340,576 | 374,908 | ||||||||||||
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Gross
profit
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58,001 | 75,551 | 212,951 | 228,653 | ||||||||||||
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Selling,
general and administrative expenses (1)
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50,803 | 57,518 | 161,696 | 166,061 | ||||||||||||
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Operating
income before amortization and depreciation (1)
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7,198 | 18,033 | 51,255 | 62,592 | ||||||||||||
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Amortization
of
intangible
assets
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271 | 211 | 928 | 549 | ||||||||||||
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Depreciation
expense
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2,185 | 2,200 | 6,788 | 6,082 | ||||||||||||
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Operating
income (1)
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4,742 | 15,622 | 43,539 | 55,961 | ||||||||||||
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Interest
income
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(458 | ) | (952 | ) | (1,354 | ) | (5,123 | ) | ||||||||
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Income
before provision for income taxes (1)
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5,200 | 16,574 | 44,893 | 61,084 | ||||||||||||
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Provision
for income taxes (2)
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3,120 | 7,909 | 20,845 | 27,801 | ||||||||||||
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Net
income (1) (2)
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$ | 2,080 | $ | 8,665 | $ | 24,048 | $ | 33,283 | ||||||||
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Diluted
net income per share
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$ | 0.05 | $ | 0.19 | $ | 0.53 | $ | 0.67 | ||||||||
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Diluted
shares
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45,390 | 46,547 | 45,760 | 49,952 | ||||||||||||
RESOURCES
CONNECTION, INC.
INCOME
STATEMENT
(in
thousands, except per share amounts)
EXPLANATORY
NOTES
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1.
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Includes
$4,212 and $6,052 of stock compensation expense for the three months ended
February 28, 2009 and February 23, 2008, respectively, and $13,811 and
$17,314 of stock compensation expense for the nine months ended February
28, 2009 and February 23, 2008,
respectively.
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2.
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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 43.6% and 40.4% for the three months ended
February 28, 2009 and February 23, 2008, respectively and 41.0% and 40.1%
for the nine months ended February 28, 2009 and February 23, 2008,
respectively. The Company adjusted its estimate of the
effective tax rate for the year ended May 30, 2009 during its third
quarter, as a result of the magnified impact of permanent differences
relative to lower pretax income; state income tax increases; and foreign
earnings. 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 60.0% and
47.7% for the three months ended February 28, 2009 and February 23, 2008,
respectively, and 46.4% and 45.5% for the nine months ended February 28,
2009 and February 23, 2008, 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 Statement of Financial
Accounting Standards 123 (R), “Share-Based Payment” (“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.
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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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Nine
Months Ended
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February
28, 2009
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February
23, 2008
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February
28, 2009
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February
23, 2008
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(unaudited)
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(unaudited)
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Adjusted
EBITDA
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Net
income
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$ | 2,080 | $ | 8,665 | $ | 24,048 | $ | 33,283 | ||||||||
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Adjustments:
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||||||||||||||||
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Amortization
of intangible assets
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271 | 211 | 928 | 549 | ||||||||||||
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Depreciation
expense
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2,185 | 2,200 | 6,788 | 6,082 | ||||||||||||
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Interest
income
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(458 | ) | (952 | ) | (1,354 | ) | (5,123 | ) | ||||||||
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Provision
for income taxes
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3,120 | 7,909 | 20,845 | 27,801 | ||||||||||||
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EBITDA
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7,198 | 18,033 | 51,255 | 62,592 | ||||||||||||
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Stock
compensation expense
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4,212 | 6,052 | 13,811 | 17,314 | ||||||||||||
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Adjusted
EBITDA
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$ | 11,410 | $ | 24,085 | $ | 65,066 | $ | 79,906 | ||||||||
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Revenue
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$ | 155,989 | $ | 202,803 | $ | 553,527 | $ | 603,561 | ||||||||
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Adjusted
EBITDA Margin
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7.3 | % | 11.9 | % | 11.8 | % | 13.2 | % | ||||||||
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 generally accepted
accounting principles (“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.
EBITDA, a
non-GAAP financial measure, is calculated as net income before amortization of
intangible assets, depreciation expense, interest income and income
taxes. Adjusted EBITDA, also a non-GAAP financial measure, is EBITDA
before 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)
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February 28,
2009
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May 31,
2008
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|||||||
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(unaudited)
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Cash,
cash equivalents and short-term investments
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$ | 145,977 | $ | 106,814 | ||||
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Accounts
receivable, less allowances
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$ | 84,134 | $ | 126,669 | ||||
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Total
assets
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$ | 408,834 | $ | 410,502 | ||||
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Current
liabilities
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$ | 72,789 | $ | 91,424 | ||||
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Total
stockholders’ equity
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$ | 331,568 | $ | 305,888 | ||||