UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of
The
Securities Exchange Act of 1934
Date
of
Report (Date of earliest event reported) October
2, 2008
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
October 2, 2008, Resources Connection, Inc. (“Resources” or “the Company”)
issued a press release announcing its financial results for the first quarterly
period of fiscal year 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 October 2, 2008
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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RESOURCES
CONNECTION, INC.
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|
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Date:
October 2, 2008
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|
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By:
/s/ Thomas Christopoul
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|
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Thomas
Christopoul
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|
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Chief
Executive Officer
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EXHIBIT
INDEX
|
Description
|
||
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Exhibit
99.1
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Press
Release issued October 2, 2008
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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 First Quarter Fiscal 2009
Results,
Continuing
Gross Margin Improvement
IRVINE,
Calif., October 2, 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 first quarter ended August 30, 2008.
Total
revenue for the first quarter of fiscal 2009 improved 6.8% to $207.3 million
from $194.1 million for the first quarter in fiscal 2008. Revenues in the U.S.
were flat quarter-over-quarter while international revenues increased 26.5%
(17.4% on a constant dollar basis).
Gross
margin was 39.0% in the first quarter of fiscal 2009 versus 37.9% in the
comparable period of fiscal 2008. Selling, general and administrative expenses,
which include stock compensation expense, were 27.3% of revenue for the first
quarter of fiscal 2009, the same as in the first quarter of fiscal 2008.
Net
income determined in accordance with generally accepted accounting principles
(“GAAP”) improved 7.8% to $12.5 million for the first quarter ended August 30,
2008 compared with $11.6 million for the quarter ended August 25, 2007; earnings
per diluted share improved 17.4% to $0.27 per diluted share for the first
quarter of fiscal 2009 from $0.23 per diluted share for the first quarter of
the
prior year. GAAP net income includes non-cash stock based compensation expense
of $3.6 million and $4.1 million, net of tax for the quarters ended August
30,
2008 and August 25, 2007, respectively.
Adjusted
earnings before interest, taxes, depreciation, amortization and stock
compensation expense or “EBITDA” for the first quarter of fiscal 2009 was $29.3
million or 14.1% of revenue versus $26.5 million or 13.7% of revenue for the
same quarter of fiscal 2008.
“I
am
particularly pleased with our gross margin and profitability trends, which
will
remain a focus of the entire Resources team,” said Don Murray, Executive
Chairman of Resources. “We continue to demonstrate our ability to adapt to our
clients’ needs in these volatile times.”
“As
we
look forward, we will continue to face a challenging economic environment and
volatility in world financial markets,” said Thomas Christopoul, President and
CEO of Resources. “We believe the enormous change taking place in the capital
markets will present significant opportunities for us in the future; however,
the timing of those opportunities will vary as companies work through the
difficult business environment. Our business model, which is designed such
that
70% of our cash costs are variable, positions Resources extremely well in these
uncertain times.”
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 4,000 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, October 2, 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. In this press release, such statements include our
plans
to remain focused on gross margin and profitability trends; our belief that
the
enormous change taking place in the capital markets will present significant
opportunities for us in the future and that our business model positions
Resources Connection well in these uncertain times; and our belief that we
continue to demonstrate our ability to adapt to our clients’ needs in these
volatile times. Such statements and all phases of Resources Connection’s
operations are subject to known and unknown risks, uncertainties and other
factors, including seasonality, overall economic conditions and other factors
and uncertainties as are identified in our most recent Annual Report on Form
10-K and our other public filings made with the Securities and Exchange
Commission (File No. 0-32113). Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date hereof.
Resources Connection’s, and its industry’s, actual results, levels of activity,
performance or achievements may be materially different from any future results,
levels of activity, performance or achievements expressed or implied by these
forward-looking statements. The Company undertakes no obligation to update
the
forward-looking statements in this press release.
###
RESOURCES
CONNECTION, INC.
INCOME
STATEMENT
(in
thousands, except per share amounts)
|
Quarter Ended
|
|||||||
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August 30,
2008
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August 25,
2007
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||||||
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(unaudited)
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|||||||
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Revenue
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$
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207,305
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$
|
194,120
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|||
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Direct
costs of services
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126,466
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120,631
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|||||
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Gross
profit
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80,839
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73,489
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|||||
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Selling,
general and administrative expenses (1)
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56,513
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53,029
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|||||
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Operating
income before amortization and depreciation (1)
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24,326
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20,460
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|||||
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Amortization
of intangible assets
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382
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254
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|||||
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Depreciation
expense
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2,340
|
1,875
|
|||||
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Operating
income (1)
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21,604
|
18,331
|
|||||
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Interest
income
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(516
|
)
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(2,542
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)
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|||
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Income
before provision for income taxes (1)
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22,120
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20,873
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|||||
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Provision
for income taxes (2)
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9,628
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9,291
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|||||
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Net
income (1) (2)
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$
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12,492
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$
|
11,582
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|||
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Diluted
net income per share
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$
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0.27
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$
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0.23
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|||
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Diluted
shares
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46,008
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50,411
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|||||
RESOURCES
CONNECTION, INC.
INCOME
STATEMENT
(in
thousands, except per share amounts)
EXPLANATORY
NOTES
|
1.
|
Includes
$4,964 and $6,000 of expense for the three months ended August 30,
2008
and August 25, 2007, respectively, related to the mandatory 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, absent the impact of the requirement to
recognize compensation expense related to employee stock option grants
and
employee stock purchases, was 40.5% and 40.0% for the three months
ended
August 30, 2008 and August 25, 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 43.5% and 44.5% for the three months ended August
30,
2008 and August 25, 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.
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RESOURCES
CONNECTION, INC.
Reconciliation
of Net Income to Adjusted EBITDA
(in
thousands, except Adjusted EBITDA Margin)
|
Quarter Ended
|
|||||||
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August 30,
2008
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August 25,
2007
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||||||
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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
Income
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$
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12,492
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$
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11,582
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|||
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Adjustments:
|
|||||||
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Amortization
of intangible assets
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382
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254
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|||||
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Depreciation
expense
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2,340
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1,875
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|||||
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Interest
income
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(516
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)
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(2,542
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)
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|||
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Provision
for income taxes
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9,628
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9,291
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|||||
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EBITDA
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24,326
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20,460
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|||||
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Stock
Compensation Expense
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4,964
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6,000
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|||||
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Adjusted
EBITDA
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$
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29,290
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$
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26,460
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|||
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Revenue
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$
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207,305
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$
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194,120
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|||
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Adjusted
EBITDA Margin
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14.1
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%
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13.6
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%
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|||
RESOURCES
CONNECTION, INC.
Reconciliation
of Net Income to Adjusted EBITDA
(in
thousands, except Adjusted EBITDA Margin)
The
Company utilizes certain financial measures and key performance indicators
that
are not defined by or calculated in accordance with GAAP to assess our financial
and operating performance. A non-GAAP financial measure is defined as a
numerical measure of a company’s financial performance that (i) excludes
amounts, or is subject to adjustments that have the effect of excluding amounts,
that are included in the comparable measure calculated and presented in
accordance with GAAP in the statement of income; or (ii) includes amounts,
or is
subject to adjustments that have the effect of including amounts, that are
excluded from the comparable measure so calculated and presented.
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)
|
August 30, 2008
|
May 31, 2008
|
||||||
|
(unaudited)
|
|||||||
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Cash,
cash equivalents and short-term investments
|
$
|
121,742
|
$
|
106,814
|
|||
|
Accounts
receivable, less allowances
|
$
|
116,981
|
$
|
126,669
|
|||
|
Total
assets
|
$
|
408,625
|
$
|
410,502
|
|||
|
Current
liabilities
|
$
|
70,076
|
$
|
91,424
|
|||
|
Total
stockholders’ equity
|
$
|
327,316
|
$
|
305,888
|
|||