-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P+IuTEGi+tG31Li0h3CNOhOmd8rDVY3fM51rSRNNoCD9nX2F+zDcKzDyxUY8jMzE rFEt9US7cE0xlx/GQ0+DTg== 0001275287-06-006582.txt : 20061221 0001275287-06-006582.hdr.sgml : 20061221 20061221160659 ACCESSION NUMBER: 0001275287-06-006582 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061221 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061221 DATE AS OF CHANGE: 20061221 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RESOURCES CONNECTION INC CENTRAL INDEX KEY: 0001084765 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 330832424 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-32113 FILM NUMBER: 061293375 BUSINESS ADDRESS: STREET 1: 695 TOWN CTR DR STREET 2: STE 600 CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 8009001131 MAIL ADDRESS: STREET 1: 695 TOWN CENTER DRIVE STREET 2: SUITE 600 CITY: COSTA MESA STATE: CA ZIP: 92626 FORMER COMPANY: FORMER CONFORMED NAME: RC TRANSACTION CORP DATE OF NAME CHANGE: 20000824 8-K 1 rc8339.txt FORM 8-K ================================================================================ 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) December 21, 2006 RESOURCES CONNECTION, INC. (Exact name of Registrant as specified in its charter) Delaware 0-32113 33-0832424 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 695 Town Center Drive, Suite 600, Costa Mesa, California 92626 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (714) 430-6400 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 December 21, 2006, Resources Connection, Inc. (the "Company") issued a press release announcing its results of operations for the quarter and six months ended November 30, 2006 (the second quarter of the Company's fiscal 2007). A copy of the press release issued by the Company is attached as Exhibit 99.1 to this report and is incorporated by reference into this item. Within the attached press release, the Company makes reference to certain non-generally accepted accounting principles ("non-GAAP") financial measures, including "non-GAAP operating income", "non-GAAP net income" and "non-GAAP net income per diluted share" which have directly comparable generally accepted accounting principles ("GAAP") financial measures. The Company believes that these non-GAAP measures represent important internal measures of performance. 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 and the Non-GAAP Income Statement 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. The Company believes that the presentation of non-GAAP operating income, non-GAAP net income, non-GAAP diluted net income per share and non-GAAP shares used in net income per share calculation, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations. For its internal budgeting process, the Company's management uses financial statements that do not include stock-based compensation expense relating to employee stock option grants and employee stock purchases, and the income tax effects thereof. The Company's management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of the Company. As described above, the Company excludes the following items from one or more of its non-GAAP measures: Stock-based compensation. These expenses (which comprise a portion of the selling, general, and administrative expenses line item in the Income Statement) consist of expenses for employee stock options and employee stock purchases under SFAS 123(R). The Company excludes stock-based compensation expenses from its non-GAAP measures primarily because they are non-cash expenses that the Company does not believe are reflective of ongoing operating results. Further, as the Company applies SFAS 123(R), it believes that it is useful to investors to understand the impact of the application of SFAS 123(R) to its results of operations. The Company will incur stock-based compensation expense related to employee stock options and employee stock purchases in future periods. Provision for income taxes. Excluding the income tax effect of the non-GAAP pre-tax adjustments from provision for income taxes assists investors in understanding the tax provision associated with those adjustments. Further, because the Company has historically issued incentive stock options, the impact of implementing SFAS 123(R) can result in a tax provision considerably different than the tax provision calculated before stock based compensation, and the Company believes it is useful for investors to understand this impact. Selling, general and administrative expenses before stock-based compensation, operating income before amortization and depreciation and stock-based compensation, operating income before stock-based compensation, income before provision for income taxes and stock-based compensation, provision for incomes taxes before stock-based compensation and net income before stock-based compensation and diluted earnings per share (before stock-based compensation) are presented as supplemental disclosures in order to provide comparable information versus prior year and prior quarter measures of operating performance. These measures are also the primary measures of performance used by management to evaluate the Company's financial performance and the compensation committee of the board of directors to assess portions of management's performance. The information in this current report on Form 8-K, including 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. (d) Exhibits EXHIBIT NO. DESCRIPTION - ------------ ---------------------------------------------------------------- Exhibit 99.1 Press Release issued December 21, 2006 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. RESOURCES CONNECTION, INC. Date: December 21, 2006 By: /s/ Donald B. Murray ----------------------- Donald B. Murray Chief Executive Officer EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ------------ ---------------------------------------------------------------- Exhibit 99.1 Press Release issued December 21, 2006 EX-99.1 2 rc8339ex991.txt EXHIBIT 99.1 Exhibit 99.1 FOR IMMEDIATE RELEASE - --------------------- RESOURCES CONNECTION, INC. REPORTS SECOND QUARTER RESULTS Second Quarter Revenue Reaches an All-Time High Costa Mesa, Calif., December 21, 2006 -- Resources Connection, Inc. (NASDAQ: RECN), an international professional services firm that provides, through its operating subsidiary, Resources Global Professionals, experienced accounting and finance, risk management and internal audit, information management, human capital, supply chain management and legal professionals to clients on a project basis, today announced financial results for its second quarter ended November 30, 2006. Total revenue for the second quarter of fiscal 2007 improved 15.6% to $182.8 million from $158.1 million for the same quarter in fiscal 2006. For the six months ended November 30, 2006, revenue grew 13.1% to $347.9 million compared to $307.7 million for the comparable six months of the prior year. The Company adopted SFAS 123(R), the accounting pronouncement requiring the recognition of compensation expense relating to employee stock option grants and employee stock purchases, effective with the Company's first quarter of fiscal 2007. Because SFAS 123(R) has been adopted prospectively, net income for the three months and six months ended November 30, 2006 is not comparable to net income for the three months and six months ended November 30, 2005. Net income on a generally accepted accounting principles (GAAP) basis for the quarter ended November 30, 2006, was $14.7 million, or $0.29 per diluted share, which includes non-cash stock-based compensation expense of $4.7 million on a pre-tax basis and $790,000 of tax benefits related to stock-based compensation. Non-GAAP net income for the second quarter of fiscal 2007, excluding stock-based compensation expense and the related income tax effect, was $18.5 million, or $0.36 per diluted share. Net income (on a GAAP basis) for the quarter ended November 30, 2005, was $16.0 million, or $0.31 per diluted share. For the six months ended November 30, 2006, net income on a GAAP basis was $25.6 million, or $0.51 per diluted share, which includes non-cash stock-based compensation expense of $9.4 million on a pre-tax basis and $1.3 million of tax benefits related to stock-based compensation. Non-GAAP net income for the first six months of fiscal 2007, excluding stock-based compensation expense and the related income tax effect, was $33.7 million, or $0.66 per diluted share. Net income (on a GAAP basis) for the six months ended November 30, 2005, was $31.1 million, or $0.60 per diluted share. "Resources continues to perform well in fiscal 2007," said Chairman and CEO of Resources Global Professionals Donald Murray. "Our established client base, the high-quality service our associates provide, and the strength of our business model help us grow as we continue to deliver on our global growth strategy. On a sequential basis, revenues grew in each of our six services during the second quarter. In addition, our international practices continue to perform well and our major markets in the U.S. have strong demand. We look forward to our ongoing expansion in Europe and Asia and to partnering with our multi-national clients around the world." ABOUT RESOURCES GLOBAL PROFESSIONALS Resources Global Professionals is an international professional services firm that helps business leaders execute internal initiatives. The Company provides accounting and finance, human capital, information management, supply chain management, internal audit/risk management, and legal services on a project basis. In addition to its project professional services, Resources Global Professionals has established itself as a leading business services provider for companies seeking independent and cost effective assistance for meeting or complying with many of the complex business and regulatory issues in today's marketplace. Resources was founded in 1996 within a Big Four firm. Today, Resources is a publicly traded company (NASDAQ: RECN) with more than 75 practice offices and 3,900 professionals. Headquartered in Costa Mesa, California, Resources serves more than half of the Fortune Global 100. The company was recently honored as one of America's 200 Best Small Companies by Forbes magazine. Selected for the fifth consecutive year, Resources placed #66 on the Forbes list. In September, 2006, Resources was named #61 on Fortune magazine's list of 100 Fastest-Growing Companies and in June, Resources placed #21 on BusinessWeek's list of 100 Hot Growth Companies to watch in 2006. The Company is listed on NASDAQ's new Global Select Market, the exchange's highest listing tier. More information about Resources is available at http://www.resourcesglobal.com. Resources will hold a conference call for interested analysts and investors at 5:00 p.m., EST today, December 21, 2006. 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 Resources Connection's Form 10-K for the year ended May 31, 2006 and Form 10-Q for the quarter ended August 31, 2006 (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. The Non-GAAP Income Statement in this release excludes stock-based compensation expense from the following non-GAAP line items: non-GAAP selling, general and administrative expenses, non-GAAP operating income before amortization and depreciation, non-GAAP operating income, non-GAAP income before provision for income taxes, non-GAAP provision for income taxes, non-GAAP net income, non-GAAP net income per diluted share, and non-GAAP diluted shares used in net income per share calculation. These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures and the Non-GAAP Income Statement are not based on any comprehensive set of accounting rules or principles. Resources believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Resources' results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Resources' results of operations in conjunction with the corresponding GAAP measures. Resources believes that the presentation of non-GAAP selling, general and administrative expenses, non-GAAP operating income before amortization and depreciation, non-GAAP operating income, non-GAAP income before provision for income taxes, non-GAAP provision for income taxes, non-GAAP net income, non-GAAP net income per diluted share and non-GAAP diluted shares used in net income per share calculation, when presented in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations. For its internal budgeting process, Resources' management uses financial statements that do not include stock-based compensation expense related to employee stock options and employee stock purchases, and the income tax effects thereof. Resources' management also uses the foregoing non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of Resources. For additional information on the items excluded by Resources Connection, Inc. from one or more of its non-GAAP financial measures, and for additional information regarding these non-GAAP measures, we refer you to the Form 8-K regarding this release furnished today to the Securities and Exchange Commission. Press Contact: Sarah Lazarus (978) 369-4478 Sarah@CL-Media.com Company Contact: Steve Giusto, Chief Financial Officer (714) 430-6500 Steve.Giusto@resources-us.com RESOURCES CONNECTION, INC. INCOME STATEMENT (in thousands, except per share amounts)
Quarter Six Months Ended November 30, Ended November 30, ------------------------ ------------------------ 2006 2005 2006 2005 ---------- ---------- ---------- ---------- (unaudited) (unaudited) Revenue $ 182,804 $ 158,138 $ 347,911 $ 307,726 Direct costs of services 110,152 95,171 210,071 185,821 ---------- ---------- ---------- ---------- Gross profit 72,652 62,967 137,840 121,905 Selling, general and administrative expenses (1) 46,658 36,826 91,456 70,918 ---------- ---------- ---------- ---------- Operating income before amortization and depreciation (1) 25,994 26,141 46,384 50,987 Amortization of intangible assets 344 435 762 870 Depreciation expense 1,444 545 2,800 1,037 ---------- ---------- ---------- ---------- Operating income (1) 24,206 25,161 42,822 49,080 Interest income (2,013) (1,114) (3,922) (2,086) ---------- ---------- ---------- ---------- Income before provision for income taxes (1) 26,219 26,275 46,744 51,166 Provision for income taxes (2) 11,562 10,250 21,136 20,082 ---------- ---------- ---------- ---------- Net income (1) (2) $ 14,657 $ 16,025 $ 25,608 $ 31,084 ========== ========== ========== ========== Diluted net income per share $ 0.29 $ 0.31 $ 0.51 $ 0.60 ========== ========== ========== ========== Diluted shares 50,470 52,034 50,123 51,722 ========== ========== ========== ==========
(1) Includes $4,662 and $9,363 of expense for the three and six months ended November 30, 2006, respectively, related to the mandatory requirement to recognize compensation expense related to employee stock option grants and employee stock purchases, effective in the Company's fiscal year 2007. There was no corresponding expense in the three and six months ended November 30, 2005. (2) The Company's effective tax rate, absent the impact of the adoption of the requirement to recognize compensation expense related to employee stock option grants and employee stock purchases, was 40% in both the three and six months ended November 30, 2006, compared to 39.0% and 39.2% for the three and six months ended November 30, 2005, respectively. The Company's effective tax rate, including the impact of the adoption of the requirement to recognize compensation expense related to employee stock option grants and employee stock purchases, was 44.1% and 45.2% in the three and six months ended November 30, 2006. 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. NON-GAAP INCOME STATEMENT (in thousands, except per share amounts)
Quarter Six Months Ended November 30, Ended November 30, ------------------------ ------------------------ 2006 2005 2006 2005 ---------- ---------- ---------- ---------- (unaudited) (unaudited) Revenue $ 182,804 $ 158,138 $ 347,911 $ 307,726 Direct costs of services 110,152 95,171 210,071 185,821 ---------- ---------- ---------- ---------- Gross profit 72,652 62,967 137,840 121,905 Selling, general and administrative expenses (1) 41,996 36,826 82,093 70,918 ---------- ---------- ---------- ---------- Operating income before amortization and depreciation (1) 30,656 26,141 55,747 50,987 Amortization of intangible assets 344 435 762 870 Depreciation expense 1,444 545 2,800 1,037 ---------- ---------- ---------- ---------- Operating income (1) 28,868 25,161 52,185 49,080 Interest income (2,013) (1,114) (3,922) (2,086) ---------- ---------- ---------- ---------- Income before provision for income taxes (1) 30,881 26,275 56,107 51,166 Provision for income taxes (2) 12,352 10,250 22,442 20,082 ---------- ---------- ---------- ---------- Net income (1) (2) $ 18,529 $ 16,025 $ 33,665 $ 31,084 ========== ========== ========== ========== Diluted net income per share $ 0.36 $ 0.31 $ 0.66 $ 0.60 ========== ========== ========== ========== Diluted shares (3) 51,107 52,034 50,956 51,722 ========== ========== ========== ==========
(1) Excludes $4,662 and $9,363 of expense for the three and six months ended November 30, 2006, respectively, related to the mandatory requirement to recognize compensation expense related to employee stock option grants and employee stock purchases, effective with the Company's first quarter of fiscal 2007. There was no corresponding expense for the three and six months ended November 30, 2005. (2) Excludes tax benefits related to stock based compensation of $790 and $1,306 for the three and six months ended November 30, 2006, respectively. Please refer to footnote (2) on the GAAP Income Statement for further detail. (3) Includes 637 and 833 of shares presumed to be repurchased in accordance with the requirements of SFAS 123(R) and SFAS 128 for GAAP computation of diluted number of shares for the quarter and six months ended November 30, 2006, respectively. See table below for reconciliation of net income on a GAAP basis to non-GAAP net income, and diluted net income per share on a GAAP basis to non-GAAP diluted net income per share. RESOURCES CONNECTION, INC. Following is a reconciliation of net income under GAAP to non-GAAP net income for the three and six months ended November 30, 2006. There was no corresponding reconciliation necessary for the three and six months ended November 30, 2005, as the Company had not adopted the accounting required under SFAS 123(R). (in thousands, except per share amounts) ---------------------------- Three months Six months ended ended November 30, November 30, 2006 2006 ------------ ------------ GAAP net income $ 14,657 $ 25,608 Stock based compensation included in SG&A 4,662 9,363 Effect of stock based compensation on provision for income taxes (790) (1,306) ------------ ------------ Net effect of stock based compensation 3,872 8,057 ------------ ------------ Non-GAAP net income $ 18,529 $ 33,665 ============ ============ Following is a reconciliation of shares used in the calculation of GAAP to non-GAAP diluted net income per share: Three months Six months ended ended November 30, November 30, 2006 2006 ------------ ------------ Diluted number of shares used - GAAP 50,470 50,123 Impact of SFAS 123R 637 833 ------------ ------------ Diluted number of shares used -non-GAAP 51,107 50,956 ============ ============ Following is a reconciliation of GAAP diluted net income per share to non-GAAP diluted net income per share: Three months Six months ended ended November 30, November 30, 2006 2006 ------------ ------------ GAAP diluted net income per share $ 0.29 $ 0.51 Net effect of stock based compensation on diluted net income per share $ 0.07 $ 0.15 ------------ ------------ Non-GAAP diluted net income per share $ 0.36 $ 0.66 ============ ============ RESOURCES CONNECTION, INC. SELECTED BALANCE SHEET INFORMATION (in thousands) NOVEMBER 30, MAY 31, 2006 2006 ------------ ------------ (unaudited) Cash, cash equivalents, short-term investments and long-term marketable securities $ 199,213 $ 185,439 Accounts receivable, less allowances $ 105,391 $ 90,720 Total assets $ 432,834 $ 398,611 Current liabilities $ 68,865 $ 66,614 Total stockholders' equity $ 350,413 $ 317,436 -----END PRIVACY-ENHANCED MESSAGE-----