Resources Connection, Inc. Reports Second Quarter Results for Fiscal 2013

  Resources Connection, Inc. Reports Second Quarter Results for Fiscal 2013

- Revenue of $141.2 million improves 3.1% sequentially; decreases 2.6%
quarter-over-quarter

- Gross margin improves to 39.1% in second quarter compared to 37.9% in prior
year second quarter

- Second quarter net income increases 20% to $5.9 million from $4.9 million
(without contingent consideration adjustments) in prior year second quarter;
Adjusted EBITDA* as a percent of revenue improves to 10.4% from 9.9% in prior
year second quarter

- Company reports second quarter earnings per share of $0.14, up from $0.11
(without contingent consideration adjustments) in prior year second quarter

- Company returns $9.5 million in capital to shareholders in dividends and
stock buy-backs during second quarter

*Adjusted EBITDA is defined as earnings before interest, income taxes,
depreciation, amortization, stock-based compensation and contingent
consideration adjustments

PR Newswire

IRVINE, Calif., Dec. 20, 2012

IRVINE, Calif., Dec. 20, 2012 /PRNewswire/ -- 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, finance, risk
management and internal audit, corporate advisory, strategic communications
and restructuring, information management, human capital, supply chain
management, healthcare solutions, and legal and regulatory services, today
announced financial results for its fiscal second quarter ended November 24,
2012.

(Logo: http://photos.prnewswire.com/prnh/20121008/MM88659LOGO)

Total revenue for the second quarter of fiscal 2013 was $141.2 million,
improving 3.1% (2.4% on a constant dollar basis) sequentially and down 2.6%
(1.9% on a constant dollar basis) compared to the prior year's second quarter
revenue. Revenues in the U.S. were up 1.0% sequentially and 2.9%
quarter-over-quarter. International revenues improved 10.0% sequentially and
decreased 16.2% quarter-over-quarter (improvement of 7.2% sequentially and
decline of 13.8% quarter-over-quarter on a constant dollar basis).

The Company's net income for the second quarter ended November 24, 2012, was
$5.9 million, or $0.14 per diluted share. This compares to the Company's net
income for the second quarter of fiscal 2012 of $25.3 million, or $0.58 per
diluted share, including the after tax impact of the adjustment of the
estimated fair value of contingent consideration liability related to the
Sitrick Brincko Group acquisition of $20.4 million, or $0.47 per diluted
share.

"We are pleased to see the increase in our Adjusted EBITDA Margin to 10.4%,
which has been driven by improvements in gross margin and control over SG&A
expenses," said Tony Cherbak, chief operating officer of Resources. "This
quarter, our people and our clients faced the additional challenge of
Superstorm Sandy and its devastating impact on both personal and professional
lives. The quick response of our employees after the storm limited the known
financial impact on the quarter to approximately $1 million in lost revenue
and approximately $0.01 per share."

Gross margin was 39.1% in the second quarter of fiscal 2013, up 120 basis
points from the prior year second quarter and up 10 basis points from the
first quarter of fiscal 2013. Selling, general and administrative expenses
for the second quarter of fiscal 2013 were $42.3 million, a decrease of
$700,000 from the comparable quarter a year ago and an increase of $200,000
from the first quarter of fiscal 2013.

Cash flow from operations and Adjusted EBITDA were $1.4 million and $14.7
million (10.4% of revenue), respectively, for the second quarter of fiscal
2013 compared to $5.4 million and $14.3 million (9.9% of revenue),
respectively, for the second quarter of fiscal 2012.

"From a revenue standpoint, I believe the results of our second quarter are
indicative of the uncertain global environment businesses face," said Don
Murray, chief executive officer of Resources. "The total financial impact of
Superstorm Sandy on our operations is hard to measure as we lost a week or
more in marketing efforts regarding new work or referring new work out of the
Tri-State region."

The Company's revenue for the six months ended November 24, 2012 was $278.1
million compared with $283.0 million for the first six months ended November
26, 2011. The Company's net income for the six months ended November 24, 2012
was $10.7 million, or $0.26 per diluted share. This compares to net income in
the prior year's first six months ended November 26, 2011 of $27.9 million or
$0.63 per diluted share (which includes the after tax impact of the adjustment
of the estimated fair value of contingent consideration expense of $20.4
million or $0.46 per diluted share).

During the second quarter of fiscal 2013, the Company purchased 545,000 shares
of common stock for $7.0 million. On December 13, 2012, the Company paid its
quarterly dividend of $2.5 million to shareholders, representing a dividend of
$0.06 per share.

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 – accounting, finance, risk management and internal audit,
corporate advisory, strategic communications and restructuring, information
management, human capital, supply chain management, healthcare solutions, and
legal and regulatory services.

Resources Global was founded in 1996 within a Big Four accounting firm. Today,
we are a publicly traded company with over 3,000 professionals, annually
serving approximately 1,900 clients around the world from 77 practice offices.


Headquartered in Irvine, California, Resources Global has served 86 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, December 20, 2012. This conference call will be
available for listening via a webcast on the Company's website:
http://www.resourcesglobal.com. An audio replay of the conference call will be
available through December 27, 2012 at 855-859-2056. The password for the
replay is 73425300. The call will also be archived on the Resources Global
Professionals website for 30 days.

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," "remain," "should" or "will" or the negative of these
terms or other comparable terminology. In this press release, such statements
include the uncertain business environment and the effects of Superstorm
Sandy. 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.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)
                                          Three Months Ended Six Months Ended
                                          November  November November November
                                          24, 2012  26, 2011 24, 2012 26, 2011
                                          (unaudited)        (unaudited)
Revenue                                   $141,197  $144,955 $278,130 $282,962
Direct costs of services                  85,987    90,034   169,531  175,869
Gross margin                              55,210    54,921   108,599  107,093
Selling, general and administrative       42,342    42,980   84,402   85,589
expenses (1)
Employee portion of contingent            ---       (500)    ---      (500)
consideration (2)
Contingent consideration adjustment (2)   ---       (33,440) ---      (33,440)
Operating income before amortization and
                                          12,868    45,881   24,197   55,444
 depreciation (1), (2)
Amortization of intangible assets         434       1,186    860      2,394
Depreciation expense                      1,172     1,471    2,363    3,020
Operating income (1), (2)                 11,262    43,224   20,974   50,030
Interest income                           (50)      (65)     (98)     (153)
Income before provision for income taxes  11,312    43,289   21,072   50,183
(1), (2)
Provision for income taxes (3)            5,448     17,968   10,376   22,266
Net income (1), (2), (3)                  $5,864    $25,321  $10,696  $27,917
Basic net income per share (1), (2), (3)  $0.14     $0.58    $0.26    $0.63
Diluted net income per share (1), (2),    $0.14     $0.58    $0.26    $0.63
(3)
Basic shares                              41,292    43,760   41,506   44,468
Diluted shares                            41,359    43,797   41,567   44,512
Cash dividends declared per share         $0.06     $0.05    $0.12    $0.10





RESOURCES CONNECTION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
EXPLANATORY NOTES
    Selling, general and administrative expenses include non-cash compensation
    expense for employee stock option grants and employee stock purchases of
 1. $1.8 million and $1.9 million for the three months ended November 24, 2012
    and November 26, 2011, respectively, and $3.6 million and $3.8 million for
    the six months ended November 24, 2012 and November 26, 2011,
    respectively.
    The contingent consideration adjustment is a favorable adjustment of
    approximately $33.4 million for the three and six months ended November
    26, 2011 in recognition of the change in the fair value of the contingent
    consideration liability associated with the acquisition of the Sitrick
    Brincko Group in November 2009. The adjustment results in a reduction in
    the anticipated contingent consideration payable in November 2013. As
    required by accounting rules for acquisitions under generally accepted
    accounting principles ("GAAP") that include earn-out provisions, the
    Company periodically assesses the likely fair value to be paid at the
    earn-out date. The Sitrick Brincko Group earn-out is based upon an annual
    assessment of actual EBITDA of the Sitrick Brincko Group and an updated
    assessment of various probability weighted projected EBITDA scenarios over
    the remaining one year of the earn-out period. This assessment requires
 2. very subjective assumptions to be made of various potential operating
    results scenarios. Based upon the first three years of actual results and
    an updated probability weighted assessment of various projected EBITDA
    scenarios of the Sitrick Brincko Group for the one year remaining in the
    earn-out period, the Company believes it is more likely than not that
    there will not be a contingent consideration payment payable in November
    2013 and has reduced the estimated liability by $33.9 million. Although
    the Company currently believes that there will be no earn-out payment due,
    it will continue to periodically review actual EBITDA results of the
    Sitrick Brincko Group and an updated assessment of various probability
    weighted projected EBITDA scenarios; if circumstances change and the
    Company determines that an earn-out payment may be due, it would result in
    a non-cash charge to operations and would materially impact operating
    results.
    The employee portion of contingent consideration is a $500,000 reduction
    of the estimate of the compensation owed to employees related to the
    Sitrick Brincko Group acquisition (and as compensation, it is treated as
    an operating expense). Similar to contingent consideration, the estimate
    of the amount of employee portion of contingent consideration payable
    requires very subjective assumptions to be made of future operating
    results and based upon the first three years of actual results and an
    updated probability weighted assessment of various projected EBITDA
    scenarios of the Sitrick Brincko Group for the one year remaining in the
    earn-out period, the Company currently believes it is more likely than not
    that the employee portion of contingent consideration will not be earned.
    The after-tax impact of the adjustments to contingent consideration and
    the employee portion of contingent consideration were $0.47 per diluted
    share for the three months ended November 26, 2011.
    The Company's effective tax rate was approximately 48% and approximately
    42% for the three months ended November 24, 2012 and November 26, 2011,
    respectively, and approximately 49% and approximately 44% for the six
    months ended November 24, 2012 and November 26, 2011, respectively.
    Without the benefit of the contingent consideration adjustments recorded
 3. for the three months ended November 26, 2011, the effective tax rate would
    have been approximately 48%. For all periods presented, the Company is
    unable to benefit from, or has limitations on the benefit of, tax losses
    in certain foreign jurisdictions. To a lesser extent, the accounting
    treatment under GAAP for the cost associated with incentive stock options
    and shares purchased through the Employee Stock Purchase Plan have caused
    volatility in the Company's effective tax rate.



RESOURCES CONNECTION, INC.

Reconciliation of Net Income to Adjusted EBITDA

(in thousands, except Adjusted EBITDA Margin)
                                    Three Months Ended Six Months Ended
                                    November  November November November
                                    24, 2012  26, 2011 24, 2012 26, 2011
                                    (unaudited)        (unaudited)
Net income                          $ 5,864   $25,321  $10,696  $27,917
Adjustments:
Amortization of intangible assets   434       1,186    860      2,394
Depreciation expense                1,172     1,471    2,363    3,020
Interest income                     (50)      (65)     (98)     (153)
Provision for income taxes          5,448     17,968   10,376   22,266
EBITDA                              12,868    45,881   24,197   55,444
Stock-based compensation expense    1,825     1,876    3,638    3,808
Contingent consideration adjustment ---       (33,440) ---      (33,440)
Adjusted EBITDA                     $14,693   $14,317  $27,835  $25,812
Revenue                             $141,197  $144,955 $278,130 $282,962
Adjusted EBITDA Margin              10.4%     9.9%     10.0%    9.1%







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 operations; or (ii) includes
amounts, or is subject to adjustments that have the effect of including
amounts, that are excluded from the comparable measure so calculated and
presented.

Adjusted EBITDA, a non-GAAP financial measure, is calculated as net income
before amortization of intangible assets, depreciation expense, interest
income, income taxes, stock-based compensation expense and contingent
consideration expense. Adjusted EBITDA Margin is calculated by dividing
Adjusted EBITDA by Revenue. 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 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, CASH FLOW AND OTHER INFORMATION

(in thousands, except consultant headcount)
                                                  November 24, May 26,
                                                  2012
                                                               2012
                                                  (unaudited)
Cash, cash equivalents and short-term investments $113,928     $128,115
Accounts receivable, less allowances              $ 93,538    $ 84,192
Total assets                                      $425,100     $430,719
Current liabilities                               $ 57,868    $ 61,651
Total stockholders' equity                        $363,026     $365,868
Consultant headcount, end of period               2,358        2,317
Shares outstanding, end of period                 41,005       41,973
                                                  Six Months Ended
                                                  November 24, November 26,
                                                  2012         2011
Cash flow from operating activities               $  5,066    $  7,007
Cash flow from investing activities               $ 1,588     ($ 7,407)
Cash flow from financing activities               ($ 17,473)   ($ 29,175)



SOURCE Resources Connection, Inc.

Website: http://www.resourcesglobal.com
Contact: Media, Michael Sitrick, +1-310-788-2850, mike_sitrick@sitrick.com, or
Analysts, Nate Franke, Chief Financial Officer, +1-714-430-6500,
nate.franke@resources-us.com