Breaking News

Tweet TWEET

Heidrick & Struggles Reports Fourth Quarter and 2012 Financial Results

Heidrick & Struggles Reports Fourth Quarter and 2012 Financial Results

CHICAGO, Feb. 26, 2013 (GLOBE NEWSWIRE) -- Heidrick & Struggles International,
Inc. (Nasdaq:HSII), the premier provider of Executive Search and Leadership
Consulting services worldwide, today announced financial results for its
fourth quarter and year ended December 31, 2012.

$ in millions              Fourth Quarter             Full Year
                          2012          2011         2012         2011
                                                               
Net Revenue                $103.9      $127.2     $443.8     $527.8
                                                               
Operating Expenses                                              
Salaries and employee      73.3         85.1        309.5       372.4
benefits
General and administrative 31.0         30.2        113.8       123.6
expenses
                                                               
GAAP Operating Income      (0.5)        (4.5)       19.6        (10.9)
(Loss)
Restructuring charges      --          16.3        0.8         16.3
Impairment charges         --          --         --         26.4
Senn Delaney acquisition   1.7          --         1.7         --
costs
Non-GAAP operating income  $1.3        $11.8      $22.2      $31.8
^ (1)
                                                               
Operating Margin (Loss)                                         
GAAP operating income      -0.5%         -3.5%        4.4%         -2.1%
(loss) as % of net revenue
Non-GAAP operating income  1.2%          9.3%         5.0%         6.0%
as % of net revenue ^(1)

Totals and subtotals may not equal the sum of individual line items due to
rounding.

^(1) These represent non-GAAP financial measures because the costs related to
the acquisition of Senn Delaney in the 2012 fourth quarter and 2012 full year;
the restructuring charges in the 2011 fourth quarter, the 2012 full year, and
the 2011 full year; as well as the impairment charges in 2011 have been
excluded.

"Challenging economic conditions and lower confirmations resulted in 2012
financial results that fell short of our expectations, particularly with
respect to net revenue," said L. Kevin Kelly, Chief Executive Officer.
"However, we are pleased with the improvements we made to our cost structure,
which helped offset the impact of the revenue decline on operating margin. We
ended 2012 with the acquisition of Senn Delaney, the leading culture-shaping
consulting firm. This a significant milestone in our long-term growth strategy
to build the premier professional services firm focused on serving the
leadership needs of the world's top organizations."

2012 Fourth Quarter Results^(2)

Consolidated net revenue was $103.9 million in the fourth quarter, down 18.3
percent from $127.2 million in the 2011 fourth quarter.Year over year, net
revenue declined 16.7 percent in the Americas, 29.2 percent in Europe and 8.3
percent in Asia Pacific.All industry practices contributed to the decline.
Net revenue from Leadership Consulting declined 34.9 percent or $4.1 million,
mostly in the Americas, to $7.6 million and represented 7.3 percent of total
net revenue.

The company ended the year with 331 Executive Search and Leadership Consulting
consultants compared to 347 at December 31, 2011.The number of executive
search confirmations in the quarter declined 9.1 percent compared to the 2011
fourth quarter, and productivity, as measured by annualized net revenue per
consultant, was $1.2 million compared to $1.4 million in the same period of
2011.Average revenue per executive search was $117,600 compared to $128,300
in the 2011 fourth quarter.

Salaries and employee benefits decreased 13.8 percent, or $11.8 million, to
$73.3 million from $85.1 million in the 2011 fourth quarter.Fixed
compensation expense decreased $5.1 million, primarily reflecting a reduction
in worldwide headcount of approximately 4 percent compared to the 2011 fourth
quarter.Variable compensation expense decreased $6.7 million, primarily
reflecting lower bonus accruals in the quarter due to lower net
revenue.Salaries and employee benefits were 70.6 percent of net revenue for
the quarter, compared to 66.9 percent in the 2011 fourth quarter.

General and administrative expenses increased 2.6 percent, or $0.8 million, to
$31.0 million from $30.2 million in the 2011 fourth quarter. However, the
2012 fourth quarter included $1.7 million of costs related to the company's
acquisition of Senn Delaney, which closed on December 31, 2012.Excluding
these costs, which is a non-GAAP measure that management believes more
appropriately reflects core operations, general and administrative expenses
would have declined 3.2 percent or $1.0 million. As a percentage of net
revenue, reported general and administrative expenses were 29.8 percent,
compared to 23.8 percent in the 2011 fourth quarter.

The operating loss in the 2012 fourth quarter was $0.5 million compared to an
operating loss of $4.5 million in the 2011 fourth quarter.Excluding $1.7
million of costs related to the acquisition of Senn Delaney, a non-GAAP
measure that management believes more appropriately reflects core operations,
2012 fourth quarter operating income would have been $1.3 million and
operating margin would have been 1.2 percent. In the 2011 fourth quarter, the
company recorded restructuring charges of $16.3 million related to initiatives
the company took to reduce costs and improve operational
efficiencies.Excluding restructuring charges of $16.3 million in the 2011
fourth quarter, which management believes more appropriately reflects core
operations, operating income would have been $11.8 million and operating
margin would have been 9.3 percent.

The company reported a net loss in the 2012 fourth quarter of $0.4 million and
a net loss per share of $0.02.The effective tax rate in the quarter of 264.1
percent is higher than the statutory rate because of losses incurred that are
not benefitted for tax purposes due to valuation allowances in certain
jurisdictions.In the 2011 fourth quarter, the net loss was $4.1 million and
the net loss per share was $0.23 based on a tax rate in the quarter of 28.7
percent.

Net cash provided by operating activities in the quarter was $55.7 million,
compared to $55.4 million in the 2011 fourth quarter. Cash and cash
equivalents at December 31, 2012 were $117.6 million, compared to $127.1
million at September 30, 2012, and $185.4 million at December 31, 2011.Cash
and cash equivalents at December 31, 2012 reflect cash payments of $60.0
million related to the acquisition of Senn Delaney, including the purchase
price of $53.5 million and $6.5 million for a retention escrow.

On January 31, 2013, the company amended its credit agreement to add a
committed term loan facility of $40.0 million in order to finance a portion of
the initial payments made to acquire Senn Delaney.The term loan will be
amortized over a five-year period pursuant to which the company will make 15
quarterly payments of $1.5 million each through December 31, 2016, four
quarterly payments of $2 million each in 2017, and a final payment of the
remaining outstanding balance of the term loan on January 31, 2018.The other
material terms of the credit agreement were not amended. Given current market
conditions, the company was able to finance the term loan facility at near
historically low market rates.

2012 Results^(2)

For the year ended December 31, 2012 consolidated net revenue of $443.8
million declined 15.9 percent (approximately 14 percent on a constant currency
basis) from $527.8 million in 2011. Exchange rate fluctuations negatively
impacted net revenue by $7.7 million. Net revenue decreased 11.2 percent in
the Americas region, 25.4 percent in Europe (approximately 22 percent on a
constant currency basis), and 16.8 percent in Asia Pacific (approximately 16
percent on a constant currency basis).Each industry practice, with the
exception of Education & Social Enterprise, contributed to the decline in net
revenue.Net revenue from Leadership Consulting Services declined 20.5 percent
to $36.1 million, and represented 8.1 percent of total net revenue in 2012.

The number of executive searches confirmed in 2012 was 3,585, down 16.1
percent compared to 4,274 in 2011. The average number of Executive Search and
Leadership Consulting consultants in 2012 was 342 compared to 376 in 2011, and
productivity, as measured by 2012 net revenue per average consultants, was
$1.3 million compared to $1.4 million in 2011.The average revenue per
executive search was $113,700 compared to $112,900 for the same period in
2011. 

Operating income in 2012 was $19.6 million and operating margin was 4.4
percent.Excluding $1.7 million of costs related to the acquisition of Senn
Delaney and $0.8 million of restructuring adjustments recorded in 2012, a
non-GAAP measure which management believes more appropriately reflects core
operations, operating income for 2012 would have been $22.2 million and
operating margin would have been 5.0 percent.The operating loss in 2011 of
$10.9 million included impairment charges of $26.4 million and restructuring
charges of $16.3 million. Excluding these charges, which management believes
more appropriately reflects core operations, operating income for 2011 would
have been $31.8 million and operating margin would have been 6.0 percent.

Net income for 2012 was $6.2 million and diluted earnings per share were
$0.34, reflecting an effective tax rate of 69.2 percent.The major drivers of
the 2012 tax rate were the inability to recognize current tax benefits on
losses in certain jurisdictions.The net loss in 2011 was $33.7 million and
the loss per share was $1.90, reflecting a negative tax rate of 128.2
percent.The tax rate for 2011 was primarily a result of income that was
reduced by the impairment charges without any tax benefit, the establishment
of valuation allowances that increased tax expense, and an inability to
recognize current tax benefits on losses in certain jurisdictions.

Regional Review^(2)

For segment purposes, reimbursements of out-of-pocket expenses classified as
revenue, and restructuring and impairment charges, are reported separately
and, therefore, are not included in the results of each geographic region.The
company believes that analyzing trends in revenue before reimbursements (net
revenue) and operating income (loss) excluding restructuring and impairment
charges more appropriately reflect the company's core operations.

$ in millions      4Q 12     4Q 11     Change    2012      2011      Change
Americas                                                        
Net revenue        $57.8   $69.4   $ (11.6) $ 254.4  $286.5  $(32.1)
Operating income   $12.4   $16.4   $(3.9)  $61.6   $60.6   $0.9
Consultants        154       160       (6)                         
                                                               
Europe                                                          
Net revenue        $23.3   $32.9   $(9.6)  $99.0   $132.7  $(33.7)
Operating income   $0.1    $3.3    $(3.2)  $3.0    $1.3    $1.8
Consultants        93        104       (11)                        
                                                               
Asia Pacific                                                    
Net revenue        $22.8   $24.9   $(2.1)  $90.4   $108.6  $(18.2)
Operating          $(0.1)  $2.8    $(2.9)  $3.8    $13.0   $(9.2)
income/(loss)
Consultants        84        83        1                           
                                                               
Global Operations  $ (12.8) $(10.6) $(2.3)  $ (47.9) $(43.1) $(4.9)
Support
Restructuring      $--    $(16.3) $16.3   $(0.8)  $(16.3) $15.5
charges
Impairment charges $--    $--    $--    $--    $(26.4) $26.4
Operating          $(0.5)  $(4.5)  $4.0    $19.6   $ (10.9) $30.6
income/(loss)

Totals and subtotals may not equal the sum of individual line items due to
rounding.

Net revenue in the Americas declined $11.6 million or 16.7 percent year over
year in the fourth quarter, driven by declines in the Consumer Markets, Life
Sciences and Industrial practices, and in Leadership Consulting.Fourth
quarter operating margin was 21.5 percent compared to 23.6 percent in the 2011
fourth quarter.Reductions in salaries and employee benefits expense and
general and administrative expenses were offset by the decline in net
revenue.For the year, net revenue declined $32.1 million or 11.2 percent
driven by declines in Consumer Markets, Financial Services, Life Sciences and
Global Technology and Services practices, and in Leadership Consulting.
Operating income increased 1.6 percent and the operating margin improved to
24.2 percent, compared to 21.2 percent, reflecting reductions in salaries and
employee benefits expense and general and administrative expenses, partially
offset by the decline in net revenue.

Net revenue in Europe declined $9.6 million or 29.2 percent year over year in
the fourth quarter. All industry practices and Leadership Consulting were down
compared to the prior year.Operating margin in the 2012 fourth quarter was
0.3 percent compared to 9.9 percent in the 2011 fourth quarter, primarily
reflecting the decline in net revenue. In 2012, net revenue declined $33.7
million or 25.4 percent (approximately 22 percent on a constant currency
basis).Exchange rate fluctuations negatively impacted 2012 net revenue by
$5.0 million. All industry practices and Leadership Consulting contributed
to the decline.Total headcount in this region was approximately 12 percent
lower than at December 31, 2011 which contributed to the decline in net
revenue but also resulted in lower salaries and employee benefits expense.
Lower operating expenses more than offset the decline in net revenue and
resulted in a $1.8 million increase in operating income, and operating margin
that improved to 3.1 percent from 0.9 percent.

Asia Pacific net revenue declined $2.1 million or 8.3 percent in the fourth
quarter, reflecting declines in the Consumer Markets, Financial Services, Life
Sciences, and Global Technology & Services practices. The region reported an
operating loss of $0.1 million in the quarter which primarily reflected the
decline in net revenue, but also an increase in fixed compensation expense
related to a year-over-year increase in headcount of approximately 7 percent
and an increase in general and administrative expenses.2012 net revenue
declined 16.8 percent (approximately 16 percent on a constant currency basis)
compared to 2011 driven by the Consumer Markets, Financial Services, and
Industrial Practices. Exchange rate fluctuations negatively impacted 2012 net
revenue by $1.2 million. Operating income declined 70.8 percent and the
operating margin was 4.2 percent compared to 12.0 percent in 2011, primarily
reflecting the decline in net revenue, partially offset by a decrease in
variable compensation expense.

Global Operations Support was $12.8 million in the fourth quarter, up 21.5
percent or $2.3 million compared to the 2011 fourth quarter.A majority of the
increase, $1.7 million, related to costs associated with the company's
acquisition of Senn Delaney.In 2012, Global Operations Support increased 11.3
percent or $4.9 million, mostly reflecting $2.5 million related to a global
Partners' meeting in the 2012 third quarter, and $1.7 million to costs
associated with the company's acquisition of Senn Delaney.

2013 Outlook

The company is forecasting 2013 first quarter net revenue of between $100
million and $110 million based on its assumptions for the anticipated volume
of new Executive Search confirmations and Leadership Consulting assignments,
the current backlog, consultant productivity, consultant retention, the
seasonality of its business, the uncertainty in the global economic climate,
and no change in future currency rates.

"Restoring growth in our core Executive Search business is our foremost
priority.We have increased our recruiting and professional development
efforts, while reinforcing a culture of performance accountability, in order
to attract and retain the best talent in the industry and increase
productivity.Although we have made good progress on controlling costs, we
continue to seek additional savings through process enhancements and
efficiencies," Kelly said."With the addition of culture shaping to our
service platform, we are excited about the opportunities to expand our
relationships with C-suite and board-level executives.As we celebrate our
60^th anniversary, we are fully committed to growing our business and
positioning Heidrick & Struggles for the next six decades."

Quarterly Conference Call

Executives of Heidrick & Struggles will host a conference call to review the
fourth quarter and 2012 results today, February 26, at 9 a.m. Central Time.
Participants may access the company's call and supporting slides through the
internet at www.heidrick.com.For those unable to participate on the live
call, a webcast and copy of the slides will be archived at www.heidrick.com
and available for up to 30 days following the investor call.

^(2) On December 31, 2012, Heidrick & Struggles acquired Senn Delaney, a
leading corporate culture-shaping consulting firm.The initial consideration
paid for this acquisition is reflected in the company's consolidated
statements of cash flows for the quarter and year ended December 31,
2012.Additionally, the preliminary purchase price allocation is reflected in
the company's condensed consolidated balance sheet as of December 31,
2012.Since the acquisition occurred on December 31, 2012 Senn Delaney's
operating results are not included in the company's consolidated statements of
operations for the quarter or year ended December 31, 2012.

About Heidrick & Struggles International, Inc.

Heidrick & Struggles International, Inc., (Nasdaq:HSII) is the
premierprovider of senior-level Executive Search and Leadership Consulting
services, including culture shaping, executive assessment, succession
planning, board effectiveness, leadership development and leadership
strategy. For 60 years, we have focused on quality service and built strong
leadership teams through our relationships with clients and individuals
worldwide. Today, Heidrick & Struggles leadership experts operate from
principal business centers in North America, Latin America, Europe and Asia
Pacific. For more information about Heidrick & Struggles, please visit
www.heidrick.com.

Non-GAAP Financial Measures

This earnings release contains certain non-GAAP financial measures. A
"non-GAAP financial measure" is defined as a numerical measure of a company's
financial performance that excludes or includes amounts different than the
most directly comparable measure calculated and presented in accordance with
GAAP in the statements of income, balance sheets or statements of cash flow of
the company. Pursuant to the requirements of Regulation G, this earnings
release contains the most directly comparable GAAP financial measure near the
non-GAAP financial measure.

The non-GAAP financial measures used within this earnings release are:

  *General and administrative expenses, operating income, and operating
    margin to the extent presented as excluding, costs related to the
    company's acquisition of Senn Delaney on December 31, 2012, restructuring
    and/or impairment charges; and
  *Constant currency amounts that represent the outcome that would have
    resulted had exchange rates in the reported period been the same as those
    in effect in the comparable prior year period.

These measures are presented because management uses this information to
monitor and evaluate financial results and trends. Management believes this
information is also useful for investors.

                                                       
$ in thousands                      Three Months Ended   Twelve Months Ended
                                   December 31,         December 31,
                                   2012      2011       2012      2011
General and Administrative Expenses                             
GAAP General& Administrative Exp   $31,002 $30,211           
Senn Delaney acquisition costs      1,749    --                
Non-GAAP G & A expenses             $29,253 $30,211           
                                                               
Operating Income (Loss)                                         
GAAP operating income (loss)        $(471)  $(4,502) $19,639 $(10,915)
Restructuring charges               --      16,344    810      16,344
Impairment charges                  --      --       --      26,366
Senn Delaney acquisition costs      $1,749  $--     $1,749  $--
Non-GAAP operating income           $1,278  $11,842  $22,198 $31,795
                                                               
Operating Margin (Loss)                                         
GAAP operating income (loss) as %   -0.5%     -3.5%      4.4%      -2.1%
of net revenue
Non-GAAP operating income as % of   1.2%      9.3%       5.0%      6.0%
net revenue

Safe Harbor Statement

This press release contains forward-looking statements. The forward-looking
statements are based on current expectations, estimates, forecasts and
projections about the industry in which we operate and management's beliefs
and assumptions. Forward-looking statements may be identified by the use of
words such as "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "estimates," "projects," "forecasts," and similar expressions.
Forward-looking statements are not guarantees of future performance and
involve certain known and unknown risks, uncertainties and assumptions that
are difficult to predict. Actual outcomes and results may differ materially
from what is expressed, forecasted or implied in the forward-looking
statements. Factors that may affect the outcome of the forward-looking
statements include, among other things: our ability to attract, integrate,
manage, and retain qualified executive search consultants; our ability to
develop and maintain strong, long-term relationships with our clients; further
declines in the global economy and our ability to execute successfully through
business cycles; the timing, speed or robustness of any future economic
recovery; social or political instability in markets where we operate; the
impact of foreign currency exchange rate fluctuations; unfavorable tax law
changes and tax authority rulings; price competition; the ability to forecast,
on a quarterly basis, variable compensation accruals that ultimately are
determined based on the achievement of annual results; our ability to realize
our tax losses; the timing of the establishment or reversal of valuation
allowance on deferred tax assets; the mix of profit and loss by country; our
reliance on information management systems; any further impairment of our
goodwill and other intangible assets; and the ability to align our cost
structure and headcount with net revenue. Our reports filed with the U.S.
Securities and Exchange Commission also include information on factors that
may affect the outcome of forward-looking statements. We undertake no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.


Heidrick & Struggles International, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
                                                                
                                 Three Months Ended             
                                 December 31,                   
                                 2012       2011       $ Change  % Change
Revenue:                                                       
Revenue before reimbursements    $103,874 $127,159 $(23,285) -18.3%
(net revenue)
Reimbursements                  4,787     7,023     (2,236)    -31.8%
Total revenue                   108,661   134,182   (25,521)   -19.0%
                                                                
Operating expenses:                                            
Salaries and employee benefits  73,343    85,106    (11,763)   -13.8%
General and administrative       31,002    30,211    791        2.6%
expenses
Reimbursed expenses             4,787     7,023     (2,236)    -31.8%
Restructuring charges           --        16,344    (16,344)   
Total operating expenses        109,132   138,684   (29,552)   -21.3%
Operating income (loss)         (471)     (4,502)   4,031      89.5%
                                                                
Non-operating income (expense):                                
Interest income, net            262       549                  
Other, net                      454       (1,785)              
Net non-operating income         716       (1,236)              
(expense)
                                                                
Income (loss) before income      245       (5,738)              
taxes
                                                                
Provision for (benefit from)     647       (1,649)              
income taxes
                                                                
Net income (loss)               $(402)   $(4,089)            
                                                                
Basic weighted average common    17,974    17,850               
shares outstanding
Diluted weighted average common  17,974    17,850               
shares outstanding
Basic earnings (loss) per common $(0.02)  $(0.23)             
share
Diluted earnings (loss) per      $(0.02)  $(0.23)             
common share
Salaries and employee benefits   70.6%      66.9%                 
as a percentage of net revenue
General and administrative
expense as a percentage of net    29.8%      23.8%                 
revenue
Operating income (loss) as a     -0.5%      -3.5%                 
percentage of net revenue
Effective income tax rate       264.1%     28.7%                 



Heidrick & Struggles International, Inc.
Segment Information
(In thousands)
(Unaudited)
                                                                  
                   Three Months Ended December 31,
                                                          2012     2011
                   2012       2011       $ Change    % Change Margin * Margin
                                                                        *
Revenue:                                                           
Americas            $57,781  $69,395  $(11,614) -16.7%           
Europe              23,258    32,864    (9,606)    -29.2%           
Asia Pacific        22,835    24,900    (2,065)    -8.3%            
Revenue before
reimbursements (net 103,874   127,159   (23,285)   -18.3%           
revenue)
Reimbursements      4,787     7,023     (2,236)    -31.8%           
Total revenue       $108,661 $134,182 $(25,521) -19.0%           
                                                                  
Operating income                                                   
(loss):
Americas            $12,409  $16,358  $(3,949)  -24.1%   21.5%    23.6%
Europe              74        3,262     (3,188)    -97.7%   0.3%     9.9%
Asia Pacific        (116)     2,786     (2,902)    -104.2%          11.2%
Total regions       12,367    22,406    (10,039)   -44.8%   11.9%    17.6%
Global Operations   (12,838)  (10,564)  (2,274)    -21.5%           
Support
Operating income
before              (471)     11,842    (12,313)   -104.0%          9.3%
restructuring
charges
Restructuring       --       (16,344)  16,344                     
charges
Operating income    $(471)   $(4,502) $4,031    89.5%            
(loss)
                                                                  
*Margin based on revenue before reimbursements (net revenue).



Heidrick & Struggles International, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
                                                                
                               Twelve Months Ended              
                               December 31,                     
                               2012        2011        $ Change  % Change
                               (Unaudited)                       
Revenue:                                                       
Revenue before reimbursements  $443,777  $527,793  $(84,016) -15.9%
(net revenue)
Reimbursements                21,304     26,187     (4,883)    -18.6%
Total revenue                 465,081    553,980    (88,899)   -16.0%
                                                                
Operating expenses:                                            
Salaries and employee          309,502    372,406    (62,904)   -16.9%
benefits
General and administrative     113,826    123,592    (9,766)    -7.9%
expenses
Reimbursed expenses           21,304     26,187     (4,883)    -18.6%
Restructuring charges         810        16,344     (15,534)   -95.0%
Impairment charges            --         26,366     (26,366)   
Total operating expenses      445,442    564,895    (119,453)  -21.1%
Operating income (loss)       19,639     (10,915)   30,554     279.9%
                                                                
Non-operating income                                            
(expense):
Interest income, net          1,118      1,402                 
Other, net                    (495)      (5,262)               
Net non-operating income       623        (3,860)               
(expense)
                                                                
Income (loss) before income    20,262     (14,775)              
taxes
                                                                
Provision for income taxes    14,022     18,947                
                                                                
Net income (loss)             $6,240    $(33,722)            
                                                                
Basic weighted average common  17,971     17,780                
shares outstanding
Diluted weighted average       18,120     17,780                
common shares outstanding
Basic earnings (loss) per      $0.35     $(1.90)              
common share
Diluted earnings (loss) per    $0.34     $(1.90)              
common share
Salaries and employee benefits 69.7%       70.6%                  
as a percentage of net revenue
General and administrative
expense as a percentage of net  25.6%       23.4%                  
revenue
Operating income (loss) as a   4.4%        -2.1%                  
percentage of net revenue
Effective income tax rate     69.2%       -128.2%                



Heidrick & Struggles International, Inc.
Segment Information
(In thousands)
(Unaudited)
                                                                  
                    Twelve Months Ended December 31,
                                                            2012   2011
                    2012       2011        $ Change    % Change Margin Margin
                                                                 *      *
Revenue:                                                           
Americas             $254,395 $286,503  $(32,108) -11.2%         
Europe               99,004    132,722    (33,718)   -25.4%         
Asia Pacific         90,378    108,568    (18,190)   -16.8%         
Revenue before
reimbursements (net  443,777   527,793    (84,016)   -15.9%         
revenue)
Reimbursements       21,304    26,187     (4,883)    -18.6%         
Total revenue        $465,081 $553,980  $(88,899) -16.0%         
                                                                  
Operating income                                                   
(loss):
Americas             $61,554  $60,612   $942      1.6%     24.2%  21.2%
Europe               3,038     1,250      1,788      143.0%   3.1%   0.9%
Asia Pacific         3,792     12,983     (9,191)    -70.8%   4.2%   12.0%
Total regions        68,384    74,845     (6,461)    -8.6%    15.4%  14.2%
Global Operations    (47,935)  (43,050)   (4,885)    -11.3%         
Support
Operating income
before restructuring 20,449    31,795     (11,346)   -35.7%   4.6%   6.0%
and impairment
charges
Restructuring        (810)     (16,344)   15,534                   
charges
Impairment charges   --       (26,366)   26,366                   
Operating income     $19,639  $(10,915) $30,554   279.9%   4.4%   
(loss):
                                                                  
*Margin based on revenue before reimbursements (net revenue).



Heidrick & Struggles International, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
                                                              
                                                  December 31, December 31,
                                                  2012         2011
                                                  (Unaudited)  
Current assets:                                                
Cash and cash equivalents                          $117,605   $185,390
Restricted cash                                    199         440
Accounts receivable, net                           69,107      69,081
Other receivables                                  10,288      9,404
Prepaid expenses                                   14,167      16,551
Other current assets                               1,366       1,382
Income taxes recoverable                           5,651       19,866
Deferred income taxes                              7,899       8,211
                                                  226,282     310,325
                                                              
Non-current assets:                                            
Property and equipment, net                        42,362      44,781
Restricted cash                                    7,968       1,470
Assets designated for retirement and pension plans 22,763      22,883
Investments                                        11,902      9,868
Other non-current assets                           5,301       6,480
Goodwill                                           120,940     90,696
Other intangible assets, net                       32,020      2,556
Deferred income taxes                              25,454      26,506
Total non-current assets                           268,710     205,240
                                                              
Total assets                                       $494,992   $515,565
                                                              
Current liabilities:                                           
Accounts payable                                   $8,657     $9,157
Accrued salaries and employee benefits             102,597     131,697
Other current liabilities                          40,390      39,362
Income taxes payable                               709         4,868
Deferred income taxes                             43          6
Total current liabilities                          152,396     185,090
                                                              
Non-current liabilities:                                       
Retirement and pension plans                       37,247      31,747
Other non-current liabilities                      56,943      47,396
Deferred income taxes                              59          37
Total non-current liabilities                      94,249      79,180
                                                              
Stockholders' equity                               248,347     251,295
                                                              
Total liabilities and stockholders' equity         $494,992   $515,565



Heidrick & Struggles International, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                                  
                                                        Three Months Ended
                                                        December 31,
                                                        2012       2011
                                                                  
Cash flows - operating activities:                                 
Net loss                                                 $(402)   $(4,089)
Adjustments to reconcile net loss to net cash provided             
by operating activities:
Depreciation and amortization                            2,718     3,056
Write-off of Investment                                            
Deferred income taxes                                    822       756
Net realized gains losses on investments                 (29)      (277)
Stock-based compensation expense                         118       1,342
Restructuring charges                                    --       16,344
Cash paid for restructuring charges                      (385)     (6,833)
Changes in assets and liabilities:                                 
Trade and other receivables                              24,910    31,973
Accounts payable                                         2,694     (1,621)
Accrued expenses                                         27,106    18,676
Income taxes recoverable (payable), net                  (5,127)   (8,544)
Retirement and pension assets and liabilities            638       957
Prepayments                                              2,972     802
Other assets and liabilities, net                        (383)     2,884
Net cash provided by operating activities                55,652    55,426
                                                                  
Cash flows - investing activities:                                 
Restricted cash                                          (6,512)   70
Acquisition of business, net of cash acquired           (52,733)  --
Capital expenditures                                     (1,256)   (1,766)
Purchases of available for sale investments              (98)      (187)
Proceeds from sale of available for sale investments     30        25
Other, net                                               200       (15)
Net cash used in investing activities                    (60,369)  (1,873)
                                                                  
Cash flows - financing activities:                                 
Cash dividends paid                                     (4,697)   (2,343)
Payment of employee tax withholdings on equity           (23)      (101)
transactions
Net cash used in financing activities                    (4,720)   (2,444)
                                                                  
Effect of exchange rate fluctuations on cashand cash    (95)      (1,218)
equivalents
                                                                  
Net increase (decrease) in cash and cash equivalents     (9,532)   49,891
Cash and cash equivalents at beginning of period         127,137   135,499
Cash and cash equivalents at end of period               $117,605 $185,390



Heidrick & Struggles International, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
                                                                 
                                                      Twelve Months Ended
                                                      December 31,
                                                      2012        2011
                                                      (Unaudited) 
                                                                 
Cash flows - operating activities:                                
Net income (loss)                                      $6,240    $(33,722)
Adjustments to reconcile net income (loss) to net cash            
used in operating activities:
Depreciation and amortization                          10,801     10,263
Write-off of investment                                --         2,810
Deferred income taxes                                  2,331      10,571
Net realized (gains) losses on investments             (2)        211
Stock-based compensation expense                       4,199      5,503
Impairment charges                                     --         26,366
Restructuring charges                                  810        16,344
Cash paid for restructuring charges                    (9,128)    (7,491)
Changes in assets and liabilities:                                
Trade and other receivables                            6,288      10,819
Accounts payable                                       (471)      (732)
Accrued expenses                                       (21,755)   5,960
Income taxes recoverable (payable), net                10,182     (6,886)
Retirement and pension plan assets and liabilities     1,594      667
Prepayments                                            2,897      (1,186)
Other assets and liabilities, net                      (1,493)    5,277
Net cash provided by operating activities              12,493     44,774
                                                                 
Cash flows - investing activities:                                
Restricted cash                                        (6,230)    83
Acquisition of business and earnout payments, net of   (52,733)   (3,930)
cash acquired
Capital expenditures                                   (7,504)    (18,016)
Purchases of available for sale investments            (1,121)    (986)
Proceeds from sale of available for sale investments   137        83
Loan to equity method investment                       --         (1,008)
Other, net                                             200        74
Net cash used in investing activities                  (67,251)   (23,700)
                                                                 
Cash flows - financing activities:                                
Cash dividends paid                                   (11,991)   (9,723)
Payment of employee tax withholdings on equity         (1,653)    (2,853)
transactions
Purchases of treasury stock                            (1,123)    --
Acquisition earnout payments                           (381)      --
Net cash used in financing activities                  (15,148)   (12,576)
                                                                 
Effect of exchange rate fluctuations on cashand cash  2,121      (4,232)
equivalents
                                                                 
Net increase (decrease) in cash and cash equivalents   (67,785)   4,266
Cash and cash equivalents at beginning of period       185,390    181,124
Cash and cash equivalents at end of period             $117,605  $185,390

CONTACT: Investors & Analysts:
         Julie Creed, Vice President, Investor Relations & Real Estate:
         +1 312 496 1774 or jcreed@heidrick.com
        
         Media:
         Jennifer Nelson, Director, Global Marketing:
         +1 404 682 7373 or jnelson@heidrick.com

Heidrick & Struggles International Inc. Logo