Heidrick & Struggles Reports Second Quarter 2013 Financial Results

Heidrick & Struggles Reports Second Quarter 2013 Financial Results

CHICAGO, July 30, 2013 (GLOBE NEWSWIRE) -- Heidrick & Struggles International,
Inc. (Nasdaq:HSII), the premier professional services firm focused on serving
the leadership needs of top organizations globally, today announced financial
results for its second quarter ended June 30, 2013.

Consolidated net revenue was $122.0 million in the second quarter, up 5.1
percent or $6.0 million from $116.1 million in the 2012 second quarter. Year
over year, net revenue increased 11.4 percent in the Americas and increased
6.5 percent in Asia Pacific (approximately 9 percent on a constant currency
basis), but declined 11.1 percent in Europe (approximately 13 percent on a
constant currency basis). Growth in the Financial Services and Global
Technology & Services Executive Search practices was partially offset by
declines in the Education & Social Enterprise and Industrial practices. Net
revenue from Leadership Consulting was $9.1 million, a decline of 5.9 percent
from the 2012 second quarter, and revenue from Senn Delaney, the
culture-shaping firm acquired on December 31, 2012, was $5.4 million.

"Improving conditions for Executive Search in the Americas and in Asia Pacific
had a positive impact on our second quarter results while Europe remains in a
challenging economic environment," said Jory Marino, Interim Chief Executive
Officer. "Our year-over-year revenue comparisons also reflect the value that
Senn Delaney brings to Heidrick & Struggles and reinforce the need to continue
to broaden our leadership talent capabilities. We are especially pleased with
a 19 percent sequential increase in revenue compared to the 2013 first quarter
that was driven by growth in all regions, including the majority of our
Executive Search practices and Leadership Consulting. The year-over-year and
sequential revenue growth is particularly encouraging considering the smaller
consultant base. Recruitment of senior-level consultants with established
client relationships, retaining high performing consultants, and managing
underperforming consultants will remain a key area of emphasis."

Excluding Senn Delaney, the company ended the second quarter with 315
Executive Search and Leadership Consulting consultants compared to 340 at June
30, 2012, reflecting both voluntary turnover and the company's performance
management initiatives. The number of executive search confirmations in the
quarter increased 6.7 percent compared to the 2012 second quarter, and the
average revenue per executive search decreased to $108,800 compared to
$114,800 in the 2012 second quarter. Excluding Senn Delaney, productivity, as
measured by annualized net revenue per consultant, was $1.5 million, compared
to $1.3 million in the 2012 second quarter.

Salaries and employee benefits increased 4.0 percent, or $3.2 million, to
$83.1 million from $79.9 million in the 2012 second quarter. Variable
compensation expense increased $2.4 million, primarily reflecting consultant
performance. Fixed compensation expense increased $0.8 million. Excluding
Senn Delaney, fixed compensation expense would have declined $2.6 million
primarily due to decreases in guarantee and sign-on bonus expense, and lower
consultant headcount. Salaries and employee benefits were 68.1 percent of net
revenue for the quarter, compared to 68.8 percent in the 2012 second quarter.

General and administrative expenses increased 14.7 percent, or $4.3 million,
to $33.2 million from $29.0 million in the 2012 second quarter. The addition
of Senn Delaney represented $2.9 million of the increase, including $1.4
million related to the amortization of the acquired intangible assets and $0.5
million associated with the accretion of the earnout payment. A significant
portion of the remaining $1.4 million increase included expenses associated
with regional consultant meetings held in the Americas and Europe during the
second quarter. As a percentage of net revenue, general and administrative
expenses were 27.2 percent, compared to 25.0 percent in the 2012 second
quarter.

As a result of the acquisition of Senn Delaney on December 31, 2012, the
company began providing Adjusted EBITDA and Adjusted EBITDA margin
comparisons, non-GAAP financial measures which management believes more
appropriately reflect core operations. Adjusted EBITDA in the 2013 second
quarter was $11.9 million and Adjusted EBITDA margin was 9.7 percent, compared
to Adjusted EBITDA of $11.2 million and Adjusted EBITDA margin of 9.7 percent
in the 2012 second quarter.

The following table reconciles Operating Income to Adjusted EBITDA^(1)

                                           
                                           Three Months Ended
                                           June 30,
$ in millions                               2013            2012
                                                          
Operating Income                           $5.7          $6.7
                                                          
Adjustments                                                
Salaries and employee benefits                             
Stock-based compensation amortization       1.2             1.3
Senn Delaney retention awards               0.6             --
                                                          
General and administrative expenses                        
Depreciation                                2.4             2.5
Intangible amortization                     1.5             0.2
Senn Delaney earnout accretion              0.5             --
                                                          
Restructuring charges                       --            0.5
                                                          
Total Adjustments                           6.2             4.5
                                                          
Adjusted EBITDA ^ (1)                       $11.9         $11.2
                                                          
Adjusted EBITDA Margin^(1)                 9.7%            9.7%
(Adjusted EBITDA as % of net revenue)                      
                                                          
Totals and subtotals may not equal the sum of individual line items due to  
rounding.

^(1) Adjusted EBITDA refers to earnings before interest, taxes, depreciation,
intangible amortization, stock-based compensation amortization, compensation
expense associated with Senn Delaney retention awards, Senn Delaney earnout
accretion, restructuring charges, and other non-operating income
(expense).Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial
measures.

Operating income in the second quarter was $5.7 million and operating margin
(operating income as a percentage of net revenue) was 4.7 percent, compared to
operating income of $6.7 million and operating margin of 5.8 percent in the
2012 second quarter.The year-over-year decline reflects an increase in
operating expenses, partially offset by an increase in net revenue.

The company reported net income in the 2013 second quarter of $1.9 million and
diluted earnings per share of $0.11, based on an effective quarterly tax rate
of 61.7 percent and a full-year projected tax rate of approximately 64
percent. In the 2012 second quarter, net income was $1.9 million and diluted
earnings per share were $0.10 based on an effective quarterly tax rate of 66.3
percent.The effective tax rates in both years are higher than the statutory
rate primarily due to losses incurred in certain jurisdictions that cannot be
benefitted for tax purposes due to valuation allowances.

Net cash provided by operating activities in the 2013 second quarter was $20.6
million, compared to $22.2 million in the 2012 second quarter. Cash and cash
equivalents at June 30, 2013 were $99.7 million, compared to $85.7 million at
March 31, 2013, and $96.8 million at June 30, 2012.

Regional Review

For segment purposes, reimbursements of out-of-pocket expenses classified as
revenue and restructuring 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 charges more appropriately
reflect the company's core operations.

$ in millions              2Q 13      2Q 12      Change    1Q 13      Change
Americas                                                          
Net revenue                $72.8    $65.3    $7.5    $64.2    $8.6
Operating income           $18.1    $15.4    $2.7    $13.4    $4.7
Consultants                139        157        (18)      148        (9)
                                                                 
Europe                                                            
Net revenue                $24.1    $27.1    $(3.0)  $19.0    $5.1
Operating income/(loss)    $(2.5)   $1.1     $(3.6)  $(3.6)   $1.1
Consultants                89         98         (9)       90         (1)
                                                                 
Asia Pacific                                                      
Net revenue                $25.1    $23.6    $1.5    $19.8    $5.3
Operating income           $2.9     $2.2     $0.8    $0.7     $2.2
Consultants                87         85         2         84         3
                                                                 
Global Operations Support  $ (12.8)  $(11.5)  $(1.3)  $(10.1)  $(2.7)
Restructuring charges      $--     $(0.5)   $0.5    $--     $--
Operating income           $5.7     $6.7     $(1.0)  $0.4     $5.4
                                                                 
Totals and subtotals may not equal the sum of individual line items due to
rounding.

Net revenue in the Americas increased $7.5 million, or 11.4 percent year over
year, to $72.8 million in the second quarter. The addition of Senn Delaney,
representing $4.6 million, as well as increases in the Financial Services and
Global Technology & Services search practices were the primary drivers of the
growth for this region, partially offset by declines in the Industrial
practice and Leadership Consulting.The America's operating margin improved to
24.8 percent compared to 23.6 percent in the 2012 second quarter as a result
of the increase in net revenue, partially offset by an increase in salaries
and employee benefits expense and general and administrative expenses, mostly
related to Senn Delaney.

Net revenue in Europe declined $3.0 million, or 11.1 percent year over year,
to $24.1 million in the second quarter (approximately 13 percent on a constant
currency basis). Exchange rate fluctuations positively impacted year-over-year
second quarter net revenue by $0.6 million. Senn Delaney represented $0.8
million of the 2013 second quarter revenue in this region. Revenue from
Leadership Consulting and all search practices, except Consumer Markets and
Life Sciences, declined compared to the prior year. The operating loss in
Europe of $2.5 million, compared to operating income of $1.1 million in the
2012 second quarter, reflects the decline in net revenue and an increase in
general and administrative expenses, partially offset by a decrease in
salaries and employee benefits expense.

Asia Pacific net revenue increased $1.5 million, or 6.5 percent, to $25.1
million in the second quarter (approximately 9 percent on a constant currency
basis).Exchange rate fluctuations negatively impacted year-over-year second
quarter net revenue by $0.5 million.Revenue growth in this region was driven
by the Financial Services and Industrial search practices, as well as by
Leadership Consulting. The operating margin in Asia Pacific improved to 11.7
percent compared to 9.3 percent in the 2012 second quarter reflecting an
improvement in revenue, partially offset by an increase in salaries and
employee benefits expense and in general and administrative expenses.

Global Operations Support was $12.8 million in the second quarter, an increase
of $1.3 million compared to the 2012 second quarter that mostly reflects an
increase in general and administrative expenses related to operating and
infrastructure costs.

Six Months Results

For the six months ended June 30, 2013 consolidated net revenue of $225.0
million increased 1.1 percent from $222.6 million in the first six months of
2012. Net revenue increased 10.3 percent in the Americas and increased 1.7
percent in Asia Pacific (approximately 3 percent on a constant currency
basis), but declined 20.4 percent in Europe.Revenue from Senn Delaney,
acquired on December 31, 2012 was $11.0 million for the first six months of
2013, of which $9.6 million was in the Americas and $1.4 million in Europe.

Productivity, as measured by annualized net revenue per consultant excluding
Senn Delaney, was $1.3 million for both the first six months of 2013 and
2012.The number of executive searches confirmed in the first six months of
2013 was essentially the same as in first six months of 2012. The average
revenue per executive search was $106,000 compared to $107,400 for the same
period in 2012. Operating income for the first six months of 2013 was $6.1
million and operating margin was 2.7 percent compared to operating income of
$9.9 million and operating margin of 4.5 percent for the first six months of
2012. Net income for the first six months of 2013 was $0.7 million and diluted
earnings per share were $0.04, reflecting an effective tax rate of 86.0
percent. Net income for the first six months of 2012 was $2.5 million and
diluted earnings per share were $0.14, reflecting an effective tax rate of
74.6 percent.

2013 Third Quarter Outlook

The company is forecasting 2013 third-quarter consolidated net revenue of
between $115 million and $125 million. Among other factors, this forecast
reflects assumptions for the anticipated volume of new Executive Search
confirmations, Leadership Consulting assignments, expectations for Senn
Delaney, the current backlog, consultant productivity, consultant retention,
the seasonality of its business, the global economic climate and no change in
future currency rates.

"I am very excited about assuming transitional leadership for Heidrick &
Struggles and look forward to continuing the strategic initiatives that are
already underway to grow the business and improve financial performance," said
Marino."With renewed energy, I am confident we can build shareholder value by
doing what we do best—serving the leadership talent needs of the world's top
organizations.We will execute our leadership advisory strategy by improving
how we attract and retain the best consultants in our profession, managing our
cost structure and solidifying long-term client relationships built on our
consulting expertise and quality of service."

Quarterly Conference Call

Executives of Heidrick & Struggles will host a conference call to review the
2013 second quarter results today, July 30, 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.comand available for up to 30 days following the investor call.

About Heidrick & Struggles International, Inc.

Heidrick & Struggles International, Inc., (Nasdaq:HSII) is the premier
provider of senior-level Executive Search, Culture Shaping and Leadership
Consulting services. 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 Adjusted
EBITDA and Adjusted EBITDA margin. Adjusted EBITDA refers to earnings before
interest, taxes, depreciation, intangible amortization, stock-based
compensation amortization, compensation expense associated with Senn Delaney
retention awards, Senn Delaney earnout accretion, restructuring charges, and
other non-operating income (expense).Adjusted EBITDA margin refers to
Adjusted EBITDA (as explained above) as a percentage of net revenue in the
same quarter. A reconciliation of Adjusted EBITDA to Operating Income is
provided in a table on page 3 of this release.

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.

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. For more information on the factors
that could affect the outcome of forward-looking statements, refer to our
Annual Report on Form 10-K for the year ended December 31, 2012, under Risk
Factors in Item 1A. We caution the reader that the list of factors may not be
exhaustive. 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 Comprehensive Income
(In thousands, except per share data)
(Unaudited)
                                                                
                                                                
                                  Three Months Ended            
                                  June 30,                      
                                  2013       2012       $ Change % Change
Revenue:                                                        
Revenue before reimbursements (net $122,033 $116,065 $5,968   5.1%
revenue)
Reimbursements                    5,295     5,692     (397)     -7.0%
Total revenue                     127,328   121,757   5,571     4.6%
                                                                
Operating expenses:                                             
Salaries and employee benefits    83,066    79,859    3,207     4.0%
General and administrative         33,225    28,960    4,265     14.7%
expenses
Reimbursed expenses               5,295     5,692     (397)     -7.0%
Restructuring charges             --        507       (507)     
Total operating expenses          121,586   115,018   6,568     5.7%
Operating income                  5,742     6,739     (997)     -14.8%
                                                                
Non-operating income (expense):                                 
Interest expense, net             (106)     231                 
Other, net                        (584)     (1,476)             
Net non-operating expense         (690)     (1,245)             
                                                                
Income before income taxes        5,052     5,494               
Provision for income taxes        3,115     3,642               
Net income                        1,937     1,852               
Other comprehensive income (loss), (1,346)   (1,146)             
net of tax
Comprehensive income              $591     $706               
                                                                
Basic weighted average common      18,076    18,010              
shares outstanding
Dilutive common shares            148       128                 
Diluted weighted average common    18,224    18,138              
shares outstanding
Basic net income per common share $0.11    $0.10              
Diluted net income per common      $0.11    $0.10              
share
                                                                
Salaries and employee benefits as  68.1%      68.8%                
a percentage of net revenue
General and administrative expense 27.2%      25.0%                
as a percentage of net revenue
Operating income as a percentage   4.7%       5.8%                 
of net revenue
Effective income tax rate         61.7%      66.3%                



Heidrick & Struggles International, Inc.
Segment Information
(In thousands)
(Unaudited)
                                                                
                                                                
                    Three Months Ended June 30,
                                                        2013     2012
                    2013       2012       $ Change % Change Margin * Margin *
Revenue:                                                         
Americas             $72,772  $65,320  $7,452 11.4%            
Europe               24,128    27,148    (3,020) -11.1%           
Asia Pacific         25,133    23,597    1,536   6.5%             
Revenue before
reimbursements (net  122,033   116,065   5,968   5.1%             
revenue)
Reimbursements       5,295     5,692     (397)   -7.0%            
Total revenue        $127,328 $121,757 $5,571 4.6%             
                                                                
Operating income                                                 
(loss):
Americas             $18,066  $15,405  $2,661 17.3%    24.8%    23.6%
Europe               (2,485)   1,110     (3,595) -323.9%          4.1%
Asia Pacific         2,944     2,193     751     34.2%    11.7%    9.3%
Total regions        18,525    18,708    (183)   -1.0%    15.2%    16.1%
Global Operations    (12,783)  (11,462)  (1,321) 11.5%            
Support
Operating income
before restructuring 5,742     7,246     (1,504) -20.8%   4.7%     6.2%
charges
Restructuring        --       (507)     507                     
charges
Operating income     $5,742   $6,739   $(997) -14.8%   4.7%     5.8%
                                                                
*Margin based on revenue before reimbursements (net revenue).



Heidrick & Struggles International, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands, except per share data)
(Unaudited)
                                                                
                                                                
                                  Six Months Ended              
                                  June 30,                      
                                  2013       2012       $ Change % Change
Revenue:                                                        
Revenue before reimbursements (net $225,011 $222,591 $2,420   1.1%
revenue)
Reimbursements                    9,625     11,484    (1,859)   -16.2%
Total revenue                     234,636   234,075   561       0.2%
                                                                
Operating expenses:                                             
Salaries and employee benefits    154,545   156,531   (1,986)   -1.3%
General and administrative         64,335    55,325    9,010     16.3%
expenses
Reimbursed expenses               9,625     11,484    (1,859)   -16.2%
Restructuring charges             --        810       (810)     
Total operating expenses          228,505   224,150   4,355     1.9%
Operating income                  6,131     9,925     (3,794)   -38.2%
                                                                
Non-operating income (expense):                                 
Interest expense, net             (29)      707                 
Other, net                        (966)     (650)               
Net non-operating income           (995)     57                  
(expense)
                                                                
Income before income taxes        5,136     9,982               
Provision for income taxes        4,415     7,451               
Net income                        721       2,531               
Other comprehensive income (loss), (1,505)   38                  
net of tax
Comprehensive income (loss)       $(784)   $2,569             
                                                                
Basic weighted average common      18,043    17,956              
shares outstanding
Dilutive common shares            157       200                 
Diluted weighted average common    18,200    18,156              
shares outstanding
Basic net income per common share $0.04    $0.14              
Diluted net income per common      $0.04    $0.14              
share
                                                                
Salaries and employee benefits as  68.7%      70.3%                
a percentage of net revenue
General and administrative expense 28.6%      24.9%                
as a percentage of net revenue
Operating income as a percentage   2.7%       4.5%                 
of net revenue
Effective income tax rate         86.0%      74.6%                



Heidrick & Struggles International, Inc.
Segment Information
(In thousands)
(Unaudited)
                                                                  
                                                                  
                    Six Months Ended June 30,
                                                          2013     2012
                    2013       2012       $ Change   % Change Margin * Margin
                                                                        *
Revenue:                                                           
Americas             $136,952 $124,190 $12,762  10.3%            
Europe               43,123    54,208    (11,085)  -20.4%           
Asia Pacific         44,936    44,193    743       1.7%             
Revenue before
reimbursements (net  225,011   222,591   2,420     1.1%             
revenue)
Reimbursements       9,625     11,484    (1,859)   -16.2%           
Total revenue        $234,636 $234,075 $561     0.2%             
                                                                  
Operating income                                                   
(loss):
Americas             $31,454  $27,853  $3,601   12.9%    23.0%    22.4%
Europe               (6,101)   2,485     (8,586)   -345.5%          4.6%
Asia Pacific         3,692     2,452     1,240     50.6%    8.2%     5.5%
Total regions        29,045    32,790    (3,745)   -11.4%   12.9%    14.7%
Global Operations    (22,914)  (22,055)  (859)     3.9%             
Support
Operating income
before restructuring 6,131     10,735    (4,604)   -42.9%   2.7%     4.8%
charges
Restructuring        --       (810)     810                       
charges
Operating income     $6,131   $9,925   $(3,794) -38.2%   2.7%     4.5%
                                                                  
*Margin based on revenue before reimbursements (net revenue).



Heidrick & Struggles International, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
                                                             
                                                             
                                                  June 30,    December 31,
                                                  2013        2012
                                                  (Unaudited) 
Current assets:                                               
Cash and cash equivalents                          $99,695   $117,605
Restricted cash                                    223        199
Accounts receivable, net                           90,867     69,107
Other receivables                                  10,446     10,288
Prepaid expenses                                   14,200     14,167
Other current assets                               2,597      1,366
Income taxes recoverable                           7,212      5,651
Deferred income taxes                              7,182      7,899
Total current assets                               232,422    226,282
                                                             
Non-current assets:                                           
Property and equipment, net                        37,571     42,362
Restricted cash                                    7,829      7,968
Assets designated for retirement and pension plans 22,297     22,763
Investments                                        12,751     11,902
Other non-current assets                           5,401      5,301
Goodwill                                           119,948    120,940
Other intangible assets, net                       28,839     32,020
Deferred income taxes                              23,520     25,454
Total non-current assets                           258,156    268,710
                                                             
Total assets                                       $490,578  $494,992
                                                             
Current liabilities:                                          
Short term borrowings                              $6,000    $--
Accounts payable                                   7,454      8,657
Accrued salaries and employee benefits             62,898     102,597
Other current liabilities                          47,720     40,390
Income taxes payable                               3,956      709
Deferred income taxes                             33         43
Total current liabilities                          128,061    152,396
                                                             
Non-current liabilities:                                      
Long term debt, less current maturities            32,500     --
Retirement and pension plans                       37,604      37,247
Other non-current liabilities                      47,884      56,943
Deferred income taxes                              132         59
Total non-current liabilities                      118,120    94,249
                                                             
Stockholders' equity                               244,397    248,347
                                                             
Total liabilities and stockholders' equity         $490,578  $494,992



Heidrick & Struggles International, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                                   
                                                                   
                                                         Three Months Ended
                                                         June 30,
                                                         2013       2012
                                                                   
Cash flows - operating activities:                                  
Net income                                                $1,937   $1,852
Adjustments to reconcile net income to net cash provided            
by operating activities:
Depreciation and amortization                             3,882     2,514
Deferred income taxes                                     335       789
Stock-based compensation expense                          1,461     1,449
Accretion expense                                         516       --
Restructuring charges                                     --       507
Cash paid for restructuring charges                       (303)     (2,909)
Changes in assets and liabilities, net of effects of                
acquisitions:
Trade and other receivables                               (13,099)  (7,787)
Accounts payable                                          248       (1,149)
Accrued expenses                                          21,079    19,809
Income taxes recoverable (payable), net                   2,291     8,214
Retirement and pension assets and liabilities             32        24
Prepayments                                               240       (1,914)
Other assets and liabilities, net                         1,941     758
Net cash provided by operating activities                 20,560    22,157
                                                                   
Cash flows - investing activities:                                  
Capital expenditures                                      (413)     (2,764)
Purchases of available for sale investments              (95)      (105)
Proceeds from sales of available for sale investments     33        29
Net cash used in investing activities                     (475)     (2,840)
                                                                   
Cash flows - financing activities:                                  
Debt repayment                                            (1,500)   --
Cash dividends paid                                      (2,412)   (2,401)
Payment of employee tax withholdings on equity            (215)     (415)
transactions
Acquisition earnout payments                              (357)     (381)
Net cash used in financing activities                     (4,484)   (3,197)
                                                                   
Effect of exchange rate fluctuations on cash and cash     (1,566)   (1,909)
equivalents
                                                                   
Net increase in cash and cash equivalents                 14,035    14,211
Cash and cash equivalents at beginning of period          85,660    82,640
Cash and cash equivalents at end of period                $99,695  $96,851



Heidrick & Struggles International, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                                   
                                                                   
                                                          Six Months Ended
                                                          June 30,
                                                          2013      2012
                                                                   
Cash flows - operating activities:                                  
Net income                                                 $721    $2,531
Adjustments to reconcile net income to net cash used in             
operating activities:
Depreciation and amortization                              8,027    5,292
Deferred income taxes                                      1,426    1,700
Stock-based compensation expense                           2,472    2,800
Accretion expense                                          1,033    --
Restructuring charges                                      --      810
Cash paid for restructuring charges                        (616)    (6,663)
Changes in assets and liabilities, net of effects of                
acquisitions:
Trade and other receivables                                (24,041) (16,050)
Accounts payable                                           (541)    (1,104)
Accrued expenses                                           (40,684) (71,194)
Income taxes recoverable (payable), net                    1,488    8,231
Retirement and pension assets and liabilities              540      797
Prepayments                                                (306)    (3,397)
Other assets and liabilities, net                          1,981    (670)
Net cash used in operating activities                      (48,500) (76,917)
                                                                   
Cash flows - investing activities:                                  
Restricted cash                                            (26)     231
Capital expenditures                                       (1,358)  (5,114)
Purchases of available for sale investments               (571)    (926)
Proceeds from sales of available for sale investments      64       77
Net cash used in investing activities                      (1,891)  (5,732)
                                                                   
Cash flows - financing activities:                                  
Proceeds from debt issuance                                40,000   --
Debt repayment                                             (1,500)  --
Cash dividends paid                                       (2,519)  (4,946)
Payment of employee tax withholdings on equity             (576)    (1,569)
transactions
Acquisition earnout payments                               (357)    (381)
Net cash provided by (used in) financing activities        35,048   (6,896)
                                                                   
Effect of exchange rate fluctuations on cash and cash      (2,567)  1,006
equivalents
                                                                   
Net decrease in cash and cash equivalents                  (17,910) (88,539)
Cash and cash equivalents at beginning of period           117,605  185,390
Cash and cash equivalents at end of period                 $99,695 $96,851

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

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