Heidrick & Struggles Reports Third Quarter 2013 Financial Results

Heidrick & Struggles Reports Third Quarter 2013 Financial Results

CHICAGO, Oct. 29, 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 third quarter ended September 30, 2013.

Consolidated net revenue was $119.0 million in the third quarter, up 1.4
percent or $1.7 million from $117.3 million in the 2012 third quarter. Year
over year, net revenue decreased 1.9 percent in the Americas, but increased
13.2 percent in Europe (approximately 12 percent on a constant currency basis)
and 0.8 percent in Asia Pacific (approximately 7 percent on a constant
currency basis). Growth in the Consumer Markets and Life Sciences Executive
Search practices was offset by declines in the Industrial, Education & Social
Enterprise, and Global Technology & Services practices. Net revenue from
Leadership Consulting was $9.1 million, an increase of 2.3 percent from the
2012 third quarter, and revenue from Senn Delaney, the culture-shaping firm
acquired on December 31, 2012, was on plan at $6.6 million.

"Our third quarter results showed progress in certain areas, but we are
capable of more," said Jory Marino, Interim Chief Executive Officer. "We are
committed to providing clients with unparalleled expertise and service in
order to help them build winning leadership teams. As part of this commitment,
we will provide our employees with the best platform from which to work and
build a career. By staying focused on these initiatives, we believe we can
deliver the long-term growth and financial results that all our stakeholders
expect."

Excluding Senn Delaney, the company ended the third quarter with 308 Executive
Search and Leadership Consulting consultants compared to 332 at September 30,
2012. Partly reflecting lower consultant headcount, the number of executive
search confirmations in the quarter decreased 5.3 percent compared to the 2012
third quarter. The average revenue per executive search increased to $124,500
compared to $123,700 in the 2012 third quarter. Excluding Senn Delaney,
productivity, as measured by annualized net revenue per consultant, was $1.4
million, the same as in the 2012 third quarter.

Salaries and employee benefits expense increased 2.6 percent, or $2.0 million,
to $81.7 million from $79.6 million in the 2012 third quarter. Included in the
2013 third quarter is $3.0 million of expense related to a separation
agreement with the company's former chief executive officer. The $2.0 million
year-over-year increase reflected an increase in variable compensation expense
of $3.2 million, primarily related to consultant performance, and a decline in
fixed compensation expense of $1.2 million, driven by decreases in guarantee
and sign-on bonus expense and lower headcount, partially offset by the
severance expense and the addition of Senn Delaney. Salaries and employee
benefits expense was 68.6 percent of net revenue for the quarter, compared to
67.9 percent in the 2012 third quarter.

General and administrative expenses increased 5.3 percent, or $1.5 million, to
$29.0 million from $27.5 million in the 2012 third quarter. The addition of
Senn Delaney represented $3.3 million in the quarter, including $1.4 million
related to the amortization of the acquired intangible assets and $0.5 million
associated with the accretion of the expected earnout payments. The 2012 third
quarter included $2.5 million of expenses related to a global Partners'
meeting. As a percentage of net revenue, general and administrative expenses
were 24.3 percent, compared to 23.4 percent in the 2012 third 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 third
quarter was $13.8 million and Adjusted EBITDA margin was 11.6 percent,
compared to Adjusted EBITDA of $14.1 million and Adjusted EBITDA margin of
12.1 percent in the 2012 third quarter.

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


                                     Three Months Ended
                                     September 30,
$ in millions                         2013      2012
                                              
Operating Income                      $8.4    $10.2
                                              
Adjustments                                    
Salaries and employee benefits                 
Stock-based compensation amortization 0.3       1.3
Senn Delaney retention awards         0.6       --
                                              
General and administrative expenses            
Depreciation                          2.6       2.5
Intangible amortization               1.5       0.2
Senn Delaney earnout accretion        0.5       --
                                              
Total Adjustments                     5.4       4.0
                                              
Adujsted EBITDA ^ (1)                 $13.8   $14.1
                                              
Adjusted EBITDA Margin^(1)            11.6%     12.1%
(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 third quarter was $8.4 million and operating margin
(operating income as a percentage of net revenue) was 7.0 percent, compared to
operating income of $10.2 million and operating margin of 8.7 percent in the
2012 third quarter.

The company reported net income in the 2013 third quarter of $4.1 million and
diluted earnings per share of $0.23, based on an effective quarterly tax rate
of 45.4 percent and a full-year projected tax rate of approximately 68
percent. In the 2012 third quarter, net income was $4.1 million and diluted
earnings per share were $0.23 based on an effective quarterly tax rate of 59.0
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 third quarter was $36.6
million, compared to $33.8 million in the 2012 third quarter. Cash and cash
equivalents at September 30, 2013 were $132.8 million ($95.8 million net of
debt), compared to $99.7 million at June 30, 2013 ($61.2 million net of debt),
and $127.1 million at September 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) more appropriately reflect the company's core
operations.


$ in millions             3Q 13     3Q 12     Change   2Q 13     Change
Americas                                                     
Net revenue               $71.1   $72.4   $(1.4) $72.8   $(1.7)
Operating income          $19.3   $21.3   $(2.0) $18.1   $1.2
Consultants               137       156       (19)     139       (2)
                                                            
Europe                                                       
Net revenue               $24.4   $21.5   $2.8   $24.1   $0.3
Operating income/(loss)   $0.1    $0.5    $(0.4) $(2.5)  $2.5
Consultants               87        91        (4)      89        (2)
                                                            
Asia Pacific                                                 
Net revenue               $23.5   $23.4   $0.2   $25.1   $(1.6)
Operating income          $2.3    $1.5    $0.9   $2.9    $(0.6)
Consultants               84        85        (1)      87        (3)
                                                            
Global Operations Support $ (13.3) $(13.0) $(0.3) $(12.8) $(0.5)
Operating income          $8.4    $10.2   $(1.8) $5.7    $2.6


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

Net revenue in the Americas decreased $1.4 million, or 1.9 percent year over
year, to $71.1 million in the third quarter.The addition of Senn Delaney,
representing $5.6 million, improved consultant productivity, and increases in
the Life Sciences and Global Technology & Services Search practices were
offset by declines in the other industry Search practices and Leadership
Consulting, and lower consultant headcount. The America's operating margin
was 27.1 percent compared to 29.4 percent in the 2012 third quarter largely as
a result of an increase in general and administrative expenses, mostly related
to Senn Delaney, partially offset by a decline in salaries and employee
benefits expense.

Net revenue in Europe increased $2.8 million, or 13.2 percent year over year,
to $24.4 million in the third quarter (approximately 12 percent on a constant
currency basis).Exchange rate fluctuations positively impacted year-over-year
third quarter net revenue by $0.2 million.Senn Delaney represented $1.0
million of the 2013 third quarter revenue in this region.Revenue from
Leadership Consulting and all Search practices, except Education & Social
Enterprise and Global Technology & Services, increased compared to the prior
year.The operating margin in Europe was 0.2 percent compared to 2.2 percent
in the 2012 third quarter, reflecting the increase in net revenue, offset by
increases in general and administrative expenses and salaries and employee
benefits expense.

Asia Pacific net revenue increased $0.2 million, or 0.8 percent, to $23.5
million in the third quarter (approximately 7 percent on a constant currency
basis).Exchange rate fluctuations negatively impacted year-over-year third
quarter net revenue by $1.5 million.Revenue growth in this region was driven
by the Consumer Markets and Industrial Search practices, as well as by
Leadership Consulting. The operating margin in Asia Pacific improved to 9.8
percent compared to 6.2 percent in the 2012 third quarter reflecting an
improvement in revenue and a decrease in salaries and employee benefits
expense, partially offset by an increase in general and administrative
expenses.

Global Operations Support was $13.3 million in the third quarter, an increase
of $0.3 million compared to $13.0 million in the 2012 third quarter.Included
in the 2013 third quarter is $3.0 million of expense related to a separation
agreement with the company's former chief executive officer.Included in the
2012 third quarter was $2.5 million of expenses related to a global Partners'
meeting.

Nine Months Results

For the nine months ended September 30, 2013 consolidated net revenue of
$344.0 million increased 1.2 percent from $339.9 million in the first nine
months of 2012. Net revenue increased 5.8 percent in the Americas and
increased 1.4 percent in Asia Pacific (approximately 5 percent on a constant
currency basis), but declined 10.9 percent in Europe (currency had minimal
impact).Revenue from Senn Delaney, acquired on December 31, 2012 was $17.6
million for the first nine months of 2013, of which $15.1 million was in the
Americas and $2.5 million in Europe.

Productivity, as measured by annualized net revenue per consultant excluding
Senn Delaney, was $1.4 million for the first nine months of 2013, compared to
$1.3 million for the same period of 2012.There were 1.7 percent fewer
executive searches confirmed in the first nine months of 2013 compared to the
first nine months of 2012 and the average revenue per executive search was
$111,700 compared to $112,600 for the same period in 2012. 

Adjusted EBITDA for the first nine months of 2013 was $32.3 million and
Adjusted EBITDA margin was 9.4 percent, compared to Adjusted EBITDA of $32.8
million and Adjusted EBITDA margin of 9.6 percent for the first nine months of
2012.

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


                                     Nine Months Ended
                                     September 30,
$ in millions                         2013     2012
                                             
Operating Income                      $14.5  $20.1
                                             
Adjustments                                   
Salaries and employee benefits                
Stock-based compensation amortization 2.5      3.9
Senn Delaney retention awards         1.8      --
                                             
General and administrative expenses           
Depreciation                          7.7      7.4
Intangible amortization               4.3      0.5
Senn Delaney earnout accretion        1.6      --
                                             
Restructuring charges                 --       0.8
                                             
Total Adjustments                     17.8     12.7
                                             
Adujsted EBITDA ^ (1)                 $32.3  $32.8
                                             
Adjusted EBITDA Margin^(1)            9.4%     9.7%
(Adjusted EBITDA as % of net revenue)         


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

Operating income for the first nine months of 2013 was $14.5 million and
operating margin was 4.2 percent compared to operating income of $20.1 million
and operating margin of 5.9 percent for the first nine months of 2012. Net
income for the first nine months of 2013 was $4.8 million and diluted earnings
per share were $0.27, reflecting an effective tax rate of 61.8 percent.Net
income for the first nine months of 2012 was $6.6 million and diluted earnings
per share were $0.37, reflecting an effective tax rate of 66.8 percent.

2013 Fourth Quarter Outlook

The company is forecasting 2013 fourth-quarter consolidated net revenue of
between $100 million and $110 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.

Quarterly Conference Call

Executives of Heidrick & Struggles will host a conference call to review the
2013 third quarter results today, October 29, 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 and page 7 of the company's 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  
                                  September 30,       
                                  2013       2012       $ Change % Change
Revenue:                                                       
Revenue before reimbursements     $118,981 $117,312 $1,669   1.4%
(net revenue)
Reimbursements                   4,523     5,033     (510)     -10.1%
Total revenue                    123,504   122,345   1,159     0.9%
                                                                
Operating expenses:                                            
Salaries and employee benefits   81,671    79,628    2,043     2.6%
General and administrative        28,957    27,499    1,458     5.3%
expenses
Reimbursed expenses              4,523     5,033     (510)     -10.1%
Total operating expenses         115,151   112,160   2,991     2.7%
Operating income                 8,353     10,185    (1,832)   -18.0%
                                                                
Non-operating income (expense):                                
Interest, net                    (91)      149                 
Other, net                       (709)     (299)               
Net non-operating expense        (800)     (150)               
                                                                
Income before income taxes       7,553     10,035              
Provision for income taxes       3,429     5,924               
Net income                       4,124     4,111               
Other comprehensive income, net of 594       1,278               
tax
Comprehensive income             $4,718   $5,389             
                                                                
Basic weighted average common     18,104    17,995              
shares outstanding
Dilutive common shares           119       102                 
Diluted weighted average common   18,223    18,097              
shares outstanding
Basic net income per common       $0.23    $0.23              
share
Diluted net income per common     $0.23    $0.23              
share
                                                                
                                                                
Salaries and employee benefits as 68.6%      67.9%                
a percentage of net revenue
General and administrative
expense as a percentage of net     24.3%      23.4%                
revenue
Operating income as a percentage  7.0%       8.7%                 
of net revenue
Effective income tax rate        45.4%      59.0%                



Heidrick & Struggles International, Inc.
Segment Information
(In thousands)
(Unaudited)


                    Three Months Ended September 30,
                                                          2013     2012
                    2013       2012       $ Change   % Change Margin * Margin
                                                                        *
Revenue:                                                           
Americas             $71,073  $72,424  $(1,351) -1.9%            
Europe               24,380    21,538    2,842     13.2%            
Asia Pacific         23,528    23,350    178       0.8%             
Revenue before
reimbursements (net  118,981   117,312   1,669     1.4%             
revenue)
Reimbursements       4,523     5,033     (510)     -10.1%           
Total revenue        $123,504 $122,345 $1,159   0.9%             
                                                                  
Operating income                                                   
(loss):
Americas             $19,279  $21,293  $(2,014) -9.5%    27.1%    29.4%
Europe               59        479       (420)     -87.7%   0.2%     2.2%
Asia Pacific         2,310     1,456     854       58.7%    9.8%     6.2%
Total regions        21,648    23,228    (1,580)   -6.8%    18.2%    19.8%
Global Operations    (13,295)  (13,043)  (252)     1.9%             
Support
Operating income     $8,353   $10,185  $(1,832) -18.0%   7.0%     8.7%
                                                                  
*Margin based on revenue before reimbursements (net revenue).



Heidrick & Struggles International, Inc.
Condensed Consolidated Statements of Comprehensive Income
(In thousands, except per share data)
(Unaudited)


                                  Nine Months Ended   
                                  September 30,       
                                  2013       2012       $ Change % Change
Revenue:                                                       
Revenue before reimbursements     $343,992 $339,903 $4,089   1.2%
(net revenue)
Reimbursements                   14,148    16,517    (2,369)   -14.3%
Total revenue                    358,140   356,420   1,720     0.5%
                                                                
Operating expenses:                                            
Salaries and employee benefits   236,216   236,159   57        0.0%
General and administrative        93,292    82,824    10,468    12.6%
expenses
Reimbursed expenses              14,148    16,517    (2,369)   -14.3%
Restructuring charges            --        810       (810)     
Total operating expenses         343,656   336,310   7,346     2.2%
Operating income                 14,484    20,110    (5,626)   -28.0%
                                                                
Non-operating income (expense):                                
Interest, net                    (120)     856                 
Other, net                       (1,675)   (949)               
Net non-operating expense        (1,795)   (93)                
                                                                
Income before income taxes       12,689    20,017              
Provision for income taxes       7,844     13,375              
Net income                       4,845     6,642               
Other comprehensive income (loss), (910)     1,316               
net of tax
Comprehensive income             $3,935   $7,958             
                                                                
Basic weighted average common     18,064    17,969              
shares outstanding
Dilutive common shares           143       167                 
Diluted weighted average common   18,207    18,136              
shares outstanding
Basic net income per common       $0.27    $0.37              
share
Diluted net income per common     $0.27    $0.37              
share
                                                                
Salaries and employee benefits as 68.7%      69.5%                
a percentage of net revenue
General and administrative
expense as a percentage of net     27.1%      24.4%                
revenue
Operating income as a percentage  4.2%       5.9%                 
of net revenue
Effective income tax rate        61.8%      66.8%                



Heidrick & Struggles International, Inc.
Segment Information
(In thousands)
(Unaudited)


                    Nine Months Ended September 30,
                                                          2013     2012
                    2013       2012       $ Change   % Change Margin * Margin
                                                                        *
Revenue:                                                           
Americas             $208,026 $196,614 $11,412  5.8%             
Europe               67,502    75,746    (8,244)   -10.9%           
Asia Pacific         68,464    67,543    921       1.4%             
Revenue before
reimbursements (net  343,992   339,903   4,089     1.2%             
revenue)
Reimbursements       14,148    16,517    (2,369)   -14.3%           
Total revenue        $358,140 $356,420 $1,720   0.5%             
                                                                  
Operating income                                                   
(loss):
Americas             $50,733  $49,146  $1,587   3.2%     24.4%    25.0%
Europe               (6,042)   2,964     (9,006)   -303.8%          3.9%
Asia Pacific         5,995     3,908     2,087     53.4%    8.8%     5.8%
Total regions        50,686    56,018    (5,332)   -9.5%    14.7%    16.5%
Global Operations    (36,202)  (35,098)  (1,104)   3.1%             
Support
Operating income
before restructuring 14,484    20,920    (6,436)   -30.8%   4.2%     6.2%
charges
Restructuring        --       (810)     810                       
charges
Operating income:    $14,484  $20,110  $(5,626) -28.0%   4.2%     5.9%
                                                                  
*Margin based on revenue before reimbursements (net revenue).



Heidrick & Struggles International, Inc.
Condensed Consolidated Balance Sheets
(In thousands)


                                                  September 30, December 31,
                                                  2013          2012
                                                  (Unaudited)   
Current assets:                                                 
Cash and cash equivalents                          $132,790    $117,605
Restricted cash                                    128          199
Accounts receivable, net                           88,746       69,107
Other receivables                                  11,497       10,288
Prepaid expenses                                   17,321       14,167
Other current assets                               1,715        1,366
Income taxes recoverable                           6,803        5,651
Deferred income taxes                              8,711        7,899
Total current assets                               267,711      226,282
                                                               
Non-current assets:                                             
Property and equipment, net                        35,721       42,362
Restricted cash                                    7,990        7,968
Assets designated for retirement and pension plans 23,104       22,763
Investments                                        13,182       11,902
Other non-current assets                           5,715        5,301
Goodwill                                           120,696      120,940
Other intangible assets, net                       27,606       32,020
Deferred income taxes                              24,079       25,454
Total non-current assets                           258,093      268,710
                                                               
Total assets                                       $525,804    $494,992
                                                               
Current liabilities:                                            
Short term borrowings                              $6,000      $--
Accounts payable                                   5,622        8,657
Accrued salaries and employee benefits             88,508       102,597
Other current liabilities                          48,634       40,390
Income taxes payable                               7,015        709
Deferred income taxes                              34           43
Total current liabilities                          155,813      152,396
                                                               
Non-current liabilities:                                        
Long term debt, less current maturities            31,000       --
Retirement and pension plans                       39,009       37,247
Other non-current liabilities                      52,818       56,943
Deferred income taxes                              137          59
Total non-current liabilities                      122,964      94,249
                                                               
Stockholders' equity                               247,027      248,347
                                                               
Total liabilities and stockholders' equity         $525,804    $494,992



Heidrick & Struggles International, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)


                                                        Three Months Ended
                                                        September 30,
                                                        2013       2012
                                                                  
Cash flows - operating activities:                                 
Net income                                               $4,124   $4,111
Adjustments to reconcile net income to net cash provided           
by operating activities:
Depreciation and amortization                            4,019     2,791
Deferred income taxes                                    (1,926)   (191)
Net realized losses on investments                       --       27
Stock-based compensation expense                         303       1,281
Accretion expense related to acquisition payments        518       --
Cash paid for restructuring charges                      (302)     (2,080)
Changes in assets and liabilities, net of effects of               
acquisitions:
Trade and other receivables                              2,434     (2,572)
Accounts payable                                         (1,840)   (2,061)
Accrued expenses                                         30,575    22,333
Income taxes recoverable (payable), net                  3,338     7,078
Retirement and pension assets and liabilities            34        159
Prepayments                                              (2,901)   3,322
Other assets and liabilities, net                        (1,742)   (440)
Net cash provided by operating activities                36,634    33,758
                                                                  
Cash flows - investing activities:                                 
Restricted cash                                          (24)      51
Capital expenditures                                     (562)     (1,134)
Purchases of available for sale investments              (90)      (97)
Proceeds from sales of available for sale investments    91        30
Net cash used in investing activities                    (585)     (1,150)
                                                                  
Cash flows - financing activities:                                 
Purchases of treasury stock                              --       (1,123)
Debt repayment                                           (1,500)   --
Cash dividends paid                                      (2,356)   (2,348)
Payment of employee tax withholdings on equity           (71)      (61)
transactions
Net cash used in financing activities                    (3,927)   (3,532)
                                                                  
Effect of exchange rate fluctuations on cash and cash    973       1,210
equivalents
                                                                  
Net increase in cash and cash equivalents                33,095    30,286
Cash and cash equivalents at beginning of period         99,695    96,851
Cash and cash equivalents at end of period               $132,790 $127,137



Heidrick & Struggles International, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)


                                                        Nine Months Ended
                                                        September 30,
                                                        2013       2012
                                                                  
Cash flows - operating activities:                                 
Net income                                               $4,845   $6,642
Adjustments to reconcile net income to net cash used in            
operating activities:
Depreciation and amortization                            12,046    8,083
Deferred income taxes                                    (500)     1,509
Net realized losses on investments                       --       27
Stock-based compensation expense                         2,775     4,081
Accretion expense related to earnout payments            1,551     --
Restructuring charges                                    --       810
Cash paid for restructuring charges                      (918)     (8,743)
Changes in assets and liabilities, net of effects of               
acquisitions:
Trade and other receivables                              (21,607)  (18,622)
Accounts payable                                         (2,381)   (3,165)
Accrued expenses                                         (10,109)  (48,861)
Income taxes recoverable (payable), net                  4,826     15,309
Retirement and pension assets and liabilities            574       956
Prepayments                                              (3,207)   (75)
Other assets and liabilities, net                        240       (1,110)
Net cash used in operating activities                    (11,865)  (43,159)
                                                                  
Cash flows - investing activities:                                 
Restricted cash                                          (50)      282
Capital expenditures                                     (1,920)   (6,248)
Purchases of available for sale investments              (661)     (1,023)
Proceeds from sales of available for sale investments    155       107
Net cash used in investing activities                    (2,476)   (6,882)
                                                                  
Cash flows - financing activities:                                 
Proceeds from debt issuance                              40,000    --
Debt repayment                                           (3,000)   --
Cash dividends paid                                      (4,875)   (7,294)
Purchases of treasury stock                              --       (1,630)
Payment of employee tax withholdings on equity           (647)     (1,123)
transactions
Acquisition earnout payments                             (357)     (381)
Net cash provided by (used in) financing activities      31,121    (10,428)
                                                                  
Effect of exchange rate fluctuations on cash and cash    (1,595)   2,216
equivalents
                                                                  
Net increase (decrease) in cash and cash equivalents     15,185    (58,253)
Cash and cash equivalents at beginning of period         117,605   185,390
Cash and cash equivalents at end of period               $ 132,790 $ 127,137


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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