SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended February 28, 2003
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 0-32113
RESOURCES CONNECTION, INC.
(Exact Name of Registrant as Specified in Its Charter)
| DELAWARE |
33-0832424 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
695 TOWN CENTER DRIVE, SUITE 600, COSTA MESA, CALIFORNIA 92626
(Address of Principal Executive Offices and Zip Code)
(714) 430-6400
(Registrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
As of April 4, 2003, 22,078,162 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.
RESOURCES CONNECTION, INC.
| Part I—Financial Information |
||||
| Item 1. |
3 | |||
| Consolidated Balance Sheets as of February 28, 2003 (Unaudited) and May 31, 2002 |
3 | |||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| 7 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
10 | ||
| Item 3. |
21 | |||
| Item 4. |
21 | |||
| Part II—Other Information |
||||
| Item 1. |
22 | |||
| Item 2. |
22 | |||
| Item 3. |
22 | |||
| Item 4. |
22 | |||
| Item 5. |
22 | |||
| Item 6. |
22 | |||
| 23 | ||||
2
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
RESOURCES CONNECTION, INC.
| February 28, 2003 |
May 31, 2002 |
|||||||
| (unaudited) |
||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
49,543,000 |
|
$ |
31,745,000 |
| ||
| Trade accounts receivable, net of allowance for doubtful accounts of $2,334,000 and $2,157,000 as of February 28, 2003 and May 31, 2002, respectively |
|
24,549,000 |
|
|
19,961,000 |
| ||
| Prepaid expenses and other current assets |
|
1,914,000 |
|
|
1,607,000 |
| ||
| Prepaid income taxes |
|
882,000 |
|
|
3,505,000 |
| ||
| Deferred income taxes |
|
2,560,000 |
|
|
2,560,000 |
| ||
| Total current assets |
|
79,448,000 |
|
|
59,378,000 |
| ||
| Investments in marketable securities |
|
12,000,000 |
|
|
24,000,000 |
| ||
| Intangible assets, net |
|
49,042,000 |
|
|
41,372,000 |
| ||
| Property and equipment, net |
|
4,432,000 |
|
|
4,885,000 |
| ||
| Other assets |
|
1,784,000 |
|
|
1,842,000 |
| ||
| Total assets |
$ |
146,706,000 |
|
$ |
131,477,000 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable and accrued expenses |
$ |
2,901,000 |
|
$ |
2,401,000 |
| ||
| Accrued salaries and related obligations |
|
14,159,000 |
|
|
13,152,000 |
| ||
| Other liabilities |
|
603,000 |
|
|
690,000 |
| ||
| Total current liabilities |
|
17,663,000 |
|
|
16,243,000 |
| ||
| Deferred income taxes |
|
1,763,000 |
|
|
1,763,000 |
| ||
| Total liabilities |
|
19,426,000 |
|
|
18,006,000 |
| ||
| Commitments and contingencies |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $0.01 par value, 5,000,000 shares authorized; zero shares issued and outstanding |
||||||||
| Common stock, $0.01 par value, 35,000,000 shares authorized; 22,138,000 and 21,661,000 shares issued and outstanding as of February 28, 2003 and May 31, 2002, respectively |
|
221,000 |
|
|
216,000 |
| ||
| Additional paid-in capital |
|
84,848,000 |
|
|
79,991,000 |
| ||
| Deferred stock compensation |
|
(558,000 |
) |
|
(909,000 |
) | ||
| Accumulated other comprehensive gain (loss) |
|
38,000 |
|
|
(51,000 |
) | ||
| Notes receivable from stockholders |
|
(55,000 |
) |
|
(109,000 |
) | ||
| Retained earnings |
|
42,787,000 |
|
|
34,334,000 |
| ||
| Treasury stock at cost, 123,000 shares at February 28, 2003 and 101,000 shares at May 31, 2002 |
|
(1,000 |
) |
|
(1,000 |
) | ||
| Total stockholders’ equity |
|
127,280,000 |
|
|
113,471,000 |
| ||
| Total liabilities and stockholders’ equity |
$ |
146,706,000 |
|
$ |
131,477,000 |
| ||
The accompanying notes are an integral part of these financial statements.
3
RESOURCES CONNECTION, INC.
CONSOLIDATED STATEMENTS OF INCOME
| Three Months Ended |
Nine Months Ended |
|||||||||||||||
| February 28, 2003 |
February 28, 2002 |
February 28, 2003 |
February 28, 2002 |
|||||||||||||
| (unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
|||||||||||||
| Revenue |
$ |
49,237,000 |
|
$ |
42,988,000 |
|
$ |
142,974,000 |
|
$ |
138,427,000 |
| ||||
| Direct cost of services, primarily payroll and related taxes for professional services employees |
|
30,153,000 |
|
|
26,150,000 |
|
|
86,363,000 |
|
|
83,123,000 |
| ||||
| Gross profit |
|
19,084,000 |
|
|
16,838,000 |
|
|
56,611,000 |
|
|
55,304,000 |
| ||||
| Selling, general and administrative expenses |
|
14,170,000 |
|
|
12,301,000 |
|
|
41,714,000 |
|
|
37,524,000 |
| ||||
| Amortization of intangible assets |
|
298,000 |
|
|
31,000 |
|
|
455,000 |
|
|
93,000 |
| ||||
| Depreciation expense |
|
328,000 |
|
|
316,000 |
|
|
955,000 |
|
|
860,000 |
| ||||
| Income from operations |
|
4,288,000 |
|
|
4,190,000 |
|
|
13,487,000 |
|
|
16,827,000 |
| ||||
| Interest income |
|
(231,000 |
) |
|
(265,000 |
) |
|
(839,000 |
) |
|
(856,000 |
) | ||||
| Income before provision for income taxes |
|
4,519,000 |
|
|
4,455,000 |
|
|
14,326,000 |
|
|
17,683,000 |
| ||||
| Provision for income taxes |
|
1,853,000 |
|
|
1,782,000 |
|
|
5,873,000 |
|
|
7,073,000 |
| ||||
| Net income |
$ |
2,666,000 |
|
$ |
2,673,000 |
|
$ |
8,453,000 |
|
$ |
10,610,000 |
| ||||
| Net income per common share: |
||||||||||||||||
| Basic |
$ |
0.12 |
|
$ |
0.13 |
|
$ |
0.39 |
|
$ |
0.50 |
| ||||
| Diluted |
$ |
0.12 |
|
$ |
0.12 |
|
$ |
0.37 |
|
$ |
0.47 |
| ||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
|
21,934,000 |
|
|
21,367,000 |
|
|
21,764,000 |
|
|
21,141,000 |
| ||||
| Diluted |
|
22,969,000 |
|
|
22,937,000 |
|
|
22,808,000 |
|
|
22,796,000 |
| ||||
The accompanying notes are an integral part of these financial statements.
4
RESOURCES CONNECTION, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
| Nine Months Ended |
||||||||
| February 28, 2003 |
February 28, 2002 |
|||||||
| (unaudited) |
(unaudited) |
|||||||
| COMMON STOCK—SHARES: |
||||||||
| Balance at beginning of period |
|
21,661,000 |
|
|
20,735,000 |
| ||
| Public offering of common stock |
|
230,000 |
||||||