UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 5, 2005
HEIDRICK & STRUGGLES INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 0-25837 | 36-2681268 | ||
| (State or other jurisdiction Of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 233 South Wacker Drive, Suite 4200, Chicago, IL | 60606-6303 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (312) 496-1200
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Conditions
On August 5, 2005, Heidrick & Struggles International, Inc. issued a news release reporting its 2005 second quarter financial results. A copy of the news release is attached hereto as Exhibit 99.1 to this report and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
| (c) | Exhibits. |
| Exhibit Number |
Description | |
| 99.1 | Heidrick & Struggles International, Inc. Press Release Dated August 5, 2005 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HEIDRICK & STRUGGLES INTERNATIONAL, INC. | ||||
| (Registrant) | ||||
| Date: August 5, 2005 |
||||
| By: | /s/ K. Steven Blake | |||
| Name: | K. Steven Blake | |||
| Title: | General Counsel & Secretary | |||
Exhibit 99.1
HEIDRICK & STRUGGLES
| NEWS | FOR IMMEDIATE RELEASE |
| Contact for media: | Eric Sodorff | +1 312-496-1613 or esodorff@heidrick.com | ||||
| Contacts for analysts: | Eileen Kamerick, CFO | +1 312-496-1557 or ekamerick@heidrick.com | ||||
| Todd Welu, Controller | +1 312-496-1637 or twelu@heidrick.com | |||||
HEIDRICK & STRUGGLES REPORTS
2005 SECOND QUARTER FINANCIAL RESULTS
CHICAGO (August 5, 2005)—Heidrick & Struggles International, Inc. (Nasdaq: HSII), the world’s premier executive search and leadership consulting firm, today announced a 6 percent increase in consolidated net revenue to $103.4 million in the 2005 second quarter from $97.9 million in the 2004 second quarter. The net revenue increase of 6 percent includes a 2 percentage point increase from the impact of exchange rate fluctuations.
The 2005 second quarter operating loss of $7.8 million includes $20.8 million in previously announced restructuring charges. The 2005 second quarter net loss of $5.0 million includes $18.5 million in restructuring charges, net of tax. The 2005 second quarter loss per share of $0.26 includes $0.95 per share of restructuring charges. By excluding the restructuring charges, which management believes more appropriately reflects core operations, the 2005 second quarter operating income would have been $13.0 million with a 12.6 percent operating margin, net income would have been $13.6 million, and diluted earnings per share would have been $0.69. The 2004 second quarter operating income was $8.6 million with an 8.8 percent operating margin. The 2004 second quarter net income was $6.9 million and diluted earnings per share were $0.34.
“We continue to make progress in our efforts to improve profitability while, at the same time, growing revenue and providing superior service to our clients. Our performance this quarter and the anticipated benefits of our recent restructuring in Europe reaffirm our confidence in our ability to achieve our 2005 goals,” said Thomas J. Friel, chairman and chief executive officer of Heidrick & Struggles.
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Consolidated salaries and employee benefits in the 2005 second quarter were $68.1 million, up 3 percent from $66.3 million in the comparable 2004 quarter. The expense increase was the result of increased salary costs of $2.7 million and $2.0 million related to amortization of retention incentive awards. This increase was partially offset by a benefit of $3.0 million related to bonus payments paid with restricted stock under a recently adopted program, which are recognized over the vesting period. Total stock-based compensation expense was $4.5 million for the 2005 second quarter and is expected to be approximately $13 million for the 2005 year. Salaries and employee benefits expense as a percent of net revenue declined to 65.8 percent in the 2005 second quarter compared to 67.7 percent in the 2004 second quarter.
Consolidated general and administrative expenses decreased 3 percent to $22.4 million in the 2005 second quarter compared to $23.0 million in the 2004 second quarter, due to $1.5 million of favorable adjustments, including a property tax rebate and an insurance recovery, offset by higher fees for professional services and discretionary spending related to business development. As a percent of net revenue, consolidated general and administrative expenses declined to 21.6 percent in the 2005 second quarter compared to 23.5 percent in the 2004 second quarter.
As of June 30, 2005, the company employed 307 consultants, compared to 305 as of March 31, 2005, and 296 as of June 30, 2004. Compared to the 2004 second quarter, consultant productivity increased in the 2005 second quarter as executive search revenue per consultant rose to an annualized rate of $1.3 million.
The cash, cash equivalents and short-term investment balance at June 30, 2005 was $154 million, $35 million higher than one year ago, and $31 million lower than the March 31, 2005 balance. During the second quarter, the company completed its $30 million stock repurchase program authorized in October 2004. Total shares repurchased under the program were 1.1 million.
Regional Review
Net revenue for the 2005 second quarter grew in every region compared to the 2004 second quarter. The Americas (formerly reported separately as North America and Latin America) grew 4 percent; Europe grew 6 percent; and Asia Pacific grew 13 percent. Each region was profitable, with 2005 second quarter operating margins of 27 percent in the Americas; 4 percent in Europe; and 23 percent in Asia Pacific as compared to 20 percent in the Americas; 2 percent in Europe; and 27 percent in Asia Pacific in the 2004 second quarter. Total corporate expenses increased by 13 percent to $6.3 million in the 2005 second quarter from $5.5 million in the 2004 second quarter.
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- 2 -
In the Americas, the industrial, professional services, and consumer industry groups reported the most significant net revenue increases in the 2005 second quarter compared to the 2004 second quarter, while the health care and technology industry groups posted declines.
In Europe, net revenue in the 2005 second quarter increased by 6 percent from the 2004 second quarter and includes a 3 percentage point increase from the impact of exchange rate fluctuations. The consumer and industrial industry groups reported the most significant net revenue increases compared to the 2004 second quarter, while the financial services industry group posted the most significant decline.
In Asia Pacific, net revenue in the 2005 second quarter increased by 13 percent from the 2004 second quarter and includes a 3 percentage point increase from the impact of exchange rate fluctuations. Net revenue growth was primarily driven by an increase in the consumer industry group.
Six Month Results
For the six months ended June 30, 2005, consolidated net revenue was $202.0 million, a 9 percent increase from $185.2 million for the first six months of 2004. For the six months ended June 30, 2005 the operating loss of $1.4 million includes $20.8 million in restructuring charges. The year-to-date net income of $1.9 million includes $18.5 million in restructuring charges, net of tax. The year-to-date income per share of $0.09 includes $0.92 per share of restructuring charges. By excluding the restructuring charges, which management believes more appropriately reflects core operations, the 2005 year-to-date operating income would have been $19.4 million with a 9.6 percent operating margin, net income would have been $20.4 million, and diluted earnings per share would have been $1.01. For the six months ended June 30, 2004, operating income was $13.7 million, net income was $11.2 million, and diluted earnings per share were $0.56.
Restructuring
During the 2005 second quarter, the company recorded restructuring charges of $20.8 million, consisting of $14.7 million of severance and related costs and $6.1 million related to the consolidation of office space and other infrastructure. The company anticipates recording additional restructuring charges of approximately $4 million to $5 million during the remainder of 2005.
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- 3 -
The restructuring plan includes a carefully considered strategic reduction in the company’s workforce that has directly affected 5 percent of the company’s global workforce—or 57 people, including 15 consultants. Of those 15 consultants, 13 are included in the 307 consultants employed by the company as of June 30, 2005.
Annual cost savings from this restructuring plan are estimated to be approximately $15 million, with approximately $8 million in savings during 2005, nearly all of which will occur during the second half of the year. Of the total savings, approximately $12 million is related to Europe, with the remainder related to the Americas and corporate.
Outlook
For the 2005 third quarter, net revenue is anticipated to be in the range of $98 million to $103 million. At those net revenue levels, the company expects that operating income would range from $10 million to $13 million, excluding restructuring charges. Assuming additional restructuring charges of approximately $4 million to $5 million during the 2005 third quarter, operating income would range from $6 million to $8 million.
For the 2005 year, net revenue is anticipated to be in the range of $400 million to $412 million. At those net revenue levels, the company expects that the operating margin will be approximately 10 percent, excluding any restructuring charges; including restructuring charges, the company expects the operating margin would be approximately 4 percent.
For the 2005 year, the company estimates an annual tax rate ranging between 15 percent and 20 percent, including restructuring charges. The tax rate estimate can be significantly impacted by country-level results, which vary from period to period, and by the timing of any deferred tax asset valuation allowance reversals, and certain discrete items that require recognition in a particular quarter rather than being considered as part of the annual tax rate.
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- 4 -
Webcast of Investor Call Available Today
The company will provide a real-time webcast of its investor call on Friday, August 5, 2005 at 9:00 a.m. Central Time (Chicago) to review its 2005 second quarter financial results. The call will last up to one hour and will feature remarks by Thomas J. Friel, chairman and chief executive officer; Eileen A. Kamerick, chief financial officer; L. Kevin Kelly, president of the Europe, Middle East, and Africa (EMEA) region; and Todd T. Welu, controller. The webcast will be available online, along with any slides accompanying management’s remarks, at www.heidrick.com or through CCBN’s individual investor center at www.companyboardroom.com. Listeners should log on approximately 10 minutes in advance to ensure they are set up to receive the webcast. A replay will be available for up to 30 days following the investor call.
About Heidrick & Struggles International, Inc.
Heidrick & Struggles International, Inc. is the world’s premier provider of senior-level executive search and leadership consulting services, including talent management, board building, executive on-boarding and M&A effectiveness. For more than 50 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, please visit www.heidrick.com.
Safe Harbor Statement
This news 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,” 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 and retain qualified executive search consultants; the condition of the economies in the United States, Europe, or elsewhere; social or political instability in markets where we operate; the impact of foreign currency exchange rate fluctuations; price competition; an inability to achieve the planned cost savings from our cost-reduction initiatives; an inability to sublease or assign unused office space; our ability to realize our tax loss carryforwards; the timing of any deferred tax asset valuation allowance reversals; the mix of profit and loss by country; an impairment of our goodwill and other intangible assets; and delays in the development and/or implementation of new technology and systems. 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.
# # #
- 5 -
Heidrick & Struggles International, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
| Three Months Ended June 30, |
|||||||||||||||
| 2005 |
2004 |
$ Change |
% Change |
||||||||||||
| Revenue: |
|||||||||||||||
| Revenue before reimbursements (net revenue) |
$ | 103,373 | $ | 97,926 | $ | 5,447 | 5.6 | % | |||||||
| Reimbursements |
4,521 | 4,954 | (433 | ) | -8.7 | % | |||||||||
| Total revenue |
107,894 | 102,880 | 5,014 | 4.9 | % | ||||||||||
| Operating expenses: |
|||||||||||||||
| Salaries and employee benefits |
68,054 | 66,299 | 1,755 | 2.6 | % | ||||||||||
| General and administrative expenses |
22,366 | 23,024 | (658 | ) | -2.9 | % | |||||||||
| Reimbursed expenses |
4,455 | 4,954 | (499 | ) | -10.1 | % | |||||||||
| Restructuring charges |
20,837 | — | 20,837 | ||||||||||||
| Total operating expenses |
115,712 | 94,277 | 21,435 | 22.7 | % | ||||||||||
| Operating income (loss) |
(7,818 | ) | 8,603 | (16,421 | ) | ||||||||||
| Non-operating income (expense): |
|||||||||||||||
| Interest income |
1,264 | 331 | |||||||||||||
| Interest expense |
(186 | ) | (18 | ) | |||||||||||
| Net realized and unrealized gains (losses) on equity and warrant portfolio |
(46 | ) | 644 | ||||||||||||
| Other, net |
709 | 83 | |||||||||||||
| Net non-operating income |
1,741 | 1,040 | |||||||||||||
| Income (loss) before income taxes |
(6,077 | ) | 9,643 | ||||||||||||
| Provision for (benefit from) income taxes |
(1,110 | ) | 2,717 | ||||||||||||
| Net income (loss) |
$ | (4,967 | ) | $ | 6,926 | ||||||||||
| Basic earnings (loss) per common share |
$ | (0.26 | ) | $ | 0.36 | ||||||||||
| Basic weighted average common shares outstanding |
18,956 | 19,000 | |||||||||||||
| Diluted earnings (loss) per common share |
$ | (0.26 | ) | $ | 0.34 | ||||||||||
| Diluted weighted average common shares outstanding |
18,956 | 20,082 | |||||||||||||
| Salaries and employee benefits as a percentage of net revenue |
65.8 | % | 67.7 | % | |||||||||||
| General and administrative expense as a percentage of net revenue |
21.6 | % | 23.5 | % | |||||||||||
| Operating income (loss) as a percentage of net revenue |
-7.6 | % | 8.8 | % | |||||||||||
| Effective tax rate |
18.3 | % | 28.2 | % | |||||||||||
Heidrick & Struggles International, Inc.
Segment Information
(In thousands)
| Three Months Ended June 30, |
|||||||||||||||||||||
| 2005 |
2004 |
$ Change |
% Change |
2005 Margin * |
2004 Margin * |
||||||||||||||||
| Revenue: |
|||||||||||||||||||||
| Americas |
$ | 59,302 | $ | 56,856 | $ | 2,446 | 4.3 | % | |||||||||||||
| Europe |
34,325 | 32,460 | 1,865 | 5.7 | % | ||||||||||||||||
| Asia Pacific |
9,746 | 8,610 | 1,136 | 13.2 | % | ||||||||||||||||
| Revenue before reimbursements (net revenue) |
103,373 | 97,926 | 5,447 | 5.6 | % | ||||||||||||||||
| Reimbursements |
4,521 | 4,954 | (433 | ) | -8.7 | % | |||||||||||||||
| Total revenue |
$ | 107,894 | $ | 102,880 | $ | 5,014 | 4.9 | % | |||||||||||||
| Operating Income (Loss): |
|||||||||||||||||||||
| Americas |
$ | 15,810 | $ | 11,212 | $ | 4,598 | 41.0 | % | 26.7 | % | 19.7 | % | |||||||||
| Europe |
1,215 | 582 | 633 | 3.5 | % | 1.8 | % | ||||||||||||||
| Asia Pacific |
2,251 | 2,348 | (97 | ) | -4.1 | % | 23.1 | % | 27.3 | % | |||||||||||
| Total regions |
19,276 | 14,142 | 5,134 | 36.3 | % | 18.6 | % | 14.4 | % | ||||||||||||
| Corporate |
(6,257 | ) | (5,539 | ) | (718 | ) | -13.0 | % | |||||||||||||
| Operating income before restructuring charges |
13,019 | 8,603 | 4,416 | 51.3 | % | 12.6 | % | 8.8 | % | ||||||||||||
| Restructuring charges |
(20,837 | ) | — | (20,837 | ) | ||||||||||||||||
| Operating income (loss) |
$ | (7,818 | ) | $ | 8,603 | $ | (16,421 | ) | |||||||||||||
| * | Margin based on revenue before reimbursements (net revenue) |
Heidrick & Struggles International, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
| Six Months Ended June 30, |
|||||||||||||||
| 2005 |
2004 |
$ Change |
% Change |
||||||||||||
| Revenue: |
|||||||||||||||
| Revenue before reimbursements (net revenue) |
$ | 201,955 | $ | 185,155 | $ | 16,800 | 9.1 | % | |||||||
| Reimbursements |
11,396 | 10,153 | 1,243 | 12.2 | % | ||||||||||
| Total revenue |
213,351 | 195,308 | 18,043 | 9.2 | % | ||||||||||
| Operating expenses: |
|||||||||||||||
| Salaries and employee benefits |
135,966 | 127,668 | 8,298 | 6.5 | % | ||||||||||
| General and administrative expenses |
46,643 | 43,771 | 2,872 | 6.6 | % | ||||||||||
| Reimbursed expenses |
11,342 | 10,153 | 1,189 | 11.7 | % | ||||||||||
| Restructuring charges |
20,837 | — | 20,837 | ||||||||||||
| Total operating expenses |
214,788 | 181,592 | 33,196 | 18.3 | % | ||||||||||
| Operating income (loss) |
(1,437 | ) | 13,716 | (15,153 | ) | ||||||||||
| Non-operating income (expense): |
|||||||||||||||
| Interest income |
2,421 | 695 | |||||||||||||
| Interest expense |
(341 | ) | (23 | ) | |||||||||||
| Net realized and unrealized gains (losses) on equity and warrant portfolio |
(196 | ) | 522 | ||||||||||||
| Other, net |
1,118 | (106 | ) | ||||||||||||
| Net non-operating income |
3,002 | 1,088 | |||||||||||||
| Income before income taxes |
1,565 | 14,804 | |||||||||||||
| Provision for (benefit from) income taxes |
(328 | ) | 3,653 | ||||||||||||
| Net income |
$ | 1,893 | $ | 11,151 | |||||||||||
| Basic earnings per common share |
$ | 0.10 | $ | 0.59 | |||||||||||
| Basic weighted average common shares outstanding |
19,090 | 18,745 | |||||||||||||
| Diluted earnings per common share |
$ | 0.09 | $ | 0.56 | |||||||||||
| Diluted weighted average common shares outstanding |
20,200 | 19,755 | |||||||||||||
| Salaries and employee benefits as a percentage of net revenue |
67.3 | % | 69.0 | % | |||||||||||
| General and administrative expense as a percentage of net revenue |
23.1 | % | 23.6 | % | |||||||||||
| Operating income (loss) as a percentage of net revenue |
-0.7 | % | 7.4 | % | |||||||||||
| Effective tax rate |
— | 24.7 | % | ||||||||||||
Heidrick & Struggles International, Inc.
Segment Information
(In thousands)
| Six Months Ended June 30, |
|||||||||||||||||||||
| 2005 |
2004 |
$ Change |
% Change |
2005 Margin * |
2004 Margin * |
||||||||||||||||
| Revenue: |
|||||||||||||||||||||
| Americas |
$ | 113,879 | $ | 105,290 | $ | 8,589 | 8.2 | % | |||||||||||||
| Europe |
68,412 | 64,579 | 3,833 | 5.9 | % | ||||||||||||||||
| Asia Pacific |
19,664 | 15,286 | 4,378 | 28.6 | % | ||||||||||||||||
| Revenue before reimbursements (net revenue) |
201,955 | 185,155 | 16,800 | 9.1 | % | ||||||||||||||||
| Reimbursements |
11,396 | 10,153 | 1,243 | 12.2 | % | ||||||||||||||||
| Total revenue |
$ | 213,351 | $ | 195,308 | $ | 18,043 | 9.2 | % | |||||||||||||
| Operating Income (Loss): |
|||||||||||||||||||||
| Americas |
$ | 24,663 | $ | 20,790 | $ | 3,873 | 18.6 | % | 21.7 | % | 19.7 | % | |||||||||
| Europe |
2,071 | 1,362 | 709 | 52.1 | % | 3.0 | % | 2.1 | % | ||||||||||||
| Asia Pacific |
4,741 | 3,399 | 1,342 | 39.5 | % | 24.1 | % | 22.2 | % | ||||||||||||
| Total regions |
31,475 | 25,551 | 5,924 | 23.2 | % | 15.6 | % | 13.8 | % | ||||||||||||
| Corporate |
(12,075 | ) | (11,835 | ) | (240 | ) | -2.0 | % | |||||||||||||
| Operating income before restructuring charges |
19,400 | 13,716 | 5,684 | 41.4 | % | 9.6 | % | 7.4 | % | ||||||||||||
| Restructuring charges |
(20,837 | ) | — | (20,837 | ) | ||||||||||||||||
| Operating income (loss) |
$ | (1,437 | ) | $ | 13,716 | $ | (15,153 | ) | |||||||||||||
| * | Margin based on revenue before reimbursements (net revenue) |
Heidrick & Struggles International, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
| June 30, 2005 |
December 31, 2004 | |||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ | 83,676 | $ | 98,428 | ||
| Short-term investments |
70,000 | 124,325 | ||||
| Accounts receivable, net of allowance for doubtful accounts |
72,961 | 51,843 | ||||
| Other receivables |
4,858 | 4,453 | ||||
| Prepaid expenses |
7,701 | 8,377 | ||||
| Income taxes recoverable, net |
4,540 | — | ||||
| Deferred income taxes, net |
657 | 2,744 | ||||
| Total current assets |
244,393 | 290,170 | ||||
| Non-current assets: |
||||||
| Property and equipment, net |
24,063 | 27,677 | ||||
| Assets designated for retirement and pension plans |
26,922 | 32,468 | ||||
| Investments |
2,370 | 4,089 | ||||
| Other non-current assets |
6,519 | 3,406 | ||||
| Goodwill |
48,609 | 48,818 | ||||
| Other intangible assets, net |
6,453 | 6,890 | ||||
| Deferred income taxes, net |
7,720 | 7,766 | ||||
| Total other non-current assets |
122,656 | 131,114 | ||||
| Total assets |
$ | 367,049 | $ | 421,284 | ||
Heidrick & Struggles International, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
| June 30, 2005 |
December 31, 2004 | |||||
| Current liabilities: |
||||||
| Accounts payable |
$ | 6,024 | $ | 10,986 | ||
| Accrued salaries and employee benefits |
68,774 | 68,044 | ||||
| Other accrued liabilities |
26,235 | 42,870 | ||||
| Current portion of accrued restructuring charges |
19,217 | 10,609 | ||||
| Income taxes payable, net |
— | 7,463 | ||||
| Total current liabilities |
120,250 | 139,972 | ||||
| Non-current liabilities: |
||||||
| Retirement and pension plans |
31,881 | 37,941 | ||||
| Non-current portion of accrued restructuring charges |
13,741 | 21,632 | ||||
| Other non-current liabilities |
5,386 | 5,613 | ||||
| Total non-current liabilities |
51,008 | 65,186 | ||||
| Stockholders’ equity |
195,791 | 216,126 | ||||
| Total liabilities and stockholders’ equity |
$ | 367,049 | $ | 421,284 | ||
Heidrick & Struggles International, Inc.
Consolidated Statements of Cash Flows
(In thousands)
| Three Months Ended June 30, |
||||||||
| 2005 |
2004 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | (4,967 | ) | $ | 6,926 | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
2,928 | 3,388 | ||||||
| Deferred income taxes |
2,193 | — | ||||||
| Net realized and unrealized losses (gains) on equity and warrant portfolio |
46 | (644 | ) | |||||
| Stock-based compensation expense, net |
4,502 | 1,088 | ||||||
| Restructuring charges |
20,837 | — | ||||||
| Cash paid for restructuring charges |
(17,067 | ) | (3,849 | ) | ||||
| Changes in assets and liabilities: |
||||||||
| Trade and other receivables |
(8,669 | ) | (7,470 | ) | ||||
| Accounts payable |
(1,941 | ) | 800 | |||||
| Accrued expenses |
20,469 | 15,988 | ||||||
| Income taxes payable |
(4,345 | ) | 2,647 | |||||
| Other assets and liabilities, net |
(1,020 | ) | 1,577 | |||||
| Net cash provided by operating activities |
12,966 | 20,451 | ||||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
(2,072 | ) | (1,526 | ) | ||||
| Proceeds from sales of equity securities |
137 | 77 | ||||||
| Payments to consultants related to sales of equity securities |
(17,349 | ) | (49 | ) | ||||
| Proceeds from sales of short-term investments |
150,000 | 15,700 | ||||||
| Purchases of short-term investments |
(92,775 | ) | (43,200 | ) | ||||
| Other, net |
11 | 17 | ||||||
| Net cash provided by (used in) investing activities |
37,952 | (28,981 | ) | |||||
| Cash flows from financing activities: |
||||||||
| Proceeds from stock options exercised |
1,892 | 2,722 | ||||||
| Purchases of treasury stock |
(25,095 | ) | — | |||||
| Net cash provided by (used in) financing activities |
(23,203 | ) | 2,722 | |||||
| Effect of foreign currency exchange rates on cash and cash equivalents |
(1,704 | ) | (347 | ) | ||||
| Net increase (decrease) in cash and cash equivalents |
26,011 | (6,155 | ) | |||||
| Cash and cash equivalents: |
||||||||
| Beginning of period |
57,665 | 50,429 | ||||||
| End of period |
$ | 83,676 | $ | 44,274 | ||||
Heidrick & Struggles International, Inc.
Consolidated Statements of Cash Flows
(In thousands)
| Six Months Ended June 30, |
||||||||
| 2005 |
2004 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 1,893 | $ | 11,151 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
5,956 | 6,439 | ||||||
| Deferred income taxes |
2,146 | — | ||||||
| Net realized and unrealized losses (gains) on equity and warrant portfolio |
196 | (522 | ) | |||||
| Stock-based compensation expense, net |
6,127 | 852 | ||||||
| Restructuring charges |
20,837 | — | ||||||
| Cash paid for restructuring charges |
(20,079 | ) | (9,559 | ) | ||||
| Changes in assets and liabilities: |
||||||||
| Trade and other receivables |
(24,530 | ) | (17,181 | ) | ||||
| Accounts payable |
(4,634 | ) | 692 | |||||
| Accrued expenses |
3,880 | 3,426 | ||||||
| Income taxes payable |
(12,027 | ) | (533 | ) | ||||
| Other assets and liabilities, net |
(4,068 | ) | 1,831 | |||||
| Net cash used in operating activities |
(24,303 | ) | (3,404 | ) | ||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
(3,125 | ) | (3,069 | ) | ||||
| Proceeds from sales of equity securities |
1,313 | 150 | ||||||
| Payments to consultants related to sales of equity securities |
(18,004 | ) | (71 | ) | ||||
| Proceeds from sales of short-term investments |
156,875 | 21,750 | ||||||
| Purchases of short-term investments |
(102,550 | ) | (55,900 | ) | ||||
| Other, net |
41 | 80 | ||||||
| Net cash provided by (used in) investing activities |
34,550 | (37,060 | ) | |||||
| Cash flows from financing activities: |
||||||||
| Proceeds from stock options exercised |
5,460 | 6,433 | ||||||
| Purchases of treasury stock |
(27,498 | ) | — | |||||
| Payments on debt |
— | (369 | ) | |||||
| Net cash provided by (used in) financing activities |
(22,038 | ) | 6,064 | |||||
| Effect of foreign currency exchange rates on cash and cash equivalents |
(2,961 | ) | (365 | ) | ||||
| Net decrease in cash and cash equivalents |
(14,752 | ) | (34,765 | ) | ||||
| Cash and cash equivalents: |
||||||||
| Beginning of period |
98,428 | 79,039 | ||||||
| End of period |
$ | 83,676 | $ | 44,274 | ||||