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Heidrick & Struggles Reports Third Quarter 2011 Financial Results

CHICAGO, Oct 25, 2011 (GlobeNewswire via COMTEX) --

Heidrick & Struggles International, Inc. (Nasdaq:HSII), the leadership advisory firm providing executive search and leadership consulting services worldwide, today announced financial results for its third quarter ended September 30, 2011.

Third quarter 2011 Year-over-year Highlights

  --  Net revenue of $142.2 million increased 12.8%, approximately 8% on a
      constant currency basis
  --  Impairment charge of $26.4 million taken to write off remaining goodwill
      and intangible assets of European business
  --  Operating income improved to $13.7 million and the operating margin
      improved to 9.7%, excluding the impairment charge (1)
  --  General and administrative expenses declined $3.7 million or 11.5%
  --  2011 net revenue and operating margin, excluding impairment and
      restructuring charges, are still on track to be within ranges issued in
      guidance


Commenting on the third quarter results, Chief Executive Officer L. Kevin Kelly said, "Our third quarter operating results, excluding impairment charges, showed sound improvement, especially at the margin where we are finally starting to see the impact of our cost savings initiatives. The expected savings from our previously announced restructuring plan, starting in the fourth quarter, will further strengthen our financial position and our ability to deliver improving results to shareholders."

(1) These represent non-GAAP financial measures because the impairment charge is excluded. Including the impairment charge, the operating loss was $12.6 million for the 2011 third quarter.

Consolidated net revenue of $142.2 million increased 12.8 percent (approximately 8 percent on a constant currency basis) from $ 126.1 million in the 2010 third quarter. Exchange rate fluctuations positively impacted net revenue by $5.7 million. Year over year, net revenue increased 15.4 percent in the Americas and 35.6 percent in Europe (approximately 25 percent on a constant currency basis), and declined 13.0 percent in Asia Pacific (a decline of approximately 20 percent on a constant currency basis). The Consumer, Industrial, and Life Sciences practices achieved the largest revenue gains, although their growth was partially offset by the Financial Services practice, which was down compared to last year. Net revenue from Leadership Consulting Services increased 30.6 percent to $12.9 million and represented 9.1 percent of consolidated net revenue in the quarter.

The number of executive search and leadership consulting consultants at September 30, 2011 was 386, compared to 343 at September 30, 2010, and 386 at June 30, 2011. The number of executive search confirmations in the quarter increased 8.0 percent compared to the 2010 third quarter, and, consistent with historical seasonality, declined 9.6 percent compared to the 2011 second quarter. Productivity, as measured by annualized net revenue per consultant, was $1.5 million, the same as in the 2010 third quarter and the 2011 second quarter. The average revenue per executive search increased to $117,600 compared to $114,200 in the 2010 third quarter and $107,400 in the 2011 second quarter.

Salaries and employee benefits increased 12.9 percent to $99.7 million, from $88.3 million in the comparable quarter of 2010. The increase reflects an increase in fixed compensation associated with a 10 percent increase in headcount compared to last year, as well as an increase in the variable component of compensation associated with the increase in net revenue. Salaries and employee benefits were 70.1 percent of net revenue for the quarter, compared to 70.0 percent in the 2010 third quarter.

General and administrative expenses declined 11.5 percent to $28.8 million, from $32.5 million in the 2010 third quarter, as a result of a number of expense reductions. As a percentage of net revenue, consolidated general and administrative expenses were 20.2 percent, compared to 25.8 percent in the 2010 third quarter.

In the third quarter, the company recorded a non-cash impairment charge in the amount of $26.4 million to write off the entire carrying value of the goodwill and intangible assets related to its European business. The company's planned restructuring initiatives in the fourth quarter, which are primarily related to Europe, (part of company-wide restructuring plan announced October 11, 2011) and the current volatility associated with the economic outlook for Europe, including political and economic uncertainty in that region, prompted the company to perform interim goodwill impairment testing. This resulted in the determination that the goodwill and intangible assets were impaired. This non-cash charge does not impact the company's normal business operations, cash flow from operating activities, free cash flow, liquidity, or availability under its credit facilities.

The company reported an operating loss of $12.6 million, driven by the goodwill impairment charge. Excluding the impairment charge of $26.4 million, which management believes more appropriately reflects core operations, operating income was $13.7 million and the operating margin was 9.7 percent. This compares favorably to operating income of $4.4 million and an operating margin of 3.5 percent in the 2010 third quarter.

The net loss was $32.4 million and the net loss per share was $1.82 based on a negative tax rate in the quarter of 129.2 percent. The higher than expected tax rate in the quarter was primarily a result of income that was reduced by the goodwill impairment charge without any tax benefit, establishment of valuation allowances that increased tax expense, and an inability to recognize losses in certain jurisdictions at this time. In the 2010 third quarter, net income was $1.2 million and diluted earnings per share were $0.07, which reflected an effective tax rate of 77.5 percent.

Net cash provided by operating activities in the quarter was $51.0 million, compared to $31.4 million in the 2010 third quarter. Cash and cash equivalents at September 30, 2011 were $135.5 million compared to $122.8 million at September 30, 2010, and $103.1 million at June 30, 2011.

Regional Review

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


    $ in millions     3Q 11      3Q 10     Change     2Q 11     Change
                     --------  ---------  --------  ---------  --------
  Americas
    Net revenue        $ 76.9     $ 66.6    $ 10.3     $ 76.7     $ 0.1
    Operating
     income            $ 17.9     $ 11.9     $ 6.0     $ 18.7   $ (0.9)
    Consultants           176        155        21        178       (2)

  Europe
    Net revenue        $ 37.8     $ 27.9     $ 9.9     $ 34.5     $ 3.3
    Operating
     income (loss)      $ 2.4    $ (1.4)     $ 3.9    $ (2.4)     $ 4.8
    Consultants           126        113        13        128       (2)

  Asia Pacific
    Net revenue        $ 27.5     $ 31.7   $ (4.1)     $ 31.5   $ (4.0)
    Operating
     income             $ 2.8      $ 7.8   $ (5.0)      $ 4.9   $ (2.1)
    Consultants            84         75         9         80         4

  Global Operations
   Support            $ (9.3)   $ (13.0)     $ 3.6   $ (10.9)     $ 1.6


                     --------  -------------------  -------------------
  Total operating
   income (loss)       $ 13.7      $ 5.3     $ 8.4     $ 10.3     $ 3.4
                     ========  =========  ========  =========  ========

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

Net revenue in the Americas increased 15.4 percent year over year and 0.2 percent compared to the 2011 second quarter. The Consumer and Financial Services practices were the largest drivers of year-over-year growth. Third quarter operating income increased 50.6 percent year-over-year, and the operating margin was 23.3 percent.

Net revenue in Europe increased 35.6 percent year over year (approximately 25 percent on a constant currency basis) and increased 9.5 percent sequentially (approximately 11 percent on a constant currency basis). Exchange rate fluctuations positively impacted year-over-year net revenue by $2.9 million. The Industrial Practice was the key driver of the reported year-over-year and sequential growth in this region, but the Life Sciences practice was also an important contributor to year-over-year and sequential growth. Operating income was $2.4 million and the operating margin was 6.4 percent compared to an operating loss of $1.4 million in the 2010 third quarter.

The Asia Pacific region reported a 13.0 percent year-over-year decline in third quarter net revenue (a decline of approximately 20 percent on a constant currency basis) and a 12.7 percent decline sequentially (approximately 13 percent on a constant currency basis). Exchange rate fluctuations positively impacted year-over-year net revenue by $2.3 million. Net revenue was negatively impacted by year-over-year and sequential declines in the Financial Services and Industrial practices. Operating income declined 64.3 percent compared to the 2010 third quarter and the operating margin was 10.1 percent primarily reflecting higher base compensation and payroll taxes associated with an investment in new hires. Employee headcount was increased 17 percent in this region over the last year and includes consultants who have yet to reach expected productivity levels.

Expenses related to Global Operations Support declined 27.8 percent, or $3.6 million, compared to the 2010 third quarter. A decline in general and administrative expenses, primarily related to professional fees, was the largest driver of the decline.

Nine Months Results

For the nine months ended September 30, 2011 consolidated net revenue of $400.6 million increased 9.5 percent (approximately 5 percent on a constant currency basis) from $365.9 million in the first nine months of 2010. Exchange rate fluctuations positively impacted net revenue by $15.8 million. Productivity, as measured by annualized net revenue per consultant, was $1.4 million, the same as the first nine months of 2010. The number of executive searches confirmed in the first nine months of 2011 increased 6.2 percent compared to the first nine months of 2010. The average revenue per executive search was $108,800 compared to $106,900 for the same period in 2010. The reported operating loss for the first nine months was $6.4 million, reflecting an impairment charge of $26.4 million in the 2011 third quarter. Excluding this impairment charge, which management believes more appropriately reflects core operations, operating income would have been $20.0 million and the operating margin would have been 5.0 percent. This compares to operating income of $8.2 million for the first nine months of 2010 and an operating margin of 2.2 percent. The reported net loss for the first nine months of 2011 was $29.6 million and the loss per share was $1.67 reflecting a negative tax rate of 227.9 percent. The higher than expected tax rate for the first nine months was primarily a result of income that was reduced by the goodwill impairment charge without any tax benefit, establishment of valuation allowances that increased tax expense, and an inability to recognize losses in certain jurisdictions at this time. The reported net income for the first nine months of 2010 was $2.3 million and diluted earnings per share were $0.13, reflecting an effective tax rate of 67.5 percent.

2011 Outlook

Based on year-to-date results, including the improvement achieved in operating results in the third quarter, the company's outlook for net revenue and operating margin (excluding third quarter impairment charges and fourth quarter restructuring charges) remain within the guidance provided throughout 2011. 2011 net revenue is expected to be between $525 million and $540 million, and the operating margin, excluding impairment and restructuring charges, is expected to be at the lower end of its range of 6 percent to 8 percent.

Kelly added, "With the exception of impairment and restructuring charges, our 2011 operating results remain in line with expectations, showing good improvement over the same period of 2010. Our outstanding search and leadership consulting teams have the capacity for driving higher revenue and we have an improving cost structure to achieve higher operating margins. We are looking forward to capitalizing on our strengths, especially if economic conditions improve in 2012."

Quarterly Conference Call

Executives of Heidrick & Struggles will host a conference call to review the third quarter 2011 results today, October 25, at 9:00 am Central Time. Participants may access the company's call and supporting slides through the internet at www.heidrick.com. For those unable to participate on the live call, a webcast and copy of the slides will be archived at www.heidrick.com and available for up to 30 days following the investor call.

About Heidrick & Struggles International, Inc.

Heidrick & Struggles International, Inc., (Nasdaq:HSII) is the leadership advisory firm providing executive search and leadership consulting services, including succession planning, executive assessment, talent retention management, executive development, transition consulting for newly appointed executives, and M&A human capital integration consulting. For almost 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 around the world. 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, we have provided a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure.

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

  --  Operating income (loss), net income (loss), and operating margin to the
      extent presented as "excluding the impairment charge" or "excluding
      impairment and restructuring charges"; and
  --  Constant currency amounts that represent the outcome that would have
      resulted had exchange rates in the reported period been the same as
      those in effect in the comparable prior year period.


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

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 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; 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; the effect of our goodwill impairment charges and our restructuring initiatives; delays in the development and/or implementation of new or improved technology and systems; and the ability to align our cost structure and headcount with net revenue. Our reports filed with the U.S. Securities and Exchange Commission also include information on factors that may affect the outcome of forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

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

                                             Three Months Ended

                                               September 30,
                                          -----------------------

                                                                                 %
                                             2011         2010      $ Change   Change
                                          -----------  ----------  ---------  -------

  Revenue:
   Revenue before reimbursements (net
    revenue)                                $ 142,213   $ 126,129   $ 16,084    12.8%

   Reimbursements                               7,092       5,099      1,993
                                          -----------  ----------  ---------    39.1%
     Total revenue                            149,305     131,228     18,077    13.8%

  Operating expenses:
   Salaries and employee benefits              99,700      88,324     11,376    12.9%
   General and administrative expenses         28,782      32,505    (3,723)   -11.5%
   Reimbursed expenses                          7,092       5,099      1,993    39.1%
   Restructuring charges                           --         920      (920)  -100.0%

   Impairment charges                          26,366          --     26,366
                                          -----------  ----------  ---------

     Total operating expenses                 161,940     126,848     35,092
                                          -----------  ----------  ---------    27.7%
     Operating income (expense)              (12,635)       4,380   (17,015)  -388.5%

  Non-operating income (expense):
   Interest income, net                           300         157

   Other, net                                 (1,803)         733
                                          -----------  ----------
     Net non-operating income (expense)       (1,503)         890

  Income (loss) before income taxes          (14,138)       5,270

  Provision for income taxes                   18,263       4,086


  Net income (loss)                        $ (32,401)     $ 1,184
                                          ===========  ==========

  Basic weighted average common shares
   outstanding                                 17,840      17,524
  Diluted weighted average common shares
   outstanding                                 17,840      17,793
  Basic earnings (loss) per common share     $ (1.82)      $ 0.07
  Diluted earnings (loss) per common
   share                                     $ (1.82)      $ 0.07
  Salaries and employee benefits as a
   percentage of net revenue                    70.1%       70.0%
  General and administrative expense as
   a percentage of net revenue                  20.2%       25.8%
  Operating income (loss) as a
   percentage of net revenue                    -8.9%        3.5%
  Effective income tax rate                   -129.2%       77.5%


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


                                       Three Months Ended September 30,
                        -------------------------------------------------------------
                                                                        2011    2010

                                                                 %     Margin  Margin
                           2011         2010      $ Change     Change     *       *
                        -----------  ----------  -----------  -------  ------  ------
  Revenue:
   Americas                $ 76,886    $ 66,601     $ 10,285    15.4%
   Europe                    37,780      27,864        9,916    35.6%

   Asia Pacific              27,547      31,664      (4,117)
                        -----------  ----------  -----------   -13.0%
     Revenue before
      reimbursements
      (net revenue)         142,213     126,129       16,084    12.8%

   Reimbursements             7,092       5,099        1,993
                        -----------  ----------  -----------    39.1%

     Total revenue        $ 149,305   $ 131,228     $ 18,077
                        ===========  ==========  ===========    13.8%

   Americas                $ 17,877    $ 11,870      $ 6,007    50.6%   23.3%   17.8%
   Europe                     2,410     (1,444)        3,854   266.9%    6.4%

   Asia Pacific               2,792       7,829      (5,037)
                        -----------  ----------  -----------   -64.3%   10.1%   24.7%
     Total regions           23,079      18,255        4,824    26.4%   16.2%   14.5%
   Global Operations
    Support                 (9,348)    (12,955)        3,607
                        -----------  ----------  -----------    27.8%
     Operating income
      before
      restructuring
      and impairment
      charges                13,731       5,300        8,431   159.1%    9.7%    4.2%
   Restructuring
    charges                      --       (920)          920

   Impairment charges      (26,366)          --     (26,366)
                        -----------  ----------  -----------
     Operating income
      (loss):            $ (12,635)     $ 4,380   $ (17,015)
                        ===========  ==========  ===========  -388.5%            3.5%

     * Margin based on revenue before reimbursements (net revenue).


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

                                        Nine Months Ended

                                          September 30,
                                     -----------------------

                                                                            %
                                        2011         2010      $ Change   Change
                                     -----------  ----------  ---------  -------

  Revenue:
   Revenue before reimbursements
    (net revenue)                      $ 400,634   $ 365,868   $ 34,766     9.5%

   Reimbursements                         19,164      14,374      4,790
                                     -----------  ----------  ---------    33.3%
     Total revenue                       419,798     380,242     39,556    10.4%

  Operating expenses:
   Salaries and employee benefits        287,300     257,449     29,851    11.6%
   General and administrative
    expenses                              93,381      95,455    (2,074)    -2.2%
   Reimbursed expenses                    19,164      14,374      4,790    33.3%
   Restructuring charges                      --       1,621    (1,621)  -100.0%
   Impairment charges                     26,366          --     26,366

   Other operating income                     --     (1,072)      1,072
                                     -----------  ----------  ---------   100.0%

     Total operating expenses            426,211     372,045     54,166
                                     -----------  ----------  ---------    14.6%
     Operating income (loss)             (6,413)       8,197   (14,610)  -178.2%

  Non-operating income (expense):
   Interest income, net                      853         573

   Other, net                            (3,477)     (1,661)
                                     -----------  ----------
     Net non-operating expense           (2,624)     (1,088)

  Income (loss) before income taxes      (9,037)       7,109


  Provision for income taxes              20,596       4,799
                                     -----------  ----------


  Net income (loss)                   $ (29,633)     $ 2,310
                                     ===========  ==========

  Basic weighted average common
   shares outstanding                     17,756      17,400
  Diluted weighted average common
   shares outstanding                     17,756      17,862
  Basic earnings (loss) per common
   share                                $ (1.67)      $ 0.13
  Diluted earnings (loss) per
   common share                         $ (1.67)      $ 0.13
  Salaries and employee benefits as
   a percentage of net revenue             71.7%       70.4%
  General and administrative
   expense as a percentage of net
   revenue                                 23.3%       26.1%
  Operating income (loss) as a
   percentage of net revenue               -1.6%        2.2%
  Effective income tax rate              -227.9%       67.5%


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


                                        Nine Months Ended September 30,
                        ---------------------------------------------------------------
                                                                       2011       2010

                                                                %     Margin     Margin
                           2011        2010      $ Change     Change     *          *
                        ----------  ----------  -----------  -------  ------     ------
  Revenue:
   Americas              $ 217,108   $ 189,177     $ 27,931    14.8%
   Europe                   99,858      92,388        7,470     8.1%

   Asia Pacific             83,668      84,303        (635)
                        ----------  ----------  -----------    -0.8%
     Revenue before
      reimbursements
      (net revenue)        400,634     365,868       34,766     9.5%

   Reimbursements           19,164      14,374        4,790
                        ----------  ----------  -----------    33.3%

     Total revenue       $ 419,798   $ 380,242     $ 39,556
                        ==========  ==========  ===========    10.4%

   Americas               $ 44,254    $ 30,092     $ 14,162    47.1%   20.4%      15.9%
   Europe                  (2,012)     (4,948)        2,936    59.3%

   Asia Pacific             10,197      18,201      (8,004)
                        ----------  ----------  -----------   -44.0%   12.2%      21.6%
     Total regions          52,439      43,345        9,094    21.0%   13.1%      11.8%
   Global Operations
    Support               (32,486)    (34,599)        2,113
                        ----------  ----------  -----------     6.1%
     Operating income
      before
      restructuring
      and impairment
      charges               19,953       8,746       11,207   128.1%    5.0%       2.4%
   Restructuring
    charges                     --     (1,621)        1,621
   Impairment charges     (26,366)          --     (26,366)
   Other operating
    income                      --       1,072      (1,072)
                        ----------  ----------  -----------
     Operating income
      (loss):            $ (6,413)     $ 8,197   $ (14,610)
                        ==========  ==========  ===========  -178.2%               2.2%

     * Margin based on revenue before reimbursements (net revenue).


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

                                September   December
                                  30,         31,

                                  2011        2010
                               ----------  ----------

  Current assets:
   Cash and cash equivalents    $ 135,499   $ 181,124
   Restricted cash                    442         393
   Accounts receivable, net       101,664      83,360
   Other receivables                9,166       7,724
   Prepaid expenses                17,483      15,323
   Other current assets             1,482       1,871

   Deferred income taxes            9,792      10,759
                               ----------  ----------

     Total current assets         289,522     312,466
                               ----------  ----------

  Non-current assets:
   Property and equipment,
    net                            47,491      34,406
   Restricted cash                  1,504       1,609
   Assets designated for
    retirement and pension
    plans                          23,668      23,647
   Investments                      9,524      11,021
   Other non-current assets         7,920       8,593
   Goodwill                        90,421     109,888
   Other intangible assets,
    net                             2,725       6,480

   Deferred income taxes           27,876      36,917
                               ----------  ----------

     Total non-current assets     211,129     232,561
                               ----------  ----------


  Total assets                  $ 500,651   $ 545,027
                               ----------  ----------

  Current liabilities:
   Accounts payable              $ 10,438     $ 8,408
   Accrued salaries and
    employee benefits             115,841     124,969
   Other current liabilities       33,208      34,064
   Income taxes payable             7,394       3,208

   Deferred income taxes            1,895       1,807
                               ----------  ----------
     Total current
      liabilities                 168,776     172,456
                               ----------  ----------

  Non-current liabilities:
   Retirement and pension
    plans                          31,393      30,907
   Other non-current
    liabilities                    43,749      47,015

   Deferred income taxes              219         107
                               ----------  ----------
     Total non-current
      liabilities                  75,361      78,029
                               ----------  ----------


  Stockholders' equity            256,514     294,542
                               ----------  ----------

  Total liabilities and
   stockholders' equity         $ 500,651   $ 545,027
                               ----------  ----------


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

                                              Three Months Ended

                                                September 30,
                                           -----------------------

                                              2011         2010
                                           -----------  ----------

  Cash flows from operating activities:
   Net income (loss)                        $ (32,401)     $ 1,184
   Adjustments to reconcile net income
    (loss) to net cash provided by
    operating activities:
    Depreciation and amortization                2,896       2,129
    Deferred income taxes                       11,065       2,096
    Net realized and unrealized losses on
     investments                                   233         784
    Stock-based compensation expense             1,013       1,518
    Allowance for doubtful accounts              (408)         486
    Impairment charges                          26,366          --
    Restructuring charges                           --         920
    Cash paid for restructuring charges           (98)       (998)
    Changes in assets and liabilities:
     Trade and other receivables                 5,110    (12,062)
     Accounts payable                          (1,157)       1,482
     Accrued expenses                           29,022      34,278
     Income taxes recoverable, net               4,911       3,669
     Retirement and pension assets and
      liabilities                                (872)          41
     Prepayments                                 1,591     (1,423)

     Other assets and liabilities, net           3,726     (2,624)
                                           -----------  ----------
       Net cash provided by operating
        activities                              50,997      31,480
                                           -----------  ----------

  Cash flows from investing activities:
   Restricted cash                                 705          --
   Acquisition earnout payments                (3,930)          --
   Capital expenditures                        (6,463)     (4,657)
   Purchases of available for sale
    investments                                  (192)       (113)
   Proceeds from sale of available for
    sale investments                                28          72

   Other, net                                       89          --
                                           -----------  ----------
       Net cash used in investing
        activities                             (9,763)     (4,698)
                                           -----------  ----------

  Cash flows from financing activities:
   Cash dividends paid                         (2,324)     (2,282)
   Payment of employee tax withholdings
    on equity transactions                         (3)        (23)
                                           -----------  ----------
       Net cash used in financing
        activities                             (2,327)     (2,305)
                                           -----------  ----------

  Effect of exchange rate fluctuations on
   cash and cash equivalents                   (6,486)       5,693
                                           -----------  ----------

  Net increase in cash and cash
   equivalents                                  32,421      30,170
  Cash and cash equivalents at beginning
   of period                                   103,078      92,593
                                           -----------  ----------
  Cash and cash equivalents at end of
   period                                    $ 135,499   $ 122,763
                                           ===========  ==========


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

                                              Nine Months Ended

                                                September 30,
                                           -----------------------

                                              2011         2010
                                           -----------  ----------

  Cash flows from operating activities:
   Net income (loss)                        $ (29,633)     $ 2,310
   Adjustments to reconcile net income
    (loss) to net cash used in operating
    activities:
    Depreciation and amortization                7,207       9,324
    Write-off of investment                      2,810          --
    Deferred income taxes                        9,815       3,151
    Net realized and unrealized losses on
     investments                                   488       1,017
    Stock-based compensation expense, net        4,161       6,027
    Other operating income                          --     (1,072)
    Allowance for doubtful accounts              (667)       1,479
    Impairment charges                          26,366          --
    Restructuring charges                                    1,621
    Cash paid for restructuring charges          (658)     (2,818)
    Changes in assets and liabilities:
     Trade and other receivables              (20,487)    (49,209)
     Accounts payable                              889       4,675
     Accrued expenses                         (12,716)      51,021
     Income taxes recoverable, net               1,658       1,317
     Retirement and pension plan assets
      and liabilities                            (290)         392
     Prepayments                               (1,988)     (3,712)

     Other assets and liabilities, net           2,393     (2,315)
                                           -----------  ----------
       Net cash (used in) provided by
        operating activities                  (10,652)      23,208
                                           -----------  ----------

  Cash flows from investing activities:
   Restricted cash                                  13       2,762
   Acquisition earnout payments                (3,930)       (554)
   Capital expenditures                       (16,250)    (16,066)
   Purchases of available for sale
    investments                                  (799)       (547)
   Proceeds from sale of available for
    sale investments                                58         280
   Loan to equity method investment            (1,008)          --

   Other, net                                       89          --
                                           -----------  ----------
       Net cash used in investing
        activities                            (21,827)    (14,125)
                                           -----------  ----------

  Cash flows from financing activities:
   Cash dividends paid                         (7,380)     (7,367)
   Payment of employee tax withholdings
    on equity transactions                     (2,752)     (4,569)
                                           -----------  ----------
       Net cash used in financing
        activities                            (10,132)    (11,936)
                                           -----------  ----------

  Effect of exchange rate fluctuations on
   cash and cash equivalents                   (3,014)       2,586
                                           -----------  ----------

  Net decrease in cash and cash
   equivalents                                (45,625)       (267)
  Cash and cash equivalents at beginning
   of period                                   181,124     123,030
                                           -----------  ----------
  Cash and cash equivalents at end of
   period                                    $ 135,499   $ 122,763
                                           ===========  ==========

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Heidrick & Struggles International, Inc.

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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