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Heidrick & Struggles Reports 2012 Second Quarter Financial Results

CHICAGO, July 31, 2012 (GLOBE NEWSWIRE) -- Heidrick & Struggles International, Inc. (Nasdaq:HSII), the leadership advisory firm providing executive search and leadership consulting services worldwide, today announced financial results for its second quarter ended June 30, 2012.

2012 Second Quarter Summary

  • Net revenue of $116.1 million declined 18.7 percent year over year.
  • Salaries and employee benefits expense decreased $19.4 million or 19.5 percent.
  • General and administrative expenses declined by $4.3 million or 13.0 percent.
  • Operating margin was 5.8 percent compared to 7.2 percent in the 2011 second quarter.
  • Latitude, the company's proprietary system under development for the last two years, went live on June 25 providing employees access to state-of-the-art technology, enhanced connectivity, and the opportunity for increased productivity.
  • The company strengthened its presence in the Middle East with the addition of three senior partners, and their teams, and now has the scale and expertise to address its clients' growing talent needs in the region.

"Although revenue improved compared to the first quarter, confirmation trends fell short of our expectations and second quarter results were disappointing," said L. Kevin Kelly, Chief Executive Officer. "Search confirmations were adversely impacted by increasing uncertainty about the pace of global economic recovery, including the euro-zone financial crisis, as well as continued weakness in hiring trends and investment spending generally. Higher than expected consultant turnover also impacted the quarter. Despite the economic environment, we remain focused on serving our clients at the top of their organizations and on achieving higher operating margin through the improvements we've made to our cost structure over the last year."

Consolidated net revenue was $116.1 million in the second quarter, down 18.7 percent from $142.8 million in the 2011 second quarter, or approximately 16 percent on a constant currency basis. Exchange rate fluctuations negatively impacted net revenue by $3.8 million. Year over year, net revenue declined 14.9 percent in the Americas, 21.3 percent in Europe (approximately 13 percent on a constant currency basis), and 25.2 percent in Asia Pacific (approximately 24 percent on a constant currency basis). All industry practices except the Education & Social Enterprise practice contributed to the decline. Net revenue from Leadership Consulting Services was $9.6 million, a decline of 21.7 percent from the 2011 second quarter, and represented 8.3 percent of total net revenue.

The number of executive search and leadership consulting consultants at June 30, 2012 was 340, compared to 386 at June 30, 2011, and 343 at March 31, 2012. The year-over-year comparison primarily reflects a global workforce reduction in the 2011 fourth quarter. The number of executive search confirmations in the quarter declined 23.8 percent compared to the 2011 second quarter, and declined 3.7 percent compared to the 2012 first quarter. Productivity, as measured by annualized net revenue per consultant, was $1.3 million, compared to $1.5 million in the 2011 second quarter and $1.2 million in the 2012 first quarter. Average revenue per executive search was $114,800 compared to $107,400 in the 2011 second quarter and $100,300 in the 2012 first quarter.

Salaries and employee benefits decreased 19.5 percent, or $19.4 million, to $79.9 million from $99.2 million in the 2011 second quarter. Fixed compensation expense decreased $11.5 million, mostly reflecting a reduction in worldwide headcount of approximately 10 percent compared to the 2011 second quarter. Variable compensation expense decreased $7.9 million, primarily reflecting lower bonus accruals in the quarter related to lower net revenue. Salaries and employee benefits were 68.8 percent of net revenue for the quarter, compared to 69.5 percent in the 2011 second quarter.

General and administrative expenses decreased 13.0 percent, or $4.3 million, to $29.0 million from $33.3 million in the 2011 second quarter. The decline was a result of a number of expense reductions, the two largest being travel and entertainment expenses and premise related costs. As a percentage of net revenue, consolidated general and administrative expenses were 25.0 percent, compared to 23.3 percent in the 2011 second quarter.

Restructuring charges of $0.5 million recorded in the 2012 second quarter reflect adjustments to estimates that related to initiatives the company took in the 2011 fourth quarter to reduce overall costs and improve operational efficiencies. Operating income was $6.7 million and operating margin was 5.8 percent. Excluding the restructuring charges of $0.5 million, which management believes more appropriately reflects core operations, operating income was $7.2 million and operating margin was 6.2 percent compared to operating income of $10.3 million and operating margin of 7.2 percent in the 2011 second quarter. The declines reflect lower net revenue, partially offset by reductions in salaries and employee benefits and general and administrative expenses.

Net income was $1.9 million and diluted earnings per share were $0.10. The effective tax rate in the quarter of 66.3 percent is mainly due to losses not benefitted for tax purposes and is based on a full year projected tax rate of approximately 57 percent. In the 2011 second quarter, net income was $7.4 million and diluted earnings per share were $0.41, which reflected an effective tax rate of 32.5 percent.

Net cash provided by operating activities in the quarter was $22.2 million, compared to $17.6 million in the 2011 second quarter. Cash and cash equivalents at June 30, 2012 were $96.9 million, compared to $82.6 million at March 31, 2012, and $103.1 million at June 30, 2011.

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 excluding restructuring charges more appropriately reflects the company's core operations.

$ in millions 2Q 12 2Q 11 Change 1Q 12 Change
Americas          
Net revenue  $ 65.3  $ 76.7  $ (11.4)  $ 58.9  $ 6.5
Operating income  $ 15.4  $ 18.7  $ (3.3)  $ 12.4  $ 3.0
Consultants 157 178 (21) 155 2
           
Europe          
Net revenue  $ 27.1  $ 34.5  $ (7.4)  $ 27.1  $ 0.1
Operating income (loss)  $ 1.1  $ (2.4)  $ 3.5  $ 1.4  $ (0.3)
Consultants 98 128 (30) 101 (3)
           
Asia Pacific          
Net revenue  $ 23.6  $ 31.5  $ (7.9)  $ 20.6  $ 3.0
Operating income  $ 2.2  $ 4.9  $ (2.7)  $ 0.3  $ 1.9
Consultants 85 80 5 87 (2)
           
Global Operations Support  $ (11.5)  $ (10.9)  $ (0.5)  $ (10.6)  $ (0.9)
Restructuring charges  $ (0.5)  $ --   $ (0.5)  $ (0.3)  $ (0.2)
Total operating income  $ 6.7  $ 10.3  $ (3.6)  $ 3.2  $ 3.6
 
Totals and subtotals may not equal the sum of individual line items due to rounding. 

Net revenue in the Americas declined 14.9 percent year over year driven by declines in the Consumer, Financial Services, Industrial, and Leadership Consulting practices. Second quarter operating margin (operating income as a percentage of net revenue) was 23.6 percent compared to 24.4 percent in the 2011 second quarter mainly as a result of the decline in net revenue, partially offset by reductions in salaries and employee benefits expense and general and administrative expenses. Compared to the 2012 first quarter net revenue increased 10.8 percent, driven largely by improvement in the Financial Services practice, but also in the Industrial and Education & Social Enterprise practices. Operating income increased 24.2 percent sequentially, primarily reflecting the increase in net revenue.

Driven mostly by generally weak economic conditions in Europe, net revenue declined 21.3 percent in the second quarter (approximately 13 percent on a constant currency basis). Exchange rate fluctuations negatively impacted year-over-year second quarter net revenue by $2.3 million.   Despite a revenue decline in all industry practices except Leadership Consulting, operating margin in the second quarter improved to 4.1 percent compared to an operating loss in last year's second quarter. The improvement reflects lower salaries and employee benefits expense and lower general and administrative expenses. Headcount in this region declined approximately 21 percent year over year, primarily as a result of the company's 2011 fourth quarter restructuring initiatives which focused on improving profitability in this region. This reduction in headcount was also a reason for the year-over-year decline in revenue as well as salaries & employee benefits expense. Compared to the 2012 first quarter, net revenue was essentially flat. Sequential growth in the Financial Services practice was essentially offset by declines in the Leadership Consulting, Consumer, and Life Sciences practices. Operating income was essentially flat compared to the 2012 first quarter.

Asia Pacific net revenue declined 25.2 percent in the second quarter (approximately 24 percent on a constant currency basis), mainly reflecting declines in the Financial Services, Industrial, and Consumer practices. Exchange rate fluctuations negatively impacted year-over-year second quarter net revenue by $0.9 million.   The region reported operating margin of 9.3 percent, compared to 15.4 percent in the prior year quarter. This decline primarily reflects the decline in net revenue, partially offset by reductions in salaries and employee benefits expense and general and administrative expenses. Compared to the 2012 first quarter, net revenue increased $3.0 million or 14.6 percent, driven largely by improvements in the Financial Services and Industrial practices. This increase in net revenue led to improved operating income compared to the first quarter.

Six Months Results

For the six months ended June 30, 2012 consolidated net revenue of $222.6 million declined 13.9 percent (approximately 12 percent on a constant currency basis) from $258.4 million in the first six months of 2011. Exchange rate fluctuations negatively impacted net revenue by $4.5 million.  Productivity, as measured by annualized net revenue per consultant, was $1.3 million compared to $1.4 million for the first six months of 2011. The number of executive searches confirmed in the first six months of 2012 declined 16.9 percent compared to the first six months of 2011. The average revenue per executive search was $107,400 compared to $104,500 for the same period in 2011.  Operating income for the first six months was $9.9 million and operating margin was 4.5 percent. Excluding restructuring charges of $0.8 million, which management believes more appropriately reflects core operations, operating income was $10.7 million and operating margin was 4.8 percent, compared to operating income of $6.2 million and operating margin of 2.4 percent for the first six months of 2011. Net income for the first six months of 2012 was $2.5 million and diluted earnings per share were $0.14, reflecting an effective tax rate of 74.6 percent. Net income for the first six months of 2011 was $2.8 million and diluted earnings per share were $0.15, reflecting an effective tax rate of 45.7 percent. 

2012 Outlook

Given the volatility of global economic and political climates and a lack of visibility beyond the near term, the company will no longer provide annual guidance for 2012 and withdraws its previously issued guidance for net revenue of between $510 million and $540 million and operating margin of between 7 percent and 9 percent.  Assuming economic and foreign exchange rates remain steady, the company is forecasting 2012 third quarter net revenue of between $115 million and $125 million.

"Macroeconomic uncertainty continues to weigh heavily on the confidence that executive leaders have in their businesses which in turn affects the demand for our services. Nobody knows if this is the new normal, but we aren't sitting on the sidelines waiting for global economies to improve," Kelly said, adding that earlier in July the company held a Partners conference which provided the opportunity for its consultants globally to collaborate on its Leadership Advisory strategy, business development, client service and innovation within the firm.

"The ideas, passion and momentum that resulted from this conference exceeded my expectations," he said. "It provided the impetus that was needed to navigate the macroeconomic headwinds.  We are committed to being the professional services firm that organizations world-wide go to for help in acquiring, developing and sustaining their leadership talent. By providing the highest level of service to our clients and running a more profitable business, we will ensure the company's long-term sustainable growth."

Quarterly Conference Call

Executives of Heidrick & Struggles will host a conference call to review the 2012 second quarter results today, July 31, at 9:00 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.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, 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:

  • Operating income, net income, and operating margin to the extent presented as "excluding 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.

$ in thousands Three months ended
June 30, 2012
Six months ended
June 30, 2012
Operating Income    
GAAP operating income  $ 6,739  $  9,925
Restructuring charges  507  810
Non-GAAP operating income  $ 7,246  $ 10,735
     
Operating Margin    
GAAP operating income as % of net revenue 5.8% 4.5%
Non-GAAP operating income as % of net revenue 6.2% 4.8%

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; the effect of our goodwill and intangible asset 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.
Condensed Consolidated Statements of Comprehensive Income
(In thousands, except per share data)
(Unaudited)
         
   Three Months Ended    
   June 30,    
  2012 2011  $ Change  % Change
Revenue:        
Revenue before reimbursements (net revenue)  $ 116,065  $ 142,799  $ (26,734) -18.7%
Reimbursements  5,692  6,815  (1,123) -16.5%
Total revenue  121,757  149,614  (27,857) -18.6%
         
Operating expenses:        
Salaries and employee benefits  79,859  99,219  (19,360) -19.5%
General and administrative expenses  28,960  33,270  (4,310) -13.0%
Reimbursed expenses  5,692  6,815  (1,123) -16.5%
Restructuring charges  507   --  507  
Total operating expenses  115,018  139,304  (24,286) -17.4%
Operating income  6,739  10,310  (3,571) -34.6%
         
Non-operating income (expense):        
Interest income, net  231  258    
Other, net  (1,476)  441    
Net non-operating income (expense)  (1,245)  699    
         
Income before income taxes  5,494  11,009    
Provision for income taxes  3,642  3,580    
Net income  1,852  7,429    
Other comprehensive income (loss), net of tax  (1,146)  3,527    
Comprehensive income  $ 706  $ 10,956    
         
Basic weighted average common shares outstanding  18,010  17,803    
Dilutive common shares  128  152    
Diluted weighted average common shares outstanding  18,138  17,955    
Basic net income per common share  $ 0.10  $ 0.42    
Diluted net income per common share  $ 0.10  $ 0.41    
Salaries and employee benefits as a percentage of net revenue 68.8% 69.5%    
General and administrative expense as a percentage of net revenue 25.0% 23.3%    
Operating income as a percentage of net revenue 5.8% 7.2%    
Effective income tax rate 66.3% 32.5%    
 
 
Heidrick & Struggles International, Inc.
Segment Information
(In thousands)
(Unaudited)
             
  Three Months Ended June 30,
          2012 2011
  2012 2011 $ Change % Change Margin * Margin *
Revenue:            
Americas  $  65,320  $ 76,745  $ (11,425) -14.9%    
Europe  27,148  34,512  (7,364) -21.3%    
Asia Pacific  23,597  31,542  (7,945) -25.2%    
Revenue before reimbursements (net revenue)  116,065  142,799  (26,734) -18.7%    
Reimbursements  5,692  6,815  (1,123) -16.5%    
Total revenue  $ 121,757  $ 149,614  $ (27,857) -18.6%    
             
Operating income (loss):            
Americas  $ 15,405  $ 18,729  $ (3,324) -17.7% 23.6% 24.4%
Europe  1,110  (2,365)  3,475 146.9% 4.1%  
Asia Pacific  2,193  4,863  (2,670) -54.9% 9.3% 15.4%
Total regions  18,708  21,227  (2,519) -11.9% 16.1% 14.9%
Global Operations Support  (11,462)  (10,917)  (545) -5.0%    
Operating income before restructuring charges  7,246  10,310  (3,064) -29.7% 6.2% 7.2%
Restructuring charges   (507)  --   (507)      
Operating income  $ 6,739  $ 10,310  $ (3,571) -34.6% 5.8% 7.2%
             
* 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)
         
   Six Months Ended    
   June 30,    
  2012 2011  $ Change  % Change
Revenue:        
Revenue before reimbursements (net revenue)  $ 222,591  $ 258,421  $ (35,830) -13.9%
Reimbursements  11,484  12,072   (588) -4.9%
Total revenue  234,075  270,493  (36,418) -13.5%
         
Operating expenses:        
Salaries and employee benefits  156,531  187,600  (31,069) -16.6%
General and administrative expenses  55,325  64,599  (9,274) -14.4%
Reimbursed expenses  11,484  12,072  (588) -4.9%
Restructuring charges  810   --  810  
Total operating expenses  224,150  264,271  (40,121) -15.2%
Operating income  9,925  6,222  3,703 59.5%
         
Non-operating income (expense):        
Interest income, net  707  553    
Other, net  (650)  (1,674)    
Net non-operating income (expense)  57  (1,121)    
         
Income before income taxes  9,982  5,101    
Provision for income taxes  7,451  2,333    
Net income  2,531  2,768    
Other comprehensive income, net of tax  38  5,974    
Comprehensive income  $ 2,569  $ 8,742    
         
Basic weighted average common shares outstanding  17,956  17,714    
Dilutive common shares  200  281    
Diluted weighted average common shares outstanding  18,156  17,995    
Basic net income per common share  $ 0.14  $ 0.16    
Diluted net income per common share  $ 0.14  $ 0.15    
Salaries and employee benefits as a percentage of net revenue 70.3% 72.6%    
General and administrative expense as a percentage of net revenue 24.9% 25.0%    
Operating income as a percentage of net revenue 4.5% 2.4%    
Effective income tax rate 74.6% 45.7%    
 
 
Heidrick & Struggles International, Inc.
Segment Information
(In thousands)
(Unaudited)
             
  Six Months Ended June 30,
          2012 2011
  2012 2011 $ Change % Change Margin * Margin *
Revenue:            
Americas  $ 124,190  $ 140,222  $ (16,032) -11.4%    
Europe  54,208  62,078  (7,870) -12.7%    
Asia Pacific  44,193  56,121  (11,928) -21.3%    
Revenue before reimbursements (net revenue)   222,591  258,421  (35,830) -13.9%    
Reimbursements  11,484  12,072  (588) -4.9%    
Total revenue  $ 234,075  $ 270,493  $ (36,418) -13.5%    
             
Operating income (loss):            
Americas  $ 27,853  $ 26,377  $ 1,476 5.6% 22.4% 18.8%
Europe  2,485  (4,422)  6,907 156.2% 4.6%  
Asia Pacific  2,452   7,405  (4,953) -66.9% 5.5% 13.2%
Total regions  32,790  29,360  3,430 11.7% 14.7% 11.4%
Global Operations Support  (22,055)  (23,138)  1,083 4.7%    
Operating income before restructuring charges  10,735  6,222  4,513 72.5% 4.8% 2.4%
Restructuring charges  (810)  --   (810)      
Operating income  $ 9,925  $ 6,222  $ 3,703 59.5% 4.5% 2.4%
             
* Margin based on revenue before reimbursements (net revenue).
 
 
Heidrick & Struggles International, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
     
  June 30, December 31,
  2012 2011
  (Unaudited)  
Current assets:    
Cash and cash equivalents  $ 96,851  $ 185,390
Restricted cash   122  440
Accounts receivable, net  85,551  69,081
Other receivables  8,546  9,404
Prepaid expenses  19,947  16,551
Other current assets  1,330  1,382
Income taxes recoverable  9,485  19,866
Deferred income taxes  7,483  8,211
Total current assets  229,315  310,325
     
Non-current assets:    
Property and equipment, net  43,890  44,781
Restricted cash   1,545  1,470
Assets designated for retirement and pension plans  22,351  22,883
Investments  11,208  9,868
Other non-current assets  6,893  6,480
Goodwill  90,892  90,696
Other intangible assets, net  2,194  2,556
Deferred income taxes  25,643  26,506
Total non-current assets  204,616  205,240
     
Total assets  $ 433,931  $ 515,565
     
Current liabilities:    
Accounts payable  $ 8,031  $ 9,157
Accrued salaries and employee benefits  64,820  131,697
Other current liabilities  34,647   39,362
Income taxes payable  2,720  4,868
Deferred income taxes  186  6
Total current liabilities  110,404   185,090
     
Non-current liabilities:    
Retirement and pension plans  32,563  31,747
Other non-current liabilities  40,177  47,396
Deferred income taxes  98  37
Total non-current liabilities  72,838  79,180
     
Stockholders' equity  250,689  251,295
     
Total liabilities and stockholders' equity  $ 433,931  $ 515,565
 
 
Heidrick & Struggles International, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
     
  Three Months Ended
  June 30,
  2012 2011
     
Cash flows - operating activities:    
Net income  $ 1,852  $ 7,429
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization  2,514  2,206
Deferred income taxes  789  (1,907)
Stock-based compensation expense  1,449   1,410
Restructuring charges  507  -- 
Cash paid for restructuring charges  (2,909)  (79)
Changes in assets and liabilities:    
Trade and other receivables  (7,787)  (16,356)
Accounts payable  (1,149)  (650)
Accrued expenses  19,809  24,213
Income taxes recoverable (payable), net  8,214  1,440
Retirement and pension assets and liabilities  24  182
Prepayments  (1,914)  (891)
Other assets and liabilities, net  758  617
Net cash provided by operating activities  22,157  17,614
     
Cash flows - investing activities:    
Restricted cash  --   180
Capital expenditures  (2,764)   (5,360)
Purchases of available for sale investments  (105)  (193)
Proceeds from sale of available for sale investments  29  15
Net cash used in investing activities   (2,840)  (5,358)
     
Cash flows - financing activities:    
Cash dividends paid  (2,401)  (2,484)
Payment of employee tax withholdings on equity transactions  (415)   (531)
Acquisition earnout payments  (381)  -- 
Net cash used in financing activities  (3,197)  (3,015)
     
Effect of exchange rate fluctuations on cash and cash equivalents   (1,909)  1,667
     
Net increase in cash and cash equivalents  14,211  10,908
Cash and cash equivalents at beginning of period  82,640  92,170
Cash and cash equivalents at end of period  $ 96,851  $ 103,078
 
 
Heidrick & Struggles International, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
     
  Six Months Ended
  June 30,
  2012 2011
     
Cash flows - operating activities:    
Net income  $ 2,531  $ 2,768
Adjustments to reconcile net income to net cash used in operating activities:  
Depreciation and amortization  5,292  4,311
Write-off of investment  --  2,810
Deferred income taxes  1,700  (1,250)
Stock-based compensation expense  2,800  3,148
Restructuring charges  810  -- 
Cash paid for restructuring charges  (6,663)  (560)
Changes in assets and liabilities:    
Trade and other receivables  (16,050)  (25,856)
Accounts payable  (1,104)  2,046
Accrued expenses  (71,194)  (41,487)
Income taxes recoverable (payable), net  8,231  (3,253)
Retirement and pension plan assets and liabilities  797  582
Prepayments  (3,397)  (3,579)
Other assets and liabilities, net  (670)  (1,329)
Net cash used in operating activities  (76,917)  (61,649)
     
Cash flows - investing activities:    
Restricted cash  231  (692)
Capital expenditures  (5,114)  (9,787)
Purchases of available for sale investments  (926)  (607)
Proceeds from sale of available for sale investments   77  30
Loan to equity method investment  --  (1,008)
Net cash used in investing activities  (5,732)  (12,064)
     
Cash flows - financing activities:    
Cash dividends paid  (4,946)  (5,056)
Payment of employee tax withholdings on equity transactions  (1,569)  (2,749)
Acquisition earnout payments  (381)  -- 
Net cash used in financing activities  (6,896)  (7,805)
     
Effect of exchange rate fluctuations on cash and cash equivalents  1,006  3,472
     
Net increase in cash and cash equivalents  (88,539)  (78,046)
Cash and cash equivalents at beginning of period  185,390  181,124
Cash and cash equivalents at end of period  $ 96,851  $ 103,078
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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