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Resources Connection revenue falls 23%

April 08 2009

Resources Connection Inc. (NASD: RECN) reported revenue fell 23.1% year-over-year to $156.0 million in its fiscal third quarter that ended Feb. 28. The Irvine CA-based company — which provides finance and accounting, information technology and legal personnel through its Resources Global Professionals subsidiary — also said it plans to consolidate offices in the next few months amid the tight economy.

President and CEO Thomas Christopoul in a conference call with analysts said negative macroeconomic trends weighed on revenues with some clients deferring or downsizing projects.

"The current economic environment means there are fewer consulting opportunities today than there were 12 months ago, and where opportunities present themselves, there is attendant bill rate pressure," Christopoul said.

U.S. third-quarter revenue fell 24.0% year-over-year, to $111.7 million, according to the conference call with analysts. International third-quarter revenue fell 20.6% to $44.3 million; it fell 9.6% on a constant currency basis.

The company's third-quarter gross margin narrowed to 37.2% from 37.3% in the same period in the previous year.

Third-quarter net income fell 76.0% to $2.1 million from $8.7 million in the third quarter of its 2008 fiscal year.

Resources Connection said it's consolidating seven offices into larger offices in its fiscal fourth quarter, and plans to take a $3.4 million charge for lease abandonment costs and severance.

The company also reported it acquired Limbus, a Netherlands-based consulting firm, for euro1.5 million in January. Limbus posted revenue of euro2.6 million (US$3.7 million) for its fiscal year ended Dec. 31.

Resources Connection Inc. (NASD: RECN)
For the fiscal third quarter ended Feb. 28, 2009, compared with the same period in the previous fiscal year.
Revenue: $156.0 million, -23.1%
Net income: $2.1 million, -76.0%

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