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International - Heidrick & Struggles' losses increase

27 April 2011

Total revenues, including reimbursements, were up by +2.1% from $118.4 million in Q1 2010 to $120.9 million in Q1 2011 at Heidrick & Struggles International, Inc. (HSII:NSQ), the US-quoted provider of executive search and leadership consulting services.

Operating losses deteriorated from -$3.8 million in Q1 2010 to -$4.1 million in Q1 2011.

Net loss equally deteriorated from -$1.5 million in Q1 2010 to -$2.5 million in Q1 2011.

In Europe revenues fell by -16% from $32.8 million in Q1 2010 to $27.6 million in Q1 2011. Operating income improved from a loss of -$4 million in Q1 2010 to a reduced loss of -$2.1 million in Q1 2011.

In the Americas revenues were up by +10.4% from $57.5 million in Q1 2010 to $63.5 million in Q1 2011. Operating income was up by 73.8% from $4.4 million in Q1 2010 to $7.6 million in Q1 2011.

In Asia Pacific revenues were up by +5.3% from $23.4 million in Q1 2010 to $24.6 million in Q1 2011. Operating income fell by -23.5% $3.3 million in Q1 2010 to $2.5 million in Q1 2011.

Chief Executive Officer, L. Kevin Kelly, commented "March confirmations were not as strong as we had projected, especially in the Financial Services practice, and this resulted in lower than anticipated revenue and operating margin in the first quarter. However, we are encouraged by April confirmations, which will be better than March, and do not believe that our first quarter results are indicative of what we believe is achievable in 2011."

"We expect confirmations to continue to improve as our new hires become more productive and market conditions improve. We remain committed to our goals for reducing general & administrative expenses and are encouraged by the first quarter decline of $3.8 million compared to the 2010 fourth quarter."

The company says further in a statement "the company expects that 2011 second quarter net revenue will be between $126 million and $136 million and that the operating margin will be between 4% and 8%. The company is forecasting that 2011 net revenue and operating margin will be within its previously disclosed ranges of $515 million to $545 million for net revenue and 6% to 10% for operating margin. Net income and earnings per share in 2011 are expected to reflect a full-year effective tax rate of between 42% and 50%, but will be impacted by country-level results and tax planning initiatives."

At the end of play in New York yesterday, Heidrick & Struggles' shares were down by -3.56% to $24.14.

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