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Resources Connection, Inc. Reports Third Quarter Results for Fiscal 2012

Resources Connection, Inc. Reports Third Quarter Results for Fiscal 2012 revenue increases 4.1% over prior year third quarter.

Third quarter net income of $4.3 million improves from $753,000 in prior year third quarter adjusted EBITDA* improves to $12.3 million from $8.2 million in prior year third quarter

Company buys back 913,000 shares and returns over $13 million in capital to shareholders during third quarter

Resources Connection, Inc. a multinational professional services firm that provides to clients - through its operating subsidiary, Resources Global Professionals ("Resources") - accomplished professionals in accounting, finance, risk management and internal audit, corporate advisory, strategic communications and restructuring, information management, human capital, supply chain management, healthcare solutions, and legal and regulatory services, today announced financial results for its fiscal third quarter ended February 25, 2012.

Total revenue for the third quarter of fiscal 2012 was $143.3 million, up 4.1% from last year's third quarter revenue of $137.6 million and down 1.2% on a sequential quarter basis. Revenues in the U.S. were up 4.8% quarter-over-quarter and 1.7% sequentially, while international revenues increased 2.4% quarter-over-quarter and decreased 8.3% sequentially (up 2.9% quarter-over-quarter and down 5.9% sequentially on a constant dollar basis).

The Company's net income for the third quarter ended February 25, 2012, was $4.3 million, or $0.10 per diluted share. This compares with a net income for the third quarter ended February 26, 2011 of $753,000, or $0.02 per diluted share.

"Our results for the third quarter are reflective of our efforts to continue improving our financial metrics," said Tony Cherbak, chief operating officer of Resources. "We are very pleased to see a substantial increase in earnings per share compared to the prior year."

Gross margin was 37.4% in the third quarter of fiscal 2012, up 40 basis points from the third quarter of fiscal 2011. Selling, general and administrative expenses for the third quarter of fiscal 2012 were $43.4 million, up $400,000 from $43.0 million in the second quarter of fiscal 2012.

Cash flow from operations and adjusted EBITDA* (earnings before interest, income taxes, depreciation, amortization, stock based compensation and contingent consideration adjustments) were $12.8 million and $12.3 million (8.6% of revenue), respectively, for the third quarter of fiscal 2012 and $3.9 million and $8.2 million (6.0% of revenue), respectively, for the third quarter of fiscal 2011.

The Company's revenue for the nine months ended February 25, 2012 was $426.3 million compared with $399.8 million for the nine months ended February 26, 2011. The Company's net income for the nine months ended February 25, 2012 was $32.2 million, or $0.73 per diluted share (including the after tax impact of the adjustment of the estimated fair value of contingent consideration expense of $20.4 million or $0.46 per share), compared with a net income for the nine months ended February 26, 2011 of $19.5 million, or $0.42 per diluted share (including the after tax impact of the adjustment of the estimated fair value of contingent consideration expense of $13.4 million or $0.29 per share).

"Our third quarter results demonstrate the strength of our business model," said Don Murray, chief executive officer. "Our cash generation capabilities allow us to continue to invest in growth initiatives while returning $44.6 million in capital to our shareholders since the beginning of fiscal 2012."

The Company's pre-tax income for the nine months ended February 25, 2012 was $58.6 million, including a non-cash adjustment of $33.9 million reducing the estimated fair value of contingent consideration liability (including the employee portion of contingent consideration) related to the Sitrick Brincko Group acquisition. Accounting standards require the Company to record increases or decreases in the estimated fair value of contingent consideration to earnings. Due to the inherent difficulties in projecting the future operating results of the episodic Sitrick Brincko business, significant increases over the current estimated future adjusted EBITDA could result in an increase in the estimated fair value of the Sitrick Brincko contingent consideration which would materially impact our future operating results.

During the third quarter of fiscal 2012, the Company purchased 913,000 shares of common stock for $10.9 million. On March 15, 2012, the Company paid its quarterly dividend of $2.2 million to shareholders, representing a dividend of $0.05 per share.

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