|
|
|
|
Delaware
|
|
36-2681268
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification Number)
|
Title of Each Class
|
Trading Symbol
|
Name of Each Exchange on Which Registered
|
Common Stock, $0.01 par value
|
HSII
|
The NASDAQ Stock Market LLC
|
Large accelerated filer
|
|
¨
|
|
Accelerated filer
|
|
x
|
Non-Accelerated filer
|
|
¨ (Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
|
¨
|
Emerging growth company
|
|
o
|
|
|
|
|
|
|
|
PAGE
|
PART I.
|
|
|
|
|
|
Item 1.
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
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||
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Item 2.
|
||
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Item 3.
|
||
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Item 4.
|
||
|
|
|
PART II.
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
|
(Unaudited)
|
|
|
||||
Current assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
251,000
|
|
|
$
|
271,719
|
|
Marketable securities
|
|
—
|
|
|
61,153
|
|
||
Accounts receivable, net of allowances of $5,209 and $5,140, respectively
|
|
131,371
|
|
|
109,163
|
|
||
Prepaid expenses
|
|
26,505
|
|
|
20,185
|
|
||
Other current assets
|
|
32,133
|
|
|
27,848
|
|
||
Income taxes recoverable
|
|
4,400
|
|
|
4,414
|
|
||
Total current assets
|
|
445,409
|
|
|
494,482
|
|
||
|
|
|
|
|
||||
Non-current assets
|
|
|
|
|
||||
Property and equipment, net
|
|
28,450
|
|
|
28,650
|
|
||
Operating lease right-of-use assets
|
|
98,943
|
|
|
99,391
|
|
||
Assets designated for retirement and pension plans
|
|
13,756
|
|
|
13,978
|
|
||
Investments
|
|
23,516
|
|
|
25,409
|
|
||
Other non-current assets
|
|
25,181
|
|
|
20,434
|
|
||
Goodwill
|
|
123,422
|
|
|
126,831
|
|
||
Other intangible assets, net
|
|
1,554
|
|
|
1,935
|
|
||
Deferred income taxes
|
|
32,299
|
|
|
33,063
|
|
||
Total non-current assets
|
|
347,121
|
|
|
349,691
|
|
||
|
|
|
|
|
||||
Total assets
|
|
$
|
792,530
|
|
|
$
|
844,173
|
|
|
|
|
|
|
||||
Current liabilities
|
|
|
|
|
||||
Accounts payable
|
|
$
|
11,088
|
|
|
$
|
8,633
|
|
Accrued salaries and benefits
|
|
97,875
|
|
|
234,306
|
|
||
Deferred revenue
|
|
41,433
|
|
|
41,267
|
|
||
Operating lease liabilities
|
|
29,818
|
|
|
30,955
|
|
||
Other current liabilities
|
|
19,534
|
|
|
26,253
|
|
||
Income taxes payable
|
|
8,198
|
|
|
3,928
|
|
||
Total current liabilities
|
|
207,946
|
|
|
345,342
|
|
||
|
|
|
|
|
||||
Non-current liabilities
|
|
|
|
|
||||
Non-current debt
|
|
100,000
|
|
|
—
|
|
||
Accrued salaries and benefits
|
|
46,823
|
|
|
59,662
|
|
||
Retirement and pension plans
|
|
43,851
|
|
|
46,032
|
|
||
Operating lease liabilities
|
|
77,594
|
|
|
79,388
|
|
||
Other non-current liabilities
|
|
4,551
|
|
|
4,634
|
|
||
Total non-current liabilities
|
|
272,819
|
|
|
189,716
|
|
||
|
|
|
|
|
||||
Total liabilities
|
|
480,765
|
|
|
535,058
|
|
||
|
|
|
|
|
||||
Commitments and contingencies (Note 17)
|
|
|
|
|
||||
|
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
|
||||
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued at March 31, 2020 and December 31, 2019
|
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 100,000,000 shares authorized, 19,585,777 shares issued, 19,274,921 and 19,165,954 shares outstanding at March 31, 2020 and December 31, 2019, respectively
|
|
196
|
|
|
196
|
|
||
Treasury stock at cost, 310,856 and 419,823 shares at March 31, 2020 and December 31, 2019, respectively
|
|
(10,957
|
)
|
|
(14,795
|
)
|
||
Additional paid in capital
|
|
226,033
|
|
|
228,807
|
|
||
Retained earnings
|
|
96,415
|
|
|
91,083
|
|
||
Accumulated other comprehensive income
|
|
78
|
|
|
3,824
|
|
||
Total stockholders’ equity
|
|
311,765
|
|
|
309,115
|
|
||
|
|
|
|
|
||||
Total liabilities and stockholders’ equity
|
|
$
|
792,530
|
|
|
$
|
844,173
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Revenue
|
|
|
|
||||
Revenue before reimbursements (net revenue)
|
$
|
171,481
|
|
|
$
|
171,594
|
|
Reimbursements
|
3,366
|
|
|
4,680
|
|
||
Total revenue
|
174,847
|
|
|
176,274
|
|
||
|
|
|
|
||||
Operating expenses
|
|
|
|
||||
Salaries and benefits
|
121,089
|
|
|
120,818
|
|
||
General and administrative expenses
|
32,240
|
|
|
34,385
|
|
||
Reimbursed expenses
|
3,366
|
|
|
4,680
|
|
||
Total operating expenses
|
156,695
|
|
|
159,883
|
|
||
|
|
|
|
||||
Operating income
|
18,152
|
|
|
16,391
|
|
||
|
|
|
|
||||
Non-operating income (expense)
|
|
|
|
||||
Interest, net
|
679
|
|
|
808
|
|
||
Other, net
|
(4,435
|
)
|
|
1,643
|
|
||
Net non-operating income (expense)
|
(3,756
|
)
|
|
2,451
|
|
||
|
|
|
|
||||
Income before income taxes
|
14,396
|
|
|
18,842
|
|
||
|
|
|
|
||||
Provision for income taxes
|
5,730
|
|
|
6,755
|
|
||
|
|
|
|
||||
Net income
|
8,666
|
|
|
12,087
|
|
||
|
|
|
|
||||
Other comprehensive income (loss), net of tax
|
|
|
|
||||
Foreign currency translation adjustment
|
(3,716
|
)
|
|
320
|
|
||
Net unrealized loss on available-for-sale investments
|
(30
|
)
|
|
—
|
|
||
Other comprehensive income (loss), net of tax
|
(3,746
|
)
|
|
320
|
|
||
|
|
|
|
||||
Comprehensive income
|
$
|
4,920
|
|
|
$
|
12,407
|
|
|
|
|
|
||||
Weighted-average common shares outstanding
|
|
|
|
||||
Basic
|
19,192
|
|
|
19,003
|
|
||
Diluted
|
19,776
|
|
|
19,504
|
|
||
|
|
|
|
||||
Earnings per common share
|
|
|
|
||||
Basic
|
$
|
0.45
|
|
|
$
|
0.64
|
|
Diluted
|
$
|
0.44
|
|
|
$
|
0.62
|
|
|
|
|
|
||||
Cash dividends paid per share
|
$
|
0.15
|
|
|
$
|
0.15
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
Additional
Paid in
Capital
|
|
Retained Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
|
||||||||||||||||||
|
Common Stock
|
|
Treasury Stock
|
|
|||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||||||
Balance at December 31, 2019
|
19,586
|
|
|
$
|
196
|
|
|
420
|
|
|
$
|
(14,795
|
)
|
|
$
|
228,807
|
|
|
$
|
91,083
|
|
|
$
|
3,824
|
|
|
$
|
309,115
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,666
|
|
|
—
|
|
|
8,666
|
|
||||||
Adoption of accounting standards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(332
|
)
|
|
—
|
|
|
(332
|
)
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,746
|
)
|
|
(3,746
|
)
|
||||||
Common and treasury stock transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,614
|
|
|
—
|
|
|
—
|
|
|
2,614
|
|
||||||
Vesting of equity, net of tax withholdings
|
—
|
|
|
—
|
|
|
(109
|
)
|
|
3,838
|
|
|
(5,388
|
)
|
|
—
|
|
|
—
|
|
|
(1,550
|
)
|
||||||
Cash dividends declared ($0.15 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,876
|
)
|
|
—
|
|
|
(2,876
|
)
|
||||||
Dividend equivalents on restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(126
|
)
|
|
—
|
|
|
(126
|
)
|
||||||
Balance at March 31, 2020
|
19,586
|
|
|
$
|
196
|
|
|
311
|
|
|
$
|
(10,957
|
)
|
|
$
|
226,033
|
|
|
$
|
96,415
|
|
|
$
|
78
|
|
|
$
|
311,765
|
|
|
|
|
|
|
Additional
Paid in
Capital
|
|
Retained Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
|
||||||||||||||||||
|
Common Stock
|
|
Treasury Stock
|
|
|||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||||||
Balance at December 31, 2018
|
19,586
|
|
|
$
|
196
|
|
|
632
|
|
|
$
|
(20,298
|
)
|
|
$
|
227,147
|
|
|
$
|
56,049
|
|
|
$
|
4,062
|
|
|
$
|
267,156
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,087
|
|
|
—
|
|
|
12,087
|
|
||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
320
|
|
|
320
|
|
||||||
Common and treasury stock transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,343
|
|
|
—
|
|
|
—
|
|
|
1,343
|
|
||||||
Vesting of equity, net of tax withholdings
|
—
|
|
|
—
|
|
|
(160
|
)
|
|
5,155
|
|
|
(9,707
|
)
|
|
—
|
|
|
—
|
|
|
(4,552
|
)
|
||||||
Cash dividends declared ($0.15 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,848
|
)
|
|
—
|
|
|
(2,848
|
)
|
||||||
Dividend equivalents on restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(87
|
)
|
|
—
|
|
|
(87
|
)
|
||||||
Balance at March 31, 2019
|
19,586
|
|
|
$
|
196
|
|
|
472
|
|
|
$
|
(15,143
|
)
|
|
$
|
218,783
|
|
|
$
|
65,201
|
|
|
$
|
4,382
|
|
|
$
|
273,419
|
|
|
|
Three Months Ended
March 31, |
||||||
|
|
2020
|
|
2019
|
||||
Cash flows - operating activities
|
|
|
|
|
||||
Net income
|
|
$
|
8,666
|
|
|
$
|
12,087
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
2,337
|
|
|
2,734
|
|
||
Deferred income taxes
|
|
110
|
|
|
336
|
|
||
Stock-based compensation expense
|
|
2,614
|
|
|
1,343
|
|
||
Accretion expense related to earnout payments
|
|
—
|
|
|
160
|
|
||
Gain on marketable securities
|
|
(111
|
)
|
|
—
|
|
||
Loss on disposal of property and equipment
|
|
1
|
|
|
—
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
(24,656
|
)
|
|
(20,167
|
)
|
||
Accounts payable
|
|
1,897
|
|
|
99
|
|
||
Accrued expenses
|
|
(147,265
|
)
|
|
(146,222
|
)
|
||
Restructuring accrual
|
|
(138
|
)
|
|
(681
|
)
|
||
Deferred revenue
|
|
837
|
|
|
(1,586
|
)
|
||
Income taxes payable, net
|
|
4,082
|
|
|
2,496
|
|
||
Retirement and pension plan assets and liabilities
|
|
2,033
|
|
|
1,550
|
|
||
Prepaid expenses
|
|
(6,566
|
)
|
|
(6,499
|
)
|
||
Other assets and liabilities, net
|
|
(9,441
|
)
|
|
(923
|
)
|
||
Net cash used in operating activities
|
|
(165,600
|
)
|
|
(155,273
|
)
|
||
|
|
|
|
|
||||
Cash flows - investing activities
|
|
|
|
|
||||
Capital expenditures
|
|
(1,753
|
)
|
|
(898
|
)
|
||
Purchases of available-for-sale investments
|
|
(2,125
|
)
|
|
(1,678
|
)
|
||
Proceeds from sales of available-for-sale investments
|
|
61,395
|
|
|
113
|
|
||
Net cash provided by (used in) investing activities
|
|
57,517
|
|
|
(2,463
|
)
|
||
|
|
|
|
|
||||
Cash flows - financing activities
|
|
|
|
|
||||
Proceeds from line of credit
|
|
100,000
|
|
|
—
|
|
||
Cash dividends paid
|
|
(3,002
|
)
|
|
(2,935
|
)
|
||
Payment of employee tax withholdings on equity transactions
|
|
(1,550
|
)
|
|
(4,552
|
)
|
||
Acquisition earnout payments
|
|
(2,788
|
)
|
|
(407
|
)
|
||
Net cash provided by (used in) financing activities
|
|
92,660
|
|
|
(7,894
|
)
|
||
|
|
|
|
|
||||
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash
|
|
(5,296
|
)
|
|
130
|
|
||
|
|
|
|
|
||||
Net decrease in cash, cash equivalents and restricted cash
|
|
(20,719
|
)
|
|
(165,500
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
|
271,719
|
|
|
280,262
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
251,000
|
|
|
$
|
114,762
|
|
1.
|
Basis of Presentation of Interim Financial Information
|
2.
|
Summary of Significant Accounting Policies
|
|
March 31,
|
|
December 31,
|
||||||||||||
|
2020
|
|
2019
|
|
2019
|
|
2018
|
||||||||
Cash and cash equivalents
|
$
|
251,000
|
|
|
$
|
114,414
|
|
|
$
|
271,719
|
|
|
$
|
279,906
|
|
Restricted cash included within other current assets
|
—
|
|
|
106
|
|
|
—
|
|
|
108
|
|
||||
Restricted cash included within other non-current assets
|
—
|
|
|
242
|
|
|
—
|
|
|
248
|
|
||||
Total cash, cash equivalents and restricted cash
|
$
|
251,000
|
|
|
$
|
114,762
|
|
|
$
|
271,719
|
|
|
$
|
280,262
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Net income
|
$
|
8,666
|
|
|
$
|
12,087
|
|
Weighted average shares outstanding:
|
|
|
|
||||
Basic
|
19,192
|
|
|
19,003
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Restricted stock units
|
418
|
|
|
319
|
|
||
Performance stock units
|
166
|
|
|
182
|
|
||
Diluted
|
19,776
|
|
|
19,504
|
|
||
Basic earnings per share
|
$
|
0.45
|
|
|
$
|
0.64
|
|
Diluted earnings per share
|
$
|
0.44
|
|
|
$
|
0.62
|
|
3.
|
Revenue
|
|
March 31,
2020 |
|
December 31,
2019 |
|
Change
|
||||||
Contract assets
|
|
|
|
|
|
||||||
Unbilled receivables, net
|
$
|
11,366
|
|
|
$
|
7,585
|
|
|
$
|
3,781
|
|
Contract assets
|
14,858
|
|
|
14,672
|
|
|
186
|
|
|||
Total contract assets
|
26,224
|
|
|
22,257
|
|
|
3,967
|
|
|||
|
|
|
|
|
|
||||||
Contract liabilities
|
|
|
|
|
|
||||||
Deferred revenue
|
$
|
41,433
|
|
|
$
|
41,267
|
|
|
$
|
166
|
|
4.
|
Credit Losses
|
Balance at December 31, 2019
|
$
|
5,140
|
|
Provision for credit losses
|
639
|
|
|
Write-offs
|
(514
|
)
|
|
Foreign currency translation
|
(56
|
)
|
|
Balance at March 31, 2020
|
$
|
5,209
|
|
|
Less Than 12 Months
|
|
Balance Sheet Classification
|
||||||||||||
Balance at March 31, 2020
|
Fair Value
|
|
Unrealized Loss
|
|
Cash and Cash Equivalents
|
|
Marketable Securities
|
||||||||
U.S. Treasury securities
|
$
|
151,750
|
|
|
$
|
18
|
|
|
$
|
151,750
|
|
|
$
|
—
|
|
5.
|
Property and Equipment, net
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
Leasehold improvements
|
$
|
47,386
|
|
|
$
|
47,269
|
|
Office furniture, fixtures and equipment
|
17,744
|
|
|
17,740
|
|
||
Computer equipment and software
|
27,821
|
|
|
27,531
|
|
||
Property and equipment, gross
|
92,951
|
|
|
92,540
|
|
||
Accumulated depreciation
|
(64,501
|
)
|
|
(63,890
|
)
|
||
Property and equipment, net
|
$
|
28,450
|
|
|
$
|
28,650
|
|
6.
|
Leases
|
|
2020
|
|
2019
|
||||
Operating lease cost
|
$
|
6,261
|
|
|
$
|
6,573
|
|
Variable lease cost
|
2,073
|
|
|
1,857
|
|
||
Total lease cost
|
$
|
8,334
|
|
|
$
|
8,430
|
|
|
2020
|
|
2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
||||
Operating cash flows from operating leases
|
$
|
7,812
|
|
|
$
|
8,481
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
|
|
||||
Operating leases
|
$
|
1,641
|
|
|
$
|
8,726
|
|
|
2020
|
|
2019
|
||
Weighted Average Remaining Lease Term
|
|
|
|
||
Operating leases
|
4.6 years
|
|
|
4.9 years
|
|
Weighted Average Discount Rate
|
|
|
|
||
Operating leases
|
3.84
|
%
|
|
3.97
|
%
|
|
Operating Lease Maturity
|
||
2020
|
$
|
21,796
|
|
2021
|
28,043
|
|
|
2022
|
24,314
|
|
|
2023
|
21,409
|
|
|
2024
|
10,950
|
|
|
Thereafter
|
10,275
|
|
|
Total lease payments
|
116,787
|
|
|
Less: Interest
|
(9,375
|
)
|
|
Present value of lease liabilities
|
$
|
107,412
|
|
7.
|
Financial Instruments and Fair Value
|
|
Fair Value
|
|
Balance Sheet Classification
|
||||||||||||||||||||
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
|
Cash and Cash Equivalents
|
|
Marketable Securities
|
||||||||||||
Balance at March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash
|
|
|
|
|
|
|
|
|
$
|
94,243
|
|
|
$
|
—
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Level 1(1):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury securities
|
156,774
|
|
|
1
|
|
|
18
|
|
|
156,757
|
|
|
156,757
|
|
|
—
|
|
||||||
Total Level 1
|
156,774
|
|
|
1
|
|
|
18
|
|
|
156,757
|
|
|
156,757
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
156,774
|
|
|
$
|
1
|
|
|
$
|
18
|
|
|
$
|
156,757
|
|
|
$
|
251,000
|
|
|
$
|
—
|
|
|
Fair Value
|
|
Balance Sheet Classification
|
||||||||||||||||||||
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
|
Cash and Cash Equivalents
|
|
Marketable Securities
|
||||||||||||
Balance at December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash
|
|
|
|
|
|
|
|
|
$
|
177,493
|
|
|
$
|
—
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Level 1(1):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Money market funds
|
|
|
|
|
|
|
|
|
15,661
|
|
|
—
|
|
||||||||||
U.S. Treasury securities
|
139,705
|
|
|
13
|
|
|
—
|
|
|
139,718
|
|
|
78,565
|
|
|
61,153
|
|
||||||
Total Level 1
|
139,705
|
|
|
13
|
|
|
—
|
|
|
139,718
|
|
|
94,226
|
|
|
61,153
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
139,705
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
139,718
|
|
|
$
|
271,719
|
|
|
$
|
61,153
|
|
(1)
|
Level 1 – Quoted prices in active markets for identical assets and liabilities.
|
|
|
|
|
Balance Sheet Classification
|
||||||||||||||||||||
|
|
Fair Value
|
|
Other Current Assets
|
|
Assets Designated for Retirement and Pension Plans
|
|
Investments
|
|
Other Current Liabilities
|
|
Retirement and Pension Plans
|
||||||||||||
Balance at March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Level 1(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. non-qualified deferred compensation plan
|
|
$
|
23,516
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,516
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Level 2(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Retirement and pension plan assets
|
|
15,053
|
|
|
1,297
|
|
|
13,756
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Pension benefit obligation
|
|
(20,586
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,297
|
)
|
|
(19,289
|
)
|
||||||
Total Level 2
|
|
(5,533
|
)
|
|
1,297
|
|
|
13,756
|
|
|
—
|
|
|
(1,297
|
)
|
|
(19,289
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total
|
|
$
|
17,983
|
|
|
$
|
1,297
|
|
|
$
|
13,756
|
|
|
$
|
23,516
|
|
|
$
|
(1,297
|
)
|
|
$
|
(19,289
|
)
|
|
|
|
|
Balance Sheet Classification
|
||||||||||||||||||||
|
|
Fair Value
|
|
Other Current Assets
|
|
Assets Designated for Retirement and Pension Plans
|
|
Investments
|
|
Other Current Liabilities
|
|
Retirement and Pension Plans
|
||||||||||||
Balance at December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Level 1(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. non-qualified deferred compensation plan
|
|
$
|
25,409
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25,409
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Level 2(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Retirement and pension plan assets
|
|
15,296
|
|
|
1,318
|
|
|
13,978
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Pension benefit obligation
|
|
(20,918
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,318
|
)
|
|
(19,600
|
)
|
||||||
Total Level 2
|
|
(5,622
|
)
|
|
1,318
|
|
|
13,978
|
|
|
—
|
|
|
(1,318
|
)
|
|
(19,600
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total
|
|
$
|
19,787
|
|
|
$
|
1,318
|
|
|
$
|
13,978
|
|
|
$
|
25,409
|
|
|
$
|
(1,318
|
)
|
|
$
|
(19,600
|
)
|
(1)
|
Level 1 – Quoted prices in active markets for identical assets and liabilities.
|
(2)
|
Level 2 – Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
|
Acquisition
Earnout Accruals |
||
Balance at December 31, 2019
|
$
|
(5,278
|
)
|
Earnout payments
|
5,051
|
|
|
Foreign currency translation
|
227
|
|
|
Balance at March 31, 2020
|
$
|
—
|
|
8.
|
Goodwill and Other Intangible Assets
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
Executive Search
|
|
|
|
||||
Americas
|
$
|
91,338
|
|
|
$
|
92,497
|
|
Europe
|
24,196
|
|
|
25,579
|
|
||
Asia Pacific
|
7,888
|
|
|
8,755
|
|
||
Total goodwill
|
$
|
123,422
|
|
|
$
|
126,831
|
|
|
Executive Search
|
|
|
||||||||||||
|
Americas
|
|
Europe
|
|
Asia Pacific
|
|
Total
|
||||||||
Goodwill at December 31, 2019
|
92,497
|
|
|
25,579
|
|
|
8,755
|
|
|
126,831
|
|
||||
Foreign currency translation
|
(1,159
|
)
|
|
(1,383
|
)
|
|
(867
|
)
|
|
(3,409
|
)
|
||||
Goodwill at March 31, 2020
|
$
|
91,338
|
|
|
$
|
24,196
|
|
|
$
|
7,888
|
|
|
$
|
123,422
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
Executive Search
|
|
|
|
||||
Americas
|
$
|
372
|
|
|
$
|
557
|
|
Europe
|
1,130
|
|
|
1,314
|
|
||
Asia Pacific
|
52
|
|
|
64
|
|
||
Total other intangible assets, net
|
$
|
1,554
|
|
|
$
|
1,935
|
|
|
Weighted
Average Life (Years) |
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||||||
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||||
Client relationships
|
6.6
|
|
$
|
15,816
|
|
|
$
|
(14,469
|
)
|
|
$
|
1,347
|
|
|
$
|
16,302
|
|
|
$
|
(14,683
|
)
|
|
$
|
1,619
|
|
Trade name
|
5.0
|
|
279
|
|
|
(72
|
)
|
|
207
|
|
|
362
|
|
|
(46
|
)
|
|
316
|
|
||||||
Total intangible assets
|
6.4
|
|
$
|
16,095
|
|
|
$
|
(14,541
|
)
|
|
$
|
1,554
|
|
|
$
|
16,664
|
|
|
$
|
(14,729
|
)
|
|
$
|
1,935
|
|
9.
|
Other Current Assets
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
Contract assets
|
$
|
26,224
|
|
|
$
|
22,257
|
|
Other
|
5,909
|
|
|
5,591
|
|
||
Total other current assets
|
$
|
32,133
|
|
|
$
|
27,848
|
|
10.
|
Line of Credit
|
11.
|
Stock-Based Compensation
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Salaries and benefits (1)
|
$
|
1,804
|
|
|
$
|
1,671
|
|
Income tax benefit related to stock-based compensation included in net income
|
479
|
|
|
441
|
|
|
Number of
Restricted Stock Units |
|
Weighted-
Average Grant-Date Fair Value |
|||
Outstanding on December 31, 2019
|
598,988
|
|
|
$
|
32.25
|
|
Granted
|
186,737
|
|
|
23.43
|
|
|
Vested and converted to common stock
|
(125,257
|
)
|
|
30.64
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Outstanding on March 31, 2020
|
660,468
|
|
|
$
|
30.06
|
|
|
Number of
Performance
Stock Units
|
|
Weighted-
Average Grant-Date Fair Value |
|||
Outstanding on December 31, 2019
|
179,559
|
|
|
$
|
32.63
|
|
Granted
|
105,847
|
|
|
23.52
|
|
|
Vested and converted to common stock
|
(50,472
|
)
|
|
26.69
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Outstanding on March 31, 2020
|
234,934
|
|
|
$
|
29.80
|
|
|
Number of
Phantom
Stock Units
|
|
Outstanding on December 31, 2019
|
266,060
|
|
Granted
|
—
|
|
Vested
|
—
|
|
Forfeited
|
—
|
|
Outstanding on March 31, 2020
|
266,060
|
|
|
Employee Related
|
||
Outstanding on December 31, 2019
|
$
|
3,245
|
|
Cash payments
|
(94
|
)
|
|
Non cash write offs
|
(28
|
)
|
|
Exchange rate fluctuations
|
(735
|
)
|
|
Outstanding on March 31, 2020
|
$
|
2,388
|
|
13.
|
Income Taxes
|
14.
|
Changes in Accumulated Other Comprehensive Income
|
|
|
Available-
for- Sale Securities |
|
Foreign
Currency Translation |
|
Pension
|
|
AOCI
|
||||||||
Balance at December 31, 2019
|
|
$
|
13
|
|
|
$
|
6,102
|
|
|
$
|
(2,291
|
)
|
|
$
|
3,824
|
|
Other comprehensive income before classification, net of tax
|
|
(30
|
)
|
|
(3,716
|
)
|
|
—
|
|
|
(3,746
|
)
|
||||
Balance at March 31, 2020
|
|
$
|
(17
|
)
|
|
$
|
2,386
|
|
|
$
|
(2,291
|
)
|
|
$
|
78
|
|
15.
|
Segment Information
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Revenue
|
|
|
|
||||
Executive Search
|
|
|
|
|
|||
Americas
|
$
|
100,301
|
|
|
$
|
99,305
|
|
Europe
|
33,082
|
|
|
33,553
|
|
||
Asia Pacific
|
22,070
|
|
|
25,447
|
|
||
Total Executive Search
|
155,453
|
|
|
158,305
|
|
||
Heidrick Consulting
|
16,028
|
|
|
13,289
|
|
||
Revenue before reimbursements (net revenue)
|
171,481
|
|
|
171,594
|
|
||
Reimbursements
|
3,366
|
|
|
4,680
|
|
||
Total revenue
|
$
|
174,847
|
|
|
$
|
176,274
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Operating income (loss)
|
|
|
|
||||
Executive Search
|
|
|
|
||||
Americas
|
$
|
25,732
|
|
|
$
|
22,449
|
|
Europe
|
3,049
|
|
|
2,165
|
|
||
Asia Pacific
|
2,502
|
|
|
4,906
|
|
||
Total Executive Search
|
31,283
|
|
|
29,520
|
|
||
Heidrick Consulting
|
(4,092
|
)
|
|
(4,827
|
)
|
||
Total segment operating income
|
27,191
|
|
|
24,693
|
|
||
Global Operations Support
|
(9,039
|
)
|
|
(8,302
|
)
|
||
Total operating income
|
$
|
18,152
|
|
|
$
|
16,391
|
|
16.
|
Guarantees
|
17.
|
Commitments and Contingencies
|
18.
|
Subsequent Event
|
•
|
the duration and scope of the pandemic;
|
•
|
the impact of the pandemic, and actions taken in response to the pandemic, on economic activity;
|
•
|
governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic;
|
•
|
restrictions inhibiting our employees’ ability to access our offices;
|
•
|
the effect on our clients and client demand for our services and solutions;
|
•
|
our ability to sell and provide our services and solutions, including as a result of travel restrictions and people working from home; and
|
•
|
the ability of our clients to pay for our services and solutions
|
•
|
a decline in demand for our executive search and consulting services due to temporary and permanent workforce reductions, and general economic uncertainty;
|
•
|
a lengthening of the executive search process due to a slow-down in client decision making;
|
•
|
an increase in executive searches placed on hold due to delays in planned work by our clients;
|
•
|
an inability to execute in-person consulting engagements; and
|
•
|
disruptions in business operations for offices in areas most impacted by the pandemic, including the United States, United Kingdom, Italy, Spain and China
|
|
Three Months Ended
March 31, |
||||
|
2020
|
|
2019
|
||
Revenue
|
|
|
|
||
Revenue before reimbursements (net revenue)
|
100.0
|
%
|
|
100.0
|
%
|
Reimbursements
|
2.0
|
|
|
2.7
|
|
Total revenue
|
102.0
|
|
|
102.7
|
|
|
|
|
|
||
Operating expenses
|
|
|
|
||
Salaries and benefits
|
70.6
|
|
|
70.4
|
|
General and administrative expenses
|
18.8
|
|
|
20.0
|
|
Reimbursed expenses
|
2.0
|
|
|
2.7
|
|
Total operating expenses
|
91.4
|
|
|
93.2
|
|
|
|
|
|
||
Operating income
|
10.6
|
|
|
9.6
|
|
|
|
|
|
||
Non-operating income (expense)
|
|
|
|
||
Interest, net
|
0.4
|
|
|
0.5
|
|
Other, net
|
(2.6
|
)
|
|
1.0
|
|
Net non-operating income (expense)
|
(2.2
|
)
|
|
1.4
|
|
|
|
|
|
||
Income before income taxes
|
8.4
|
|
|
11.0
|
|
|
|
|
|
||
Provision for income taxes
|
3.3
|
|
|
3.9
|
|
|
|
|
|
||
Net income
|
5.1
|
%
|
|
7.0
|
%
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Revenue
|
|
|
|
||||
Executive Search
|
|
|
|
||||
Americas
|
$
|
100,301
|
|
|
$
|
99,305
|
|
Europe
|
33,082
|
|
|
33,553
|
|
||
Asia Pacific
|
22,070
|
|
|
25,447
|
|
||
Total Executive Search
|
155,453
|
|
|
158,305
|
|
||
Heidrick Consulting
|
16,028
|
|
|
13,289
|
|
||
Revenue before reimbursements (net revenue)
|
171,481
|
|
|
171,594
|
|
||
Reimbursements
|
3,366
|
|
|
4,680
|
|
||
Total revenue
|
$
|
174,847
|
|
|
$
|
176,274
|
|
|
Three Months Ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
Operating income (loss)
|
|
|
|
||||
Executive Search
|
|
|
|
||||
Americas
|
$
|
25,732
|
|
|
$
|
22,449
|
|
Europe
|
3,049
|
|
|
2,165
|
|
||
Asia Pacific
|
2,502
|
|
|
4,906
|
|
||
Total Executive Search
|
31,283
|
|
|
29,520
|
|
||
Heidrick Consulting
|
(4,092
|
)
|
|
(4,827
|
)
|
||
Total segment operating income
|
27,191
|
|
|
24,693
|
|
||
Global Operations Support
|
(9,039
|
)
|
|
(8,302
|
)
|
||
Total operating income
|
$
|
18,152
|
|
|
$
|
16,391
|
|
(a)
|
Evaluation of Disclosure Controls and Procedures
|
Exhibit
No.
|
|
Description
|
|
|
|
#3.01
|
|
|
|
|
|
#3.02
|
|
|
|
|
|
*31.1
|
|
|
|
|
|
*31.2
|
|
|
|
|
|
*32.1
|
|
|
|
|
|
*32.2
|
|
|
|
|
|
*101.INS
|
|
XBRL Instance Document
|
|
|
|
*101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
*101.CAL
|
|
XBRL Taxonomy Calculation Linkbase Document
|
|
|
|
*101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
*101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
*101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
#
|
Refiled herewith to provide an updated hyperlink to the appropriate prior filing.
|
*
|
Filed herewith.
|
|
|
|
Heidrick & Struggles International, Inc.
|
|
(Registrant)
|
|
|
|
|
|
/s/ Stephen A. Bondi
|
|
Stephen A. Bondi
|
|
Vice President, Controller
(On behalf of the registrant and in his capacity as Chief Accounting Officer)
|
1.
|
The name of the corporation is Heidrick & Struggles International, Inc. The date of the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was May 9, 1968 under the name Heidrick and Struggles International, Inc. A Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on September 13, 1984 under the name Heidrick and Struggles International, Inc. Certificates of Amendment to the Restated Certificate of Incorporation were filed on August 9, 1989 and on November 7, 1990 respectively. A Certificate of Amendment to the Restated Certificate of Incorporation was filed on December 23, 1992 changing the name of the Corporation to Heidrick & Struggles International, Inc. An Amended and Restated Certificate of Incorporation (the "Existing Amended and Restated Certificate of Incorporation") was filed with the Secretary of State of the State of Delaware on February 26, 1999 under the Corporation's name.
|
2.
|
This Amended and Restated Certificate of Incorporation has been duly adopted by the Board of Directors and by written consent of the stockholders in accordance with the provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware and amends and restates the provisions of the Existing Amended and Restated Certificate of Incorporation.
|
3.
|
The text of the Existing Amended and Restated Certificate of Incorporation as amended heretofore is hereby amended and restated to read in its entirety as follows:
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Heidrick & Struggles International, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
Dated:
|
April 27, 2020
|
|
/s/ Krishnan Rajagopalan
|
|
|
|
Krishnan Rajagopalan
|
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Heidrick & Struggles International, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
Dated:
|
April 27, 2020
|
|
/s/ Mark R. Harris
|
|
|
|
Mark R. Harris
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
Dated:
|
April 27, 2020
|
|
/s/ Krishnan Rajagopalan
|
|
|
|
Krishnan Rajagopalan
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
Dated:
|
April 27, 2020
|
|
/s/ Mark R. Harris
|
|
|
|
Mark R. Harris
|
|
|
|
Executive Vice President and Chief Financial Officer
|