Heidrick & Struggles Reports Growth in 2001 First Quarter Revenue and Earnings

Strength in Europe Offsets Slower U.S. Economy



Apr 25, 2001, 01:00 ET from Heidrick & Struggles International, Inc.

    CHICAGO, April 25 /PRNewswire/ -- Heidrick & Struggles International, Inc.
 (Nasdaq:   HSII), the world's premier executive search and leadership consulting
 firm, today announced record revenue and earnings for the 2001 first quarter.
 Diluted earnings per share were $0.28, excluding $0.18 of net unrealized gains
 on a portion of the warrant portfolio, an increase of 56 percent from $0.18 in
 the 2000 first quarter. Consolidated revenue grew 6 percent to $139.3 million,
 up from $131.9 million in the comparable quarter of 2000. Net income, also
 excluding net unrealized gains on a portion of the warrant portfolio, was
 $5.7 million, an increase of 62 percent from $3.5 million in last year's first
 quarter.
     "Even as we navigated through a troubled U.S. economy, we were able to
 generate revenue and earnings growth," said Patrick S. Pittard, Chairman,
 President and Chief Executive Officer of Heidrick & Struggles International
 (HSI Group). "We knew that we faced difficult comparisons with last year's
 first quarter, but we benefited from our geographic diversification with
 particularly strong revenue performance in Europe."
     Diluted earnings per share in the 2001 first quarter include $0.05 in
 losses incurred by LeadersOnline. Realized gains from the sale of equity in
 connection with the warrant program, net of consultants' bonuses and
 administrative and other costs, contributed $0.01 per share.
     On January 1, 2001, HSI Group adopted Statement of Financial Accounting
 Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
 Activities," and its subsequent amendments. As a result of the adoption, the
 company is now required to include, in its income statement, unrealized gains
 or losses from a portion of its warrant portfolio. In the 2001 first quarter,
 the unrealized gain was $3.7 million after tax, or $0.18 per share on a
 diluted basis. This amount comprises the original $4.5 million transition
 adjustment at January 1, 2001, and the unrealized loss of $841,000,
 representing the decrease in value in the 2001 first quarter.
     The 2001 first quarter's consolidated results were affected by a
 significant increase in bad-debt-related expenses; $10.3 million of expense
 was recorded in the quarter. The negative effect on earnings of the bad-debt-
 related expenses was more than offset by $13.0 million, predominantly related
 to performance-based compensation. Because bad debt write-offs continued at an
 above average level in the quarter and the weakening of the U.S. economy has
 heightened the potential for a more difficult collection environment, the
 company determined it was appropriate to increase substantially its allowance
 for doubtful accounts. As consultants are not compensated for fees generated
 that are not collected, a reduction was made to current period and previously
 recorded bonus accruals. In addition, the 2001 first quarter benefited from
 decisions taken and performance-related settlements made in the quarter that
 reduced compensation, benefits, and other amounts that had been accrued
 previously. Separately, certain discretionary bonuses, related to achieving
 planned performance targets, were not accrued during the quarter.
     On a reported basis for the 2001 first quarter, which includes the
 $0.18 in net unrealized gains on a portion of the warrant portfolio, diluted
 earnings per share were $0.45, an increase of 150 percent from $0.18 in the
 2000 first quarter. Net income was $9.3 million, an increase of 165 percent
 from $3.5 million in last year's first quarter.
 
     2001 First Quarter Performance by Segment
     HSI Group adjusted its segment reporting to reflect the current internal
 management reporting structure, as well as some changes to the allocation of
 certain costs to operations and corporate expenses. Beginning in the 2001
 first quarter, the company broke out revenue and operating income for its
 Executive Search business in the Americas segment into two regions: North
 America and Latin America. The North America region includes the U.S. (except
 Miami) and Canada. The Latin America region includes Mexico and the rest of
 Latin America, as well as Miami, which serves as our gateway office to the
 region. Reporting for the International segment remained the same, comprising
 the Europe region (which includes Africa and the Middle East) and the Asia
 Pacific region.
 
     Executive Search Results
     Revenue for Executive Search grew 4 percent to $134.0 million in the 2001
 first quarter, up from $128.7 million in the 2000 first quarter. Operating
 income was $17.2 million in the 2001 first quarter, essentially flat with
 $17.4 million a year ago. Although fewer searches were conducted overall, CEO
 searches remained strong, which resulted in a higher level of fees per search.
 Confirmed searches decreased 12 percent from the 2000 first quarter, while
 fees per search rose 18 percent. As of March 31, 2001, the company employed
 546 executive search consultants, a 7 percent increase over the consultant
 headcount of 510 as of Dec. 31, 2000.
     Revenue in North America was $70.1 million, a decrease of 6 percent from
 $74.8 million in the 2000 first quarter. Strength in the Health Care and
 Professional Services practice groups partially offset a decline in the
 Financial Services practice. The operating margin declined to 10.4 percent
 from 17.5 percent in the 2000 first quarter, due to a decrease in revenue,
 higher base salary costs related to the substantial number of consultants
 hired over the past 12 months, and a significant increase in the allowance for
 doubtful accounts, partially offset by the related reduction in bonuses.
     In Latin America, revenue decreased 2 percent to $4.3 million in the 2001
 first quarter, down from $4.4 million in the 2000 first quarter, as the region
 felt some of the effects of a weakening U.S. economy. The company has
 previously indicated that 2001 would be an investment year for Latin America
 and, as expected, there was an operating loss of $217,000 in the 2001 first
 quarter, compared to operating income of $115,000 in the comparable quarter
 last year.
     Revenue in Europe increased 25 percent to $51.7 million, compared to
 $41.4 million in the 2000 first quarter, due to particularly strong
 performances from the Financial Services and Professional Services practice
 groups. Excluding the impact of foreign currency translation into the U.S.
 dollar, revenue increased 35 percent on a local currency basis over the
 comparable quarter in 2000. The operating margin increased to 18.2 percent
 from 7.2 percent. This margin improvement, which is not sustainable, reflects
 superior leverage as a result of strong revenue growth and a decrease in the
 region's bad debt provision due to recoveries.
     In Asia Pacific, revenue was $7.9 million, a decrease of 3 percent from
 $8.1 million in the 2000 first quarter. Excluding the impact of foreign
 currency translation into the U.S. dollar, revenue increased 6 percent on a
 local currency basis over the comparable quarter in 2000. The operating margin
 declined to 9.3 percent from 14.7 percent in the 2000 first quarter primarily
 due to office expansions in the region.
 
     LeadersOnline Results
     Revenue for LeadersOnline grew 63 percent to $5.2 million in the 2001
 first quarter, up from $3.2 million in the 2000 first quarter. LeadersOnline
 reported an operating loss of $1.7 million versus an operating loss of
 $4.2 million in the 2000 first quarter. Losses were $0.05 per share compared
 to $0.14 per share in the 2000 first quarter. The company's goal remains to
 break even no later than the 2001 third quarter; however, the state of the
 U.S. economy will be the major factor in our ability to achieve this goal.
 
     Warrant Program
     For the 2001 first quarter, the sale of equity obtained in search
 assignments resulted in a pre-tax gain of $254,000, net of consultants'
 bonuses and administrative and other costs, or $0.01 per diluted share. This
 amount is included in Non-Operating Income on the income statement. In
 addition to its normal cash fees, Heidrick & Struggles receives warrants for
 equity in connection with searches conducted for pre-public as well as some
 public firms, and has been expanding the program around the world.
 
     Consolidated Outlook
     Because of the uncertainty surrounding the U.S. economy and its impact on
 our clients' decisions to initiate searches -- other than for CEOs and other
 critical leadership positions -- revenue and earnings visibility for the 2001
 second quarter continues to be very limited.
     "We have found it challenging to discern any patterns from our revenue in
 2001. Some weeks are very strong while others are much less so. This uneven
 pattern seems to be continuing," said Pittard. "Each month, revenue has
 progressively improved from the month before, but is not strong enough -- at
 least at this point -- to put us on pace with last year's second quarter,
 which saw a nearly 50 percent revenue increase, fueled by early stage,
 venture-backed, largely dot-com searches."
     The company wishes to provide some perspective, however, on possible
 revenue and earnings relationships. For example, if revenue were in the
 $150 million to $160 million range for the 2001 second quarter, the company
 estimates that diluted earnings per share would likely be in the $0.38 to
 $0.46 range.
     With the hiring of 135 consultants and their support staff in the past 12
 months, the company has been making investments in its future. This also means
 that it dramatically increased capacity just prior to the economic slowdown.
 The fixed costs of the base salaries of the newly hired consultants and
 support staff, as well as the expense to provide workspace, are significant to
 the company's cost structure. However, the company's management team is
 charged not only with the responsibility to meet short-term commitments but
 also to balance those commitments with the ability to grow longer term, for
 which these consultants will be pivotal.
 
     Robinson-Humphrey to Offer Block Trade Program in Connection with Lock-up
 Expiration
     The Robinson-Humphrey Company is offering employees and former employees
 of HSI Group whose shares were subject to a two-year lock-up agreement in
 connection with the IPO the opportunity to aggregate a portion of their shares
 with those of other employees and former employees for sale as a block to
 investors who want to accumulate an equity stake in Heidrick & Struggles
 International.
     "The block trade program will allow shareholders who have been subject to
 this agreement to diversify their holdings in an organized, responsible
 fashion," said Pittard. "In the spirit of partnership, we have asked that
 internal shareholders voluntarily limit their selling to no more than
 25 percent of their total holdings during any 12-month period."
     Of the company's 19.4 million shares outstanding, 10.3 million are subject
 to the lock-up agreement. Internal members of the Heidrick & Struggles
 International Board of Directors, as well as the company's Executive Officers,
 are not expected to sell any of their shares in the near future. Collectively,
 this group owns approximately 16 percent of the lock-up shares.
 
     Webcast of Investor Call Available
     To review its first quarter earnings results, the company will provide a
 real-time investor call webcast on Thursday, April 26, at 9:00 a.m. (CDT). The
 webcast will feature remarks by Don Kilinski, Chief Financial Officer, and
 Lynn McHugh, Managing Partner of Finance and Investor Relations. The live
 webcast will be available online at www.heidrick.com . A replay will be
 available for up to 30 days following the investor call.
 
     Webcast of Investor Day Presentations Available
     The company will provide a real-time webcast of its first-ever Investor
 Day on Wednesday, May 2 at 10:30 a.m. (CDT). The webcast will feature audio-
 only presentations by several members of the company's senior management team.
 The live webcast will be available online at www.heidrick.com . A replay will
 be available for up to 14 days following the Investor Day.
 
     About Heidrick & Struggles International, Inc. (HSI Group)
     Heidrick & Struggles International, Inc. (HSI Group) is the world's
 premier provider of executive-level search and leadership consulting services.
 More than 1,200 Heidrick & Struggles professionals operate from offices in
 over 75 locations throughout North and South America, Europe, the Middle East,
 Africa and Asia Pacific. For nearly 50 years, our core business - Heidrick &
 Struggles Executive Search - has specialized in chief executive, board member
 and senior-level management assignments for a broad spectrum of clients:
 multi-national corporations, mid-cap and start-up companies, nonprofit
 entities, educational institutions, foundations, associations and governmental
 units. We are expanding our range of complementary services to offer solutions
 to senior management teams for their human capital needs. LeadersOnline, our
 Internet-enhanced recruiting business, serves clients who seek the next
 generation of corporate leaders. We are capitalizing on our access and
 influence with the highest levels of our client organizations through Heidrick
 & Struggles Ventures, our unit responsible for other complementary businesses,
 alliances and investments. For more information about HSI Group, visit our web
 site at www.heidrick.com .
 
     Safe Harbor Statement
     This news 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," 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 and retain qualified executive search consultants; a
 material economic downturn in the United States or Europe, or social or
 political instability in overseas markets; bad debt write-offs far in excess
 of allowances for doubtful accounts; continued increased acceptance of online
 recruiting; losses in our venture capital investments; an inability to control
 expenses; and delays in the development and/or implementation of new
 technology and systems. 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.
                       CONSOLIDATED STATEMENTS OF INCOME
                     (In thousands, except per share data)
 
                                               Three Months Ended March 31,
                                              2001         2000      % Change
 
     Revenue                                $139,268     $131,936       5.6%
 
     Operating expenses:
       Salaries and employee benefits         87,090       92,400      -5.7%
       General and administrative expenses    44,329       35,810      23.8%
       Total operating expenses              131,419      128,210       2.5%
       Operating income                        7,849        3,726     110.7%
 
     Non-operating income (expense):
       Interest income                         2,061        1,517      35.9%
       Interest expense                          (41)         (75)    -45.3%
       Realized gains on investments             254        1,522     -83.3%
       Other, net                               (162)         174         --
       Net non-operating income                2,112        3,138     -32.7%
 
       Income before income taxes and
        cumulative effect of accounting
        change and unrealized loss on
        derivative instruments (A)             9,961        6,864      45.1%
 
     Provision for income taxes                4,283        3,349      27.9%
     Net income before cumulative effect
      of accounting change and unrealized
      loss on derivative instruments           5,678        3,515      61.5%
       Cumulative effect of accounting
        change, net of tax (A)                 4,494           --         --
       Unrealized loss on derivative
        investments, net of tax (A)             (841)          --         --
 
     Net income                               $9,331       $3,515     165.5%
 
     Basic earnings per common share           $0.48        $0.19     152.6%
     Basic weighted average common
      shares outstanding                      19,374       18,075       7.2%
     Diluted earnings per common share         $0.45        $0.18     150.0%
     Diluted weighted average common
      shares outstanding                      20,571       19,315       6.5%
     Diluted earnings per common share
      excluding cumulative effect of
      accounting change and unrealized
      loss on derivative instruments (A)       $0.28        $0.18      55.6%
 
     (A) On January 1, 2001, the Company adopted Statement of Financial
         Accounting Standards (SFAS) No. 133, "Accounting for Derivative
         Instruments and Hedging Activities", and its subsequent amendments.
         As a result the Company recorded a transition adjustment of
         $4.5 million, net of consultants' bonuses, administrative and other
         costs, and taxes.  In addition, for the three months ended March 31,
         2001, the Company recorded an unrealized loss of $0.8 million, net of
         consultants' bonuses, administrative and other costs, and taxes due to
         SFAS 133.
 
 
                    HEIDRICK & STRUGGLES INTERNATIONAL, INC.
                            SEGMENT INFORMATION (A)
                                 (In thousands)
 
                                            Three Months Ended March 31,
                                                                  2001    2000
                                      2001       2000  % Change  Margin  Margin
     Revenue:
     Americas
         North America              $70,080    $74,799    -6.3%
         Latin America                4,335      4,427    -2.1%
     International
         Europe                      51,744     41,384    25.0%
         Asia Pacific                 7,883      8,122    -2.9%
     Total Executive Search         134,042    128,732     4.1%
     LeadersOnline                    5,226      3,204    63.1%
         Total                     $139,268   $131,936     5.6%
 
     Operating Income (Loss):
     Americas
         North America               $7,288    $13,086   -44.3%   10.4%   17.5%
         Latin America                 (217)       115       --   -5.0%    2.6%
     International
         Europe                       9,436      2,962   218.6%   18.2%    7.2%
         Asia Pacific                   734      1,190   -38.3%    9.3%   14.7%
     Total Executive Search          17,241     17,353    -0.6%   12.9%   13.5%
     LeadersOnline                   (1,686)    (4,186)  -59.7%      --      --
     Corporate                       (7,706)    (9,441)  -18.4%      --      --
         Total                       $7,849     $3,726   110.7%    5.6%    2.8%
 
     (A) Note, 2000 segments have been restated to reflect 2001 segment
         reporting.
 
 
                    HEIDRICK & STRUGGLES INTERNATIONAL, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
 
                                            March 31,  December 31, March 31,
                                              2001        2000        2000
                                          (unaudited)              (unaudited)
     Current assets:
       Cash and cash equivalents            $136,461    $184,836    $133,079
       Accounts receivable, net of
        allowance for doubtful accounts       97,461     106,334      94,208
       Other receivables                       5,887       7,357       4,745
       Prepaid expenses                       16,574      11,783       9,295
       Deferred income taxes, net             27,092      26,071      21,107
         Total current assets                283,475     336,381     262,434
 
     Property and equipment, net              51,560      52,660      55,282
 
     Other assets:
       Cash and investments designated
        for nonqualified retirement plans     15,925      16,506      33,532
       Investments and other assets           41,990      45,097      25,808
       Deferred income taxes, net              4,822       6,792          --
       Goodwill and other intangibles, net    64,939      66,208      47,606
         Total other assets                  127,676     134,603     106,946
 
         Total assets                       $462,711    $523,644    $424,662
 
 
                    HEIDRICK & STRUGGLES INTERNATIONAL, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
 
                                            March 31,  December 31, March 31,
                                              2001        2000        2000
                                           (unaudited)             (unaudited)
     Current liabilities:
       Current maturities of long-term debt   $1,054      $1,135      $3,039
       Accounts payable                       11,110      10,051       8,321
       Accrued expenses:
         Salaries and employee benefits       85,909     160,552      91,637
         Other                                23,475      27,888      17,450
       Income taxes payable                   14,384      16,415      10,325
         Total current liabilities           135,932     216,041     130,772
 
     Long-term debt, less current maturities     566         610          --
 
     Liability for nonqualified retirement
      plans                                   19,900      19,316      28,500
 
     Other long-term liabilities                  --          --       2,205
 
     Stockholders' equity                    306,313     287,677     263,185
 
         Total liabilities and
          stockholders' equity              $462,711    $523,644    $424,662
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X63514015
 
 

SOURCE Heidrick & Struggles International, Inc.
    CHICAGO, April 25 /PRNewswire/ -- Heidrick & Struggles International, Inc.
 (Nasdaq:   HSII), the world's premier executive search and leadership consulting
 firm, today announced record revenue and earnings for the 2001 first quarter.
 Diluted earnings per share were $0.28, excluding $0.18 of net unrealized gains
 on a portion of the warrant portfolio, an increase of 56 percent from $0.18 in
 the 2000 first quarter. Consolidated revenue grew 6 percent to $139.3 million,
 up from $131.9 million in the comparable quarter of 2000. Net income, also
 excluding net unrealized gains on a portion of the warrant portfolio, was
 $5.7 million, an increase of 62 percent from $3.5 million in last year's first
 quarter.
     "Even as we navigated through a troubled U.S. economy, we were able to
 generate revenue and earnings growth," said Patrick S. Pittard, Chairman,
 President and Chief Executive Officer of Heidrick & Struggles International
 (HSI Group). "We knew that we faced difficult comparisons with last year's
 first quarter, but we benefited from our geographic diversification with
 particularly strong revenue performance in Europe."
     Diluted earnings per share in the 2001 first quarter include $0.05 in
 losses incurred by LeadersOnline. Realized gains from the sale of equity in
 connection with the warrant program, net of consultants' bonuses and
 administrative and other costs, contributed $0.01 per share.
     On January 1, 2001, HSI Group adopted Statement of Financial Accounting
 Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
 Activities," and its subsequent amendments. As a result of the adoption, the
 company is now required to include, in its income statement, unrealized gains
 or losses from a portion of its warrant portfolio. In the 2001 first quarter,
 the unrealized gain was $3.7 million after tax, or $0.18 per share on a
 diluted basis. This amount comprises the original $4.5 million transition
 adjustment at January 1, 2001, and the unrealized loss of $841,000,
 representing the decrease in value in the 2001 first quarter.
     The 2001 first quarter's consolidated results were affected by a
 significant increase in bad-debt-related expenses; $10.3 million of expense
 was recorded in the quarter. The negative effect on earnings of the bad-debt-
 related expenses was more than offset by $13.0 million, predominantly related
 to performance-based compensation. Because bad debt write-offs continued at an
 above average level in the quarter and the weakening of the U.S. economy has
 heightened the potential for a more difficult collection environment, the
 company determined it was appropriate to increase substantially its allowance
 for doubtful accounts. As consultants are not compensated for fees generated
 that are not collected, a reduction was made to current period and previously
 recorded bonus accruals. In addition, the 2001 first quarter benefited from
 decisions taken and performance-related settlements made in the quarter that
 reduced compensation, benefits, and other amounts that had been accrued
 previously. Separately, certain discretionary bonuses, related to achieving
 planned performance targets, were not accrued during the quarter.
     On a reported basis for the 2001 first quarter, which includes the
 $0.18 in net unrealized gains on a portion of the warrant portfolio, diluted
 earnings per share were $0.45, an increase of 150 percent from $0.18 in the
 2000 first quarter. Net income was $9.3 million, an increase of 165 percent
 from $3.5 million in last year's first quarter.
 
     2001 First Quarter Performance by Segment
     HSI Group adjusted its segment reporting to reflect the current internal
 management reporting structure, as well as some changes to the allocation of
 certain costs to operations and corporate expenses. Beginning in the 2001
 first quarter, the company broke out revenue and operating income for its
 Executive Search business in the Americas segment into two regions: North
 America and Latin America. The North America region includes the U.S. (except
 Miami) and Canada. The Latin America region includes Mexico and the rest of
 Latin America, as well as Miami, which serves as our gateway office to the
 region. Reporting for the International segment remained the same, comprising
 the Europe region (which includes Africa and the Middle East) and the Asia
 Pacific region.
 
     Executive Search Results
     Revenue for Executive Search grew 4 percent to $134.0 million in the 2001
 first quarter, up from $128.7 million in the 2000 first quarter. Operating
 income was $17.2 million in the 2001 first quarter, essentially flat with
 $17.4 million a year ago. Although fewer searches were conducted overall, CEO
 searches remained strong, which resulted in a higher level of fees per search.
 Confirmed searches decreased 12 percent from the 2000 first quarter, while
 fees per search rose 18 percent. As of March 31, 2001, the company employed
 546 executive search consultants, a 7 percent increase over the consultant
 headcount of 510 as of Dec. 31, 2000.
     Revenue in North America was $70.1 million, a decrease of 6 percent from
 $74.8 million in the 2000 first quarter. Strength in the Health Care and
 Professional Services practice groups partially offset a decline in the
 Financial Services practice. The operating margin declined to 10.4 percent
 from 17.5 percent in the 2000 first quarter, due to a decrease in revenue,
 higher base salary costs related to the substantial number of consultants
 hired over the past 12 months, and a significant increase in the allowance for
 doubtful accounts, partially offset by the related reduction in bonuses.
     In Latin America, revenue decreased 2 percent to $4.3 million in the 2001
 first quarter, down from $4.4 million in the 2000 first quarter, as the region
 felt some of the effects of a weakening U.S. economy. The company has
 previously indicated that 2001 would be an investment year for Latin America
 and, as expected, there was an operating loss of $217,000 in the 2001 first
 quarter, compared to operating income of $115,000 in the comparable quarter
 last year.
     Revenue in Europe increased 25 percent to $51.7 million, compared to
 $41.4 million in the 2000 first quarter, due to particularly strong
 performances from the Financial Services and Professional Services practice
 groups. Excluding the impact of foreign currency translation into the U.S.
 dollar, revenue increased 35 percent on a local currency basis over the
 comparable quarter in 2000. The operating margin increased to 18.2 percent
 from 7.2 percent. This margin improvement, which is not sustainable, reflects
 superior leverage as a result of strong revenue growth and a decrease in the
 region's bad debt provision due to recoveries.
     In Asia Pacific, revenue was $7.9 million, a decrease of 3 percent from
 $8.1 million in the 2000 first quarter. Excluding the impact of foreign
 currency translation into the U.S. dollar, revenue increased 6 percent on a
 local currency basis over the comparable quarter in 2000. The operating margin
 declined to 9.3 percent from 14.7 percent in the 2000 first quarter primarily
 due to office expansions in the region.
 
     LeadersOnline Results
     Revenue for LeadersOnline grew 63 percent to $5.2 million in the 2001
 first quarter, up from $3.2 million in the 2000 first quarter. LeadersOnline
 reported an operating loss of $1.7 million versus an operating loss of
 $4.2 million in the 2000 first quarter. Losses were $0.05 per share compared
 to $0.14 per share in the 2000 first quarter. The company's goal remains to
 break even no later than the 2001 third quarter; however, the state of the
 U.S. economy will be the major factor in our ability to achieve this goal.
 
     Warrant Program
     For the 2001 first quarter, the sale of equity obtained in search
 assignments resulted in a pre-tax gain of $254,000, net of consultants'
 bonuses and administrative and other costs, or $0.01 per diluted share. This
 amount is included in Non-Operating Income on the income statement. In
 addition to its normal cash fees, Heidrick & Struggles receives warrants for
 equity in connection with searches conducted for pre-public as well as some
 public firms, and has been expanding the program around the world.
 
     Consolidated Outlook
     Because of the uncertainty surrounding the U.S. economy and its impact on
 our clients' decisions to initiate searches -- other than for CEOs and other
 critical leadership positions -- revenue and earnings visibility for the 2001
 second quarter continues to be very limited.
     "We have found it challenging to discern any patterns from our revenue in
 2001. Some weeks are very strong while others are much less so. This uneven
 pattern seems to be continuing," said Pittard. "Each month, revenue has
 progressively improved from the month before, but is not strong enough -- at
 least at this point -- to put us on pace with last year's second quarter,
 which saw a nearly 50 percent revenue increase, fueled by early stage,
 venture-backed, largely dot-com searches."
     The company wishes to provide some perspective, however, on possible
 revenue and earnings relationships. For example, if revenue were in the
 $150 million to $160 million range for the 2001 second quarter, the company
 estimates that diluted earnings per share would likely be in the $0.38 to
 $0.46 range.
     With the hiring of 135 consultants and their support staff in the past 12
 months, the company has been making investments in its future. This also means
 that it dramatically increased capacity just prior to the economic slowdown.
 The fixed costs of the base salaries of the newly hired consultants and
 support staff, as well as the expense to provide workspace, are significant to
 the company's cost structure. However, the company's management team is
 charged not only with the responsibility to meet short-term commitments but
 also to balance those commitments with the ability to grow longer term, for
 which these consultants will be pivotal.
 
     Robinson-Humphrey to Offer Block Trade Program in Connection with Lock-up
 Expiration
     The Robinson-Humphrey Company is offering employees and former employees
 of HSI Group whose shares were subject to a two-year lock-up agreement in
 connection with the IPO the opportunity to aggregate a portion of their shares
 with those of other employees and former employees for sale as a block to
 investors who want to accumulate an equity stake in Heidrick & Struggles
 International.
     "The block trade program will allow shareholders who have been subject to
 this agreement to diversify their holdings in an organized, responsible
 fashion," said Pittard. "In the spirit of partnership, we have asked that
 internal shareholders voluntarily limit their selling to no more than
 25 percent of their total holdings during any 12-month period."
     Of the company's 19.4 million shares outstanding, 10.3 million are subject
 to the lock-up agreement. Internal members of the Heidrick & Struggles
 International Board of Directors, as well as the company's Executive Officers,
 are not expected to sell any of their shares in the near future. Collectively,
 this group owns approximately 16 percent of the lock-up shares.
 
     Webcast of Investor Call Available
     To review its first quarter earnings results, the company will provide a
 real-time investor call webcast on Thursday, April 26, at 9:00 a.m. (CDT). The
 webcast will feature remarks by Don Kilinski, Chief Financial Officer, and
 Lynn McHugh, Managing Partner of Finance and Investor Relations. The live
 webcast will be available online at www.heidrick.com . A replay will be
 available for up to 30 days following the investor call.
 
     Webcast of Investor Day Presentations Available
     The company will provide a real-time webcast of its first-ever Investor
 Day on Wednesday, May 2 at 10:30 a.m. (CDT). The webcast will feature audio-
 only presentations by several members of the company's senior management team.
 The live webcast will be available online at www.heidrick.com . A replay will
 be available for up to 14 days following the Investor Day.
 
     About Heidrick & Struggles International, Inc. (HSI Group)
     Heidrick & Struggles International, Inc. (HSI Group) is the world's
 premier provider of executive-level search and leadership consulting services.
 More than 1,200 Heidrick & Struggles professionals operate from offices in
 over 75 locations throughout North and South America, Europe, the Middle East,
 Africa and Asia Pacific. For nearly 50 years, our core business - Heidrick &
 Struggles Executive Search - has specialized in chief executive, board member
 and senior-level management assignments for a broad spectrum of clients:
 multi-national corporations, mid-cap and start-up companies, nonprofit
 entities, educational institutions, foundations, associations and governmental
 units. We are expanding our range of complementary services to offer solutions
 to senior management teams for their human capital needs. LeadersOnline, our
 Internet-enhanced recruiting business, serves clients who seek the next
 generation of corporate leaders. We are capitalizing on our access and
 influence with the highest levels of our client organizations through Heidrick
 & Struggles Ventures, our unit responsible for other complementary businesses,
 alliances and investments. For more information about HSI Group, visit our web
 site at www.heidrick.com .
 
     Safe Harbor Statement
     This news 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," 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 and retain qualified executive search consultants; a
 material economic downturn in the United States or Europe, or social or
 political instability in overseas markets; bad debt write-offs far in excess
 of allowances for doubtful accounts; continued increased acceptance of online
 recruiting; losses in our venture capital investments; an inability to control
 expenses; and delays in the development and/or implementation of new
 technology and systems. 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.
                       CONSOLIDATED STATEMENTS OF INCOME
                     (In thousands, except per share data)
 
                                               Three Months Ended March 31,
                                              2001         2000      % Change
 
     Revenue                                $139,268     $131,936       5.6%
 
     Operating expenses:
       Salaries and employee benefits         87,090       92,400      -5.7%
       General and administrative expenses    44,329       35,810      23.8%
       Total operating expenses              131,419      128,210       2.5%
       Operating income                        7,849        3,726     110.7%
 
     Non-operating income (expense):
       Interest income                         2,061        1,517      35.9%
       Interest expense                          (41)         (75)    -45.3%
       Realized gains on investments             254        1,522     -83.3%
       Other, net                               (162)         174         --
       Net non-operating income                2,112        3,138     -32.7%
 
       Income before income taxes and
        cumulative effect of accounting
        change and unrealized loss on
        derivative instruments (A)             9,961        6,864      45.1%
 
     Provision for income taxes                4,283        3,349      27.9%
     Net income before cumulative effect
      of accounting change and unrealized
      loss on derivative instruments           5,678        3,515      61.5%
       Cumulative effect of accounting
        change, net of tax (A)                 4,494           --         --
       Unrealized loss on derivative
        investments, net of tax (A)             (841)          --         --
 
     Net income                               $9,331       $3,515     165.5%
 
     Basic earnings per common share           $0.48        $0.19     152.6%
     Basic weighted average common
      shares outstanding                      19,374       18,075       7.2%
     Diluted earnings per common share         $0.45        $0.18     150.0%
     Diluted weighted average common
      shares outstanding                      20,571       19,315       6.5%
     Diluted earnings per common share
      excluding cumulative effect of
      accounting change and unrealized
      loss on derivative instruments (A)       $0.28        $0.18      55.6%
 
     (A) On January 1, 2001, the Company adopted Statement of Financial
         Accounting Standards (SFAS) No. 133, "Accounting for Derivative
         Instruments and Hedging Activities", and its subsequent amendments.
         As a result the Company recorded a transition adjustment of
         $4.5 million, net of consultants' bonuses, administrative and other
         costs, and taxes.  In addition, for the three months ended March 31,
         2001, the Company recorded an unrealized loss of $0.8 million, net of
         consultants' bonuses, administrative and other costs, and taxes due to
         SFAS 133.
 
 
                    HEIDRICK & STRUGGLES INTERNATIONAL, INC.
                            SEGMENT INFORMATION (A)
                                 (In thousands)
 
                                            Three Months Ended March 31,
                                                                  2001    2000
                                      2001       2000  % Change  Margin  Margin
     Revenue:
     Americas
         North America              $70,080    $74,799    -6.3%
         Latin America                4,335      4,427    -2.1%
     International
         Europe                      51,744     41,384    25.0%
         Asia Pacific                 7,883      8,122    -2.9%
     Total Executive Search         134,042    128,732     4.1%
     LeadersOnline                    5,226      3,204    63.1%
         Total                     $139,268   $131,936     5.6%
 
     Operating Income (Loss):
     Americas
         North America               $7,288    $13,086   -44.3%   10.4%   17.5%
         Latin America                 (217)       115       --   -5.0%    2.6%
     International
         Europe                       9,436      2,962   218.6%   18.2%    7.2%
         Asia Pacific                   734      1,190   -38.3%    9.3%   14.7%
     Total Executive Search          17,241     17,353    -0.6%   12.9%   13.5%
     LeadersOnline                   (1,686)    (4,186)  -59.7%      --      --
     Corporate                       (7,706)    (9,441)  -18.4%      --      --
         Total                       $7,849     $3,726   110.7%    5.6%    2.8%
 
     (A) Note, 2000 segments have been restated to reflect 2001 segment
         reporting.
 
 
                    HEIDRICK & STRUGGLES INTERNATIONAL, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
 
                                            March 31,  December 31, March 31,
                                              2001        2000        2000
                                          (unaudited)              (unaudited)
     Current assets:
       Cash and cash equivalents            $136,461    $184,836    $133,079
       Accounts receivable, net of
        allowance for doubtful accounts       97,461     106,334      94,208
       Other receivables                       5,887       7,357       4,745
       Prepaid expenses                       16,574      11,783       9,295
       Deferred income taxes, net             27,092      26,071      21,107
         Total current assets                283,475     336,381     262,434
 
     Property and equipment, net              51,560      52,660      55,282
 
     Other assets:
       Cash and investments designated
        for nonqualified retirement plans     15,925      16,506      33,532
       Investments and other assets           41,990      45,097      25,808
       Deferred income taxes, net              4,822       6,792          --
       Goodwill and other intangibles, net    64,939      66,208      47,606
         Total other assets                  127,676     134,603     106,946
 
         Total assets                       $462,711    $523,644    $424,662
 
 
                    HEIDRICK & STRUGGLES INTERNATIONAL, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
 
                                            March 31,  December 31, March 31,
                                              2001        2000        2000
                                           (unaudited)             (unaudited)
     Current liabilities:
       Current maturities of long-term debt   $1,054      $1,135      $3,039
       Accounts payable                       11,110      10,051       8,321
       Accrued expenses:
         Salaries and employee benefits       85,909     160,552      91,637
         Other                                23,475      27,888      17,450
       Income taxes payable                   14,384      16,415      10,325
         Total current liabilities           135,932     216,041     130,772
 
     Long-term debt, less current maturities     566         610          --
 
     Liability for nonqualified retirement
      plans                                   19,900      19,316      28,500
 
     Other long-term liabilities                  --          --       2,205
 
     Stockholders' equity                    306,313     287,677     263,185
 
         Total liabilities and
          stockholders' equity              $462,711    $523,644    $424,662
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X63514015
 
 SOURCE  Heidrick & Struggles International, Inc.