Resources Connection Inc (RGP) 2005 Q4 法說會逐字稿

Good day and welcome everyone to the Resources Connection fourth quarter fiscal year 2005 earnings results conference call. This call is being recorded. With us today from the Company is Ms. Kate Duchene, Chief Legal Officer, Mr. Steve Giusto, Chief Financial Officer and Mr. Don Murray, Chief Executive Officer. At this time I would like to turn the call over to Ms. Duchene. Please go ahead.

Thank you, operator. Good afternoon everyone and thank you for joining us today. Joining me here are Don Murray, our Chairman and Chief Executive Officer of Resources Connection, and Steve Giusto, our Executive Vice President of Corporate Development and CFO. During this call we will be providing with you comments on our results for the fourth quarter of fiscal 2005. By now you should have a copy of today's press release in front of you. If you need a copy, and are unable to access a copy by our Website, please call [Patricia Marquez] at 714-430-6314 and she will be happy to send a copy - - fax a copy off to you.

Before introducing Mr. Murray, I would like to read an important announcement about certain statements that we may make during this call. Specifically, we may make forward-looking statements. In other words, statements regarding future events or future financial performance of the Company. As always, we wish to caution you that such statements are just predictions, and actual events or results may differ materially. We refer you to our 10-K report for the year ended May 31, 2004, for a discussion of some of the risks, uncertainties, and other factors such as seasonal and economic conditions; that may cause our business, results of operations, and financial condition to differ materially from results of operations and financial conditions expressed or implied by forward-looking statements made during this call. I'll now turn the call over to Don Murray, our Chairman and CEO, to give an overview of the quarter.

Thanks, Kate. Well, good afternoon and welcome to our conference call for the fourth quarter of fiscal 2005. We believe Resources Global Professionals is "the" professional services firm of the future as clients look for internal consultants to fix their problems and assist with critical projects. Fiscal 2005 has been an excellent year for Resources and the results in our fourth quarter ended May 31, 2005, continued the strong operating performance throughout the Company. We've continued to experience demand for help with regulatory compliance and this is fueled demands in other areas of our business. The summary of our operating results for the fourth quarter and for the year were reported earlier in our press release.

For the final quarter of fiscal 2005 revenues were $150 million. And this represents sequential growth of 11% and year-over-year growth of 40%. For the year, revenues totaled $538 million, higher by 64% from the previous year. And this is our second consecutive year of revenue growth over 60%. Revenue results in the fourth quarter are consistent with the trends we disclosed during our last conference call. We experienced a slight softening around Easter and have sequentially seen weekly revenue levels growing. Steve will provide additional detailed revenue trends in his review of operations later in the call.

Consistent with our expectations and comments during the previous quarter's call, there has been a modest slowdown in our resource audit solutions internal practice. That has been more than offset by renewed strength in other areas of our business. Revenue results in our international markets grew during the later part of the quarter. And a number of our international practices were operating at record levels as we entered the first week of fiscal 2006. And as is our normal practice, I will update you on our progress towards the four key components of our growth strategy.

First, this has been our best year in terms of client penetration. During fiscal 2005 we had 111 clients with individual revenue above $1 million. And a total of 212 at revenue levels over $500,000. The number of $1 million clients has more than doubled the year ago and more than four times the number we served in fiscal 2002. We focus on building long-term relationships with major companies and consider this progress a key indicator of the foundations we are building for future growth. Revenues from our top 50 clients represented about 40% of total revenue during the year and 50% of our revenue came from 82 clients. Our largest client this year represented a little over 5% of revenue. Second, included among the major clients I just described were some significant new clients. In total, we added about 300 net new clients this year and of these new clients 38 were Fortune 500 companies.

Third, during this year we continued with the goal of global reach in providing services. During fiscal 2005, we added capabilities in the Nordic region of Europe, expanded our presence on the European continent. Developed relationships that allow to us serve clients in India and on mainland China. And while continuing to open offices in North America where our clients tell us they have needs. During this year we have served clients in 39 countries and each of our established international practices was profitable.

And fourth, our strategy of diversifying our scope of services had allowed us to build numerous layers of potential revenue in a variety of professional areas. We added client needs - - we addressed client needs as one coordinated Company with six services and one product. Our offerings are accounting and finance, information management, human capital services, supply-chain management, internal audit through our RAS subsidiary, and legal services. We also sell a policy management software solution called policyIQ. Our fastest growing service in the past year has been RAS, our internal audit and corporate governing service. And it is four times bigger than a year ago and represented about 40% of revenue this year.

In our latest quarter, all services grew sequentially and non-RAS services grew faster than RAS did. We are optimistic about the long-term growth prospects of the internal audit area but also believe that clients have been delaying projects in other areas because of their focus on the SOX compliance during the last year. As we reported in our recent press release, our survey of larger companies shows that over 50% of companies have not institutionalized their SOX compliance efforts. And thus we expect that companies will continue to need our assistance in this area. The dates for accelerated SOX filers with calendar year-ends has now passed. But we are still seeing demand from clients in the SOX area. Some of that demand is coming from non-accelerated filers, including major international companies who must comply with SEC rules. While other demands are coming from companies already working on year two compliance. As well as those accelerated filers with non-calendar year-ends.

We have several engagements where we are helping clients remediate issues identified during the SOX process. We see SOX compliance as one component as a larger opportunity in the internal audit market. We also expect that clients will be working on corporate governance, risk assessment and control and operational audits. We believe we are well positioned to help them with these sorts of initiatives. There's continued strength in other areas of our business. Accounting and finance has been and continues to be our largest service and clients' demands for this service line were higher during the past quarter. Gross margins for the quarter were right on our 40% target on a consolidated basis. For the year gross margins improved by 0.05% to 39.6%.

For the year conversion fees were less than 1% of revenue and client reimbursements were about 3% of revenue. As previously discussed we do not manage these two components of gross margin. Now, Steve will provide a more detailed review of our financial results for the quarter and the year.

Thank you, Don. Revenues for the quarter were $150 million versus $107 million in the comparable quarter a year ago, and $135 million in the previous quarter. For the year, revenues totaled $538 million, 54% higher than a year ago. That represents dollar growth of $210 million for the year. Weekly revenue results through the fourth quarter were strong. As we previously reported, the first few weeks of the quarter revenues were above $11.5 million per week. We experienced a brief slowdown during the Easter holidays. The slowdown was slightly more significant internationally where the entire Easter week is pretty quiet. We then returned to good revenue growth and the last few weeks of the quarter were all-time high weeks. We finished the quarter at a weekly run rate of about $11.7 million and the average weekly revenue during the quarter was slightly above $11.5 million.

Now let me discuss revenues geographically. Revenues in the U.S. were strong. The U.S. practice averaged $9.1 million per week. This is sequentially higher than the average for Q3 by about $100,000 per week. International revenues accelerated during the latter part of the quarter. We experienced strong revenues across most international practices and a number of our international practices were operating at their highest levels. The dollar strengthened modestly during the quarter so results on a dollar basis were negatively impact by currency exchange. Revenues for the quarter on a dollar basis were up 12% year-over-year in the Netherlands and by 69% in the U.K.

Revenues for the Dutch practice were at a 52-week high in the last week of the quarter and increased early in Q1. The U.K. practice also experienced record revenue levels with growth also continuing into the first quarter. Elsewhere, our Asia Pacific practices continued to make good progress and were profitable. Total revenues for the Dutch practice in Q4 were $14.9 million and total revenues internationally were $32.1 million, 21% of total revenue.

Let me now give you information about how revenues in the first quarter of fiscal 2006 are progressing. We have had five weeks since the end of the year. Average revenue per week has been greater than the average of Q4. Weekly revenue in the three full weeks, excluding the week of Memorial Day, during the first month of fiscal 2006, averaged about $11.9 million. The week before the 4th of July holiday week was another all-time high with revenues over $12 million. The month of August tends to be seasonally weak due to vacation periods in Europe and to a lesser extent in the U.S.

We have been successful in developing some recent large engagements that are progressing through the summer but we still to have deal with vacations and their effects on revenues. Currently we expect revenues to be down slightly on a sequential basis in Q1. As expected, gross margins were higher in Q4 than Q3. Domestic gross margins were 41.2% for the quarter.

Conversion fees were less than 1% of revenues and client reimbursements about 3% of revenues during the quarter. These percentages have been consistent for some time. As a reminder, conversion fees generate 100% gross margins and client reimbursements, a pass-through of out of pocket costs, generates 0% gross margins. Conversion fees were highest in 2001 when they accounted for about 5% of revenue in a few periods. We consider them a signal of the strength of the job market in the sectors we operate in.

International gross margins were 35.6% during the quarter. As discussed previously, the international practices have slightly lower gross margins due to differences in work customs, laws, and regulations in those markets. Consolidated gross margins were 40% for the quarter, exactly in line with our long-term goals and in line with our results in Q2. Without the impact of conversion fees and client reimbursements gross margins would have been 40.4% during Q4. For the year, gross margins were 39.6%, an improvement of 50 basis points from the prior year and in line with our long-term gross margin expectations. Associate headcount at the end of the quarter was 2,639 compared to 2,086 a year ago and 2,582 last quarter. Starting in Q1 of fiscal 2006, we will report associate headcount on a full-time equivalent basis. We believe this will improve the information available to investors to understand this fundamental driver of revenue.

Now, to the other components of our fourth quarter and full year financial results. Selling, general, and administrative expenses for the fourth quarter were $33.5 million, or 22.3% of revenue. In last year's fourth quarter SG&A was also 22.3% of revenue. Included in our operating costs, are our own significant compliance costs for Sarbanes. Our out of pocket costs, including payments to our auditors and to the Resources' associates we engaged to help us with this effort, were approximately $1.4 million year to date. This did not include the time investment of our management team. We continued to add internal headcount as we bolstered our management team to address the ongoing demands we seen in the business. We expect to continue adding internal headcount into fiscal 2006 to fuel future growth but this could have a modest negative impact on short-term operating margins.

SG&A was $23.9 million in the prior year fourth quarter and was $29.6 million in the third quarter of this fiscal year. For the year, SG&A as a percentage of revenue was 21.7% compared to 25.7% a year ago. Depreciation and amortization were $1 million for the quarter and $3.9 million for the year. Last year depreciation and amortization for the year was $3.6 million, and it was $1.1 million in the year-ago fourth quarter. Interest income was $827,000 for the fourth quarter, versus $171,000 a year ago. Total interest income for the year was $2.1 million due to our higher cash balances and slightly higher interest rates.

Our tax rate came down to 40.5% in the fourth quarter due primarily to better international results. And we expect that rate to continue in coming quarters. Our operating margin for the fourth quarter was 17.7% compared to 17.8% a year ago. Operating margins for the year were 18% compared to 13.5% a year ago. Earnings for the quarter were $15.7 million, or $0.31 per share, versus $10.7 million and $0.22 a share a year ago, representing earnings growth of 46%. Earnings for the year were $56.1 million, or $1.11 per share, compared to $24.3 million or $0.50 per share last year. This represents earnings growth of 130%.

Now let me turn to our balance sheet. Cash and investments at year end were $135 million. Receivables at year end were $81 million, relatively flat with the third quarter and up 35% from a year ago. Days sales outstanding trended down to 48 days from 50 days the previous quarter. And for the year we generated about $68 million of cash flow from operations, which represents more than 120% of our net income for the year. We are pleased in the efficiency with which our business model generates cash and significant cash balances. And short receivables are emblematic of the strength of our balance sheet. Both management and the Board will continue to discuss best ways to use cash to benefit the Company and our shareholders. Now, let me turn the call back to Don for some final comments.

Thanks Steve. Well, our operating performance in the last quarter and for this last year and a half has been excellent. We continue to see numerous near-term opportunities that we are pursuing. And we believe the long-term trends in the professional services industry are in our favor. To capitalize on these opportunities we must continually make investments that we expect to lead to future revenues and profits. We have recently hired four former big four partners who will be focused on helping us develop and grow large client opportunities and on augmenting our leadership team.

Our ability to attract these individuals, and others like them, is a testament to the evolution of our Company as an alternative to other traditional professional services is firms. And I believe we have a culture that is different and preferable to other firms. And our management team works hard to ensure that culture remains strong as we continue to grow. We expect to grow revenues and earnings in fiscal 2006 as well. As Steve mentioned, the early weeks of the new fiscal year are off to a good start and our people are enthusiastic and confident. Our long-term objectives are to achieve 20% to 30% average annual revenue growth. If we continue to experience the same trends throughout this year, that we are seeing during the early part of the summer, we hope to grow 20% in fiscal 2006.

There are obstacles to reaching that objective. Many of which are not in our control. For instance, a slowdown in the economy, terrorist acts, a significant change in the regulatory environment, all might change the spending patterns of our clients. Recruiting and retention are always an issue in a strengthening economy. Our focus continues to be on executing our business model well. It starts we identifying high-quality associates who have the right skills and experiences to help our clients. We have added many new talented people in the last few years. And we are told that has helped us differentiate ourselves in the marketplace. We believe that our clients have high satisfaction with our services. And we're working very hard every day to maintain their trust in us and our business model. And that, in turn, allows us to offer interesting assignments to our people. And this relationship between finding talented associates and serving high visibility clients is our circle of quality.

During the coming year, we're going to continue to invest in improving our Company and assisting our clients around the world while providing an environment where our people can grow and thrive. We have the financial strength to address new geographic needs around the world and also spending appropriately and carefully in existing markets with high potential. We try to make these investments in a balanced way, so that revenue growth and earnings growth continue but the timing of investments always precedes expected revenue.

During the last 18 months, investments we made during the recession paid off with higher revenues and operating margin. With our global business model and footprint we provided coordinated services around the world and previously only available from a big five or major consulting firm. Our people are proud of all that's been accomplished this year. And they believe that Resources is well positioned to capitalize on substantial opportunities continuing to develop from the historic changes in the professional services environment and by our own evolution as a business.

Our clients are going through changes and this creates need for services. And the breadth and quality of services we are able to provide has expanded. We have created momentum that we hope to carry into this coming fiscal year. So now we would be glad to answer your questions. Thank you.

[OPERATOR INSTRUCTIONS] Our first question today is from Brandt Sakakeeny from Deutsche Banc. Please go ahead.

Can you guys give us just in terms of as you look in the investment? You obviously talked to personnel, can you talk to - - do you anticipate stuff in the way of additional office openings? Should we expect that you will continue to expand in Europe given the strong growth that we saw in the first quarter, systems implementation, things like that? Where exactly are the investment dollars going to go? And I guess as you look out to the revenue line going forward as well, where do you see the greatest opportunities with respect to the specific business lines? Do you expect legal to be a material contributor to FY '06? Thanks.

Thanks, Brandt. There's a bunch of questions there, if I can remember them all, I'll try. We do plan to continue to invest in new offices as well as new people and existing offices. We're currently looking at a Resources direct presence in India. We're looking to establish a joint office in our name in Beijing with our Chinese affiliate. We're looking - - or actually have opened an office in Copenhagen. We're looking at another office one of the Nordic countries. We have discussions in three other western European countries for leaders. We're, I think, doing a search right now to establish an office in Dublin, because we have a number, 12 to 15 type associates that are working on clients in Dublin. So, yes, we're looking to expand the business model geographically into countries where we're doing work for clients already, we're utilizing resources. So geographically we'll continue to expand.

Number two, we think there's a lot expansion left in our major existing market places in - - around the world, in the United States. So we continue to add a lot of Resources, I would say, internally in the East Coast and on the West Coast. So those two markets are very strong for us. The demand right now is outstripping the people available. So we're looking for internal quality people in those two markets. Service lines, I continue to see growth in all of our service lines and a lot of them are very dependent on each other. Legal services is - - has a lot of similarities to some of the things we're doing in the human capital services line. Legal services we do hope will be a major contributor in the future. We think legal services is where accounting services were when we started our business in 1996. In that clients need a lot of interim project assistance in legal. The only place they get them right now is is either through a staffing firm where the quality is questionable, or through their own law firms where the rates are very high.

So, we think there's a great opportunity there for us. And so far it's been very well received. If I had to say where - - what future geographies will get the most of our growth from, it's probably going to be from Tokyo. I imagine from Asia, from, again, Tri-state and the Western region, and Europe. So, we're pretty optimistic wherever we look about the things that we can control.

Great. And maybe just a quick comment on the supply side?

Well, the supply side right now is for us is tight in the - - especially in New York, Tri-state area, and southern California, northern California areas, because our demand is really strong there. And on the other hand, in the middle of the country it's soft and we have people available. So, we're trying to redeploy some of our resources from our associates from the Midwest and south back into the East Coast and West Coast if they want to travel. So it's sort of - - the two coasts are very strong, so the demand is tough for people, and the Midwest and South and the middle of the country is soft.

Great. Thanks. I'll let other people ask.

Our next question will be from Andrew Steinerman from Bear Stearns.

Steve, could you just give us your SG&A comments a little bit more crisply? Given that SG&A has come up a few million dollars sequentially, as we look into the August quarter, which is seasonally slower and you indicated revs might be down slight, is there anything within SG&A that might come down slightly or is the direction in dollar terms for SG&A sort of just up from here?

Well, the only thing that I think might be down Andrew, is most of the spending we did for Sarbanes is done. So we will have less spending in that area in Q1. We will expect to spend more in that area towards the latter part of fiscal '06 just as we think most of our clients will. But most of the work for completion of our K and other things like that is wrapping up. Other than that we do have, as I mentioned, plans to continue to build headcount within our offices to address growth. And the primary driver of that SG&A is when we find the quality people that we want. So we are constantly looking for new talented people and when they arrive we scoop them up as quickly as we can. So we're trying to do it in balance. We think we have kept it probably a little out of balance actually in the last year with growth in revenues well in excess of the hiring. And now as we go forward into '06, we're continuing to look at those open positions as quickly as we can. And we'll try, nonetheless, to make certain that revenue growth matches up with that growth in headcount as best as possible.

Right. And so just even in the seasonally slow August quarter, given the combination of those two factors, does that mean SG&A dollars stay about the same?

That has been our history. I don't think that we're guiding to a specific SG&A number for the first quarter. Our history has been that the spending and SG&A between Q4 and Q1 is generally pretty flat.

Okay. And just a quick seasonality comment for gross margins, obviously we're right there square at 40 in May. What should we keep in mind seasonally as we think about an August quarter?

Well, we had a couple of holidays during the quarter. The Memorial Day holiday here in the U.S., the 4th of July holiday in the U.S. and then there are a couple of regional holidays internationally. And whenever we have holidays, that has a negative impact on our gross margins. So, we're hopeful of keeping pretty close to the 40% target but we're going to have a little pressure during the summer that might bring gross margins down a little bit.

Okay. Thanks so much. Appreciate it.

We will take a question from Greg Cappelli from CS First Boston.

Hi. So, Steve, just back to the margin question for a second. So, you bounced back up to 17% this quarter. Are you going to be able to - - you guys have repeatedly said historically that 15% is more likely over the long term. I'm assuming there's been no change in that. That being said, the amount of spending you're going to do on the SG&A front, and I realize the timing is going to depend. But when you think of the entire year, would you think more like a 15% number would be more logical or can it hold at this higher level?

Well, I think that has two components to it, which is how quickly we're able to grow revenues and how quickly we grow SG&A. Right? So as Don mentioned, we have optimistic revenue numbers for this year that we think are achievable. And while doing that we have, as I just mentioned, a number of needs internally, which we will have to continue to address. And we're certainly not trying to drive operating margins down. In fact, we think that we can continue to operate the business above our targets. But what we're trying to tell you is that there are factors involved with that which sometimes make timing somewhat difficult. So, without giving fundamental very discrete guidance going forward, we're trying to keep the margins as strong as possible while addressing the investment needs that we've discussed.

If we didn't plan to try to continue our growth for the next five years and were not investing in future growth, we would - - we could run this business easily at a 20% operating margin. But the expectation, I think that we have, and that we believe our investors have, and our people have, is that we're going to grow this into a $1 billion plus revenue professional services firm. And to do that, we have to invest for the right people when we find them, and in the right geographies.

Okay. No, I understand that. I appreciate that. And then you added about 2% sequentially, I think you said, to headcount. Is that - - was that something you were shooting for? And should we expect about that amount next quarter given the guidance or what are your thoughts there?

Our thoughts are that we have significant demand for our services, and we are out looking for people actively. And if we're successful in doing that through the quarter, then the number in headcount should be higher at the end of this quarter.

Okay. And Steve, any update on the bill rate, pay rate for us?

They were both up. Year-over-year, our bill rates were up more than 10%.

Okay. And I'm assuming the same rule holds that you've used in the past that you will you mark up - - as you're paying your associates, you'll mark that up - -?

Well, if you consider that our gross margin is right at our 40% target, we're completely consistent with the business model that we're heading for.

Okay. Got it. One final one, more qualitative. When you think about - - I think, Don, you mentioned how strong some of the work was outside of Sarbanes. Can you just give us some examples, maybe, of where you're seeing the greatest - - specific types of assignments where you're seeing the greatest demand? I know you've said in the past M&A has been pretty strong but maybe some additional color there?

We're working on at least two major change initiatives at professional or financial clients right now that are very large demand. So these are people trying to put in financial changes to their system, remediate issues that they've identified as problems that aren't short-term solutions. So those are two big projects. We have several opportunities on some of the M&A work that you read about. So it's - - internationally we're seeing some large Sarbanes demand internationally, not as much in the U.S. So, what's interesting is one of our largest clients that's been a Sarbanes client, we have a $5 million backlog, I've been told, for accounting and finance projects, etc. over the summer.

So once we prove ourselves to this client base, we think that they will depend upon us and use us over and over again. Our second largest client for the year was our very first large client we ever got in 1996. And every year that client, since then has been a multimillion dollar client for us. And we think that's the power of what we do and our client service business model.

Got it. Thanks a lot. Appreciate it.

We will take a question from Mark Marcon from R. W. Baird.

Just wondering, can you be specific with regards to what RAS was for the quarter?

Sure. It was just less than 39% of revenues.

And how about - - how does it split in terms of other Europe and Asia? So, you gave us the total international numbers and we got the Netherlands. I'm just wondering if you can give us the split there?

We have not historically given out anything other than Dutch and then total international revenues and that's going to continue to be our practice for the moment.

It's fair to say that Europe, because the practices have been more established, are bigger and stronger than our practices in Asia. Our largest city that we're operating in in Asia is Tokyo. And that business is only one year old and we started it from scratch. So, the European practices are more established and therefore, much larger.

And looks like you had pretty good growth in both areas. I was just trying to get a better feel for that.

For Europe or for Asia?

For Europe.

As Don said those - - that's the major part of our international practice as of yet. Though we, as Don has also said, have high hopes and feel there's high potential elsewhere in the world, which is why we're continuing to expand there. When you consider that London is the financial capital of Europe, and then we have a well established foundation now on the continent, we think we've got a great foundation in Europe. But we're looking in the long run to also build a similar size or even larger practice in Asia Pacific.

Okay. Great. Can you give us a feel for what you might do in terms of option expense for next year?

We have the good fortune of not having to adopt the new standard until the first quarter of fiscal '07. And that is is when we intend to adopt the standard. In the meantime, we will continue to disclose in our K's and our Q's the pro forma effective options. So you can get a pretty good indication of what the expense will be once we do adopt.

Great. And then DSO's, nice job there. Where do you think that can go? Can that stay at these levels, or - -?

Well, I think, Mark, that the driver of DSO's going up was really, really rapid revenue growth. And so if we keep the revenue growth up it's difficult to drive the DSO's down. Having said that, we are in that period when we're getting through a cycle, essentially. And so we're getting to that period when we should be able to see DSO's come down a little bit more. But as you can tell from my earlier comments, we were extremely efficient this year with cash flows from Ops, 120% of net income. So that sort of performance is something we hope to maintain discipline around.

Great. Thank you.

[OPERATOR INSTRUCTIONS] We will go next to Michael Moran from Merrill Lynch.

Yes, good afternoon, guys. A couple of questions. First, I just wanted to clarify, Don, I think you made a comment about expectations for fiscal '06 of 20% growth. I just wanted to clarify if you were referring to revenue?

Yes, that's our goal for revenue growth.

Okay. And then on the partner additions, would you give us a bit of color in terms of how that came about? Was it a group that came together from the same firm, or were these kind of piecemeal additions to the team? And is this something we should expect going forward?

These were not a team. These were actually three different former big five type firms involved. So these are people that, in some cases, we've been recruiting for a few years. In other cases they've sought us out. So we've tried to boost up our RAS practice and corporate governance practice and hired some senior practitioners there. We've hired a senior practitioner from one of the big four firms who has been involved, again, corporate governance, risk management type services around the world. So I would say, as I've said, we're opportunistic. So, we look for great people and great business ideas and as the opportunities present, we grab it. And we try to maintain a 15% operating margin while we're doing these investments. And so far we've been able to do that.

And when you're attracting these types of people do they typically come with a few other team members, or are these more one-offs?

They - - to date they have not come with other team people. In the past, we have done that but not the four people we referred to in the discussion.

Okay. And then just another quick question, on the share count, what was the basic number of shares? And was there any buyback activity at all in the quarter?

Yes, we did buy shares back on the quarter.

The basic share count for the fourth quarter was 47,508,000. And for the year was 47,074,000. And we bought back a modest amount of shares during this quarter at levels below the current market price.

200,000 plus shares?

Yes. A little over 200,000 I think we bought back.

Great. Thanks very much.

And we'll take a question from Thatcher Thompson with CIBC World Markets.

Good afternoon guys. Congratulations.

Thanks, Thatcher.

Tell me again how many shares you bought back during the quarter, please.

255,000 shares.

So after that initial day of 100,000 there wasn't a lot of additional repurchase, obviously.

Yes, that's right.

150-some-thousand shares.

Okay. It seems like you opened Tokyo a year ago, it's growing very quickly, it's already making money, your new offices are making money in a year. Have you thought about - - in view of acquisitions what your recent success in opening new offices? It seems like denovo start-ups are a much better way to go, and maybe the cash should be directed more aggressively towards share repurchases.

That could be your opinion on it. I look for opportunities that we - - I look to try to start or acquire something we don't already have. We never would have the growth in the United States in some of our major accounts if we didn't have a large European presence. And we got that large European presence by the acquisition in the Netherlands. So we try to balance the investments. We believe, yes, we get a much better return if we start a practice on its own and it's successful. Though it took us four years to make Hong Kong successful, we are just doing very well in Japan because we hired great people in Japan. So, it's always a balance. We've looked in Japan to start a practice by an acquisition and we didn't find anybody that we thought was suitable for the right price. So we started it on our own. I'd much rather have a $50 million business in Tokyo right away, and I think it's a good use of shareholders' money, but there wasn't anything available. So, again, we're pretty opportunistic as to how we use our shareholders' money, how we use our own money. And we try to pick the best way to expand as possible.

Okay. Thanks, guys.

And our final question today will come from Jim Wilson from JMP Securities.

Thanks a lot, guys. Most of my questions have, of course, been answered. But I was wondering, can you give - - if you have a mix count of your consultant base, CPA's versus other backgrounds? I think you've given that before. Not every quarter, but you've given it before.

Yes. I don't have that statistic for the year-end in front of me. It's - - the number of CPA's starts getting diluted as we add all these other business lines, like the information management and human capital. And a lot of our risk management work has been in information management systems. Accounting-wise, probably 30% to 40% type of CPA-level people. I think we had, again, maybe 50% with graduate degrees, so it's a fairly well experienced, well educated group of people. The mix changes where the demand is and in the last year, we've had a lot of technology demand around risk management.

Okay. And then the final one I had is just, could you give us maybe an idea of your largest client or your largest deployment where you might have the most consultants at a single Company? Not the name of the Company, but how many you might have out, whether it's 50 or 100, or how big some of your biggest deployments are?

Our largest client was about 300 associates during the year. It's not at 300 now. It's quite a bit below that, but it's - - we still have, like I said, about a $5 million backlog of projects just on that one client. And right - - again, we're in a softer period because of all the vacations, et cetera. But we have very strong demand on the East Coast and the West Coast of the United States and in the U.K. So demand is actually not an issue in those areas right now. It's trying to find people. And it's hard to find people when people are taking vacations and not in the job mode change right now.

Okay. Very good. Excellent quarter. Thanks.

Thank you.

That does conclude our question-and-answer session. I'd like to turn the call back over to our speakers for any additional or closing remarks.

Well, I just want to thank everybody for their continuing interest in Resources and we look forward to talking to you after next quarter.

And that does conclude today's conference call. Thank you for your participation. You may now disconnect.