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Resources Connection's IPO Brings in $78 Million

Stocks: The Costa Mesa temp-staffing outfit will repay debt and expand in a mushrooming market.


Resources Connection Inc., a fast-growing temporary staffing firm specializing in accounting and business professionals, raised $78 million Friday in its first sale of stock to the public.

The Costa Mesa company and certain shareholders sold a total of 6.5 million shares at $12 each in the initial public offering. Wall Street bid up the price to $16 a share by the close of trading on Nasdaq, where the stock trades under the ticker symbol RECN.

The new capital will allow Resources Connection to repay debt and expand in a burgeoning market for temporary help, especially for accountants and financial workers.

The market for those professionals should double by 2002 to $14.6 million from last year's figures, and the market for temporary professional help of all types should rise 64% to $65.6 billion in that time, according to a survey by Staffing Industry Analysts.

Resources Connection said in its offering papers that it has seen demand for its services grow, pushing revenue from $9.3 million in 1997 to $126.3 million this year. Profitable since its inception four years ago, the company earned $6.5 million in its latest fiscal year, which ended May 31.

With 38 offices in the U.S. and three internationally, Resources Connection has more than 1,500 clients, ranging from large corporations to small start-up companies in a number of industries. About half the 1,050 professionals it employs are certified public accountants and more than a quarter have master's degrees in business administration.

Founded as a subsidiary of accounting giant Deloitte & Touche, Resources Connection was purchased by a management-led group last year. Its chairman, Donald B. Murray, 53, was a partner in charge of accounting and assurance services for Deloitte's Orange County office.

In Friday's offering, the company sold 5 million shares for $60 million and expects to net $54.4 million after paying underwriters and other offering costs. The remaining 1.5 million shares were sold for $18 million by existing shareholders, who were expected to receive $16.7 million after paying their share of the underwriting expenses.

The price was at the low end of its expected selling range of $12 to $14 a share.

Resources Connection said it would use $38.2 million of the proceeds to retire debt, and the remaining $16.2 million to expand sales and marketing, upgrade technology systems and possibly finance acquisitions and international expansion.

Underwriters for the offering were Credit Suisse First Boston, Deutsche Banc Alex. Brown and Robert W. Baird & Co.

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