What changed in this filing

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Item 1A. Risk Factors

2022-03-03 compared with 2021-03-04 · 58 added, 46 removed, 288 unchanged (27% of the section changed)

9 unchanged sentences

If we lose the services of any employee consultant or group of employee consultants, or if our employee consultants fail to generate business or otherwise fail to perform effectively, that loss or failure could adversely affect our revenues and results of operations.

We do not have non-competition agreements with a majority of our employee consultants, and they can terminate their relationships with us at will and without notice.

Many of our employee consultants have signed non-solicitation agreements.

We do not have non-competition agreements with a majority of our employee consultants, however, and they can terminate their relationships with us at will and without notice.

The non-competition and non-solicitation agreements that we have with some of our employee consultants offer us only limited protection and may not be enforceable in every jurisdiction.

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These competing employers may be able to offer potential employees greater compensation and benefits or more attractive lifestyle choices, career paths, or geographic locations than we can.

Further, there has been an increase in employees leaving their positions throughout our industry, and the market to hire and retain employees has become even more highly competitive.

Competition for these employee consultants has increased our labor costs, and a continuation of this trend could adversely affect our margins and results of operations.

1 unchanged sentence

Our ability to secure new engagements and hire qualified consultants as employees depends heavily on our overall reputation as well as the individual reputations of our employee consultants and principal non-employee experts.

Because we obtain a majority of our revenues from new engagements with existing clients, any client that is dissatisfied with our performance on a single matter could seriously impair our ability to secure new engagements.

obtain a majority of our revenues from new engagements with existing clients, any client that is dissatisfied with our performance on a single matter could seriously impair our ability to secure new engagements.

Given the frequently high-profile nature of the matters on which we work, including work before and on behalf of government agencies, any factor that diminishes our reputation or the reputations of any of our employee consultants or non-employee experts could make it substantially more difficult for us to compete successfully for both new engagements and qualified consultants.

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In addition, our or our clients' sensitive, confidential or proprietary information could be compromised or corrupted, whether intentionally or unintentionally, by our employees, outside consultants, vendors, or rogue third-party "hackers" or enterprises.

A breach or compromise of the security of our information technology systems or infrastructure, or our processes for securing sensitive, confidential or proprietary information, whether due to a cybersecurity attack or otherwise, could result

in the loss or misuse of this information.

Any such loss or misuse could result in our suffering claims, fines, damages, losses or reputational damage, any of which could have a material adverse effect on our business and results of operations.

3 unchanged sentences

Accordingly, the nature of our business limits the number of both potential clients and potential engagements.

Moreover, in many industries in which we provide consulting services, such as in the telecommunications industry, there has been a continuing trend toward business consolidations and strategic alliances.

Moreover, in many industries in which we provide consulting services there has been a continuing trend toward business consolidations and strategic alliances.

These consolidations and alliances reduce the number of potential clients for our services and increase the chances that we will be unable to continue some of our ongoing engagements or accept new engagements as a result of conflicts of interests.

15 unchanged sentences

Overall global economic, business, health and political conditions, as well as conditions specific to the industries we or our clients serve, can affect our clients' businesses and financial condition, their demand or ability to pay for our services, and the market for our services.

These conditions, all of which are outside of our control, include merger and acquisition activity levels, the availability, cost and terms of credit, the state of the United States and global financial markets, the levels of litigation and regulatory and administrative investigations and proceedings, global health crises and pandemics, and general economic and business conditions.

These conditions, all of which are outside of our control, include but are not limited to merger and acquisition activity levels, the availability, cost and terms of credit, the state of the United States and global financial markets, including the impact of rising inflation rates, the levels of litigation and regulatory and administrative investigations and proceedings, global health crises and pandemics, and general economic and business conditions.

In addition, many of our clients are in highly regulated industries, and regulatory and legislative changes affecting these industries could impact the market for our service offerings, render our current service offerings obsolete, or increase the competition among providers of these services.

Although we are not able to predict the positive or negative effects that general changes in global economic, business and political conditions will have on our individual practice areas or our business as a whole, any specific changes in these conditions could have a material adverse impact on our revenues, results of operations and financial condition.

The June 2016 referendum where voters in the United Kingdom ("UK") approved an exit from the European Union ("EU"), commonly referred to as "Brexit," created political, economic, and regulatory uncertainty in the UK, where our European operations are headquartered.

The impact of Brexit depends on the terms of the UK's withdrawal from the EU.

UK formally left the EU on January 31, 2020.

The UK and EU announced, on December 24, 2020, that they reached agreement on a new Trade and Cooperation Agreement (the “TCA”) which addresses a range of aspects of the future relationship between the parties.

The TCA was ratified by the UK Parliament on December 31, 2020.

The TCA addresses, for example, trade in goods and the ability of UK nationals to travel to the EU on business but defers other issues.

While the TCA includes a commitment by the UK and the EU to keep their markets open for persons wishing to provide financial services through a permanent establishment, it does not address substantive future cooperation in the sphere of financial services or reciprocal market access into the EU by UK firms under so-called “equivalence” arrangements.

The June 2016 referendum where voters in the United Kingdom ("U.K.") approved an exit from the European Union ("E.U."), commonly referred to as "Brexit," created political, economic, and regulatory uncertainty in the U.K., where our European operations are headquartered.

The impact of Brexit depends on the terms of the U.K.'s withdrawal from the E.U.

formally left the E.U.

on January 31, 2020.

entered into a new Trade and Cooperation Agreement (the “TCA”), which was ratified by the U.K.

Parliament on December 31, 2020 and which addresses a range of aspects of the future relationship between the parties.

The TCA addresses, for example, trade in goods and the ability of U.K.

nationals to travel to

on business but defers other issues.

While the TCA provides clarity in some areas, there also remains substantial political, economic, and regulatory uncertainty that may not be fully realized for several years or more.

This uncertainty may result in new regulatory, tax, operations, and cost challenges to our UK, European and global operations.

Such uncertainties may significantly impact our business, as customers of UK-based operations evaluate their business needs in consideration of changing economic conditions or increased international regulatory complexities.

This uncertainty may result in new regulatory, tax, operations, and cost challenges to our U.K., European and global operations.

Currency fluctuations caused by or relating to Brexit could adversely affect our financial position.

Such uncertainties may significantly impact our business, as customers of our UK-based operations evaluate their business needs in consideration of changing economic conditions or increased international regulatory complexities.

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, and the United States and other governments' imposed travel restrictions on travel between the United States, Europe and other countries.

Within the U.S., several states have imposed restrictions on interstate travel.

In addition, stay-at-home orders have been issued by several countries, states, and cities in which our offices are located.

Such uncertainties may significantly impact our business, as customers of our U.K.-based operations evaluate their business needs in consideration of changing economic conditions or increased international regulatory complexities.

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.

The pandemic has adversely impacted global health and the economic environment as the outbreak continues to grow with the introduction of new variants in both the U.S.

and globally.

In response, many governments have implemented, and continue to implement, "shelter-in-place" restrictions, travel restrictions, and other measures to reduce the spread of COVID-19.

Many businesses, including those of our clients, have responded with their own work-from-home policies and procedures.

We intend to continue to provide our services to our clients for the duration of these orders and closures.

However, the timing of projects may be delayed or otherwise disrupted due to the length and severity of the current closures and any other restrictions or limitations implemented in the future.

Although our offices remain open and capable of hosting our colleagues, we have invited them to work wherever they feel most comfortable.

We intend to continue to provide our services to our clients for the duration of the pandemic and related government-imposed restrictions.

However, the timing of projects may be delayed or otherwise disrupted due to the length and severity of restrictions or limitations implemented in the future.

The COVID-19 virus poses the risk that our employees, our non-employee experts, governmental agencies, clients, and parties otherwise engaged in the delivery of our services may be prevented from conducting business activities in the ordinary course for an indefinite period.

18 unchanged sentences

• Our ability to predict future demand for our services and maintain the appropriate staffing levels without significantly underutilizing consultants.

The interpretation and application of U.S.

tax legislations or other changes in U.S.

taxation of our operations could harm our business, revenue, cash flows and financial results.

Tax reform remains a legislative priority for the U.S.

government and certain legislations have already been enacted.

Further regulatory or legislative developments may arise from the proposed U.S.

tax reform under the Biden Administration’s “Build Back Better Act” which is proposing a new corporate alternative minimum tax and increased taxation of international

business operations.

While there is current uncertainty regarding what changes will eventually be enacted, such new laws may affect our operating results and financial conditions.

What changes if any to the U.S.

taxation of our operations may increase our worldwide effective tax rate, result in additional taxes or other costs or have other material consequences, which could harm our business, revenue, cash flows and financial results.

Our revenues, operating results and cash flows are likely to fluctuate

28 unchanged sentences

It may also require changes to the current accounting treatment of certain transactions and the way they are reported in our financial statements.

Additionally, such a change in accounting standards or

practices may require us to enhance our internal accounting systems and processes, as well as our internal control over financial reporting.

Additionally, such a change in accounting standards or practices may require us to enhance our internal accounting systems and processes, as well as our internal control over financial reporting.

Our failure to execute our business strategy or manage future growth successfully could adversely affect our revenues and results of operations

2 unchanged sentences

Opening and managing new offices often requires extensive management supervision and increases our overall selling, general and administrative expenses.

Expansion creates new and increased management, consulting, and training responsibilities for our employee consultants.

Expansion creates new and increased management, consulting, and training responsibilities for our employee consultants, and expansion may require additional regulatory compliance.

Expansion also increases the demands on our internal systems, procedures, and controls, and on our managerial, administrative, financial, marketing, and other resources.

46 unchanged sentences

Fluctuations in the mix between time-and-material contracts, fixed-price contracts and arrangements with fees tied to performance-based criteria may result in fluctuations of revenue and results of operations.

In addition, if we fail to estimate accurately the resources required for a fixed-price project or fail to satisfy our contractual obligations in a manner consistent with the project budget, we might generate a smaller profit or incur a loss on the project.

In addition, if we fail to estimate accurately third-party vendor expenses and the resources required for a fixed-price project or fail to satisfy our contractual obligations in a manner consistent with the project budget, we might generate a smaller profit or incur a loss on the project.

On occasion, we have had to commit unanticipated additional resources to complete projects, and we may have to take similar action in the future, which could adversely affect our revenues and results of operations.

Revenues generated from fixed-price contracts was approximately 24% of our total revenues for the year ended January 2, 2021.

Revenue generated from fixed-price contracts was approximately 24% of our total revenues for the year ended January 1, 2022.

There can be no assurance that we will continue to declare cash dividends at all or in any particular amounts

10 unchanged sentences

Repurchases pursuant to our stock repurchase programs could affect the market price of our common stock and increase its volatility.

Any termination of our stock repurchase programs could cause a decrease in the market price of our common stock, and the existence of a stock repurchase program could cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity of our common stock.

There can be no assurance that any stock repurchases under these programs will enhance stockholder value because the market price of our common stock may decline below the levels at which those repurchases were made.

Although our stock repurchase programs are intended to enhance long-term stockholder value, short-term fluctuations in the market price of our common stock could reduce the programs' effectiveness.

We previously identified material weaknesses in our internal control over financial reporting, which have now been remediated.

If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to report our financial results timely and accurately, which could adversely affect investor confidence in the Company, and in turn, our results of operations and our stock price.

We previously disclosed in our Annual Reports on Form 10-K, material weaknesses in our internal control over financial reporting primarily related to control deficiencies within various aspects of its control environment.

As a result of these control deficiencies, we concluded that our internal control over financial reporting was not effective for the fiscal years ended December 28, 2013 through December 28, 2019.

During fiscal 2020, we completed a series of actions and measures that effectively remediated the previously disclosed material weakness and concluded that as of January 2, 2021 our internal control over financial reporting was effective.

– “Controls and Procedures” of this Form 10-K for the fiscal year ended January 2, 2021.

We cannot provide assurances that material weaknesses or significant deficiencies will not occur in the future and that we will be able to remediate such weaknesses or deficiencies in a timely manner, which could have a material adverse effect on our business, prospects, results of operations, financial condition and/or cash flows.

We could incur substantial costs protecting our proprietary rights from infringement or defending against a claim of infringement

As a professional services organization, we rely on non-competition and non-solicitation agreements with many of our employees and non-employee experts to protect our proprietary rights.

As a professional services organization, we may rely on non-competition and non-solicitation agreements with some of our employees and non-employee experts to protect our proprietary rights.

These agreements, however, may offer us only limited protection and may not be enforceable in every jurisdiction.

40 unchanged sentences

• unexpected changes in trading policies, regulatory requirements, tariffs, and other barriers;

• continued uncertainty around how Brexit will impact the UK generally, including its impact on the regulatory environment, currency, tax, and operations that could disrupt trade, the sale of our services, the movement of our people between the UK, EU, and other locations, and the global economy;

• continued uncertainty around how Brexit will impact the U.K.

generally, including its impact on the regulatory environment, currency, tax, and operations that could disrupt trade, the sale of our services, the movement of our people between the U.K., E.U., and other locations, and the global economy;

• restrictions on the repatriation of earnings;

6 unchanged sentences

Fluctuations in currency exchange rates could adversely affect our operations

We conduct our business in North America, Europe, and Australia, and the global scope of our business exposes us to risk of fluctuations in foreign currency markets.

We conduct our business in the Americas, Europe, and Australia, and the global scope of our business exposes us to risk of fluctuations in foreign currency markets.

Specifically, our results of operations are subject to fluctuations primarily in the British Pound and Euro against the U.S.

4 unchanged sentences

Revenue generated

from our UK-based operations was approximately 16% (which includes currency exchange effects) of our total revenues for the year ended January 2, 2021.

from our U.K.-based operations was approximately 15% (which includes currency exchange effects) of our total revenues for the year ended January 1, 2022.

We currently do not hedge our exposure to current foreign currency exchange risks by engaging in foreign exchange hedging transactions, though we may do so in the future.

2 unchanged sentences

We rely on our cash and cash equivalents, cash flows from operations and borrowings under our credit agreement to fund our short-term and anticipated long-term operating activities.

Following an amendment to our credit agreement in January 2021, we have a revolving line of credit with our bank for up to $175.0 million.

The amounts available under this line of credit are constrained by various financial covenants and reduced by certain letters of credit outstanding.

Our loan agreement with the bank will mature on October 24, 2022.

We currently have a revolving credit facility with our bank for up to $175.0 million.

The amounts available under this revolving credit facility are constrained by various financial covenants and reduced by certain letters of credit outstanding.

At February 25, 2022, we had no borrowings outstanding under the credit agreement and approximately $170.8 million available for future borrowings, after consideration of outstanding letters of credit.

The degree to which we are leveraged could adversely affect our ability to obtain further financing for working capital, acquisitions or other purposes and could make us more vulnerable to industry downturns and competitive pressures.

Our ability to secure short-term and long-term debt or equity financing in the future will depend on several factors, including our future profitability, the levels of our debt and equity, restrictions under our existing revolving line of credit, and the overall credit and equity market environments.

Our debt obligations may adversely impact our financial performance

At present LIBOR is expected to be published only on a limited basis after 2021.

Our credit agreement does not specify a particular replacement index rate (or related margin) when LIBOR becomes unavailable and permits the administrative agent in its sole and reasonable discretion to use an alternative method to choose a rate that is selected in accordance with and applied in a manner consistent with general market practice.

Our loan agreement with the bank will mature on October 24, 2022.

We expect to extend or refinance our revolving credit agreement prior to maturity, but there can be no assurance that we will be able to do so on favorable terms or at all.

Our ability to refinance our indebtedness will depend on our ability to generate cash from operations, which may be subject to general economic, financial, competitive and other factors that are beyond our control.

If we are not able to extend or replace this source of capital, it could adversely affect our ability to obtain further financing for working capital, acquisitions or other purposes and could make us more vulnerable to industry downturns and competitive pressures.

Our ability to secure short-term and long-term debt or equity financing in the future will also depend on several factors, including our future profitability, the levels of our debt and equity, restrictions under our existing or any future revolving credit facility, and the overall credit and equity market environments.

As LIBOR is phased out, we will need to agree to a replacement index rate to be used under our credit agreement, which may have an adverse effect on our financial condition

At present LIBOR is expected to be published only on a limited basis for certain LIBOR tenors in U.S.

dollars through June 30, 2023, after which LIBOR reference rates will no longer be provided.

Our credit agreement, which is set to mature on October 24, 2022, does not specify a particular replacement index rate (or related margin) when LIBOR becomes unavailable.

The credit agreement permits the administrative agent and us to select a replacement rate (which may include a rate based on the Secured Overnight Financing Rate, or SOFR, and the related spread adjustment) consistent with relevant regulatory guidance and general market practice and permits the administrative agent to implement conforming changes to our credit agreement determined by it to be appropriate and consistent with general practice.

We expect to amend our credit facility to provide a market-based replacement index rate and margin prior to the time when LIBOR is no longer available.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors