What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-02-10 compared with 2020-02-06 · 365 added, 361 removed, 705 unchanged (51% of the section changed)

5 unchanged sentences

Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018

Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017

Consolidated Statements of Comprehensive Income ( Loss) for the years ended December 31, 2020, 2019 and 2018

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2020, 2019 and 2018

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We have audited the accompanying consolidated balance sheets of DHI Group, Inc.

and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2019, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 10, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principles

As discussed in Notes 3 and 6 to the financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of ASU No.

2016-02, Leases, under the modified retrospective method, and contract acquisition costs in 2018 due to adoption of ASU No.

2014-09, Revenue from Contracts with Customers, under the modified retrospective method.

Change in Accounting Principle

As discussed in Note 7 to the financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of ASU No.

2016-02, Leases , under the modified retrospective method.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill and Acquired Intangible Assets, Net – Impairment of Goodwill and Dice Trademarks and Brand Name - Refer to Notes 2, 9, and 10 to the financial statements

Critical Audit Matter Description

The Company determines whether the carrying value of recorded goodwill is impaired on an annual basis or more frequently if indicators of potential impairment exist.

If the fair value of the reporting unit is less than its carrying amount, an impairment charge is recorded for the amount the carrying value exceeds the fair value.

Fair values are determined by using a combination of a discounted cash flow methodology and a market comparable method.

Determining the fair value of a reporting unit is judgmental in nature and requires the use of estimates and key assumptions, particularly assumed discount rates and projections of future operating results, such as forecasted revenues and earnings before interest, taxes, depreciation and amortization (EBITDA) margins.

Changes in these assumptions could have a significant impact on either the fair value, the amount of the

goodwill impairment charge, or both.

The amount of goodwill as of December 31, 2020 was $133.4 million.

During 2020, the Company recognized a $23.6 million goodwill impairment charge as the fair value of the reporting unit was lower than its carrying value.

The Company determines whether the carrying value of recorded indefinite-lived acquired intangible assets, which consists entirely of the Dice trademarks and brand name, is impaired on an annual basis or more frequently if indicators of potential impairment exist.

The impairment review process compares the fair value of the Dice trademarks and brand name to their carrying value.

If the carrying value exceeds the fair value, an impairment loss is recorded.

The Company utilizes a relief from royalty rate method to value the Dice trademarks and brand name, which involves a significant level of judgment in the assumptions underlying the approach used to determine the fair value, including the revenue growth rate, royalty rate, and discount rate.

Changes in these assumptions could have a significant impact on either the fair value, the amount of the trademarks and brand name impairment charge, or both.

The amount of acquired intangible assets as of December 31, 2020 was $23.8 million.

During 2020, the Company recognized a $15.2 million trademarks and brand name impairment charge as the fair value of the trademarks and brand name was lower than their carrying value.

Given the significant judgments made by management to estimate the fair value of the reporting unit and the goodwill impairment charge recorded during the year, performing auditing procedures to evaluate the reasonableness of management’s judgments regarding the business and valuation assumptions utilized in the valuation models, particularly the forecasts of future revenue and EBITDA margins and the selection of the discount rate, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

In addition, given the determination of the fair values of the Dice trademarks and brand name and the impairment charges recorded during the year required management to make significant estimates and assumptions relating to the forecasts of future revenue and the selection of the royalty and discount rates, performing audit procedures to evaluate the reasonableness of such estimates and assumptions, particularly the forecasts of future revenue and the selection of the discount rate and royalty rate, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future revenues and EBITDA margins and selection of the royalty rate and discount rates used by management to estimate the fair value of the reporting unit and the Dice trademarks and brand name included the following, among others:

• We tested the effectiveness of controls over management’s impairment evaluation of the reporting unit and acquired intangible assets, including those controls related to management’s forecasts of future revenues and expenses and selection of the royalty rate and discount rates.

• We evaluated management’s ability to accurately forecast future revenues and expenses by comparing actual revenues and expenses to management’s historical forecasts.

• We evaluated the reasonableness of management’s revenues and expenses forecast by comparing the forecasts with:

◦ Historical revenues and expenses and forecasted information in industry reports.

◦ Internal communications to management and the Board of Directors.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) valuation assumptions (discount rates and royalty rate) by:

◦ Testing the source information underlying the determination of the assumption and testing the mathematical accuracy of the calculation.

◦ Developing a range of independent estimates and comparing those to the assumptions selected by management.

/s/ Deloitte & Touche LLP

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Capitalized contract costs 7,734 7,515

Goodwill 133,353 156,059

Deferred income taxes 19 7

Operating lease right-of-use asset

Operating lease right-of-use assets 16,405 19,712

Other assets 1,647 2,604

Total assets $ 240,987 $ 278,321

LIABILITIES AND STOCKHOLDERS’ EQUITY

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For the year ended December 31,

2020 2019 2018

Revenues $ 136,878 $ 149,370 $ 161,570

Operating expenses:

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General and administrative 31,265 31,003 37,589

Depreciation 12,019 9,743 9,280

Amortization of intangible assets — — 482

Impairment of fixed assets

Impairment of intangible assets 15,200 — —

Impairment of goodwill 23,626 — —

Disposition related and other costs (Note 15) — 1,700 7,619

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Gain (loss) on sale of businesses (Note 4) — ( 537 ) 3,369

Proceeds from restitution award

Total other operating income (loss) — ( 537 ) 3,369

Operating income

Operating income (loss) ( 29,605 ) 17,025 11,692

Interest expense and other ( 827 ) ( 701 ) ( 2,054 )

Impairment of equity investment ( 2,002 ) — —

Other expense — — ( 36 )

Income before income taxes

Income tax expense

Basic earnings per share

Diluted earnings per share

Income (loss) before income taxes ( 32,434 ) 16,324 9,602

Income tax expense (benefit) ( 2,419 ) 3,773 2,428

Net income (loss) $ ( 30,015 ) $ 12,551 $ 7,174

Basic earnings (loss) per share $ ( 0.62 ) $ 0.26 $ 0.15

Diluted earnings (loss) per share $ ( 0.62 ) $ 0.24 $ 0.14

Weighted-average basic shares outstanding 48,278 48,739 48,520

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DHI GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the years ended December 31, 2020, 2019, and 2018

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For the year ended December 31,

2020 2019 2018

Net income (loss) $ ( 30,015 ) $ 12,551 $ 7,174

Foreign currency translation adjustment 729 1,988 ( 3,906 )

Total other comprehensive income (loss) 729 1,988 ( 3,906 )

Comprehensive income

Comprehensive income (loss) $ ( 29,286 ) $ 14,539 $ 3,268

See accompanying notes to the consolidated financial statements.

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For the years ended December 31, 2020, 2019, and 2018 (in thousands)

Preferred Stock

Treasury Stock

Comprehensive Loss

Shares Issued

Preferred Stock Common Stock Additional

Capital Treasury Stock Accumulated

Earnings Accumulated

Comprehensive Loss Total

Shares Issued Amount Shares Issued Amount

Balance at January 1, 2018 — $ — 83,125 $ 831 $ 375,537 $ ( 276,173 ) $ 59,776 $ ( 27,330 ) $ 132,641

Other comprehensive income

Net income 7,174 7,174

Other comprehensive loss ( 3,906 ) ( 3,906 )

Stock based compensation 6,606 6,606

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Restricted stock forfeited or withheld to satisfy tax obligations ( 440 ) ( 4 ) ( 693 ) ( 697 )

Exercise of common stock options

Performance-based restricted stock units eligible to vest 750 8 8

Cumulative-effect of new accounting principle (see Note 2) 4,485 4,485

Unclaimed shareholder liability (Note 13) 980 980

Purchase of treasury stock under stock repurchase plan ( 1,977 ) ( 1,977 )

Balance at December 31, 2018 — — 87,522 876 383,123 ( 278,843 ) 71,435 ( 31,236 ) 145,355

Net income 12,551 12,551

Other comprehensive income 1,988 1,988

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Performance-based restricted stock units eligible to vest 449 4 4

Cumulative-effect of new accounting principle (see Note 2)

Unclaimed shareholder liability (see Note 12)

Performance-based restricted stock units forfeited ( 160 ) ( 2 ) ( 2 )

Retirement of treasury stock (see Note 13) ( 20,000 ) ( 200 ) ( 161,600 ) 161,800 —

Purchase of treasury stock under stock repurchase plan ( 2,519 ) ( 2,519 )

Balance at December 31, 2019 — — 69,509 696 227,227 ( 121,466 ) 83,986 ( 29,248 ) 161,195

Net loss ( 30,015 ) ( 30,015 )

Other comprehensive income 729 729

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Restricted stock issued 2,173 22 22

Restricted stock forfeited or withheld to satisfy tax obligations

Performance-based restricted stock units eligible to vest

Purchase of treasury stock related to vested restricted and performance stock units ( 430 ) ( 4 ) ( 2,248 ) ( 2,252 )

Performance-based restricted stock units forfeited ( 19 ) — —

Retirement of treasury stock (see Note 12)

Purchase of treasury stock under stock repurchase plan ( 8,436 ) ( 8,436 )

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For the year ended December 31,

2020 2019 2018

Cash flows from (used in) operating activities:

Adjustments to reconcile net income to net cash flows from operating activities:

Net income (loss) $ ( 30,015 ) $ 12,551 $ 7,174

Adjustments to reconcile net income to net cash flows from (used in) operating activities:

Depreciation 12,019 9,743 9,280

Amortization of intangible assets — — 482

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Stock based compensation 6,327 5,704 6,606

Impairment of fixed assets

Impairment of intangible assets 15,200 — —

Impairment of goodwill 23,626 — —

Impairment of equity investment 2,002 — —

Change in accrual for unrecognized tax benefits ( 446 ) 107 ( 1,179 )

Gain on sale of equity investment ( 200 ) — —

(Gain) loss on sale of businesses — 537 ( 3,369 )

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Deferred revenue ( 8,193 ) ( 4,583 ) ( 18,866 )

Other, net 1,236 940 508

Net cash flows from operating activities 18,683 22,923 14,918

Cash flows from (used in) investing activities:

Cash received from sale of business, net

Cash received from sale of businesses, net — 2,683 17,542

Purchases of fixed assets ( 16,104 ) ( 14,188 ) ( 10,053 )

Purchases of cost method investments

Net cash received from sale of equity investment 200 — —

Net cash flows from (used in) investing activities ( 15,904 ) ( 11,505 ) 7,489

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Payments under stock repurchase plan ( 8,294 ) ( 2,519 ) ( 1,977 )

Proceeds from stock option exercises

Purchase of treasury stock related to vested restricted stock

Purchase of treasury stock related to vested restricted and performance stock units ( 2,248 ) ( 1,904 ) ( 693 )

Financing costs paid — — ( 504 )

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Employers and recruiters use its websites and services to source, hire and connect with the most qualified and highly-skilled tech professionals, while professionals use its websites and services to find ideal employment opportunities, relevant job advice and tailored career-related data.

For over 25 years, through its predecessor companies, the Company was built on providing employers and professionals with career connections, news, tools and information.

For 30 years, through its predecessor companies, the Company was built on providing employers and professionals with career connections, news, tools and information.

The Company serves multiple markets located throughout North America, Europe, the Middle East and the Asia Pacific region.

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All intercompany balances and transactions have been eliminated in consolidation.

Revenue Recognition — On January 1, 2018, we adopted Topic 606 applying the modified retrospective method to all contracts that were not completed as of January 1, 2018.

Results for periods beginning after January 1, 2018 are presented under Topic 606, while prior periods are reported under the accounting standards in effect for the period presented.

Under Topic 606, we recognize revenue when control of the promised goods or services is transferred to our customers at an amount that reflects the consideration to which we expect to receive in exchange for those goods or services.

Revenue Recognition — We recognize revenue when control of the promised goods or services is transferred to our customers at an amount that reflects the consideration to which we expect to receive in exchange for those goods or services.

Revenue is recognized net of customer discounts ratably over the service period.

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Recruitment packages.

Recruitment package revenues are derived from the sale to recruiters and employers of a combination of job postings and access to a searchable database of candidates on Dice, ClearanceJobs, eFinancialCareers and Rigzone (sold the RigLogix portion of the Rigzone business on February 20, 2018 and DHI transferred majority ownership of the remaining Rigzone business to Rigzone management on August 31, 2018).

Recruitment package revenues are derived from the sale to recruiters and employers of a combination of job postings and/or access to a searchable database of candidates on Dice, ClearanceJobs, eFinancialCareers and Rigzone (sold the RigLogix portion of the Rigzone business on February 20, 2018 and DHI transferred majority ownership of the remaining Rigzone business to Rigzone management on August 31, 2018).

Certain of the Company’s arrangements include multiple performance obligations, which primarily consists of the ability to post jobs and access to a searchable database of candidates.

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The Company believes it is not exposed to any significant credit risk.

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company performs ongoing credit evaluations of its customers’ financial condition and generally does not require collateral on accounts receivable.

No single customer represents 10% or more of revenues for the years ended December 31, 2020, 2019 and 2018.

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Allowance for Doubtful Accounts— The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments.

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The supplemental disclosures to the accompanying consolidated statements of cash flows are as follows (in thousands):

2020 2019 2018

Supplemental cash flow information:

Interest paid $ 1,100 $ 639 $ 1,807

Taxes paid 457 1,506 2,634

Non-cash investing and financing activities:

Capital expenditures on fixed assets included in accounts payable and accrued expenses 110 140 223

Investments— During 2017, pursuant to the achievement of certain performance milestones, the Company purchased additional preferred stock representing a 2.3% interest in the fully diluted shares of a leading tech skills assessment company for $0.5 million , bringing its total interest to 10.0% .

During the year ended December 31, 2018, the skills assessment company completed an additional equity offering, lowering DHI's total interest to 7.6% .

As of December 31, 2019, it was not practicable to estimate the fair value of the preferred stock as the shares are not traded.

The Company has elected the measurement alternative in accordance with FASB ASC 321, Investments - Equity Securities , and is carrying the investment at its original cost of $2.0 million .

The investment is included in other assets on the consolidated balance sheets.

On January 31, 2018, the Company transferred a majority ownership of the BioSpace business to BioSpace management with zero proceeds received from the transfer.

The Company retained a 20% preferred share interest in the BioSpace business.

The fair value of the investment was estimated to be zero at the time of the transfer.

As of December 31, 2019, it was not practicable to estimate the fair value of the preferred stock investment as the shares are not traded.

The investment is recorded at cost, which is zero.

Upon a liquidation, sale or change in control of BioSpace within five years of January 31, 2018, the Company has the right to the first $1.0 million of proceeds or the option to convert its 20% preferred stock interest to a 20% common stock interest.

On January 31, 2023, the 20% preferred share interest will convert to a 20% common share interest.

Rigzone is a website dedicated to delivering online content, data , and career services in the oil and gas industry in North America, Europe, the Middle East, and Asia Pacific.

Oil and gas companies, as well as companies that serve the energy industry, use Rigzone to find talent for roles such as petroleum engineers, sales, professionals with energy industry expertise and skilled tradesmen.

On August 31, 2018, the Company transferred a majority ownership of the Rigzone business to Rigzone management, while retaining a 40% common share interest, with zero proceeds received from the transfer.

The Company agreed to provide $0.4 million of funding to the Rigzone business, which was recorded in accounts payable and accrued expenses on the consolidated balance sheets as of December 31, 2018.

The Company has no further funding requirements to the Rigzone business.

The Company has evaluated the 40% common share investment in the Rigzone business and has determined the investment meets the definition and criteria of a variable interest entity ("VIE").

The Company evaluated the VIE and determined that the Company does not have a controlling financial interest in the VIE, as the Company does not have the power to direct the activities of the VIE that most significantly impact the VIE's economic performance.

The common share interest is being accounted for under the equity method of accounting as the Company has the ability to exercise significant influence over Rigzone.

As accumulated earnings of the VIE have been approximately zero since the date of transfer, the investment continues to be recorded at cost, which was zero at December 31, 2019.

Share repurchases included in accounts payable and accrued expenses 141 — —

Fixed Assets— Depreciation of equipment, furniture and fixtures, computer software and capitalized website development costs are provided under the straight-line method over estimated useful lives ranging from two to five years.

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Capitalized Software Costs— Capitalized software costs consist of costs to purchase and develop software for internal use.

The Company capitalizes certain incurred software development costs in accordance with the Internal Use Software subtopic of the

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company capitalizes certain incurred software development costs in accordance with the Internal Use Software subtopic of the FASB ASC.

Costs incurred during the application-development stage for software bought and further customized by outside vendors for the Company’s use and software developed by a vendor for the Company’s proprietary use have been capitalized.

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Changes in the Company’s strategy and/or market conditions could significantly impact these judgments and require adjustments to recorded amounts of goodwill or indefinite-lived intangible assets.

See Note 5 for discussion of impairment charges.

See Notes 9 and 10 for discussion of impairment charges.

Capitalized Contract Costs— The Company capitalizes certain contract acquisition costs consisting primarily of commissions paid when contracts are signed.

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Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are charged to operations as incurred.

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Advertising Costs— The Company expenses advertising costs as they are incurred.

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DHI’s significant estimates include the useful lives and valuation of fixed assets and intangible assets, goodwill, the income tax valuation allowance, and the assumptions used to value the Performance-Based Restricted Stock Units (“PSUs”) of the Company.

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Earnings per Share— The Company follows the Earnings Per Share topic of the FASB ASC in computing earnings per share (“EPS”).

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Companies can choose to apply the standard retrospectively to each prior reporting period presented (full retrospective application) or retrospectively with the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings of the annual reporting period that includes the date of initial application (modified retrospective application).

The Company has chosen the modified retrospective application method and has implement Topic 606 effective January 1, 2018.

The Company has chosen the modified retrospective application method and implemented Topic 606 effective January 1, 2018.

The Company has determined that the January 1, 2018 cumulative effect to its revenue streams was an increase of approximately $ 0.2 million to deferred revenues, and the cumulative effect to its contract acquisition costs was an increase to contract acquisition cost assets of approximately $ 6.1 million, with a net after tax increase to retained earnings of approximately $ 4.5 million.

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The new standard aims to improve existing U.S.

GAAP and will change certain aspects of accounting for equity investments, financial instruments, financial liabilities, and presentation and related disclosures.

GAAP and will change certain aspects of accounting for equity investments, financial instruments, financial liabilities, and presentation and

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

related disclosures.

The updated standard became effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.

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In July 2018, the FASB issued updated guidance which allows an additional transition method to adopt the new standard at the adoption date, as compared to the beginning of the earliest period presented, and recognize a cumulative-effect adjustment to the beginning balance of retained earnings in the period of adoption.

DHI has implemented the new standard effective January 1, 2019 and has elected to recognize a cumulative effect adjustment to the beginning balance of retained earnings in the period of adoption.

Adoption of this standard has resulted in a right-of-use asset of $17.2 million, net of accrued rent and lease exit costs, and related operating lease liability of $18.0 million being established on the Company's balance sheet on January 1, 2019, with no cumulative-effect adjustment to retained earnings.

DHI implemented the new standard effective January 1, 2019 and elected to recognize a cumulative effect adjustment to the beginning balance of retained earnings in the period of adoption.

Adoption of this standard resulted in a right-of-use asset of $ 17.2 million, net of accrued rent and lease exit costs, and related operating lease liability of $ 18.0 million being established on the Company's balance sheet on January 1, 2019, with no cumulative-effect adjustment to retained earnings.

Right-of-Use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the obligation to make payments arising from the lease.

The Company has implemented processes and tools to assist in the ongoing lease data collection and analysis, and has updated accounting policies and internal controls as a result of adopting this standard.

In March 2016, the FASB issued ASU No.

2016-09, Improvements to Employee Share-Based Payment Accounting .

The Company adopted the standard during the three months ended March 31, 2017.

The new standard requires all income tax effects of awards to be recognized in the income statement when the awards vest or are settled, rather than in additional paid-in capital.

Accordingly, the new standard eliminates the requirement to reclassify excess tax benefits from operating activities to financing activities in the statement of cash flows.

Additionally, the Company can now make a policy election to account for forfeitures as they occur.

Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement were applied prospectively.

The tax effect of awards vested resulted in income tax expense of $1.4 million during the twelve months ended December 31, 2017.

The Company will record forfeitures as they occur, rather than estimating in advance.

On January 1, 2017, under the modified retrospective transition method as required by the standard, the Company recorded a cumulative-effect adjustment of $0.3 million to decrease accumulated earnings and increase additional paid-in capital to remove estimated forfeitures on all outstanding equity awards after December 31, 2016.

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In June 2016, the FASB issued ASU No.

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The Company is evaluating the expected impact of this standard on its consolidated financial statements.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles-Goodwill and Other .

The new standard eliminates Step 2 from the goodwill impairment test and requires the Company to compare the fair value of a reporting unit with its carrying amount.

The Company should recognize an impairment charge for the amount by which the carrying amount exceeds the fair value.

The standard is effective for fiscal years beginning after December 15, 2019, with early adoption permitted.

Accordingly, the Company has adopted the new standard during the year ended December 31, 2017, which did not have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurements (Topic 820), Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement .

This standard removes, modifies, and adds certain disclosure requirements for fair value measurements.

This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted.

The Company is evaluating the expected impact of this standard on its consolidated financial statements.

This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019.

The Company adopted the new standard on January 1, 2020.

The adoption of ASU 2018-13 did not have a material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU No.

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The new standard requires entities that are customers in cloud computing arrangements to defer implementation costs if they would be capitalized by the entity in software licensing arrangements under the internal-use software guidance.

2018-15 is effective for fiscal years beginning after December 15, 2019 and interim periods within those years and early adoption is permitted.

2018-15 is effective for fiscal years beginning after December 15, 2019 and interim periods within those years.

The amendments allow either a retrospective or prospective approach to all implementation costs incurred after adoption.

The Company is evaluating the expected impact of this standard on its consolidated financial statements.

The Company adopted this standard, effective January 1, 2020, under the prospective approach, and capitalized implementation costs are included in other assets on the Company's balance sheet.

In December 2019, the FASB issued ASU No.

2019-12 Simplifying the Accounting for Income Taxes .

2019-12, Simplifying the Accounting for Income Taxes , which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating taxes during interim quarters and the recognition of deferred tax liabilities for outside basis differences.

This guidance also simplifies aspects of accounting for franchise taxes, specifies the timing for recognizing certain income tax effects of changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

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REVENUE RECOGNITION

On January 1, 2018, the Company adopted Topic 606 applying the modified retrospective method to all contracts that were not completed as of January 1, 2018.

Results for reporting periods beginning after January 1, 2018 will be presented under Topic 606, while prior period amounts will not be adjusted and continue to be reported under the accounting standards in effect prior to January 1, 2018.

We recorded a net increase to opening retained earnings of $4.5 million as of January 1, 2018 due to the cumulative impact of adopting Topic 606.

The Company recognizes revenue when control of the promised goods or services is transferred to our customers at an amount that reflects the consideration to which we expect to receive in exchange for those goods or services.

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The Company generates revenue from recruitment packages, advertising, classifieds, data services, and career fair and recruitment event booth rentals.

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Disaggregation of revenue

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The following table provides information about disaggregated revenue by brand and includes a reconciliation of the disaggregated revenue with reportable segments (in thousands):

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Year Ended December 31,

For the Year Ended December 31, 2018

2020 2019 2018

Tech-focused Other Total Tech-focused Other Total Tech-Focused Other Total

$ 82,190 — $ 82,190 $ 92,527 $ — $ 92,527 $ 94,438 $ — $ 94,438

ClearanceJobs 28,977 — 28,977 24,745 — 24,745 21,086 — 21,086

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Dice Europe (2)

— — — — — — 2,976 — 2,976

— — — — — — — 3,771 3,771

— — — — — — — 5,329 5,329

— — — — — — 212 212

Total $ 136,878 $ — $ 136,878 $ 149,370 $ — $ 149,370 $ 152,258 $ 9,312 $ 161,570

(1) Includes Dice U.S.

and Career Events (formerly known as Targeted Job Fairs).

and Career Events.

(2) The Company ceased Dice Europe operations on August 31, 2018.

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Hcareers was sold on May 22, 2018 and the Company transferred majority ownership of BioSpace to BioSpace management on January 31, 2018.

Revenue for periods ending prior to January 1, 2018 have not been presented under Topic 606.

Contract Balances

The following table provides information about opening and closing balances of receivables and contract liabilities from contracts with customers as required under Topic 606 (in thousands):

As of December 31, 2019

As of December 31, 2018

As of January 1, 2018

As of December 31, 2020 As of December 31, 2019

Receivables $ 20,298 $ 21,158

Short-term contract liabilities (deferred revenue) 42,426 50,568

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Contract liabilities include customer billings delivered in advance of performance under the contract, and associated revenue is realized when services are rendered under the contract.

Receivables increase due to customer billings and decrease by cash collected from customers along with business divestitures.

Included in January 1, 2018 is $4.4 million of receivables related to businesses divested during the year ended December 31, 2018.

Receivables increase due to customer billings and decrease by cash collected from customers.

Contract liabilities increase due to customer billings and are decreased as performance obligations are satisfied under the contracts.

Included in January 1, 2018 is $8.4 million of short-term contract liabilities related to the businesses divested during the year ended December 31, 2018.

The Company recognized the following revenues as a result of changes in the contract liability balances in the respective periods (in thousands):

Year Ended December 31, 2019

Year Ended December 31, 2018

Revenue recognized in the period from:

Amounts included in the contract liability at the beginning of the period

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year Ended December 31, 2020 Year Ended December 31, 2019 Year Ended December 31, 2018

Revenue recognized in the period from:

Amounts included in the contract liability at the beginning of the period $ 50,438 $ 54,825 $ 75,967

Transaction price allocated to the remaining performance obligations

Under the guidance of Topic 606, the following table includes estimated deferred revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period (in thousands):

2021 2022 2023 Total

Tech-focused $ 42,426 $ 1,033 $ 35 $ 43,494

Contract acquisition costs

In connection with the adoption of Topic 606, we are required to capitalize certain contract acquisition costs consisting primarily of commissions paid when contracts are signed.

We are required to capitalize certain contract acquisition costs consisting primarily of commissions paid when contracts are signed.

As allowed for by the practical expedient, the Company is using a portfolio approach for contract acquisition costs, which allows the new revenue guidance to be applied to a portfolio of contracts with similar characteristics.

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for the remaining sales contracts, we will record these costs over the weighted average contract term.

The Company recorded $11.8 million and $10.1 million of expense related to the amortization of contract acquisition costs during the years ended December 31, 2019 and 2018, respectively, and there was no impairment loss incurred.

During the year ended December 31, 2018, $1.2 million of contract acquisition costs were removed due to the sale of BioSpace and the RigLogix portion of the Rigzone business in the first quarter of 2018, the sale of Hcareers in the second quarter of 2018, and the transfer of majority ownership of the remaining Rigzone business to Rigzone management in the third quarter of 2018.

In accordance with Topic 606, the impact of adoption to our consolidated statements of operations was as follows:

Year Ended December 31, 2018

(in thousand, except per share amounts)

Balance Without Adoption of Topic 606

Effect of Change-Higher (Lower)

Operating expenses

Gain on sale of businesses

Operating income

Basic earnings per share

Diluted earnings per share

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Topic 606, the impact of adoption to our consolidated balance sheet was as follows:

As of December 31, 2018

(in thousands)

Balance Without Adoption of Topic 606

Effect of Change-Higher (Lower)

Capitalized contract assets

Liabilities & Stockholders Equity

Deferred revenue

Deferred income taxes

Total liabilities

Stockholders equity

Accumulated earnings

Total stockholders' equity

Total liabilities & stockholders' equity

In accordance with Topic 606, the impact of adoption to our consolidated statement of cash flows was as follows:

Year Ended December 31, 2018

(in thousands)

Balance Without Adoption of Topic 606

Effect of Change-Higher (Lower)

Cash flows from operating activities:

Adjustments to reconcile net income to net cash flows from operating activities:

Deferred income taxes

Gain on sale of businesses, net

Capitalized contract costs

Deferred revenue

Net cash flows from operating activities

The Company recorded $ 11.5 million, $ 11.8 million and $ 10.1 million of expense related to the amortization of contract acquisition costs during the years ended December 31, 2020, 2019 and 2018, respectively, and there was no impairment loss incurred.

SALE OF BUSINESSES

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The Company incurred approximately $ 0.4 million in selling costs and recognized a $ 0.4 million loss on sale in the third quarter of 2018.

The Company sold the Hcareers business on May 22, 2018 for $16.5 million and incurred approximately $1.5 million in selling costs, with $1.7 million of the purchase price placed in escrow (recorded in prepaid and other current assets), to be released twelve months after the closing date, subject to the terms and conditions of the transaction agreement, including certain contingencies.

Additionally, the Company recorded a receivable of $0.2 million related to working capital, subject to the terms and conditions of the transaction agreement.

The Company sold the Hcareers business on May 22, 2018 for $ 16.5 million and incurred approximately $ 1.5 million in selling costs, with $ 1.7 million of the purchase price placed in escrow, to be released twelve months after the closing date, subject to the terms and conditions of the transaction agreement, including certain contingencies.

Net cash proceeds of $ 14.0 million were received on the date of sale of Hcareers.

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As a result of the sale, a $ 4.6 million gain was recognized in the first quarter of 2018.

The gain on sale

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

exceeded net proceeds as liabilities transferred in the transaction exceeded assets, primarily due to deferred revenues of $1.2 million .

The gain on sale exceeded net proceeds as liabilities transferred in the transaction exceeded assets, primarily due to deferred revenues of $ 1.2 million.

The Company transferred a majority ownership of the BioSpace business to BioSpace management on January 31, 2018.

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The Company incurred approximately $ 0.3 million in selling costs and recognized a $ 0.5 million loss on sale during the year ended December 31, 2018.

The Company sold the Health eCareers business on December 4, 2017 for $15.0 million and incurred approximately $0.6 million of selling costs.

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company sold the Health eCareers business on December 4, 2017 for $ 15.0 million.

$ 1.5 million of the purchase price was placed in escrow, which was released to the Company in the second quarter of 2019.

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Certain assets and liabilities are measured at fair value on a non-recurring basis.

These assets include goodwill and intangible assets which result as acquisitions occur.

These assets include investments (included in other assets), goodwill and intangible assets which resulted from prior acquisitions.

Items valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation.

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Such instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, for example, when there is evidence of impairment.

Impairment —The impairment review process for goodwill compares the fair value of the reporting unit in which the goodwill resides to the carrying value of that reporting unit.

If the fair value of the reporting unit is less than the carrying value, an impairment charge is recorded for the excess of the carrying value over the fair value of the reporting unit.

Fair values are determined either by using a discounted cash flow methodology or by using a combination of a discounted cash flow methodology and a market comparable method.

The discounted cash flow methodology is based on projections of the amounts and timing of future revenues and cash flows, assumed discount rates and other assumptions as deemed appropriate.

Factors such as historical performance, anticipated market conditions, operating expense trends and capital expenditure requirements are considered.

Additionally, the discounted cash flows analysis takes into consideration cash expenditures for product development, other technological updates and advancements to the websites and investments to improve the candidate databases.

The market comparable method indicates the fair value of a business by comparing it to publicly traded companies in similar lines of business or to comparable transactions or assets.

Considerations for factors such as size, growth, profitability, risk and return on investment are analyzed and compared to the comparable businesses and adjustments are made.

A market value of invested capital of the publicly traded companies is calculated and then applied to the entity’s operating results to arrive at an estimate of value.

As required under FASB ASC 360, Impairment or Disposal of Long-Lived Assets , an impairment loss shall be recognized only if the carrying amount of the long-lived asset is not recoverable and exceeds its fair value.

During 2017, the Company performed an in-depth review of the getTalent product and the market outlook due to slow sales of the product and the high cost of development.

Based on the review, the Company determined the required investments to competitively position the product were too high.

As a result, the product offering was canceled.

The long-lived assets of getTalent were tested for recoverability.

This process resulted in an impairment of capitalized website development costs of $9.3 million , which was recorded in the third quarter of 2017 and reduced the net book value of assets related to getTalent to zero.

GetTalent (discontinued in the third quarter of 2017) is included in Other as defined in Note 18.

Impairment —The Company performs annual impairment tests for goodwill and the Dice trademarks and brand name as of October 1 of each year or more frequently if indicators of potential impairment exist.

See Notes 9 and 10 of the Notes to Consolidated Financial Statements.

The Company evaluates the carrying value of equity investments at each reporting period as described in Note 6 of the Notes to the Consolidated Financial Statements.

At January 1, 2018, the Company held preferred stock representing a 10.0 % interest in the fully diluted shares of a leading tech skills assessment company.

During 2018, the skills assessment company completed an additional equity offering, lowering DHI's total interest to 7.6 %.

The Company did not adjust the recorded value of the investment because the shares issued under the new share offering were not similar to the Company's share rights.

The Company has elected the measurement alternative in accordance with FASB ASC 321, Investments - Equity Securities.

As of December 31, 2019, it was not practicable to estimate the fair value of the preferred stock as the shares are not traded.

Accordingly, the investment was carried at its original cost of $ 2.0 million and was included in the other assets section of the Condensed Consolidated Balance Sheets.

During the year ended December 31, 2020, based on the investment's historical cash burn rate, uncertainty of its ability to meet revenue and cash flow projections, current liquidity position, lack of access to additional capital, and impacts from the COVID-19 pandemic, the Company determined the value to be zero.

Accordingly, the Company recorded an impairment charge of $ 2.0 million during the first quarter of 2020.

On January 31, 2018, the Company transferred a majority ownership of the BioSpace business to BioSpace management with zero proceeds received from the transfer, while retaining a 20 % preferred share interest in the BioSpace business.

At the time of sale, the fair value of the investment was estimated to be zero.

During the second quarter of 2020, the Company sold its 20 % interest in BioSpace to BioSpace management for $ 0.2 million.

Accordingly, the Company recognized a $ 0.2 million gain on sale, which was included in interest expense and other on the Consolidated Statements of Operations.

Rigzone is a website dedicated to delivering online content, data , and career services in the oil and gas industry in North America, Europe, the Middle East, and Asia Pacific.

Oil and gas companies, as well as companies that serve the energy industry, use Rigzone to find talent for roles such as petroleum engineers, sales, professionals with energy industry expertise

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and skilled tradesmen.

On August 31, 2018, the Company transferred a majority ownership of the Rigzone business to Rigzone management, while retaining a 40 % common share interest, with zero proceeds received from the transfer.

The Company agreed to provide $ 0.4 million of funding to the Rigzone business, which was recorded in accounts payable and accrued expenses on the consolidated balance sheets as of December 31, 2018.

The Company has no further funding requirements to the Rigzone business.

The Company has evaluated the 40 % common share investment in the Rigzone business and has determined the investment meets the definition and criteria of a variable interest entity ("VIE").

The common share interest is being accounted for under the equity method of accounting as the Company has the ability to exercise significant influence over Rigzone.

As accumulated earnings of the VIE have been approximately zero since the date of transfer, the investment continues to be recorded at cost, which was zero at December 31, 2020.

On January 1, 2019, the Company adopted ASU No.

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Periods beginning after January 1, 2019 will be presented under Topic 842, while prior period amounts will not be adjusted and continue to be reported under the accounting standards in effect prior to January 1, 2019.

We have operating leases for corporate office space and certain equipment.

Our leases have terms from one year to eight years, some of which include options to renew the lease, and are included in the lease term when it is reasonably certain that the Company will exercise the option.

The Company has operating leases for corporate office space and certain equipment.

The leases have terms from one year to eight years, some of which include options to renew the lease, and are included in the lease term when it is reasonably certain that the Company will exercise the option.

No leases include options to purchase the leased property.

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The component of lease cost were as follows (in thousands):

Year Ended December 31, 2019

Year Ended December 31, 2020 Year Ended December 31, 2019

Operating lease cost* $ 4,059 $ 4,265

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Total lease cost

*Includes short-term lease costs and variable lease costs, which are immaterial.

$ 3,041 $ 2,943

*Includes short-term and variable lease costs, which are immaterial.

Supplemental cash flow information related to leases was as follows (in thousands):

Year Ended December 31, 2019

Year Ended December 31, 2020 Year Ended December 31, 2019

Cash paid for amounts included in measurement of lease liabilities:

Operating cash flows from operating leases

$ 4,315 $ 4,632

Right-of-use assets obtained in exchange for lease obligations:

Operating leases

$ 292 $ 7,434

Supplemental balance sheet information related to lease was as follows (in thousands, except lease term and discount):

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental balance sheet information related to lease was as follows (in thousands, except lease term and discount):

Year Ended December 31, 2019

Year Ended December 31, 2020 Year Ended December 31, 2019

Operating lease right-of-use assets $ 16,405 $ 19,712

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Total operating lease liabilities

Weighted average remaining lease term (in years)

$ 17,114 $ 20,307

Weighted average remaining lease term

Operating leases

4.9 years 5.9 years

Weighted average discount rate

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As of December 31, 2020, the Company has no additional operating or finance leases that have not yet commenced.

Future minimum lease commitments as of December 31, 2018, under Accounting Standard Codification Topic 840, the predecessor to Topic 842, are as follows (in thousands):

Operating Leases

2024 and thereafter

Total minimum payments

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FIXED ASSETS, NET

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Capitalized development costs 48,515 35,925

59,757 49,321

Accumulated depreciation and amortization ( 35,213 ) ( 28,969 )

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Therefore, as of December 31, 2020 and 2019, the net value of all finite-lived acquired intangible assets was zero.

As of December 31, 2019 and 2018, the Company had an indefinite-lived acquired intangible asset of $39.0 million related to the Dice trademark and brand name.

The Company evaluates the indefinite-lived acquired intangible asset for impairment on an annual basis.

No impairment has been recorded during the twelve months ending December 31, 2019 and 2018.

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Considering the recognition of the Dice brand, its long history, awareness in the talent acquisition and staffing services market, and the intended use, the remaining useful life of the Dice.com trademarks and brand name was determined to be indefinite.

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If the carrying value exceeds the fair value, an impairment loss is recorded.

The impairment test performed as of October 1, 2019 and 2018 resulted in the fair value of the Dice trademarks and brand name exceeding the carrying value by 26% and 2%, respectively.

The increase in the fair value over the carrying value is driven by the industry growth expectations described below and the Company's investments in its product and its sales team, combined with a lower discount rate as a result of a decline in the risk-free rate.

Revenue attributable to the Dice trademarks and brand name have declined during the year ended December 31, 2019 due to competition in the technology recruiting market, challenges in developing and introducing new products and product enhancements to the market and the Company’s ability to attribute value delivered to customers.

Revenues related to the Dice trademarks and brand name declined 2% and 7% for the years ended December 31, 2019 and 2018, respectively, and declined 3% and 4% for the three months ended December 31, 2019 and 2018, respectively, representing a decrease in the rate of decline for each period.

Revenue projections for the year ending December 31, 2020 include a modest increase compared to the year ended December 31, 2019 and then increasing to rates approaching industry growth projections.

The Company’s ability to achieve these revenue projections may be impacted by, among other things, the factors noted above that have contributed to the decline in recent periods.

Cash flows attributable to the Dice trademarks and brand name declined during 2019 as a result of the lower revenue, as well as increased spending focused on new and enhanced products.

Operating expenses, excluding amortization expense and disposition related and other costs, are projected to increase for the year ending December 31, 2020 as compared to the year ended December 31, 2019, including a small operating margin reduction, as the company continues to invest in new and enhanced products, and then increase at levels that allow for modest operating margin improvements.

If future cash flows attributable to the Dice trademark are not achieved, the Company could realize an impairment in a future period.

The Company utilized a relief from royalty rate method to value the Dice trademarks and brand name using a royalty rate of 6.0% based on comparable industry studies and improving operating margins and a discount rate of 14.2%.

As of December 31, 2020 and 2019, the Company had an indefinite-lived acquired intangible asset of $ 23.8 million and $ 39.0 million, respectively, related to the Dice trademarks and brand name.

The annual impairment test for the Dice trademarks and brand name is performed on October 1 of each year.

During the first quarter of 2020, because of the initial impacts of the COVID-19 pandemic and its potential impact on future earnings and cash flows that are attributable to the Dice trademarks and brand name, the Company performed an interim impairment analysis.

As a result of the analysis, the Company recorded an impairment charge of $ 7.2 million during the first quarter of 2020.

During the third quarter of 2020, the impacts of the COVID-19 pandemic continued and the Company's projected earnings and cash flows that are attributable to the Dice trademarks and brand name declined as compared to the projections used in the March 31, 2020 analysis.

As a result, the Company performed an interim impairment analysis as of September 30, 2020, which resulted in the Company recording an additional impairment charge of $ 8.0 million during the three month period ended September 30, 2020.

Revenues attributable to the Dice trademarks and brand name for the fourth quarter of 2020 and estimated future results as of December 31, 2020 have exceeded the projections used in the September 30, 2020 analysis.

As a result, the Company believes it is not more likely than not that the fair value of the Dice trademarks and brand name is less than the carrying value as of December 31, 2020.

Therefore, no quantitative impairment test was performed as of December 31, 2020.

No impairment was recorded during the years ended December 31, 2019 and 2018.

The projections utilized in the March 31 and September 30, 2020 analyses included a decline in revenues caused by the COVID-19 pandemic that are attributable to the Dice trademarks and brand name for the year ended December 31, 2020 compared to the year ended December 31, 2019.

The September 30, 2020 analysis included a further decline in revenues caused by the COVID-19 pandemic that are attributable to the Dice trademarks and brand name for the year ending December 31, 2021 compared to the year ended December 31, 2020 and then increasing to rates approximating industry growth projections, although peaking at rates slightly lower than in the March 31, 2020 analysis.

The Company’s ability to achieve these revenue projections may be impacted by, among other things, uncertainty related to COVID-19, competition in the technology recruiting market, challenges in developing and introducing new products and product enhancements to the market and the Company’s ability to attribute value delivered to customers.

Cash flows that are attributable to the Dice trademarks and brand name were projected to decline for the year ended December 31, 2020 compared to the year ended December 31, 2019 as a result of the lower revenue, but partially offset by reductions to operating expenses.

Operating expenses, excluding impairments, utilized in the March 31 and September 30, 2020 analyses were projected to decline for the year ended December 31, 2020 as compared to the year ended December 31, 2019, including a reduction in operating margin.

The March 31, 2020 analysis included modest operating margin improvements during the year ending December 31, 2021 and beyond while the September 30, 2020 analysis included a small reduction in operating margin during the year ending December 31, 2021 and then increasing modestly.

If future cash flows that are attributable to the Dice trademarks and brand name are not achieved, the Company could realize an impairment in a future period.

In the March 31, 2020 and September 30, 2020 analyses, the Company utilized a relief from royalty rate method to value the Dice trademarks and brand name using a royalty rate of 5.0 % and 4.0 %, respectively, based on comparable industry studies and a discount rate of 17.5 % and 15.5 %, respectively.

The decline in the royalty rate is due to revenue declines and impacts of the COVID-19 pandemic and the decline in the discount rate is primarily due to the lower projections, as compared to the March 31, 2020 analysis.

The determination of whether or not indefinite-lived acquired intangible assets have become impaired involves a significant level of judgment in the assumptions underlying the approach used to determine the value of the indefinite-lived acquired intangible assets.

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We consider factors such as historical performance, anticipated market conditions, operating expense trends and capital expenditure requirements.

Changes in our strategy and/or market conditions could significantly impact these judgments and require adjustments to recorded amounts of intangible assets.

If projections are not achieved, the Company could realize an impairment in a future period.

Changes in our strategy, uncertainty related to COVID-19, and/or changes in market conditions could significantly impact these judgments and require adjustments to recorded amounts of intangible assets.

If projections are not achieved, the Company could realize an impairment in the foreseeable future.

DHI GROUP, INC.

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Foreign currency translation adjustment 2,085

Sale of business

Goodwill at December 31, 2019 $ 156,059

Foreign currency translation adjustment 920

Impairment ( 23,626 )

Goodwill at December 31, 2020 $ 133,353

The annual impairment tests for the Tech-focused reporting unit, which were performed as of October 1, 2019 and 2018, resulted in the fair value of the reporting unit exceeding the carrying value by 37% and 40%, respectively.

Results for the Tech-focused reporting unit for the fourth quarter of 2019 and estimated future results as of December 31, 2019 are consistent with or have exceeded the October 1, 2019 analysis.

As a result, the Company believes it is not more likely than not that the fair value of the reporting unit is less than the carrying value as of December 31, 2019.

Therefore, no interim impairment testing was performed as of December 31, 2019.

The amount of goodwill as of December 31, 2020 allocated to the Tech-focused reporting unit was $ 133.4 million.

The discount rate applied for the Tech-focused reporting unit was 13.2%.

The annual impairment test for the Tech-focused reporting unit is performed on October 1 of each year.

During the first quarter of 2020, because of the initial impacts of the COVID-19 pandemic and its potential impact on future earnings and cash flows for the reporting unit, the Company performed an interim impairment analysis of goodwill.

The results of the analysis indicated that the fair value of the Tech-focused reporting unit was not substantially in excess of the carrying value as of March 31, 2020.

The percentage by which the estimated fair value exceeded carrying value for the Tech-focused reporting unit at March 31, 2020 was less than 1%.

During the third quarter of 2020, the impacts of the COVID-19 pandemic continued and the Company's projected earnings and cash flows for the Tech-focused reporting unit declined as compared to the projections used in the March 31, 2020 analysis.

As a result, the Company performed an interim impairment analysis as of September 30, 2020, which resulted in the Company recording an impairment charge of $ 23.6 million during the three month period ended September 30, 2020.

Results for the Tech-focused reporting unit for the fourth quarter of 2020 and estimated future results as of December 31, 2020 have exceeded the projections used in the September 30, 2020 analysis.

As a result, the Company believes it is not more likely than not that the fair value of the reporting unit is less than the carrying value as of December 31, 2020.

Therefore, no quantitative impairment test was performed as of December 31, 2020.

No impairment was recorded during the years ended December 31, 2019 and 2018.

Revenue projections for the Tech-focused reporting unit declined compared to the projections used in the March 31, 2020 analysis due to the continued impacts of the COVID-19 pandemic.

The September 30, 2020 analysis included a further decline in revenues attributable to the Tech-focused reporting unit for the year ending December 31, 2021 compared to the year ended December 31, 2020 and then increasing to rates approximating industry growth projections, although peaking at rates slightly lower than in the March 31, 2020 analysis.

The Company’s ability to achieve these revenue projections may be impacted by, among other things, the length and impacts of the COVID-19 pandemic, competition in the technology recruiting market, challenges in developing and introducing new products and product enhancements to the market and the Company’s ability to attribute value delivered to customers.

Cash flows attributable to the Tech-focused reporting unit declined for the year ended December 31, 2020 compared to the year ended December 31, 2019 as a result of the lower revenue, but partially offset by reductions to operating expenses.

Operating expenses, excluding impairments, utilized in the March 31 and September 30, 2020 analyses have declined for the year ending December 31, 2020 as compared to the year ended December 31, 2019, including a reduction in operating margin.

The discount rate applied for the Tech-focused reporting unit in the September 30, 2020 analysis was 14.5 %, compared to 16.5 % at March 31, 2020.

The decline in the discount rate is primarily due to the lower projections, as compared to the March 31, 2020 analysis.

An increase to the discount rate applied or reductions to future projected operating results could result in future impairment of the Tech-focused reporting unit’s goodwill.

It is reasonably possible that changes in judgments, assumptions and estimates the Company made in assessing the fair value of goodwill could cause the Company to consider some portion or all of the goodwill of the Tech-focused reporting unit to become impaired.

In addition, a future decline in the overall market conditions and/or changes in the Company’s market share could negatively impact the estimated future cash flows and discount rates used to determine the fair value of the reporting unit and could result in an impairment charge in the foreseeable future.

In addition, a future decline in the overall market conditions, uncertainty related to COVID-19, political instability, and/or changes in the Company’s market share could negatively impact the estimated future cash flows and discount rates used to determine the fair value of the reporting unit and could result in an impairment charge in the foreseeable future.

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The determination of whether or not goodwill has become impaired is judgmental in nature and requires the use of estimates and key assumptions, particularly assumed discount rates and projections of future operating results, such as forecasted revenues and earnings before interest, taxes, depreciation and amortization margins and capital expenditure requirements.

Fair values are determined either by using a discounted cash flow methodology or by using a combination of a discounted cash flow methodology and a market comparable method.

The discounted cash flow methodology is based on projections of the amounts and timing of future revenues and cash flows, assumed discount rates and other assumptions as deemed appropriate.

Factors such as historical performance, anticipated market conditions, operating expense trends and capital expenditure requirements are considered.

The market comparable method indicates the fair value of a business by comparing it to publicly traded companies in similar lines of business or to comparable transactions or assets.

Considerations for factors such as size, growth, profitability, risk and return on investment are analyzed and compared to the comparable businesses and adjustments are made.

A market value of invested capital of the publicly traded companies is calculated and then applied to the entity’s operating results to arrive at an estimate of value.

Credit Agreement —In November 2018, the Company, together with Dice Inc.

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The Credit Agreement provides for a revolving loan facility of $ 90 million, with an expansion option up to $ 140 million, as permitted in the Credit Agreement.

The Company borrowed $18 million to repay, in full, all outstanding indebtedness, including accrued interest, under the previous credit agreement and to pay certain costs associated with the Credit Agreement.

Unamortized debt issuance costs of $0.2 million were recorded to interest expense at the time of reduction.

Borrowings under the Credit Agreement bear interest, at the Company’s option, at a LIBOR rate or a base rate plus a margin.

The margin ranges from 1.75 % to 2.50 % on LIBOR loans and 0.75 % to 1.50 % on base rate loans, determined by the Company’s most recent consolidated leverage ratio.

The Company incurs a commitment fee ranging from 0.30 % to 0.45 % on any unused capacity under the revolving loan facility, determined by the Company's most recent consolidated leverage ratio.

The facility may be prepaid at any time without penalty.

Interest expense on long-term debt for the years ended December 31, 2020, 2019, and 2018 was $ 1.1 million, $ 0.9 million, and $ 1.9 million, respectively.

The Credit Agreement contains various customary affirmative and negative covenants and also contains certain financial covenants, including a consolidated leverage ratio and a consolidated interest coverage ratio.

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As of December 31, 2020, the Company was in compliance with all of the financial covenants under the Credit Agreement.

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The obligations under the Credit Agreement are guaranteed by two of the Company’s wholly-owned subsidiaries, and secured by substantially all of the assets of the Borrowers and the guarantors and stock pledges from certain of the Company’s foreign subsidiaries.

The amounts borrowed as of December 31, 2020 and 2019 are as follows (dollars in thousands):

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2020 December 31,

Amounts borrowed:

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Actual interest rates 2.19 % 3.56 %

Commitment Fee 0.35 % 0.30 %

There are no scheduled payments until maturity of the Credit Agreement in November 2023.

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Section 1681n for alleged willful violations of the FCRA.

The action was originally filed in a federal district court on July 26, 2017, but as part of the settlement process, the action was re-filed in the Superior Court of Santa Clara County, California (Case No.

The recorded liability reflected a settlement, which became final and was paid in the third quarter of 2019, that resolved all remaining claims subject to the lawsuit.

A compliance hearing is currently scheduled for April 3, 2020.

The action was originally filed in a federal district court on July 26, 2017, but as a part of the settlement process, the action was re-filed in the Superior Court of Santa Clara County, California (Case No.

The recorded liability reflected a settlement, which was subject to a final judgment, and was paid in the third quarter of 2019.

The settlement resolved all remaining claims subject to the lawsuit, and final judgment approving the settlement was entered on July 24, 2020.

Tax Contingencies

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Management has discretion in determining the conditions under which shares may be purchased from time to time.

There were no stock repurchase plan in place during the year ended December 31, 2017.

The following table summarizes the Stock Repurchase Plans approved by the Board of Directors:

May 2018 to May 2019 May 2019 to May 2020 May 2020 to May 2021

Approval Date May 2018 April 2019 May 2020

Authorized Repurchase Amount of Common Stock $ 7 million $ 7 million $ 5 million

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 2018 to May 2019

May 2019 to May 2020

Approval Date

Authorized Repurchase Amount of Common Stock

As of December 31, 2019 the value of shares that may yet to be purchased under the current plan was $5.0 million .

As of December 31, 2020, the value of shares available to be purchased under the current plan was $ 1.1 million.

During the years ended December 31, 2020, 2019 and 2018, purchases of the Company’s common stock pursuant to Stock Repurchase Plans were as follows:

Year Ended December 31,

2020 2019 2018

Shares repurchased [1]

3,548,265 848,760 1,086,420

Average purchase price per share [2]

$ 2.38 $ 2.97 $ 1.82

Dollar value of shares repurchased (in thousands) $ 8,436 $ 2,519 $ 1,977

Unsettled shares repurchased [3]

63,451 4,310 26,337

[1] No shares of our common stock were purchased other than through a publicly announced plan or program.

[2] Average price paid per share includes costs associated with the repurchases.

There were 4,310 and 26,337 unsettled share repurchases, which are included above in the number of shares purchased as of December 31, 2019 and 2018, respectively.

There were no unsettled share repurchases as of December 31, 2017.

[3] Included in the number of shares repurchased above

The Company's Board approved the retirement of 20 million shares of treasury stock during the first quarter of 2019 and, as a result, the Company reduced additional paid in capital by $ 161.6 million and Common Stock by $ 0.2 million during the quarter.

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Refer to Note 11 “Indebtedness.”

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unclaimed Shareholder Liability— Prior to the third quarter of 2018, other long-term liabilities included $ 1.0 million due to former shareholders of the Company under a Joint Plan of Reorganization that was agreed to by the Company and two of its creditors, and confirmed by the U.S.

Bankruptcy Court of the Southern District Court of New York on June 24, 2003.

During the third quarter of 2018, the Company concluded the unclaimed amounts were no longer due and payable and further, such amounts represent additional equity of the Company.

During the third quarter of 2018, the Company concluded the unclaimed amounts were no longer due and payable and further, such

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

amounts represent additional equity of the Company.

Accordingly, the Company reclassified $ 1.0 million from other long-term liabilities to additional paid-in capital during the third quarter of 2018.

6 unchanged sentences

Year Ended December 31,

2020 2019 2018

Foreign currency translation:

5 unchanged sentences

The planned divestitures included:

BioSpace (transferred majority ownership to BioSpace management on January 31, 2018), Hcareers (sold May 22, 2018), Health eCareers (sold December 4, 2017), and Rigzone (sold the RigLogix portion of the Rigzone business on February 22, 2018 and transferred majority ownership of the remaining Rigzone business to Rigzone management on August 31, 2018).

BioSpace (transferred majority ownership to BioSpace management on January 31, 2018 and sold the remaining interest during the second quarter of 2020), Hcareers (sold May 22, 2018), and Rigzone (sold the RigLogix portion of the Rigzone business on February 22, 2018 and transferred majority ownership of the remaining Rigzone business to Rigzone management on August 31, 2018).

Additionally, the Company ceased the Dice Europe operations on August 31, 2018 and vacated certain offices during 2018.

In connection with the planned divestitures and reorganization to the tech-focused strategy, the Company incurred certain costs, including severance and retention, lease exit, business closure, professional fees related to activist shareholders, search, financial advisory, and legal services, and other costs to further these strategic objectives.

The activities associated with disposition related and other costs were substantially completed during the year ended December 31, 2019.

The following table displays a roll forward of the disposition related and other costs and related liability balances (in thousands):

Accrual at December 31, 2018

Cash Payments

Accrual at December 31, 2019

Accrual at December 31, 2019 Expense Cash Payments Accrual at December 31, 2020

Severance and retention $ 145 $ — $ ( 145 ) $ —

Professional fees and other costs

Lease exit and related asset impairment costs 365 — ( 117 ) 248

Total disposition related and other costs $ 510 $ — $ ( 262 ) $ 248

Accrual at December 31, 2017

Cash Payments

Non-cash Impairment

Accrual at December 31, 2018

Accrual at December 31, 2018 Expense Cash Payments Accrual at December 31, 2019

Severance and retention $ 1,089 $ 1,258 $ ( 2,202 ) $ 145

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accrual at December 31, 2016

Cash Payments

Accrual at December 31, 2017

Accrual at December 31, 2017 Expense Cash Payments Non-cash Impairment Accrual at December 31, 2018

Severance and retention $ 1,237 $ 3,191 $ ( 3,339 ) $ — $ 1,089

Professional fees and other costs 825 2,914 ( 2,468 ) — 1,271

Lease exit and related asset impairment costs — 1,514 ( 399 ) ( 168 ) 947

Total disposition related and other costs $ 2,062 $ 7,619 $ ( 6,206 ) $ ( 168 ) $ 3,307

1 unchanged sentence

Under the 2012 Omnibus Equity Award Plan, the Company has granted stock options, restricted stock and Performance-Based Restricted Stock Units (“PSUs”) to certain employees and directors.

On January 1, 2017, as a result of ASU No.

2016-09 as discussed in Note 2, the Company began recording expense based upon the number of awards outstanding with no estimate for forfeitures.

Previously, the Company estimated forfeitures that it expected would occur and recorded expense based upon the number of awards expected to vest.

The Company recorded stock based compensation expense of $ 5.7 million and $ 6.6 million in the years ended December 31, 2019 and 2018, respectively.

The Company records expense based upon the number of awards outstanding with no estimate for forfeitures.

The Company recorded stock based compensation expense of $ 6.3 million, $ 5.7 million, and $ 6.6 million during the years ended December 31, 2020, 2019, and 2018, respectively.

At December 31, 2020, there was $ 9.0 million of unrecognized compensation expense related to unvested awards, which is expected to be recognized over a weighted-average period of approximately 1.3 years.

9 unchanged sentences

Year Ended December 31,

Weighted- Average Fair Value at Grant Date

2020 2019 2018

Shares Weighted- Average Fair Value at Grant Date Shares Weighted- Average Fair Value at Grant Date Shares Weighted- Average Fair Value at Grant Date

Non-vested at beginning of the period 3,994,787 $ 2.46 4,518,932 $ 2.32 2,393,257 $ 5.48

Granted 2,172,550 $ 2.67 2,257,940 $ 2.72 4,087,342 $ 1.68

Forfeited ( 430,136 ) $ 2.81 ( 560,375 ) $ 2.75 ( 439,750 ) $ 4.20

Vested ( 1,859,348 ) $ 2.58 ( 2,221,710 ) $ 2.36 ( 1,521,917 ) $ 5.03

Non-vested at end of period 3,877,853 $ 2.49 3,994,787 $ 2.46 4,518,932 $ 2.32

1 unchanged sentence

These shares are granted under two compensation agreements that are for services provided by the employees.

Under the first agreement, with a grant during the year ended December 31, 2017, the fair value of PSUs were measured using the Monte Carlo pricing model.

The expense related to these PSUs are recorded over the vesting period.

These shares will vest on the dates the Compensation Committee certifies the Company’s achievement of stock price performance relative to the Russell 2000 Index, provided that the recipient remains employed through such date.

Performance will be measured over three separate measurement periods:

a one-year measurement period, a two-year

The first agreement expired and was terminated during the first quarter of 2020.

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

measurement period and a three-year measurement period.

For performance periods one and two, vesting is not to exceed the total grant divided by three.

For performance period three, vesting is no less than zero and no greater than 150% of the initial grant less shares vested in performance periods one and two.

As of December 31, 2019, there were 237,500 unvested shares related to this agreement.

Under the second agreement, the fair value of the PSUs are measured at the grant date fair value of the award, which was determined based on an analysis of the probable performance outcomes.

The performance period is based on the achievement of bookings targets during the year ended December 31, 2019, as defined in the agreement.

The performance period is over one year and is based on the achievement of bookings targets during the years ended December 31, 2020 and 2019, as defined in the agreement.

The earned shares will then vest over a three year period, one-third on each of the first, second, and third anniversaries of the grant date, or if later, the date the Compensation Committee certifies the performance results with respect to the performance period.

For the performance period ending December 31, 2020, as a result of the COVID-19 pandemic and its impact on the overall economy, the bookings targets were modified during the third quarter of 2020.

Accordingly, the Company remeasured the awards.

As of December 31, 2020, there were 1,352,438 unvested shares related to the second agreement.

There were no cash flow impact resulting from the grants.

The fair value of PSUs measured using the Monte Carlo pricing model utilized the following assumptions:

Year Ended December 31,

Weighted average fair value of PSUs granted

Dividend yield of DHI Group, Inc.

Dividend yield of Russell 2000 Index

Risk free interest rate

Volatility of DHI Group, Inc.

Volatility of Russell 2000 Index

A summary of the status of PSUs as of December 31, 2020, 2019, and 2018 and the changes during the periods then ended, is presented below:

Year Ended December 31,

Weighted- Average Fair Value at Grant Date

2020 2019 2018

Shares Weighted- Average Fair Value at Grant Date Shares Weighted- Average Fair Value at Grant Date Shares Weighted- Average Fair Value at Grant Date

Non-vested at beginning of the period 1,664,650 $ 2.53 1,255,000 $ 3.45 760,003 $ 6.92

Granted 911,460 $ 2.65 837,150 $ 2.54 750,000 $ 1.58

Forfeited ( 695,628 ) $ 3.26 ( 427,500 ) $ 5.26 ( 255,003 ) $ 8.27

Vested ( 528,044 ) $ 1.88 — $ — — $ —

Non-vested at end of period 1,352,438 $ 2.50 1,664,650 $ 2.53 1,255,000 $ 3.45

7 unchanged sentences

No stock options were granted during the years ended December 31, 2020, 2019, and 2018.

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the status of options previously granted as of December 31, 2020, 2019, and 2018, and the changes during the periods then ended is presented below:

Year Ended December 31, 2020

Weighted-Average Exercise Price

Aggregate Intrinsic Value

Options Weighted-Average Exercise Price Aggregate Intrinsic Value

Options outstanding at January 1 190,000 $ 8.28 $ —

Forfeited ( 80,000 ) $ 9.48 —

Options outstanding at December 31 110,000 $ 7.40 $ —

Exercisable at December 31 110,000 $ 7.40 $ —

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year Ended December 31, 2019

Weighted-Average Exercise Price

Aggregate Intrinsic Value

Options Weighted-Average Exercise Price Aggregate Intrinsic Value

Options outstanding at January 1 327,000 $ 8.35 $ —

Forfeited ( 137,000 ) $ 8.46 —

Options outstanding at December 31 190,000 $ 8.28 $ —

1 unchanged sentence

Year Ended December 31, 2018

Weighted-Average Exercise Price

Aggregate Intrinsic Value

Options Weighted-Average Exercise Price Aggregate Intrinsic Value

Options outstanding at January 1 1,101,875 $ 9.28 $ —

Forfeited ( 774,875 ) $ 9.67 —

Options outstanding at December 31 327,000 $ 8.35 $ —

Exercisable at December 31 327,000 $ 8.35 $ —

Options expected to vest on December 31

The weighted-average remaining contractual term of options exercisable at December 31, 2019 is 0.8 years years.

The following table summarizes information about options outstanding as of December 31, 2019 :

Options Outstanding

Exercise Price

The weighted-average remaining contractual term of options exercisable at December 31, 2020 is 0.2 years.

T he following table summarizes information about options outstanding as of December 31, 2020:

Options Outstanding Options

Exercise Price Number

Outstanding Weighted-

$ 7.00 - $ 7.99 100,000 0.1 100,000

1 unchanged sentence

110,000 110,000

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred tax assets (liabilities) included in the balance sheet as of December 31, 2020 and 2019 are as follows (in thousands):

19 unchanged sentences

Net deferred tax liability $ ( 9,917 ) $ ( 12,816 )

The Company had no deferred tax assets as of December 31, 2019 and $0.1 million as of December 31, 2018 related to net operating loss carryforwards;

The Company had deferred tax assets of $ 0.4 million at December 31, 2020 related to net operating loss carryforwards;

$ 5.2 million and $ 5.0 million, respectively, at December 31, 2020 and 2019 related to capital loss carryforwards;

and $ 0.3 million and $ 0.1 million, respectively, at December 31, 2020 and 2019 related to tax credit carryforwards.

The capital losses expire in 2023 and 2024.

The tax credit carryforward period is indefinite.

The net operating loss carryforward period is indefinite.

The capital losses expire in 2023 through 2025.

The tax credits expire in 2029.

The Company has recorded valuation allowances of $ 5.3 million and $ 5.1 million, respectively, at December 31, 2020 and 2019 in order to measure only the portion of the deferred tax assets which are more likely than not to be realized.

Income (loss) before income taxes are as follows (in thousands):

2020 2019 2018

United States $ ( 5,628 ) $ 10,882 $ 762

Foreign ( 26,806 ) 5,442 8,840

Income (loss) before income taxes $ ( 32,434 ) $ 16,324 $ 9,602

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Tax expense (benefit) for the years ended December 31, 2020, 2019 and 2018 is as follows (in thousands):

2020 2019 2018

Current income tax expense (benefit):

Federal $ 244 $ 524 $ ( 1,299 )

State 173 72 ( 119 )

Foreign 82 684 1,570

Current income tax expense 499 1,280 152

Deferred income tax expense (benefit):

Federal ( 2,025 ) 1,660 1,387

State ( 461 ) 539 104

Foreign ( 432 ) 294 785

Deferred income tax expense (benefit) ( 2,918 ) 2,493 2,276

Income tax expense

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income tax expense (benefit) $ ( 2,419 ) $ 3,773 $ 2,428

A reconciliation between the tax expense at the federal statutory rate and the reported income tax expense is summarized as follows:

Year Ended December 31,

2020 2019 2018

Federal statutory rate $ ( 6,811 ) $ 3,428 $ 2,016

1 unchanged sentence

Stock-based compensation 482 380 2,112

Nondeductible impairment 5,274 — —

State taxes, net of federal effect ( 315 ) 467 ( 38 )

Difference between foreign and U.S.

rates 32 ( 192 ) ( 102 )

Change in accrual for unrecognized tax benefits ( 437 ) 107 ( 1,179 )

2 unchanged sentences

Currency translation gains (losses) ( 278 ) ( 67 ) 219

Gross tax on foreign dividend

Foreign tax credits

transition tax on foreign earnings — 140 368

Federal rate change impact on deferred tax liabilities

Research and development tax credits ( 530 ) ( 557 ) ( 481 )

Change in valuation allowances ( 30 ) 12 5,117

Income tax expense

Other ( 87 ) ( 260 ) 152

Income tax expense (benefit) $ ( 2,419 ) $ 3,773 $ 2,428

Effective tax rate 7.5 % 23.1 % 25.3 %

H.R.1, commonly known as the Tax Cuts and Jobs Act (“TCJA”), was signed into law in December 2017 and made significant changes to the Internal Revenue Code.

Changes included a reduction in the U.S.

statutory federal tax rate from 35% to 21%;

the transition of U.S.

international taxation from a worldwide tax system to a territorial system;

a one-time transition tax on the deemed repatriation of undistributed earnings from foreign subsidiaries;

and a tax on global intangible low-taxed income earned by foreign subsidiaries.

Subsequent to enactment of the TCJA in December 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No.

118 (“SAB 118”) to provide guidance regarding accounting for the TCJA’s impact.

SAB 118 required companies to recognize those tax items for which accounting had been completed.

For items whose accounting had not been completed, companies were required to recognize provisional amounts to the extent they were reasonably estimable, with subsequent adjustments over a measurement period as more information was available and calculations were finalized.

The measurement period provided in SAB 118 concluded as of December 2018.

As of December 31, 2017, the Company applied the guidance of SAB 118 and recorded a provisional decrease of $3.3 million in its deferred tax liabilities to reflect the new U.S.

statutory rate of 21%;

and recorded a liability of $3.0 million less tax credits of $1.4 million for a $1.6 million provisional estimate of the transition tax on the deemed repatriation of foreign earnings.

In the year ended December 31, 2018, the Company completed its measurement-period analysis of the impact of the TCJA on its deferred tax liabilities and its transition tax liability.

No change was made to the provisional adjustment of the deferred tax liabilities.

For the transition tax, the Company recognized a measurement-period adjustment on the basis of revised foreign earnings computations and additional guidance issued by U.S.

federal and state tax authorities.

The adjustment increased the transition tax liability to $2.0 million , resulting in tax expense of $0.4 million .

H.R.1, commonly known as the Tax Cuts and Jobs Act (“TCJA”), was signed into law in December 2017.

In the year ended December 31, 2018, the Company completed its analysis of the impact of the TCJA on its liability for the one-time transition tax on the deemed repatriation of undistributed earnings from foreign subsidiaries.

The Company recognized an adjustment on the basis of revised foreign earnings computations and additional guidance issued by U.S.

federal and state tax authorities, resulting in tax expense of $ 0.4 million.

In the year ended December 31, 2019, the Company increased its transition tax liability to reflect further guidance issued by tax authorities, resulting in tax expense of $ 0.1 million.

As of December 31, 2017, the Company indicated that it was evaluating the impact of the TCJA on the Company's existing accounting position with regard to indefinite reinvestment, which was that with the exception of its Canada subsidiary, all unremitted earnings of foreign subsidiaries were indefinitely reinvested outside the U.S.

The Company completed this evaluation in the year ended December 31, 2018 and made no change to its indefinite reinvestment position.

The Company also sold its Canada subsidiary during 2018.

As of December 31, 2019, undistributed earnings of all foreign subsidiaries will continue to be indefinitely reinvested

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

outside the U.S., and taxes that would result from distributions have not been provided as determination of the deferred tax liability is not practicable.

The TCJA established new rules designed to tax U.S.

companies on global intangible low-taxed income ("GILTI") earned by foreign subsidiaries.

Companies could make an accounting policy election either to recognize deferred taxes for temporary basis differences related to GILTI;

or to recognize tax expense as current period cost in the period when the tax related to GILTI is incurred.

As of December 31, 2017, the Company indicated that it was evaluating its policy election alternatives and the impact of GILTI on tax expense.

The Company completed this evaluation in the year ended December 31, 2018 and elected to treat tax expense related to GILTI as a current period cost.

The Company recognized tax expense of $0.1 million and $0.2 million , respectively, during the years ended December 31, 2019 and 2018 related to its GILTI liability.

An uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return, or planned to be taken in a tax return not yet filed, that has not been reflected in measuring income tax expense for financial reporting purposes.

At December 31, 2019 and 2018 , the Company has recorded a liability of $1.8 million and $1.7 million , respectively, which consists of unrecognized tax benefits of $1.4 million for 2019 and 2018, and estimated accrued interest and penalties of $0.4 million and $0.3 million , respectively.

At December 31, 2020 and 2019, the Company has recorded a liability of $ 1.3 million and $ 1.8 million, respectively, which consists of unrecognized tax benefits of $ 1.2 million and $ 1.4 million, respectively, and estimated accrued interest and penalties of $ 0.1 million and $ 0.4 million, respectively.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

During the years ended December 31, 2020, 2019 and 2018, interest expense (income) and penalties recorded in the Consolidated Statements of Operations were $( 214,000 ), $ 94,000 and $( 61,000 ), respectively.

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Following is a reconciliation of the amounts of unrecognized tax benefits, net of tax and excluding interest and penalties, for the years ended December 31, 2020, 2019 and 2018 (in thousands):

2020 2019 2018

Unrecognized tax benefits—beginning of period $ 1,434 $ 1,422 $ 2,539

19 unchanged sentences

SEGMENT INFORMATION

The Company previously had two reportable segments which was reduced to one reportable Tech-focused segment when Health eCareers (Healthcare reportable segment) was sold on December 4, 2017.

The Company modified its Tech-focused reportable segment in the first quarter of 2019 to reflect the current Tech-focused operating structure.

The change comes as a result of the non-tech businesses being divested during 2018, and, as a result, corporate related costs are now reflected as part of the Tech-focused segment.

Accordingly, all prior periods have been recast to reflect the current segment presentation.

DHI GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has one reportable segment, Tech-focused, which includes the Dice, Dice Europe (ceased operations on August 31, 2018), ClearanceJobs, eFinancialCareers services, Brightmatter (absorbed into Tech-focused in the third quarter of 2017 and formerly in Other), and corporate related costs (formerly included in Other).

Management has organized its reportable segment based upon its internal management reporting.

Beginning in 2019, the Company has had a single reportable segment, Tech-focused, which includes the Dice, ClearanceJobs, and eFinancialCareers services, as well as corporate related costs.

The Company allocates resources and assesses financial performance on a consolidated basis, as all services pertain to the Company's Tech-focused strategy.

Prior to 2019, the Company had other services and activities that individually were not significant in relation to consolidated revenues, operating income or total assets.

These include Hcareers (sold May 22, 2018), Rigzone (sold the RigLogix portion of the Rigzone business on February 20, 2018 and transferred majority ownership of the remaining Rigzone business to Rigzone management on August 31, 2018) , Biospace (majority ownership transferred to BioSpace management on January 31, 2018) , and getTalent (discontinued operations in the third quarter of 2017) services, which are recorded in the "Other" category.

The Company’s foreign operations are comprised of the Dice Europe (ceased operations on August 31, 2018) operations and a portion of the eFinancialCareers and Rigzone services (sold the RigLogix portion of the Rigzone business on February 20, 2018 and transferred majority ownership of the remaining Rigzone business to Rigzone management on August 31, 2018), which operate in Europe, the financial centers of the gulf region of the Middle East, and Asia Pacific.

These include Hcareers (sold May 22, 2018), Rigzone (sold the RigLogix portion of the Rigzone business on February 20, 2018 and transferred majority ownership of the remaining Rigzone business to Rigzone management on August 31, 2018) , and Biospace (majority ownership transferred to BioSpace management on January 31, 2018) services, which are recorded in the "Other" category.

The Company’s current foreign operations are comprised of the Dice Europe (ceased operations on August 31, 2018) operations and a portion of the eFinancialCareers and Rigzone services (sold the RigLogix portion of the Rigzone business on February 20, 2018 and transferred majority ownership of the remaining business to Rigzone management on August 31, 2018), which operate in Europe, the financial centers of the gulf region of the Middle East, and Asia Pacific.

The Company's foreign operations also included Hcareers (sold May 22, 2018), which operated in Canada.

During the 2019 period, the Company changed its method of presenting revenue by geographic region and as such, 2019 is based on the location of each of the Company’s subsidiaries.

The prior presentation was based on the customer's location.

The Company believes this method better reflects the revenue generated from each geographic region.

The prior periods have been recast to be consistent with the 2019 presentation.

Revenue and long-lived assets by geography, as presented in the tables below, are based on the location of each of the Company's subsidiaries.

DHI GROUP, INC.

1 unchanged sentence

The following table shows the segment information (in thousands and recast for the change in reportable segments):

2020 2019 2018

Tech-focused $ 136,878 $ 149,370 $ 152,258

Other — — 9,312

Total revenues $ 136,878 $ 149,370 $ 161,570

Depreciation:

Tech-focused $ 12,019 $ 9,743 $ 9,001

Other — — 279

Total depreciation $ 12,019 9,743 $ 9,280

Amortization:

Tech-focused $ — $ — $ —

Other — — 482

Total amortization $ — $ — $ 482

Operating income (loss):

Tech-focused $ ( 29,605 ) $ 17,025 $ 7,280

Other — — 4,412

Operating income ( 29,605 ) 17,025 11,692

3 unchanged sentences

Capital expenditures:

Tech-focused $ 16,104 $ 14,188 $ 10,060

Other — — 221

Total capital expenditures $ 16,104 $ 14,188 $ 10,281

2020 2019 2018

By Geography:

8 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company divested all of it's non-tech businesses during 2018, and, as a result, all assets were entirely Tech-focused as of December 31, 2019 and 2018.

Total assets:

EARNINGS PER SHARE

Basic earnings per share (“EPS”) is computed based on the weighted-average number of shares of common stock outstanding.

March 31, December 31, December 31, December 31,

2020 2019 2020 2019

Long-lived assets 2:

United States $ 33,838 $ 30,260

United Kingdom 6,277 8,307

EMEA and APAC (1)

Non-United States 7,111 9,804

Total long-lived assets $ 40,949 $ 40,064

(1) Europe (excluding United Kingdom), the Middle East and Africa (“EMEA”) and Asia-Pacific (“APAC”).

(2) Long-lived assets include fixed assets and lease right of use assets.

EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share (“EPS”) is computed based on the weighted-average number of shares of common stock outstanding.

Diluted EPS is computed based on the weighted-average number of shares of common stock outstanding plus common stock equivalents assuming exercise of stock options, where dilutive.

The following is a calculation of basic and diluted earnings per share and weighted-average shares outstanding (in thousands, except per share amounts):

Income from continuing operations—basic and diluted

2020 2019 2018

Income (loss) from continuing operations—basic and diluted $ ( 30,015 ) $ 12,551 $ 7,174

Weighted-average shares outstanding—basic 48,278 48,739 48,520

1 unchanged sentence

Weighted-average shares outstanding—diluted $ 48,278 $ 51,633 $ 49,605

Basic earnings per share

Diluted earnings per share

Basic earnings (loss) per share $ ( 0.62 ) $ 0.26 $ 0.15

Diluted earnings (loss) per share $ ( 0.62 ) $ 0.24 $ 0.14

DHI GROUP, INC.

3 unchanged sentences

For the Three Months Ended

March 31 June 30 September 30 December 31

(in thousands, except per share amounts)

Total operating expenses

Other operating loss

Operating income

Basic earnings per common share

Diluted earnings per common share

Revenues $ 36,633 $ 33,784 $ 33,250 $ 33,211

Total operating expenses 41,883 31,331 61,828 31,441

Other operating income (loss)

Operating income (loss) $ ( 5,250 ) $ 2,453 $ ( 28,578 ) $ 1,770

2 unchanged sentences

Diluted earnings (loss) per common share $ ( 0.13 ) $ 0.04 $ ( 0.57 ) $ 0.04 [1]

Escrow and working capital terms and related contingencies were finalized regarding the Hcareers's sale resulting in an additional loss on the sale.

Revenues $ 37,120 $ 37,359 $ 37,176 $ 37,715

Total operating expenses 33,528 33,057 31,903 33,320

Other operating income (loss) $ — $ ( 537 ) $ — $ — [2]

Operating income $ 3,592 $ 3,765 $ 5,273 $ 4,395

Net income $ 1,588 $ 3,061 $ 4,381 $ 3,521

Basic earnings per common share $ 0.03 $ 0.06 $ 0.09 $ 0.07 [1]

Diluted earnings per common share $ 0.03 $ 0.06 $ 0.08 $ 0.07 [1]

[1] The sum of the quarter may not equal the full year amount.

Majority ownership of the BioSpace business was transferred to BioSpace management on January 31, 2018, the RigLogix portion of the Rigzone business was sold on February 20, 2018.

Hcareers was sold on May 22, 2018, and majority ownership of the remaining Rigzone business was transferred to Rigzone management on August 31, 2018.

[2] Escrow and working capital terms and related contingencies were finalized regarding the Hcareers's sale resulting in an additional loss on the sale.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

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 8. Financial Statements and Supplementary Data