What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-07-23 compared with 2020-07-27 · 220 added, 124 removed, 112 unchanged (75% of the section changed)

7 unchanged sentences

When determining whether to buy our common stock, other information in this Annual Report on Form 10-K, including our financial statements and the related notes should also be reviewed.

Our business is subject to risks arising from epidemic diseases, such as the recent outbreak of the COVID-19 pandemic.

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, and the United States and other governmental authorities issued stay-at-home orders, proclamations and directives aimed at minimizing the spread of the virus.

The impact of the Pandemic and the resulting restrictions have caused disruptions in the U.S.

and global economy and may continue to disrupt financial markets and global economic activities.

A pandemic, including COVID-19, or other public health epidemic poses the risk that we or our employees and partners may be prevented from conducting business activities at full capacity for an indefinite period of time, including due to the spread of the disease or due to shutdowns that are requested or mandated by governmental authorities.

The continued spread of COVID-19 and the measures taken by the governments of countries affected and in which we operate may, among other things, reduce demand for or delay client decisions to procure our services, or result in cancellations of existing projects.

We may also experience a decline in productivity, impacting our ability to continue to serve our clients efficiently.

Risks Related to the Business Environment

Our business is subject to risks arising from epidemic diseases, such as the ongoing COVID-19 pandemic.

A pandemic, including COVID-19, or other public health epidemic poses the risk that we or our employees and partners may be prevented from conducting business activities at full capacity for an indefinite period of time, including due to the spread of the virus or due to shutdowns that are requested or mandated by governmental authorities.

The current Pandemic and governmental measures intended to reduce its spread have affected, and may continue to affect, how we operate, including, among other things, by reducing demand for or delaying client decisions to procure our services, or resulting in cancellations of existing projects.

We may also experience a decline in productivity, adversely impacting our ability to continue to serve our clients efficiently.

The Pandemic may also have impacted, and may continue to impact, the overall financial condition of some of our clients and their ability to pay outstanding receivables owed to us.

While the full impact from the Pandemic is not quantifiable, we experienced some of the foregoing risks during the fourth quarter of fiscal 2020 and, as a result, our results of operations and cash flows were adversely impacted for the year ended May 30, 2020.

For example, during the last

12 non-holiday weeks in the fourth quarter of fiscal 2020, which started with the week ended March 7, 2020, our average weekly revenue declined 9.1% compared to the first eight non-holiday weeks of the 2020 calendar year .

Our number of consultants also decreased from 2,965 as of May 25, 2019 to 2,495 as of May 30, 2020.

Due to the disruption of business operations in the U.S.

and globally, we have also experienced some decline in our pipeline, and we expect the adverse effects of the Pandemic will continue into fiscal 2021.

Furthermore, we have experienced declines in the market price of our stock subsequent to the end of the third quarter.

If there are further decreases in our stock price for a sustained period or other unfavorable factors, we may be required to perform a goodwill impairment assessment, which may result in a recognition of goodwill impairment .

Although the impairment is a non-cash expense, it could be material to our Consolidated Financial Statements.

In addition, we have followed government mandatory stay-at-home orders in certain regions, and suspended all non-essential travel worldwide for our employees, which could negatively affect our business.

The extent to which the Pandemic impacts our results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact.

While not yet quantifiable, management expects this situation will have an adverse impact to our operating results in fiscal 2021.

We have followed government mandatory stay-at-home orders when required, and limited all non-essential travel worldwide for our employees, which have negatively impacted, and could continue to negatively affect our business, especially in certain regions with continued high rates of infection of COVID-19.

Although our operations have started to stabilize in a majority of the markets in which we operate, the lingering adverse effects of the Pandemic could continue into fiscal 2022.

The full extent to which the Pandemic impacts our business and financial results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact, the impacts of new variants of the virus, and the timing, distribution, efficacy and public acceptance of vaccines and other treatments for COVID-19.

Economic conditions or changes in the use of outsourced professional services consultants could adversely affect our business.

The Pandemic has caused disruptions in the U.S.

and global economy, and continued uncertainty regarding general economic conditions within some regions and countries in which we operate has led to reluctance on the part of some companies to spend on discretionary projects.

This has partially contributed to the decrease in hours worked and the number of professional services consultants at RGP from fiscal 2019 to 2020.

and global economy, and uncertainty regarding general economic conditions within some regions and countries in which we operate has led to reluctance on the part of some companies to spend on discretionary projects.

This has partially contributed to a decrease in hours worked and the number of professional services consultants at Resources Global Professionals from fiscal 2020 to 2021.

Deterioration of or prolonged uncertainty related to the global economy or tightening credit markets could further reduce the demand for our services and adversely affect our business in the future.

In addition, the use of professional services consultants on a project-by-project basis could decline for non-economic reasons.

In addition, the use of professional services consultants on a project-by-project basis could decline for non-economic reasons, including due to clients utilizing their own internal employees, due to competitive reasons, due to a lack of qualified consultants and for the other reasons described elsewhere in this Item 1A.

In the event of a reduction in the demand for our consultants, our financial results would suffer.

Economic deterioration at one or more of our clients may also affect our allowance for doubtful accounts.

Our estimate of losses resulting from our clients’

failure to make required payments for services rendered has historically been within our expectations and the provisions established.

Our estimate of losses resulting from our clients’ failure to make required payments for services rendered has historically been within our expectations and the provisions established.

While our overall receivable collections have not been severely impacted by the Pandemic, we cannot guarantee we will continue to experience the same credit loss rates we have in the past.

1 unchanged sentence

These additional allowances could materially affect our future financial results.

In addition, we are required periodically, but at least annually, to assess the recoverability of certain assets, including deferred tax assets and goodwill.

Continued downturns in the United States economy and international economies could adversely affect our evaluation of the recoverability of deferred tax assets, requiring us to record additional tax valuation allowances.

Our assessment of impairment of goodwill is currently based upon comparing our market capitalization to our net book value.

Therefore, a significant and protracted downturn in the future market value of our stock could potentially result in an impairment of our goodwill.

Although the impairment is a non-cash expense, it could materially affect our future financial results and financial condition.

In addition, we are required periodically, and at least annually, to assess the recoverability of certain assets, including deferred tax assets, long-lived assets and goodwill.

Downturns in the U.S.

and international economies could adversely affect our evaluation of the recoverability of deferred tax assets, long-lived assets and goodwill.

Although the additional tax valuation allowances and the impairment of long-lived assets and goodwill are non-cash expenses, they could materially affect our future financial results and financial condition.

The market for professional services is highly competitive, and if we are unable to compete effectively against our competitors, our business and operating results could be adversely affected.

We operate in a competitive, fragmented market, and we compete for clients and consultants with a variety of organizations that offer similar services.

The competition is likely to increase in the future due to the expected growth of the market and the relatively few barriers to entry.

Our principal competitors include:

3 unchanged sentences

traditional and Internet-based staffing firms;

the in-house or former in-house resources of our clients

and the in-house or former in-house resources of our clients.

The competition is likely to increase in the future due to the expected growth of the market and the relatively few barriers to entry.

We cannot provide assurance that we will be able to compete effectively against existing or future competitors.

1 unchanged sentence

Some of our competitors in certain markets do not provide medical and other benefits to their consultants, thereby allowing them to potentially charge lower rates to clients.

In addition, our competitors may be able to respond more quickly to changes in companies’

needs and developments in the professional services industry.

Our business depends upon our ability to secure new projects from clients and, therefore, we could be adversely affected if we fail to do so.

We do not have long-term agreements with our clients for the provision of services and our clients may terminate engagements with us at any time.

The success of our business is dependent on our ability to secure new projects from clients.

For example, if we are unable to secure new client projects because of improvements in our competitors’

service offerings, or because of a change in government regulatory requirements, or because of an economic downturn decreasing the demand for outsourced professional services, our business is likely to be materially adversely affected.

In addition, our competitors may be able to respond more quickly to changes in companies’ needs and developments in the professional services industry.

Risks Related to Human Capital Resources

We must provide our clients with highly qualified and experienced consultants, and the loss of a significant number of our consultants, or an inability to attract and retain new consultants, could adversely affect our business and operating results.

Our business involves the delivery of professional services, and our success depends on our ability to provide our clients with highly qualified and experienced consultants who possess the skills and experience necessary to satisfy their needs.

At various times, such professionals can be in great demand, particularly in certain geographic areas or if they have specific skill sets.

Our ability to attract and retain consultants with the requisite experience and skills depends on several factors including, but not limited to, our ability to:

 provide our consultants with either full-time or flexible-time employment;

 obtain the type of challenging and high-quality projects that our consultants seek;

 provide competitive compensation and benefits;

 provide our consultants with flexibility as to hours worked and assignment of client engagements.

There can be no assurance we will be successful in accomplishing any of these factors and, even if we are, we cannot assure we will be successful in attracting and retaining the number of highly qualified and experienced consultants necessary to maintain and grow our business.

Our business could suffer if we lose the services of one or more key members of our senior management.

Our future success depends upon the continued employment of our senior management team.

The unforeseen departure of one or more key members of our senior management team could significantly disrupt our operations if we are unable to successfully manage the transition.

The replacement of members of senior management can involve significant time and expense and create uncertainties that could delay, prevent the achievement of, or make it more difficult for us to pursue and execute on our business opportunities, which could have an adverse effect on our business, financial condition and operating results.

Further, due to legal restrictions prohibiting non-compete agreements in certain jurisdictions, we generally do not have non-compete agreements with our employees, including our senior management team, and, therefore, they could terminate their employment with us at any time.

Our ability to retain the services of members of our senior management and other key employees could be impacted by a number of factors, including competitors’ hiring practices or the effectiveness of our compensation programs.

If members of our senior management or other key employees leave us for any reason, they could pursue other employment opportunities with our competitors or otherwise compete with us.

If we are unable to retain the services of these key personnel or attract and retain other qualified and experienced personnel on acceptable terms, our business, financial condition and operating results could be adversely affected.

Significant increases in wages or payroll-related costs could have a material adverse effect on our financial results.

We are required to pay a number of federal, state and local payroll related costs for our employees and consultants, including providing certain benefits such as medical insurance, paid time off and sick leave, and paying unemployment taxes, workers’ compensation insurance premiums and claims, and FICA and Medicare taxes.

These costs could be increased by changes to local laws and regulations.

Costs could also increase as a result of health care reforms or the possible imposition of additional requirements and restrictions related to the placement of personnel.

We may not be able to increase the fees charged to our clients in a timely manner or in a sufficient amount to cover these potential cost increases.

Risks Related to Our Business Operations and Initiatives

Our business depends upon our ability to secure new projects from clients and renew expired contracts, and we could be adversely affected if we fail to do so.

We generally do not have long-term agreements with our clients for the provision of services and our clients may terminate engagements with us at any time.

The success of our business is dependent on our ability to secure new projects from clients or to renew expired contracts with clients.

For example, our business is likely to be materially adversely affected if we are unable to secure new client projects because of improvements in our competitors’ service offerings, because of a change in government regulatory requirements, because of an economic downturn decreasing the demand for outsourced professional services, or for other reasons.

New impediments to our ability to secure projects from clients may develop over time, such as the increasing use by large clients of in-house procurement groups that manage their relationship with service providers.

We may be legally liable for damages resulting from the performance of projects by our consultants or for our clients’

mistreatment of our personnel.

Many of our engagements with our clients involve projects or services critical to our clients’

If we fail to meet our contractual obligations, we could be subject to legal liability or damage to our reputation, which could adversely affect our business, operating results and financial condition.

While we are not currently subject to any client-related legal claims which we believe are material, it remains possible, because of the nature of our business, we may be involved in litigation in the future that could materially affect our future financial results.

Claims brought against us could have a serious negative effect on our reputation and on our business, financial condition and results of operations.

Because we are in the business of placing our personnel in the workplaces of other companies, we are subject to possible claims by our personnel alleging discrimination, sexual harassment, negligence and other similar activities by our clients.

We may also be subject to similar claims from our clients based on activities by our personnel.

The cost of defending such claims, even if groundless, could be substantial and the associated negative publicity could adversely affect our ability to attract and retain personnel and clients.

If we are not able to replace the revenue from our expired client contracts, either through follow-on contracts or new contracts for those requirements or for other requirements, our revenue and operating results may be adversely affected.

On the expiration of a contract, we typically seek a new contract or subcontractor role relating to that client to replace the revenue generated by the expired contract.

There can be no assurance that those expiring contracts we are servicing will continue after their expiration, that the client will re-procure those requirements, that any such re-procurement will not be restricted in a way that would eliminate us from the competition, or that we will be successful in any such re-procurements or in obtaining subcontractor roles.

Any factor that diminishes client relationships and/or our professional reputation could make it substantially more difficult for us to compete successfully for new engagements and qualified consultants.

To the extent our client relationships and/or professional reputation deteriorate, our revenue and operating results could be adversely affected.

Our financial results could suffer if we are unable to achieve or maintain a suitable pay/bill ratio.

Our consultant cost structure is primarily variable in nature, and our profitability depends to a large extent on the level of pay/bill ratio achieved.

Our failure to maintain or increase the hourly rates we charge our clients for our services or to pay an adequate and competitive rate to our consultants in order to maintain a suitable pay/bill ratio could compress our gross margin and adversely impact our profitability.

The pay rates of our consultants are affected by a number of factors, including:

 the skill sets and qualifications our consultants possess;

 the competition for talent;

 current labor market and economic conditions.

The billing rates of our consultants are affected by a number of factors, including:

 our clients’ perception of our ability to add value through our services;

 the market demand for the services we provide;

 introduction of new services by us or our competitors;

 our competition and the pricing policies of our competitors;

 current economic conditions.

If we are unable to achieve a desirable pay/bill ratio, our financial results could materially suffer.

In addition, a limited number of clients are requesting certain engagements be a fixed fee rather than our traditional hourly time and materials approach, thus shifting a portion of the burden of financial risk and monitoring to us.

We derive significant revenue and profits from contracts awarded through a competitive bidding process, which can impose substantial costs on us, and we will lose revenue and profits if we fail to compete effectively.

We derive significant revenue and profits from contracts that are awarded through a competitive bidding process.

Competitive bidding imposes substantial costs and presents a number of risks, including the:

 Substantial cost and managerial time and effort that we spend to prepare bids and proposals;

 Need to estimate accurately the resources and costs that will be required to service any contracts we are awarded, sometimes in advance of the final determination of their full scope;

 Opportunity cost of not bidding on and winning other contracts we may have otherwise pursued.

To the extent we engage in competitive bidding and are unable to win particular contracts, we not only incur substantial costs in the bidding process that negatively affect our operating results, but we may lose the opportunity to operate in the market for the services provided under those contracts for a number of years.

Even if we win a particular contract through competitive bidding, our profit margins may be depressed, or we may even suffer losses as a result of the costs incurred through the bidding process and the need to lower our prices to overcome competition.

Our contracts may contain provisions that are unfavorable to us and permit our clients to, among other things, terminate our contracts partially or completely at any time prior to completion.

Our contracts typically contain provisions that allow our clients to terminate or modify these contracts at their convenience on short notice.

If a client terminates one of our contracts for convenience, we generally can only bill the client for work completed prior to the termination, plus any commitments and settlement expenses the client agrees to pay, but not for any work not yet performed.

If a client were to terminate, decline to exercise options under, or curtail further performance under one or more of our major contracts, our revenue and operating results could be adversely affected.

We may be unable to realize the level of benefit that we expect from our restructuring initiatives, which may adversely impact our business and results of operations.

We may be unable to realize some or all of the anticipated benefits of restructuring initiatives we have undertaken, which may adversely impact our business and results of operations.

In response to changes in industry and market conditions, we have undertaken in the past, and may undertake in the future, restructuring, reorganization, or other strategic initiatives and business transformation plans to realign our resources with our growth strategies, operate more efficiently and control costs.

For example, we initiated a global restructuring and business transformation plan in North America and Asia Pacific (the “North America and APAC Plan”) in March 2020 and in Europe (the “European Plan”) in September 2020.

The successful implementation of our restructuring activities may from time to time require us to effect business and asset dispositions, workforce reductions, management restructurings, decisions to limit investments in or otherwise exit businesses, office consolidations and closures, and other actions, each of which may depend on a number of factors that may not be within our control.

Any such effort to realign or streamline our organization may result in the recording of restructuring or other charges, such as asset impairment charges, contract and lease termination costs, exit costs, termination benefits, and other restructuring costs.

a result of restructuring initiatives, we may experience a loss of continuity, loss of accumulated knowledge and/or inefficiency, adverse effects on employee morale, loss of key employees and/or other retention issues during transitional periods.

Reorganization and restructuring can impact a significant amount of management and other employees’ time and focus, which may divert attention from operating and growing our business.

Further, upon completion of any restructuring initiatives, our business may not be more efficient or effective than prior to the implementation of the plan and we may be unable to achieve anticipated operating enhancements or cost reductions, which would adversely affect our business, competitive position, operating results and financial condition.

Our recent digital expansion and technology transformation efforts may not be successful, which could adversely impact our growth and profitability.

One of our primary areas of focus for fiscal 2021 and fiscal 2022 is digital expansion, which includes the development and launch of our human cloud platform aimed at introducing a new way for clients and talent alike to engage with us and expanding go-to-market penetration for the business we acquired from Veracity.

We are also making investments in the transformation of our technology systems to keep up with technological changes that impact the needs of our clients, the delivery of our services and the efficiency of our back-office operations.

These investments require significant capital expenditures.

If we are unable to execute these initiatives successfully, we may not realize our anticipated return on investment and may not be able to realize the benefits expected, which could adversely impact our growth and profitability.

We may not be able to build an efficient support structure as our business continues to grow and transform.

As our business continues to grow and transform, we may not be able to build an efficient support structure.

For example, in fiscal 2020 we launched our Borderless Talent initiative in response to the Pandemic to evolve towards and facilitate a virtual operating model.

With this initiative, we seek to provide borderless solutions, anytime, anywhere, bringing the best talent to meet our clients’ business needs, based on workload, not zip code.

The successful implementation of such initiatives requires adjusting and strengthening of our business operations, financial and talent management systems, procedures and controls and compliance, which may increase our total operating costs and adversely impact our profitability and growth.

New business strategies and initiatives, such as these, can be time consuming for our management team and disruptive to our operations.

New business initiatives could also involve significant unanticipated challenges and risks including not advancing our business strategy, not realizing our anticipated return on investment, experiencing difficulty in implementing initiatives, or diverting management’s attention from our other businesses.

These events could cause material harm to our business, operating results or financial condition.

We may not be able to grow our business, manage our growth or sustain our current business.

Historically, we have grown by opening new offices and by increasing the volume of services provided through existing offices.

Beginning late in fiscal 2017, we embarked on several new strategic initiatives, including the implementation of a new operating model to drive growth.

In addition, in February 2020, we initiated a plan to consolidate our physical geographic presence to certain key markets while shifting to a virtual operating model in certain other markets.

Our ability to execute on those strategies or the disruptions related to implementation of the new operating model may impact or limit our ability to grow our business.

Beginning late in fiscal 2017, we embarked on several new strategic initiatives, including the implementation of a new operating model to be more center led instead of geographically focused, to drive growth and scale.

As noted above, we undertook the North America and APAC Plan in March 2020 and the European Plan in September 2020 to analyze our physical geographic footprint and real estate spend in those areas.

We have worked to focus investment dollars in high growth core markets for greater impact and to shift to a virtual operating model in certain other markets.

There can be no assurance we will be able to maintain or expand our market presence in our current locations, successfully enter other markets or locations or successfully operate our business virtually without a physical presence in all our markets.

Our ability to continue to grow our business will depend upon an improving global economy and a number of factors, including our ability to:

grow our client base

 grow new client base and penetrate our existing client base;

 expand profitably into new geographies;

drive growth in core markets and the digital transformation space

provide additional professional services offerings

 drive growth in core markets, key industry verticals and solution offerings such as digital transformation services;

 provide additional professional service offerings;

 hire qualified and experienced consultants;

maintain margins in the face of pricing pressures

maintain or grow revenues and increase other service offerings from existing clients

 maintain margins in the face of pricing pressure;

 manage costs

Even if we are able to resume more rapid growth in our revenue, the growth will result in new and increased responsibilities for our management as well as increased demands on our internal systems, procedures and controls, and our administrative, financial, marketing and other resources.

For instance, a limited number of clients are requesting certain engagements be of a fixed fee nature rather than our traditional hourly time and materials approach, thus shifting a portion of the burden of financial risk and monitoring to us.

Failure to adequately respond to these new responsibilities and demands may adversely affect our business, financial condition and results of operations.

Our ability to serve clients internationally is integral to our strategy and our international activities expose us to additional operational challenges we might not otherwise face.

Our international activities require us to confront and manage a number of risks and expenses we would not face if we conducted our operations solely in the United States.

Our international activities require us to confront and manage several risks and expenses we would not face if we conducted our operations solely in the U.S.

Any of these risks or expenses could cause a material negative effect on our operating results.

1 unchanged sentence

 difficulties in staffing and managing foreign offices as a result of, among other things, distance, language and cultural differences;

less flexible or future changes in labor laws and regulations in the U.S.

and in foreign countries

 exposure to labor laws and regulations in foreign countries;

 expenses associated with customizing our professional services for clients in foreign countries;

foreign currency exchange rate fluctuations when we sell our professional services in denominations other than United States dollars

 foreign currency exchange rate fluctuations when we sell our professional services in denominations other than U.S.

 protectionist laws and business practices that favor local companies;

3 unchanged sentences

 compliance with stringent and varying privacy laws in the markets in which we operate;

 compliance with regulations on international business, including the Foreign Corrupt Practices Act, the United Kingdom Bribery Act of 2010 and the anti-bribery laws of other countries;

 reduced protection for intellectual property rights in some countries;

 potentially adverse tax consequences;

 restrictions on the ability to repatriate profits to the U.S.

or otherwise move funds.

We have acquired, and may continue to acquire, companies, and these acquisitions could disrupt our business.

1 unchanged sentence

Entering into an acquisition entails many risks, any of which could harm our business, including:

diversion of management’s attention from other business concerns

 diversion of management’s attention from other business concerns;

 failure to integrate the acquired company with our existing business;

5 unchanged sentences

 incurrence of additional debt with restrictive covenants or other limitations;

addition of significant amounts of intangible assets, including goodwill, that are subject to periodic assessment of impairment, primarily through comparison of market value of our stock to our net book value, with such non-cash impairment potentially resulting in a material impact on our future financial results and financial condition

 addition of significant amounts of intangible assets, including goodwill, that are subject to periodic assessment of impairment, with such non-cash impairment potentially resulting in a material impact on our future financial results and financial condition;

 dilution of our stock as a result of issuing equity securities;

1 unchanged sentence

Our failure to be successful in addressing these risks or other problems encountered in connection with our past or future acquisitions could cause us to fail to realize the anticipated benefits of such acquisitions, incur unanticipated liabilities and harm our business generally.

At various times, such professionals can be in great demand, particularly in certain geographic areas or if they have specific skill sets.

Our ability to attract and retain consultants with the requisite experience and skills depends on several factors including, but not limited to, our ability to:

provide our consultants with either full-time or flexible-time employment

obtain the type of challenging and high-quality projects our consultants seek

pay competitive compensation and provide competitive benefits

provide our consultants with flexibility as to hours worked and assignment of client engagements

We may be unable to realize the level of benefit that we expect from our restructuring initiatives, which may adversely impact our business and results of operations.

We may be unable to realize some or all of the anticipated benefits of restructuring initiatives we have undertaken, which may adversely impact our business and results of operations.

For example, on February 27, 2020, management and our board of directors committed to a restructuring plan to reduce approximately 7.5% of our management and administrative workforce and consolidate our geographic presence to certain key markets.

The restructuring plan was designed to streamline our organizational structure, reduce operating costs and more effectively align resources with business priorities.

Further, as a result of restructuring initiatives, we may experience a loss of continuity, loss of accumulated knowledge and/or inefficiency, adverse effects on employee morale, loss of key employees and/or other retention issues during transitional periods.

Reorganization and restructuring can impact a significant amount of management and other employees’

time and focus, which may divert attention from operating and growing our business.

Our recent rebranding efforts may not be successful.

In addition, we may be unable to adequately protect our intellectual property rights, including our brand name.

We believe establishing, maintaining and enhancing the RGP and Resources Global Professionals brand names are important to our business.

We rely on trademark registrations and common law trademark rights to protect the distinctiveness of our brand.

In fiscal 2020, we launched a significant global rebranding initiative.

However, there can be no assurance that our rebranding initiative will result in a positive return on investment.

In addition, there can be no assurance that the actions we have taken to establish and protect our trademarks will be adequate to prevent use of our trademarks by others.

Further, not all of our trademarks were successfully registered in all of our desired countries.

Accordingly, we may not be able to claim or assert trademark or unfair competition claims against third parties for any number of reasons.

For example, a judge, jury or other adjudicative body may find that the conduct of competitors does not infringe or violate our trademark rights.

In addition, third parties may claim that the use of our trademarks and branding infringe, dilute or otherwise violate the common law or registered marks of that party, or that our marketing efforts constitute unfair competition.

Such claims could result in injunctive relief prohibiting the use of our marks, branding and marketing activities as well as significant damages, fees and costs.

If such a claim was made and we were required to change our name or any of our marks, the value of our brand may diminish and our results of operations and financial condition could be adversely affected.

Risks Related to Information Technology, Cybersecurity and Data Protection

Our computer hardware and software and telecommunications systems are susceptible to damage, breach or interruption.

The management of our business is aided by the uninterrupted operation of our computer and telecommunication systems.

These systems are vulnerable to security breaches, natural disasters or other catastrophic events, computer viruses, or other interruptions or damage stemming from power outages, equipment failure or unintended usage by employees.

In particular, our employees may have access or exposure to personally identifiable or otherwise confidential information and customer data and systems, the misuse of which could result in legal liability.

These systems are vulnerable to security breaches, natural disasters or other catastrophic events, computer viruses, ransomware attacks, or other interruptions or damage stemming from power outages, equipment failure or unintended or unauthorized usage by employees.

In addition, we rely on information technology systems to process, transmit and store electronic information and to communicate among our locations around the world and with our clients, partners and consultants.

The breadth and complexity of this infrastructure increases the potential risk of security breaches.

Security breaches, including cyber-attacks or cyber-intrusions by computer hackers, foreign governments, cyber terrorists or others with grievances against the industry in which we operate or us in particular, may disable or damage the proper functioning of our networks and systems.

Security breaches, including ransomware attacks, cyber-attacks or cyber-intrusions by computer hackers, foreign governments, cyber terrorists or others with grievances against the industry in which we operate or us in particular, may disable or damage the proper functioning of our networks and systems and result in a significant disruption of our business and potentially significant payments to restore the networks and systems.

We review and update our systems and have implemented processes and procedures to protect against security breaches and unauthorized access to our data.

access and tampering (including through social engineering such as phishing attacks), impersonation of authorized users and coordinated denial-of-service attacks.

Despite our implementation of security controls, our systems and networks are vulnerable to computer viruses, malware, worms, hackers and other security issues, including physical and electronic break-ins, router disruption, sabotage or espionage, disruptions from unauthorized access and tampering (including through social engineering such as phishing attacks), impersonation of authorized users and coordinated denial-of-service attacks.

For example, in the past we have experienced cyber security incidents resulting from unauthorized access to our systems, which to date have not had a material impact on our business or results of operations;

however, there is no assurance that such impacts will not be material in the future.

In addition, our transition of certain of our employees to remote working during the Pandemic could also increase our vulnerability to risks related to our hardware and software systems, including risks of phishing and other cybersecurity attacks.

Our systems may be subject to additional risk introduced by software that we license from third parties.

2 unchanged sentences

this access could lead to potential unauthorized disclosure of confidential personal, Company or client information that others could use to compete against us or for other disruptive, destructive or harmful purposes and outcomes.

Any such disclosure or damage to our networks and systems could subject us to third party claims against us and reputational harm.

Any such disclosure or damage to our networks and systems could subject us to third party claims against us and reputational harm, including statutory damages under California law, regulatory penalties and significant costs of breach investigation, remediation and notification.

If these events occur, our ability to attract new clients may be impaired or we may be subjected to damages or penalties.

In addition, system-wide or local failures of these information technology systems could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Legal and Regulatory Risks

Failure to comply with data privacy laws and regulations could have a materially adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences.

Our employees may have access or exposure to personally identifiable or otherwise confidential information and customer data and systems, the misuse of which could result in legal liability.

The collection, hosting, transfer, disclosure, use, storage and security of personal information required to provide our services is subject to federal, state and foreign data privacy laws.

These laws, which are not uniform, do one or more of the following:

regulate the collection, transfer (including in some cases, the transfer outside the country of collection), processing, storage, use and disclosure of personal information, require notice to individuals of privacy practices;

give individuals certain access and correction rights with respect to their personal information;

regulate the collection, transfer (including in some cases, the transfer outside the country of collection), processing, storage, use and disclosure of personal information, and require notice to individuals of privacy practices;

give individuals certain access, correction and deletion rights with respect to their personal information;

and prevent the use or disclosure of personal information for secondary purposes such as marketing.

1 unchanged sentence

In many cases, these laws apply not only to third-party transactions, but also to transfers of information among us and our subsidiaries.

In addition, the European Union adopted a comprehensive General Data Protection Regulation (the “GDPR”) that replaced the EU Data Protection Directive and related country-specific legislation.

The GDPR became fully effective in May 2018.

Under the European General Data Protection Regulation (the “GDPR”), data transfers from the European Union to the United States are generally prohibited unless certain measures are followed.

Significantly, the Court of Justice of the European Union issued a decision in 2020 in the Schrems II case that invalidated one of the mechanisms, the Privacy Shield, and called into question another mechanism, the Standard Contractual Clauses (“SCC”).

The European Commission recently adopted a new set of SCCs.

Complying with the enhanced obligations imposed by the GDPR may result in additional costs to our business and require us to amend certain of our business practices.

2 unchanged sentences

states, including California and South Carolina, have also recently enacted cybersecurity laws requiring certain security measures of regulated entities that are broadly similar to GDPR requirements, and we expect other states will follow suit.

As these laws continue to evolve, we may be required to make changes to our systems, services, solutions and/or products so as to enable us and/or our clients to meet the new legal requirements, including by taking on more onerous obligations in our contracts, limiting our storage, transfer and processing of data and, in some cases, limiting our service and/or solution offerings in certain locations.

As these laws continue to evolve, we may be required to make changes to our systems, services, solutions and/or products to enable us and/or our clients to meet the new legal requirements, including by taking on more onerous obligations in our contracts, limiting our storage, transfer and processing of data and, in some cases, limiting our service and/or solution offerings in certain locations.

Changes in these laws, or the interpretation and application thereof, may also increase our potential exposure through significantly higher potential penalties for non-compliance.

The costs of compliance with, and other burdens imposed by, such laws and regulations and client demand in this area may limit the use of, or demand for, our services, solutions and/or products, make it more difficult and costly to meet client expectations, or lead to significant fines, penalties or liabilities for noncompliance, any of which could adversely affect our business, financial condition, and results of operations.

Our business could suffer if we lose the services of one or more key members of our senior management.

Our future success depends upon the continued employment of our senior management team.

The unforeseen departure of one or more key members of our senior management team could significantly disrupt our operations if we are unable to successfully manage the transition.

Further, we generally do not have non-compete agreements with our employees and, therefore, they could terminate their employment with us at any time.

Our ability to retain the services of members of our senior management and other key employees could be impacted by a number of factors, including competitors’

hiring practices or the effectiveness of our compensation programs.

If members of our senior management or other key employees leave our employ for any reason, they could pursue other employment opportunities with our competitors or otherwise compete with us.

Failure to comply with governmental, regulatory and legal requirements or with our company-wide Code of Business Conduct and Ethics, Compliance Policy for Anti-Bribery and Anti-Corruption Laws, Insider Trading Policy, and other policies could lead to governmental or legal proceedings that could expose us to significant liabilities and damage our reputation.

We are subject to governmental, regulatory and legal requirements in each jurisdiction in which we operate.

While we seek to remain in compliance with such legal and regulatory requirements, there may be changes to regulatory schemes in jurisdictions in which we operate that are outside our control and our efforts to remain in compliance with such changes may adversely affect our business and operating results.

We have a robust Code of Business Conduct and Ethics, Compliance Policy for Anti-Bribery and Anti-Corruption Laws, Insider Trading Policy, and other policies and procedures that are designed to educate and establish the standards of conduct that we expect from our executive officers, outside directors, employees, consultants and independent contractors.

These policies require strict compliance with U.S.

and local laws and regulations applicable to our business operations, including those laws and regulations prohibiting improper payments to government officials.

In addition, as a corporation whose securities are registered under the Exchange Act and publicly traded on the Nasdaq Stock Market, our executive officers, outside directors, employees, consultants and independent contractors are required to comply with the prohibitions against insider trading of our securities.

Nonetheless, we cannot assure our stakeholders that our policies, procedures and related training programs will ensure full compliance with all applicable legal requirements.

Illegal or improper conduct by our executive officers, directors, employees, consultants or independent contractors, or others who are subject to our policies and procedures could damage our reputation in the U.S.

and internationally, which could adversely affect our existing client relationships or adversely affect our ability to attract and retain new clients, or lead to litigation or governmental or regulatory proceedings in the U.S.

or foreign jurisdictions, which could result in civil or criminal penalties, including substantial monetary awards, fines and penalties, as well as disgorgement of profits.

We may be legally liable for damages resulting from the actions of our employees, the performance of projects by our consultants or for our clients’ mistreatment of our personnel.

Many of our engagements with our clients involve projects or services critical to our clients’ businesses.

Claims brought against us could have a serious negative effect on our reputation and on our business, financial condition and results of operations.

We may also be

subject to similar claims from our clients based on activities by our personnel.

We may also be subject to claims of or relating to wrongful termination, violations of employment rights related to employment screening or privacy issues;

misclassification of workers as employees or independent contractors;

violations of wage and hour requirements and other labor laws;

employment of undocumented noncitizens;

criminal activity;

breach of contract;

failure to protect confidential personal information;

intentional criminal misconduct;

misuse or misappropriation of client intellectual property;

employee benefits;

or other claims.

In some cases, we are contractually obligated to indemnify our clients against such risks.

The cost of defending such claims, even if groundless, could be substantial and the associated negative publicity could adversely affect our ability to attract and retain personnel and clients.

We could also be subject to injunctive relief, criminal investigations and/or charges, monetary damages or fines that may be significant, or other material adverse effects on our business.

To reduce our exposure, we maintain policies, procedures and guidelines to promote compliance with laws, rules, regulations and best practices applicable to our business.

We also maintain insurance coverage for professional malpractice liability, fidelity, employment practices liability and general liability in amounts and with deductibles that we believe are appropriate for our operations.

However, our insurance coverage may not cover all potential claims against us, may require us to meet a deductible or may not continue to be available to us at a reasonable cost.

In this regard, we face various employment-related risks not covered by insurance, such as wage and hour laws and employment tax responsibility.

courts in recent years have been receiving large numbers of wage and hour class action claims.

In addition, the use or misuse of social media by our employees or others could reflect negatively on us or our clients and could have a material adverse effect on our business, financial condition and results of operations.

The available legal remedies for the use or misuse of social media may not adequately compensate us for the damages caused by such use or misuse and consequences arising from such actions.

Changes in applicable tax laws or adverse results in tax audits or interpretations could have a material adverse effect on our business and operating results.

We are subject to income and other taxes in the U.S.

at the federal and state level and also in foreign jurisdictions.

Future changes in applicable tax laws and regulations, including changes in tax rates in the jurisdictions in which we operate, are outside our control and are difficult to predict given the political, budgetary and other challenges.

Such changes could adversely affect our business and operating results.

We are also subject to periodic federal, state and local tax audits for various tax years.

Although we attempt to comply with all taxing authority regulations, adverse findings or assessments made by taxing authorities as the result of an audit could have a material adverse effect on us.

Reclassification of our independent contractors by foreign tax or regulatory authorities could have an adverse effect on our business model and/or could require us to pay significant retroactive wages, taxes and penalties.

Internationally, our consultants are a blend of employees and independent contractors.

Independent contractor arrangements are more common abroad than in the U.S.

due to the labor laws, tax regulations and customs of the international markets we serve.

However, changes to foreign laws governing the definition or classification of independent contractors, or judicial decisions regarding independent contractor classification could require classification of consultants as employees.

Such reclassification could have an adverse effect on our business and results of operations, could require us to pay significant retroactive wages, taxes and penalties, and could force us to change our contractor business model in the foreign jurisdictions affected.

Risks Related to Our Corporate and Capital Structure

It may be difficult for a third party to acquire us, and this could depress our stock price.

1 unchanged sentence

These provisions could also discourage proxy contests and make it difficult for our stockholders to elect directors and take other corporate actions.

As a result, these provisions could limit the price future investors are willing to pay for our shares.

As a result, these provisions could limit the price that future investors are willing to pay for our shares.

These provisions:

13 unchanged sentences

We are subject to various operating covenants under the credit facility which restrict our ability to, among other things, incur liens, incur additional indebtedness, make certain restricted payments, merge or consolidate and make dispositions of assets.

The credit facility also requires us to comply with financial covenants limiting our total funded debt, minimum interest coverage ratio and maximum leverage ratio.

The credit facility also requires us to comply with financial covenants limiting our total funded debt, minimum fixed charge coverage ratio and maximum leverage ratio.

Any failure to comply with these covenants may constitute a breach under the credit facility, which could result in the acceleration of all or a substantial portion of any outstanding indebtedness and termination of revolving credit commitments under the credit facility.

Our inability to maintain our credit facility could materially and adversely affect our liquidity and our business.

Our credit facility bears a variable rate of interest that is based on the London Interbank Offered Rate (“LIBOR”) which may have consequences for us that cannot be reasonably predicted and may increase our cost of borrowing in the future.

Borrowings under our credit facility bear interest at a rate per annum of either, at the Company’s option, (i) LIBOR plus a margin or (ii) an alternate base rate plus a margin, with the applicable margin depending on the Company’s consolidated leverage ratio.

The LIBOR benchmark has been the subject of national, international, and other regulatory guidance and proposals for reform.

In July 2017, the U.K.

Financial Conduct Authority announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.

However, for U.S.

dollar LIBOR, the relevant date was deferred to June 30, 2023 for certain tenors (including overnight and one, three, six and 12 months), at which time the LIBOR administrator will cease publication of U.S.

dollar LIBOR.

Despite this deferral, the LIBOR administrator has advised that no new contracts using U.S.

dollar LIBOR should be entered into after December 31, 2021.

These actions indicate that the continuation of U.S.

LIBOR on the current basis cannot be guaranteed after June 30, 2023.

Moreover, it is possible that U.S.

LIBOR will be discontinued or modified prior to June 30, 2023.

While regulators in various jurisdictions have been working to replace LIBOR, it is unclear whether new agreed-upon benchmark rates will be established.

Although our credit facility provides for alternative reference rates, such alternative reference rates and the consequences of the phase-out of LIBOR cannot be entirely predicted at this time.

An alternative reference rate could be higher or more volatile than LIBOR prior to its discontinuance, which could result in an increase in the cost of our indebtedness, impacting our financial condition and results of operations.

Additionally, the U.S.

or global financial markets may be disrupted as a result of the phase-out of LIBOR, which could also have a material adverse effect on our business, financial condition and results of operations.

We may be unable to or elect not to pay our quarterly dividend payment.

We currently pay a regular quarterly dividend, subject to quarterly board of director approval.

The payment of, or continuation of, the quarterly dividend is at the discretion of our board of directors and is dependent upon our financial condition, results of operations, capital requirements, general business conditions, tax treatment of dividends in the United States, contractual restrictions contained in credit agreements and other agreements and other factors deemed relevant by our board of directors.

The payment of, or continuation of, the quarterly dividend is at the discretion of our board of directors and is dependent upon our financial condition, results of operations, capital requirements, general business conditions, tax treatment of dividends in the U.S., contractual restrictions contained in credit agreements and other agreements and other factors deemed relevant by our board of directors.

We can give no assurance that dividends will be declared and paid in the future.

The failure to pay the quarterly dividend, reduction of the quarterly dividend rate or the discontinuance of the quarterly dividend could adversely affect the trading price of our common stock.

Our recent rebranding efforts may not be successful.

In addition, we may be unable to adequately protect our intellectual property rights, including our brand name.

We believe establishing, maintaining and enhancing the RGP and Resources Global Professionals brand name is important to our business.

We rely on trademark registrations and common law trademark rights to protect the distinctiveness of our brand.

After the end of fiscal year 2019, we launched a significant global rebranding initiative.

However, there can be no assurance that our rebranding initiative will result in a positive return on investment.

In addition, there can be no assurance that the actions we have taken to establish and protect our trademarks will be adequate to prevent use of our trademarks by others.

Further, not all of our trademarks were able to successfully register in all of the desired countries.

Accordingly, we may not be able to claim or assert trademark or unfair competition claims against third parties for any number of reasons.

For example, a judge, jury or other adjudicative body may find that

the conduct of competitors does not infringe or violate our trademark rights.

Such claims could result in injunctive relief prohibiting the use of our marks, branding and marketing activities as well as significant damages, fees and costs.

Internationally, our consultants are a blend of employees and independent contractors.

Independent contractor arrangements are more common abroad than in the United States due to the labor laws, tax regulations and customs of the international markets we serve.

UNRESOLVED STAFF COMMENTS.

1 unchanged sentence

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

What changed 10-K

Item 1A. Risk Factors