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Market Information and Holders
−Removed: Our common stock is listed on The Nasdaq Stock Market LLC and trades on the Nasdaq Global Select Market under the symbol “RGP.” As of July 14, 2021, the last reported sales price on Nasdaq of our common stock was $13.71 per share and the approximate number of holders of record of our common stock was 38 (a holder of record is the name of an individual or entity that an issuer carries in its records as the registered holder (not necessarily the beneficial owner) of the issuer’s securities).
+Added: Our common stock is listed on The Nasdaq Stock Market LLC and trades on the Nasdaq Global Select Market under the symbol “RGP.” As of July 21, 2022, the approximate number of holders of record of our common stock was 37 (a holder of record is the name of an individual or entity that an issuer carries in its records as the registered holder (not necessarily the beneficial owner) of the issuer’s securities).
Dividend Policy
Our board of directors has established a quarterly dividend, subject to quarterly board of directors’ approval.
−Removed: Pursuant to declaration and approval by our board of directors, we declared a dividend of $0.14 per share of common stock during each quarter in fiscal 2021 and 2020, and $0.13 per share of common stock during each quarter in fiscal 2019.
+Added: Pursuant to declaration and approval by our board of directors, we declared a dividend of $0.14 per share of common stock during each quarter in fiscal 2022, 2021, and 2020.
On April 13, 2022, our board of directors declared a regular quarterly dividend of $0.14 per share of our common stock.
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The information contained in the performance graph shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference into such filing.
−Removed: For the Fiscal Years Ended
Resources Connection, Inc.
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and Korn Ferry.
−Removed: Our compensation committee, a committee of our board of directors comprised of independent directors, reviews the composition of the peer group annually to ensure its alignment with our size, practice areas, business model delivery and geographic reach.
−Removed: On November 19, 2020, the SEC adopted certain amendments to Regulation S-K, including to remove and reserve Item 301 thereof.
−Removed: The final rules became effective on February 10, 2021.
−Removed: The Company has chosen to adopt the recent amendments and omit the disclosure formerly required by Item 301 of Regulation S-K.
MANAGEME NT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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This discussion and analysis contains forward-looking statements that involve risks and uncertainties.
−Removed: Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors including, but not limited to, those discussed in Part I, Item 1A.
−Removed: “Risk Factors.” and elsewhere in this Annual Report on Form 10-K.
+Added: Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors including, but not limited to, those discussed in Part I, Item 1A “Risk Factors” and elsewhere in this Annual Report on Form 10 K.
See “Forward Looking Statements” above for further explanation.
−Removed: Resources Global Professionals is a global consulting firm helping clients match the right professional talent needed to tackle transformation, change and compliance challenges.
+Added: Resources Global Professionals is a global consulting firm focused on project execution services that power clients’ operational needs and change initiatives with on demand experienced and diverse talent.
As a next-generation human capital partner for our clients, we specialize in solving today’s most pressing business problems across the enterprise in the areas of transactions, regulations, and transformations.
Our engagements are designed to leverage human connection and collaboration to deliver practical solutions and more impactful results that power our clients’, consultants’ and partners’ success.
−Removed: Disrupting the professional services industry since our founding in 1996, we are the “now of work” – attracting the best talent in an increasingly fluid gig-oriented environment.
−Removed: Based in Irvine, California, with offices worldwide, our agile human capital model attracts top-caliber professionals with in-demand skillsets who seek a workplace environment that embraces flexibility, collaboration and human connection.
−Removed: Our agile professional services model quickly aligns the right resources for the work at hand with speed and efficiency.
−Removed: Our approach to workforce strategy uniquely positions us to help our clients transform their businesses and workplaces.
−Removed: See Part 1, Item 1 “Business” for further discussions about our business and operations.
−Removed: Key Transformation Initiatives
−Removed: Over the last several years, we have made strides to ensure our company is truly global, scalable and distinctive in our culture and approach to professional services.
−Removed: We completed a number of transformative enterprise initiatives including cultivating a more robust sales culture, adopting a center-led operating model for sales, talent and delivery, refreshing the RGP brand, and developing a digital pathway to serve our clients through building and commercializing our digital engagement platform and enhancing our consulting capabilities in the digital transformation space.
−Removed: To optimize our sales organization, we aligned our sales process using tools such as Salesforce.com and implemented a new incentive compensation program focused on driving growth in our business with the appropriate metrics.
−Removed: In addition, we focused on client-centricity, including the establishment of our Strategic Client Account Program to serve a set of our largest global multi-national clients with a dedicated account team and our key industry vertical in healthcare.
−Removed: We will continue to invest in building broader and deeper relationships in these important clients to enhance the stickiness of our revenue stream.
−Removed: Under the new operating model, we realigned our organizational structure, largely defined by functional area rather than on an office location basis.
−Removed: We reorganized our Advisory and Project Services function, a team of seller-doer professionals whose primary responsibility is to shepherd sales pursuits and engagement delivery on our more complex projects.
−Removed: We believe this team deepens the scoping conversation, achieves value-oriented pricing and improves delivery management through greater accountability and a more seamless customer experience.
−Removed: Through an extensive brand refresh project, we adopted a new brand identity focused on our human-centered approach to serving clients and engaging with our consultants.
−Removed: We believe the continued development of our new brand will attract and retain both clients and consultants, supporting future revenue growth.
−Removed: Over recent years, explosive technological innovation has fueled the rise of digital transformation as a corporate imperative.
−Removed: Our clients have been forced to rethink the way they do business to stay ahead and compete with digitally native new entrants.
−Removed: In order to support our clients – including these digitally native businesses—we have evolved significantly to help clients solve their digital needs including automation, functional process redesign and technology migration.
−Removed: We acquired Veracity in 2019 to help us build end-to-end digital solutions for our clients who strive to automate workflows and increase collaboration – which has become even more important given the increasingly virtual nature of today’s workforce as a result of the Pandemic.
−Removed: As the Pandemic struck in the fourth quarter of our fiscal 2020, we evolved our business to be more virtual and borderless.
+Added: A disruptor within the professional services industry since its founding in 1996, today the Company finds itself enjoying a highly favorable macro environment that embraces its differentiated agile delivery model.
+Added: The trends in today’s marketplace favor the flexibility and agility RGP provides as businesses confront transformation pressures and speed-to-market challenges.
+Added: Based in Irvine, California, with offices worldwide, RGP’s agile delivery model attracts top-caliber professionals with in-demand skillsets who seek a workplace environment that embraces flexibility, collaboration and human connection.
+Added: Our unique approach to workforce strategy strongly positions us to help our clients transform their businesses and workplaces, especially in a time where high-quality talent is increasingly scarce and the usage of a flexible workforce to execute transformational projects has become the dominant operating model .
+Added: See Part I, Item 1 “Business” for further discussions about our business and operations.
+Added: We are laser focused on driving long-term growth in our business by seizing the favorable macro shifts in workforce strategies and preferences, building an efficient and scalable operating model, and maintaining a distinctive culture and approach to professional services.
+Added: Our enterprise initiatives in recent years include refining the operating model for sales, talent and delivery to be more client-centric, cultivating a more robust performance culture by aligning incentives to business performance, building and commercializing our digital engagement platform, enhancing our consulting capabilities in digital transformation to align with market demand and improving our fixed-cost structure through a global restructuring initiative.
+Added: Despite the impact of the Pandemic, we successfully evolved our operating model to enable us to capitalize on the prominent macro industry trends that favor our business model.
+Added: These macro industry trends include the pivot to virtual and/or hybrid working models, the dramatic shift in talent preferences toward flexibility and career control and our clients responding to these trends by embracing new, more agile, workforce strategies.
We launched the Borderless Talent initiative, changing our employment paradigm and client delivery model by finding and matching qualified talent with appropriate skill sets for specific project needs on a global basis.
−Removed: As remote work became more mainstream, our borderless talent management and deployment further enhanced our capabilities to serve multinational clients in a seamless manner, broadened our client reach in markets where we do not have a physical presence, allowed for improved operation efficiency while offering clients and consultants more choice and agility.
−Removed: As the economy opens up, our ability to flex seamlessly between traditional on-premise and virtual models will offer greater optionality in how we deliver projects and our go-to-market motion.
−Removed: Supply and demand alignment is a key operating principle which we believe can be truly streamlined in a world of borderless talent.
−Removed: Removing the constraint of geo-fencing our consultants based on locality has opened up new avenues of opportunity for both our clients and our talent.
−Removed: This enables us to attract and retain talent on a broader geographic basis and allows for additional opportunities in terms of prospect cultivation, client engagement and project delivery.
−Removed: For RGP’s clients specifically, the Pandemic has hastened the shift to fluid talent strategies as a dynamic force for improving corporate performance.
−Removed: In other words, in a world filled with technology change, demographic shifts, and economic uncertainty, having the right talent in the right place at the right time has become an imperative to compete and thrive in today’s business environment.
−Removed: As we move into more of a post-pandemic environment, the added dimension of evolving labor preferences toward remote work, additional flexibility and increased choice, has resulted in drastic changes to the human capital marketplace.
−Removed: These factors explain why a growing number of large enterprises now define staffing needs with agility in mind.
−Removed: We believe the agile talent strategies that are taking hold today, play to our strengths and capabilities.
+Added: As remote work became more mainstream, our borderless talent management and deployment further enhanced our ability to serve multinational clients in a seamless manner, broadened our client reach in markets where we do not have a physical presence, and allowed for improved operational efficiency while offering clients and consultants more choice and agility.
+Added: As the economy reopened and recovered in fiscal 2022, our ability to flex seamlessly between traditional on-premises and virtual models has offered greater optionality in how we deliver projects and our go-to-market motion.
+Added: Removing the constraint of geo-fencing our consultants based on locality has opened new avenues of opportunity for both our clients and our talent.
+Added: This enabled us to attract and retain talent on a broader geographic basis and allowed for additional opportunities in terms of prospect cultivation, client engagement and project delivery.
+Added: Our agile talent platform has helped clients pivot their workforce and operating models in an increasingly tightening labor market.
+Added: The robust top-line growth and margin expansion we achieved in fiscal 2022 were fueled by the favorable macro shifts in both talent and client preferences driving higher supply and demand, and the operational and go-to-market improvements we have achieved through our enterprise initiatives discussed above.
+Added: We believe we are continuing to lay the right foundation for further growth ahead.
Fiscal 2022 Strategic Focus Areas
Our strategic focus areas in fiscal 2022 were:
−Removed: Furthering our digital expansion through the launch of our human cloud platform and expanded go-to-market penetration for the business we acquired from Veracity
−Removed: Growing our core business through our strategic client and industry vertical programs
−Removed: Right sizing and controlling our cost structure globally, and optimizing our operations to achieve higher operating leverage
−Removed: Our primary area of focus for fiscal 2021 was digital expansion and we have made solid strides in this area.
−Removed: We are substantially ready to pilot our human cloud platform with select clients in the fall of calendar 2021, which introduces a new way for clients and talent alike to engage with us.
−Removed: Our efforts also include expanding the go-to-market penetration for Veracity and launching a new Digital Technology Practice in the Asia Pacific region, which is expected to enhance our abilities to provide digital transformation and technology consulting services from strategy and roadmap to technical implementation.
−Removed: Our focus on introducing Veracity more broadly to our client base and integrating Veracity with the rest of the RGP business operations has generated positive returns throughout fiscal 2021, with Veracity revenue growing 39.2% compared to fiscal 2020 and the Technology and Digital solution offerings becoming one of the key drivers for accelerating the overall RGP revenue recovery during fiscal 2021.
−Removed: We believe the Pandemic and the resulting increase in virtual or remote delivery arrangements have and will continue to accelerate digital transformation agendas in our existing client base and create opportunities for us to engage with new clients.
−Removed: The second focus area for this fiscal year was building our core business, including through the growth of our strategic client and key industry vertical programs, particularly in healthcare.
−Removed: The continued evolution of our delivery model to be more flexible, virtual and borderless has allowed us to expand opportunities within existing core clients and markets as well as to uncover opportunities to effectively serve new clients in new markets.
−Removed: We are working to further penetrate our existing core accounts at a time when many are looking to reduce fixed costs by moving toward more flexible workforce strategies and building relationships with higher value partners for project execution needs.
−Removed: We are also actively extending our offerings to new buyers within these organizations – like Chief Digital, Chief People and Chief Marketing Officers.
−Removed: We see strong growth momentum in our biggest clients and robust opportunity in the healthcare industry from pharmaceutical to medical device to payor and provider, including in practice areas such as revenue cycle optimization, clinical trials process redesign and supply chain transformation.
−Removed: We believe these client needs align well with the capabilities of our dedicated industry group.
−Removed: Finally, with the goal to strengthen the business and right size our cost structure globally, we have substantially completed our restructuring initiatives across North America, APAC and Europe.
−Removed: The North America and APAC Plan, which we initiated in the fourth quarter of fiscal 2020, and the European Plan which we initiated in the second quarter of fiscal 2021 (collectively, the “ Restructuring Plans”), consisted of two key components:
−Removed: (i) an effort to streamline the management and organizational structure and eliminate certain positions as well as exit certain markets to focus on core solution offerings and core high growth clients;
−Removed: and (ii) a strategic rationalization of our physical geographic footprint and real estate spend to focus investment dollars on high growth core markets for greater impact.
−Removed: As of May 29, 2021, we have substantially completed the reduction in force under the Restructuring Plans, and recognized substantially all of the associated expected employee termination costs.
−Removed: Additionally, we made solid progress in executing our real estate exit strategy, with all of the planned lease terminations in Europe and 79% of the planned lease terminations in North America completed as of May 29, 2021, generating substantial savings in occupancy costs.
−Removed: We expect to continue to push for a more virtual footprint beyond the
−Removed: Restructuring Plans, although the exact amount and timing of the expenses and resulting payments associated with our real estate exit plans are subject to a number of variables which may not be within our control, such as the condition of the real estate/leasing market.
−Removed: We believe the successful execution of the Restructuring Plans has allowed us to operate with agility, resilience and efficiency heading into fiscal 2022.
−Removed: See Note 13 – Restructuring Activities in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K and “Results of Operations” below for additional disclosures regarding the impact of the Restructuring Plans on our results of operations and cash flows during the year ended May 29, 2021.
−Removed: COVID-19 Impact and Outlook
−Removed: The Pandemic has adversely impacted our business in the past year including, among other things, reducing demand for or delaying client decisions to procure our services.
−Removed: In response to the Pandemic, we evolved our operating model to be more virtual and borderless.
−Removed: The move to virtual and borderless talent helped us manage supply and demand more efficiently, which resulted in faster revenue generation and reduced consultant turnover, mitigating the negative impact of the Pandemic.
−Removed: During fiscal 2021, our revenue declined 10.5% from the prior year, or 10.2% on a same day constant currency basis, as the Pandemic started to impact the Company on a worldwide basis in the fourth quarter of fiscal 2020.
−Removed: We reached a trough in our revenue during the first quarter of fiscal 2021 and have since experienced a steady recovery in each sequential quarter thereafter .
−Removed: By the fourth quarter of fiscal 2021, our revenue, although declined 3.5% year over year, exceeded the prior year quarter on a same day constant currency basis by 1.2%.
−Removed: Given the timing of our fiscal period and the latent impact of the Pandemic in the fourth quarter of fiscal 2020, we did not yet see the full impact of the recovery from the Pandemic in our results in the fourth quarter of fiscal 2021.
−Removed: While the adverse financial impact of the Pandemic is undeniable, it has also accelerated certain macro trends that we believe allow us to operate from a position of strength.
−Removed: These include the increased use of contingent talent, virtual or remote delivery becoming mainstream and new client attitudes toward borderless talent models.
−Removed: The increasing value that CEO and other C-suite decision-makers place on workforce flexibility and agility helped propel the robust momentum in our professional staffing revenue growth in fiscal 2021.
−Removed: In strengthening our core business, we expect to continue to evolve our client engagement and talent delivery model to take advantage of these important shifts.
−Removed: As further described in “Fiscal 2021 Strategic Focus Areas” above, we have substantially completed our restructuring initiatives across the globe as of the end of fiscal 2021.
−Removed: We believe these actions initiated ahead of the onset of the Pandemic have enabled us to operate with greater agility, as we seek to ensure our organizational health and resilience, and weather the challenges associated with the Pandemic.
−Removed: In order to strengthen our liquidity during the Pandemic, we took proactive measures to increase our cash on hand including, but not limited to, borrowing $39 million under our secured revolving credit facility in the fourth quarter of fiscal 2020, reducing discretionary spending, and focusing on receivables collections efforts.
−Removed: We also elected to defer the deposit of our employer portion of social security taxes from April to December 2020, as provided for under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).
−Removed: Due to our focused efforts to contain costs and manage working capital, we generated healthy cash flows from our operations to afford the ability to repay a total of $45 million on our borrowings during fiscal 2021 and another $10 million subsequently on June 9, 2021.
−Removed: In addition, we elected to repay a total of $6.3 million in deferred deposit of our employer portion of social security taxes prior to May 29, 2021.
−Removed: See “Liquidity and Capital Resources” below for additional information.
−Removed: Until we have further visibility into the continued lingering impact of the Pandemic on the global economy, we will remain focused on the health of our balance sheet and liquidity, cost containment and strategic allocation of resources to drive key growth initiatives in core markets and the expansion of our digital capabilities.
−Removed: As of the close of fiscal 2021, our operations have stabilized in a majority of the markets in which we operate, although we expect that some lingering adverse effects of the Pandemic could continue into fiscal 2022.
−Removed: The full extent to which the Pandemic impacts our business 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.
−Removed: Heading into fiscal 2022, we are encouraged by the revenue acceleration and the continued improvements in sales and pipeline metrics, including win percentage, close won amount and average deal size, as well as the continued recovery of our average bill rate, as our clients rebound from the challenges caused by the Pandemic and resume or increase their discretionary spending, especially on advisory projects driven by digital transformation imperatives as a result of the Pandemic, and continue to shift towards a more agile workforce model.
−Removed: With sustained strength in our pipeline and accelerated revenue conversion, we remain optimistic about our position to capitalize on the positive dynamic of an economy in continued recovery.
+Added: • Drive meaningful revenue growth and deliver enhanced EBITDA margin;
+Added: • Commercialize our digital strategy;
+Added: • Modernize our global technology infrastructure;
+Added: • Strengthen the RGP brand.
+Added: Drive Revenue and EBITDA Growth — Driving meaningful growth in our top-line revenue and expanding our EBITDA (earnings before interest, taxes, depreciation and amortization) margin were our highest priorities this fiscal year.
+Added: In fiscal 2022, we continued to focus on the growth of our Strategic Client Account and key industry vertical programs, particularly in healthcare, leveraging broader market talent for virtual delivery and the increasing focus on account penetration.
+Added: Since inception, our Strategic Client Account program has been one of the key drivers of revenue and business growth.
+Added: In fiscal year 2022, we successfully expanded our Strategic Client Account program by moving additional accounts into the program and adopting a client-centric and borderless approach to serve these clients.
+Added: Revenue within this client set experienced significant growth over the prior fiscal years and represented 32% of our consolidated revenue .
+Added: We believe our efforts have and will continue to allow us to develop in-depth knowledge of these clients’ needs and increase the scope and size of our projects with them.
+Added: In our healthcare industry vertical, we experienced strong growth momentum from pharmaceutical to medical device to payor and provider, including in practice areas such as revenue cycle optimization, clinical trials process redesign and supply chain transformation.
+Added: Revenue from the healthcare industry vertical grew 22% year over year.
+Added: To align with market demand, we have been expanding our capabilities in such areas as revenue integrity, clinical trials support and supply chain optimization and leveraging our depth of industry expertise to help clients operate with enhanced agility and efficiency in the rapidly evolving healthcare industry.
+Added: In addition, the continued evolution of our operating and delivery model to be more flexible, virtual, and borderless has allowed us to further penetrate existing core clients and markets as well as to uncover opportunities to effectively serve new clients in new markets.
+Added: Revenue from our regional accounts grew 30% over the prior fiscal year.
+Added: As our clients continue to accelerate their digital and workforce paradigm transformations in this still uncertain economic environment, we are well positioned to deliver greater workforce agility and flexibility to our clients.
+Added: Building on significant cost savings achieved in fiscal 2021 and the fundamental improvement in our cost structure, coupled with heightened focus on pricing and operational efficiency, we delivered significant improvement in EBITDA performance in fiscal 2022 and enhanced shareholder value.
+Added: We improved our pay/bill ratio through value-based pricing and strategic management of our direct delivery costs.
+Added: In a world with intensified competition for talent, we strive to attract high-caliber professionals with the right skillsets and qualifications at competitive pay, and appropriately capture the value of the talent and solutions delivered in our bill rates.
+Added: In addition, we maintained the structural improvement in cost leverage through disciplined management of headcount, business expenses, and real estate costs in an increasingly digital, virtual market.
+Added: Commercialize Our Digital Strategy — Over recent years, explosive technological innovation has fueled the rise of digital transformation as a corporate imperative.
+Added: Our clients have been forced to rethink the way they do business to stay ahead of, and compete with, digitally native new entrants.
+Added: In order to support our clients – including these digitally native businesses – we have evolved significantly to help clients address their digital needs including automation and digitization of business processes as well as offering digital pathways to serve their needs.
+Added: We have completed the development of the core functionalities of HUGO, our first-to-market employed-model digital staffing platform where talent and clients can connect, engage and even transact directly.
+Added: HUGO is designed to offer clients and talent unprecedented transparency, speed, and control.
+Added: We launched a limited pilot in the New York Tri-State area in October 2021 and continued to enhance its functionality with further artificial intelligence and machine learning.
+Added: We also have been developing sales and marketing strategies to increase client and talent adoption of the platform.
+Added: We plan to expand the geographic reach to other key markets within the U.S.
+Added: such as California and Texas in fiscal 2023.
+Added: Additionally, our efforts to commercialize our digital strategy this year included the acceleration of digital transformation revenue through the continued expansion of go-to-market penetration for Veracity in North America.
+Added: We continued to drive enhancement in our abilities to provide digital transformation and technology consulting services from strategy and roadmap to technical implementation.
+Added: Our focus on introducing Veracity more broadly to our client base has generated positive returns since inception, with Veracity revenue growing 16% year over year in fiscal 2022.
+Added: We believe the increase in virtual or remote delivery arrangements resulting from the Pandemic has and will continue to accelerate digital transformation agendas in our existing client base and create opportunities for us to engage with new clients, contributing to further top-line revenue growth.
+Added: Modernize Our Global Technology Infrastructure — In the third quarter of fiscal 2022, we launched a holistic digital transformation project to elevate our technology infrastructure globally, including a cloud-based enterprise resource planning system and talent acquisition and management system.
+Added: We believe our investment in this technology initiative will accelerate our efficiency and data-led decision-making capabilities, optimize process flow and automation, scale our operations to support future growth, and create an enhanced digital experience for our consultants, clients and employees.
+Added: Strengthen the RGP Brand — We have continued to build upon the brand work conducted to date to further clarify and amplify our brand positioning in the marketplace.
+Added: Our employer-facing brand will continue to focus on the power of human.
+Added: Through enhanced transparency, flexibility and digital connection, fulfilling assignments, competitive compensation and benefits and continued education,
+Added: training and professional development, we are strengthening our professional community and delivering care and wellbeing to our consultants and employees.
+Added: We are positioning ourselves as the preferred professional environment for talent looking for greater flexibility, choice and career control than traditional employment models can offer.
+Added: As we announced at our Investor Day, held on April 12, 2022 at Nasdaq Marketplace, our corporate brand will focus on helping both talent and clients work differently in the new world of work.
+Added: We believe we are poised to own a dominant position as a leading project execution partner of choice and the brand work that we are doing is intended to support that effort.
Critical Accounting Policies and Estimates
−Removed: The discussion and analysis of our financial condition and results of operations included in this Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, are based upon our Consolidated Financial Statements, which
−Removed: have been prepared in accordance with GAAP in the United States.
+Added: The discussion and analysis of our financial condition and results of operations included in this Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the U.S.
The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
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(a) are the most important to the portrayal of our financial condition and results of operations and (b) involve inherently uncertain issues that require management’s most subjective or complex judgments.
+Added: Revenue recognition — Revenues are recognized when control of the promised service is transferred to our clients, in an amount that reflects the consideration expected in exchange for the services.
+Added: Revenue is recorded net of sales or other transaction taxes collected from clients and remitted to taxing authorities.
+Added: Revenues for the vast majority of our contracts are recognized over time, based on hours worked by our professionals.
+Added: The performance of the agreed-upon service over time is the single performance obligation for revenues.
+Added: On a limited basis, the Company may have fixed-price contracts, for which revenues are recognized over time using the input method based on time incurred as a proportion of estimated total time.
+Added: Time incurred represents work performed, which corresponds with, and therefore best depicts, the transfer of control to the client.
+Added: Management uses significant judgments when estimating the total hours expected to complete the contract performance obligation.
+Added: It is possible that updated estimates for consulting engagements may vary from initial estimates with such updates being recognized in the period of determination.
+Added: Depending on the timing of billings and services rendered, the Company accrues or defers revenue as appropriate.
+Added: Certain clients may receive discounts (for example, volume discounts or rebates) to the amounts billed.
+Added: These discounts or rebates are considered variable consideration.
+Added: Management evaluates the facts and circumstances of each contract and client relationship to estimate the variable consideration, assessing the most likely amount to recognize and considering management’s expectation of the volume of services to be provided over the applicable period.
+Added: Rebates are the largest component of variable consideration and are estimated using the most-likely-amount method prescribed by Accounting Standards Codification Topic 606, Revenue from Contracts with Customers , contracts terms and estimates of revenue.
+Added: Revenues are recognized net of variable consideration to the extent that it is probable that a significant reversal of revenues will not occur in subsequent periods.
+Added: Changes in estimates would result in cumulative catch-up adjustments and could materially impact our financial results.
+Added: Rebates recognized as contra-revenue for the years ended May 28, 2022, May 29, 2021 and May 30, 2020 were $3.1 million, $2.6 million and $1.4 million, respectively.
Allowance for doubtful accounts — We maintain an allowance for doubtful accounts for estimated losses resulting from our clients failing to make required payments for services rendered.
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If the ultimate tax liability differs from the amount of tax expense we have reflected in the Consolidated Statements of Operations, an adjustment of tax expense may need to be recorded and this adjustment may materially affect our future financial results and financial condition.
+Added: We evaluate the realizability of our deferred tax assets based on all available evidence and establish a valuation allowance to reduce deferred tax assets when it is more likely than not that they will not be realized.
+Added: When all available evidence indicates that the deferred tax assets are more likely than not to be realized, a valuation allowance is not required to be recorded or an existing valuation allowance is reversed.
+Added: Management assesses all available positive and negative evidence, including (1) three-year cumulative pre-tax income or loss adjusted for permanent tax differences, (2) history of operating losses and of net operating loss carryforwards expiring unused, (3) evidence of future reversal of existing taxable temporary differences, (4) availability of sufficient taxable income in prior years, (5) tax planning strategies, and (6) projection of future taxable income, to determine the need to establish or release a valuation allowance on the deferred tax assets.
+Added: An increase or decrease in valuation allowance will result in a corresponding increase or decrease in tax expense, and any such adjustment may materially affect our future financial results.
We also evaluate our uncertain tax positions and only recognize the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
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As of May 28, 2022 and May 29, 2021, a valuation allowance of $8.2 million and $13.3 million was established on deferred tax assets totaling $34.3 million and $38.4 million, respectively.
−Removed: Our income tax for the years ended May 29, 2021, May 30, 2020 and May 25, 2019 was a benefit of $2.5 million, an expense of $6.9 million and an expense of $16.5 million, respectively.
−Removed: Our total liability for unrecognized tax benefits was $0.9 million and $0.8 million as of May 29, 2021 and May 30, 2020, respectively.
−Removed: Revenue recognition — Revenues are recognized when control of the promised service is transferred to our clients, in an amount that reflects the consideration expected in exchange for the services.
−Removed: Revenue is recorded net of sales or other transaction taxes collected from clients and remitted to taxing authorities.
−Removed: Revenues from contracts are recognized over time, based on hours worked by our professionals.
−Removed: The performance of the agreed-upon service over time is the single performance obligation for revenues.
−Removed: Certain clients may receive discounts (for example, volume discounts or rebates) to the amounts billed.
−Removed: These discounts or rebates are considered variable consideration.
−Removed: Management evaluates the facts and circumstances of each contract and client relationship to estimate the variable consideration assessing the most likely amount to recognize and considering management’s expectation of the volume of services to be provided over the applicable period.
−Removed: Rebates are the largest component of variable consideration and are estimated using the most likely amount method prescribed by Accounting Standards Codification Topic 606, Revenue from Contracts with Customers , contracts terms and estimates of revenue.
−Removed: Revenues are recognized net of variable consideration to the extent that it is probable that a significant reversal of revenues will not occur in subsequent periods.
−Removed: Changes in estimates would result in cumulative catch-up adjustments and could materially impact our financial results.
−Removed: Rebates recognized as contra-revenue for the years ended May 29, 2021, May 30, 2020 and May 25, 2019 were $2.6 million, $1.4 million and $1.5 million, respectively.
+Added: Our income tax for the years ended May 28, 2022, May 29, 2021 and May 30, 2020 was an expense of $15.8 million, a benefit of $2.5 million and an expense of $6.9 million, respectively.
+Added: Our total liability for unrecognized tax benefits was $0.9 million as of both May 28, 2022 and May 29, 2021.
Stock-based compensation — Under our 2020 Performance Incentive Plan, officers, employees, and outside directors have received or may receive grants of restricted stock, restricted stock units, performance stock units, options to purchase common stock or other stock or stock-based awards.
−Removed: Under our ESPP, eligible officers and employees may purchase our common stock in accordance with the terms of the plan.
+Added: Under our ESPP, eligible officers and employees may purchase our common stock at a discount in accordance with the terms of the plan.
+Added: During fiscal 2022, the Company started issuing performance stock unit awards under the 2020 Performance Incentive Plan that will vest upon the achievement of certain company-wide performance targets at the end of the defined three-year performance period.
+Added: Vesting periods for restricted stock, restricted stock units and stock option awards range from three to four years.
We estimate the fair value of stock-based payment awards on the date of grant as described below.
−Removed: We determine the estimated value of restricted stock and restricted stock unit awards using the closing price of our common stock on the date of grant.
−Removed: elected to use the Black-Scholes option-pricing model for our stock options and stock purchased under our ESPP which takes into account assumptions regarding a number of highly complex and subjective variables.
+Added: We determine the estimated value of restricted stock, restricted stock unit and performance stock unit awards using the closing price of our common stock on the date of grant.
+Added: We have elected to use the Black-Scholes option-pricing model for our stock options and stock purchased under our ESPP which takes into account assumptions regarding a number of complex and subjective variables.
These variables include the expected stock price volatility over the term of the awards and actual and projected employee stock option exercise behaviors.
2 unchanged sentences
The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of our employee stock options.
−Removed: The impact of expected dividends ($0.14 per share for each quarter during fiscal 2021 and 2020 and $0.13 per share for each quarter during fiscal 2019) is also incorporated in determining the estimated value per share of employee stock option grants and purchases under our ESPP.
−Removed: Such dividends are subject to quarterly board of director approval.
+Added: The impact of expected dividends ($0.14 per share for each quarter during fiscal 2022, 2021 and 2020) is also incorporated in determining the estimated value per share of employee stock option grants and purchases under our ESPP.
+Added: Such dividends are subject to quarterly board of directors’ approval.
Our expected life of stock option grants is 5.6 years for non-officers and 8.1 years for officers, and the expected life of grants under our ESPP is 6 months.
−Removed: We review the underlying assumptions related to stock-based compensation at least annually or more frequently if we believe triggering events exist.
In addition, because stock-based compensation expense recognized in the Consolidated Statements of Operations is based on awards ultimately expected to vest, it is reduced for estimated forfeitures.
−Removed: Forfeitures are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates.
+Added: Forfeitures are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates, and in the case of performance stock units, based on the actual performance.
+Added: The number of performance stock units earned at the end of the performance period may equal, exceed or be less than the targeted number of shares depending on whether the performance criteria are met, surpassed or not met.
+Added: During each reporting period, the Company uses the latest forecasted results to estimate the number of shares to be issued at the end of the performance period.
+Added: resulting changes to stock compensation expense are adjusted in the period in which the change in estimates occur.
Forfeitures are estimated based on historical experience.
2 unchanged sentences
Stock-based compensation expense for the years ended May 28, 2022, May 29, 2021 and May 30, 2020 was $8.2 million, $6.6 million and $6.1 million, respectively.
−Removed: Valuation of long-lived assets — For long-lived tangible and intangible assets, including property and equipment, right-of-use assets, and finite-lived intangible assets, we assess the potential impairment periodically or whenever events or changes in circumstances indicate the carrying value may not be recoverable from the estimated undiscounted expected future cash flows expected to result from their use and eventual disposition.
+Added: Valuation of long-lived assets — For long-lived tangible and intangible assets, including property and equipment, right-of-use (“ROU”) assets, and definite-lived intangible assets, we assess the potential impairment periodically or whenever events or changes in circumstances indicate the carrying value may not be recoverable from the estimated undiscounted expected future cash flows expected to result from their use and eventual disposition.
In cases where the estimated undiscounted expected future cash flows are less than net book value, an impairment loss is recognized equal to the amount by which the net book value exceeds the estimated fair value of assets.
−Removed: We performed our assessment of potential qualitative impairment indicators of long-lived assets, including property and equipment, right-of-use assets outside of exited markets, and finite-lived intangible assets as of May 29, 2021.
+Added: We performed our assessment of potential qualitative impairment indicators of long-lived assets, including property and equipment, ROU assets outside of exited markets, and definite-lived intangible assets as of May 28, 2022.
We determined that for such long-lived assets, no impairment indicators were present as of May 28, 2022, and no impairment charge was recorded during fiscal 2022.
−Removed: For right-of-use assets within exited markets as we continue to execute the Restructuring Plans and move towards a more virtual footprint in certain markets, we assess the potential impairment whenever an impairment indicator was present.
−Removed: For further discussion regarding impairment of right-of-use assets in exited markets, see Note 13 – Restructuring Activities in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K .
+Added: For ROU assets within exited markets under our restructuring plans, we assess the potential impairment whenever an impairment indicator was present.
+Added: For further discussion regarding impairment of ROU assets in exited markets, see Note 14 – Restructuring Activities in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K .
Estimating future cash flows requires significant judgment, and our projections may vary from the cash flows eventually realized.
1 unchanged sentence
Although the impairment is a non-cash expense, it could materially affect our future financial results and financial condition.
−Removed: Valuation of goodwill — Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination.
+Added: Goodwill — Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination.
We evaluate goodwill for impairment annually on the last day of our fiscal year, and whenever events indicate that it is more likely than not that the fair value of a reporting unit could be less than its carrying amount.
11 unchanged sentences
The market approach requires us to make a series of assumptions that involve significant judgment, such as the selection of comparable companies and the evaluation of the multiples.
−Removed: The income approach estimates fair value based on our estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital that reflects the relevant
−Removed: risks associated with each reporting unit and the time value of money.
+Added: The income approach estimates fair value based on our estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital that reflects the relevant risks associated with each reporting unit and the time value of money.
The income approach also requires us to make a series of assumptions that involve significant judgment, such as discount rates, revenue projections and Adjusted EBITDA margin projections.
2 unchanged sentences
The following is a discussion of our goodwill impairment tests performed during fiscal 2022.
−Removed: Second Quarter 2021 Goodwill Impairment Test
−Removed: As further discussed in Note 2 – Summary of Significant Accounting Policies and Note 18 – Segment Information and Enterprise Reporting in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K and in “Operating Results of Segment” below, effective in the second quarter of fiscal 2021, we revised our historical one segment position and identified the following new operating segments:
−Removed: RGP, taskforce and Sitrick, each of which represents a reporting unit.
−Removed: Concurrent with the segment change, we completed a goodwill impairment assessment using the quantitative analysis, as further discussed above, and concluded that no goodwill impairment existed immediately before or after the change in segment reporting.
−Removed: We reallocated goodwill to the new reporting units on the relative fair value basis.
2022 Annual Goodwill Impairment Analysis
We performed our annual goodwill impairment test as of May 28, 2022 on our three reporting units.
−Removed: Considering the recent quantitative goodwill impairment analysis completed and the conclusion reached, we elected to perform a qualitative analysis and assessed the relevant events and circumstances to determine if it is more likely than not that the fair value of any of our reporting units is less than its respective carrying amount.
+Added: We elected to perform a qualitative analysis and assessed the relevant events and circumstances to determine if it is more likely than not that the fair value of any of our reporting units is less than its respective carrying amount.
We considered such events and circumstance including, macroeconomic factors, industry and market conditions, financial performance indicators and measurements, and other factors.
−Removed: Based on our assessment of these factors, we do not believe that it is more likely than not that the fair value of any of our reporting units is less than its respective carrying value, and no further testing is needed.
+Added: on our assessment of these factors, we do not believe that it is more likely than not that the fair value of any of our reporting units is less than its respective carrying value, and no further testing is needed.
We concluded that there was no goodwill impairment as of May 28, 2022.
−Removed: While we believe that the assumptions underlying our quantitative and qualitative assessment are reasonable, these assumptions could have a significant impact on whether or not a non-cash impairment charge is recognized and also the magnitude of such charge.
+Added: While we believe that the assumptions underlying our qualitative assessment are reasonable, these assumptions could have a significant impact on whether a non-cash impairment charge is recognized and also the magnitude of such charge.
The results of an impairment analysis are as of a point in time.
1 unchanged sentence
We will continue to monitor any changes to our assumptions and will evaluate goodwill as deemed warranted during future periods.
−Removed: Business combinations — We allocate the fair value of the purchase consideration of our acquisitions to the tangible assets, liabilities, and intangible assets acquired based on their estimated fair values.
−Removed: Purchase price allocations for business acquisitions require significant judgments, particularly with regards to the determination of value of identifiable assets, liabilities, and goodwill.
−Removed: Often third-party specialists are used to assist in valuations requiring complex estimation.
−Removed: The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.
−Removed: Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.
−Removed: Purchase agreements related to certain business acquisitions may include provisions for the payment of additional cash consideration if certain future performance conditions are met.
−Removed: These contingent consideration arrangements are recognized at their acquisition date fair value and included as part of the purchase price at the acquisition date.
−Removed: These contingent consideration arrangements are classified as accrued liabilities or other long-term liabilities in our Consolidated Balance Sheets and are remeasured to fair value at each reporting period, with any change in fair value being recognized in the applicable period’s results of operations.
−Removed: Measuring the fair value of contingent consideration at the acquisition date, and for all subsequent remeasurement periods, requires a careful examination of the facts and circumstances to determine the probable resolution of the contingency(ies).
−Removed: We utilize the Monte Carlo simulation model and estimate fair value of the contingent consideration based on unobservable input variables related to meeting the applicable contingency conditions as per the terms of the applicable agreements.
−Removed: Total contingent consideration liabilities were $7.1 million and $7.9 million as of May 29, 2021 and May 30, 2020, respectively.
−Removed: Contingent consideration adjustment was an expense of $4.5 million and $0.8 million, respectively, for the years ended May 29, 2021 and May 30, 2020, respectively, and a benefit of $0.6 million for the year ended May 25, 2019.
−Removed: Results of Operations
+Added: R esults of Operations
The following tables set forth, for the periods indicated, our Consolidated Statements of Operations data.
1 unchanged sentence
Our operating results for the periods indicated are expressed as a percentage of revenue below.
−Removed: The fiscal years ended May 29, 2021, May 30, 2020 and May 25, 2019 consisted of 52, 53, and 52 weeks, respectively.
−Removed: (Amounts in thousands, except percentages.)
+Added: The fiscal years ended May 28, 2022, May 29, 2021 and May 30, 2020 consisted of 52, 52, and 53 weeks, respectively (amounts in thousands, except percentages).
For the Years Ended
1 unchanged sentence
Selling, general and administrative expenses
−Removed: Amortization of intangible assets
+Added: Amortization expense
Depreciation expense
2 unchanged sentences
Income before provision for income taxes
−Removed: Income tax (benefit) expense
+Added: Income tax expense (benefit)
Non-GAAP Financial Measures
1 unchanged sentence
A non-GAAP financial measure is defined as a numerical measure of a company’s financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the Consolidated Statements of Operations;
−Removed: or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable measure so calculated and presented.
+Added: or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable GAAP measure so calculated and presented.
Our primary non-GAAP financial measures are listed below and reflect how we evaluate our operating results.
1 unchanged sentence
o Currency impact.
−Removed: In order to remove the impact of fluctuations in foreign currency exchange rates, we calculate constant currency revenue, which represents the outcome that would have resulted had exchange rates in the current period been the same as those in effect in the comparable prior period.
+Added: In order to remove the impact of fluctuations in foreign currency exchange rates, we calculate same-day constant currency revenue, which represents the outcome that would have resulted had exchange rates in the current period been the same as those in effect in the comparable prior period.
o Business days impact.
1 unchanged sentence
The number of business days in each respective period is provided in the “Number of Business Days” section in the table below.
−Removed: Adjusted EBITDA is calculated as net income before amortization of intangible assets, depreciation expense, interest and income taxes plus stock-based compensation expense, restructuring costs, and plus or minus contingent consideration adjustments.
+Added: Adjusted EBITDA is calculated as net income before amortization expense, depreciation expense, interest and income taxes plus stock-based compensation expense, restructuring costs, technology transformation costs, and plus or minus contingent consideration adjustments.
Adjusted EBITDA at the segment level excludes certain shared corporate administrative costs that are not practical to allocate.
4 unchanged sentences
The following table presents a reconciliation of same-day constant currency revenue to revenue, the most directly comparable GAAP financial measure, by geography.
+Added: RESOURCES CONNECTION, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
27 unchanged sentences
(1) This represents the number of business days in the U.S.
−Removed: (2) This represents the number of business days in the countries in which the revenues are most concentrated within the geography.
−Removed: Adjusted EBITDA and Adjusted EBITDA Margin
−Removed: Adjusted EBITDA and Adjusted EBITDA Margin assist management in assessing our core operating performance.
+Added: (2) This represents the number of business days in the country or countries in which the revenues are most concentrated within the geography.
+Added: EBITDA, A djusted EBITDA and Adjusted EBITDA Margin
+Added: EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin assist management in assessing our core operating performance.
We also believe these measures provide investors with useful perspective on underlying business results and trends and facilitate a comparison of our performance from period to period.
−Removed: The following table presents Adjusted EBITDA and Adjusted EBITDA Margin for the periods indicated and includes a reconciliation of such measures to net income, the most directly comparable GAAP financial measure:
−Removed: Three Months Ended
+Added: The following table presents EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for the periods indicated and includes a reconciliation of such measures to net income, the most directly comparable GAAP financial measure (amounts in thousands, except percentages).
For the Years Ended
−Removed: (Amounts in thousands, except percentages)
−Removed: Amortization of intangible assets
+Added: Amortization expense
Depreciation expense
Interest expense, net
−Removed: Income tax (benefit) expense
+Added: Income tax expense (benefit)
Stock-based compensation expense
1 unchanged sentence
Contingent consideration adjustment
+Added: Technology transformation costs (1)
Adjusted EBITDA
−Removed: Adjusted EBITDA Margin
−Removed: Our non-GAAP financial measures are not measurements of financial performance or liquidity under GAAP and should not be considered in isolation or construed as substitutes for revenue, net income or other cash flow data prepared in accordance with GAAP for purposes of analyzing our revenue, profitability or liquidity.
+Added: (1) Technology transformation costs represent costs included in net income related to the Company’s initiative to upgrade its technology platform globally, including a cloud-based enterprise resource planning system and talent acquisition and management system.
+Added: Costs for the fiscal year ended May 28, 2022 primarily include software licensing costs, third-party consulting fees and costs associated with dedicated internal resources.
+Added: Our non-GAAP financial measures are not measurements of financial performance or liquidity under GAAP and should not be considered in isolation or construed as substitutes for revenue, net income or other measures of financial performance or financial condition prepared in accordance with GAAP for purposes of analyzing our revenue, profitability or liquidity.
Further, a limitation of our non-GAAP financial measures is they exclude items detailed above that have an impact on our GAAP-reported results.
3 unchanged sentences
Percentage change computations are based upon amounts in thousands.
−Removed: Fiscal 2021 consisted of 52 weeks while fiscal 2020 consisted of 53 weeks.
−Removed: Revenue decreased $73.8 million, or 10.5%, to $629.5 million for the year ended May 29, 2021 from $703.4 million for the year ended May 30, 2020.
−Removed: Billable hours decreased by 10.4% year-over-year in fiscal 2021, while the average bill rate remained relatively consistent between the two periods.
−Removed: In fiscal 2021, we approached pricing opportunistically with certain clients when warranted but remained cautious to recover concessions and rebates extended during the Pandemic.
−Removed: On a same day constant currency basis, revenue decreased $71.8 million, or 10.2%, to $631.5 million for the year ended May 29, 2021 from $703.4 million for the year ended May 30, 2020.
−Removed: The following table represents our GAAP consolidated revenues by geography:
+Added: Fiscal 2022 and fiscal 2021 consisted of 52 weeks.
+Added: Revenue increased $175.5 million, or 27.9%, to $805.0 million for the year ended May 28, 2022 from $629.5 million for the year ended May 29, 2021.
+Added: On a same-day constant currency basis, revenue increased 28.7% in fiscal 2022 compared to fiscal 2021.
+Added: In addition to higher volume of billable hours, we improved bill rates.
+Added: Billable hours increased by 25.0% and the average bill rate improved 2.4% year over year, meaningfully contributing to the overall year over year revenue growth in fiscal 2022.
+Added: The following table represents our GAAP consolidated revenues by geography (amounts in thousands, except percentages) :
For the Years Ended
−Removed: (Amounts in thousands, except percentages)
North America
−Removed: Revenue declined across all geographies during fiscal 2021 as compared to fiscal 2020 due to the adverse impact of the Pandemic and fewer business days in each geography in fiscal 2021.
−Removed: North America experienced the most significant decline at 11.6%.
−Removed: Revenue level troughed during the first quarter of fiscal 2021 and has since recovered steadily in each quarter thereafter as uncertainties related to the Pandemic began to subside beginning in the second fiscal quarter as vaccine development advanced.
−Removed: We experienced sustained improvement in revenue momentum, especially in the fourth quarter, as both pipeline and sales productivity continued to pick up, resulting from the combination of better operational execution and some level of pent-up demand, especially in advisory projects, as clients begin to resume their discretionary spending and continue to accelerate their digital and workforce paradigm transformations .
−Removed: Certain macro trends accelerated by the Pandemic, including increased use of contingent talent and the shift towards a more agile workforce model also helped propel the momentum in professional staffing in fiscal 2021.
−Removed: Our European and Asia Pacific region experienced similar trends as North America in fiscal 2021 due to the Pandemic, albeit with a more modest decline of 2.7% and 9.0%, respectively.
−Removed: Europe’s revenue decline of $2.1 million in fiscal 2021 was driven by the decline in revenue of $2.6 million as a result of exiting certain markets in connection with our restructuring initiative, partially offset by revenue growth in certain other European markets, as we continue to adopt an integrated global go-to-market approach to focus on serving our tier one multi-national clients in this region.
−Removed: Despite sporadic COVID-19 outbreaks in certain parts of Asia in the second half of fiscal 2021, revenue in Asia Pacific returned to pre-Pandemic level by the end of the fourth quarter.
−Removed: To capitalize on the upward momentum in the macro environment across all three geographies, we focused our efforts on our strategic client accounts, core markets, key solution offerings as well as key industry verticals, and drove meaningful acceleration and growth in the second half of the fiscal year.
−Removed: During the fourth quarter of fiscal 2021, we achieved a 16.9% rebound in consolidated revenue compared to the first quarter trough in fiscal 2021.
−Removed: Although still a decline of 3.5% year over year, revenue in the fourth quarter of fiscal 2021 improved 1.2% from the prior year quarter on the same day constant currency basis.
−Removed: Given the timing of our fiscal period and the latent impact of the Pandemic in the fourth quarter of fiscal 2020, we did not yet see the full impact of the recovery from the Pandemic in our results in the fourth quarter of fiscal 2021.
+Added: Revenue grew across all geographies during fiscal 2022 compared to fiscal 2021, as we continued to benefit from favorable secular trends including a shift in businesses adopting more workforce agility, workforce gaps caused by the tightening labor market, the demand for digital transformation services, an increase in client spending on significant and transformational initiatives, our sustained improvement in sales execution and operational efficiency to match supply and demand and continued progress in raising our bill rates.
+Added: The strong revenue performance was also driven by our client segmentation and client service strategy to deepen our relationship within the Strategic Client Account base as well as other key client sets to further expand our presence across multiple buying centers.
+Added: Our successful execution led to larger deal sizes, longer project durations and record high pipelines and closed deals.
+Added: The robust revenue growth was across most client segments, and the majority of our markets, and was led by solution areas in Finance and Accounting, Risk and Compliance and Business Transformation.
+Added: North America experienced robust revenue growth of 31.9%, or 32.4% on a same-day constant currency basis, compared to fiscal 2021.
+Added: As the macro economy in the U.S.
+Added: continued to strengthen in fiscal 2022, our clients increased their spending to advance change initiatives, such as finance and digital and workforce paradigm transformation.
+Added: The tightening labor market and almost record low unemployment rate drove significant growth in our professional staffing revenue, particularly in the U.S., as our clients looked to us to supply quality talent to fill their temporary workforce gaps.
+Added: The shift towards workforce agility and the increased acceptance of co-delivery and remote delivery not only enhanced our value proposition to our clients, but also allowed for better and more efficient matching of supply and demand, enabling us to achieve sustained improvement in our operational efficiency.
+Added: In Europe, our adoption of a more integrated global go-to-market approach to focus on serving our tier one multi-national clients in this region also drove sustained top-line growth.
+Added: Europe revenue in fiscal 2022 grew 4.9%, or 7.0% on a same-day constant currency basis, compared to fiscal 2021.
+Added: Asia Pacific revenue improved 18.7%, or 22.1% on a same-day constant currency basis, compared to fiscal 2021, as the economies in this region continued to strengthen despite episodic COVID-19 outbreaks.
Direct Cost of Services .
−Removed: Direct cost of services decreased $39.8 million, or 9.3%, to $388.1 million for the year ended May 29, 2021 from $427.9 million for the year ended May 30, 2020.
−Removed: The decrease is primarily due to a 10.4% decrease in billable hours between the two periods offset slightly by a 2.0% increase in the average consultant pay rates from fiscal 2020 to fiscal 2021.
−Removed: Direct cost of services as a percentage of revenue was 61.7% for the year ended May 30, 2021 compared to 60.8% for the year ended May 30, 2020.
−Removed: The increased percentage compared to the prior year was partially attributable to an increase in the pay/bill ratio of 60 basis points, as the 0.8% increase in average bill rate was outpaced by the 2.0% increase in average pay rate during fiscal 2021 compared to fiscal 2020.
−Removed: This was primarily caused by a more opportunistic pricing approach with certain clients, while offering competitive pay rates to consultants as the labor market continues to tighten.
−Removed: Additionally, the increase in non-billable pay and unfavorable healthcare costs further contributed to the increased direct cost of services as a percentage of revenue.
−Removed: These negative impacts were partially offset by lower passthrough revenue from client reimbursement and less holiday pay due to the timing of the Memorial Day holiday which occurred after our fiscal 2021 year-end.
−Removed: Our target direct cost of services percentage is 60%.
+Added: Direct cost of services increased $100.3 million, or 25.8%, to $488.4 million during fiscal 2022 from $388.1 million for fiscal 2021.
+Added: The increase in direct cost of services year over year was primarily attributable to a 25.0% increase in billable hours.
+Added: Direct cost of services as a percentage of revenue was 60.7% for fiscal 2022 compared to 61.7% for fiscal 2021.
+Added: The decreased percentage compared to the prior year was primarily attributable to bill rate increases leading to an improvement of 100 basis points in the overall pay/bill ratio.
+Added: Pay rate increases were relatively modest in fiscal 2022 despite tight labor supply conditions and rising wages.
+Added: In addition to these macro labor market conditions, other factors impacting average pay rate included the impact of revenue mix across solutions and geographies and foreign currency fluctuations against the U.S.
+Added: Our target direct cost of services percentage is below 60%.
The number of consultants on assignment at the end of fiscal 2022 was 3,388 compared to 2,902 at the end of fiscal 2021.
−Removed: Selling, General and Administrative Expenses (“SG&A”).
−Removed: SG&A expenses were $209.3 million, or 33.3% as a percentage of revenue, for the fiscal year ended May 29, 2021 compared to $228.1 million, or 32.4% as a percentage of revenue, for the fiscal year ended May 30, 2020.
−Removed: Contingent consideration and restructuring costs contributed $12.8 million and $5.8 million to SG&A expense in fiscal 2021 and 2020, respectively.
−Removed: Excluding contingent consideration and restructuring costs, SG&A expense improved $25.7 million, or 11.6%, compared to fiscal 2020.
−Removed: Management compensation and bonus and occupancy costs were reduced by $12.5 million and $3.5 million, respectively, compared to the prior year, primarily as a result of the restructuring initiatives the Company undertook at the end of fiscal 2020 and one less week included in fiscal 2021 compared to fiscal 2020.
−Removed: The Company continued to benefit from its virtual work environment and disciplined cost measures, reducing general business expenses by $5.7 million compared to the prior year.
−Removed: Additionally, the Company reduced its bad debt expense by $1.9 million compared to the prior year, as strengthened collections drove improvement in accounts receivable aging.
−Removed: The Company reduced its legal costs by $2.0 million primarily due to its continued spending discipline and the recovery of $1.0 million of legal costs during fiscal 2021 related to a collection case.
−Removed: Contingent consideration expense was $4.5 million in fiscal 2021 compared to $0.8 million in fiscal 2020.
+Added: Selling, General and Administrative Expenses .
+Added: SG&A was $224.7 million, or 27.9% as a percentage of revenue, for the year ended May 28, 2022 compared to $209.3 million, or 33.3% as a percentage of revenue, for the year ended May 29, 2021.
+Added: SG&A as a percentage of revenue improved by 5.4% in fiscal 2022 compared to fiscal 2021 as a result of the improvement in our operating leverage due to significant year over year revenue growth.
+Added: The $15.4 million increase in SG&A year over year was primarily attributed to (1) a $21.0 million increase in management compensation and benefits primarily related to higher incentive compensation due to significant growth in both revenue and profitability, (2) a $1.6 million increase in stock-based compensation expense, (3) an increase of $1.4 million in technology transformation costs incurred in fiscal 2022, (4) a $1.3 million increase in other business and travel expenses as the impact of the Pandemic subsided and business travel started to resume gradually, (5) a $1.2 million increase in computer software and consulting costs, (6) $0.5 million of impairment related to exiting a real estate facility, and (7) a $1.2 million increase in all other general and administration expenses.
+Added: These incremental costs were partially offset by (1) a decrease of $7.4 million in restructuring costs as the restructuring activities wound down toward completion in fiscal 2022, (2) a $4.3 million adjustment related to the Veracity contingent consideration recorded in the prior year, and (3) a $1.1 million gain in foreign currency related to the dissolution of a foreign entity in the third quarter of fiscal 2022.
+Added: Management and administrative headcount was 871 at the end of fiscal 2022 and 851 at the end of fiscal 2021.
+Added: Management and administrative headcount includes full-time equivalent headcount for our seller-doer group, which is determined by utilization levels achieved by the seller-doers.
+Added: Any unutilized time is converted to full-time equivalent headcount.
Restructuring charges .
−Removed: We initiated our North America and APAC Plan in March 2020 and the European Plan in September 2020.
−Removed: All employee termination and facility exit costs incurred under the Restructuring Plans were associated with the RGP segment, as further discussed in Note 18 – Segment Information and Enterprise Reporting in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K .
−Removed: Restructuring costs for the years ended May 29, 2021 and May 30, 2020 were as follows (in thousands):
−Removed: For the Year Ended May 29, 2021
−Removed: For the Year Ended May 30, 2020
−Removed: North America
−Removed: North America
−Removed: and APAC Plan
−Removed: and APAC Plan
+Added: The Company initiated its 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” and, together with the North America and APAC Plan, the “Restructuring Plans”) in September 2020.
+Added: We substantially completed our Restructuring Plans in fiscal 2022.
+Added: All employee termination and facility exit costs incurred under the Restructuring Plans were associated with the RGP segment, and are recorded in selling, general and administrative expenses in the Consolidated Statements of Operations, as further discussed in Note 19 – Segment Information and Enterprise Reporting in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
+Added: Restructuring costs for the years ended May 28, 2022, May 29, 2021 and May 30, 2020 were as follows (amounts in thousands):
+Added: For the Year Ended
+Added: May 28, 2022
+Added: For the Year Ended
+Added: May 29, 2021
+Added: For the Year Ended
+Added: May 30, 2020
+Added: North America and APAC Plan
+Added: European Plan
+Added: North America and APAC Plan
+Added: European Plan
+Added: North America and APAC Plan
+Added: European Plan
Employee termination costs
1 unchanged sentence
Total restructuring costs
−Removed: For further information on our restructuring initiatives, please refer to Note 13 – Restructuring Activities in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K and “Fiscal 2021 Strategic Focus Areas” above.
+Added: For further information on our restructuring initiatives, please refer to Note 14 – Restructuring Activities in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Amortization and Depreciation Expense .
−Removed: Amortization of intangible assets was $5.2 million and $5.7 million in fiscal 2021 and fiscal 2020, respectively.
−Removed: The decrease in amortization expense is primarily due to certain acquired intangible assets being fully amortized at the end of the first quarter in fiscal 2021, partially offset by the amortization of identifiable intangible assets acquired through Veracity and certain internally developed software put in service in the second quarter of fiscal 2021.
+Added: Amortization expense was $4.9 million and $5.2 million in fiscal 2022 and fiscal 2021, respectively.
+Added: The decrease in amortization expense is primarily due to certain acquired intangible assets being fully amortized at the end of the first quarter in fiscal 2021, partially offset by the amortization of our internally developed digital engagement platform (HUGO).
+Added: HUGO was placed in service in October 2021 as we launched the software in the New York Tri-state area, resulting in amortization expense associated with the development costs in fiscal 2022.
Depreciation expense was $3.6 million and $3.9 million in fiscal 2022 and fiscal 2021, respectively.
−Removed: The decrease in depreciation expense was primarily due to computer equipment becoming fully-depreciated in periods prior to fiscal 2021, and the write-off of leasehold improvement as part of the real estate exit initiatives executed under the Restructuring Plans.
−Removed: Other Income.
−Removed: Other income for fiscal 2021 was $1.3 million compared to $0.6 million for fiscal 2020.
−Removed: Other income in fiscal 2021 was primarily related to government COVID-19 relief funds received globally.
−Removed: Other income in fiscal 2020 was primarily related to the gain on the settlement of a pre-acquisition claim with the seller of Accretive, an acquisition completed in fiscal 2018.
−Removed: Interest Expense, Net.
−Removed: Net interest expense for fiscal 2021, including commitment fees, was $1.6 million compared to $2.1 million in fiscal 2020.
−Removed: The decrease was due to a lower average interest rate in fiscal 2021 as compared to the prior fiscal year.
+Added: The decrease in depreciation expense was primarily due to fully-depreciated computer equipment during fiscal 2022.
Income Taxes.
−Removed: Income tax was a benefit of $2.5 million (effective tax benefit rate of approximately 11.2%) for the year ended May 29, 2021 compared to an expense of $6.9 million (effective tax rate of approximately 19.7%) for the year ended May 30, 2020.
−Removed: We operate in an international environment.
−Removed: Accordingly, the consolidated effective tax rate is a composite rate reflecting the earnings (losses) in various locations and the applicable tax rates in those jurisdictions, and fluctuations in the consolidated effective tax rate reflect the changes in the mix of earnings (losses) in these jurisdictions.
−Removed: We record tax expense based upon actual results versus a forecasted tax rate because of the volatility in the profitability of our international operations.
−Removed: The income tax benefit for fiscal 2021 was primarily related to our tax planning strategies under which we elected to make certain changes to the capitalization of fixed assets, resulting in an NOL carryback permitted under the CARES Act.
−Removed: As a result, we recognized a discrete tax benefit of $12.8 million in the fourth quarter of fiscal 2021, resulting in an overall effective tax benefit rate of 11.2% and an expected federal tax refund in the amount of $34.0 million that we expect to file for within the next 12 months.
−Removed: The prior year effective tax rate of 19.7% was primarily a result of a $6.6 million discrete tax benefit from the deduction of the investment basis in four European entities upon their dissolutions.
−Removed: We recognized a breakeven and a net tax benefit of $0.2 million from compensation expense related to stock options, restricted stock awards, restricted stock units and disqualifying dispositions under our ESPP during fiscal 2021 and fiscal 2020, respectively.
−Removed: We review the components of both book and taxable income to prepare the tax provision.
−Removed: There can be no assurance that our effective tax rate will remain constant in the future because of the lower benefit from the United States statutory rate for losses in certain foreign jurisdictions, the limitation on the benefit for losses in jurisdictions in which a valuation allowance for operating loss carryforwards has previously been established, our election to change certain tax methods , and the unpredictability of timing and the amount of disqualifying dispositions of certain stock options.
+Added: The provision for income taxes was $15.8 million (effective tax rate of 19.0%) for the year ended May 28, 2022 compared to an income tax benefit of $2.5 million (effective benefit rate of 11.2%) for the year ended May 29, 2021.
+Added: We record tax expense based upon actual results versus a forecasted tax rate because of the volatility in our international operations that span numerous tax jurisdictions and the resulting uncertainty of our ability to utilize historical net operating losses in such jurisdictions.
+Added: The current year rate benefitted from the improvement in operating results in the international entities, enabling us to utilize the benefits from historical net operating losses in certain foreign jurisdictions by reversing a $4.9 million valuation allowance in a specific European entity in the third quarter.
+Added: The Company also recognized a $2.6 million benefit from the dissolution of our France entity.
+Added: In fiscal 2021, we recognized a $12.8 million benefit from the carryback of net operating losses to higher tax rate years as permitted under the Coronavirus Aid, Relief, and Economic Security Act (“ CARES Act”) in the U.S., resulting in an effective tax benefit rate of 11.2%.
+Added: The losses carried back resulted from accounting method changes in the treatment of self-constructed assets.
+Added: We recognized a net tax benefit of $2.1 million for fiscal 2022 and a breakeven impact in fiscal 2021 from compensation expense related to stock options, restricted stock awards, restricted stock units, performance stock units and ESPP during fiscal 2022 and fiscal 2021, respectively.
+Added: We reviewed the components of both book and taxable income to prepare the tax provision.
+Added: There can be no assurance that our effective tax rate will remain constant in the future because of the lower benefit from the U.S.
+Added: statutory rate for losses in certain foreign jurisdictions, the limitation on the benefit for losses in jurisdictions in which a valuation allowance for operating loss carryforwards has previously been established, and the unpredictability of timing and the amount of disqualifying dispositions of certain stock options.
Based upon current economic circumstances and our business performance, management will continue to monitor the need to record additional or release existing valuation allowances in the future, primarily related to certain foreign jurisdictions.
3 unchanged sentences
Management’s indefinite reinvestment position is supported by:
−Removed: RGP in the United States has generated more than enough cash to fund operations and expansion, including acquisitions.
+Added: RGP in the U.S.
+Added: has generated more than enough cash to fund operations and expansion, including acquisitions.
RGP uses its excess cash to, at its discretion, return cash to stockholders through dividend payments and stock repurchases.
−Removed: RGP has sufficient cash flow from operations in the United States to service its debt and other current or known obligations without requiring cash to be remitted from foreign subsidiaries.
+Added: RGP has sufficient cash flow from operations in the U.S.
+Added: to service its debt and other current or known obligations without requiring cash to be remitted from foreign subsidiaries.
Management’s growth objectives include allowing cash to accumulate in RGP’s profitable foreign subsidiaries with the expectation of finding strategic expansion plans to further penetrate RGP’s most successful locations.
1 unchanged sentence
Operating Results of Segment
−Removed: As discussed in Business Segments in Item 1, Note 2 – Summary of Significant Accounting Policies and Note 18 – Segment Information and Enterprise Reporting in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, we revised our historical one segment position and identified the following new operating segments effective in the second quarter of fiscal 2021 to align with changes made in our internal management structure and our reporting structure of financial information used to assess performance and allocate resources:
+Added: As discussed in Business Segments in Item 1, Note 2 – Summary of Significant Accounting Policies and Note 19 – Segment Information and Enterprise Reporting in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, we revised our historical one-segment position and identified the following new operating segments effective in the second quarter of fiscal 2021 to align with changes made in our internal management structure and our reporting structure of financial information used to assess performance and allocate resources:
RGP, taskforce , and Sitrick.
2 unchanged sentences
Therefore, they are combined and disclosed as Other Segments.
−Removed: The following table presents our operating results by segment.
−Removed: All prior year periods presented in the table and referenced below were recast to reflect the impact of the preceding segment changes (amounts in thousands, except percentages).
+Added: We regularly evaluate all parts of our business to ensure that we align our time, resources and efforts to market opportunities that will enable us to maximize profitability and shareholder value.
+Added: On May 31, 2022, we completed the sale of taskforce to the senior leaders of the business.
+Added: We believe an interim management business that primarily serves the middle market client base in Germany no longer aligns with our strategy in the European region, which highly focuses on providing project consulting and execution services to large global clients.
+Added: Beginning in fiscal 2023, we will operate in the remaining two operating segments, RGP and Sitrick.
+Added: See the discussion in Note 2 – Summary of Significant Accounting Policies and Note 20 – Subsequent Events in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
+Added: The following table presents our operating results by segment (amounts in thousands, except percentages):
For the Years Ended
Other Segments
−Removed: Total revenues
+Added: Total revenue
Adjusted EBITDA:
3 unchanged sentences
(1) Reconciling items are generally comprised of u nallocated corporate administrative costs, including management and board compensation, corporate support function costs and other general corporate costs that are not allocated to segments.
−Removed: (2) Fiscal year 2020 consisted of 53 weeks.
−Removed: Fiscal year 2021 consisted of 52 weeks.
+Added: (2) A reconciliation of the Company’s net income to Adjusted EBITDA on a consolidated basis is presented above under “Non-GAAP Financial Measures--Reconciliation of GAAP to Non-GAAP Financial Measures.”
Revenue by Segment
−Removed: RGP – RGP revenue decreased $74.9 million, or 11.3%, in fiscal 2021 compared to fiscal 2020, primarily as a result of a 10.8% decline in billable hours year-over-year.
−Removed: Revenue from RGP represents more than 90% of total consolidated revenue and generally reflects the overall consolidated revenue trend.
+Added: RGP – RGP revenue increased $176.7 million, or 30.1%, to $764.4 million compared to $587.6 million in fiscal 2021, primarily as a result of a 25.6% increase in billable hours and a 3.3% increase in bill rate year over year.
+Added: Revenue from RGP generally represents more than 90% of total consolidated revenue.
+Added: Geographic revenue trends in North America and Asia Pacific within the RGP segment are consistent with the revenue trends discussed within Consolidated Operating results above.
+Added: Revenue in the European region within the RGP segment grew by 8.1%, or 8.8% on a same-day constant currency basis, during fiscal 2022 compared to fiscal 2021.
+Added: The growth in the European region outside of Germany was led by continued penetration and growth in the Strategic Client Account base.
The number of consultants on assignment under the RGP segment as of May 28, 2022 was 3,263 compared to 2,795 as of May 29, 2021.
−Removed: Other Segments – Other Segments’ revenue for fiscal 2021 increased $1.0 million, or 2.5%, compared to fiscal 2020.
−Removed: The revenue growth was primarily due to the continued revenue synergy generated from combining RGP Germany to operate under taskforce despite the adverse impact from the Pandemic and the more recent COVID-19 lock-downs in Germany.
+Added: Other Segments – Other Segments’ revenue decreased $1.2 million, or 2.9%, in fiscal 2022 compared to fiscal 2021, primarily due to a $1.2 million decrease in Sitrick revenue.
+Added: The declines in Sitrick revenue during fiscal 2022 compared to the prior year were primarily due to the closure of the U.S.
+Added: courts during the Pandemic and the continued lingering impact on the court system, resulting in slower business development and revenue conversion.
The number of consultants on assignment under Other Segments as of May 28, 2022 was 125 compared to 107 as of May 29, 2021.
Adjusted EBITDA by Segment
−Removed: RGP – RGP adjusted EBITDA decreased $10.2 million, or 11.7%, in fiscal 2021, compared to fiscal 2020.
−Removed: Adjusted EBITDA margin decreased slightly by 6 basis points to 13.2% in fiscal 2021.
−Removed: Compared to the prior year, revenue decreased $74.9 million, which was partially offset by the decrease in cost of services of $42.0 million and significant cost savings of $22.0 million primarily in SG&A costs attributed to RGP.
−Removed: The trend in revenue, cost of services and other costs and expenses at RGP year-over-year is generally consistent with those at the consolidated level, as discussed above, with the exception that the SG&A used to derive segment Adjusted EBITDA does not include certain unallocated corporate administrative costs.
−Removed: Other Segments – Other Segments’ adjusted EBITDA improved $1.0 million, or 37.6%, in fiscal 2021 compared to fiscal 2020.
−Removed: Adjusted EBITDA margin increased by 220 basis points to 8.5% in fiscal 2021.
−Removed: The improvement in adjusted EBITDA and EBITDA margin was primarily attributable to the $2.1 million improvement in SG&A year-over-year, partially offset by higher cost of services as a percentage of revenue, mostly driven by lower utilization of fixed salaried consultants.
+Added: RGP – RGP Adjusted EBITDA increased $56.6 million, or 72.9%, to $134.2 million in fiscal 2022, compared to $77.6 million in fiscal 2021.
+Added: The increase was primarily attributable to the $176.7 million increase in segment revenue partially offset by the increase in the related cost of services of $101.0 million.
+Added: Additionally, SG&A costs attributed to RGP increased $18.4 million in fiscal 2022 as compared to fiscal 2021 primarily due to the increase in bonuses and commissions of $17.8 million as a result of higher revenue and profitability achieved;
+Added: an increase in other business and travel expenses of $1.2 million as the impact of the Pandemic subsided and business travel started to resume gradually;
+Added: a $0.4 million increase in recruiting expenses;
+Added: a $0.5 million impairment related to exiting a real estate facility;
+Added: a $0.7 million reduction in other income;
+Added: and a $0.6 million increase in all other general and administration expenses;
+Added: and partially offset by reductions in occupancy costs of $2.4 million primarily as a result of the restructuring effort and fixed management compensation of $0.4 million in fiscal 2021 that did not occur in fiscal 2022.
+Added: For fiscal 2022, the material costs and expenses attributable to the RGP segment that are not included in computing the segment measure of Adjusted EBITDA included depreciation and amortization expense of $8.0 million and stock-based compensation expense of $7.6 million.
+Added: The trend in revenue, cost of services, and other costs and expenses at RGP year over year are generally consistent with those at the consolidated level, as discussed above, with the exception that the SG&A used to derive segment Adjusted EBITDA does not include certain unallocated corporate administrative costs.
+Added: Other Segments – Other Segments’ Adjusted EBITDA declined $0.1 million in fiscal 2022 compared to the same period in fiscal 2021.
+Added: This decline was primarily driven by a decrease in revenue of $1.2 million, which was partially offset by a decrease of $0.8 million in cost of services and a $0.3 million reduction in general and administrative expenses.
+Added: For fiscal 2022, the material costs and expenses attributable to the Other Segments that are not included in computing the segment measure of Adjusted EBITDA included depreciation and amortization expense of $0.5 million and stock-based compensation expense of $0.6 million.
Year Ended May 29, 2021 Compared to Year Ended May 30, 2020
−Removed: For a comparison of our results of operations at the consolidated level for the fiscal years ended May 30, 2020 and May 25, 2019, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended May 30, 2020, filed with the SEC on July 27, 2020 (File No.
−Removed: Operating Results of Segment
−Removed: As discussed in Business Segments in Item 1, Note 2 – Summary of Significant Accounting Policies and Note 18 – Segment Information and Enterprise Reporting in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, we reorganized our reporting segments in fiscal 2021, and the discussion and analysis for our reporting segments set forth below conform to the current presentation of our reporting segments.
−Removed: Amounts in thousands, except percentages.
−Removed: For the Years Ended
−Removed: Other Segments
−Removed: Total revenues
−Removed: Adjusted EBITDA:
−Removed: Other Segments
−Removed: Reconciling Items (1)
−Removed: Total Adjusted EBITDA
−Removed: (1) Reconciling items are generally comprised of u nallocated corporate administrative costs, including management and board compensation, corporate support function costs and other general corporate costs that are not allocated to segments.
−Removed: (2) Fiscal year 2020 consisted of 53 weeks.
−Removed: Fiscal year 2019 consisted of 52 weeks.
−Removed: Revenue by Segment
−Removed: RGP – RGP revenue decreased $27.1 million, or 3.9%, in fiscal 2020 compared to fiscal 2019, primarily as a result of a 3.5% decline in billable hours year-over-year while average bill rate remained relatively consistent between the two periods.
−Removed: Revenue from RGP represents more than 90% of total consolidated revenue and generally reflects the overall consolidated revenue trend.
−Removed: The number of consultants on assignment under the RGP segment as of May 30, 2020 was 2,407 compared to 2,858 as of May 25, 2019.
−Removed: Other Segments – Other Segments’ revenue for fiscal 2020 increased $1.5 million, or 3.8%, compared to fiscal 2019.
−Removed: The improvement in revenue was primarily due to the continued strong revenue growth at taskforce since our acquisition in fiscal 2018.
−Removed: The number of consultants on assignment under Other Segments as of May 30, 2020 was 88 compared to 107 as of May 25, 2019.
−Removed: Adjusted EBITDA by Segment
−Removed: RGP – RGP adjusted EBITDA increased $0.1 million, or 0.1%, in fiscal 2020, compared to fiscal 2019.
−Removed: Adjusted EBITDA margin increased by 50 basis points to 13.3% in fiscal 2020.
−Removed: Compared to the prior year, revenue decreased $27.1 million which was offset by a $20.1 million reduction in cost of services and cost savings of approximately $6.6 million primarily as a result of savings in general business expenses mainly attributable to cost containment measures and reduced business travel during the Pandemic and a decrease in internal consultants costs as we continued to leverage our existing resources more efficiently on various projects and initiatives.
−Removed: The trend in revenue, cost of services and other costs and expenses at RGP year-over-year is generally consistent with that at the consolidated level, with the exception that the SG&A used to derive segment Adjusted EBITDA does not include certain unallocated corporate administrative costs.
−Removed: Other Segments – Other Segments’ adjusted EBITDA decreased $0.7 million, or 21.7%, in fiscal 2020 compared to fiscal 2019.
−Removed: Adjusted EBITDA margin decreased by 210 basis points to 6.4% in fiscal 2020.
−Removed: The decline in adjusted EBITDA margin was primarily attributable to higher sales commission costs at taskforce as a result of the revenue growth.
+Added: For a comparison of our results of operations at the consolidated and segment level for the fiscal years ended May 29, 2021 and May 30, 2020, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended May 29, 2021, filed with the SEC on July 23, 2021 (File No.
Liquidity and Capital Resources
−Removed: Our primary source of liquidity is cash provided by our operations, our $120.0 million secured revolving credit facility with Bank of America (the “Facility”) and, historically, to a lesser extent, stock option exercises and ESPP purchases.
−Removed: On an annual basis, we have generated positive cash flows from operations since inception, and we continued to do so for the year ended May 29, 2021, despite significant additional cash payouts associated with the execution of our restructuring initiatives across our geographies.
−Removed: Our ability to generate positive cash flow from operations in the future will be, at least in part, dependent on global economic conditions and our ability to remain resilient during economic downturns, such as the current one caused by the Pandemic.
+Added: Our primary sources of liquidity are cash provided by our operations, our $175.0 million senior secured revolving credit facility, as further discussed below, and, historically, to a lesser extent, stock option exercises and ESPP purchases.
+Added: On an annual basis, we have generated positive cash flows from operations since inception.
+Added: Our ability to generate positive cash flow from operations in the future will be, at least in part, dependent on global economic conditions and our ability to remain resilient during economic downturns.
As of May 28, 2022, we had $104.2 million of cash and cash equivalents, including $35.4 million held in international operations.
−Removed: As described in Note 7 — Long-Term Debt in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, we entered into a Credit Agreement, dated October 17, 2016, between the Company and Resources Connection LLC, as borrowers, and Bank of America, N.A.
−Removed: as lender (as amended, the “Credit Agreement”), which provides for a Facility for working capital and general corporate purposes, including potential acquisitions and stock repurchases.
−Removed: Until September 3, 2020, the Facility consisted of (1) a $90.0 million revolving loan facility (“Revolving Commitment”), which included a $5.0 million sublimit for the issuance of standby letters of credits, and (ii) a $30.0 million reducing revolving loan facility (“ Reducing Revolving Commitment” ), any amounts of which could not be reborrowed after being repaid.
−Removed: We entered into the Fifth Amendment to the Credit Agreement (the “Fifth Amendment”) with Bank of America, N.A.
−Removed: as lender on September 3, 2020, and the Sixth Amendment to the Credit Agreement (the “Sixth Amendment”) with Bank of America, N.A.
−Removed: as lender on May 25, 2021, both of which amended the terms of the Facility.
−Removed: The Fifth Amendment, among other things, (1) eliminated the $30.0 million Reducing Revolving Commitment and (2) increased the Revolving Commitment by $30.0 million to $120.0 million.
−Removed: The Sixth Amendment, among other things, (1) further revised the definition of Consolidated EBITDA in the Credit Agreement to include addbacks for certain restructuring costs, (2) included customary provisions relating to the transition from LIBOR as the benchmark interest rate under the Credit Agreement, including providing for a Benchmark Replacement option (as defined in the Credit Agreement) to replace LIBOR, and (3) decreased the interest rate floor as described below.
−Removed: Borrowings under the Facility bear interest at a rate per annum of either, at our option, (i) a LIBOR interest rate defined in the Credit Agreement plus a margin or (ii) an alternate base rate, plus a margin, with the applicable margin depending on our consolidated leverage ratio.
−Removed: The alternate base rate is the highest of (i) Bank of America’s prime rate, (ii) the federal funds rate plus 0.50% and (iii) the Eurodollar rate plus 1.0%.
−Removed: Prior to entering into the Fifth Amendment, the margin for loans based on LIBOR was 1.25% to 1.50%, and the margin for loans based on the alternate base rate was 0.25% to 0.50%, and the LIBOR interest rate floor was 0%.
−Removed: Effective upon entering into the Fifth Amendment, the appliable margin increased by 0.25% and the LIBOR interest rate floor increased to 0.25%.
−Removed: Effective upon entering into the Sixth Amendment, the LIBOR interest rate floor was removed and reverted to 0%.
−Removed: We pay an unused commitment fee on the average daily unused portion of the Facility, which, prior to entering into the Fifth Amendment, was a rate of 0.15% to 0.25% per annum depending on our consolidated leverage ratio and, effective upon entering into the Fifth Amendment, is 0.25% per annum.
−Removed: The unused commitment fee remains at 0.25% per annum under the Sixth Amendment.
−Removed: The Facility expires on October 17, 2022.
−Removed: The Facility contains both affirmative and negative covenants.
−Removed: We were in compliance with all financial covenants under the Facility as of May 29, 2021 and do not expect material uncertainties in our continued ability to be in compliance with all financial covenants through the remaining term of the Facility.
−Removed: As of May 29, 2021, our borrowings on the Facility were $43.0 million outstanding under the Facility, bearing an average interest rate per annum of 1.93% and we had $1.3 million of outstanding letters of credit issued under the Facility.
−Removed: The Pandemic has created significant uncertainty in the global economy and capital markets for a large part of fiscal 2021.
−Removed: While there appears to be more certainty and clarity in the macro environment and capital markets in the recent months, there could be lingering adverse effect into the remainder of calendar 2021 and beyond.
−Removed: We currently believe that our cash on hand, ongoing cash flows
−Removed: from our operations and funding available under our Facility will be adequate to meet our working capital and capital expenditure needs and fund for our restructuring initiatives, systems and technology transformations and upgrades, and potential future contingent consideration payments associated with our acquisitions for at least the next 12 months and beyond.
−Removed: During fiscal 2021, we paid approximately $6.5 million related to employee termination costs, consisting of $2.5 million under the North America and APAC Plan and $4.0 million under the European Plan.
−Removed: We currently estimate the cash requirement for completing the remaining restructuring actions to be in the range of $2 million to $4 million.
−Removed: The exact amount and timing of the expenses and resulting payments are subject to a number of variables which may not be within our control, such as the condition of the real estate/leasing market.
−Removed: We also have certain contractual obligations, such as operating lease obligations and purchase obligations.
−Removed: At May 29, 2021, we had operating leases, primarily for office premises, and purchase obligations include payments due under various types of licenses, expiring at various dates through March 2028.
−Removed: As described further in Note 6 – Leases in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, we had a total of $33.2 million of minimum operating lease obligations.
−Removed: These minimum lease payments range from approximately $1.6 million to $11.2 million on an annual basis over the next five years.
−Removed: At May 29, 2021, we had purchase obligations of $2.3 million outstanding, including $1.9 million and $0.4 million expiring in fiscal 2022 and fiscal 2023, respectively.
−Removed: Our total liability for unrecognized tax benefits could also impact operating cash flows, which was $872,000 as of May 29, 2021, although we are unable to reasonably estimate the period during which this obligation may be incurred, if at all.
−Removed: As described in Note 3 – Acquisitions and Dispositions in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, the purchase agreements for Veracity and Expertence require cash earn-out payments to be made when certain performance conditions are met.
−Removed: We estimated the fair value of c ontingent liabilities under the Monte Carlo simulation model based on unobservable input variables related to meeting the applicable contingency conditions as per the terms of the applicable agreements.
−Removed: The estimated fair value of the contingent consideration liability as of May 29, 2021 was $7.1 million, all of which is due before the end of calendar 2021 .
−Removed: In March 2020, the CARES Act was enacted into law.
−Removed: The CARES Act includes provisions, among others, addressing the carryback of net operating losses (“NOLs”) for specific periods, and provides for deferral of the employer-paid portion of the social security payroll taxes.
−Removed: We have elected to defer the employer-paid portion of social security payroll taxes through December 31, 2020 until May of 2021 when we chose to make a partial payment of previously deferred payroll taxes in the amount of $6.3 million.
−Removed: As of May 29, 2021, $6.3 million of deferred payroll taxes remain and is expected to be paid in calendar 2022.
+Added: Prior to November 12, 2021, we had a $120.0 million secured revolving credit facility with Bank of America (the “Previous Credit Facility”), which was scheduled to mature on October 17, 2022.
+Added: On November 12, 2021, the Company and Resources Connection LLC and all domestic subsidiaries of the Company as guarantors, entered into the New Credit Agreement and concurrently terminated the Previous Credit Facility.
+Added: The New Credit Agreement provides for a $175.0 million senior secured revolving loan, which includes a $10.0 million sublimit for the issuance of standby letters of credit and a swingline sublimit of $20.0 million .
+Added: The New Credit Facility also includes an option to increase the amount of the revolving loan up to an additional $75.0 million, subject to the terms of the agreement.
+Added: The New Credit Facility matures on November 12, 2026.
+Added: Borrowings under the New Credit Facility bear interest at a rate per annum of either, at the Company’s election, (i) Term SOFR (as defined in the New Credit Agreement) plus a margin ranging from 1.25% to 2.00% or (ii) the Base Rate (as defined in the New Credit Agreement), plus a margin of 0.25% to 1.00% with the applicable margin depending on the Company’s consolidated leverage ratio.
+Added: In addition, the Company pays an unused commitment fee on the average daily unused portion of the New Credit Facility, which ranges from 0.20% to 0.30% depending upon on the Company’s consolidated leverage ratio.
+Added: The New Credit Facility is available for working capital and general corporate purposes, including potential acquisitions, dividend distribution and stock repurchases.
+Added: Additional information regarding the New Credit Facility is included in Note 8 – Long-Term Debt in the Notes to consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K.
+Added: As of May 28, 2022, we had $54.0 million outstanding under the New Credit Facility.
+Added: We borrowed $20.0 million under the New Credit Facility on December 6, 2021 to finance the repurchase of 1,155,236 shares of our common stock from Dublin Acquisition, LLC (the “Seller”) pursuant to a Stock Purchase Agreement, dated December 3, 2021, entered into between the Company and the Seller.
+Added: See Note 12 – Stockholders’ Equity in the Notes to consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K.
+Added: In addition to cash needs for ongoing business operations, from time to time, we have strategic initiatives that could generate significant additional cash requirements.
+Added: Our initiative to upgrade our technology platform, as described in “Fiscal 2022 Strategic Focus Areas” above, requires significant investments over multiple years.
+Added: As of May 28, 2022, we have non-cancellable purchase obligations totaling $9.9 million, which are payable as follows pursuant to the licensing arrangements that we have entered into in connection with this initiative:
+Added: $3.4 million due during fiscal 2023 and 2024, $3.6 million due during fiscal 2025 and 2026, and $2.9 million due thereafter.
+Added: While we are still finalizing the assessment of the total amount of the investments required for this multi-year initiative, we currently expect to incur total investments between $20.0 million to $25.0 million through the completion of the system implementation.
+Added: Such costs primarily include software licensing fees, third-party consulting fees and costs associated with dedicated internal resources that are not capitalized.
+Added: The exact amount and timing will depend on a number of variables, including progress made on the implementation.
+Added: We expect the majority of the investment will take place in fiscal 2023 and fiscal 2024.
+Added: In addition to our technology transformation initiative, we expect to continue to invest in digital pathways to enhance the experience and touchpoints with our end users, including current and prospective employees (consultants and management employees) and clients.
+Added: Such effort will require additional cash outlay and could further elevate our capital expenditures in the near term.
+Added: We believe our current cash, ongoing cash flows from our operations and funding available under our New Credit Facility will provide sufficient funds for these initiatives.
+Added: At May 28, 2022, we have substantially completed our restructuring initiatives globally.
+Added: We do not expect future cash requirements for restructuring initiatives to be material.
+Added: Additionally, during the three months ended November 27, 2021, we made the final cash earn-out payment of $7.0 million related to the acquisition of Veracity.
+Added: We have no remaining contingent consideration liabilities as of May 28, 2022.
+Added: Other trends impacting our near-term liquidity include the deferral of payroll taxes under the CARES Act and certain tax planning strategies implemented in the fourth quarter of fiscal 2021.
+Added: The CARES Act includes provisions, among others, allowing deferral of the employer portion of the social security payroll taxes and addressing the carryback of net operating losses (“NOLs”) for specific periods.
+Added: We previously elected to defer the employer portion of social security payroll taxes through December 31, 2020 totaling $12.6 million.
+Added: Subsequent to the deferral, we elected to make a partial repayment of $6.3 million in May 2021 and $2.3 million in December 2021.
+Added: We expect to pay the remaining $4.0 million of deferred payroll taxes in late calendar 2022.
In addition, as part of our tax planning strategies, we made certain changes related to the capitalization of fixed assets effective for fiscal 2021.
−Removed: This strategy allowed us to carry back the net operating losses of fiscal 2021 to fiscal years 2016 to 2018.
−Removed: We recognized a discrete tax benefit of $12.8 million in the fourth quarter of fiscal 2021 and expect to file for a federal tax refund in the amount of $34.0 million within the next 12 months.
−Removed: Our ongoing operations and growth strategy may require us to continue to make investments in critical markets and in systems and technology.
−Removed: In addition, we may consider making strategic acquisitions or initiating additional restructuring initiatives, which could require significant liquidity .
−Removed: In order to strengthen our liquidity during the Pandemic, we took proactive measures to increase our cash on hand including, but not limited to, borrowing of $39 million under our Facility in the fourth quarter of fiscal 2020, reducing discretionary spending, and focusing on receivables collections efforts.
−Removed: We repaid a total of $45 million on our borrowings during fiscal 2021, and another $10 million subsequently on June 9, 2021 as a result of our ability to generate adequate cash flows from operations and improved clarity in the capital market.
−Removed: Beyond the next 12 months, if we require additional capital resources to grow our business, either organically or through acquisition, we may seek to sell additional equity securities, increase use of our Facility, expand the size of our Facility or raise additional debt.
−Removed: In addition, if we decide to make additional share repurchases, we may fund these through existing cash balances or use of our Facility.
+Added: This strategy allowed us to carry back the NOLs of fiscal 2021 to fiscal years 2016 to 2018.
+Added: We recognized a discrete tax benefit of $12.8 million in fiscal 2021 and filed for a federal tax refund in the amount of $34.8 million in April 2022.
+Added: We expect to receive such refund in the first half of fiscal 2023.
+Added: On a macro level, the Pandemic and uncertain macroeconomic conditions, including recent inflationary pressures, rise in interest rates and global uncertainties associated with the current conflict in Ukraine, have created significant uncertainty in the global economy and capital markets, which is expected to continue into fiscal 2023 and beyond and impact our financial results and liquidity.
+Added: If we are required to raise additional capital or incur additional indebtedness for our operations or to invest in our business, we can provide no assurances that we would be able to do so on acceptable terms or at all.
+Added: Our ongoing operations and growth strategy may require us to continue to make investments in critical markets and further expand our internal technology and digital capabilities.
+Added: In addition, we may consider making strategic acquisitions or initiating additional restructuring initiatives, which could require significant liquidity and adversely impact our financial results due to higher cost of borrowings.
+Added: We believe that our current cash, ongoing cash flows from our operations and funding available under our New Credit Facility will be adequate to meet our working capital and capital expenditure needs for at least the next 12 months.
+Added: Beyond the next 12 months, if we require additional capital resources to grow our business, either organically or through acquisitions, we may seek to sell additional equity securities, increase use of our New Credit Facility, expand the size of our New Credit Facility or raise additional debt.
+Added: In addition, if we decide to make additional share repurchases, we may fund these through existing cash balances or use of our New Credit Facility.
The sale of additional equity securities or certain forms of debt financing could result in additional dilution to our stockholders.
−Removed: We may not be able to obtain financing arrangements in amounts or on terms acceptable to us in the future.
−Removed: In the event we are unable to obtain additional financing when needed, we may be compelled to delay or curtail our plans to develop our business or to pay dividends on our capital stock, which could have a material adverse effect on our operations, market position and competitiveness.
−Removed: Notwithstanding the potential liquidity challenges described above, we expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements.
−Removed: However, we could be required, or could elect to seek additional funding prior to that time.
−Removed: Our future capital requirements will depend on many factors, including our ability to continue to adapt and efficiently serve our clients, our clients’ project needs in the future, and our clients’ financial health and ability to make timely payments on our receivables.
−Removed: A material adverse impact from the Pandemic could result in a need for us to raise additional capital or incur additional indebtedness to fund strategic initiatives or operating activities.
+Added: Our ability to secure additional financing in the future, if needed, will depend on several factors.
+Added: These include our future profitability and the overall condition of the credit markets.
+Added: Notwithstanding these considerations, we expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements.
Operating Activities, Fiscal 2022 and 2021
−Removed: Operating activities provided $39.9 million and $49.5 million in cash in fiscal 2021 and fiscal 2020, respectively.
−Removed: Cash provided by operations in fiscal 2021 resulted from net income of $25.2 million and net favorable non-cash reconciling adjustments of $33.9 million.
−Removed: These were partially offset by net unfavorable changes in operating assets and liabilities totaling $19.2 million, primarily consisting of an increase in income taxes receivable of $32.6 million as a result of certain tax method changes elected in the fourth quarter of fiscal 2021 and the first quarter of fiscal 2022, which allowed us to recognize a tax benefit of $12.8 million in fiscal 2021, as described further in Note 8 – Income Taxes in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, partially offset by a decrease in trade accounts receivable of $11.4 million , mostly attributable to improved collection on our accounts receivable and an increase in accrued salaries and related obligations of $2.4 million primarily as a result of increased vacation accrual year-over-year.
−Removed: In fiscal 2020, cash provided by operations resulted from net income of $28.3 million and net favorable non-cash reconciling adjustments of $21.5 million.
−Removed: These amounts were partially offset by a net unfavorable change in operating assets and liabilities of $0.3 million primarily due to a $7.9 million decrease in accounts payable, a $6.8 million decrease in accrued salaries and related obligations and a $2.5 million increase in prepaid income taxes, partially offset by a $10.0 million decrease in trade accounts receivable and a $7.3 million increase in other liabilities.
+Added: Operating activities provided cash of $49.4 million and $39.9 million in fiscal 2022 and fiscal 2021, respectively.
+Added: In fiscal 2022, cash provided by operations resulted from net income of $67.2 million and non-cash adjustments of $6.9 million.
+Added: Additionally, in fiscal 2022, net unfavorable changes in operating assets and liabilities totaled $24.7 million.
+Added: These changes primarily consisted of a $44.8 million increase in trade accounts receivable, mainly attributable to accelerated revenue growth throughout fiscal 2022, and a $5.5 million decrease in other liabilities, which includes the final Veracity contingent consideration payment, of which $3.7 million was categorized as operating (the remaining $3.3 million of the total $7.0 million contingent consideration payment was categorized as financing cash flow) p artially offset by a $22.0 million increase in accrued salaries and related obligations due to the significant increase in accrued incentive compensation as a result of strong business performance during the fiscal year, and a $2.1 million decrease in prepaid income taxes due to timing of estimated quarterly tax payments.
+Added: In fiscal 2021, cash provided by operations resulted from net income of $25.2 million and non-cash adjustments of $33.9 million.
+Added: Additionally, in fiscal 2021, these were partially offset by net unfavorable changes in operating assets and liabilities totaling $19.2 million, primarily consisting of an increase in income taxes receivable of $32.6 million as a result of certain tax method changes elected in the fourth quarter of fiscal 2021 and the first quarter of fiscal 2022, which allowed us to recognize a tax benefit of $12.8 million in fiscal 2021, partially offset by a decrease in trade accounts receivable of $11.4 million, mostly attributable to improved collection on our accounts receivable and an increase in accrued salaries and related obligations of $2.4 million primarily as a result of increased vacation accrual year over year.
Investing Activities, Fiscal 2022 and 2021
−Removed: Net cash used in investing activities was $3.8 million for fiscal 2021, compared to $26.8 million in fiscal 2020.
−Removed: We used $3.8 million of cash in fiscal 2021 to develop internal-use software and acquire property and equipment.
−Removed: In fiscal 2020, we used $30.3 million of cash (net of cash acquired) to acquire Veracity .
−Removed: We also redeemed $6.0 million of short-term investments in fiscal 2020, which we purchased in fiscal 2019.
+Added: Net cash used in investing activities was $3.0 million in fiscal 2022 compared to $3.8 million in fiscal 2021.
+Added: Net cash used in investing activities in both periods was primarily for the development of internal-use software and acquisition of property and equipment.
Financing Activities, Fiscal 2022 and 2021
−Removed: The primary sources of cash in financing activities are borrowings under our Facility, cash proceeds from the exercise of employee stock options and proceeds from the issuance of shares purchased under our ESPP.
−Removed: The primary uses of cash in financing activities are repayments under the Facility, payment of contingent consideration, repurchases of our common stock and cash dividend payments to our stockholders.
−Removed: Net cash used in financing activities totaled $59.5 million in fiscal 2021 compared to net cash provided by financing activities of $30.9 million in fiscal 2020.
−Removed: Net cash used in financing activities during the year ended May 29, 2021 consisted of repayments on the Facility of $45.0 million, cash dividend payments of $18.2 million, and the first Veracity contingent consideration payment, of which $3.0 million was categorized as financing (the remaining $2.3 million of the total $5.3 million Veracity year one contingent consideration payment was categorized as operating cash flow).
+Added: The primary sources of cash in financing activities are borrowings under our New Credit Facility, cash proceeds from the exercise of employee stock options and proceeds from the issuance of shares purchased under our ESPP.
+Added: The primary uses of cash in financing activities are repayments under the New Credit Facility, payment of contingent consideration, repurchases of our common stock and cash dividend payments to our stockholders.
+Added: Net cash used in financing activities totaled $13.4 million in fiscal 2022 compared to $59.5 million in fiscal 2021 .
+Added: Net cash used in financing activities during fiscal 2022 consisted of $19.7 million used for the repurchase of our common stock, cash dividend payments of $18.6 million, the final Veracity contingent consideration payment, of which $3.3 million was categorized as financing (the remaining $3.7 million of the total $7.0 million final Veracity contingent consideration payment was categorized as operating) , and the Expertforce Interim Projects GmbH, LLC (“Expertence”) contingent consideration payment of $0.3 million, partially offset by $10.4 million of net borrowing under the New Credit Facility (consisting of $73.4 million of proceeds and $63.0 million of repayment), and $17.9 million in proceeds received from ESPP share purchases and employee stock option exercises.
+Added: Net cash used in financing activities in fiscal 2021 consisted of repayments under the Previous Credit Facility of $45.0 million, cash dividend payments of $18.2 million, and the first Veracity contingent consideration payment, of which $3.0 million was categorized as financing (the remaining $2.3 million of the total $5.3 million Veracity year-one contingent consideration payment was categorized as operating).
These were partially offset by $6.8 million in proceeds received from ESPP share purchases and employee stock option exercises.
−Removed: Additional information regarding dividends is included in Note 11 — Stockholders’ Equity in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
−Removed: Net cash provided by financing activities of $30.9 million in fiscal 2020 consisted of $74.0 million of proceeds borrowed from the Facility and $10.3 million from the issuance of shares under ESPP and the exercise of employee stock options, partially offset by principal repayments of $29.0 million under the Facility , $17.6 million of cash dividend payments and $5.0 million for share repurchases .
−Removed: For a comparison of our cash flow activities for the fiscal years ended May 30, 2020 and May 25, 2019, see Part II, Item 7.
−Removed: “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended May 30, 2020, filed with the SEC on July 27, 2020 (File No.
+Added: For a comparison of our cash flow activities for the fiscal years ended May 29, 2021 and May 30, 2020, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended May 29, 2021, filed with the SEC on July 23, 2021 (File No.
Recent Accounting Pronouncements
−Removed: Information regarding recent accounting pronouncements is contained in Note 2 — Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
+Added: Information regarding recent accounting pronouncements is contained in Note 2 — Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
QUANTITA TIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Interest Rate Risk.
−Removed: We are primarily exposed to market risks from fluctuations in interest rates and the effects of those fluctuations on the market values of our cash and cash equivalents and our borrowings under our Facility that bear interest at a variable market rate.
−Removed: At the end of fiscal 2021, we had approximately $74.4 million of cash and cash equivalents and $43.0 million of borrowings under our Facility.
+Added: We are primarily exposed to market risks from fluctuations in interest rates and the effects of those fluctuations on the market values of our cash and cash equivalents and our borrowings under the New Credit Facility that bear interest at a variable market rate.
+Added: As of May 28, 2022, we had approximately $104.2 million of cash and cash equivalents and $54.0 million of borrowings under our New Credit Facility.
The earnings on cash and cash equivalents are subject to changes in interest rates;
however, assuming a constant balance available for investment, a 10% decline in interest rates would reduce our interest income but would not have a material impact on our consolidated financial position or results of operations.
−Removed: We are exposed to interest rate risk related to fluctuations in the LIBOR rate.
−Removed: See “Sources and Uses of Liquidity” above and Note 7 – Long-Term Debt in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion about the interest rate on our Facility.
+Added: We are exposed to interest rate risk related to fluctuations in the term SOFR rate.
+Added: See “Sources and Uses of Liquidity” above and Note 8 – Long-Term Debt in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion about the interest rate on our New Credit Facility.
At the current level of borrowing as of May 28, 2022 of $54.0 million, a 10% change in interest rates would have resulted in approximately a $0.1 million change in annual interest expense.
Foreign Currency Exchange Rate Risk.
−Removed: For the year ended May 29, 2021, approximately 20.2% of our revenues were generated outside of the United States.
+Added: For the year ended May 28, 2022, approximately 17.5% of our revenues were generated outside of the U.S.
As a result, our operating results are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S.
2 unchanged sentences
Thus, as the value of the U.S.
−Removed: dollar fluctuates relative to the currencies in our non-United States based operations, our reported results may vary.
−Removed: Assets and liabilities of our non-United States based operations are translated into U.S.
+Added: dollar fluctuates relative to the currencies in our non-U.S.-based operations, our reported results may vary.
+Added: Assets and liabilities of our non-U.S.-based operations are translated into U.S.
dollars at the exchange rate effective at the end of each monthly reporting period.
Approximately 66.1% of our fiscal year-end balances of cash and cash equivalents were denominated in U.S.
−Removed: The remaining amount of approximately 37.1% was comprised primarily of cash balances translated from Euros, Japanese Yen, Mexican Pesos and Chinese Yuan.
−Removed: The difference resulting from the translation in each period of assets and liabilities of our non-United States based operations is recorded as a component of stockholders’ equity in accumulated other comprehensive income or loss.
−Removed: Although we intend to monitor our exposure to foreign currency fluctuations, we do not currently use financial hedges to mitigate risks associated with foreign currency fluctuations including in a limited number of circumstances when we may be asked to transact with our client in one currency but are obligated to pay our consultant in another currency.
−Removed: We cannot provide assurance that exchange rate fluctuations will not adversely affect our financial results in the future.
+Added: The remaining amount of approximately 33.9% was comprised primarily of cash balances translated from Euros, Japanese Yen, Chinese Yuan, Mexican Pesos and Canadian Dollar.
+Added: The difference resulting from the translation in each period of assets and liabilities of our non-U.S.-based operations is recorded as a component of stockholders’ equity in accumulated other comprehensive income or loss.
+Added: Although we monitor our exposure to foreign currency fluctuations, we do not currently use financial hedges to mitigate risks associated with foreign currency fluctuations including in a limited number of circumstances when we may be asked to transact with our client in one currency but are obligated to pay our consultants in another currency.
+Added: Our foreign entities typically transact with clients and consultants in their local currencies and generate enough operating cash flows to fund their own operations.
+Added: We believe our economic exposure to exchange rate fluctuations has not been material.
+Added: However, we cannot provide assurance that exchange rate fluctuations will not adversely affect our financial results in the future.
FINANCI AL STATEMENTS AND SUPPLEMENTARY DATA.
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We have audited the accompanying consolidated balance sheets of Resources Connection, Inc.
−Removed: and its subsidiaries (the Company) as of May 29, 2021, and May 30, 2020, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended May 29, 2021, and the related notes to the consolidated financial statements (collectively, the financial statements).
+Added: and its subsidiaries (the “Company”) as of May 28, 2022 and May 29, 2021, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended May 28, 2022, and the related notes to the consolidated financial statements (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 May 28, 2022 and May 29, 2021, and the results of its operations and its cash flows for each of the three years in the period ended May 28, 2022, in conformity with accounting principles generally accepted in the United States of America.
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Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
−Removed: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.
+Added: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
+Added: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
2 unchanged sentences
We believe that our audits provide a reasonable basis for our opinion.
−Removed: Critical Audit Matters
+Added: 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 unchanged sentence
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.
−Removed: Valuation of Goodwill
−Removed: As described in Note 2 and Note 4 to the financial statements, the Company’s consolidated goodwill balance was $216.8 million as of May 29, 2021.
−Removed: The Company performs its annual goodwill impairment test as of May 29, 2021, and also performed an interim test as of October 24, 2020, in connection with its change in operating segments.
−Removed: The impairment test is performed using a quantitative evaluation for each of its three reporting units based off of an income approach, under a discounted cash flow model, and a market approach, under a guideline public company method, which are then reconciled to determine the fair value of the reporting units.
−Removed: To test for goodwill impairment, the Company compares the fair value of each reporting unit to its carrying value.
−Removed: When estimating the fair value of each reporting unit, management makes significant estimates and assumptions related to the specific circumstances of each reporting unit.
−Removed: We have identified the valuation of goodwill for all reporting units as a critical audit matter primarily due to significant assumptions management makes in order to reach a determination as to the fair value of goodwill for each reporting unit.
−Removed: These significant assumptions include cash flow projections which include revenue, gross profit, expenses as well as the determination of the discount rate.
−Removed: Auditing management’s assumptions for the aforementioned items involves a high degree of auditor judgment and increased audit effort including the use of valuation specialists, due to the significant impact these assumptions have on the determination of fair value and potential impairment charges.
−Removed: Our audit procedures related to the Company’s valuation of goodwill included the following, among others:
−Removed: We obtained an understanding of the relevant controls related to the development of forecasted cash flow (revenue, gross profit and expenses) projections as well as the selection of discount rates and tested such controls for design and operating effectiveness.
−Removed: We evaluated management’s ability to forecast cash flow projections by comparing management’s estimates to historical trends and guideline public company information as well as evaluating management’s historical forecasts to actual results.
−Removed: We evaluated the reasonableness of expense reduction in the forecast through inquiry with management and inspection of Board of Director communication and reduction in force plan documents along with comparison to the results from operations since the plan was put place.
−Removed: We utilized a valuation specialist to assist in the following:
−Removed: Developing independent estimates using a combination of historical and publicly available data to evaluate the reasonableness of the discount rate.
−Removed: Assessing the reasonableness of growth and profitability data used in the determination of measures of performance that drive the valuation of reporting units under the market approach by comparing it to available market data.
−Removed: Testing the mathematical accuracy of the calculation.
+Added: As described in Note 9 to the consolidated financial statements, during the year the Company reversed approximately $7.5M of its valuation allowance on deferred tax assets in the Netherlands.
+Added: Management made the decision to reverse this allowance based on a history of earnings, forecasted income in future periods sufficient to utilize deferred tax assets in the Netherlands and changes in Netherlands tax law that removed expiration dates on net operating loss carryforwards.
+Added: The valuation allowance for deferred tax assets in the Netherlands has been identified as the critical audit matter due to the significant assumptions management made as to when and in what amount to reverse the valuation allowance.
+Added: These significant assumptions require management to make estimates related to the forecast of future earnings.
+Added: Auditing management’s assumptions requires a high degree of auditor judgment and increased audit effort due to the significant impact these assumptions have on the amount of the valuation allowance reversed.
+Added: Our audit procedures related to the valuation allowance reversed included the following, among others:
+Added: We obtained an understanding of the relevant control related to the evaluation of the valuation allowance and tested such control for design and implementation and operating effectiveness.
+Added: Utilized our tax specialists to test the change to the tax law in the Netherlands and its applicability to the Company’s Netherlands operations.
+Added: Performed mathematical accuracy procedures over the forecast of earnings developed by management.
+Added: Tested the reasonableness of assumptions within the forecast including subjected the forecast to sensitivity analysis on key assumptions regarding future sources of income, evaluation of management’s ability to forecast by comparing management’s prior forecasts to historical results, comparing management’s forecasted income growth rates to independent market data, validated management’s recent history of book income and earnings trend and developed an understanding of management’s operational plans for future years related to the Netherlands.
/s/ RSM US LLP
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CONSOLIDATED BALANCE SHEETS
−Removed: (Amounts in thousands, except
−Removed: par value per share)
+Added: (Amounts in thousands, except par value per share)
Current assets:
Cash and cash equivalents
−Removed: Trade accounts receivable, net of allowance for doubtful accoun ts of $ 2,032
+Added: Trade accounts receivable, net of allowance for doubtful accounts of $ 2,121
and $ 2,032 as of May 28, 2022 and May 29, 2021, respectively
Prepaid expenses and other current assets
+Added: Assets held for sale
Income taxes receivable
6 unchanged sentences
Current liabilities:
−Removed: Accounts payable and accrued expenses
+Added: Accounts payable and other accrued expenses
Accrued salaries and related obligations
−Removed: Operating lease liabilities, current
+Added: Operating lease liabilities
Contingent consideration liabilities
+Added: Liabilities held for sale
Other liabilities
1 unchanged sentence
Long-term debt
−Removed: Operating lease liabilities, noncurrent
+Added: Operating lease liabilities
Deferred income taxes
1 unchanged sentence
Total liabilities
−Removed: Commitments and contingencies
+Added: Commitments and contingencies (Note 18)
Stockholders’ equity:
7 unchanged sentences
Retained earnings
−Removed: Treasury stock at cost, 31,741 and 31,766 shares as of May 29, 2021 and
−Removed: May 30, 2020, respectively
+Added: Treasury stock at cost, 1,155 and 31,741 shares as of May 28, 2022
+Added: and May 29, 2021, respectively
Total stockholders’ equity
3 unchanged sentences
CONSOLIDATED STATEMENTS OF OPERATIONS
+Added: (Amounts in thousands, except per share amounts)
For the Years Ended
−Removed: (Amounts in thousands, except
−Removed: per share amounts)
Direct cost of services, primarily payroll and related taxes
1 unchanged sentence
Selling, general and administrative expenses
−Removed: Amortization of intangible assets
+Added: Amortization expense
Depreciation expense
1 unchanged sentence
Interest expense, net
−Removed: Income before income tax (benefit) expense
−Removed: Income tax (benefit) expense
+Added: Income before income tax expense (benefit)
+Added: Income tax expense (benefit)
Net income per common share:
−Removed: Weighted average common shares outstanding:
+Added: Weighted average number of common and common equivalent
+Added: shares outstanding:
Cash dividends declared per common share
2 unchanged sentences
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
−Removed: For the Years Ended
(Amounts in thousands)
+Added: For the Years Ended
COMPREHENSIVE INCOME:
4 unchanged sentences
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
+Added: (Amounts in thousands, except per share amounts)
Treasury Stock
1 unchanged sentence
Stockholders'
−Removed: (Amounts in thousands, except per share amounts)
Balances as of May 25, 2019
1 unchanged sentence
Stock-based compensation expense
−Removed: Issuance of common stock under Employee
−Removed: Stock Purchase Plan
−Removed: Issuance of restricted stock out of treasury
−Removed: stock to board of director members
−Removed: Purchase of shares
+Added: Issuance of common stock purchased under
+Added: Employee Stock Purchase Plan
+Added: Cancellation of restricted stock
+Added: Issuance of restricted stock
+Added: Amortization of restricted stock issued out of
+Added: treasury stock to board of director members
+Added: Repurchase of common stock
Cash dividends declared ($ 0.56 per share)
+Added: Issuance of common stock in connection with
+Added: the acquisition of Accretive
Currency translation adjustment
3 unchanged sentences
Stock-based compensation expense
−Removed: Issuance of common stock under Employee
−Removed: Stock Purchase Plan
−Removed: Cancellation of restricted stock
+Added: Issuance of common stock purchased under
+Added: Employee Stock Purchase Plan
Issuance of restricted stock
1 unchanged sentence
treasury stock to board of director members
−Removed: Repurchase of shares
Cash dividends declared ($ 0.56 per share)
−Removed: Issuance of common stock in connection with the
−Removed: acquisition of Accretive
+Added: Dividend equivalents on restricted stock
Currency translation adjustment
3 unchanged sentences
Stock-based compensation expense
−Removed: Issuance of common stock under Employee
−Removed: Stock Purchase Plan
+Added: Issuance of common stock purchased under
+Added: Employee Stock Purchase Plan
Issuance of restricted stock
+Added: Issuance of common stock upon vesting of
+Added: restricted stock units, net shares withheld to
+Added: cover taxes
Amortization of restricted stock issued out of
1 unchanged sentence
Cash dividends declared ($ 0.56 per share)
+Added: Retirement of treasury stock
+Added: Repurchase of common stock
Dividend equivalents on restricted stock
5 unchanged sentences
CONSOLIDATED STATEMENTS OF CASH FLOWS
−Removed: For the Years Ended
(Amounts in thousands)
+Added: For the Years Ended
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
−Removed: Depreciation and amortization
+Added: Depreciation and amortization expense
Stock-based compensation expense
1 unchanged sentence
Loss on disposal of assets
−Removed: Impairment of operating right-of-use assets
+Added: Gain on dissolution of subsidiaries
+Added: Amortization of debt issuance costs and lender fees
+Added: Impairment of right-of-use and other costs
Adjustment to allowance for doubtful accounts
3 unchanged sentences
Prepaid expenses and other current assets
−Removed: Accounts payable and accrued expenses
+Added: Accounts payable and other accrued expenses
Accrued salaries and related obligations
3 unchanged sentences
Redemption of short-term investments
−Removed: Purchase of short-term investments
Proceeds from sale of assets
1 unchanged sentence
Acquisition of Veracity , net of cash acquired
−Removed: Acquisition of property and equipment and internal-use software
+Added: Investments in property and equipment and internal-use software
Net cash used in investing activities
2 unchanged sentences
Proceeds from issuance of common stock under Employee Stock Purchase Plan
−Removed: Purchase of common stock
−Removed: Payment of contingent consideration
+Added: Repurchase of common stock
+Added: Payment of contingent consideration liabilities
Proceeds from Revolving Credit Facility
Repayments on Revolving Credit Facility
+Added: Payment of debt issuance costs
Cash dividends paid
1 unchanged sentence
Effect of exchange rate changes on cash
−Removed: Net (decrease) increase in cash
+Added: Net increase (decrease) in cash
Cash and cash equivalents at beginning of period
+Added: Cash, cash equivalents and restricted cash at end of period
+Added: Restricted cash at end of period
Cash and cash equivalents at end of period
6 unchanged sentences
The Company’s operating entities provide services primarily under the name Resources Global Professionals.
−Removed: Resources Global Professionals is a global consulting firm helping clients match the right professional talent needed to tackle change and transformational initiatives.
−Removed: As a next-generation human capital partner for its clients, the Company specializes in solving today’s most pressing business problems across the enterprise in the areas of transactions, regulations, and transformations.
−Removed: The Company’s principal markets of operations are the United States (“U.S.”), Europe, Asia Pacific, Mexico and Canada.
+Added: Resources Global Professionals (“RGP”) is a global consulting firm focused on project execution services that power clients’ operational needs and change initiatives utilizing on-demand experienced and diverse talent.
+Added: As a next-generation human capital partner for its clients, the Company specializes in co-delivery of enterprise initiatives typically precipitated by business transformation, strategic transactions, or regulatory change.
+Added: The Company’s principal markets of operations are North America, Europe, and Asia Pacific.
The Company’s fiscal year consists of 52 or 53 weeks, ending on the Saturday in May closest to May 31.
3 unchanged sentences
Basis of Presentation and Principles of Consolidation
−Removed: The Consolidated Financial Statements of the Company (“financial statements”) have been prepared in conformity with accounting principles generally accepted in the U.S.
−Removed: (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”).
+Added: The Consolidated Financial Statements of the Company (“financial statements”) have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”).
The financial statements include the accounts of the Company and its subsidiaries.
2 unchanged sentences
Effective in the second quarter of fiscal 2021, the Company revised its historical one -segment position and identified the following new operating segments to align with changes made in its internal management structure and its reporting structure of financial information used to assess performance and allocate resources:
−Removed: RGP – a global business consulting practice which operates primarily under the RGP brand and focuses on project consulting and professional staffing services in areas such as finance and accounting, business strategy and transformation, risk and compliance, and technology and digital;
+Added: RGP – a global business consulting firm focused on project execution services that power clients’ operational and change initiatives with experienced and diverse talent;
taskforce – a German professional services firm that operates under the taskforce brand.
1 unchanged sentence
Sitrick – a crisis communications and public relations firm which operates under the Sitrick brand, providing corporate, financial, transactional and crisis communication and management services.
−Removed: Each of these three segments reports through a separate management team to the Company’s Chief Executive Officer, who is designated as the Chief Operating Decision Maker for segment reporting purposes.
+Added: Each of these three segments reports through a separate management team to the Company’s Chief Executive Officer, who is designated as the Chief Operating Decision Maker (“CODM”) for segment reporting purposes.
RGP is the Company’s only reportable segment.
4 unchanged sentences
The change in segment reporting did not impact the Company’s consolidated financial statements.
+Added: On May 31, 2022, the Company divested of taskforce .
+Added: The resulting change in segments will be reported in fiscal 2023 following the disposition.
+Added: S ee Note 20 – Subsequent Events for further information .
Reclassifications
1 unchanged sentence
These reclassifications had no effect on previously reported totals for assets, liabilities, stockholders’ equity, cash flows or net income.
−Removed: Risks and Uncertainties
−Removed: The Pandemic has adversely impacted the Company’ business in the past year including, among other things, reducing demand for or delaying client decisions to procure its services.
−Removed: In response to the Pandemic, the Company evolved its operating model to be more virtual and borderless.
−Removed: The move to virtual and borderless talent helped the Company manage supply and demand more efficiently,
−Removed: which resulted in faster revenue generation and reduced consultant turnover, mitigating the negative impact of the Pandemic.
−Removed: During fiscal 2021, the Company’s revenue declined 10.5 % compared to fiscal 2020, as the Pandemic started to impact the Company on a worldwide basis in the fourth quarter of fiscal 2020.
−Removed: The Company reached a trough in revenue during the first quarter of fiscal 2021 and has since experienced a steady recovery in each sequential quarter thereafter .
−Removed: By the fourth quarter of fiscal 2021, the revenue decline compared to the prior year quarter improved to 3.5 % year over year, and revenue in the fourth quarter of fiscal 2021 exceeded the first quarter of fiscal 2021 by 16.9 %.
−Removed: In order to strengthen the Company’s liquidity during the Pandemic, the Company took proactive measures to increase its cash on hand including, but not limited to, borrowing $ 39 million under its $ 120.0 million secured revolving credit facility with Bank of America (the “Facility”) in the fourth quarter of fiscal 2020, reducing discretionary spending, and focusing on receivables collections efforts.
−Removed: The Company also elected to defer the deposit of its employer portion of social security taxes from April to December 2020, as provided for under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).
−Removed: Due to the focused efforts to contain costs and manage working capital, the Company’s cash flows from operations enabled it to repay a total of $ 45 million on its borrowings during fiscal 2021 and another $ 10 million subsequently on June 9, 2021.
−Removed: In addition, the Company repaid a total of $ 6.3 million in deferred deposit of the employer portion of social security taxes prior to May 29, 2021.
−Removed: As of May 29, 2021, the Company had cash and cash equivalents of $ 74.4 million, and additional availability under the Facility of $ 75.7 million.
−Removed: Given its balance sheet and liquidity position, management believes that the Company has the financial flexibility and resources needed to operate in the current uncertain economic environment.
−Removed: However, if global economic conditions worsen as a result of the Pandemic, it could materially impact the Company’s liquidity position and capital needs.
−Removed: The full extent to which the Pandemic impacts the Company’ 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.
Use of Estimates
3 unchanged sentences
The Company generates substantially all of its revenues from providing professional consulting services to its clients.
−Removed: Revenues are recognized when control of the promised service is transferred to the Company’s clients, in an amount that reflects the consideration expected in exchange for the services.
+Added: Revenues are recognized when control of the promised service is transferred to the Company’s clients, in an amount that reflects the consideration expected in exchange for the services rendered.
Revenue is recorded net of sales or other transaction taxes collected from clients and remitted to taxing authorities.
−Removed: Revenues from contracts are recognized over time, based on hours worked by the Company’s professionals.
+Added: Revenues for the vast majority of our contracts are recognized over time, based on hours worked by the Company’s professionals.
The performance of the agreed-to service over time is the single performance obligation for revenues.
19 unchanged sentences
The Company elected to apply the practical expedient to expense sales commissions as incurred as the expected amortization period is one year or less.
−Removed: Sales commissions are recorded in selling, general and administrative expenses in the Company’s Consolidated Statement of Operations.
+Added: Sales commissions are recorded in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations.
During the years ended May 28, 2022, May 29, 2021, and May 30, 2020, sales commission expense was $ 6.8 million, $ 5.9 million, and $ 6.3 million, respectively.
10 unchanged sentences
While clients are contractually obligated to pay the Company for all hours billed, the Company does not have long-term agreements with its clients for the provision of services and the Company’s clients may terminate engagements at any time.
−Removed: All costs of compensating the Company’s professionals are the responsibility of the Company and are included in direct cost of services.
+Added: All costs of compensating the Company’s professionals for services provided are the responsibility of the Company and are included in direct cost of services.
Foreign Currency Translation
−Removed: The financial statements of subsidiaries outside the U.S.
−Removed: are measured using the local currency as the functional currency.
+Added: The financial statements of subsidiaries outside the United States (“U.S.”) are measured using the local currency as the functional currency.
Assets and liabilities of these subsidiaries are translated at current exchange rates, income and expense items are translated at average exchange rates prevailing during the period and the related translation adjustments are recorded as a component of comprehensive income or loss within stockholders’ equity.
6 unchanged sentences
Common equivalent shares are excluded from the computation in periods in which they have an anti-dilutive effect.
+Added: The performance stock units are also excluded from the EPS calculation, since the awards are not considered vested until the performance criteria are met.
Stock options for which the exercise price exceeds the average market price over the period are anti-dilutive and are excluded from the calculation.
−Removed: The following table summarizes the calculation of net income per share for the years ended May 29, 2021, May 30, 2020 and May 25, 2019 (in thousands, except per share amounts):
+Added: The following table summarizes the calculation of net income per share for the years ended May 28, 2022, May 29, 2021 and May 30, 2020 (amounts in thousands, except per share amounts):
For the Years Ended
8 unchanged sentences
The carrying amounts reflected in the Consolidated Balance Sheets for cash and cash equivalents approximate the fair values due to the short maturities of these instruments.
+Added: Restricted Cash
+Added: Restricted cash consists of cash and claims to cash that are restricted as to withdrawal or usage.
+Added: This includes cash designated for specific use in an acquisition or dissolution.
+Added: Restricted cash is carried at cost, approximates fair value, and is reflected in the Consolidated Balance Sheets within assets held for sale.
+Added: See Note 4 – Assets and Liabilities Held for Sale for further information .
Financial Instruments
6 unchanged sentences
Level 3 – Unobservable inputs.
−Removed: The following table shows the Company’s financial instruments that are measured and recorded in the consolidated financial statements at fair value on a recurring basis (in thousands):
−Removed: Contingent consideration liability
+Added: The following table shows the Company’s financial instruments that are measured and recorded in the consolidated financial statements at fair value on a recurring basis (amounts in thousands):
+Added: Contingent consideration liabilities
Total liabilities
−Removed: Contingent consideration liability presented in the table above is for estimated future contingent consideration cash payments related to the Company’s acquisitions.
−Removed: Total contingent consideration liabilities were $ 7.1 million and $ 7.9 million as of May 29, 2021 and May 30, 2020, respectively.
+Added: Contingent consideration liabilities presented in the table above is for estimated future contingent consideration cash payments related to the Company’s acquisitions.
+Added: Total contingent consideration liabilities were zero and $ 7.1 million as of May 28, 2022 and May 29, 2021, respectively.
The fair value measurement of the liability is based on significant inputs not observed in the market and thus represents a Level 3 measurement.
−Removed: The significant unobservable inputs used in the fair value measurement of the contingent consideration liability are the Company’s measures of the estimated payouts based on internally generated financial projections and discount rates.
−Removed: The fair value of contingent consideration liability is remeasured on a quarterly basis by the Company using additional information as it becomes available, and any change in the fair value estimates are recorded in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations .
−Removed: See Note 3 – Acquisitions and Dispositions .
+Added: The significant unobservable inputs used in the fair value measurement of the contingent consideration liabilities are the Company’s measures of the estimated payouts based on internally generated financial projections and discount rates.
+Added: The fair value of contingent consideration liabilities is remeasured on a quarterly basis by the Company using additional information as it becomes available, and any change in the fair value estimates are recorded in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations .
+Added: See Note 3 – Acquisitions and Dispositions for further information.
The Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and long-term debt, are carried at cost, which approximates their fair value because of the short - term maturity of these instruments or because their stated interest rates are indicative of market interest rates.
3 unchanged sentences
If the financial condition of the Company’s clients deteriorates or there is an unfavorable trend in aggregate receivable collections, additional allowances may be required.
−Removed: The following table summarizes the activity in the allowance for doubtful accounts (in thousands):
+Added: The following table summarizes the activity in the allowance for doubtful accounts (amounts in thousands):
+Added: Currency Rate
(Write-offs)/
+Added: (1) Other includes foreign currency translation adjustments and the impact of reclassifying certain assets to assets held for sale.
+Added: See Note 4 – Assets and Liabilities Held for Sale for further information .
+Added: Assets and Liabilities Held for Sale
+Added: Assets and liabilities held for sale represent primarily cash, accounts receivable, goodwill, and other assets and liabilities that have met the criteria of “held for sale” accounting, as specified by ASC 360, Property, Plant, and Equipment .
+Added: The effect of suspending amortization on noncurrent assets held for sale is immaterial to the results of operations.
+Added: The Company records assets and liabilities held for sale at the lower of carrying value or fair value less cost to sell.
+Added: Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met.
+Added: Conversely, gains are not recognized on the sale of a long-lived asset or disposal group until the date of sale.
+Added: As of May 28, 2022, the Company classified certain assets and liabilities as held for sale in connection with the sale of taskforce , which closed on May 31, 2022.
+Added: Fair value was determined based on the estimated proceeds from the sale of the business utilizing the purchase price as defined in the Sale and Purchase Agreement.
+Added: See Note 4 – Assets and Liabilities Held for Sale and Note 20 – Subsequent Events for further information .
Property and Equipment
12 unchanged sentences
If the sum of expected undiscounted future cash flows is less than the carrying amount of the asset, a second step is warranted and an impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value calculated using the present value of estimated net future cash flows.
−Removed: The Company recorded right-of-use (“ROU”) assets impairment of $ 0.9 million and $ 0.6 million for the years ended May 29, 2021 and May 30, 2020, respectively, primarily associated with exiting certain real estate leases as part of its restructuring initiatives.
+Added: The Company recorded an impairment against its right-of-use (“ROU”) assets and leasehold improvements of $ 0.8 million, $ 0.9 million and $ 0.6 million for the years ended May 28, 2022, May 29, 2021 and May 30, 2020, respectively, primarily associated with exiting certain real estate leases as part of its restructuring initiatives.
The impairment charges are included in selling, general and administrative expense in the Company’s Consolidated Statements of Operations.
5 unchanged sentences
Significant management judgment is required in the forecasts of future operating results that are used in these evaluations.
−Removed: The Company’s interim and annual goodwill impairment analysis indicated that there was no related impairment for the fiscal years ended May 29, 2021, May 30, 2020 and May 25, 2019, respectively.
The Company’s identifiable intangible assets include customer contracts and relationships, tradenames, backlog, consultant list, non-compete agreements and computer software, including internally-developed software.
−Removed: These assets are amortized on a straight-line basis over lives ranging from 17 months to ten years .
+Added: These assets are amortized on a straight-line basis over lives ranging from two to ten years .
See Note 5 — Intangible Assets and Goodwill for a further description of the Company’s goodwill and intangible assets, including information about the Company’s goodwill impairment assessment in connection with its change in segment reporting effective in the second quarter of fiscal 2021 .
1 unchanged sentence
At May 28, 2022, the Company had no finance leases.
−Removed: The Company’s operating leases are primarily for real estates, which include fixed payments plus, in some cases, scheduled base rent increases over the term of the lease.
+Added: The Company’s operating leases are primarily for real estate, which include fixed payments plus, in some cases, scheduled base rent increases over the term of the lease.
Certain leases require variable payments of common area maintenance, operating expenses and real estate taxes applicable to the property.
5 unchanged sentences
The Company determines if an arrangement is a lease at the inception of the contract.
−Removed: Specially, the Company considers whether it can control the underlying asset and have the right to obtain substantially all of the economic benefits or outputs from the assets.
+Added: Specifically, the Company considers whether it can control the underlying asset and have the right to obtain substantially all of the economic benefits or outputs from the assets.
The ROU assets represent the right to use the underlying assets for the lease term and the lease liabilities represent the Company’s obligation to make lease payments arising from the leases.
3 unchanged sentences
See “Long-lived Assets” above.
−Removed: ROU assets are presented as operating right-of-use assets in the Company’s Consolidated Balance Sheets.
+Added: ROU assets are presented as operating ROU assets in the Company’s Consolidated Balance Sheets.
Operating lease liabilities are presented as operating lease liabilities, current or operating lease liabilities, noncurrent in the Company’s Consolidated Balance Sheets based on their contractual due dates.
11 unchanged sentences
The Company, as sublessor, continues to account for the head lease.
−Removed: If the lease cost for the term of the sublease exceeds the Company’s anticipated sublease income for the same period, this indicates that the right-of-use asset associated with the head lease should be assessed for impairment under the long-lived asset impairment provisions.
+Added: If the lease cost for the term of the sublease exceeds the Company’s anticipated sublease income for the same period, this indicates that the ROU asset associated with the head lease should be assessed for impairment under the long-lived asset impairment provisions.
Sublease income is included in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations.
1 unchanged sentence
Additionally, the Company has also made an accounting policy election to recognize the lease payments under short-term leases as an expense on a straight-line basis over the lease term without recognizing the lease liability and the ROU asset.
−Removed: See Note 6 — Leases for a further description of the Company’s leases.
+Added: See Note 7 — Leases for a further information on the Company’s leases.
Stock-Based Compensation
−Removed: The Company recognizes compensation expense for all share-based payment awards made to employees and directors, including restricted stock awards, restricted stock units, employee stock options awarded under the Company’s 2020 Performance Incentive Plan (the “2020 Plan”) and the Company’s 2014 Performance Incentive Plan (the “2014 Plan”), and employee stock purchases made via the Company’s 2019 Employee Stock Purchase Plan (the “ESPP”), based on estimated fair value at the date of grant.
−Removed: The Company estimates the fair value of share-based payment awards on the date of grant using the Black-Scholes valuation model for stock options and the closing price of the Company’s common stock on the date of grant for restricted stock awards and
−Removed: restricted stock units .
+Added: The Company recognizes compensation expense for all share-based payment awards made to employees and directors, including restricted stock awards, restricted stock units, employee stock options, performance stock units awarded under the Company’s 2020 Performance Incentive Plan (the “2020 Plan”) and the Company’s 2014 Performance Incentive Plan (the “2014 Plan”), stock units credited under the Directors Deferred Compensation Plan and employee stock purchases made via the Company’s 2019 Employee Stock Purchase Plan (the “ESPP”), based on estimated fair value at the date of grant.
+Added: The Company estimates the fair value of share-based payment awards on the date of grant using the Black-Scholes valuation model for stock options, including options under the ESPP, and the closing price of the Company’s common stock on the date of grant for restricted stock awards, restricted stock units and performance stock units.
The value of the portion of the award that is ultimately expected to vest is recognized on a straight-line basis as an expense over the requisite service periods.
−Removed: If the actual number of forfeitures differs from that estimated by management, additional adjustments to compensation expense may be required in future periods.
+Added: If the actual number of forfeitures, and in the case of performance stock units, the actual performance, differs from that estimated by management, additional adjustments to compensation expense may be required in future periods.
Excess income tax benefits and deficiencies from stock-based compensation are recognized as a discrete item within the provision for income taxes on the Company’s Consolidated Statements of Operations.
−Removed: Stock options and restricted stock units typically vest over four years and restricted stock award vesting is determined on an individual grant basis under the 2014 Plan or the 2020 Plan.
+Added: Stock options and restricted stock units typically vest over three to four years and restricted stock award vesting is determined on an individual grant basis under the 2014 Plan or the 2020 Plan.
+Added: Performance stock units vest on the last day of the three-year performance period, based on the actual performance for the performance period.
See Note 15 — Stock-Based Compensation Plans for further information on the 2020 Plan and stock-based compensation.
3 unchanged sentences
The Company also evaluates its uncertain tax positions and only recognizes the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
−Removed: The tax benefits recognized in the financial statements from such positions are measured based on the largest benefit that has a greater than 50 percentage likelihood of being realized upon settlement.
+Added: The tax benefits recognized in the financial statements from such positions are measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon settlement.
The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return.
Any change in judgment related to the expected ultimate resolution of uncertain tax positions is recognized in earnings in the period in which such change occurs.
+Added: Share Repurchases and Retirement of Treasury Shares
+Added: Shares of common stock repurchased by the Company are held as treasury shares.
+Added: The Company accounts for the retirement of treasury shares using the par-value method under which the cost of repurchased and retired treasury shares in excess of the par value is allocated between additional paid-in capital and retained earnings.
+Added: When the repurchase price is greater than the original issue proceeds, the excess is charged to retained earnings.
+Added: The Company uses the weighted-average cost flow assumption to identify and assign the original issue proceeds to the cost of the repurchased and retired treasury shares.
+Added: The Company believes that this allocation method is preferable because it more accurately reflects its paid-in capital balances by allocating the cost of the repurchased and retired treasury shares to paid-in capital in proportion to paid-in capital associated with the original issuance of those shares.
+Added: See Note 12 — Stockholders’ Equity for further information on the retirement of treasury shares.
Recent Accounting Pronouncements
−Removed: Accounting Pronouncements Adopted During Fiscal Year 2021
−Removed: In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update No.
−Removed: 2016-13, “Financial Instruments – Credit Losses (Topic 326):
−Removed: Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”).
−Removed: Under ASU 2016-13, companies are required to present financial assets, measured at amortized cost basis, at the net amount expected to be collected.
−Removed: The allowance for credit losses is a valuation account that is deducted from the amortized cost basis, such as trade receivables.
−Removed: The measurement of expected credit loss will be based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.
−Removed: The Company adopted this guidance using the modified retrospective adoption method beginning with its first quarter of fiscal 2021, and applied it to all applicable accounts.
−Removed: The application of this new guidance did not have a material impact on the Company’s consolidated financial condition, results of operations or cash flows.
+Added: No recent accounting pronouncements or changes in accounting pronouncements have been issued or adopted in fiscal 2022 that are of material significance, or have potential material significance, to the Company.
Acquisitions and Dispositions
−Removed: The Company did no t complete any acquisitions during the year ended May 29, 2021.
−Removed: Prior Year Acquisitions
−Removed: During fiscal 2020, the Company completed two acquisitions.
+Added: The Company did no t complete any acquisitions during the years ended May 28, 2022 and May 29, 2021.
+Added: In fiscal 2020, the Company acquired two entities.
The first acquisition, completed November 30, 2019, was Expertforce Interim Projects GmbH, LLC (“Expertence”), a leading provider of professional interim management services, based in Munich, Germany.
−Removed: With the acquisition of Expertence, the Company is able to offer a full range of project and management consulting services in the German market.
−Removed: The Company paid an initial cash consideration of $ 0.4 million.
−Removed: The initial consideration is subject to final adjustments for the impact of working capital as defined in the purchase agreement.
−Removed: In addition, the purchase agreement required earn-out payments to be made based on performance over an 18 -month period that ended on May 31, 2021.
−Removed: The Company was obligated to pay the former owners of Expertence contingent consideration if certain revenue targets were achieved, up to a maximum of $ 0.3 million, and as a result, made payments of contingent consideration equal to $ 0.3 million in July 2021.
−Removed: In determining the fair value of the contingent consideration liability, the Company used an estimate based on a number of possible projections over the earnout period and applied a probability to each possible outcome.
−Removed: Given the short duration of the earnout period, the fair value of contingent liability was measured on an undiscounted basis.
−Removed: The Company remeasures the fair value of the contingent consideration at each reporting period, and any change in fair value is recognized in the Company’s results of operations in the applicable period.
−Removed: The estimate of the fair value of contingent consideration requires very subjective assumptions to be made of various potential revenue results.
−Removed: Given that the performance period has ended, the Company does not expect to make any future revisions to these assumptions to materially change the estimate of the fair value of contingent consideration.
−Removed: Fair value of consideration transferred (in thousands):
−Removed: Estimated initial contingent consideration
−Removed: The following table summarizes the final valuation of the assets acquired and liabilities assumed at the acquisition date (dollars in thousands):
−Removed: Cash and cash equivalents
−Removed: Accounts receivable
−Removed: Prepaid expenses and other current assets
−Removed: Intangible assets:
−Removed: Computer software ( 24 months useful life)
−Removed: Total identifiable assets
−Removed: Accounts payable
−Removed: Accrued expenses and other current liabilities
−Removed: Deferred tax liability
−Removed: Total liabilities assumed
−Removed: Net identifiable assets acquired
−Removed: Net assets acquired
−Removed: Results of operations of Expertence are included in the Consolidated Statements of Operations from the date of acquisition and is not material to the Company’s consolidated results of operations for the years ended May 29, 2021 and May 30, 2020.
−Removed: The amount of the acquisition costs incurred as included in the Consolidated Statements of Operations for the year ended May 30, 2020 was immaterial.
−Removed: The second acquisition occurred on July 31, 2019 when the Company acquired Veracity Consulting Group, LLC (“Veracity”), a fast-growing, digital transformation firm based in Richmond, Virginia, that delivers innovative solutions to the Fortune 500 and leading healthcare organizations.
−Removed: The acquisition of Veracity was a critical step in accelerating the Company’s stated objective to enhance its digital capabilities and allows the Company to offer comprehensive end-to-end solutions to its clients by combining Veracity’s customer-facing offerings with the Company’s depth of experience in transforming the back office.
−Removed: The Company paid an initial cash consideration of $ 30.3 million (net of $ 2.1 million cash acquired).
−Removed: The initial consideration is subject to final adjustments for the impact of the Internal Revenue Code Section 338(h)(10) joint election between the Company and former owners of Veracity and working capital as defined in the purchase agreement.
−Removed: In addition, the purchase agreement requires earn-out payments to be made in cash based on performance after each of the first and second anniversary of the acquisition date.
−Removed: The Company is obligated to pay the former owners of Veracity contingent consideration if certain earnings before interest, taxes, depreciation and amortization (“EBITDA”) thresholds are achieved.
−Removed: In determining the fair value of the contingent consideration liability, the Company used the Monte Carlo simulation modeling which included the application of an appropriate discount rate (Level 3 fair value).
−Removed: The Company remeasures the fair value of the contingent consideration at each reporting period, and any change in fair value is be recognized in the Company’s results of operations in the applicable period.
−Removed: The estimate of fair value of contingent consideration requires very subjective assumptions to be made, including various potential EBITDA results and discount rates.
−Removed: Future revisions to these assumptions could materially change the estimate of the fair value of contingent consideration and therefore could materially affect the Company’s future operating results.
−Removed: During the quarter ended August 24, 2019, the Company made an initial provisional allocation of the purchase price for Veracity based on the fair value of the assets acquired and liabilities assumed, with the residual amount recorded as goodwill, in accordance with ASC 805, Business Combinations .
−Removed: The Company’s initial purchase price allocation considered a number of factors, including the valuation of identifiable intangible assets and contingent consideration.
−Removed: During the three months ended November 23, 2019, the Company adjusted the previously reported provisional allocation of the purchase price to reflect new information obtained during the quarter, which resulted in changes in expected future performance and cash flows as of the acquisition date.
−Removed: There were no additional adjustments to the provisional purchase price allocation during the remainder of the measurement period.
−Removed: The following table provides a summary of the final purchase price allocation.
−Removed: Fair value of consideration transferred (in thousands):
−Removed: Estimated initial contingent consideration
−Removed: Recognized final amounts of identifiable assets acquired and liabilities assumed (dollars in thousands):
+Added: The results of operations and the amount of the acquisition costs included in the Company’s Consolidated Statement of Operations related to the Expertence acquisition were not material to the Company’s consolidated results of operations for the year ended May 30, 2020.
+Added: The second acquisition, completed on July 31, 2019, was the digital consulting firm Veracity Consulting Group, LLC (“Veracity”), which contributed $ 18.8 million to consolidated revenue and $ 4.1 million to income from operations during the year ended May 30, 2020.
+Added: In addition, the Company recorded $ 1.3 million in expenses associated with an increase in the fair value of the Veracity contingent consideration liability, and incurred $ 0.6 million in acquisition costs, both of which were recorded in selling, general and administrative expenses in the Company’s Consolidated Statement of Operations for the year ended May 30, 2020.
+Added: As part of its restructuring effort in Europe which began in fiscal 2021, the Company initiated the wind-down and dissolution of certain entities.
+Added: During fiscal 2022, the Company completed the dissolution of the following three foreign subsidiaries:
+Added: RGP France SAS, RGP Denmark A/S, and RGP Italy SRL, as it continued to complete its exit from certain non-core markets in Europe.
+Added: The Company recognized a total gain on dissolutions of $ 0.9 million during fiscal 2022.
+Added: The net gain on the dissolutions of these subsidiaries was primarily related to the recognition of the accumulated translation adjustment associated with the foreign subsidiaries, which was included in selling, general and administrative expenses in the Company’s Consolidated Statement of Operations for the year ended May 28, 2022.
+Added: See Note 14 – Restructuring Activities for further information on the Company’s restructuring initiatives.
+Added: In fiscal 2020, the Company engaged in the sale of certain assets and liabilities in Sweden and discontinued operations in Belgium, Luxemburg and Norway.
+Added: In connection with the exit activities in these markets, the Company recognized a loss on the sale of assets and liabilities in Sweden and $ 0.7 million of expenses primarily related to employee termination benefits.
+Added: Such expenses were included in selling, general and administrative expenses in the Consolidated Statement of Operations for the year ended May 30, 2020.
+Added: None of the markets sold or exited in fiscal 2022 and 2020 are considered strategic components of the Company’s operations.
+Added: Assets and Liabilities Held for Sale
+Added: On April 21, 2022, Resources Global Professionals (Germany) GmbH (“RGP Germany”), a subsidiary of the Company, entered into a Sale and Purchase Agreement (the “Sale and Purchase Agreement”) with MoveVision – Management-, Beteiligungs- und Servicegesellschaft mbH and Blue Elephant – Management-, Beteiligungs- und Servicegesellschaft mbH (collectively, the “Purchasers”), owned by the original founder and a member of the senior leadership team of taskforce – Management on Demand GmbH (“ taskforce ”), respectively.
+Added: The Sale and Purchase Agreement provided for a purchase price of approximately EUR 5.5 million (approximately $ 5.9 million), subject to final working capital adjustments on July 31, 2022.
+Added: See Note 20 – Subsequent Events for further information on the Company’s sale of taskforce .
+Added: As of May 28, 2022, the Company determined the criteria of classifying the assets and liabilities of taskforce as held for sale was met, which requires us to present the related assets and liabilities as separate line items in our Consolidated Balance Sheet.
+Added: In addition, such assets and liabilities should be presented at the lower of carrying value or fair value less any costs to sell.
+Added: The Company concluded that the agreed-upon transaction price of the business approximates fair value, which exceeded the carrying value of the related assets and liabilities as of May 28, 2022.
+Added: As such, the assets and liabilities related to the sale were recorded and presented at their carrying value.
+Added: The following table presents information related to the major classes of assets and liabilities that were classified as held for sale in our Consolidated Balance Sheets (amounts in thousands):
+Added: Assets & Liabilities Held for Sale
+Added: taskforce - Management on Demand GmbH
Cash and cash equivalents
−Removed: Accounts receivable
+Added: Trade accounts receivable, net of allowance for doubtful accounts
Prepaid expenses and other current assets
−Removed: Intangible assets:
−Removed: Backlog ( 17 months useful life)
−Removed: Customer relationships ( 7 years useful life)
−Removed: Trademarks ( 3 years useful life)
−Removed: Property and equipment
−Removed: Total identifiable assets
−Removed: Accounts payable
−Removed: Accrued expenses and other current liabilities
−Removed: Total liabilities assumed
−Removed: Net identifiable assets acquired
−Removed: Net assets acquired
−Removed: During the years ended May 29, 2021 and May 30, 2020, the fair value of the Veracity contingent consideration liability increased by $ 4.5 million and $ 1.3 million, respectively.
−Removed: Such amounts were recorded in selling, general and administrative expenses in the Consolidated Statements of Operations.
−Removed: In November 2020, the Company paid $ 5.3 million in contingent consideration to the former owners of Veracity relating to the first earn-out period.
−Removed: As of May 29, 2021, the contingent consideration liability related to Veracity for the second and final earn-out period was $ 6.8 million, all of which was included in Other current liabilities in the Consolidated Balance Sheet.
−Removed: As of May 30, 2020, the contingent consideration liability was $ 7.6 million, of which $ 5.0 million was included in Other current liabilities and $ 2.6 million was included in Other long-term liabilities in the Consolidated Balance Sheet.
−Removed: Results of operations of Veracity are included in the Consolidated Statements of Operations from the date of acquisition.
−Removed: Veracity contributed $ 26.2 million to consolidated revenue and $ 6.6 million to income from operations during the year ended May 29, 2021, and $ 18.8 million to consolidated revenue and $ 4.1 million to income from operations during the year ended May 30, 2020.
−Removed: T he Company incurred $ 0.6 million in acquisition costs which were recorded in selling, general and administrative expenses in the Consolidated Statements of Operations during the year ended May 30, 2020.
−Removed: As part of its restructuring initiatives in Europe, the Company completed or substantially completed the dissolution of certain of its foreign subsidiaries in Europe as of May 29, 2021.
−Removed: The dissolutions did not have a material impact on the Company’s financial condition, results of operations or cash flows for the year ended May 29, 2021.
−Removed: See Note 13 – Restructuring Activities for further information on the Company’s restructuring initiatives.
−Removed: Prior Year Dispositions
−Removed: During the fourth quarter of fiscal 2020, the Company discontinued its operations in Belgium, Luxembourg and Norway.
−Removed: All three legal entities were dissolved as of the end of fiscal 2020.
−Removed: In connection with the foregoing sale of assets and exit activities, the Company incurred costs of approximately $ 0.7 million primarily related to employee termination benefits.
−Removed: Such expenses were included in selling, general and administrative expenses in the Consolidated Statements of Operations for the year ended May 30, 2020.
−Removed: None of the markets sold or exited are considered strategic components of the Company’s operations.
−Removed: On September 2, 2019, the Company completed the sale of certain assets and liabilities of its foreign subsidiary, Resources Global Professionals Sweden AB, to Capacent Holding AB (publ), a Swedish public company, for SEK 1,016,862 (approximately $ 105,000 ) in cash, resulting in a loss on sale of assets of approximately $ 38,000 .
−Removed: As a part the sale, the Company transferred the majority of its local customer contracts, the existing office lease as well as all its employee consultants.
−Removed: As a result of the sale, the nearby Denmark and Norway markets also discontinued serving local Sweden customer contracts.
−Removed: In connection with exiting the above-mentioned entities, the Company analyzed the facts and circumstances regarding its historical and current investments, along with its associated accounting and tax positions.
−Removed: Based on the analysis, the Company recorded a tax benefit related to the worthless stock loss in the investment in its wholly owned subsidiaries as well as worthless loans to these subsidiaries.
−Removed: See Note 8 – Income taxes .
+Added: Income taxes receivable
+Added: Intangible assets, net
+Added: Property and equipment, net
+Added: Operating right-of-use assets
+Added: Total assets held for sale
+Added: Accounts payable and accrued expenses
+Added: Accrued salaries and related obligations
+Added: Operating lease liabilities, current
+Added: Other liabilities
+Added: Intercompany balances with other entities
+Added: Operating lease liabilities, noncurrent
+Added: Total liabilities held for sale
+Added: The above-referenced transaction did not qualify as discontinued operations because the sale of taskforce did not represent a strategic shift that has or will have a major effect on the Company’s operations or financial results .
+Added: See Note 2 – Summary of Significant Accounting Policies and Note 20 – Subsequent Events for further information on the Company’s taskforce business.
Intangible Assets and Goodwill
−Removed: The following table presents details of the Company’s intangible assets, estimated lives and related accumulated amortization (dollars in thousands):
+Added: The following table presents details of the Company’s intangible assets, estimated lives and related accumulated amortization (amounts in thousands):
As of May 28, 2022
As of May 29, 2021
−Removed: Customer contracts and relationships ( 3 - 8 years )
+Added: Customer contracts and relationships
+Added: ( 3 - 8 years )
Tradenames ( 3 - 10 years )
6 unchanged sentences
The Company recorded amortization expense of $ 4.9 million, $ 5.2 million, and $ 5.7 million for the years ended May 28, 2022, May 29, 2021 and May 30, 2020, respectively.
−Removed: The following table presents future estimated amortization expense based on existing intangible assets (in thousands):
+Added: The following table presents future estimated amortization expense based on existing intangible assets held for use (amounts in thousands):
As further described in Note 19 – Segment Information and Enterprise Reporting , the Company changed its segment reporting effective in the second quarter of fiscal 2021, and reallocated goodwill to the new reporting units on the relative fair value basis.
Concurrent with the segment change, the Company completed a goodwill impairment assessment, and concluded that no goodwill impairment existed immediately before or after the change in segment reporting.
+Added: The Company’s interim and annual goodwill impairment analysis indicated that there was no related impairment for the fiscal years ended May 28, 2022, May 29, 2021 and May 30, 2020.
The following table summarizes the activity in the Company’s goodwill balance.
−Removed: The prior year information was recast to reflect the impact of the preceding segment change.
−Removed: Amounts are in thousands.
+Added: Fiscal year 2020 information was recast to reflect the impact of the preceding segment change (amounts in thousands):
Other Segments
1 unchanged sentence
Balance as of May 30, 2020
−Removed: Acquisitions (see Note 3)
Impact of foreign currency exchange rate changes
1 unchanged sentence
Impact of foreign currency exchange rate changes
+Added: Impact of held for sale reclass (1)
Balance as of May 28, 2022
+Added: (1) The 2022 decrease is due to taskforce’s goodwill being reclassified as held for sale as of May 28, 2022.
+Added: See Note 4 – Assets and Liabilities Held for Sale .
Property and Equipment
−Removed: Property and equipment consist of the following (in thousands):
+Added: Property and equipment consist of the following (amounts in thousands):
Building and land
1 unchanged sentence
Leasehold improvements
+Added: Property and equipment, gross
accumulated depreciation and amortization
−Removed: Lease cost components included within selling, general and administrative expenses in the Consolidated Statements of Operations were as follows (in thousands):
+Added: Property and equipment, net
+Added: Lease cost components included within selling, general and administrative expenses in the Consolidated Statements of Operations were as follows (amounts in thousands):
For the Years Ended
4 unchanged sentences
Total lease cost
+Added: (1) Sublease income does not include rental income received from owned property.
The weighted-average lease terms and discount rates for operating leases are presented in the following table:
1 unchanged sentence
Weighted average discount rate
−Removed: Cash flow and other information related to operating leases is included in the following table (in thousands):
+Added: Cash flow and other information related to operating leases is included in the following table (amounts in thousands):
For the Years Ended
1 unchanged sentence
Right-of-use assets obtained in exchange for new operating lease obligations
−Removed: Future maturities of operating lease liabilities at May 29, 2021 are presented in the following table (in thousands):
−Removed: Years Ending:
+Added: Future maturities of operating lease liabilities at May 28, 2022 are presented in the following table (amounts in thousands):
Operating Lease Maturity
5 unchanged sentences
Long-Term Debt
−Removed: Pursuant to the terms of the Credit Agreement, dated October 17, 2016, between the Company and Resources Connection LLC, as borrowers, and Bank of America, N.A.
−Removed: as lender (as amended, the “Credit Agreement”), the Company has a $ 120.0 million Facility with Bank of America, which until September 3, 2020, consisted of (i) a $ 90.0 million revolving loan facility (“Revolving Commitment”), which included a $ 5.0 million sublimit for the issuance of standby letters of credit, and (ii) a $ 30.0 million reducing revolving loan facility (“Reducing Revolving Commitment”), any amounts of which may not be reborrowed after being repaid.
−Removed: The Company and Resources Connection LLC, as borrowers, entered into the Fifth Amendment to the Credit Agreement (the “Fifth Amendment”) with Bank of America, N.A.
−Removed: as lender on September 3, 2020, and the Sixth Amendment to the Credit Agreement (the
−Removed: “Sixth Amendment”) with Bank of America, N.A.
−Removed: as lender on May 25, 2021, both of which amended the terms of the Facility.
−Removed: The Fifth Amendment, among other things, (1) eliminated the $ 30.0 million Reducing Revolving Commitment and (2) increased the Revolving Commitment by $ 30.0 million to $ 120.0 million.
−Removed: The Sixth Amendment, among other things, (1) further revised the definition of Consolidated EBITDA in the Credit Agreement to include addbacks for certain restructuring costs (2) included customary provisions relating to the transition from LIBOR as the benchmark interest rate under the Credit Agreement, including providing for a Benchmark Replacement option (as defined in the Credit Agreement) to replace LIBOR, and (3) decreased the interest rate floor as described below.
−Removed: Borrowings under the Facility bear interest at a rate per annum of either, at the Company’s option, (i) a London Interbank Offered Rate (“LIBOR”) defined in the Facility plus a margin or (ii) an alternate base rate, plus a margin, with the applicable margin depending on the Company’s consolidated leverage ratio.
−Removed: The alternate base rate is the highest of (i) Bank of America’s prime rate, (ii) the federal funds rate plus 0.50 % and (iii) the Eurodollar rate plus 1.0 %.
−Removed: Prior to entering into the Fifth Amendment, the margin for loans based on LIBOR was 1.25 % to 1.50 %, the margin for loans based on the alternate base rate was 0.25 % to 0.50 %, and the LIBOR interest rate floor was 0 %.
−Removed: Effective upon entering into the Fifth Amendment, the applicable margin increased by 0.25 % and the LIBOR interest rate floor increased to 0.25 %.
−Removed: Effective upon entering into the Sixth Amendment, the LIBOR interest rate floor was removed and reverted to 0 %.
−Removed: The Company pays an unused commitment fee on the average daily unused portion of the Facility, which, prior to entering into the Fifth Amendment, was a rate of 0.15 % to 0.25 % per annum depending on the Company’s consolidated leverage ratio and, effective upon entering into the Fifth Amendment, is 0.25 % per annum.
−Removed: The unused commitment fee remains at 0.25 % per annum under the Sixth Amendment.
−Removed: The Facility is available for working capital and general corporate purposes, including potential acquisitions and stock repurchases.
−Removed: The Company’s obligations under the Facility are guaranteed by all of the Company’s domestic subsidiaries and certain foreign subsidiaries, and secured by essentially all assets of the Company, Resources Connection LLC and their respective domestic and foreign subsidiaries, subject to certain customary exclusions.
−Removed: The Facility expires on October 17, 2022 .
−Removed: The Facility contains both affirmative and negative covenants.
+Added: Prior to November 12, 2021, the Company had a $ 120.0 million secured revolving credit facility (the “Previous Credit Facility”) with Bank of America, pursuant to the terms of the Credit Agreement dated October 17, 2016 between the Company and Resources Connection LLC, as borrowers, and Bank of America, N.A.
+Added: as lender (as amended, the “Previous Credit Agreement”).
+Added: The Previous Credit Agreement was set to mature on October 17, 2022 .
+Added: On November 12, 2021, the Company, and Resources Connection LLC, and all domestic subsidiaries of the Company, as guarantors entered into a credit agreement with the lenders’ party thereto and Bank of America, N.A.
+Added: as administrative agent for the lenders (the “New Credit Agreement”), and concurrently terminated the Previous Credit Facility .
+Added: The New Credit Agreement provides for a $ 175.0 million senior secured revolving loan (the “New Credit Facility”), which includes a $ 10.0 million sublimit for the issuance of standby letters of credit and a swingline sublimit of $ 20.0 million.
+Added: The New Credit Facility also includes an option to increase the amount of the revolving loan up to an additional $ 75.0 million , subject to the terms of the New Credit Agreement .
+Added: The New Credit Facility matures on November 12, 2026 .
+Added: The obligations under the New Credit Facility are secured by substantially all assets of the Company, Resources Connection LLC and the Company’s domestic subsidiaries.
+Added: Borrowings under the New Credit Facility bear interest at a rate per annum of either, at the Company’s election, (i) Term SOFR (as defined in the New Credit Agreement) plus a margin ranging from 1.25 % to 2.00 % or (ii) the Base Rate (as defined in the New Credit Agreement), plus a margin of 0.25 % to 1.00 % with the applicable margin depending on the Company’s consolidated leverage ratio, which resulted in an interest rate of 2.15 % as of May 28, 2022.
+Added: The Company pays an unused commitment fee on the average daily unused portion of the New Credit Facility, which ranges from 0.20 % to 0.30 % depending upon on the Company’s consolidated leverage ratio.
+Added: The New Credit Agreement contains both affirmative and negative covenants.
Covenants include, but are not limited to, limitations on the Company’s and its subsidiaries’ ability to incur liens, incur additional indebtedness, make certain restricted payments, merge or consolidate and make dispositions of assets.
−Removed: In addition, the Facility requires the Company to comply with financial covenants limiting the Company’s total funded debt, minimum interest coverage ratio and maximum leverage ratio.
−Removed: The Company was compliant with all financial covenants under the Facility as of May 29, 2021 .
−Removed: Upon the occurrence of an event of default under the Facility, the lender may cease making loans, terminate the Facility and declare all amounts outstanding to be immediately due and payable.
−Removed: The Facility specifies a number of events of default (some of which are subject to applicable grace or cure periods), including, among other things, non-payment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults and material judgment defaults.
−Removed: The Company’s borrowings under the Facility were $ 43.0 million and $ 88.0 million as of May 29, 2021 and May 30, 2020, respectively.
−Removed: In addition, the Company had $ 1.3 million of outstanding letters of credit issued under the Facility as of both May 29, 2021 and May 30, 2020.
−Removed: As of May 29, 2021, there was $ 75.7 million remaining capacity under the Facility, and the interest rate on the Company’s borrowings under the Facility was 1.93 %.
−Removed: The following table represents the current and deferred income tax (benefit) provision for federal, state and foreign income taxes attributable to operations (in thousands):
+Added: In addition, the New Credit Agreement requires the Company to comply with financial covenants including limitation on the Company’s total funded debt, minimum interest coverage ratio and maximum leverage ratio.
+Added: The Company was compliant with all financial covenants under the New Credit Agreement as of May 28, 2022.
+Added: As of May 28, 2022, the Company has borrowed $ 54.0 million under the New Credit Facility, and borrowed $ 43.0 million as of May 29, 2021 under the Previous Credit Facility.
+Added: In addition, the Company had $ 1.2 million of outstanding letters of credit issued under the New Credit Facility as of May 28, 2022 and $ 1.3 million of outstanding letters of credit issued under the Previous Credit Facility as of May 29, 2021.
+Added: As of May 28, 2022, there was $ 119.8 million remaining capacity under the New Credit Facility.
+Added: The following table represents the current and deferred income tax expense (benefit) for federal, state and foreign income taxes attributable to operations (amounts in thousands):
For the Years Ended
−Removed: Income before income tax (benefit) expense is as follows (in thousands):
+Added: Income tax expense (benefit)
+Added: Income before income tax expense (benefit) is as follows (amounts in thousands):
For the Years Ended
−Removed: The income tax (benefit) expense differs from the amount that would result from applying the federal statutory rate as follows:
+Added: Income before income tax expense (benefit)
+Added: The income tax expense (benefit) differs from the amount that would result from applying the federal statutory rate as follows:)
For the Years Ended
3 unchanged sentences
Stock-based compensation
−Removed: Long-term net capital gains
−Removed: Foreign tax credit
Valuation allowance
−Removed: Global Intangible Low-Taxed Income (“GILTI”)
+Added: Global Intangible Low-Taxed Income, net of credits
Worthless stock deduction
Worthless debt deduction
−Removed: Permanent items, primarily meals and entertainment
−Removed: Deferred tax impact of U.S.
−Removed: federal rate changes
+Added: Permanent items
Deferred tax impact of foreign rate changes
5 unchanged sentences
rates fluctuates year over year due to the changes in the mix of operating income and losses amongst the various states and foreign jurisdictions in which the Company operates.
−Removed: The components of the net deferred tax asset (liability) consist of the following (in thousands):
+Added: The current year rate benefitted from the improvement in operating results in the international entities, enabling us to utilize the benefits from historical net operating losses in certain foreign jurisdictions by reversing a $ 4.9 million valuation allowance in a specific European entity in the third quarter.
+Added: We also recognized a $ 2.6 million benefit from the dissolution of our France entity.
+Added: The components of the net deferred tax (liability) asset consist of the following (amounts in thousands):
Deferred tax assets:
2 unchanged sentences
Accrued expenses
+Added: Lease liability
Stock options and restricted stock
6 unchanged sentences
Deferred tax liabilities:
−Removed: Property and equipment
Outside basis difference - Sweden investment
2 unchanged sentences
Net deferred tax liability
+Added: (1) Prior year amounts have been reclassified and presented separately for the impact from lease liability and ROU asset to be comparable with the current year presentation.
+Added: There is no change in the resulting net deferred tax liability as reported in the prior year.
In March 2020, the CARES Act was enacted into law.
−Removed: The CARES Act made various tax law changes, including among other things (i) enacting technical corrections so that qualified improvement property can be immediately expensed under IRC Section 168(k) and (ii) allowing federal net operating losses (“NOLs”) incurred in calendar year 2018 to 2020 (RGP’s fiscal years 2019, 2020 and 2021) to be carried back to the five preceding taxable years.
+Added: The CARES Act made various tax law changes, including among other things (i) enacting technical corrections so that qualified improvement property can be immediately expensed under IRC Section 168(k) and (ii) allowing federal net operating losses (“NOLs”) incurred in calendar year 2018 to 2020 (the Company’s fiscal years 2019, 2020 and 2021) to be carried back to the five preceding taxable years.
The NOL carryback is intended to generate tax benefits at higher tax rates in the carryback periods.
1 unchanged sentence
The strategy allowed the Company to carry back the net operating losses of fiscal 2021 to fiscal years 2016 to 2018.
−Removed: The Company recognized a discrete tax benefit of $ 12.8 million in the fourth quarter of fiscal 2021.
+Added: The Company recognized a discrete tax benefit of $ 12.8 million in the fourth quarter of fiscal 2021, and subsequently an additional $ 0.2 million in the fourth quarter of fiscal 2022 after the fiscal year 2021 federal tax return was filed.
The Company had a net income tax receivable of $ 34.0 million as of May 28, 2022 and $ 36.1 million as of May 29, 2021, respectively.
−Removed: The tax benefit associated with the exercise of nonqualified stock options, disqualifying dispositions by employees of shares acquired pursuant to incentive stock options or under the Company’s ESPP, and the grant of restricted stock awards and restricted stock units reduced income taxes payable by $ 0.4 million and $ 0.9 million for the years ended May 29, 2021 and May 30, 2020, respectively.
+Added: We expect to receive our tax refund in the first half of fiscal 2023.
+Added: The tax benefit associated with the exercise of nonqualified stock options and disqualifying dispositions by employees of shares acquired pursuant to incentive stock options or under the Company’s ESPP reduced income taxes payable by $ 2.0 million and $ 0.4 million for the years ended May 28, 2022 and May 29, 2021, respectively.
The Company has foreign net operating loss carryforwards of $ 64.3 million and foreign tax credit carryforwards of $ 0.6 million.
The foreign tax credits will expire beginning in fiscal 2023.
−Removed: The following table summarizes the net operating loss expiration periods.
+Added: The following table summarizes the net operating loss expiration periods (amounts in thousands):
Expiration Periods
1 unchanged sentence
Fiscal Years Ending:
−Removed: (in thousands)
−Removed: The following table summarizes the activity in the Company’s valuation allowance accounts (in thousands):
+Added: The following table summarizes the activity in the Company’s valuation allowance accounts (amounts in thousands):
Realization of deferred tax assets is dependent upon generating sufficient future taxable income.
2 unchanged sentences
If the earnings of the Company’s foreign subsidiaries were to be distributed, management estimates that the income tax impact would be immaterial as a result of the transition tax and federal dividends received deduction for foreign source earnings provided under the US Tax Cuts and Jobs Act of 2017.
−Removed: The following table summarizes the activity related to the gross unrecognized tax benefits (in thousands):
+Added: The following table summarizes the activity related to the gross unrecognized tax benefits (amounts in thousands):
For the Years Ended
Unrecognized tax benefits, beginning of year
−Removed: Gross increases (decreases)-tax positions in prior period
+Added: Gross increases -tax positions in prior period
Gross increases-tax positions in current period
8 unchanged sentences
The Company recognizes interest and penalties related to unrecognized tax benefits as a part of its provision for income taxes.
−Removed: During the fiscal year ended May 29, 2021, the Company accrued for interest of $ 24,000 as a component of the liability for unrecognized tax benefits.
+Added: During the fiscal years ended May 28, 2022 and May 29, 2021, the Company accrued for interest of $ 36,000 and $ 24,000 , respectively, as a component of the liability for unrecognized tax benefits.
Accrued Salaries and Related Obligations
−Removed: Accrued salaries and related obligations consist of the following (in thousands):
+Added: Accrued salaries and related obligations consist of the following (amounts in thousands):
Accrued salaries and related obligations
4 unchanged sentences
Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of trade receivables.
−Removed: However, concentrations of credit risk are limited due to the large number of customers comprising the Company’s customer
−Removed: base and their dispersion across different business and geographic areas.
+Added: However, concentrations of credit risk are limited due to the large number of customers comprising the Company’s client base and their dispersion across different business and geographic areas.
The Company monitors its exposure to credit losses and maintains an allowance for anticipated losses.
−Removed: A significant change in the liquidity or financial position of one or more of the Company’s customers could result in an increase in the allowance for anticipated losses.
−Removed: No single customer accounted for more than 10% of revenue for the years ended May 29, 2021, May 30, 2020 and May 25, 2019.
−Removed: No single customer accounted for more than 10% of trade accounts receivable as of May 29, 2021 and May 30, 2020.
+Added: A significant change in the liquidity or financial position of one or more of the Company’s clients could result in an increase in the allowance for anticipated losses.
+Added: No single client accounted for more than 10% of revenue for the years ended May 28, 2022, May 29, 2021 and May 30, 2020.
+Added: No single client accounted for more than 10% of trade accounts receivable as of May 28, 2022 and May 29, 2021.
Stockholders’ Equity
9 unchanged sentences
Repurchases under the program may take place in the open market or in privately negotiated transactions and may be made pursuant to a Rule 10b5-1 plan.
−Removed: The Company did no t purchase any share of its common stock during the year ended May 29, 2021.
−Removed: During the year ended May 30, 2020, the Company purchased on the open market approximately 0.3 million shares of its common stock at an average price $ 15.70 per share for approximately $ 5.0 million.
+Added: On December 8, 2021, the Company repurchased 1,155,236 shares of the Company’s common stock in a privately negotiated transaction with Dublin Acquisition, LLC (the “Seller”) pursuant to the terms of a Stock Purchase Agreement, dated December 3, 2021, entered into between the Company and the Seller (the “Stock Purchase Agreement”).
+Added: The Stock Purchase Agreement provided that the purchase price per share was $ 17.01 , equal to the lower of (i) the 10 -day volume-weighted average price for the period ending on Friday December 3, 2021 or (ii) the closing price on December 3, 2021.
+Added: The purchased shares had previously been issued to the Seller in connection with the Company’s acquisition of Accretive Solutions, Inc.
+Added: in November 2017.
+Added: The shares of common stock were purchased by the Company pursuant to the Company’s July 2015 Program.
+Added: The Company did no t purchase any shares of its common stock during the year ended May 29, 2021.
+Added: During the year ended May 30, 2020, the Company purchased on the open market approximately 0.3 million shares of its common stock at an average price of $ 15.70 per share for approximately $ 5.0 million.
As of May 28, 2022, approximately $ 65.4 million remained available for future repurchases of the Company’s common stock under the July 2015 Program.
2 unchanged sentences
On April 13, 2022, the board of directors declared a regular quarterly dividend of $ 0.14 per share of the Company’s common stock.
−Removed: The dividend, paid on June 10, 2021 to holders of record as of May 13, 2021, was accrued in the Company’s Consolidated Balance Sheet as of May 29, 2021 for $ 4.6 million.
+Added: The dividend was paid on June 8, 2022 to holders of record as of May 11, 2022.
+Added: As of May 28, 2022 and May 29, 2021, $ 4.6 million was accrued and recorded in other current liabilities in each of the Company’s Consolidated Balance Sheets for dividends declared but not yet paid.
Continuation of the quarterly dividend is at the discretion of the board of directors and depends upon the Company’s financial condition, results of operations, capital requirements, general business condition, contractual restrictions contained in the Company’s current credit agreements and other agreements, and other factors deemed relevant by the board of directors.
+Added: Retirement of Treasury Shares
+Added: On November 8, 2021, the Company retired 31.7 million shares of its common stock held in treasury.
+Added: The shares were returned to the status of authorized but unissued shares.
+Added: As a result, the treasury stock balance decreased by approximately $ 520.7 million.
+Added: In connection with the retirement, the Company reduced its common stock, additional paid-in capital, and retained earnings balances by $ 0.3 million, $ 157.6 million, and $ 362.7 million, respectively.
+Added: Refer to Note 2 — Summary of Significant Accounting Policies for the Company’s accounting policy on the retirement of treasury shares.
Revenue Recognition
1 unchanged sentence
Contract assets represent the Company’s rights to consideration for completed performance under the contract (e.g., unbilled receivables), in which the Company has transferred control of the product or services before there is an unconditional right to payment.
−Removed: Contract assets were $ 36.2 million and $ 30.6 million as of May 29, 2021 and May 30, 2020, respectively, which were included in Accounts Receivable in the Consolidated Balance Sheets.
+Added: Contract assets were $ 42.6 million and $ 36.2 million as of May 28, 2022 and May 29, 2021, respectively, which were included in trade accounts receivable in the Consolidated Balance Sheets.
Contract liabilities represent deferred revenue when cash is received in advance of performance and are presented in other liabilities in the Consolidated Balance Sheets.
Contract liabilities were $ 4.2 million and $ 4.6 million as of May 28, 2022 and May 29, 2021, respectively.
−Removed: The year over year increase of $ 1.7 million was primarily related to an increase in services credits earned by key clients.
+Added: The year over year decrease of $ 0.4 million was primarily related to a decrease in services credits earned by key clients.
Revenues recognized during the year ended May 28, 2022 that were included in deferred revenues as of May 29, 2021 were $ 2.4 million.
2 unchanged sentences
The Company initiated its 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” and, together with the North America and APAC Plan, the “Restructuring Plans”) in September 2020.
−Removed: Both the North America and APAC Plan and the European Plan consisted of two key components:
+Added: The Restructuring Plans consist of two key components:
(i) an effort to streamline the management and organizational structure and eliminate certain positions as well as exit certain markets to focus on core solution offerings and high-growth clients;
−Removed: and (ii) a strategic rationalization of the Company’s physical
−Removed: geographic footprint and real estate spend to focus investment dollars in high growth core markets for greater impact.
−Removed: In connection with the execution of the European Plan, the Company changed its internal management structure and its reporting structure of financial information used to assess performance and allocate resources during the second quarter of fiscal 2021.
−Removed: The Company revised its operating segments accordingly effective in the second quarter of fiscal 2021, resulting in a change to the Company’s reportable segments into RGP and Other Segments.
+Added: and (ii) a strategic rationalization of the Company’s physical geographic footprint and real estate spend to focus investment dollars in high-growth core markets for greater impact.
All of the employee termination and facility exit costs associated with the Company’s restructuring initiatives are within its RGP segment, and are recorded in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations.
−Removed: Unpaid employee termination benefits were included in accounts payable and accrued expenses in the Company’s Consolidated Balance Sheets.
−Removed: See further discussion about the Company’s segment position in Note 2 – Summary of Significant Accounting Policies and Note 18 – Segment Information and Enterprise Reporting .
−Removed: Restructuring costs for the years ended May 29, 2021 and May 30, 2020 were as follows (in thousands):
−Removed: For the Year Ended May 29, 2021
−Removed: For the Year Ended May 30, 2020
−Removed: North America
−Removed: North America
−Removed: and APAC Plan
−Removed: and APAC Plan
+Added: Unpaid employee termination benefits were included in accounts payable and other accrued expenses in the Company’s Consolidated Balance Sheets.
+Added: See Note 2 – Summary of Significant Accounting Policies and Note 19 – Segment Information and Enterprise Reporting for further discussion about the Company’s segment reporting.
+Added: Restructuring costs for the years ended May 28, 2022, May 29, 2021 and May 30, 2020 were as follows (amounts in thousands):
+Added: For the Year Ended
+Added: May 28, 2022
+Added: For the Year Ended
+Added: May 29, 2021
+Added: For the Year Ended
+Added: May 30, 2020
+Added: North America and APAC Plan
+Added: European Plan
+Added: North America and APAC Plan
+Added: European Plan
+Added: North America and APAC Plan
+Added: European Plan
Employee termination costs
1 unchanged sentence
Total restructuring costs
−Removed: Real estate exit costs for the year ended May 29, 2021 consisted of $ 0.4 million in lease early termination costs paid under the European Plan, $ 0.4 million in loss on disposal of property and equipment, including $ 0.2 million under the European Plan and $ 0.2 million under the North America and APAC Plan, and $ 0.9 million of impairment of ROU assets, including $ 0.1 million under the European Plan and $ 0.8 million under the North America and APAC Plan.
+Added: Employee termination costs during fiscal 2022 were insignificant as the Company has substantially completed the planned employee headcount reduction under the Restructuring Plans and recognized substantially all of the expected employee termination costs in connection with the reduction in workforce.
+Added: Any future changes in estimates of total employee termination costs are expected to be immaterial.
+Added: Real estate exit costs for the year ended May 28, 2022 consisted of $ 0.3 million of noncash impairment of ROU assets and $ 0.6 million of loss on disposal of fixed assets and other related costs under the North America and APAC Plan.
+Added: Real estate exit costs for the year ended May 29, 2021 consisted of $ 0.4 million in lease early termination costs, $ 0.4 million in loss on disposal of property and equipment, and $ 0.9 million of impairment of ROU assets.
Other costs incurred under the European Plan for the year ended May 29, 2021 of $ 0.7 million were primarily related to legal and professional fees associated with the exit of certain non-core markets in Europe.
−Removed: Real estate exit costs for the year ended May 30, 2020 consisted of $ 0.6 million of impairment of ROU assets and $ 0.5 million in loss on disposal of property and equipment, both under the North America and APAC Plan.
−Removed: The following table summarizes the employee termination activity under both the North America and APAC Plan and the European Plan for the years ended May 30, 2020 and May 29, 2021 (in thousands):
+Added: Real estate exit costs for the year ended May 30, 2020 consisted of $ 0.6 million of impairment of ROU assets and $ 0.5 million in loss on disposal of property and equipment.
+Added: The following table summarizes the employee termination activity under both the North America and APAC Plan and the European Plan for the years ended May 29, 2021 and May 28, 2022 (amounts in thousands):
Liability balance at May 30, 2020
5 unchanged sentences
Liability balance at May 28, 2022
−Removed: As of May 29, 2021, the Company has substantially completed the planned employee headcount reduction under both the North America and APAC Plan and the European Plan, and has recognized substantially all of the associated expected employee termination costs.
−Removed: The Company expects the remaining liability of $ 0.4 million and $ 0.9 million as of May 29, 2021, for the North America and APAC Plan and European Plan, respectively, to be paid out prior to the end of fiscal 2022.
−Removed: The Company currently expects to incur additional restructuring charges in fiscal 2022 as it continues to exit certain real estate leases in accordance with the Restructuring Plans.
−Removed: The exact amount and timing will depend on a number of variables, including market conditions.
−Removed: Given the current macro environment, particularly the current shift away from commercial real estate occupancy, accelerated by the Pandemic, management believes it could take longer and be more costly to terminate and sublet the Company’s leases, therefore taking longer to realize the expected savings.
+Added: The Company expects the remaining liability of $ 0.4 million recorded in accounts payable and accrued expenses in the Consolidated Balance Sheet as of May 28, 2022 to be paid prior to the end of December 2022.
Stock-Based Compensation Plans
−Removed: T he Company’s stockholders approved the 2020 Plan on October 22, 2020, which replaced and succeeded in its entirety the 2014 Plan.
+Added: T he Company’s stockholders approved the 2020 Performance Incentive Plan (the “2020 Plan”) on October 22, 2020, which replaced and succeeded in its entirety the 2014 Performance Incentive Plan (the “2014 Plan”).
Executive officers and certain employees, as well as non-employee directors of the Company and certain consultants and advisors are eligible to participate in the 2020 Plan.
1 unchanged sentence
(1) 1,797,440 (which represents the number of shares that were available for additional award grant purposes under the 2014 Plan immediately prior to the termination of the authority to grant new awards under the 2014 Plan as of October 22, 2020), plus (2) the number of any shares subject to stock options granted under the 2014 Plan or the Resources Connection, Inc.
−Removed: 2004 Performance Incentive Plan (together with the 2014 Plan, the “Prior Plans”) and outstanding as of October 22, 2020 which expire, or for any reason are cancelled or terminated, after that date without being exercised, plus (3) the
−Removed: number of any shares subject to restricted stock and restricted stock unit awards granted under the Prior Plans that are outstanding and unvested as of October 22, 2020 which are forfeited, terminated, cancelled, or otherwise reacquired after that date without having become vested.
−Removed: Awards under the 2020 Plan may include, but are not limited to, stock options, stock appreciation rights, restricted stock, stock units, stock bonuses and other forms of awards granted or denominated in shares of common stock or units of common stock, as well as certain cash bonus awards .
+Added: 2004 Performance Incentive Plan (together with the 2014 Plan, the “Prior Plans”) and outstanding as of October 22, 2020 which expire, or for any reason are cancelled or terminated, after that date without being exercised, plus (3) the number of any shares subject to restricted stock and restricted stock unit awards granted under the Prior Plans that are outstanding and unvested as of October 22, 2020 which are forfeited, terminated, cancelled, or otherwise reacquired after that date without having become vested.
+Added: Awards under the 2020 Plan may include, but are not limited to, stock options, stock appreciation rights, restricted stock, performance stock, stock units, stock bonuses and other forms of awards granted or denominated in shares of common stock or units of common stock, as well as certain cash bonus awards .
Historically, the Company has granted restricted stock units and stock option awards that typically vest in equal annual installments, and restricted stock awards vest based on an individual grant basis as described in the award agreement.
Stock option grants typically terminate ten years from the date of grant.
+Added: During fiscal 2022, the Company issued stock unit awards under the 2020 Plan that will vest upon the achievement of certain Company-wide performance targets at the end of a defined three-year performance period.
+Added: Vesting periods for restricted stock, restricted stock units and stock option awards range from three to four years .
As of May 28, 2022, there were 1,715,208 shares available for further award grants under the 2020 Plan.
1 unchanged sentence
Stock-based compensation expense included in selling, general and administrative expenses was $ 8.2 million, $ 6.6 million and $ 6.1 million for the years ended May 28, 2022, May 29, 2021 and May 30, 2020, respectively.
−Removed: These amounts consisted of stock-based compensation expense related to employee stock options, employee stock purchases made via the ESPP, restricted stock awards, restricted stock units and stock units credited under the Directors Deferred Compensation Plan.
+Added: These amounts consisted of stock-based compensation expense related to employee stock options, employee stock purchases made via the ESPP, restricted stock awards, restricted stock units, performance stock units and stock units credited under the Directors Deferred Compensation Plan.
+Added: The Company recognizes stock-based compensation expense on time-vesting equity awards ratably over the applicable vesting period based on the grant date fair value, net of estimated forfeitures.
+Added: Expense related to the liability-classified awards reflects the change in fair value during the reporting period.
+Added: The number of performance stock units earned at the end of the performance period may equal, exceed or be less than the targeted number of shares depending on whether the performance criteria are met, surpassed or not met.
+Added: During each reporting period, the Company uses the latest forecasted results to estimate the number of shares to be issued at the end of the performance period.
+Added: Any resulting changes to stock compensation expense are adjusted in the period in which the change in estimates occur.
Stock Options
3 unchanged sentences
Awards outstanding at May 29, 2021
−Removed: Forfeited (1)
Awards outstanding at May 28, 2022
1 unchanged sentence
Vested and expected to vest at May 28, 2022 ( 1 )
−Removed: (1) For stock options forfeited, represent one share for each stock option forfeited.
(1) The expected to vest options are the result of applying the pre-vesting forfeiture rate assumptions to options not yet vested of 645,449 and 1,321,496 as of May 28, 2022 and May 29, 2021, respectively.
2 unchanged sentences
The total estimated fair value of stock options that vested during the years ended May 28, 2022, May 29, 2021 and May 30, 2020 was $ 2.2 million, $ 3.2 million and $ 3.5 million, respectively.
+Added: As of May 28, 2022, there was $ 1.4 million of total unrecognized compensation cost related to unvested and outstanding employee stock options.
+Added: That cost is expected to be recognized over a weighted-average period of 0.91 years.
Valuation and Expense Information for Stock Based Compensation Plans
−Removed: There were no employee stock option grants during the year ended May 29, 2021.
−Removed: The weighted average estimated fair value per share of employee stock options granted during the years ended May 30, 2020 and May 25, 2019 was $ 3.88 and $ 4.74 , respectively, using the Black-Scholes model with the following assumptions:
−Removed: For the Years Ended
+Added: There were no employee stock options granted during the years ended May 28, 2022 and May 29, 2021.
+Added: The weighted average estimated fair value per share of employee stock options granted during the year ended May 30, 2020 was $ 3.88 , using the Black-Scholes model with the following assumptions:
+Added: For the Year Ended
Expected volatility
30.9 % - 32.9 %
−Removed: 31.6 % - 34.7 %
Risk-free interest rate
1.5 % - 1.8 %
−Removed: 3.1 % - 3.2 %
Expected dividends
2 unchanged sentences
5.6 - 8.1 years
−Removed: 5.7 - 8.3 years
+Added: Employee Stock Purchase Plan
+Added: On October 15, 2019, the Company’s stockholders approved the ESPP which superseded the 2014 Employee Stock Purchase Plan.
+Added: The maximum number of shares of the Company’s common stock authorized for issuance under the ESPP is 1,825,000 .
+Added: The Company’s ESPP allows qualified employees (as defined in the ESPP) to purchase designated shares of the Company’s common stock at a price equal to 85 % of the lesser of the fair market value of common stock at the beginning or end of each semi-annual stock purchase period.
+Added: The Company issued 462,000 , 506,000 and 400,000 shares of common stock pursuant to the ESPP for the years ended May 28, 2022, May 29, 2021 and May 30, 2020, respectively.
+Added: There were 672,000 shares of common stock available for issuance under the ESPP as of May 28, 2022.
Restricted Stock Awards
8 unchanged sentences
Restricted Stock Units
−Removed: On January 1, 2018, the Company adopted the Directors Deferred Compensation Plan, which provides the members of the Company’s board of directors who are not officers or employees of the Company the opportunity to defer certain compensation and equity awards paid or granted for their service in the form of stock units (“Stock Units”).
−Removed: The Stock Units are used solely as a device for determining the amount of cash benefit to eventually be paid to the director.
−Removed: Each has the same value as one share of Resources Connection, Inc.
+Added: In 2018, the Company adopted the amended and restated Directors Deferred Compensation Plan, which provides the non-employee members of the Company’s board of directors with the opportunity to defer certain cash compensation and equity awards earned or granted for their service in the form of stock units (“Stock Units”).
+Added: The Stock Units are used solely as a device for determining the amount of cash eventually paid to the director.
+Added: Each Stock Unit has the same value as one share of Resources Connection, Inc.
common stock.
−Removed: Stock Units must be retained until the director leaves the board of directors, at which time the cash value of the Stock Units is paid out.
+Added: Stock Units are not paid out until the director leaves the board of directors, at which time the cash value of the Stock Units is paid out in accordance with terms of the plan and the director’s election.
Additional Stock Units are credited to reflect dividends paid on shares of Resources Connection, Inc.
common stock.
−Removed: Stock Units credited to a director pursuant to an election to defer compensation (and any dividend equivalents credited thereon) are fully vested at all times.
+Added: Stock Units credited to a director pursuant to an election to defer cash compensation (and any dividend equivalents credited thereon) are fully vested at all times.
Stock Units credited to a director pursuant to an election to defer an equity award are subject to the vesting conditions applicable to the equity award, except that dividend equivalents credited to a director with respect to such Stock Units are vested at all times.
1 unchanged sentence
Any change in fair value is recorded as stock-based compensation expense in the period.
−Removed: The Company recognizes stock-based compensation on these Stock Units using the straight-line method over the requisite service period.
+Added: The Company recognizes stock-based compensation expense on these Stock Units using the straight-line method over the requisite service period.
The Company also grants restricted stock units to its employees under the 2020 Plan, which are classified as equity awards.
9 unchanged sentences
Expected to vest as of May 28, 2022
−Removed: As of May 29, 2021, there was $ 6.2 million of total unrecognized compensation cost related to unvested restricted stock units.
+Added: As of May 28, 2022, there was $ 5.8 million of total unrecognized compensation cost related to unvested restricted stock units (which are the restricted stock units granted under the 2020 Plan that settle in shares of the Company’s common stock) .
The cost is expected to be recognized over a weighted-average period of 1.87 years.
+Added: As of May 28, 2022, there was $ 0.8 million of total unrecognized compensation cost related to unvested liability-classified restricted stock units (which are the stock units credited under the Directors Deferred Compensation Plan that settle in cash).
+Added: That cost is expected to be recognized over a weighted average period of 1.78 years.
The weighted average estimated fair value per share of restricted stock units granted during the years ended May 28, 2022, May 29, 2021 and May 30, 2020 was $ 18.25 , $ 11.51 and $ 14.98 , respectively.
−Removed: Employee Stock Purchase Plan
−Removed: On October 15, 2019, the Company’s stockholders approved the ESPP which superseded the 2014 Employee Stock Purchase Plan.
−Removed: The maximum number of shares of the Company’s common stock authorized for issuance under the ESPP is 1,825,000 .
−Removed: The Company’s ESPP allows qualified employees (as defined in the ESPP) to purchase designated shares of the Company’s common stock at a price equal to 85 % of the lesser of the fair market value of common stock at the beginning or end of each semi-annual stock purchase period.
−Removed: The Company issued 506,000 , 400,000 and 358,000 shares of common stock pursuant to the ESPP for the years ended May 29, 2021, May 30, 2020 and May 25, 2019, respectively.
−Removed: There were 1,134,355 shares of common stock available for issuance under the ESPP as of May 29, 2021.
−Removed: The Company has a defined contribution 401(k) plan (“the plan”) which covers all employees in the U.S.
+Added: Performance Stock Units
+Added: During the second quarter of fiscal 2022, the Company issued performance stock units to certain members of management and other select employees.
+Added: The total number of shares that would vest under the performance stock units will be determined at the end of the three-year performance period based on the Company’s achievement of certain revenue and Adjusted EBITDA percentage targets over the performance period.
+Added: The total number of shares that may be earned for these awards based on performance over the performance period ranges from zero to 150 % of the target number of shares.
+Added: The following table summarizes the activities for the unvested performance stock units for the year ended May 28, 2022 (amounts in thousands, except weighted average grant-date fair value):
+Added: Weighted Average Grant-Date Fair Value
+Added: Outstanding at May 29, 2021
+Added: Unvested as of May 28, 2022
+Added: Expected to vest as of May 28, 2022
+Added: (1) Shares granted during the year ended May 28, 2022 are presented at the stated target, which represents the base number of shares that would vest.
+Added: Actual shares that vest may be 0 - 150 % of the target based on the achievement of the specific company-wide performance targets.
+Added: As of May 28, 2022, there was $ 3.2 million of total unrecognized compensation cost related to unvested performance stock units.
+Added: That cost is expected to be recognized over a weighted-average period of 1.99 years.
+Added: The Company maintains the Resources Global Professionals 401(k) Savings Plan, a defined contribution plan (the “401(k) Plan”) which generally covers all employees in the U.S.
who have completed 90 days of service and are age 21 or older.
−Removed: Participants may contribute up to 50 % of their annual salary up to the maximum amount allowed by statute.
−Removed: As defined in the plan agreement, the Company may make matching contributions in such amount, if any, up to a maximum of 6 % of individual employees’ annual compensation.
−Removed: The Company, at its sole discretion, determines the matching contribution made from quarter to quarter.
−Removed: For the years ended May 29, 2021, May 30, 2020 and May 25, 2019, the Company contributed $ 6.2 million, $ 6.5 million and $ 6.4 million, respectively, to the plan as Company matching contributions.
+Added: Participants may contribute up to 75 % of their annual salary, up to the maximum amount allowed by applicable law.
+Added: Pursuant to the terms of the 401(k) Plan, the Company may make discretionary matching contributions.
+Added: The Company, at its sole discretion, determines the matching contribution made at each pay period.
+Added: For the years ended May 28, 2022, May 29, 2021 and May 30, 2020, the Company contributed $ 8.1 million, $ 6.2 million and $ 6.5 million, respectively, to the 401(k) Plan as Company matching contributions.
Supplemental Disclosure of Cash Flow Information
−Removed: Additional information regarding cash flows is as follows (in thousands):
+Added: Additional information regarding cash flows is as follows (amounts in thousands):
For the Years Ended
5 unchanged sentences
Liability for contingent consideration
−Removed: Acquisition of taskforce:
−Removed: Liability for contingent consideration
Acquisition of Expertence:
3 unchanged sentences
Dividends declared, not paid
−Removed: The $ 18.0 million income taxes paid during the year ended May 29, 2021 was partially due to the tax method change that the Company elected to make related to the capitalization of certain fixed assets as part of its overall tax planning strategies.
−Removed: See further discussion in Note 8 – Income Taxes .
Commitments and Contingencies
9 unchanged sentences
The tables below reflect the operating results of the Company’s segments consistent with the management and performance measurement system utilized by the Company.
−Removed: All prior year periods presented were recast to reflect the impact of the preceding segment changes.
+Added: Fiscal 2020 results were recast to reflect the impact of the preceding segment changes.
Performance measurement is based on segment Adjusted EBITDA.
−Removed: Adjusted EBITDA is defined as net income before amortization of intangible assets, depreciation expense, interest and income taxes plus stock-based compensation expense, restructuring costs, and plus or minus contingent consideration adjustments.
+Added: Adjusted EBITDA is defined as net income before amortization expense, depreciation expense, interest and income taxes plus stock-based compensation expense, restructuring costs, technology transformation costs, and plus or minus contingent consideration adjustments.
Adjusted EBITDA at the segment level excludes certain shared corporate administrative costs that are not practical to allocate.
−Removed: The Company’s Chief Operating Decision Maker does not evaluate segments using asset information.
−Removed: Amounts are in thousands.
+Added: The Company’s CODM does not evaluate segments using asset information.
For the Years Ended
+Added: (Amounts in thousands)
Other Segments
−Removed: Total revenues
+Added: Total revenue
Adjusted EBITDA:
3 unchanged sentences
(1) Reconciling items are generally comprised of u nallocated corporate administrative costs, including management and board compensation, corporate support function costs and other general corporate costs that are not allocated to segments.
−Removed: (2) Fiscal year 2020 consisted of 53 weeks.
−Removed: Fiscal year 2021 and Fiscal year 2019 consisted of 52 weeks.
−Removed: The below is a reconciliation of the Company’s net income to Adjusted EBITDA for all periods presented (amounts in thousands).
+Added: (2) A reconciliation of the Company’s net income to Adjusted EBITDA on a consolidated basis is presented below.
+Added: The table below represents a reconciliation of the Company’s net income to Adjusted EBITDA for all periods presented:
For the Years Ended
−Removed: Amortization of intangible assets
+Added: (Amounts in thousands)
+Added: Amortization expense
Depreciation expense
Interest expense, net
−Removed: Income tax (benefit) expense
+Added: Income tax expense (benefit)
Stock-based compensation expense
1 unchanged sentence
Contingent consideration adjustment
+Added: Technology transformation costs (1)
Adjusted EBITDA
+Added: (1) Technology transformation costs in fiscal 2022 represent costs included in net income related to the Company’s initiative to upgrade its technology platform globally, including a cloud-based enterprise resource planning system and talent acquisition and management system.
+Added: Such costs primarily include software licensing costs, third-party consulting fees and costs associated with dedicated internal resources that are not capitalized.
The table below represents the Company’s revenue and long-lived assets by geographic location (amounts in thousands):
5 unchanged sentences
Subsequent Events
−Removed: Repayment on Revolving Credit Facility
−Removed: On June 9, 2021, the Company repaid $ 10.0 million on its Facility, reducing its outstanding borrowing under the Facility to $ 33.0 million.
+Added: Sale of taskforce
+Added: On April 21, 2022, RGP Germany entered into the Sale and Purchase Agreement for the sale of taskforce to Purchasers owned by the original founder and a member of the senior leadership team of taskforce .
+Added: The Sale and Purchase Agreement provided for the sale of all of the shares of taskforce from RGP Germany to the Purchasers for a purchase price of approximately EUR 5.5 million (approximately $ 5.9 million), subject to final working capital adjustments on July 31, 2022, with 50 % of the consideration to be paid in cash in connection with the closing and the remaining 50 % payable on July 1, 2024 and bearing interest based on the Company’s average borrowing interest rate .
+Added: On May 27, 2022, the Company received a purchase payment of EUR 2.5 million (approximately $ 2.7 million) in cash prior to the closing of the sale.
+Added: The amount has been recorded as cash and cash equivalents with a corresponding increase in other liabilities in the Consolidated Balance Sheet as of May 28, 2022.
+Added: The sale of taskforce was completed o n May 31, 2022.
+Added: The Company considers the Purchasers of taskforce to be related parties as defined in ASC 850 , Related Party Disclosures .
+Added: See Note 2 – Summary of Significant Accounting Policies and Note 4 – Assets and Liabilities Held for Sale for further information on the Company’s taskforce business .
+Added: The above-referenced transaction did not qualify as discontinued operations because the sale of taskforce did not represent a strategic shift that has or will have a major effect on the Company’s operations or financial results.
+Added: Repayment under the New Credit Facility
+Added: The Company elected to repay a total of $ 34.0 million under the New Credit Facility on June 16, 2022 and subsequently borrowed $15.0 million on July 22, 2022.
CHAN GES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
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.