RESOURCES CONNECTION, INC. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. RESOURCES CONNECTION, INC. CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm 47 Consolidated Balance Sheets as of May 2 5 , 202 4 and May 2 7 , 20 23 50 Consolidated Statements of Operations for each of the three years in the period ended May 2 5 , 20 24 51 Consolidated Statements of Comprehensive Income for each of the three years in the period ended May 2 5 , 20 24 52 Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended May 2 5 , 20 24 53 Consolidated Statements of Cash Flows for each of the three years in the period ended May 2 5 , 20 24 54 Notes to Consolidated Financial Statements 55 46 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Resources Connection, Inc. Opinions on the Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Resources Connection, Inc. and its subsidiaries (the “Company”) as of May 25, 2024 and May 27, 2023, and the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended May 25, 2024, and the related notes (collectively the “financial statements”). We also have audited the Company's internal control over financial reporting as of May 25, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of May 25, 2024 and May 27, 2023, and the results of its operations and its cash flows for each of the three years in the period ended May 25, 2024, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 25, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Basis for Opinions The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's financial statements and an opinion on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with 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. 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, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements 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. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 47 Table of Contents Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee of the board of directors and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Valuation of RGP Reporting Unit for Goodwill Impairment Testing As described in Notes 2 and 5 to the financial statements, the Company’s goodwill balance assigned to the RGP reporting unit was $216.6 million. The Company tests for impairment of goodwill at the reporting unit level at least annually and whenever events occur or circumstances indicate that a carrying amount of goodwill may not be recoverable. The Company determined the fair value of the RGP reporting unit using a discounted cash flow methodology. When determining the fair value of the RGP reporting unit management makes significant estimates and assumptions, including revenue growth rates, projected operating costs, and discount rates. We identified the valuation of the RGP reporting unit for goodwill impairment testing as a critical audit matter given the significant estimates and assumptions management makes to determine the fair value of the RGP reporting unit including revenue growth rates, projected operating costs, and discount rates utilized. Auditing the reasonableness of management’s estimates and assumptions required a high degree of auditor judgment and an increased audit effort, including the involvement of our valuation specialists. Our audit procedures related to the valuation of the Company’s RGP reporting unit included the following, among others: • We obtained an understanding of the relevant controls related to the valuation of the Company’s RGP reporting unit and tested such controls for design and operating effectiveness, including management review controls. • We evaluated the reasonableness of management’s forecasts of revenue growth rates by comparing the forecasts to (1) historical results, and (2) external market and industry data. • We tested the reasonableness of management’s revenue projections by comparing management’s prior forecasts of future revenues to historical results for the Company. • We evaluated the reasonableness of management’s forecasts of operating costs as a percentage of revenue by comparing the forecasts to the historical results, and comparison to guideline public companies. • With the assistance of our valuation specialists, we evaluated the reasonableness of the Company’s valuation methodology and significant assumptions by: ◦ Evaluating the reasonableness of the discount rate by comparing the underlying source information to publicly available market data and verifying the accuracy of the calculations. ◦ Evaluating the appropriateness of the valuation method used by management and testing their mathematical accuracy. Valuation of CloudGo Pte Ltd. acquisition-date contingent consideration As described in Note 3 to the financial statements, the Company acquired CloudGo Pte Ltd. (“CloudGo”) in November 2023. The total consideration on the acquisition date for CloudGo amounted to approximately $12.2 million, which included an estimated acquisition-date fair value contingent consideration of approximately $4.4 million. The contingent consideration may be paid based on the achievement of certain revenue and operating profit margin performance during two one-year performance periods that begin after the acquisition date. The acquisition-date fair value of the contingent consideration was estimated using a Monte Carlo simulation model. In estimating the acquisition-date fair value of the contingent consideration, management was required to make significant judgments in formulating the significant estimates and assumptions about future revenue and operating expenses when utilizing the aforementioned valuation method. We identified the Company’s valuation of the contingent consideration related to the acquisition of CloudGo as a critical audit matter due to the high degree of auditor judgment, including the use of our valuation specialists, involved in 48 Table of Contents performing procedures and evaluating audit evidence related to significant estimates and assumptions utilized by management, including revenue and operating expenses, when calculating the fair value of the contingent consideration. Our audit procedures related to the Company’s valuation of the contingent consideration in connection with the aforementioned acquisition included the following, among others: • We obtained an understanding of the relevant controls related to the valuation of the contingent consideration and tested such controls for design and operating effectiveness, including management review controls. • We evaluated the reasonableness of management’s forecasts of revenue and operating expenses by comparing the forecasts to (1) the historical results, and (2) external market and industry data. • With the assistance of our valuation specialists, we evaluated the reasonableness of the Company’s valuation model that reflects the use of multiple probabilities. /s/ RSM US LLP We have served as the Company’s auditor since 2012. Irvine, California July 22, 2024 49 Table of Contents RESOURCES CONNECTION, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except par value per share) May 25, 2024 May 27, 2023 ASSETS Current assets: Cash and cash equivalents $ 108,892 $ 116,784 Trade accounts receivable, net of allowances of $ 2,755 and $ 3,283 as of May 25, 2024 and May 27, 2023, respectively 108,515 137,356 Prepaid expenses and other current assets 6,888 5,187 Assets held for sale 8,909 - Income taxes receivable 7,551 4,739 Total current assets 240,755 264,066 Goodwill 216,579 206,722 Intangible assets, net 9,573 11,521 Property and equipment, net 3,763 15,380 Operating right-of-use assets 11,899 15,856 Deferred tax assets 11,312 10,701 Other non-current assets 17,033 7,753 Total assets $ 510,914 $ 531,999 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and other accrued expenses $ 15,223 $ 14,464 Accrued salaries and related obligations 41,999 64,776 Operating lease liabilities, current 4,735 7,460 Other liabilities 10,476 10,384 Total current liabilities 72,433 97,084 Long-term debt - - Operating lease liabilities, non-current 8,586 10,274 Deferred tax liabilities 8,680 7,136 Other non-current liabilities 2,452 2,985 Total liabilities 92,151 117,479 Commitments and contingencies (Note 17) Stockholders’ equity: Preferred stock, $ 0.01 par value, 5,000 shares authorized; zero shares issued and outstanding - - Common stock, $ 0.01 par value, 70,000 shares authorized; 36,194 and 35,545 shares issued, and 33,556 and 33,475 shares outstanding as of May 25, 2024 and May 27, 2023, respectively 363 355 Additional paid-in capital 389,720 378,657 Accumulated other comprehensive loss ( 17,713 ) ( 17,290 ) Retained earnings 88,595 87,648 Treasury stock at cost, 2,638 and 2,070 shares as of May 25, 2024 and May 27, 2023, respectively ( 42,202 ) ( 34,850 ) Total stockholders’ equity 418,763 414,520 Total liabilities and stockholders’ equity $ 510,914 $ 531,999 The accompanying notes are an integral part of these consolidated financial statements. 50 Table of Contents RESOURCES CONNECTION, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) For the Years Ended May 25, 2024 May 27, 2023 May 28, 2022 Revenue $ 632,801 $ 775,643 $ 805,018 Direct cost of services 386,733 462,501 488,376 Gross profit 246,068 313,142 316,642 Selling, general and administrative expenses 208,864 228,842 224,721 Amortization expense 5,378 5,018 4,908 Depreciation expense 3,050 3,539 3,575 Goodwill impairment - 2,955 - Income from operations 28,776 72,788 83,438 Interest (income) expense, net ( 1,064 ) 552 1,064 Other expense (income) 11 ( 382 ) ( 594 ) Income before income tax expense 29,829 72,618 82,968 Income tax expense 8,795 18,259 15,793 Net income $ 21,034 $ 54,359 $ 67,175 Net income per common share: Basic $ 0.63 $ 1.63 $ 2.04 Diluted $ 0.62 $ 1.59 $ 2.00 Weighted-average number of common and common equivalent shares outstanding: Basic 33,445 33,407 32,953 Diluted 33,895 34,185 33,556 Cash dividends declared per common share $ 0.56 $ 0.56 $ 0.56 The accompanying notes are an integral part of these consolidated financial statements. 51 Table of Contents RESOURCES CONNECTION, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) For the Years Ended May 25, 2024 May 27, 2023 May 28, 2022 Net income $ 21,034 $ 54,359 $ 67,175 Foreign currency translation adjustment, net of tax ( 423 ) ( 806 ) ( 9,091 ) Total comprehensive income $ 20,611 $ 53,553 $ 58,084 The accompanying notes are an integral part of these consolidated financial statements. 52 Table of Contents RESOURCES CONNECTION, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands, except per share amounts) Common Stock Additional Paid-in Capital Treasury Stock Other Comprehensive Loss Retained Earnings Total Stockholders' Equity Shares Amount Shares Amount Balances as of May 29, 2021 64,626 $ 646 $ 489,864 31,741 $ ( 520,800 ) $ ( 7,393 ) $ 367,229 $ 329,546 Exercise of stock options 834 8 11,949 - - - - 11,957 Stock-based compensation expense - - 7,027 - - - - 7,027 Issuance of common stock purchased under Employee Stock Purchase Plan 462 5 5,174 - - - - 5,179 Issuance of restricted stock 97 1 ( 1 ) ( 2 ) - - - - Issuance of common stock upon vesting of restricted stock units, net shares withheld to cover taxes 72 1 ( 1,096 ) - - - - ( 1,095 ) Amortization of restricted stock issued out of treasury stock to board of director members - - ( 24 ) - 114 - ( 50 ) 40 Cash dividends declared ($ 0.56 per share) - - - - - - ( 18,638 ) ( 18,638 ) Retirement of treasury stock ( 31,739 ) ( 317 ) ( 157,646 ) ( 31,739 ) 520,686 - ( 362,723 ) - Repurchase of common stock - - - 1,155 ( 19,651 ) - - ( 19,651 ) Dividend equivalents on equity awards - - 255 - - - ( 255 ) - Currency translation adjustment - - - - - ( 9,091 ) - ( 9,091 ) Net income for the year ended May 28, 2022 - - - - - - 67,175 67,175 Balances as of May 28, 2022 34,352 $ 344 $ 355,502 1,155 $ ( 19,651 ) $ ( 16,484 ) $ 52,738 $ 372,449 Exercise of stock options 624 5 9,026 - - - - 9,031 Stock-based compensation expense - - 9,270 - - - - 9,270 Issuance of common stock purchased under Employee Stock Purchase Plan 393 4 5,995 - - - - 5,999 Issuance of restricted stock 97 1 ( 1 ) - - - - - Issuance of common stock upon vesting of restricted stock units, net shares withheld to cover taxes 79 1 ( 1,763 ) - - - ( 5 ) ( 1,767 ) Cash dividends declared ($ 0.56 per share) - - - - - - ( 18,816 ) ( 18,816 ) Repurchase of common stock - - - 915 ( 15,199 ) - - ( 15,199 ) Dividend equivalents on equity awards - - 628 - - - ( 628 ) - Currency translation adjustment - - - - - ( 806 ) - ( 806 ) Net income for the year ended May 27, 2023 - - - - - - 54,359 54,359 Balances as of May 27, 2023 35,545 $ 355 $ 378,657 2,070 $ ( 34,850 ) $ ( 17,290 ) $ 87,648 $ 414,520 Exercise of stock options 32 1 451 - - - - 452 Stock-based compensation expense - - 5,703 - - - - 5,703 Issuance of common stock purchased under Employee Stock Purchase Plan 456 5 5,646 - - - - 5,651 Issuance of restricted stock 75 1 ( 1 ) ( 38 ) 648 - ( 648 ) - Issuance of common stock upon vesting of restricted stock units, net shares withheld to cover taxes 86 1 ( 1,336 ) - - - - ( 1,335 ) Cash dividends declared ($ 0.56 per share) - - - - - - ( 18,839 ) ( 18,839 ) Repurchase of common stock - - - 606 ( 8,000 ) - - ( 8,000 ) Dividend equivalents on equity awards - - 600 - - - ( 600 ) - Currency translation adjustment - - - - - ( 423 ) - ( 423 ) Net income for the year ended May 25, 2024 - - - - - - 21,034 21,034 Balances as of May 25, 2024 36,194 $ 363 $ 389,720 2,638 $ ( 42,202 ) $ ( 17,713 ) $ 88,595 $ 418,763 The accompanying notes are an integral part of these consolidated financial statements. 53 Table of Contents RESOURCES CONNECTION, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Years Ended May 25, 2024 May 27, 2023 May 28, 2022 Cash flows from operating activities: Net income $ 21,034 $ 54,359 $ 67,175 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 8,428 8,557 8,483 Stock-based compensation expense 5,732 9,521 8,168 Contingent consideration adjustment ( 4,400 ) - 166 Loss or (gain) on dissolution of subsidiaries - 220 ( 884 ) Goodwill impairment - 2,955 - Adjustment to allowances 137 1,440 557 Deferred income taxes 440 ( 9,701 ) ( 11,053 ) Other, net 910 ( 230 ) 1,488 Changes in operating assets and liabilities, net of dispositions: Trade accounts receivable 29,631 13,552 ( 44,756 ) Prepaid expenses and other current assets ( 766 ) 294 916 Income taxes ( 3,252 ) 30,027 2,057 Other assets ( 9,862 ) ( 4,067 ) ( 393 ) Accounts payable and other accrued expenses 305 1,551 1,022 Accrued salaries and related obligations ( 24,531 ) ( 21,535 ) 21,996 Other liabilities ( 1,887 ) ( 5,307 ) ( 5,498 ) Net cash provided by operating activities 21,919 81,636 49,444 Cash flows from investing activities: Proceeds from sale of taskforce - 5,953 - Proceeds from sale of assets - 2 - Acquisition of CloudGo, net of cash acquired ( 7,411 ) - - Investments in property and equipment and internal-use software ( 1,143 ) ( 2,012 ) ( 2,961 ) Net cash (used in) provided by investing activities ( 8,554 ) 3,943 ( 2,961 ) Cash flows from financing activities: Proceeds from exercise of stock options 465 10,070 13,105 Proceeds from issuance of common stock under Employee Stock Purchase Plan 5,651 5,999 5,179 Repurchase of common stock ( 8,000 ) ( 15,199 ) ( 19,651 ) Payment of contingent consideration liabilities - - ( 3,575 ) Proceeds from Revolving Credit Facility - 15,000 73,393 Repayments on Revolving Credit Facility - ( 69,000 ) ( 63,000 ) Payment of debt issuance costs - - ( 222 ) Payment of cash dividends ( 18,825 ) ( 18,784 ) ( 18,600 ) Net cash used in financing activities ( 20,709 ) ( 71,914 ) ( 13,371 ) Effect of exchange rate changes on cash ( 548 ) ( 1,105 ) ( 3,034 ) Net (decrease) increase in cash ( 7,892 ) 12,560 30,078 Cash and cash equivalents at beginning of period 116,784 104,224 74,391 Cash, cash equivalents and restricted cash at end of period 108,892 116,784 104,469 Less: Restricted cash at end of period - - ( 245 ) Cash and cash equivalents at end of period $ 108,892 $ 116,784 $ 104,224 Supplemental cash flow disclosures Income taxes paid (refund), net $ 11,161 $ ( 2,913 ) $ 24,619 Interest paid $ 352 $ 962 $ 1,047 Non-cash investing and financing activities Capitalized leasehold improvements paid directly by landlord $ - $ - $ 7 Dividends declared, not paid $ 4,695 $ 4,681 $ 4,647 The accompanying notes are an integral part of these consolidated financial statements. 54 Table of Contents RESOURCES CONNECTION, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Description of the Company and its Business Resources Connection, Inc. (the “Company”), a Delaware corporation, was incorporated on November 16, 1998. The Company’s operating entities provide services primarily under the name Resources Global Professionals (“RGP”). 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. 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. 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. Fiscal years 2024, 2023 and 2022 consisted of four 13-week quarters and included a total of 52 weeks of activity in each fiscal year. 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation 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. All significant intercompany accounts and transactions have been eliminated in consolidation. Reporting Segments Effective May 31, 2022, the Company’s operating segments consist of the following: • RGP – a global consulting firm focused on project execution services that power clients’ operational needs and change initiatives utilizing on-demand, experienced and diverse talent; and • Sitrick – a crisis communications and public relations firm which operates under the Sitrick brand, providing corporate, financial, transactional and crisis communication and management services. Each of these 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. Sitrick does not individually meet the quantitative threshold to qualify as a reportable segment. Therefore, Sitrick is the only entity disclosed in Other Segments in fiscal 2024 and 2023. Each of these segments represents a reporting unit for the purposes of assessing goodwill for impairment. On November 15, 2023, the Company acquired CloudGo Pte Ltd. and its subsidiaries (collectively, “CloudGo”). CloudGo is reported as part of the RGP operating segment. See Note 3 – Acquisitions and Dispositions for further information. On May 31, 2022, the Company divested taskforce – Management on Demand GmbH, and its wholly-owned subsidiary skillforce – Executive Search GmbH, a German professional services firm operating under the taskforce brand (“ taskforce ”); see Note 3 – Acquisitions and Dispositions for further information. Since the second quarter of fiscal 2021 and prior to the divestment, the business operated by taskforce , along with its parent company, Resources Global Professionals (Germany) GmbH (“RGP Germany”), an affiliate of the Company, represented an operating segment of the Company and was reported as a part of Other Segments in fiscal 2022. Prior-period comparative segment information was not restated as a result of the divestiture of taskforce as the Company did not have a change in internal organization or the financial information that the CODM uses to assess performance and allocate resources. See Note 18 – Segment Information and Enterprise Reporting for further information. 55 Table of Contents Reclassifications Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no effect on previously reported totals for assets, liabilities, stockholders’ equity, cash flows or net income. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions 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. Although management believes these estimates and assumptions are adequate, actual results could differ from the estimates and assumptions used. Revenue Recognition The Company generates substantially all of its revenues from providing professional consulting services to its clients. 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. 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. Certain clients may receive discounts (for example, volume discounts or rebates) to the amounts billed. These discounts or rebates are considered variable consideration. 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. Rebates are the largest component of variable consideration and are estimated using the most-likely-amount method, contracts terms and estimates of revenue. 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. 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. Time incurred represents work performed, which corresponds with, and therefore best depicts, the transfer of control to the client. Management uses significant judgments when estimating the total hours expected to complete the contract performance obligation. It is possible that updated estimates for consulting engagements may vary from initial estimates with such updates being recognized in the period of determination. Depending on the timing of billings and services rendered, the Company accrues or defers revenue as appropriate. The Company recognizes revenues primarily on a gross basis as it acts as a principal for primarily all of its revenue transactions. The Company has concluded that gross reporting is appropriate because it controls the services before they are transferred to the customers. The Company a) has the risk of identifying and hiring qualified consultants; b) has the discretion to select the consultants and establish the price and responsibilities for services to be provided; c) is primarily responsible for fulfilling the promise to provide the service to the customer; and d) bears the risk for services provided that are not fully paid for by clients. The Company recognizes all reimbursements received from clients for “out-of-pocket” expenses as revenue and all such expenses as direct cost of services. Reimbursements received from clients were $ 4.3 million, $ 4.7 million and $ 4.1 million for the years ended May 25, 2024, May 27, 2023, and May 28, 2022, respectively. Commissions earned by the Company’s sales professionals are considered incremental and recoverable costs of obtaining a contract with a customer. The Company elected to apply the practical expedient to expense sales commissions as incurred as the expected amortization period is one year or less. Sales commissions are recorded in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations. During the years ended May 25, 2024, May 27, 2023 and May 28, 2022, sales commission expense was $ 2.8 million, $ 3.3 million, and $ 6.8 million, respectively. The Company’s clients are contractually obligated to pay the Company for all hours billed. The Company invoices most of its clients on a weekly basis or, in certain circumstances, on a bi-weekly or monthly basis, and its typical arrangement of payment is due within 30 days. To a much lesser extent, in certain circumstances, the Company also earns revenue if one of its consultants is hired by, or if the Company places an outside candidate with, its client. Conversion fees or permanent placement fees are recognized when one of the Company’s professionals, or a candidate identified by the Company, accepts an offer of permanent employment from a client and all requisite terms of the agreement have been met. Such conversion fees or permanent placement fees are recognized when the performance obligation is considered complete, 56 Table of Contents which the Company considers a) when the consultant or candidate accepts the position; b) the consultant or candidate has notified either RGP or their current employer of their decision; and c) the start date is within the Company’s current quarter. Conversion fees were 0.3 %, of revenue for each of the years ended May 25, 2024, May 27, 2023 and May 28, 2022. Permanent placement fees were 0.2 %, 0.3 % and 0.6 % of revenue for the years ended May 25, 2024, May 27, 2023 and May 28, 2022, respectively. The Company’s contracts generally have termination-for-convenience provisions and do not have termination penalties. 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. 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 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. Gains and losses from foreign currency transactions are included in selling, general and administrative expenses in the Consolidated Statements of Operations. Per Share Information The Company presents both basic and diluted earnings per share (“EPS”). Basic EPS is calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Performance stock units are excluded from the basic EPS calculation, since the number of shares subject to the award that will vest will not be determined until after the end of the applicable performance period. Diluted EPS is based upon the weighted-average number of common shares and common equivalent shares outstanding during the period, calculated using the treasury stock method. Under the treasury stock method, exercise proceeds include the amount the employee must pay for exercising stock options, the amount of compensation cost related to stock awards for future services that the Company has not yet recognized and the amount of tax benefits that would be recorded when the award becomes deductible. Common equivalent shares are excluded from the computation in periods in which they have an anti-dilutive effect. Stock options for which the exercise price exceeds the average market price over the period are anti-dilutive and are excluded from the calculation. 57 Table of Contents The following table summarizes the calculation of net income per share for the years ended May 25, 2024, May 27, 2023 and May 28, 2022 (in thousands, except per share amounts): For the Years Ended May 25, 2024 May 27, 2023 May 28, 2022 Net income $ 21,034 $ 54,359 $ 67,175 Weighted-average shares outstanding: Basic weighted-average shares 33,445 33,407 32,953 Effect of dilutive shares: Weighted-average shares — Basic 33,445 33,407 32,953 Potentially dilutive stock options 48 359 369 Potentially dilutive employee stock purchase plan 14 8 - Potentially dilutive restricted stock awards 56 64 44 Potentially dilutive restricted stock units 179 233 185 Potentially dilutive performance stock units 153 114 5 Diluted weighted-average shares outstanding 33,895 34,185 33,556 Net income per common share: Basic $ 0.63 $ 1.63 $ 2.04 Dilutive $ 0.62 $ 1.59 $ 2.00 Anti-dilutive shares not included above 2,152 704 1,759 Cash and Cash Equivalents The Company considers cash on hand, deposits in banks, and short-term investments purchased with an original maturity date of three months or less to be cash and cash equivalents. 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. Restricted Cash Restricted cash consists of cash and claims to cash that are restricted as to withdrawal or usage. This includes cash designated for specific use in an acquisition or dissolution. Financial Instruments The fair value of the Company’s financial instruments reflects the amounts that the Company estimates it will receive in connection with the sale of an asset in an orderly transaction between market participants at the measurement date (exit price). The fair value hierarchy prioritizes the use of inputs used in valuation techniques into the following three levels: Level 1 – Quoted prices in active markets for identical assets and liabilities. Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets. Level 3 – Unobservable inputs. Contingent consideration liability is for estimated future contingent consideration payments related to the Company’s acquisitions. Total contingent consideration liabilities related to the acquisition of CloudGo were preliminarily valued at $ 4.4 million as of November 25, 2023 and zero as of May 25, 2024. The fair value measurement of the liability was based on significant inputs not observed in the market and thus represents a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the contingent consideration liability were the Company’s measures of the estimated payouts based on internally generated financial projections and discount rates. The fair value of contingent consideration liability will be remeasured on a quarterly basis until settlement by the Company using additional 58 Table of Contents information as it becomes available, and any change in the fair value estimates will be recorded in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations. 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. The Company’s remaining financial instruments, including cash and cash equivalents, trade accounts receivable, accounts payable and other 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. Allowance for Credit Losses The Company maintains an allowance for credit losses for estimated losses resulting from its clients’ failure to make required payments for services rendered. Management estimates this allowance based upon knowledge of the financial condition of the Company’s clients (which may not include knowledge of all significant events), review of historical receivable and reserve trends and other pertinent information. 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. The following table summarizes the activity in the allowance for credit losses (in thousands): Beginning Balance Charged to Operations Currency Rate Changes Other (Write-offs)/ Recoveries Ending Balance Years Ended: May 28, 2022 $ 2,032 $ 557 $ ( 14 ) $ ( 39 ) $ ( 415 ) $ 2,121 May 27, 2023 $ 2,121 $ 1,440 $ 1 $ - $ ( 279 ) $ 3,283 May 25, 2024 $ 3,283 $ 137 $ 5 $ 2 $ ( 672 ) $ 2,755 Assets and Liabilities Held for Sale Assets and liabilities held for sale primarily represent property and equipment, and other assets and liabilities that have met the criteria of “held for sale” accounting, as specified by ASC 360, Property, Plant, and Equipment . The effect of suspending amortization on noncurrent assets held for sale is immaterial to the results of operations. The Company records assets and liabilities held for sale at the lower of carrying value or fair value less cost to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset or disposal group until the date of sale. On February 24, 2024, the Company determined the asset groups associated with the corporate office in Irvine, California met the criteria of held for sale, since the Company intends to complete the sale of these assets within the twelve months following the end of the third quarter of fiscal 2024. The Company concluded that the offering price of the disposal assets was an approximate fair value. See Note 4 – Assets and Liabilities Held for Sale for further information. Property and Equipment Property and equipment is stated at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the following estimated useful lives: Building 30 years Furniture and fixtures 5 to 10 years Leasehold improvements Lesser of useful life of asset or term of lease Computer, equipment and software 3 to 5 years Costs for normal repairs and maintenance are expensed to operations as incurred, while renewals and major refurbishments are capitalized. 59 Table of Contents Long-lived Assets The Company evaluates the recoverability of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The impairment test is comprised of two steps. The first step compares the carrying amount of the asset to the sum of expected undiscounted future cash flows. If the sum of expected undiscounted future cash flows exceeds the carrying amount of the asset, no impairment is taken. 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. The Company recorded an impairment against its right of use ("ROU") assets and leasehold improvements of $ 0.2 million , zero and $ 0.8 million for the years ended May 25, 2024, May 27, 2023 and May 28, 2022, 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. Goodwill and Intangible Assets Goodwill is recorded at the time of an acquisition and is calculated as the difference between the aggregate consideration paid for an acquisition and the fair value of the net tangible and intangible assets acquired. Goodwill is not subject to amortization but the carrying value is tested for impairment on an annual basis in the fourth quarter of the fiscal year, or more frequently if the Company believes indicators of impairment exist. Impairment evaluations involve management’s assessment of qualitative factors to determine whether it is more likely than not that goodwill is impaired. If management concludes from its assessment of qualitative factors that it is more likely than not that impairment exists, then a quantitative impairment test will be performed. Significant management judgment is required in the forecasts of future operating results that are used in these evaluations. Impairment testing is conducted at the reporting unit level. Application of the goodwill impairment test requires judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the Company’s business, and determination of the Company’s weighted average cost of capital. Under Accounting Standards Codification (“ASC”) 350, Intangibles - Goodwill and Other , the qualitative assessment requires the consideration of factors such as recent market transactions, macroeconomic conditions, and changes in projected future cash flows or planned revenue or earnings of the reporting unit as potential indicators when determining the need for a quantitative assessment of impairment. During the fourth quarter, we voluntarily changed the date of the annual impairment test from the last day of the fourth quarter to the first day of the fourth quarter. This voluntary change is preferable under the circumstances as it results in better alignment with our business operating process. This change was applied prospectively and was not material to the Company’s consolidated financial statements as it did not delay, accelerate or avoid an impairment charge. On the first day of the fourth quarter of fiscal 2024, the Company performed an annual goodwill impairment on its RGP reporting unit and elected to perform a quantitative goodwill impairment analysis. As a result of the quantitative impairment test performed on February 25, 2024, the Company concluded that there was no goodwill impairment. Furthermore, there have been no changes in facts, circumstances or events, since the date of the Company's goodwill impairment test through May 25, 2024 that would give rise to modifying this conclusion regarding our goodwill impairment assessment or require further testing. However, the Company concluded in fiscal 2023 that the carrying amount of the Sitrick reporting unit exceeded its fair value, which resulted in an impairment charge of $ 3.0 million on the goodwill associated with the Other Segments on the Consolidated Statements of Operations as of May 27, 2023. There was no goodwill impairment during the year-ended May 28, 2022. The Company’s identifiable intangible assets include customer contracts and relationships, and computer software, including internally-developed software. These assets are amortized on a straight-line basis over lives ranging from two to thirteen years . For intangible assets subject to amortization, if the estimated undiscounted expected future cash flows are less than the 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. The Company reviewed its intangible assets and did not identify any impairment as of May 25, 2024, May 27, 2023 and May 28, 2022. See Note 5 — Goodwill and Intangible Assets for a further description of the Company’s goodwill and intangible assets, including information about the Company’s goodwill impairment assessment. Leases The Company currently leases office space, vehicles and certain equipment under operating leases expiring through 2030. At May 25, 2024, the Company had no finance leases. 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 60 Table of Contents leases require variable payments of common area maintenance, operating expenses and real estate taxes applicable to the property. Variable payments are excluded from the measurements of lease liabilities and are expensed as incurred. Any tenant improvement allowances received from the lessor are recorded as a reduction to rent expense over the term of the lease. None of the Company’s lease agreements contained residual value guarantees or material restrictive covenants. The Company has not entered into any real estate lease arrangements where it occupies the entire building. As such, the Company does not have any separate land lease components embedded within any of its real estate leases. The Company determines if an arrangement is a lease at the inception of the contract. 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. The Company’s lease liability is recognized as of the lease commencement date at the present value of the lease payments over the lease term. The Company’s ROU asset is recognized as of the lease commencement date at the amount of the corresponding lease liability, adjusted for prepaid lease payments, lease incentives received, and initial direct costs incurred. The Company evaluates its ROU assets for impairment consistent with its policy for evaluating long-lived assets for impairment. See “Long-lived Assets” above. 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. Operating lease expense is recognized on a straight-line basis over the lease term, and is recognized in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations. Most of the Company’s leases do not provide an implicit rate that can be readily determined. Therefore, the Company uses a discount rate based on its incremental borrowing rate and the information available at the commencement date. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a fully collateralized basis over a similar term in an amount equal to the total lease payments in a similar economic environment. The Company has a centrally managed treasury function; therefore, the portfolio approach is applied in determining the incremental borrowing rate. Application at the portfolio level is not materially different from applying guidance at the individual lease level. Certain of the Company’s leases include one or more options to renew or terminate the lease at the Company’s discretion. Generally, the renewal and termination options are not included in the ROU assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates lease renewal and termination options and, when they are reasonably certain of exercise, includes the renewal or termination option in the lease term. In some instances, the Company subleases excess office space to third-party tenants. The Company, as sublessor, continues to account for the head lease. 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. The Company has elected the practical expedient that allows lessees to choose to not separate lease and non-lease components by class of underlying asset and is applying this expedient to all real estate asset classes. 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. See Note 7 — Leases for further information on the Company’s leases. Capitalized Hosting Arrangements The capitalized hosting arrangements costs are primarily related to the Company’s implementation of a cloud-based enterprise resource planning system and talent acquisition and management system. Such costs include third party implementation costs and costs associated with internal resources directly involved in the implementation. Capitalized hosting arrangements are stated at historical cost and amortized on a straight-line basis over an estimated useful life of the expected term of the hosting arrangement, taking into consideration several other factors such as, but not limited to, options to extend the hosting arrangement or options to terminate the hosting arrangement. The amortization of capitalized implementation costs for hosting arrangements will commence when the systems are ready for their intended use and will be presented as operating expenses on the Company’s Consolidated Statements of Operations consistent with the presentation for expensing the fees for the associated hosting arrangement. 61 Table of Contents As of May 25, 2024 and May 27, 2023, the capitalized costs related to hosting arrangements incurred during the application development stage were $ 16.1 million and $ 6.0 million, respectively. These capitalized hosting arrangements are included in other non-current assets on the Consolidated Balance Sheets. During the year ended May 25, 2024, there was less than $ 0.2 million of amortization. No costs were amortized during the year ended May 27, 2023. Stock-Based Compensation 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, as amended (the “ESPP”), based on estimated fair value at the date of grant. 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. 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. 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. 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. Income Taxes The Company recognizes deferred income taxes for the estimated tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established to reduce deferred tax assets to the amount expected to be realized when, in management’s opinion, it is more likely than not that some portion of the deferred tax assets will not be realized. The provision for income taxes represents current taxes payable net of the change during the period in deferred tax assets and liabilities. 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. 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. The Company recognizes interest and penalties related to income tax matters, if applicable, in income tax expense. Share Repurchases and Retirement of Treasury Shares The Company’s stock repurchase program authorizes the Company to repurchase shares at the discretion of the Company’s senior executives based on numerous factors, including, without limitation, share price and other market conditions, the Company’s ongoing capital allocation planning, the levels of cash and debt balances, and other demands for cash. The Company records the shares repurchased as treasury stock based on the amount paid to repurchase its shares. Direct costs incurred to acquire treasury stock are treated like stock issue costs and added to the cost of the treasury stock. 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. When the repurchase price is greater than the original issue proceeds, the excess is charged to retained earnings. 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. The Company believes that this allocation method is preferable 62 Table of Contents 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. See Note 12 — Stockholders’ Equity for further information on the repurchase of shares. Recent Accounting Pronouncements Recently Issued Accounting Guidance On December 14, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance is intended to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is evaluating the potential impact of this guidance on its financial statement disclosures. On November 27, 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The guidance is intended to improve reportable segment disclosure requirements for public entities primarily through enhanced disclosures about significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit. This guidance is effective for annual periods beginning after December 15, 2023, and for interim periods beginning after December 15, 2024. The Company is evaluating the potential impact of this guidance on its financial statement disclosures. Recently Adopted Accounting Guidance On October 9, 2023, FASB issued ASU 2023-06, Disclosure Improvements. The effective date for the ASU is immediately after the new Accounting Standards Codification (“ASC”) 260, Earnings Per Share is updated. The Company adopted the guidance effective with the quarter ending November 25, 2023 and prior periods to the date of adoption are presented in accordance with ASC 260 – Earnings Per Share. Other recent changes in authoritative accounting pronouncements did not, or are not expected to, have a materially significant effect on the Company’s consolidated financial statements. 3. Acquisitions and Dispositions Acquisition of CloudGo On November 15, 2023, the Company acquired 100 % of the equity interests in CloudGo pursuant to the terms of a Share Purchase Agreement entered into by and between the Company, CloudGo, and the shareholders of CloudGo (the “CloudGo SPA”). Headquartered in Singapore, CloudGo is a digital transformation firm primarily focused on technology implementation through the ServiceNow platform. The Company paid cash consideration of $ 7.4 million (net of $ 0.3 million of cash acquired). In addition, the CloudGo SPA provides for contingent consideration of up to $ 12.0 million to be paid based on CloudGo’s revenue and operating profit margin performance during two one-year performance periods that began after the acquisition date. The Company determined the fair value of the contingent consideration as of the acquisition date using the Monte Carlo simulation model and the application of an appropriate discount rate (Level 3 fair value). The preliminary fair value of the contractual obligation to pay the contingent consideration amounted to $ 4.4 million. Due to a revision in the Company's estimate in the fourth quarter of fiscal 2024, the Company decreased the fair value of the CloudGo contingent consideration liability to zero as of May 25, 2024. The estimate of fair value of contingent consideration liability requires assumptions to be made of various levels of potential revenue and operating profit performance as well as discount rates. 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. Results of operations of CloudGo are included in the Consolidated Statements of Operations from the date of acquisition. CloudGo contributed $ 4.2 million of revenue to the consolidated results of operations during the year ended May 25, 2024 post close of the transaction. During the year ended May 25, 2024, the Company incurred $ 2.0 million of 63 Table of Contents acquisition related costs in connection with the acquisition of CloudGo and Reference Point . Such costs were recorded in selling, general and administrative expenses in the Consolidated Statements of Operations. In accordance with ASC 805, the Company made an initial provisional allocation of the purchase price for CloudGo based on the fair value of the assets acquired and liabilities assumed, with the residual amount recorded as goodwill. The Company’s provisional purchase price allocation considered a number of factors, including the valuation of identifiable intangible assets. In connection with this acquisition, the Company provisionally recorded total intangible assets consisting of $ 3.1 million for customer relationships (to be amortized over 9 to 12 years). The Company also provisionally recorded $ 9.6 million of goodwill. The goodwill is attributable primarily to expected synergies and the assembled workforce of CloudGo. The following table summarizes the consideration for the acquisition of CloudGo and the provisional amounts of the identified assets acquired and liabilities assumed at the acquisition date: Fair value of consideration transferred (in thousands): Cash $ 7,753 Contingent consideration 4,400 Total $ 12,153 Recognized provisional amounts of identifiable assets acquired and liabilities assumed (in thousands): Cash and cash equivalents $ 342 Trade accounts receivable (1) 778 Prepaid expenses and other current assets 78 Income taxes receivable 2 Intangible assets 3,100 Property and equipment 36 Other non-current assets 13 Total identifiable assets 4,349 Accounts payable and other accrued expenses 411 Accrued salaries and related obligations 366 Deferred tax liabilities 490 Other liabilities 566 Total liabilities assumed 1,833 Net identifiable assets acquired 2,516 Goodwill 9,637 Net assets acquired $ 12,153 (1) As of the acquisition date, the gross contractual amount of accounts receivable of $ 0.8 million was expected to be fully collected, and was subsequently collected. The purchase price allocation described above is preliminary with respect to the valuation of intangible assets acquired, goodwill, tax related matters, and the amount of contingent consideration. A final determination of fair value of assets acquired and liabilities assumed relating to the acquisition could differ from the preliminary purchase price allocation. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable, but no later than one year from the acquisition date. The weighted-average useful life of CloudGo’s customer relationships and intangible assets is approximately 10.94 years. 64 Table of Contents Sale of taskforce On April 21, 2022, RGP Germany entered into a Sale and Purchase Agreement (the “ taskforce SPA”) to sell its business in taskforce to MoveVision – Management-, Beteiligungs- und Servicegesellschaft mbH and Blue Elephant – Management-, Beteiligungs- und Servicegesellschaft mbH (collectively, the “Purchasers”), which are owned by the original founder and a member of the senior leadership team of taskforce , respectively. The taskforce SPA 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, subject to final working capital adjustments, 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 plus 285 basis points, compounded annually. On May 31, 2022, the Company completed the sale of taskforce . Upon conclusion of the Final Completion Accounts and Calculation (as defined in the taskforce SPA), the final purchase price was determined to be EUR 5.5 million (approximately $ 6.0 million), of which EUR 2.8 million (approximately $ 3.0 million) was received in cash and EUR 2.7 million (approximately $ 3.0 million) should become due in July 2024 in accordance with the taskforce SPA. During fiscal year 2023, the Company received full payment from the purchasers of taskforce on the note receivable in the amount of EUR 2.7 million (approximately $ 3.0 million), which included an interest payment. The Company recognized a $ 0.2 million gain on the sale during the year ended May 27, 2023, which was recorded in other income in the Company’s Consolidated Statements of Operations. During fiscal 2023, the Company completed the dissolution of the following three foreign subsidiaries: Compliance.co.uk Ltd, Resources Compliance (UK) Ltd and RGP Poland spolka z ograniczona odpowiedzialnoscia. The Company recognized a total net loss on dissolutions of $ 0.5 million during fiscal 2023. As part of its restructuring effort in Europe which began in fiscal 2021, the Company initiated the wind-down and dissolution of certain entities. During fiscal 2022, the Company completed the dissolution of the following three foreign subsidiaries: 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. The Company recognized a total gain on dissolutions of $ 0.9 million during fiscal 2022. The net gain or loss on the dissolutions of these subsidiaries in both fiscal years was primarily related to the recognition of the accumulated translation adjustment associated with the foreign subsidiaries, which was reclassified from accumulated other comprehensive loss in the Company’s Consolidated Balance Sheet and included in selling, general and administrative expenses in the Company’s Consolidated Statement of Operations for the year ended May 27, 2023 and May 28, 2022, respectively. See Note 14 – Restructuring Activities for further information on the Company’s restructuring initiatives. None of the markets sold or exited in fiscal 2023 and 2022 were considered strategic components of the Company’s operations. 4. Assets and Liabilities Held for Sale As of February 24, 2024, the Company determined the asset groups associated with its corporate office in Irvine, California met the criteria of held for sale, since the Company intends to complete the sale of these assets within the twelve months following the end of the third quarter of fiscal 2024. Accordingly, the related assets classified as held for sale are separately presented in our Consolidated Balance Sheets as of May 25, 2024. In addition, such assets are presented at the lower of carrying value or fair value less any costs to sell. The Company concluded that the offering price of the disposal assets was an approximate fair value, which exceeded the carrying value of the related assets as of May 25, 2024. As such, the assets held for sale are reported at their carrying value. 65 Table of Contents The following table presents information related to the major classes of assets that were classified as held for sale in our Consolidated Balance Sheets (in thousands): Assets Held for Sale As of Irvine Office Building May 25, 2024 Building and land $ 14,309 Leasehold improvements 321 Furniture and fixtures 1,565 Total assets held for sale, gross 16,195 Less: accumulated depreciation and amortization ( 7,286 ) Total assets held for sale, net $ 8,909 The Company entered into a Purchase and Sale Agreement dated May 15, 2024, and as amended and restated as of May 20, 2024, with a third-party buyer for the sale of its Irvine Building for a total purchase price of $ 13.0 million. The anticipated closing date for the sale of the property is August 15, 2024. 5. Goodwill and Intangible Assets There were no impairments during the fiscal years ended May 25, 2024 and May 28, 2022. During the third quarter of fiscal 2023, the Company completed an interim goodwill impairment analysis for Sitrick, a strategic and crisis communications business acquired in 2009. Many of Sitrick’s target clients were impacted by the initial closures of U.S. courts during the COVID-19 pandemic (the “Pandemic”) and the continued lingering impact on the court system despite the reopening, resulting in less opportunities and a slower revenue conversion typically provided by Sitrick. The Company determined that the carrying value of Sitrick, also a reporting unit, was in excess of its fair value and recorded a non-cash impairment charge of $ 3.0 million during the third quarter of fiscal 2023. This impairment reduced the goodwill within the Other Segments to zero as of May 27, 2023. See Note 2 – Summary of Significant Accounting Policies for further information. The following table summarizes the activity in the Company’s goodwill balance (in thousands): RGP Other Segments Total Company Balance as of May 28, 2022 $ 206,830 $ 2,955 $ 209,785 Goodwill impairment - ( 2,955 ) ( 2,955 ) Impact of foreign currency exchange rate changes ( 108 ) - ( 108 ) Balance as of May 27, 2023 $ 206,722 $ - $ 206,722 Acquisition (See Note 3) 9,637 - 9,637 Impact of foreign currency exchange rate changes 220 - 220 Balance as of May 25, 2024 $ 216,579 $ - $ 216,579 The following table presents details of the Company’s intangible assets, estimated lives and related accumulated amortization (in thousands, except for estimated useful life): As of May 25, 2024 As of May 27, 2023 Estimated Useful Life Gross Accumulated Amortization Net Carrying Amount Gross Accumulated Amortization Net Carrying Amount Customer contracts and relationships 7 - 12 years $ 25,100 $ ( 16,858 ) $ 8,242 $ 22,000 $ ( 13,802 ) $ 8,198 Computer software 1 - 3.5 years 7,870 ( 6,539 ) 1,331 7,541 ( 4,218 ) 3,323 Total $ 32,970 $ ( 23,397 ) $ 9,573 $ 29,541 $ ( 18,020 ) $ 11,521 66 Table of Contents The weighted-average useful lives of the customer contracts and relationships, and computer software are approximately 5.0 years, and 2.5 years, respectively. The weighted-average useful life of all of the Company’s intangible assets is 4.6 years. The Company recorded amortization expense of $ 5.4 million, $ 5.0 million, and $ 4.9 million for the years ended May 25, 2024, May 27, 2023 and May 28, 2022, respectively. The following table presents future estimated amortization expense based on existing intangible assets held for use (in thousands): Fiscal Years: 2025 $ 4,102 2026 2,792 2027 592 2028 2,087 Total $ 9,573 Actual future estimated amortization expense could differ from these estimated amounts as a result of future acquisitions, dispositions, impairments, and other factors or changes. 6. Property and Equipment Property and equipment consist of the following (in thousands): As of May 25, 2024 As of May 27, 2023 Building and land $ — $ 14,309 Computers, equipment and software 8,303 15,444 Leasehold improvements 10,719 12,900 Furniture 4,417 7,579 Property and equipment, gross $ 23,439 $ 50,232 Less: accumulated depreciation and amortization ( 19,676 ) ( 34,852 ) Property and equipment, net $ 3,763 $ 15,380 On February 24, 2024, the Company determined the asset groups associated with the corporate office in Irvine, California met the criteria of held for sale. As a result, the Company transferred such asset groups previously used in operations to assets held for sale in its Consolidated Balance Sheet as of May 25, 2024. See Note 4 - Assets and Liabilities Held for Sale for more information. 7. Leases Lease cost components included within selling, general and administrative expenses in the Consolidated Statements of Operations were as follows (in thousands): For the Years Ended May 25, 2024 May 27, 2023 May 28, 2022 Operating lease cost $ 7,280 $ 7,242 $ 8,766 Short-term lease cost 192 118 89 Variable lease cost 1,586 1,279 22 Sublease income ( 1 ) ( 740 ) ( 516 ) ( 994 ) Total lease cost $ 8,318 $ 8,123 $ 7,883 (1) Sublease income does not include rental income received from owned property. 67 Table of Contents The weighted-average lease terms and discount rates for operating leases are presented in the following table: As of May 25, 2024 As of May 27, 2023 Weighted-average remaining lease term 3.5 years 3.4 years Weighted-average discount rate 4.37 % 3.97 % Cash flow and other information related to operating leases is included in the following table (in thousands): For the Years Ended May 25, 2024 May 27, 2023 May 28, 2022 Cash paid for amounts included in the measurement of operating lease liabilities $ 8,406 $ 9,258 $ 11,187 Right-of-use assets obtained in exchange for new operating lease obligations $ 3,707 $ 4,688 $ 1,748 Future maturities of operating lease liabilities at May 25, 2024 are presented in the following table (in thousands): Fiscal Years Operating Lease Maturity 2025 $ 5,482 2026 3,589 2027 2,329 2028 1,938 2029 1,113 Thereafter 305 Total future lease payments 14,756 Less: interest ( 1,435 ) Present value of operating lease liabilities $ 13,321 The Company, as a lessor, leases approximately 13,000 square feet of the approximately 57,000 square feet of a company-owned building located in Irvine, California to independent third parties and has operating lease agreements for sublet space with independent third parties expiring in fiscal 2025. Rental income received for the years ended May 25, 2024, May 27, 2023 and May 28, 2022 totaled $ 142,000 , $ 195,000 and $ 199,000 , respectively. Under the terms of these operating lease agreements, rental income from such third-party leases is expected to be $ 8,344 in fiscal 2025. 8. Long-Term Debt On November 12, 2021, the Company and Resources Connection LLC, as borrowers, and all of the Company’s domestic subsidiaries, as guarantors entered into a credit agreement with the lenders that are party thereto and Bank of America, N.A. as administrative agent for the lenders (the “Credit Agreement”), and concurrently terminated the then existing credit facility, which provided a $ 120.0 million revolving loan. The Credit Agreement provides for a $ 175.0 million senior secured revolving loan (the “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. The 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 Credit Agreement. The Credit Facility matures on November 12, 2026. The obligations under the Credit Facility are secured by substantially all assets of the Company, Resources Connection LLC and all of the Company’s domestic subsidiaries. Future borrowings under the Credit Facility bear interest at a rate per annum of either, at the Company’s election, (i) Term SOFR (as defined in the Credit Agreement) plus a margin ranging from 1.25 % to 2.00 % or (ii) the Base Rate (as defined in the Credit Agreement), plus a margin of 0.25 % to 1.00 % with the applicable margin depending on the Company’s consolidated leverage ratio. In addition, the Company pays an unused commitment fee on the average daily unused portion of the Credit Facility, which ranges from 0.20 % to 0.30 % depending upon the Company’s consolidated leverage ratio. 68 Table of Contents The 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. In addition, the Credit Agreement requires the Company to comply with financial covenants including limitations on the Company’s total funded debt, minimum interest coverage ratio and maximum leverage ratio. The Company was compliant with all financial covenants under the Credit Agreement as of May 25, 2024. As of May 25, 2024 and May 27, 2023, the Company had no debt outstanding under the Credit Facility. In addition, the Company had $ 1.4 million and $ 0.8 million of outstanding letters of credit issued under the Credit Facility as of May 25, 2024 and May 27, 2023, respectively. As of May 25, 2024, there was $ 173.6 million of remaining capacity under the Credit Facility. On November 2, 2022 , Resources Global Enterprise Consulting (Beijing) Co., Ltd. (a wholly-owned subsidiary of the Company), as borrower, and the Company, as guarantor, entered into a RMB 13.4 million (USD $ 1.8 million based on the prevailing exchange rate on November 2, 2022 ) revolving credit facility with Bank of America, N.A. (Beijing) as the lender (the “Beijing Revolver”). The Beijing Revolver bears interest at loan prime rate plus 0.80 %. Interest incurred on borrowings will be payable monthly in arrears. As of May 25, 2024 , the Company had no debt outstanding under the Beijing Revolver and RMB 13.4 million ($ 1.9 million based on the prevailing exchange rate on May 25, 2024 ) in available credit. The availability of proceeds under the Beijing Revolver is at the lender's absolute discretion and may be terminated at any time by the lender, with or without prior notice to the borrower. 9. Income Taxes The following table represents the current and deferred income tax expense (benefit) for federal, state and foreign income taxes attributable to operations (in thousands): For the Years Ended May 25, 2024 May 27, 2023 May 28, 2022 Current: Federal $ 3,245 $ 19,317 $ 20,210 State 1,422 6,323 4,131 Foreign 3,596 2,945 2,464 8,263 28,585 26,805 Deferred: Federal 935 ( 6,613 ) ( 5,838 ) State 273 ( 1,357 ) 1,884 Foreign ( 676 ) ( 2,356 ) ( 7,058 ) 532 ( 10,326 ) ( 11,012 ) Income tax expense $ 8,795 $ 18,259 $ 15,793 Income before income tax expense is as follows (in thousands): For the Years Ended May 25, 2024 May 27, 2023 May 28, 2022 Domestic $ 23,084 $ 60,835 $ 68,416 Foreign 6,745 11,783 14,552 Income before income tax expense $ 29,829 $ 72,618 $ 82,968 69 Table of Contents The income tax expense (benefit) differs from the amount that would result from applying the federal statutory rate as follows: For the Years Ended May 25, 2024 May 27, 2023 May 28, 2022 Statutory tax rate 21.0 % 21.0 % 21.0 % State taxes, net of federal benefit 4.6 5.6 5.7 Non-U.S. rate adjustments 2.8 1.4 0.7 Stock-based compensation 2.2 ( 0.1 ) 0.3 Valuation allowance 5.8 ( 1.7 ) ( 6.5 ) U.S. international tax impact, net of credits 0.9 0.4 0.3 Worthless stock deduction - - ( 3.2 ) FIN48 0.2 0.1 - Contingent consideration (1) ( 3.1 ) - - Section 986(c) foreign exchange loss (1) ( 1.3 ) - - Capital loss carryforward (1) ( 6.2 ) - - Permanent items 2.5 0.3 1.0 Tax impact of foreign rate changes 0.2 ( 0.4 ) ( 0.2 ) Return-to-provision & other adjustments ( 0.5 ) ( 1.6 ) 0.1 Other, net 0.4 0.1 ( 0.2 ) Effective tax rate 29.5 % 25.1 % 19.0 % (1) Our current year rate primarily benefited from the nontaxable income on the reversal of CloudGo's contingent liability, a foreign exchange loss as a result of the repatriation of funds from our Japan subsidiary and the benefit of the capital loss carryforward, partially offset with a valuation allowance as a result of the pending sale of the Company’s Irvine building. The impact of state taxes, net of federal benefit, and foreign income taxed at other than U.S. 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 we operate. Our accounting policy is to recognize the U.S. tax effects of global intangible low-taxed income as a component of income tax expense in the period it arises. 70 Table of Contents The components of the net deferred tax asset (liability) consist of the following (in thousands): As of May 25, 2024 As of May 27, 2023 Deferred tax assets: Allowance for credit losses $ 482 $ 642 Accrued compensation 4,089 5,477 Accrued expenses 970 487 Lease liability 3,345 4,532 Stock options and restricted stock 3,870 4,599 Foreign tax credit 477 431 Net operating losses 17,714 16,623 Capital loss carryforwards 2,343 - State taxes 113 354 Property and equipment 782 80 Gross deferred tax asset 34,185 33,225 Valuation allowance ( 8,550 ) ( 6,514 ) Gross deferred tax asset, net of valuation allowance 25,635 26,711 Deferred tax liabilities: ROU asset ( 2,911 ) ( 3,998 ) Outside basis difference - Sweden investment ( 262 ) ( 262 ) Goodwill and intangibles ( 19,830 ) ( 18,886 ) Net deferred tax asset $ 2,632 $ 3,565 The Organisation for Economic Co-operation and Development ("OECD") has released an Inclusive Framework on Base Erosion and Profit Shifting including Pillar Two Model Rules to reform international corporate taxation and introduce a new 15% global minimum tax applicable to large multinational corporations. Certain jurisdictions have enacted or substantively enacted the Pillar Two legislations. We have considered the applicability of such global implementations and determined that it does not have a material impact on our consolidated financial statements in fiscal 2024. We will continue to monitor and evaluate global implementation of Pillar Two legislations. Additionally, we are continuing to monitor new guidance with regard to the new corporate alternative minimum tax ("CAMT") and its applicability. We have considered the applicability of the CAMT and determined that it does not have a material impact on our consolidated financial statements in fiscal 2024. The Company recognized a tax benefit of approximately $ 1.3 million, $ 2.1 million and $ 2.0 million for the years ended May 25, 2024, May 27, 2023 and May 28, 2022, respectively, associated with the exercise of nonqualified stock options, vesting of restricted stock awards, restricted stock units, and disqualifying dispositions by employees of shares acquired under the ESPP. 71 Table of Contents The Company has tax-effected foreign net operating loss carryforwards of $ 17.3 million ($ 69.7 million on a gross basis), tax-effected state net operating loss carryforwards of $ 0.4 million, capital loss carryforwards of $ 2.3 million, and foreign tax credit carryforwards of $ 0.5 million. The state net operating loss carryforwards will expire beginning in fiscal 2033, the capital loss carryforwards will expire in fiscal 2028, and the foreign tax credits will expire beginning in fiscal 2025. The following table summarizes the foreign net operating losses expiration periods (in thousands): Expiration Periods Amount of Net Operating Losses Fiscal Years Ending: 2026 $ 21 2027 and beyond 1,111 Unlimited 68,560 Total $ 69,692 The following table summarizes the activity in the Company’s valuation allowance accounts (in thousands): Beginning Balance Charged to Operations Currency Rate Changes Ending Balance Years Ended: May 28, 2022 $ 13,263 $ ( 3,152 ) $ ( 1,862 ) $ 8,249 May 27, 2023 $ 8,249 $ ( 1,343 ) $ ( 392 ) $ 6,514 May 25, 2024 $ 6,514 $ 1,964 $ 72 $ 8,550 Realization of deferred tax assets is dependent upon generating sufficient future taxable income of the appropriate character. Management believes that it is more likely than not that all remaining deferred tax assets will be realized through future taxable earnings or alternative tax strategies. We repatriated $ 10.2 million from our Japan subsidiary during the year ended May 25, 2024. Remaining unremitted earnings as of May 25, 2024 in our Japan subsidiary are intended to be indefinitely reinvested in our Japan subsidiary's operations and growth. Going forward, the indefinite reversal criteria will apply only to the portion of our Japan subsidiary’s unremitted earnings that are needed for its ongoing operations and growth. Deferred income taxes have not been provided on the undistributed earnings of approximately $ 31.6 million from the Company's foreign subsidiaries as of May 25, 2024 since these amounts are intended to be indefinitely reinvested in foreign operations. 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. The following table summarizes the activity related to the gross unrecognized tax benefits (in thousands): For the Years Ended May 25, 2024 May 27, 2023 May 28, 2022 Unrecognized tax benefits, beginning of year $ 962 $ 908 $ 872 Gross increases-tax positions in prior period 71 54 36 Unrecognized tax benefits, end of year $ 1,033 $ 962 $ 908 The Company’s total liability for unrecognized gross tax benefits was $ 1.0 million, $ 1.0 million and $ 0.9 million as of May 25, 2024, May 27, 2023 and May 28, 2022, respectively, which, if ultimately recognized, any differences in assessment or non-assessment would impact the effective tax rate in future periods. The unrecognized tax benefits are included in long-term liabilities in the Consolidated Balance Sheets. None of the unrecognized tax benefits are short-term liabilities as management does not anticipate any cash payments within 12 months to settle the liability. 72 Table of Contents The Company’s major income tax jurisdiction is the U.S., with federal statutes of limitations remaining open for fiscal 2020 and thereafter. For states within the U.S. in which the Company does significant business, the Company remains subject to examination for fiscal 2020 and thereafter. Most major foreign jurisdictions remain open for fiscal years ended 2019 and thereafter. The Company recognizes interest and penalties related to unrecognized tax benefits as a part of its provision for income taxes. During the fiscal years ended May 25, 2024, May 27, 2023 and May 28, 2022, the Company accrued interest of $ 71,000 , $ 54,000 and $ 36,000 , respectively, as a component of the liability for unrecognized tax benefits. 10. Accrued Salaries and Related Obligations Accrued salaries and related obligations consist of the following (in thousands): As of May 25, 2024 As of May 27, 2023 Accrued salaries and related obligations $ 14,450 $ 15,765 Accrued bonuses 9,039 23,716 Accrued vacation 18,510 25,295 $ 41,999 $ 64,776 11. Concentrations of Credit Risk The Company currently maintains cash and cash equivalents in commercial paper or money market accounts. Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of trade receivables. 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. 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. No single client accounted for more than 10% of revenue for the years ended May 25, 2024, May 27, 2023 and May 28, 2022. No single client accounted for more than 10% of trade accounts receivable as of May 25, 2024 and one single client accounted for more than 10% of trade accounts receivable as of May 27, 2023. 12. Stockholders’ Equity Stock Repurchase Program The Company’s Board of Directors has periodically approved a stock repurchase program authorizing the repurchase, at the discretion of the Company’s senior executives, of the Company’s common stock for a designated aggregate dollar limit. The current program was authorized in July 2015 (the “July 2015 Program”) and set an aggregate dollar limit not to exceed $ 150 million. Subject to the aggregate dollar limit, the currently authorized stock repurchase program does not have an expiration date. 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. During the years ended May 25, 2024 and May 27, 2023, respectively, the Company purchased 606,254 and 914,809 shares of its common stock on the open market at an average price of $ 13.20 and $ 16.62 per share, for an aggregate total purchase price of approximately $ 8.0 million and $ 15.2 million. As of May 25, 2024, approximately $ 42.2 million remained available for future repurchases of the Company’s common stock under the July 2015 Program. Quarterly Dividend Subject to approval each quarter by its Board of Directors, the Company pays a regular dividend. On April 18, 2024, the Board of Directors declared a regular quarterly dividend of $ 0.14 per share of the Company’s common stock. The dividend was paid on June 13, 2024 to stockholders of record at the close of business on May 16, 2024. As of May 25, 2024 and May 27, 2023, approximately $ 4.7 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, 73 Table of Contents 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. 13. Revenue Recognition The timing of revenue recognition, billings and cash collections affects the recognition of accounts receivable, contract assets and contract liabilities. 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. Contract assets were $ 29.3 million and $ 35.4 million as of May 25, 2024 and May 27, 2023, 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 $ 3.5 million and $ 3.1 million as of May 25, 2024 and May 27, 2023, respectively. Revenues recognized during the year ended May 25, 2024 that were included in deferred revenues as of May 27, 2023 were $ 2.5 million. Revenues recognized during the year ended May 27, 2023 that were included in deferred revenues as of May 28, 2022 were $ 3.0 million. 14. Restructuring Activities During fiscal 2024, the Company initiated a cost reduction plan, including a reduction in force (the “U.S. Restructuring Plan”) intended to reduce costs and streamline operations, which resulted in a reduction of approximately 12 % of the Company’s U.S. management and administrative workforce. The Company incurred employee termination costs of $ 4.1 million associated with the U.S. Restructuring Plan within its RGP segment during the year ended May 25, 2024, and were recorded in selling, general and administrative expenses in its Consolidated Statements of Operations. The U.S. Restructuring Plan was substantially completed during the year ended May 25, 2024. The Restructuring adjustments and costs were $( 0.4 ) million and $ 0.8 million for the year ended May 27, 2023 and May 28, 2022, respectively, related to restructuring efforts in previous fiscal years. Restructuring liability recorded in accounts payable and accrued expenses in the Consolidated Balance Sheet was $ 0.8 million and zero as of May 25, 2024 and May 27, 2023, respectively. 15. Stock-Based Compensation Plans General T he Company’s stockholders approved the 2020 Plan on October 22, 2020, which replaced and succeeded in its entirety 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. The maximum number of shares of the Company’s common stock that may be issued or transferred pursuant to awards under the 2020 Plan equals: (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. 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. 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, restricted stock units and stock option awards under the 2020 Plan that typically vest in equal annual installments, and performance stock unit awards under the 2020 Plan that vest upon the achievement of certain Company-wide performance targets at the end of the defined performance period. Stock option grants typically terminate ten years from the date of grant. Vesting periods for restricted stock, restricted stock units and stock option awards range from three years to four years . The performance period for the performance stock unit awards is three years . As of May 25, 2024, there were 1,194,913 shares available for further award grants under the 2020 Plan. 74 Table of Contents Stock-Based Compensation Expense Stock-based compensation expense included in selling, general and administrative expenses was $ 5.7 million, $ 9.5 million and $ 8.2 million for the years ended May 25, 2024, May 27, 2023 and May 28, 2022, respectively. These amounts consisted of stock-based compensation expense related to employee stock options, restricted stock awards, restricted stock unit awards and performance stock unit awards under the 2020 Plan and Prior Plans, employee stock purchases made via the ESPP, and stock units credited under the Directors Deferred Compensation Plan. The Company recognized a tax benefit of approximately $ 1.1 million, $ 2.0 million, and $ 1.7 million, associated with such stock-based compensation expense for the years ended May 25, 2024, May 27, 2023, and May 28, 2022, respectively. 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. Expense related to the liability-classified awards reflects the change in fair value during the reporting period. 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. 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. Any resulting changes to stock compensation expense are adjusted in the period in which the change in estimates occur. Stock Options The following table summarizes the stock option activity for the year ended May 25, 2024 (in thousands, except weighted average exercise price): Number of Shares Under Option Weighted Average Exercise Price Weighted Average Remaining Contractual Life (in years) Aggregate Intrinsic Value Awards outstanding at May 27, 2023 2,648 $ 16.44 4.37 $ 1,298 Exercised ( 32 ) 14.29 Forfeited ( 9 ) 17.44 Expired ( 422 ) 16.99 Awards outstanding at May 25, 2024 2,185 $ 16.36 3.21 $ — Exercisable at May 25, 2024 2,185 $ 16.36 3.21 $ — Vested and expected to vest as of May 25, 2024 (1) 2,185 $ 16.36 3.20 $ — (1) The expected to vest options are the result of applying the pre-vesting forfeiture rate assumptions to options not yet vested. As of May 25, 2024, all outstanding options have met the vesting requirement. The aggregate intrinsic value represents the total pre-tax intrinsic value, based on the Company’s closing stock price of $ 11.16 as of May 24, 2024 (the last trading day of fiscal 2024), which would have been received by the option holders had all option holders exercised their options as of that date. The total pre-tax intrinsic value related to stock options exercised during the years ended May 25, 2024, May 27, 2023 and May 28, 2022 was $ 0.5 million, $ 11.9 million and $ 15.1 million, respectively. The total estimated fair value of stock options that vested during the years ended May 25, 2024, May 27, 2023 and May 28, 2022 was $ 0.3 million, $ 1.2 million and $ 2.2 million, respectively. As of May 25, 2024 , there was no unrecognized compensation cost related to unvested and outstanding employee stock options. 75 Table of Contents Valuation and Expense Information for Stock Based Compensation Plans There were no employee stock options granted during the years ended May 25, 2024 and May 27, 2023. Employee Stock Purchase Plan On October 20, 2022, the Company’s stockholders approved an amendment and restatement of the 2019 ESPP that increased the number of shares authorized for issuance under the ESPP by 1,500,000 , resulting in a maximum number of shares of the Company’s common stock authorized for issuance under the ESPP of 3,325,000 shares. 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. The Company issued 455,678 , 393,060 and 462,000 shares of common stock pursuant to the ESPP for the years ended May 25, 2024, May 27, 2023 and May 28, 2022, respectively. There were 1,323,246 shares of common stock available for issuance under the ESPP as of May 25, 2024. Restricted Stock Awards The following table summarizes the activities for the unvested restricted stock awards for the year ended May 25, 2024 (in thousands, except weighted average grant-date fair value): Shares Weighted-Average Grant-Date Fair Value Unvested at May 27, 2023 209 $ 17.19 Granted 113 $ 13.79 Vested ( 99 ) $ 16.33 Forfeited - $ - Unvested as of May 25, 2024 223 $ 15.84 Expected to vest as of May 25, 2024 202 $ 15.89 As of May 25, 2024, there was $ 2.4 million of total unrecognized compensation cost related to unvested restricted stock awards. The cost is expected to be recognized over a weighted-average period of 1.49 years. The weighted average estimated fair value per share of restricted stock awards granted during the years ended May 25, 2024, May 27, 2023 and May 28, 2022 was $ 13.79 , $ 18.31 and $ 18.28 , respectively. Restricted Stock Units (“RSUs”) 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”). The Stock Units are used solely as a device for determining the amount of cash eventually paid to the director. Each Stock Unit has the same value as one share of the Company’s common stock. 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 the Company’s common stock. 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. These liability-classified awards are re-measured at each reporting date and on settlement using the closing price of the Company’s common stock on that date. Any change in fair value is recorded as stock-based compensation expense in the period. The Company recognizes stock-based compensation expense on these Stock Units using the straight-line method over the requisite service period. 76 Table of Contents The Company also grants RSUs to its employees under the 2020 Plan, which are classified as equity awards. The following table summarizes the activities for the unvested RSUs, including both equity- and liability-classified RSUs, for the year ended May 25, 2024 (in thousands, except weighted average grant-date fair value): Equity-Classified RSUs Liability-Classified RSUs Total RSUs Shares Weighted-Average Grant-Date Fair Value Shares Weighted-Average Grant-Date Fair Value Shares Weighted-Average Grant-Date Fair Value Unvested at May 27, 2023 631 $ 15.78 60 $ 16.55 691 $ 15.85 Granted (1) 329 13.50 28 14.07 357 13.54 Vested ( 184 ) 14.91 ( 40 ) 15.97 ( 224 ) 15.10 Forfeited ( 161 ) 15.55 - - ( 161 ) 15.55 Unvested as of May 25, 2024 615 $ 14.91 48 $ 15.64 663 $ 14.96 Expected to vest as of May 25, 2024 550 $ 14.93 48 $ 15.64 598 $ 14.99 (1) The dividend equivalents are included in the granted shares. As of May 25, 2024, there was $ 6.1 million of total unrecognized compensation cost related to unvested RSUs (which are the RSUs 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 1.71 years. As of May 25, 2024, there was $ 0.6 million of total unrecognized compensation cost related to unvested liability-classified RSUs (which are the stock units credited under the Directors Deferred Compensation Plan that settle in cash). That cost is expected to be recognized over a weighted average period of 1.79 years. The weighted average estimated fair value per share of RSUs granted during the years ended May 25, 2024, May 27, 2023 and May 28, 2022 was $ 13.54 , $ 18.27 and $ 18.25 , respectively. Performance Stock Units (“PSUs”) The Company issued PSUs to certain members of management and other select employees. The total number of shares that will vest under the PSUs will be determined at the end of a three-year performance period based on the Company’s achievement of certain revenue and Adjusted EBITDA percentage targets over the performance period. 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. The following table summarizes the activities for the unvested PSUs for the year ended May 25, 2024 (in thousands, except weighted average grant-date fair value): Shares (1) Weighted-Average Grant-Date Fair Value Unvested at May 27, 2023 434 $ 18.32 Granted (2) 301 13.63 Forfeited ( 114 ) 18.07 Unvested as of May 25, 2024 621 $ 16.15 Expected to vest as of May 25, 2024 390 $ 15.65 (1) Shares are presented at the stated target, which represents the base number of shares that would vest. Actual shares that vest may be 0 - 150 % of the target based on the achievement of the specific company-wide performance targets. (2) The dividend equivalents are included in the granted shares. As of May 25, 2024, there was no unrecognized compensation cost related to unvested PSUs. 77 Table of Contents 16. Benefit Plan 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 three months of service. Participants may contribute up to 75 % of their annual salary, up to the maximum amount allowed by applicable law. Pursuant to the terms of the 401(k) Plan, the Company may make discretionary matching contributions. The Company, at its sole discretion, determines the matching contribution made at each pay period. For the years ended May 25, 2024, May 27, 2023 and May 28, 2022, the Company contributed $ 7.9 million, $ 8.7 million and $ 8.1 million, respectively, to the 401(k) Plan as Company matching contributions. 17. Commitments and Contingencies Legal Proceedings The Company is involved in certain legal matters in the ordinary course of business. In the opinion of management, all such matters, if disposed of unfavorably, would not have a material adverse effect on the Company’s financial position, cash flows or results of operations. 18. Segment Information and Enterprise Reporting As discussed in Note 2 — Summary of Significant Accounting Policies , from May 29, 2022 to May 31, 2022, the Company had three operating segments – RGP, Sitrick and taskforce . Upon completing the sale of the taskforce operating segment, effective May 31, 2022, the Company’s operating segments consist of RGP and Sitrick. RGP is the Company’s only reportable segment. Sitrick does not individually meet the quantitative thresholds to qualify as a reportable segment. Therefore, Sitrick is disclosed as Other Segments. Prior-period comparative segment information was not restated. See Note 2 – Summary of Significant Accounting Policies for further discussion about the Company’s operating and reportable segments. The tables below reflect the operating results of the Company’s segments consistent with the management and performance measurement system utilized by the Company. Performance measurement is based on segment Adjusted EBITDA, a non-GAAP measure. Adjusted EBITDA is defined as net income before amortization expense, depreciation expense, interest and income taxes plus or minus stock-based compensation expense, technology transformation costs, goodwill impairment, restructuring costs, and contingent consideration adjustments. Adjusted EBITDA at the segment level excludes certain shared corporate administrative costs that are not practical to allocate. The Company’s CODM does not evaluate segments using asset information. 78 Table of Contents The following table discloses the Company’s revenue and Adjusted EBITDA by segment for all periods presented (in thousands): For the Years Ended May 25, 2024 May 27, 2023 May 28, 2022 Revenue: RGP $ 622,895 $ 764,511 $ 764,350 Other Segments (1) 9,906 11,132 40,668 Total revenue $ 632,801 $ 775,643 $ 805,018 Adjusted EBITDA: RGP $ 84,677 $ 132,377 $ 134,187 Other Segments ( 676 ) 1,179 3,527 Reconciling items (2) ( 32,518 ) ( 33,362 ) ( 34,583 ) Total Adjusted EBITDA (3) $ 51,483 $ 100,194 $ 103,131 (1) Amounts reported for the year ended May 27, 2023 include Sitrick and an immaterial amount from taskforce from May 29, 2022 through May 31, 2022, the completion date of the sale. Amounts previously reported for the year ended May 28, 2022 included the Sitrick and taskforce operating segments. (2) Reconciling items are generally comprised of unallocated corporate administrative costs, including management and board compensation, corporate support function costs and other general corporate costs that are not allocated to segments. (3) A reconciliation of the Company’s net income to Adjusted EBITDA on a consolidated basis is presented below. The table below represents a reconciliation of the Company’s net income to Adjusted EBITDA for all periods presented (in thousands): For the Years Ended May 25, 2024 May 27, 2023 May 28, 2022 Net income $ 21,034 $ 54,359 $ 67,175 Adjustments: Amortization expense 5,378 5,018 4,908 Depreciation expense 3,050 3,539 3,575 Interest expense, net ( 1,064 ) 552 1,064 Income tax expense (benefit) 8,795 18,259 15,793 EBITDA 37,193 81,727 92,515 Stock-based compensation expense 5,732 9,521 8,168 Technology transformation costs (1) 6,901 6,355 1,449 Goodwill impairment (2) - 2,955 - Acquisition costs (3) 1,970 - - Restructuring costs (4) 4,087 ( 364 ) 833 Contingent consideration adjustment ( 4,400 ) - 166 Adjusted EBITDA $ 51,483 $ 100,194 $ 103,131 (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 79 Table of Contents acquisition and management systems. Such costs primarily include hosting and certain other software licensing costs, third-party consulting fees and costs associated with dedicated internal resources that are not capitalized. (2) The effect of the goodwill impairment charge recognized during the year ended May 27, 2023 was related to Sitrick's operating segment. (3) Acquisition costs primarily represent one-time costs included in net income related to the Company’s acquisitions, which include fees paid to the Company’s brokers and other professional services firms. See 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 for further discussion. (4) The Company initiated the cost reduction plan (the “U.S. Restructuring Plan”) in October 2023 and substantially completed the U.S. Restructuring Plan during fiscal 2024. In addition, the Company substantially completed its global restructuring and business transformation plans in North America, Asia Pacific and Europe in fiscal 2021 and the remaining accrued restructuring liability was released in fiscal 2023. The table below represents the Company’s revenue and long-lived assets by geographic location (in thousands): Revenue for the Years Ended Long-Lived Assets (1) as of May 25, 2024 May 27, 2023 May 28 2022 May 25, 2024 May 27, 2023 United States $ 519,869 $ 664,515 $ 663,980 $ 13,343 $ 28,377 International 112,932 111,128 141,038 2,319 2,859 Total $ 632,801 $ 775,643 $ 805,018 $ 15,662 $ 31,236 (1) Long-lived assets are comprised of property and equipment and ROU assets . 19. Subsequent Event The Company entered into a Membership Interest Purchase Agreement, dated as of March 27, 2024, and as amended and restated as of June 30, 2024 (the “Reference Point MIPA”) with Reference Point LLC (“Reference Point”) and the sole member of Reference Point, to acquire 100 % of the membership interests of Reference Point. The Company paid an initial cash consideration of $ 23.8 million on the acquisition date of July 1, 2024. The initial consideration is subject to final post-closing adjustments for the final working capital, cash, indebtedness and transaction expenses as described in the Reference Point MIPA. Reference Point is a strategy, management, and technology consulting firm serving the financial services sector and is headquartered in New York. 80 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.