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 50 Consolidated Balance Sheets as of May 31 , 202 5 and May 2 5 , 20 24 53 Consolidated Statements of Operations for each of the three years in the period ended May 31 , 20 25 54 Consolidated Statements of Comprehensive Income (Loss) for each of the three years in the period ended May 31 , 20 25 55 Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended May 31 , 202 5 56 Consolidated Statements of Cash Flows for each of the three years in the period ended May 31 , 202 5 57 Notes to Consolidated Financial Statements 58 49 Table o f 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 31, 2025 and May 25, 2024, and the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity and cash flows for each of the three years in the period ended May 31, 2025, and the related notes (collectively, the financial statements). We also have audited the Company’s internal control over financial reporting as of May 31, 2025, 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 31, 2025 and May 25, 2024, and the results of its operations and its cash flows for each of the three years in the period ended May 31, 2025, 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 31, 2025, 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. 50 Table o f Contents 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. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee 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 this critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Annual and Interim Goodwill Impairment Assessments As described in Notes 2 and 5 to the financial statements, the Company’s consolidated net goodwill balance was $28.8 million as of May 31, 2025. The Company tests for goodwill impairment at the reporting unit level at least annually on the first day of the last quarter of the fiscal year or more frequently if facts, events or circumstances indicate that the carrying amount of goodwill may not be recoverable. On May 26, 2024, management realigned its reporting units due to a change in organizational structure. Reporting units under the former structure were tested for impairment prior to the realignment, and no impairment was identified. As a result of the realignment, the Company reallocated its existing goodwill to its new reporting units which resulted from the change in its operating segments. Goodwill was reassigned to each of the new reporting units using a relative fair value approach and reconciled to its market capitalization. Management assessed the goodwill of the new reporting units for impairment as of May 26, 2024 and determined that there was $3.8 million of goodwill impairment in the Europe & Asia Pacific reporting unit. During the second, third and fourth quarters of 2025, the Company experienced a sustained decline in its stock price resulting in the market capitalization being less than the carrying value of the combined reporting units. After considering all available evidence in the evaluation of goodwill impairment indicators, management determined it appropriate to perform interim quantitative assessments of the reporting units during those periods. As a result of these quantitative assessments performed, the Company incurred an aggregate impairment charge of $190.6 million for fiscal year 2025 in the On-Demand Talent, Consulting and Europe & Asia Pacific reporting units. The Company’s determination of the estimated fair value for each reporting unit was based on a market-based approach, income-based approach or a combination of both approaches. The market-based approach was based on the guideline public company method, which uses market multiples of revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) for a group of comparable public companies. The income-based approach was based on the present value of discounted cash flows of each reporting unit, using the Company’s assumptions regarding revenue growth rates, forecasted gross profit margins, forecasted earnings and free cash flows, terminal period growth rates, and other economic and market trends. Additionally, the present value was based on applying a weighted average cost of capital, which considered long-term interest rates and cost of equity based on the reporting segment’s risk profile. We identified the valuation of goodwill as a critical audit matter given the significant estimates and assumptions the Company makes to determine the fair value of the reporting unit including revenue growth rates, adjusted EBITDA margin and discount rates. Auditing the reasonableness of the Company’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 goodwill for each reporting unit included the following, among others: • We obtained an understanding of the relevant controls related to the Company’s goodwill valuation and tested such controls for design and operating effectiveness, including management’s review of the significant assumptions used in the estimate of fair value. 51 Table o f Contents • We evaluated the reasonableness of management’s forecasts of revenue growth rates by comparing the forecasts to (1) historical results, and (2) external market data. • We evaluated the reasonableness of management’s forecasts of adjusted EBITDA margin 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 methodologies and significant assumptions by: • Evaluating the reasonableness of the discount rates by comparing the underlying source information to publicly available market data and verifying the accuracy of the calculations. • Evaluating the appropriateness of the valuation methods used by management and testing the mathematical accuracy. /s/ RSM US LLP We have served as the Company’s auditor since 2012. Irvine, California July 28, 2025 52 Table o f Contents RESOURCES CONNECTION, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except par value per share) May 31, 2025 May 25, 2024 ASSETS Current assets: Cash and cash equivalents $ 86,147 $ 108,892 Trade accounts receivable, net of allowances of $ 2,603 and $ 2,755 as of May 31, 2025 and May 25, 2024, respectively 99,210 108,515 Prepaid expenses and other current assets 10,246 6,888 Assets held for sale - 8,909 Income taxes receivable 8,083 7,551 Total current assets 203,686 240,755 Goodwill 28,757 216,579 Intangible assets, net 18,978 9,573 Property and equipment, net 4,423 3,763 Operating right-of-use assets 22,551 11,899 Deferred tax assets 9,280 11,312 Other non-current assets 17,013 17,033 Total assets $ 304,688 $ 510,914 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and other accrued expenses $ 13,902 $ 15,223 Accrued salaries and related obligations 47,931 41,999 Operating lease liabilities, current 5,149 4,735 Other liabilities 8,420 10,476 Total current liabilities 75,402 72,433 Long-term debt - - Operating lease liabilities, non-current 20,156 8,586 Deferred tax liabilities 92 8,680 Other non-current liabilities 1,957 2,452 Total liabilities 97,607 92,151 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; 37,027 and 36,194 shares issued, and 33,075 and 33,556 shares outstanding as of May 31, 2025 and May 25, 2024, respectively 370 363 Additional paid-in capital 400,180 389,720 Accumulated other comprehensive loss ( 17,863 ) ( 17,713 ) Retained earnings (Accumulated deficit) ( 121,575 ) 88,595 Treasury stock at cost, 3,952 and 2,638 shares as of May 31, 2025 and May 25, 2024, respectively ( 54,031 ) ( 42,202 ) Total stockholders’ equity 207,081 418,763 Total liabilities and stockholders’ equity $ 304,688 $ 510,914 The accompanying notes are an integral part of these consolidated financial statements. 53 Table o f Contents RESOURCES CONNECTION, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) For the Years Ended May 31, 2025 May 25, 2024 May 27, 2023 Revenue $ 551,331 $ 632,801 $ 775,643 Direct cost of services 343,907 386,733 462,501 Gross profit 207,424 246,068 313,142 Selling, general and administrative expenses 202,024 208,864 228,842 Goodwill impairment 194,409 - 2,955 Amortization expense 5,880 5,378 5,018 Depreciation expense 1,868 3,050 3,539 Income (loss) from operations ( 196,757 ) 28,776 72,788 Interest (income) expense, net ( 544 ) ( 1,064 ) 552 Other (income) expense ( 138 ) 11 ( 382 ) Income (loss) before income tax (benefit) expense ( 196,075 ) 29,829 72,618 Income tax (benefit) expense ( 4,295 ) 8,795 18,259 Net income (loss) $ ( 191,780 ) $ 21,034 $ 54,359 Net income (loss) per common share: Basic $ ( 5.80 ) $ 0.63 $ 1.63 Diluted $ ( 5.80 ) $ 0.62 $ 1.59 Weighted-average number of common and common equivalent shares outstanding: Basic 33,063 33,445 33,407 Diluted 33,063 33,895 34,185 Cash dividends declared per common share $ 0.49 $ 0.56 $ 0.56 The accompanying notes are an integral part of these consolidated financial statements. 54 Table o f Contents RESOURCES CONNECTION, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) For the Years Ended May 31, 2025 May 25, 2024 May 27, 2023 Net income (loss) $ ( 191,780 ) $ 21,034 $ 54,359 Foreign currency translation adjustment, net of tax ( 150 ) ( 423 ) ( 806 ) Total comprehensive income (loss) $ ( 191,930 ) $ 20,611 $ 53,553 The accompanying notes are an integral part of these consolidated financial statements. 55 Table o f 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 (Accumulated deficit) Total Stockholders' Equity Shares Amount Shares Amount 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 Stock-based compensation expense - - 7,249 - - - - 7,249 Issuance of common stock purchased under Employee Stock Purchase Plan 493 4 3,910 - - - - 3,914 Issuance of restricted stock 80 1 ( 1 ) ( 69 ) 1,170 - ( 1,170 ) - Issuance of common stock upon vesting of restricted stock units, net shares withheld to cover taxes 260 2 ( 1,639 ) - - - - ( 1,637 ) Cash dividends declared ($ 0.49 per share) - - - - - - ( 16,282 ) ( 16,282 ) Repurchase of common stock - - - 1,383 ( 12,999 ) - - ( 12,999 ) Dividend equivalents on equity awards - - 938 - - - ( 938 ) - Currency translation adjustment - - 3 - - ( 150 ) - ( 147 ) Net loss for the year ended May 31, 2025 - - - - - - ( 191,780 ) ( 191,780 ) Balances as of May 31, 2025 37,027 $ 370 $ 400,180 3,952 $ ( 54,031 ) $ ( 17,863 ) $ ( 121,575 ) $ 207,081 The accompanying notes are an integral part of these consolidated financial statements. 56 Table o f Contents RESOURCES CONNECTION, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the Years Ended May 31, 2025 May 25, 2024 May 27, 2023 Cash flows from operating activities: Net income (loss) $ ( 191,780 ) $ 21,034 $ 54,359 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization expense 7,748 8,428 8,557 Stock-based compensation expense 6,754 5,732 9,521 Contingent consideration adjustment - ( 4,400 ) - Loss on dissolution of subsidiaries - - 220 (Gain) loss on sale of assets ( 3,687 ) 574 38 Impairment of goodwill 194,409 - 2,955 Adjustment to allowances 1,239 137 1,440 Deferred income taxes ( 6,305 ) 440 ( 9,701 ) Other, net 612 336 ( 268 ) Changes in operating assets and liabilities, net of acquisitions and dispositions: Trade accounts receivable 10,416 29,631 13,552 Prepaid expenses and other current assets ( 3,604 ) ( 766 ) 294 Income taxes ( 545 ) ( 3,252 ) 30,027 Other assets ( 83 ) ( 9,862 ) ( 4,067 ) Accounts payable and other accrued expenses ( 1,209 ) 305 1,551 Accrued salaries and related obligations 3,078 ( 24,531 ) ( 21,535 ) Other liabilities 1,856 ( 1,887 ) ( 5,307 ) Net cash provided by operating activities 18,899 21,919 81,636 Cash flows from investing activities: Proceeds from sale of taskforce - - 5,953 Net proceeds from the sale of assets 12,309 - 2 Acquisition of Reference Point, net of cash acquired ( 23,169 ) - - Acquisition of CloudGo, net of cash acquired - ( 7,411 ) - Investments in property and equipment and internal-use software ( 2,711 ) ( 1,143 ) ( 2,012 ) Net cash (used in) provided by investing activities ( 13,571 ) ( 8,554 ) 3,943 Cash flows from financing activities: Proceeds from exercise of stock options - 465 10,070 Proceeds from issuance of common stock under Employee Stock Purchase Plan 3,914 5,651 5,999 Repurchase of common stock ( 12,999 ) ( 8,000 ) ( 15,199 ) Proceeds from Revolving Credit Facility - - 15,000 Repayments on Revolving Credit Facility - - ( 69,000 ) Payment of cash dividends ( 18,646 ) ( 18,825 ) ( 18,784 ) Net cash used in financing activities ( 27,731 ) ( 20,709 ) ( 71,914 ) Effect of exchange rate changes on cash ( 342 ) ( 548 ) ( 1,105 ) Net (decrease) increase in cash ( 22,745 ) ( 7,892 ) 12,560 Cash and cash equivalents at beginning of period 108,892 116,784 104,224 Cash and cash equivalents at end of period $ 86,147 $ 108,892 $ 116,784 Supplemental cash flow disclosures Income taxes paid (refund), net $ 2,353 $ 11,161 $ ( 2,913 ) Interest paid $ 354 $ 352 $ 962 Non-cash investing and financing activities Capitalized leasehold improvements paid directly by landlord $ 1,095 $ - $ - Dividends declared, not paid $ 2,317 $ 4,695 $ 4,681 The accompanying notes are an integral part of these consolidated financial statements. 57 Table o f 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 professional services firm focused on delivering consulting execution services that power clients’ operational needs and change initiatives utilizing a combination of bench and on-demand, expert and diverse talent. As a next-generation human capital partner for its clients, the Company specializes in leadership and 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 year 2025 consisted of three 13-week quarters and one 14-week fourth quarter for a total of 53 weeks. Fiscal years 2024 and 2023 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 During the first quarter of fiscal 2025, the Chief Executive Officer announced a decision to reorganize the Company’s business by forming multiple discrete operational business units. To align the new operating model and financial reporting, the Company made management organizational changes and implemented new reporting modules and processes to provide discrete information to manage the business. During the first quarter of fiscal 2025, the Company completed its assessment of the Company's operating segments and identified the following newly defined operating segments: • On-Demand Talent – this segment provides businesses with a go-to source for bringing in experts when they need them. • Consulting – this segment drives transformation across people, processes and technology across domain areas including finance, technology and digital, risk and compliance and supply chain transformation. • Europe & Asia Pacific – is a geographically defined segment that offers both on-demand and consulting services (excluding the digital consulting business, which is included in our Consulting segment) to clients throughout Europe and Asia Pacific. • Outsourced Services – operating under the Countsy by RGP TM brand, this segment offers finance, accounting and HR services provided to startups, spinouts and scale-up enterprises, utilizing a technology platform and fractional team. • Sitrick – a crisis communications and public relations firm that provides corporate, financial, transactional and crisis communication and management services. Each of these segments reports through a separate segment manager to the Company’s Chief Executive Officer and Chief Operating Officer, who are collectively designated as the Chief Operating Decision Maker (“CODM”) for segment reporting purposes. The Company's reportable segments are comprised of On-Demand Talent, Consulting, Europe & Asia Pacific, and Outsourced Services. Sitrick does not individually meet the quantitative thresholds to qualify as a reportable segment. Therefore, Sitrick is disclosed under the “All Other” segment. Each of these segments represents a reporting unit for the purposes of assessing goodwill for impairment. 58 Table o f Contents On November 15, 2023, the Company acquired CloudGo Pte Ltd. and its subsidiaries (collectively, “CloudGo”). On July 1, 2024, the Company acquired Reference Point LLC (“Reference Point”). CloudGo and Reference Point are both reported as part of the Consulting operating segment. See Note 3 – Acquisitions and Dispositions in the Notes to Consolidated Financial Statements for further information. 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 $ 4.4 million, $ 4.3 million and $ 4.7 million for the years ended May 31, 2025, May 25, 2024, and May 27, 2023, 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 31, 2025, May 25, 2024 and May 27, 2023, sales commission expense was $ 3.1 million, $ 2.8 million, and $ 3.3 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 59 Table o f Contents 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, 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 0.2 % of revenue for the year ended May 31, 2025, and 0.3 % of revenue for each of the years ended May 25, 2024 and May 27, 2023. Permanent placement fees were 0.1 %, 0.2 % and 0.3 % of revenue for the years ended May 31, 2025, May 25, 2024 and May 27, 2023, 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 (loss) per share (“EPS”). Basic EPS is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted EPS is based upon the weighted-average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive shares of common stock include the assumed exercise of outstanding in-the-money stock options, assumed issuance of common stock under the Company's 2019 Employee Stock Purchase Plan, as amended (“ESPP”), assumed release of outstanding restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance stock units (“PSUs”) using the treasury stock method. However, potentially dilutive shares of common stock are excluded from the computation in periods in which they have an anti-dilutive effect. During the year ended May 31, 2025, the Company incurred a net loss, and as a result potentially dilutive common shares issuable from the assumed exercise of stock options and the assumed release of shares of common stock under the outstanding ESPP, RSAs, RSUs, and PSUs awards were not included in the diluted shares used to calculate net loss per share, as their inclusion would have been anti-dilutive. 60 Table o f Contents The following table summarizes the calculation of net income (loss) per share for the years ended May 31, 2025, May 25, 2024 and May 27, 2023 (in thousands, except per share amounts): For the Years Ended May 31, 2025 May 25, 2024 May 27, 2023 Net income (loss) $ ( 191,780 ) $ 21,034 $ 54,359 Weighted-average shares outstanding: Basic weighted-average shares 33,063 33,445 33,407 Effect of dilutive shares: Weighted-average shares — Basic 33,063 33,445 33,407 Potentially dilutive stock options - 48 359 Potentially dilutive employee stock purchase plan - 14 8 Potentially dilutive restricted stock awards - 56 64 Potentially dilutive restricted stock units - 179 233 Potentially dilutive performance stock units - 153 114 Diluted weighted-average shares outstanding 33,063 33,895 34,185 Net income (loss) per common share: Basic $ ( 5.80 ) $ 0.63 $ 1.63 Dilutive $ ( 5.80 ) $ 0.62 $ 1.59 Anti-dilutive shares not included above 2,730 2,152 704 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 31, 2025 and May 25, 2024, respectively. As a result, no further remeasurements or revisions are required. 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 at these dates were the Company’s measures of the estimated payouts based on internally generated financial projections and discount rates. The fair value of contingent 61 Table o f Contents consideration liability will be remeasured on a quarterly basis until settlement by the Company using additional 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 significant unobservable inputs and the assumptions underlying them 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 27, 2023 $ 2,121 $ 1,440 $ 1 $ - $ ( 279 ) $ 3,283 May 25, 2024 $ 3,283 $ 137 $ 5 $ 2 $ ( 672 ) $ 2,755 May 31, 2025 $ 2,755 $ 1,239 $ ( 15 ) $ - $ ( 1,376 ) $ 2,603 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 Accounting Standards Codification (“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 Company's former corporate office in Irvine, California met the criteria of held for sale, since the Company intended 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. The Company sold its Irvine, California corporate office in August 2024. 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: 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. 62 Table o f 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 zero , $ 0.2 million and zero for the years ended May 31, 2025, May 25, 2024 and May 27, 2023, 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 or more frequently if the Company believes indicators of impairment exist. During the fourth quarter of fiscal 2024, the Company 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 to better align with our internal operations. 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. Impairment testing is conducted at the reporting unit level. Under 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. Under the quantitative analysis, the fair value of the reporting units is determined by using a market-based approach, an income-based approach or a combination thereof. The market-based approach estimates fair value by applying revenue and EBITDA multiples to each reporting unit’s operating performance. The multiples are derived from guideline public companies with similar operating and investment characteristics to the Company's reporting units, and are evaluated and adjusted, if needed, based on specific characteristics of the reporting units relative to the selected guideline companies. The market-based approach requires the Company to make a series of assumptions that involve significant judgment, such as the selection of comparable companies and the evaluation of the multiples. The income-based approach estimates fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital that reflects the relevant risks associated with each reporting unit and the time value of money. The income approach also requires a series of assumptions that involve significant judgment, such as revenue projections and Adjusted EBITDA margin projections, which are based on historical experience and internal forecasts about future performance. While the Company believes that the assumptions underlying its quantitative assessment are reasonable, these assumptions could have a significant impact on whether a non-cash impairment charge is recognized and the magnitude of such charge. The results of an impairment analysis are as of a point in time. There is no assurance that the actual future earnings or cash flows of the reporting units will be consistent with the Company’s projections. 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 one to twelve 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 during the years ended May 31, 2025, May 25, 2024 and May 27, 2023. 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. 63 Table o f Contents Leases The Company currently leases office space, vehicles and certain equipment under operating leases expiring through 2034. At May 31, 2025, 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 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 64 Table o f Contents 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. As of May 31, 2025 and May 25, 2024, the capitalized costs related to hosting arrangements incurred during the application development stage were $ 20.8 million and $ 16.1 million, respectively. These capitalized hosting arrangements are included in current and other non-current assets on the Consolidated Balance Sheets. During the years ended May 31, 2025 and May 25, 2024, amortization was $ 1.8 million and less than $ 0.2 million, respectively. 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 programs authorize 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. 65 Table o f Contents 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 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 In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses requiring disaggregated disclosure of certain expense captions into specified categories in the notes to financial statements on an annual and interim basis. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with updates to be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company expects to adopt this guidance in its fiscal year beginning May 30, 2027. The Company is evaluating the potential impact of this guidance on its financial statement disclosures. In December 2023, FASB issued 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 has adopted ASU 2023-09 for fiscal year 2026, which began on June 1, 2025, and is in the process of implementing the related disclosure requirements. Recently Adopted Accounting Guidance In November 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 adopted this guidance in the fiscal year ending May 31, 2025. For additional information, refer to Note 18 – Segment Information and Enterprise Reporting . 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 Reference Point On July 1, 2024, the Company entered into an Amended and Restated Membership Interest Purchase Agreement (the “Reference Point MIPA”) with Reference Point LLC (“Reference Point”) and the holder of all the outstanding membership interests of Reference Point LLC, in which the Company acquired 100 % of the membership interests of Reference Point. Reference Point is a strategy, management, and technology consulting firm serving the financial services sector across four areas of focus: Strategy & Management, Risk & Regulatory Compliance, Digital & Technology and Data & Analytics. The Company paid cash consideration of $ 23.2 million (net of $ 0.2 million cash acquired). Results of operations of Reference Point are included within the Consulting Services operating segment in the Consolidated Statements of Operations from the date of acquisition. Reference Point contributed $ 16.1 million of revenue and $ 1.9 million of operating income to the Consolidated Statements of Operations during the year ended May 31, 2025. During the year ended May 31, 2025, the Company recognized approximately $ 2.8 million of acquisition-related costs in connection with the acquisition of Reference Point that were recorded in selling, general and administrative expenses in the Consolidated Statements of Operations. 66 Table o f Contents In accordance with ASC 805 Business Combinations , the Company made an initial provisional allocation of the purchase price for Reference Point based on the fair value of the assets acquired and liabilities assumed, with the residual amount recorded as goodwill. The Company’s purchase price allocation considered a number of factors, including the valuation of identifiable intangible assets. In connection with this acquisition, the Company recorded total intangible assets consisting of $ 14.4 million for customer relationships (to be amortized over 12 years), $ 0.7 million related to a non-compete agreement (to be amortized over 5 years) and $ 0.6 million for trade name (to be amortized over 1 year). The Company also recorded $ 6.9 million of goodwill, which is expected to be deductible for tax purposes. The goodwill is attributable primarily to expected synergies and the assembled workforce of Reference Point. The following table summarizes the consideration for the acquisition of Reference Point and the amounts of the identified assets acquired and liabilities assumed at the acquisition date: Fair value of consideration transferred (in thousands): Cash $ 23,417 Recognized provisional amounts of identifiable assets acquired and liabilities assumed (in thousands): Cash and cash equivalents $ 248 Trade accounts receivable (1) 2,013 Prepaid expenses and other current assets 52 Intangible assets 15,720 Property and equipment 28 Other non-current assets 63 Total identifiable assets 18,124 Accounts payable and other accrued expenses 47 Accrued salaries and related obligations 988 Other liabilities 527 Total liabilities assumed 1,562 Net identifiable assets acquired 16,562 Goodwill 6,855 Net assets acquired $ 23,417 (1) As of the acquisition date, the gross contractual amount of accounts receivable of $ 2.0 million was expected to be fully collected, and was fully collected during fiscal 2025. The weighted-average useful life of all Reference Point's intangible assets is 11.3 years. 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 . The Company has concluded that a fair value of zero for the contingent consideration liability as of May 31, 2025 was appropriate. 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. 67 Table o f Contents 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 within the Consulting Services operating segment in the Consolidated Statements of Operations from the date of acquisition. CloudGo contributed $ 6.5 million and $ 4.2 million of revenue to the consolidated results of operations during the years ended May 31, 2025 and May 25, 2024, respectively. During the year ended May 25, 2024, the Company recognized approximately $ 2.0 million of acquisition-related costs in connection with the acquisition of CloudGo . Such costs were recorded in selling, general and administrative expenses in the Consolidated Statements of Operations. In accordance with ASC 805 Business Combinations , the Company made an 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 purchase price allocation considered a number of factors, including the valuation of identifiable intangible assets. In connection with this acquisition, the Company recorded total intangible assets consisting of $ 3.1 million for customer relationships (to be amortized over 9 to 12 years). The Company also 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 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 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 weighted-average useful life of CloudGo’s customer relationships and intangible assets is approximately 10.9 years. 68 Table o f Contents Dispositions 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. This net loss 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. None of the markets sold or exited in fiscal 2023 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 former corporate office in Irvine, California met the criteria of held for sale, since the Company intended 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. 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. In August 2024, the Company completed the sale for total consideration of $ 13.0 million, resulting in a net gain of $ 3.4 million. The sale does not constitute a discontinued operation. As such, the gain has been recorded as a reduction of selling, general, and administrative expenses in the Consolidated Statement of Operations for the year ended May 31, 2025. 5. Goodwill and Intangible Assets As described in Note 2 – Summary of Significant Accounting Policies , the Company performs its annual impairment test for goodwill impairment in the fourth quarter, unless indicators of impairment exist, the Company will perform interim quantitative goodwill impairment analysis more frequently. As a result of impairment indicators related to business performance and decline in share price throughout the fiscal year, the Company performed four interim quantitative goodwill impairment assessments for its reporting units, each of which is also a reporting segment, and recorded an aggregate impairment charge of $ 194.4 million for fiscal 2025. During the year ended May 25, 2024, the Company performed an annual goodwill impairment on its reporting units 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. There were no changes in facts, circumstances or events from February 25, 2024 through May 25, 2024, the end of the fiscal year, that would give rise to modifying the conclusion regarding goodwill impairment assessment or require further testing, During the year ended May 27, 2023, the Company completed an interim goodwill impairment analysis in the third fiscal quarter for Sitrick, which is included in Other Segments. Many of Sitrick’s target clients were impacted by the 69 Table o f Contents initial closures of U.S. courts during the COVID-19 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. This impairment reduced the goodwill within the Other Segments to zero as of May 27, 2023. The Company’s determination of the estimated fair value may be based on the market-based approach, the income-based approach or a combination of both approaches. The market-based approach was based on the guideline public company method, which uses market multiples of revenue and earnings before interest, taxes, depreciation and amortization for a group of comparable public companies. The income-based approach was based on the present value of discounted cash flows of each reporting unit, using the Company’s assumptions regarding revenue growth rates, forecasted gross profit margins, forecasted earnings and free cash flows, terminal period growth rates, and other economic and market trends. Additionally, the present value was based on applying a weighted average cost of capital, which considered long-term interest rates and cost of equity based on the reporting segment’s risk profile. As part of the goodwill impairment test, the Company reconciled the aggregated estimated fair value of the Company's operating segments to the Company’s market capitalization, including consideration of any asymmetry in information, and control premium representing the estimated amount a market participant would pay to obtain a controlling interest in the Company. Fourth Quarter 2025 Interim Impairment Assessments During the fourth quarter of fiscal 2025, and subsequent to the Company's annual impairment test date, a decrease in market capitalization and slow business recovery in the Consulting segment triggered a goodwill impairment assessment. Using a combination of income-based and market-based approaches to determine the fair value of its reporting units with associated goodwill, the Company determined that the carrying value of the Consulting segment exceeded its fair value by $ 58.8 million. In addition to recording this excess as a goodwill impairment charge, the Company also recorded a $ 10.2 million charge related to the deferred tax impacts from the excess carrying value. The Company therefore recorded an aggregate of $ 69.0 million in goodwill impairment charges for the Consulting segment. Third Quarter 2025 Interim Impairment Assessments During the third quarter of fiscal 2025, slow business recovery in the On-Demand Talent and Consulting segments triggered a goodwill impairment assessment. Using a combination of income-based and market-based approaches to determine the fair value of its reporting units with associated goodwill, the Company determined that the carrying values of On-Demand Talent and Consulting segments exceeded their fair values. As a result, a non-cash goodwill impairment charge of $ 42.0 million was recorded, comprised of excess in carrying value over fair value of $ 12.4 million for On-Demand Talent and $ 24.8 million for Consulting, as well as a $ 4.8 million related to deferred tax impacts from the charge recorded in the Consulting segment. Second Quarter 2025 Interim Impairment Assessments During the second quarter of fiscal 2025, a decrease in market capitalization and slower-than-expected recovery in the On-Demand Talent and Europe and Asia Pacific segments triggered a goodwill impairment assessment. Using a combination of income-based and market-based approaches to determine the fair value of its reporting units with goodwill, the Company determined that the carrying values of On-Demand Talent and Europe and Asia Pacific segments exceeded their fair values. As a result, a non-cash goodwill impairment charge of $ 79.5 million was recorded, comprised of the excess in carrying value over fair value of $ 48.4 million for On-Demand Talent and $ 21.7 million for Europe and Asia Pacific, as well as $ 9.3 million related to deferred tax impacts from the charges recorded in the On-Demand Talent segment. First Quarter 2025 Interim Impairment Assessments During the first quarter of fiscal 2025, concurrent with the change in the Company’s operating segments, which were aligned to the Company’s reporting units and reportable segments, the Company allocated goodwill to each of its reporting units under the new organizational structure on a relative fair value basis. The Company estimated the fair values of the reporting units based on the income-based approach. As a result, a non-cash goodwill impairment charge of $ 3.9 million was recorded for the excess in carrying value over fair value of the Europe and Asia Pacific segment. In performing the goodwill impairment assessments, the Company considers the assumptions used in determining the estimated fair values of its reporting units to be reasonable and appropriate. However, the assumptions are complex and 70 Table o f Contents subjective, and additional adverse changes in a key assumption or a combination of key assumptions may significantly affect the Company’s assessment of the fair value and goodwill impairment. These assumptions include, among other things, a failure to meet expected earnings or other financial plans; changes in the discount rate, the terminal growth rate or tax rates; or significant changes in industry or economic trends. If the assumptions noted above adversely change, negative macroeconomic conditions worsen or the Company’s market capitalization decreases for a sustained period of time, the Company may be required to perform an additional impairment analysis that could result in additional impairment charges and materially adversely affect the Company’s financial condition and results of operations. The following table summarizes the activity in the Company’s goodwill balance. The balance as of May 25, 2024 was recast to reflect the impact of the Company's change in segment reporting and the final fair value allocation of the reporting units that became effective during the first quarter of fiscal 2025 (in thousands): On-Demand Talent Consulting Europe & Asia Pacific Outsourced Services All Other Total Balance as of May 27, 2023 $ 70,202 $ 82,115 $ 25,648 $ 28,757 $ - $ 206,722 Acquisition (see Note 3) - 9,637 - - - 9,637 Impact of foreign currency exchange rate changes - 18 202 - - 220 Balance as of May 25, 2024 $ 70,202 $ 91,770 $ 25,850 $ 28,757 $ - $ 216,579 Acquisition (see Note 3) - 6,855 - - - 6,855 Goodwill Impairment ( 70,202 ) ( 98,625 ) ( 25,582 ) - - ( 194,409 ) Impact of foreign currency exchange rate changes - - ( 268 ) - - ( 268 ) Balance as of May 31, 2025 $ - $ - $ - $ 28,757 $ - $ 28,757 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 31, 2025 As of May 25, 2024 Estimated Useful Life Gross Accumulated Amortization Net Carrying Amount Gross Accumulated Amortization Net Carrying Amount Customer contracts and relationships 7 - 12 years $ 39,500 $ ( 21,160 ) $ 18,340 $ 25,100 $ ( 16,858 ) $ 8,242 Computer software 3 - 3.5 years - - - 7,870 ( 6,539 ) 1,331 Trade names 1 year 600 ( 550 ) 50 - - - Non-Compete Agreements 5 years 720 ( 132 ) 588 - - - Total $ 40,820 $ ( 21,842 ) $ 18,978 $ 32,970 $ ( 23,397 ) $ 9,573 The remaining weighted-average useful life of all of the Company’s intangible assets is approximately 4.7 years. 71 Table o f Contents For the year ended May 31, 2025, the Company determined that the computer software component of its intangible assets no longer provides future economic benefit and recorded a $ 0.4 million charge to write-off the unamortized asset. The Company recorded amortization expense of $ 5.9 million, $ 5.4 million, and $ 5.0 million for the years ended May 31, 2025, May 25, 2024 and May 27, 2023, respectively. The following table presents future estimated amortization expense based on existing intangible assets held for use (in thousands): Fiscal Years: 2026 $ 3,829 2027 1,859 2028 1,633 2029 1,633 2030 and thereafter $ 10,024 Total $ 18,978 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 31, 2025 As of May 25, 2024 Computers, equipment and software 6,859 8,303 Leasehold improvements 10,253 10,719 Furniture 4,346 4,417 Property and equipment, gross $ 21,458 $ 23,439 Less: accumulated depreciation and amortization ( 17,035 ) ( 19,676 ) Property and equipment, net $ 4,423 $ 3,763 On February 24, 2024, the Company determined the asset groups associated with its former 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. The Company's corporate office in Irvine, California was subsequently sold in August 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 31, 2025 May 25, 2024 May 27, 2023 Operating lease cost $ 7,096 $ 7,280 $ 7,242 Short-term lease cost 297 192 118 Variable lease cost 1,367 1,586 1,279 Sublease income ( 1 ) ( 702 ) ( 740 ) ( 516 ) Total lease cost $ 8,058 $ 8,318 $ 8,123 (1) Sublease income represents rental income received by the Company as sublessor. 72 Table o f Contents Following the sale of the building in Irvine, California, on August 1, 2024, the Company entered into a lease agreement for an office space in Irvine. The lease commenced on November 1, 2024 and has an expiration date of June 30, 2032. See Note 4 – Assets Held for Sale for further discussion. The average annual rent for the lease term will be $ 0.7 million. On December 20, 2023, the Company entered into a lease agreement for an office space in New York that commenced on July 1, 2024 with an expiration date of July 31, 2034. The annual fixed rent for the first five years and the last five years are $ 1.2 million and $ 1.3 million respectively. The weighted-average lease terms and discount rates for operating leases are presented in the following table: As of May 31, 2025 As of May 25, 2024 Weighted-average remaining lease term 6.2 years 3.5 years Weighted-average discount rate 5.12 % 4.37 % Cash flow and other information related to operating leases is included in the following table (in thousands): For the Years Ended May 31, 2025 May 25, 2024 May 27, 2023 Cash paid for amounts included in the measurement of operating lease liabilities $ 7,005 $ 8,406 $ 9,258 Right-of-use assets obtained in exchange for new operating lease obligations $ 16,252 $ 3,707 $ 4,688 Future maturities of operating lease liabilities at May 31, 2025 are presented in the following table (in thousands): Fiscal Years Operating Lease Maturity 2026 $ 6,657 2027 4,909 2028 4,491 2029 3,638 2030 2,902 Thereafter 7,713 Total future lease payments 30,310 Less: interest ( 5,005 ) Present value of operating lease liabilities $ 25,305 The Company owned no assets that it leases to third-parties, as a lessor, at May 31, 2025. Prior to the sale of the company-owned building located in Irvine, California to independent third parties, as described in Note 4 – Assets Held for Sale, the Company, as lessor, had operating lease agreements for office space with independent third parties for which it received rental income during the years ended May 31, 2025, May 25, 2024 and May 27, 2023 totaling $ 8,000 , $ 142,000 and $ 195,000 , respectively. The terms of those operating lease agreements were terminated upon the sale of the building. 8. Long-Term Debt Prior to July 2, 2025, the Company had a revolving credit facility with Bank of America, pursuant to the terms of the credit Agreement dated November 12, 2021 by the Company and Resources Connection LLC, as borrowers, and all of the Company’s domestic subsidiaries, as guarantors, with the lenders that are party thereto and Bank of America, N.A. as administrative agent for the lenders (the “2021 Credit Facility”). The 2021 Credit Facility provided for a $ 175.0 million senior secured revolving loan, which included a $ 10.0 million sublimit for the issuance of standby letters of credit and a swingline sublimit of $ 20.0 million. The 2021 Credit Facility also included an option to increase the amount of the revolving loan up to an additional $ 75.0 million, subject to the terms of the 2021 Credit Facility. The 2021 Credit Facility was originally set to mature on November 12, 2026; however it was terminated on July 2, 2025 in connection with a new credit agreement entered into between the Company, and Resources Connection LLC, as borrowers, and all of the 73 Table o f Contents Company’s domestic subsidiaries, as guarantors, with the lenders that are party thereto and Bank of America, N.A. as administrative agent for the lenders (the “New Credit Facility”). See Note 19 - Subsequent Events for further discussion. The obligations under the 2021 Credit Facility were secured by substantially all assets of the Company, Resources Connection LLC and all of the Company’s domestic subsidiaries. On December 31, 2024 and March 28, 2025, the parties then entered into amendments to the 2021 Credit Agreement (collectively, the “Fiscal 2025 Amendments”) to waive the Company's non-compliance with a financial covenant related to the consolidated interest coverage ratio under the Credit Agreement due to the goodwill impairment recognized during the second and third quarters of fiscal 2025, respectively. The Fiscal 2025 Amendments also amended certain definitions under the Credit Agreement to exclude the impact of goodwill impairments recognized in the first, second, and third quarters of fiscal 2025. As of May 31, 2025 and May 25, 2024, the Company had no debt outstanding under the 2021 Credit Facility. In addition, the Company had $ 1.0 million and $ 1.4 million of outstanding letters of credit issued under the 2021 Credit Facility as of May 31, 2025 and May 25, 2024, respectively. As of May 31, 2025, there was $ 174.0 million of remaining capacity under the 2021 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 31, 2025 , 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 31, 2025 ) 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 31, 2025 May 25, 2024 May 27, 2023 Current: Federal $ 51 $ 3,245 $ 19,317 State ( 387 ) 1,422 6,323 Foreign 2,296 3,596 2,945 1,960 8,263 28,585 Deferred: Federal ( 6,540 ) 935 ( 6,613 ) State ( 1,793 ) 273 ( 1,357 ) Foreign 2,078 ( 676 ) ( 2,356 ) ( 6,255 ) 532 ( 10,326 ) Income tax expense (benefit) $ ( 4,295 ) $ 8,795 $ 18,259 74 Table o f Contents Income (loss) before income tax expense (benefit) is as follows (in thousands): For the Years Ended May 31, 2025 May 25, 2024 May 27, 2023 Domestic $ ( 181,733 ) $ 23,084 $ 60,835 Foreign ( 14,342 ) 6,745 11,783 Income (loss) before income tax expense (benefit) $ ( 196,075 ) $ 29,829 $ 72,618 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 31, 2025 May 25, 2024 May 27, 2023 Statutory tax rate 21.0 % 21.0 % 21.0 % State taxes, net of federal benefit 1.0 4.6 5.6 Non-U.S. rate adjustments ( 0.3 ) 2.8 1.4 Stock-based compensation ( 0.6 ) 2.2 ( 0.1 ) Valuation allowance ( 8.6 ) 5.8 ( 1.7 ) U.S. international tax impact, net of credits ( 0.3 ) 0.9 0.4 Contingent consideration - ( 3.1 ) - Section 986(c) foreign exchange loss - ( 1.3 ) - Capital loss carryforward - ( 6.2 ) - Goodwill impairment ( 9.8 ) - - Permanent items ( 0.2 ) 2.5 0.3 Return-to-provision & other adjustments 0.1 ( 0.5 ) ( 1.6 ) Other, net ( 0.1 ) 0.8 ( 0.2 ) Effective tax rate 2.2 % 29.5 % 25.1 % 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. 75 Table o f Contents The components of the net deferred tax asset (liability) consist of the following (in thousands): As of May 31, 2025 As of May 25, 2024 Deferred tax assets: Allowance for credit losses $ 369 $ 482 Accrued compensation 3,583 4,089 Accrued expenses 1,215 970 Lease liability 6,684 3,345 Stock options and restricted stock 2,770 3,870 Foreign tax credit 345 477 Net operating losses 19,632 17,714 Capital loss carryforwards 1,606 2,343 State taxes - 113 Property and equipment 520 782 Goodwill and intangibles 7,700 - Gross deferred tax asset 44,424 34,185 Valuation allowance ( 29,402 ) ( 8,550 ) Gross deferred tax asset, net of valuation allowance 15,022 25,635 Deferred tax liabilities: ROU asset ( 5,834 ) ( 2,911 ) Outside basis difference - Sweden investment - ( 262 ) Goodwill and intangibles - ( 19,830 ) Net deferred tax asset $ 9,188 $ 2,632 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 2025. 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 2025. The Company recognized a tax benefit of approximately $ 1.5 million, $ 1.3 million and $ 2.1 million for the years ended May 31, 2025, May 25, 2024 and May 27, 2023, respectively, associated with the exercise of nonqualified stock options, vesting of restricted stock awards, restricted stock units, performance-based stock units, and disqualifying dispositions by employees of shares acquired under the Company's Employee Stock Purchase Plan. 76 Table o f Contents The Company has tax-effected foreign net operating loss carryforwards of $ 18.9 million ($ 76.1 million on a gross basis), tax-effected federal net operating loss carryforwards of $ 0.1 million, tax-effected state net operating loss carryforwards of $ 0.7 million, capital loss carryforwards of $ 1.6 million, and foreign tax credit carryforwards of $ 0.3 million. The federal net operating loss is carried forward indefinitely, but it may only reduce 80 % of taxable income in a carryforward tax year. The state net operating loss carryforwards will expire beginning in fiscal 2030, the capital loss carryforwards will expire in fiscal 2028, and the foreign tax credits will expire beginning in fiscal 2028. The following table summarizes the foreign net operating losses expiration periods (in thousands): Expiration Periods Amount of Net Operating Losses Fiscal Years Ending: 2026 $ 1 2027 and beyond 2,113 Unlimited 74,019 Total $ 76,133 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 27, 2023 $ 8,249 $ ( 1,343 ) $ ( 392 ) $ 6,514 May 25, 2024 $ 6,514 $ 1,964 $ 72 $ 8,550 May 31, 2025 $ 8,550 $ 20,450 $ 402 $ 29,402 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. Given the current economic outlook, management believes there is a reasonable possibility that within the next 12 months, sufficient evidence may become available to allow it to reach a conclusion to establish or release a valuation allowance on the deferred tax assets of certain foreign entities. We repatriated $ 2.9 million from our Japan subsidiary during the year ended May 31, 2025. Remaining unremitted earnings as of May 31, 2025 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 $ 30.4 million from the Company's foreign subsidiaries as of May 31, 2025 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 31, 2025 May 25, 2024 May 27, 2023 Unrecognized tax benefits, beginning of year $ 1,033 $ 962 $ 908 Gross increases-tax positions in prior period 82 71 54 Unrecognized tax benefits, end of year $ 1,115 $ 1,033 $ 962 The Company’s total liability for unrecognized gross tax benefits was $ 1.1 million, $ 1.0 million and $ 1.0 million as of May 31, 2025, May 25, 2024 and May 27, 2023, 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 77 Table o f Contents 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. 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 2020 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 31, 2025, May 25, 2024 and May 27, 2023, the Company accrued interest of $ 82,000 , $ 71,000 and $ 54,000 , respectively, as a component of the liability for unrecognized tax benefits. The Company's cumulative accrued interest was $ 267,000 , $ 185,000 and $ 114,000 as of May 31, 2025, May 25, 2024 and May 27, 2023, respectively. 10. Accrued Salaries and Related Obligations Accrued salaries and related obligations consist of the following (in thousands): As of May 31, 2025 As of May 25, 2024 Accrued salaries and related obligations $ 17,807 $ 14,450 Accrued bonuses 14,911 9,039 Accrued vacation 15,213 18,510 $ 47,931 $ 41,999 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 31, 2025, May 25, 2024 and May 27, 2023. No single client accounted for more than 10% of trade accounts receivable as of May 31, 2025, or May 25, 2024. 12. Stockholders’ Equity Stock Repurchase Program The Company’s Board of Directors has previously approved two stock repurchase programs authorizing the repurchase, at the discretion of the Company’s senior executives, of the Company’s common stock for a designated aggregate dollar limit. In July 2015, the first program was authorized for an aggregate dollar limit not to exceed $ 150 million, and in October 2024, the second program was authorized for an additional dollar limit not to exceed $ 50 million (collectively, the “Stock Repurchase Programs”). Subject to the aggregate dollar limits, the currently authorized Stock Repurchase Programs do not have an expiration date. Repurchases under the programs 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 31, 2025 and May 25, 2024, respectively, the Company purchased 1,382,820 and 606,254 shares of its common stock on the open market at an average price of $ 9.40 and $ 13.20 per share, for an aggregate total purchase price of approximately $ 13.0 million and $ 8.0 million. As of May 31, 2025, approximately $ 79.2 million remained available for future repurchases of the Company’s common stock under the Stock Repurchase Programs. 78 Table o f Contents Quarterly Dividend Subject to approval each quarter by its Board of Directors, the Company pays a regular dividend. On April 29, 2025, the Board of Directors approved a regular quarterly dividend of $ 0.07 per share of the Company’s common stock. The dividend was paid on July 21, 2025 to stockholders of record at the close of business on June 23, 2025. As of May 31, 2025 and May 25, 2024, approximately $ 2.3 million and $ 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, 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 $ 30.7 million, $ 29.3 million, and $ 35.4 million as of May 31, 2025, 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 $ 4.3 million, $ 3.5 million, and $ 3.1 million as of May 31, 2025, May 25, 2024, and May 27, 2023, respectively. Revenues recognized during the year ended May 31, 2025 that were included in deferred revenues as of May 25, 2024 were $ 1.9 million. 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, which 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 of $( 0.4 ) million for the year ended May 27, 2023 related to restructuring efforts in previous fiscal years. In December, 2024, the Company authorized a global cost reduction plan, including a reduction in force (the “2025 Restructuring Plan”) intended to reduce costs and streamline operations. In May 2025, the Company authorized additional global cost reductions. The 2025 Restructuring Plan resulted in a reduction of force of the Company’s global management and administrative workforce. The Company incurred employee termination costs associated with the 2025 Restructuring Plan, which were recorded in selling, general and administrative expenses in its Consolidated Statements of Operations. Restructuring costs were $ 5.1 million for the year ended May 31, 2025 . The restructuring liability was nominal and $ 0.8 million as of May 31, 2025 and May 25, 2024, 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. On October 17, 2024, the Company’s stockholders approved an amendment and restatement of the 2020 Plan, which increased the maximum number of shares of the Company’s common stock authorized for issuance under the 2020 Plan by 815,000 shares. 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) 815,000 shares, plus (2) 1,797,440 (which represents the number of shares that were available for additional award grant 79 Table o f Contents 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 (3) 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 (4) 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 31, 2025, there were 1,308,213 shares available for further award grants under the 2020 Plan. Stock-Based Compensation Expense Stock-based compensation expense included in selling, general and administrative expenses was $ 6.8 million, $ 5.7 million and $ 9.5 million for the years ended May 31, 2025, May 25, 2024 and May 27, 2023, 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 $ 1.6 million, $ 1.1 million, and $ 2.0 million, associated with such stock-based compensation expense for the years ended May 31, 2025, May 25, 2024, and May 27, 2023, 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 31, 2025 (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 25, 2024 2,185 $ 16.36 3.21 $ - Exercised - - Forfeited - - Expired ( 658 ) 15.29 Awards outstanding at May 31, 2025 1,527 $ 16.89 2.62 $ - Exercisable at May 31, 2025 1,527 $ 16.89 2.62 $ - Vested and expected to vest as of May 31, 2025 (1) 1,527 $ 16.89 2.62 $ - (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 31, 2025, all outstanding options have met the vesting requirement. 80 Table o f Contents The aggregate intrinsic value represents the total pre-tax intrinsic value, based on the Company’s closing stock price of $ 5.22 as of May 30, 2025 (the last trading day of fiscal 2025), 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 and May 27, 2023 was $ 0.5 million and $ 11.9 million, respectively. The total estimated fair value of stock options that vested during the years ended May 25, 2024 and May 27, 2023 was $ 0.3 million and $ 1.2 million, respectively. There were no stock options exercised during the year ended May 31, 2025. As of May 31, 2025, there was no unrecognized compensation cost relate d to unvested and outstanding employee stock options. Valuation and Expense Information for Stock Based Compensation Plans There were no employee stock options granted during the years ended May 31, 2025 and May 25, 2024. Employee Stock Purchase Plan On October 20, 2022, the Company’s stockholders approved an amendment and restatement of the 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 492,858 , 455,678 and 393,060 shares of common stock pursuant to the ESPP for the years ended May 31, 2025, May 25, 2024 and May 27, 2023, respectively. There were 830,388 shares of common stock available for issuance under the ESPP as of May 31, 2025. Restricted Stock Awards The following table summarizes the activities for the unvested restricted stock awards for the year ended May 31, 2025 (in thousands, except weighted average grant-date fair value): Shares Weighted-Average Grant-Date Fair Value Unvested at May 25, 2024 223 $ 15.84 Granted 149 $ 8.91 Vested ( 103 ) $ 16.41 Forfeited - $ - Unvested as of May 31, 2025 269 $ 11.80 Expected to vest as of May 31, 2025 262 $ 11.71 As of May 31, 2025, there was $ 2.3 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 1.56 years. The weighted average estimated fair value per share of restricted stock awards granted during the years ended May 31, 2025, May 25, 2024 and May 27, 2023 was $ 8.91 , $ 13.79 and $ 18.31 , 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 81 Table o f Contents 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. 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 31, 2025 (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 25, 2024 615 $ 14.91 48 $ 15.64 663 $ 14.96 Granted (1) 1,081 9.95 45 8.68 1,126 9.90 Vested ( 263 ) 14.45 ( 30 ) 12.93 ( 293 ) 14.29 Forfeited ( 110 ) 12.95 - - ( 110 ) 12.95 Unvested as of May 31, 2025 1,323 $ 11.16 63 $ 11.95 1,386 $ 11.20 Expected to vest as of May 31, 2025 1,120 $ 11.17 63 $ 11.95 1,183 $ 11.21 (1) The dividend equivalents are included in the granted shares. As of May 31, 2025, there was $ 8.8 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 2.13 years. As of May 31, 2025, 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 1.78 years. The weighted average estimated fair value per share of RSUs granted during the years ended May 31, 2025, May 25, 2024 and May 27, 2023 was $ 9.90 , $ 13.54 and $ 18.27 , respectively. Performance Stock Units (“PSUs”) The Company granted 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 31, 2025 (in thousands, except weighted average grant-date fair value): Shares (1) Weighted-Average Grant-Date Fair Value Unvested at May 25, 2024 621 $ 16.15 Granted (2) 366 9.12 Vested ( 164 ) 18.41 Forfeited ( 125 ) 13.65 Unvested as of May 31, 2025 698 $ 12.60 Expected to vest as of May 31, 2025 507 $ 10.85 (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. 82 Table o f Contents (2) The dividend equivalents are included in the granted shares. As of May 31, 2025, there was no unrecognized compensation cost related to unvested PSUs. 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 31, 2025, May 25, 2024 and May 27, 2023, the Company contributed $ 3.1 million, $ 7.9 million and $ 8.7 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 During the first quarter of fiscal 2025, the Company reorganized its business segments to better align with changes in its internal operating model and financial reporting, which is used for performance assessment and resource allocation by the CODMs. All prior year periods presented were recast to reflect the impact of the preceding segment changes. 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 (loss) before amortization expense, depreciation expense, interest and income taxes excluding stock-based compensation expense, amortized Enterprise Resource Planning (“ERP”) system costs, technology transformation costs, goodwill impairment, acquisition costs, gain on sale of assets, and restructuring costs. Adjusted EBITDA at the segment level excludes certain shared corporate administrative costs that are not practical to allocate. The Company’s CODMs do not evaluate segments using asset information. The table below represents a reconciliation of the Company’s net income (loss) to Adjusted EBITDA for all periods presented (in thousands): 83 Table o f Contents For the Years Ended May 31, 2025 May 25, 2024 May 27, 2023 Revenue: On-Demand Talent $ 205,976 $ 272,600 $ 372,679 Consulting 219,215 227,967 259,946 Europe & Asia Pacific 77,602 84,207 93,166 Outsourced Services 39,618 38,122 38,950 All Other 8,920 9,905 10,902 Total consolidated revenue $ 551,331 $ 632,801 $ 775,643 Adjusted EBITDA: On-Demand Talent $ 17,116 $ 31,673 $ 60,484 Consulting 31,718 38,420 53,477 Europe & Asia Pacific 4,478 5,289 9,913 Outsourced Services 7,581 7,641 7,408 All Other ( 1,838 ) ( 675 ) 1,131 Unallocated items (1) ( 35,598 ) ( 30,865 ) ( 32,219 ) Adjustments: Stock-based compensation expense ( 6,754 ) ( 5,732 ) ( 9,521 ) Amortized ERP system costs (2) ( 1,287 ) - - Technology transformation costs (3) ( 5,474 ) ( 6,901 ) ( 6,355 ) Acquisition costs (4) ( 2,763 ) ( 1,970 ) - Goodwill impairment (5) ( 194,409 ) - ( 2,955 ) Gain on sale of assets (6) 3,420 - - Restructuring cost (7) ( 5,061 ) ( 4,087 ) 364 Amortization expense ( 5,880 ) ( 5,378 ) ( 5,018 ) Depreciation expense ( 1,868 ) ( 3,050 ) ( 3,539 ) Contingent consideration adjustment (8) - 4,400 - Interest income, net 544 1,064 ( 552 ) Income (loss) before income tax benefit (expense) ( 196,075 ) 29,829 72,618 Income tax benefit (expense) 4,295 ( 8,795 ) ( 18,259 ) Net income (loss) $ ( 191,780 ) $ 21,034 $ 54,359 (1) Unallocated 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. (2) Amortized ERP system costs represent the amortization of capitalized technology transformation costs related to newly implemented ERP system, which was recorded within selling, general, and administrative expenses on the Consolidated Statement of Operations. (3) Technology transformation costs represent costs included in net income (loss) related to the Company’s initiative to upgrade its technology platform globally, including a cloud-based ERP system and talent 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. 84 Table o f Contents (4) Acquisition costs primarily represent costs included in net income (loss) related to the Company’s business acquisition. These costs include transaction bonuses, cash retention bonus accruals, and fees paid to the Company's broker, legal counsel, and other professional services firms. See Note 3 – Acquisitions and Dispositions for further discussion. (5) The effect of the goodwill impairment charge recognized during the year ended May 31, 2025 was related to the On-Demand Talent, Consulting, and Europe and Asia Pacific segments and during the year ended May 27, 2023 related to the Sitrick segment. (6) Gain on sale of assets was related to the Company’s sale of its Irvine office building, which was completed on August 15, 2024. (7) Restructuring costs for the year ended May 31, 2025 related to the 2025 Restructuring Plan, which were authorized in December 2024 and May 2025. Restructuring costs for the year ended May 25, 2024 related to U.S. Restructuring Plan, which was authorized in October 2023, and was substantially completed during fiscal 2024. The restructuring credits for the year ended May 27, 2023 related to the release of accrued restructuring liabilities upon completion of the global restructuring and business transformation plans from fiscal 2021. (8) Contingent consideration adjustment related to the remeasurement of contingent liabilities related to the CloudGo acquisition. The tables below disclose the Company’s revenue, gross profit, significant expenses, Adjusted EBITDA, gross margin and Adjusted EBITDA margin by segment (amount in thousands): Year Ended May 31, 2025 On-Demand Talent Consulting Europe and Asia Pacific Outsourced Services All Other Revenue $ 205,976 $ 219,215 $ 77,602 $ 39,618 $ 8,920 Cost of services 127,195 137,619 50,216 23,646 5,231 Gross Profit 78,781 81,596 27,386 15,972 3,689 Compensation, bonus and commissions (1) 47,048 38,313 16,390 5,977 2,134 Other segment expenses (2) 14,617 11,565 6,518 2,414 3,393 Adjusted EBITDA $ 17,116 $ 31,718 $ 4,478 $ 7,581 $ ( 1,838 ) 85 Table o f Contents Gross Margin 38.2 % 37.2 % 35.3 % 40.3 % 41.4 % Adjusted EBITDA margin (3) 8.3 % 14.5 % 5.8 % 19.1 % ( 20.6 ) % Year Ended May 25, 2024 On-Demand Talent Consulting Europe and Asia Pacific Outsourced Services All Other Revenue $ 272,600 $ 227,967 $ 84,207 $ 38,122 $ 9,905 Cost of services 167,796 138,119 53,231 22,239 5,348 Gross Profit 104,804 89,848 30,976 15,883 4,557 Compensation, bonus and commissions (1) 53,910 41,714 17,804 6,472 2,098 Other segment expenses (2) 19,221 9,714 7,883 1,770 3,134 Adjusted EBITDA $ 31,673 $ 38,420 $ 5,289 $ 7,641 $ ( 675 ) Gross Margin 38.4 % 39.4 % 36.8 % 41.7 % 46.0 % Adjusted EBITDA margin (3) 11.6 % 16.9 % 6.3 % 20.0 % ( 6.8 ) % Year Ended May 27, 2023 On-Demand Talent Consulting Europe and Asia Pacific Outsourced Services All Other Revenue $ 372,679 $ 259,946 $ 93,166 $ 38,950 $ 10,902 Cost of services 222,595 152,898 58,624 22,978 5,406 Gross Profit 150,084 107,048 34,542 15,972 5,496 Compensation, bonus and commissions (1) 67,835 45,215 17,640 6,467 2,481 Other segment expenses (2) 21,765 8,356 6,989 2,097 1,884 Adjusted EBITDA $ 60,484 $ 53,477 $ 9,913 $ 7,408 $ 1,131 Gross Margin 40.3 % 41.2 % 37.1 % 41.0 % 50.4 % Adjusted EBITDA margin (3) 16.2 % 20.6 % 10.6 % 19.0 % 10.4 % (1) The significant expense category and amounts align with the segment-level information that is regularly provided to the CODMs. (2) Other segment expenses include occupancy expenses, business expenses, marketing expenses, recruiting expenses and other operating expenses. (3) Segment Adjusted EBITDA Margin is calculated by dividing segment Adjusted EBITDA by segment revenue. 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 31, 2025 May 25, 2024 May 27 2023 May 31, 2025 May 25, 2024 United States $ 451,228 $ 519,869 $ 664,515 $ 25,297 $ 13,343 International 100,103 112,932 111,128 1,677 2,319 Total $ 551,331 $ 632,801 $ 775,643 $ 26,974 $ 15,662 (1) Long-lived assets are comprised of property and equipment and ROU assets . 86 Table o f Contents 19. Subsequent Events On July 2, 2025, the Company, Resources Connection LLC, as borrowers, and all of the Company’s domestic subsidiaries, as guarantors, entered into the New Credit Facility, and concurrently terminated the 2021 Credit Facility. The New Credit Facility provides for a secured revolving loan, available in an amount up to the lesser of $ 50.0 million and a borrowing base formula tied to eligible receivables, which includes a $ 10.0 million sublimit for the issuance of standby letters of credit. The New Credit Facility also includes an option to increase the amount of the revolving loan up to an additional $ 15.0 million. The New Credit Facility will mature on November 30, 2029. The obligations under the New Credit Facility are secured by substantially all assets of the Company, Resources Connection LLC and all of the Company’s domestic subsidiaries. Borrowings under the New Credit Facility bear interest at a rate per annum of either, at the Company's election (i) Term SOFR (as defined in the New Credit Facility) plus a margin ranging from 1.25 % to 2.50 % or (ii) the Base Rate (as defined in the New Credit Facility), plus a margin of 0.25 % to 1.50 %, in either case, with the applicable margin depending on the Company's Consolidated EBITDA (as defined in the New Credit Facility). The Company is also obligated to pay other customary facility fees for a credit facility of this size and type. The New Credit Facility contains customary covenants, including covenants that limit or restrict the Company’s and its subsidiaries’ ability to incur liens, incur indebtedness, make certain restricted payments, merge or consolidate and make dispositions of assets and financial covenants to maintain a certain consolidated total net leverage ratio and a consolidated fixed charge coverage ratio. Upon the occurrence of an event of default under the New Credit Facility, the lender may cease making loans, terminate the New Credit Facility, and declare all amounts outstanding to be immediately due and payable. The New Credit Facility specifies a number of events of default (some of which are subject to applicable grace or cure periods), including, among other things, non-payment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults and material judgment defaults. On July 4, 2025, One Big Beautiful Bill Act (“OBBBA”) was signed into law. Among other changes, OBBBA makes permanent several expiring provisions from the Tax Cuts and Jobs Act of 2017, restores favorable tax treatment of various business provisions, and modifies the international tax regime. These changes were not reflected in the income tax provision for fiscal 2025, as enactment occurred after the balance sheet date. We are currently evaluating the potential impact of OBBBA on our consolidated financial statements going forward. 87 Table o f Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None.