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What changed in RESOURCES CONNECTION, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of RESOURCES CONNECTION, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+339 added−314 removedSource: 10-K (2023-07-25) vs 10-K (2022-07-28)

Top changes in RESOURCES CONNECTION, INC.'s 2023 10-K

339 paragraphs added · 314 removed · 222 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

66 edited+23 added−16 removed44 unchanged
Biggest changeFor these reasons, we invest in the ongoing professional development of our employees through curated programs designed to acclimate employees to the business and promote personal, functional and leadership growth. In fiscal 2022, we facilitated small-leader forums to foster peer mentorship opportunities and to support areas where our leaders sought reinforcement in driving alignment and building high-performing teams.
Biggest changeIn fiscal 2023, we saw a continued and strengthened desire from employees seeking authentic, empathetic and adaptive behaviors from their leaders. For these reasons, we invest in the ongoing professional development of our employees and leaders. We designed and delivered curated programs to onboard and acclimate employees to the business and promote personal, professional and leadership growth.
The use of project consultants as a viable alternative to traditional accounting, consulting, and law firms allows companies to: Strategically access specialized skills and expertise for projects of set durations; Engage the very best talent across regions and geographies; Be nimble and mobilize quickly; Blend independent and fresh points of view; Effectively supplement internal resources; Increase labor flexibility; and Reduce overall hiring, training and termination costs.
The use of project consultants as a viable alternative to traditional accounting, consulting, and law firms allows companies to: Strategically access specialized skills and expertise for projects of set durations; Engage the very best expert talent across regions and geographies; Be nimble and mobilize quickly; Blend independent and fresh points of view; Effectively supplement internal resources; Increase labor flexibility; and Reduce overall hiring, training and termination costs.
ITEM 1. BUSINESS. Overview Resources Global Professionals is a global consulting firm focused on project execution services that power clients’ operational needs and change initiatives utilizing on-demand, experienced and diverse talent. As a next-generation human capital partner for our clients, we specialize in co-delivery of enterprise initiatives typically precipitated by business transformation, strategic transactions or regulatory change.
ITEM 1. BUSINESS. Overview Resources Global Professionals (“RGP”) is a global consulting firm focused on project execution services that power clients’ operational needs and change initiatives utilizing on-demand, experienced and diverse talent. As a next-generation human capital partner for our clients, we specialize in co-delivery of enterprise initiatives typically precipitated by business transformation, strategic transactions or regulatory change.
Our solution offers the following elements: A relationship-oriented and collaborative approach to client service; A dedicated talent acquisition and management team adept at developing, managing and deploying a project-based workforce; Deep functional and/or technical experts who can assess clients’ project needs and customize solutions to meet those needs; Highly qualified and pedigreed consultants with the requisite expertise, experience and points of view; Competitive rates on an hourly basis as well as on a project basis; and Significant client control of their projects with effective knowledge transfer and change management. 4 Table of Contents Resources Global Professionals’ Strategic Priorities Our Business Strategy We are dedicated to serving our clients with highly qualified and experienced talent in support of projects and initiatives in a broad array of functional areas, including: Transactions Integration and divestitures Bankruptcy/restructuring Going public readiness and support Financial process optimization System implementation Regulations Accounting regulations Internal audit and compliance Data privacy and security Healthcare compliance Regulatory compliance Transformations Finance transformation Digital transformation Supply chain management Cloud migration Data design and analytics Our objective is to build and maintain Resources Global Professionals’ reputation as the premier provider of project execution services for companies facing transformation, change and compliance challenges.
Our solution offers the following elements: A relationship-oriented and collaborative approach to client service; A dedicated talent acquisition and management team adept at developing, managing and deploying a project-based workforce; Deep functional and/or technical experts who can assess clients’ project needs and customize solutions to meet those needs; Highly qualified and pedigreed consultants with the requisite expertise, experience and points of view; Competitive rates on an hourly basis as well as on a project basis; and Significant client control of their projects with effective knowledge transfer and change management. 4 Table of Contents RGP’s Strategic Priorities Our Business Strategy We are dedicated to serving our clients with highly qualified and experienced talent in support of projects and initiatives in a broad array of functional areas, including: Transactions Integration and divestitures Bankruptcy/restructuring Going public readiness and support Financial process optimization System implementation Regulations Accounting regulations Internal audit and compliance Data privacy and security Healthcare compliance Regulatory compliance Transformations Finance transformation Digital transformation Supply chain management Cloud migration Data design and analytics Our objective is to build and maintain RGP’s reputation as the premier provider of project execution services for companies facing transformation, change and compliance challenges.
Supply of Project Consultants Based on our review of labor market dynamics and discussions with our consultants, we believe the number of professionals seeking to work on an agile basis has been increasing due to a desire for: More flexible hours and work arrangements, including working-from-home options, coupled with an evolving professional culture that offers competitive wages and benefits; The ability to learn and contribute in different environments and collaborate with diverse team members; Challenging engagements that advance their careers, develop their skills and add to their portfolio of experience; A work environment that provides a diversity of, and more control over, client engagements; and Alternate employment opportunities throughout the world.
Supply of Project Consultants Based on our review of labor market dynamics and discussions with our consultants, we believe the number of professionals seeking to work on an agile basis has been increasing due to a desire for: More flexible hours and work arrangements, including working-from-home options, coupled with an evolving professional culture that offers competitive wages and benefits; The ability to learn and contribute to different environments and collaborate with diverse team members; Challenging engagements that advance their careers, develop their skills and add to their portfolio of experience; A work environment that provides a diversity of, and more control over, client engagements; and Alternative employment opportunities throughout the world.
We want to maintain a leadership position in today’s world of work, providing the best talent to execute on client projects in an increasingly fluid gig-oriented environment.
We want to maintain a leadership position in today’s world of work, providing the best talent to execute client projects in an increasingly fluid gig-oriented environment.
A copy of our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K and amendments to those reports may also be obtained free of charge on the Investor Relations page of our website at https://ir.rgp.com as soon as reasonably practicable after we file such reports with the SEC. 11 Table of Contents
A copy of our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K and amendments to those reports may also be obtained free of charge on the Investor Relations page of our website at https://ir .rgp.com as soon as reasonably practicable after we file such reports with the SEC. 12 Table of Contents
We believe that by establishing relationships with our clients to solve their professional service needs, we are more likely to identify new opportunities to serve them. The strength and depth of our client relationships is demonstrated by the 75% retention rate of our top 100 clients over the last five fiscal years. Build the RGP brand.
We believe that by establishing relationships with our clients to solve their professional service needs, we are more likely to identify new opportunities to serve them. The strength and depth of our client relationships is demonstrated by the 80% retention rate of our top 100 clients over the last five fiscal years. Build the RGP brand.
For more discussion of the potential impact that the regulatory environment could have on our financial results, refer to Item 1A “Risk Factors.” Available Information Our principal executive offices are located at 17101 Armstrong Avenue, Irvine, California 92614. Our telephone number is (714) 430-6400 and our website address is https://www.rgp.com.
For more discussion of the potential impact that the regulatory environment could have on our financial results, refer to Item 1A “Risk Factors.” 11 Table of Contents Available Information Our principal executive offices are located at 17101 Armstrong Avenue, Irvine, California 92614. Our telephone number is (714) 430-6400 and our website address is https://www.rgp.com.
In fiscal 2022 we continued with this initiative, as we seek to provide borderless solutions, anytime, anywhere, bringing the best talent to meet our clients’ business needs, based on expected outcome, not zip code.
In fiscal 2023 we continued with this initiative, as we seek to provide borderless solutions, anytime, anywhere, bringing the best talent to meet our clients’ business needs, based on expected outcome, not zip code.
We believe our branding initiatives, coupled with our high-quality client service, help to differentiate us from our competitors and to establish Resources Global Professionals as a credible and reputable global professional services firm. Competition We operate in an extremely competitive, highly fragmented market and compete for clients and consultants with a variety of organizations that offer similar services.
We believe our branding initiatives, coupled with our high-quality client service, help to differentiate us from our competitors and to establish RGP as a credible and reputable global professional services firm. Competition We operate in an extremely competitive, highly fragmented market and compete for clients and consultants with a variety of organizations that offer similar services.
We believe we have significant opportunity for continued organic growth in our core business while also growing through strategic and highly targeted acquisitions as our clients continue to accelerate their digital, workforce and workplace paradigm transformations . Key elements of our growth strategy include: 5 Table of Contents Further our strategic brand marketing.
We believe we have significant opportunity for continued organic growth in our core business while also growing through strategic and highly targeted acquisitions as our clients continue to accelerate their digital, workforce and workplace paradigm transformations . Key elements of our growth strategy include: Further our strategic brand marketing.
As a more cost-efficient alternative, companies sometimes use temporary employees from traditional and internet-based staffing firms, although these employees may be less experienced or less qualified than employees from professional services firms. Finally, companies can supplement their internal resources with employees from agile consulting or other traditional professional services firms, like Resources Global Professionals.
As a more cost-efficient alternative, companies sometimes use temporary employees from traditional and internet-based staffing firms, although these employees may be less experienced or less qualified than employees from professional services firms. Finally, companies can supplement their internal resources with employees from agile consulting or other traditional professional services firms, like RGP.
The Total Rewards Philosophy is comprised of three main components: base pay, designed to reflect an individual’s value, knowledge and skills that contribute to the organization through an individual’s day-to-day job performance; short-term incentives, awarded to employees based on results delivered during the applicable fiscal year and determined by quantitative metrics, qualitative contributions, individual goals, and demonstration of company values; and long-term incentives, granted to reward and retain employees who have strategic impact on the long-term success of the Company.
The Total Rewards Philosophy is comprised of three main components: (i) base pay, designed to reflect an individual’s value, knowledge and skills that contribute to the organization through an individual’s day-to-day job performance; (ii) short-term incentives, awarded to employees based on results delivered during the applicable fiscal year and determined by quantitative metrics, qualitative contributions, individual goals, and demonstration of company values; and (iii) long-term incentives, granted to reward and retain employees who have strategic influence on the long-term success of the Company.
While the majority of our client relationships are driven at a local market level, our Strategic Client Accounts, which comprise approximately 75 accounts, are led by account leaders responsible for relationships across markets and who are specifically tasked with growing our global relationships in these key accounts.
While the majority of our client relationships are driven at a local market level, our Strategic Client Accounts, which comprise 106 accounts, are led by account leaders responsible for relationships across markets and who are specifically tasked with growing our global relationships in these key accounts.
Consistent with current industry trends, we believe our clients may also continue to increase that spend as the global economy recovers and as businesses adopt a more agile workforce strategy. We believe that by continuing to deliver high-quality services and by furthering our relationships with our clients, we can capture a significantly larger share of our clients’ professional services budgets.
Consistent with current industry trends, we believe our clients may also continue to increase that spend as businesses adopt a more agile workforce strategy. We believe that by continuing to deliver high-quality services and by furthering our relationships with our clients, we can capture a significantly larger share of our clients’ professional services budgets.
Our brand marketing initiatives help bolster Resources Global Professionals’ reputation in the markets we serve. Our brand is reinforced by our professionally designed website, print, and online advertising, direct marketing, seminars, thought leadership whitepapers, initiative-oriented brochures, social media and public relations efforts.
Our brand marketing initiatives help bolster RGP’s reputation in the markets we serve. Our brand is reinforced by our professionally designed website, print, and online advertising, direct marketing, seminars, thought leadership whitepapers, initiative-oriented brochures, social media and public relations efforts.
Over time, we expect to be able to drive volume through the HUGO platform by attracting more small- and medium-sized businesses looking for interim support and by serving a large percentage of our current interim business, which in turn will not only drive top-line growth but also enhance profitability. Engage in strategic acquisitions .
Over time, we expect to be able to drive volume through the HUGO platform by attracting more small- and medium-sized businesses looking for interim support and by serving a larger percentage of our current professional staffing business, which we believe will not only drive top-line growth but also enhance profitability . Engage in strategic acquisitions .
In addition to salaries or hourly rates, our eligible employees, including our consultants, are offered participation in a comprehensive benefits program including: paid time off and holidays, group medical and dental programs, a basic term life insurance program, health savings accounts, flexible spending accounts, a 401(k) retirement plan with employer matching contributions, a 2019 Employee Stock Purchase Plan (“ESPP”), which enables employees to purchase shares of our stock at a discount, and an employee assistance program.
In addition to salaries or hourly rates, our eligible employees, including our consultants, are offered participation in a comprehensive benefits program (based on location) including: paid time off and holidays, group medical and dental programs, a basic term life insurance program, health savings accounts, flexible spending accounts, a 401(k) retirement plan with employer matching contributions, a pension plan or contributions to a statutory retirement program, the 2019 Employee Stock Purchase Plan, as amended (“ESPP”), which enables employees to purchase shares of our stock at a discount, and an employee assistance program.
We also share across the Company and with new revenue team members the best and most effective practices of our highest achieving offices and accounts.
We also share across the Company and with new client development team members the best and most effective practices of our highest achieving offices and accounts.
On the other hand, a professional who works as an independent contractor assumes the ongoing burden of sourcing assignments and significant administrative obligations, including potential tax and legal issues. Resources Global Professionals’ Solution We believe Resources Global Professionals is ideally positioned to capitalize on the confluence of the industry shifts described above.
On the other hand, a professional who works as an independent contractor assumes the ongoing burden of sourcing assignments and significant administrative obligations, including potential tax and legal issues. RGP’s Solution We believe RGP is ideally positioned to capitalize on the confluence of the industry shifts described above.
These reports are maintained on the SEC’s website at http://www.sec.gov.
These reports are maintained on the SEC’s website at https://www .sec.gov.
We believe, based on discussions with our clients, that Resources Global Professionals provides the agility companies desire in today’s highly competitive and quickly evolving business environment.
We believe, based on discussions with our clients, that RGP provides the agility companies desire in today’s highly competitive and quickly evolving business environment.
RGP accounts for more than 90% of our consolidated revenue and segment total Adjusted EBITDA and, therefore, represents our dominant segment. The discussions in this section apply to both our entire business and RGP.
Therefore, Sitrick is disclosed in Other Segments. RGP accounts for more than 90% of our consolidated revenue and segment total Adjusted EBITDA and, therefore, represents our dominant segment. The discussions in this section apply to both our entire business and RGP.
We have historically built our brand through the consistent and reliable delivery of high-quality, value-added services to our clients as well as a significant referral network of 3,388 consultants and 871 management and administrative employees as of May 28, 2022. In recent years, we have invested in global, regional and local marketing and brand activation efforts that reinforce our brand.
We have historically built our brand through the consistent and reliable delivery of high-quality, value-added services to our clients as well as a significant referral network of 3,145 consultants and 917 management and administrative employees as of May 27, 2023. In recent years, we have invested in global, regional and local marketing and brand activation efforts that reinforce our brand.
We strive to develop new client relationships primarily by leveraging the significant contact networks of our management and consultants and through referrals from existing clients. We believe we can continue to attract new clients by building our brand identity and reputation, supplemented by our global, regional and local marketing efforts.
We strive to develop new client relationships primarily by leveraging the significant contact networks of our management and consultants, through referrals from existing clients and through a dedicated business development team targeting specific clients. We believe we can continue to attract new clients by building our brand identity and reputation, supplemented by our global, regional and local marketing efforts.
Based in Irvine, California, with offices worldwide, RGP’s agile human capital delivery model attracts top-caliber professionals with in-demand skillsets who seek a workplace environment that embraces flexibility, collaboration and human connection.
Based in Irvine, California, with a worldwide presence, our agile human capital model attracts top-caliber professionals with in-demand skillsets who seek a workplace environment that embraces flexibility, collaboration and human connection.
Additionally, team members in our Project Consulting Services group (formerly known as our “Advisory and Project Services” group) are individuals with the requisite and deep subject matter expertise in areas of particular client concern and assist with scoping, proposing and delivering complex engagements. 9 Table of Contents We believe our ability to deliver professional services successfully to clients is dependent on our leaders in the field working together as a collegial and collaborative team.
Additionally, team members in our Project Consulting Services group are individuals with deep subject matter expertise in areas of particular client concern who assist with scoping, proposing and delivering complex engagements. We believe our ability to deliver professional services successfully to clients is dependent on our leaders in the field working together as a collegial and collaborative team.
The Diversity Council serves an important role in working closely with senior leaders to facilitate alignment between our DE&I efforts and overall business strategy of promoting human capital practices that support and accelerate our DE&I goals. Our Diversity Council hosts periodic town hall meetings that are accessible to our global workforce.
The DE&I Council serves an important role in working closely with senior leaders to facilitate alignment between our DE&I efforts and overall business strategy. Our DE&I Council hosts periodic town hall meetings that are accessible to our global workforce.
Our engagements are designed to leverage human connection and collaboration to deliver practical solutions and more impactful results that power our clients’, consultants’ and partners’ success. A disruptor within the professional services industry since its founding in 1996, today the Company finds itself enjoying a highly favorable macro environment that embraces its differentiated agile delivery model.
Our engagements are designed to leverage human connection, expertise and collaboration to deliver practical solutions and more impactful results that power our clients’, consultants’ and partners’ success. A disruptor within the professional services industry since our founding in 1996, today we embrace our differentiated agile delivery model.
In fiscal 2022, we also continued our Social Justice Charitable Matching Fund, which has allowed us to help raise DE&I awareness internally across our organization by matching employees’ contributions to charitable organizations that promote social justice. As of May 28, 2022, we achieved our goal of matching $100,000 in contributions during fiscal 2022.
In fiscal 2023, we also continued our Social Justice Charitable Matching Fund, which has allowed us to help raise DE&I awareness internally across our organization by matching employees’ contributions to charitable organizations that promote social justice.
Operations We generally provide our professional services to clients at a local level, with the oversight of our market or account leaders and consultation with our corporate management team.
In fiscal 2023, our 10 largest clients accounted for approximately 22% of our revenue. Operations We generally provide our professional services to clients at a local level, with the oversight of our market or account leaders and consultation with our corporate management team.
We plan to expand the geographic reach to other key markets within the United States (“U.S.”) such as California and Texas in fiscal 2023 .
We plan to expand the geographic reach to other key markets within the United States (“U.S.”) in fiscal 2024 .
Consumer buying habits continue to dictate a more self-serve frictionless experience. We believe the use of technology platforms to match clients and talent is the future of professional staffing. HUGO, our digital engagement platform, allows such an experience for clients and talent in the professional staffing space to connect, engage and even transact directly.
We believe the use of technology platforms to match clients and talent is the future of professional staffing. HUGO by RGP® (“HUGO”), our digital engagement platform, allows such an experience for clients and talent in the professional staffing space to connect, engage and even transact directly.
The employment alternatives available to professionals may fulfill some, but not all, of an individual’s career objectives. A professional working for a Big Four firm or a consulting firm may receive challenging assignments and training; however, he or she may encounter a career path with less choice and less flexible hours, extensive travel demands and limited control over work engagements.
A professional working for a Big Four firm or a consulting firm may receive challenging assignments and training; however, he or she may encounter a career path with less choice and less flexible hours, extensive travel demands and limited control over work engagements.
We piloted the platform in limited markets in October 2021 and continued to enhance its functionality with further artificial intelligence and machine learning. We also have been developing sales and marketing strategies to increase client and talent adoption of the platform.
We piloted the platform in three primary markets – New York/New Jersey, Southern California and Texas, and have continued to expand its functionality with further artificial intelligence and machine learning. We have also been developing sales and marketing strategies to increase client and talent adoption of the platform.
Each of these three segments reports through a separate management team to our Chief Executive Officer, who is the Chief Operating Decision Maker for segment reporting purposes. RGP is our only reportable segment. taskforce and Sitrick do not individually meet the quantitative thresholds to qualify as reportable segments. Therefore, they are combined and disclosed as Other Segments.
Each of these segments reports through a separate management team to our Chief Executive Officer, who is the Chief Operating Decision Maker for segment reporting purposes. RGP is the Company’s only reportable segment that meets the quantitative threshold of a reportable segment . Sitrick does not individually meet the quantitative threshold to qualify as a reportable segment.
We are proud to be a Paradigm for Parity Coalition member, which is a coalition of companies committed to addressing the corporate leadership gender and diversity gaps, and are proud that 100% of our C-suite members (i.e., our “Chief” level positions) are women or minorities. Additionally, 36% of our directors identify as women or minorities.
We are proud to be a Paradigm for Parity Coalition member, which is a coalition of companies committed to addressing the corporate leadership gender and diversity gaps, and are proud that 100% of our Executive Leadership Team are women, racially or ethnically diverse. Additionally, 40% of our directors identify as women, racially or ethnically diverse.
Successful talent development starts with hiring the right people. We seek to recruit and hire candidates that demonstrate skills and competencies that align with our core values and that have an aptitude to further develop those strengths. After onboarding, we remain dedicated to providing employees with training and development opportunities to allow our employees to progress in their careers.
We seek to recruit and hire candidates that demonstrate skills and competencies that align with our core values and that have an aptitude to further develop and expand those capabilities. After onboarding, our Life + Learning team remains committed to providing employees with training and development opportunities to allow our employees to progress in their careers.
Additionally, we offer all U.S.-based employees participation in our Employee Assistance Program, which provides our employees with mental health support and resources. Building Strong Leaders and Talent Management Strong leadership is critical to fostering employee engagement and positioning employees to perform at their best.
We also offer all global employees participation in programs and resources to support personal and family health and wellbeing, including our Employee Assistance Program in the U.S. Building Strong Leaders and Talent Management Strong “human leadership” is critical to fostering employee engagement and positioning employees to perform at their best.
We believe this growing shift in workforce strategy towards a project-based orientation was greatly accelerated by the Pandemic, which placed an enhanced emphasis on business agility, and continues to be 3 Table of Contents hastened by the competition for talent. Permanent professional personnel positions are being reduced as organizations engage agile talent for project initiatives and transformation work.
We believe this growing shift in workforce strategy towards a project-based orientation was greatly accelerated by the COVID-19 pandemic (the “Pandemic”), which placed an enhanced emphasis on business agility, and continues to be hastened by the competition for talent.
In fiscal 2022, we served over 2,200 clients in 42 countries. Our revenues are not concentrated with any particular client. No single client accounted for more than 10% of revenue for the 2022, 2021 or 2020 fiscal years. In fiscal 2022, our 10 largest clients accounted for approximately 20% of our revenues.
Clients We provide our services and solutions to a diverse client base in a broad range of industries. In fiscal 2023, we served over 2,000 clients in 37 countries. Our revenues are not concentrated with any particular client. No single client accounted for more than 10% of revenue for the 2023, 2022 or 2021 fiscal years.
Our agile professional services model allows us to quickly align the right resources for the work at hand with speed and efficiency in ways that bring value to both our clients and talent.
Our agile professional services model allows us to quickly align the right resources for the work at hand with speed and efficiency in ways that bring value to both our clients and talent. Our approximately 4,100 professionals collectively engaged with over 2,000 clients around the world in fiscal 2023, including over 87% of the Fortune 100 as of May 2023.
Organizations use a mix of alternative resources to execute on projects. Some companies rely solely on their own employees who may lack the requisite time, experience or skills for specific projects.
Permanent professional personnel positions are being reduced as organizations engage agile talent for project initiatives and transformation work. 3 Table of Contents Organizations use a mix of alternative resources to execute projects. Some companies rely solely on their own employees who may lack the requisite time, experience or skills for specific projects.
Our unique approach to workforce strategy strongly positions us to help our clients transform their businesses and workplaces, especially in a time where high-quality talent is increasingly scarce and the usage of a flexible workforce to execute transformational projects has become the dominant operating model.
Our unique approach to workforce strategy strongly positions us to help our clients transform their businesses and workplaces, especially in a time where high-quality talent is increasingly scarce and leaders are increasingly adopting more flexible workforce models to execute transformational projects. We believe that we are continuing to lay a solid foundation for the future.
As talent preferences have shifted dramatically in the direction of flexibility, choice and control, employers struggling to compete in today’s environment must rethink the way work gets done and consider implementing new, more agile workforce strategies.
The trends in today’s marketplace favor the flexibility and agility that RGP provides as businesses confront transformation pressures and speed-to-market challenges. As talent preferences continue to shift in the direction of flexibility, choice and control, employers struggling to compete in today’s business environment must rethink the way work gets done and consider implementing new, more agile workforce strategies.
Our Global Business Continuity Team continued to improve our disaster preparedness plans and implement strategies to manage the health and security of our employees, business continuity, client confidence, and excellent customer service. In response to the Pandemic, we introduced a work-from-home policy, critical safety and hygiene protocols and a limited business travel directive.
Our Global Business Continuity Team continued to improve our disaster preparedness plans and implement strategies to manage the health and security of our employees, business continuity, client confidence, and excellent customer service.
We also allow eligible consultants to maintain continuation of benefits for 90 days following the completion of a consulting project. 8 Table of Contents We utilize a Pay for Success Total Rewards Philosophy that promotes more consistent and transparent practices for rewarding and incentivizing our employees and the alignment of pay practices with the Company’s success.
We utilize a Pay for Success Total Rewards Philosophy that promotes more consistent and transparent practices for rewarding and incentivizing our employees and the alignment of pay practices with the Company’s success.
The need for automation and self-service has been an increasing trend, especially in light of the Pandemic. We will continue to focus on expanding our digital consulting capabilities and their geographic reach to drive growth in the business by capturing the market demand and opportunities. Expand sales channel through our digital engagement platform (HUGO).
We will continue to focus on expanding our digital consulting capabilities and their geographic reach to drive growth in the business by capturing the market demand and opportunities. Expand sales channel through our digital engagement platform (HUGO by RGP®). Consumer buying habits continue to dictate a more self-serve frictionless experience.
You Matter includes service awards to acknowledge key milestones, including employment anniversaries and hours of service. This program provides all employees with the ability to both give and receive recognition, contributing to our culture of gratitude and excellence. Clients We provide our services and solutions to a diverse client base in a broad range of industries.
During fiscal 2023, we also continued our “You Matter” digital global employee recognition and appreciation program. You Matter includes service awards to acknowledge key milestones, including employment anniversaries and hours of service. This program provides all employees with the ability to both give and receive recognition, contributing to our culture of gratitude and excellence.
Business Development Our business development initiatives are comprised of: local and global initiatives focused on existing clients and target companies; national and international targeting efforts focused on multinational companies; brand marketing activities; and national and local advertising and direct mail programs.
These centralized functions minimize the administrative burdens on our front office market leaders and enable operational efficiency and scalability throughout the enterprise. 10 Table of Contents Business Development Our business development initiatives are comprised of: local and global initiatives focused on existing clients and target companies; national and international targeting efforts focused on multinational companies; brand marketing activities; and national and local advertising and direct mail programs.
This group’s mission is to “meet people where they are” in relationship to DE&I and to promote DE&I awareness in existing business forums (i.e., to raise a DE&I topic in existing business meetings or planned social gatherings). The Ambassador teams operate at a regional level and meet quarterly to share success stories and practices across the regions.
The DE&I Ambassador program is comprised of employee volunteers, with a mission to “meet people where they are” in relationship to DE&I and to promote DE&I awareness in existing business forums (i.e., to raise a DE&I topic in existing business meetings or planned social gatherings).
Our Growth Strategy Since inception, our growth has been primarily organic with certain strategic acquisitions along the way that augmented our physical presence or solution offerings.
We rely on trademark registrations and common law trademark rights to protect the distinctiveness of our brand. 5 Table of Contents Our Growth Strategy Since inception, our growth has been primarily organic with certain strategic acquisitions along the way that augmented our physical presence or solution offerings.
Our principal competitors include: business operations and financial consulting firms; local, regional, national and international accounting and other traditional professional services firms; independent contractors; traditional and internet-based staffing firms; and the in-house or former in-house resources of our clients. 10 Table of Contents We compete for clients based on the quality of professionals we bring to our clients, the knowledge base they possess, our ability to mobilize the right talent quickly, the scope and price of services, and the geographic reach of services.
Our principal competitors include: business operations and financial consulting firms; local, regional, national and international accounting and other traditional professional services firms; independent contractors; traditional and internet-based staffing firms; and the in-house or former in-house resources of our clients.
In fiscal 2022, we continued our Diversity Council and Diversity, Equity and Inclusion Ambassador programs, consisting of employees representing a cross-section of functions and levels across the globe.
In fiscal 2023, we continued our DE&I Council and DE&I Ambassador programs, which consist of employees representing a cross-section of functions and levels across the globe and support our DE&I priorities by designing and delivering measurable and impactful solutions.
Our gender and racial diversity representation in the C-suite positions, board of directors and U.S.-based workforce is presented in the following table: * -- Data for our C-suite and board of directors is as of May 28, 2022 and our total U.S.-based employees is as of November 2021.
Our gender, racial and ethnic diversity representation in the Executive Leadership Team, Board of Directors and U.S.-based workforce is presented in the following table: 7 Table of Contents * -- Diversity representation is as of May 27, 2023.
Business Segments In fiscal 2022, we operated in three business segments, consisting of: RGP – a global business consulting firm focused on project execution services that power clients’ operational and change initiatives with experienced and diverse talent; taskforce – a German professional services firm that operates under the taskforce brand.
Business Segments Effective May 31, 2022, the Company’s operating segments consist of the following: RGP – a global business consulting firm focused on project execution services that power clients’ operational needs and change initiatives with experienced and diverse talent; and Sitrick – a crisis communications and public relations firm which operates under the Sitrick brand, providing corporate, financial, transactional and crisis communication and management services.
With the addition of Veracity Consulting Group, LLC (“Veracity”), a digital consulting firm that we acquired in July 2019, we added significant digital consulting capabilities, particularly as related to experience and automation. Customer experience and employee and workspace experience continue to be growing themes in the marketplace and within our client portfolio.
Our subsidiary Veracity Consulting Group, LLC (“Veracity”) offers valuable digital consulting services, particularly related to experience and automation. Customer experience and employee and workspace experience continue to be growing themes in the marketplace and within our client portfolio. The need for automation and self-service has also been an increasing trend.
In addition, eligible management and administrative employees may participate in annual cash incentive programs or receive stock-based awards.
In addition, eligible management and administrative employees may participate in annual cash incentive programs or receive stock-based awards. We also allow eligible consultants in the U.S. to maintain continuation of benefits for 90 days following the completion of a consulting project.
We believe this focus enhances our opportunities to develop in-depth knowledge of these clients’ needs and the ability to increase the scope and size of projects with those clients. The Strategic Client Account program has been one of our key drivers for revenue and business growth. Grow our client base. We continue to focus on attracting new clients.
In addition to serving our largest clients with a differentiated focus, we also segment our clients by industry verticals. We believe this focus enhances our opportunities to develop in-depth knowledge of these clients’ needs and the ability to increase the scope and size of projects with those clients.
We continue to monitor changing government rules and regulations in countries where we operate and have reopened offices in accordance with local health department guidelines. We have also evolved our work-from-home policy to a hybrid work policy, where employees are invited to work collaboratively with colleagues in the office but are also permitted to work from home as desired.
To promote employee wellbeing and collaboration, we evolved our work-from-home policy to a hybrid work policy, where employees are invited to work collaboratively with colleagues in the office but are also permitted to work remotely as desired. Our goal is to help every human in our workforce maintain a positive, productive and connected work experience.
As of May 28, 2022, we had 4,259 employees, including 871 management and administrative employees and 3,388 consultants. Our employees are not covered by any collective bargaining agreements. 6 Table of Contents Our Culture and Values Our culture is the cornerstone of all our human capital programs.
Human Capital Management Our internal employees and consultants represent our greatest asset and operate together to provide the highest quality of service to our clients. As of May 27, 2023, we had 4,062 employees, including 917 management and administrative employees and 3,145 consultants. Our employees are not covered by any collective bargaining agreements.
In addition, we continued to support and prepare our internal leaders to lead through this unprecedented time of change by integrating wellness and leadership development topics into our quarterly senior leadership meetings. We also conducted intentional leader listening forums to help guide our leaders to establish and manage a return-to-the-office hybrid work approach.
We continued to actively engage with our internal leaders by integrating wellness and leadership development topics into our quarterly senior leadership meetings. We also conducted intentional leader listening forums and mentorship programs to help guide our leaders during fiscal 2023. Compensation and Benefits We provide a competitive compensation and benefits program to attract and reward our employees.
In fiscal 2022, we introduced our new tagline ― Dare to Work Differently ― to clarify our brand. We are now in the process of further clarifying our brand and will be activating our new brand positioning early next fiscal year. We rely on trademark registrations and common law trademark rights to protect the distinctiveness of our brand.
In fiscal 2022, we introduced our new tagline ― Dare to Work Differently ― to clarify our brand. We made progress on clarifying our brand and activated our new brand positioning during fiscal 2023.
In these meetings, our council discusses the current year’s DE&I initiatives and strategy for execution on those initiatives and considers ideas for new DE&I activities raised by the broader employee population. 7 Table of Contents Our fiscal 2022 DE&I initiatives focused on increasing DE&I awareness, education and involvement among our workforce, increasing diversity in our workforce, and promoting diversity in our Go-to-Market activities.
Our fiscal 2023 DE&I strategic priorities remained focused on increasing DE&I awareness, education and involvement among our workforce, increasing diversity in our workforce, and promoting diversity in our Go-to-Market activities.
We will continue to seek acquisition opportunities to augment and expand the breadth and depth of our digital and other core capabilities. Human Capital Management Our internal employees and consultants represent our greatest asset and operate together to provide the highest quality of service to our clients.
We will continue to seek acquisition opportunities to augment and expand the breadth and depth of our digital and other core capabilities. 6 Table of Contents Our Service Offerings Project Consulting . We partner with our people and clients to deliver value and impact, bringing our depth of experience and “sleeves up” approach to project execution.
Removed
The trends in today’s marketplace favor the flexibility and agility that Resources Global Professionals (“RGP”) provides as businesses confront transformation pressures and speed-to-market challenges. While these forces were already well underway in 2019, the COVID-19 pandemic (the “Pandemic”) has served to significantly transform the modern workplace in ways that offer us a clear competitive advantage.
Added
We have evolved our client engagement and talent delivery model to take advantage of these dramatic and important shifts in the direction of flexibility, control and choice.
Removed
Our approximately 4,300 professionals collectively engaged with over 2,200 clients around the world in fiscal 2022, including over 88% of the Fortune 100 as of May 2022.
Added
Prior to May 31, 2022, the Company’s Other Segments included taskforce, along with its parent company, Resources Global Professionals GmbH, an affiliate of the Company. taskforce was divested on May 31, 2022; refer to Note 2 – Summary of Significant Accounting Policies and Note 3 – Dispositions in the Notes to Consolidated Financial Statements for further information.
Removed
It utilizes a distinct independent contractor/partner business model and infrastructure and focuses on providing senior interim management and project management services to middle-market clients in the German market; and  Sitrick – a crisis communications and public relations firm which operates under the Sitrick brand, providing corporate, financial, transactional and crisis communication and management services.
Added
Prior-period comparative segment information was not restated as a result of the divestiture of taskforce as we did not have a change in internal organization or the financial information our Chief Operating Decision Maker uses to assess performance and allocate resources.
Removed
We regularly evaluate all parts of our business to ensure that we align our time, resources and efforts to market opportunities that will enable us to maximize profitability and shareholder value. On May 31, 2022, we completed the sale of taskforce to the original founder and a member of the senior leadership team of taskforce .
Added
The traditional employment options available to professionals may fulfill some, but not all, of an individual’s career objectives.
Removed
We believe the interim management business that primarily serves the middle-market client base in the German market no longer aligns with our strategy in the European region, which highly focuses on providing project consulting and execution services to large global clients. Beginning in fiscal 2023, we will operate in the remaining two operating segments, RGP and Sitrick.
Added
The Strategic Client Account and Industry Vertical programs have been key drivers for our revenue and business growth.  Grow our client base. We continue to focus on attracting new clients.
Removed
See discussion in Note 2 – Summary of Significant Accounting Policies and Note 20 – Subsequent Events in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K .
Added
While many companies find their internal employees lack the time, experience, or skills for project execution, we seek out talent who can bring fresh ideas to drive any project to a successful conclusion.  On-demand Talent . Tapping into our agile talent pool, we mobilize the right resources to support an organization in today’s rapidly changing business environment.
Removed
Additionally, we will direct clients that typically use RGP more episodically and almost exclusively for interim staffing to the HUGO platform, allowing a broader array of clients to be reached and lowering the overall cost to serve in that client segment.
Added
Our workforce strategy provides flexible, collaborative resources to meet our clients’ needs.  Other Services . From digital workflows to back-office functions, we support vital business processes, freeing our clients to focus on transformation. In addition, our award-winning recruiters quickly find and assess top talent for business-critical positions for a wide range of clients.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

43 edited+14 added−8 removed110 unchanged
Biggest changeGovernmental measures intended to reduce the spread of the Pandemic have affected, and similar measures that may be taken in the future to combat the Pandemic or any other pandemic or epidemic may affect, how we operate, including, among other things, by reducing demand for or delaying client decisions to procure our services, or by resulting in cancellations of existing projects. 12 Table of Contents Any surge in the Pandemic or any future pandemic or epidemic could also result in a decline in productivity, which may adversely impact our ability to continue to efficiently serve our clients.
Biggest changeGovernmental measures that are intended to reduce the spread or otherwise combat a pandemic or epidemic may affect how we operate, including, among other things, by reducing demand for or delaying client decisions to procure our services, or by resulting in cancellations of existing projects.
While we are not currently subject to any client-related legal claims which we believe are material, it remains possible, because of the nature of our business, we may be involved in litigation in the future that could materially affect our future financial results.
While we are not currently subject to any client-related legal claims which we believe are material, it remains possible, because of the nature of our business, that we may be involved in litigation in the future that could materially affect our future financial results.
The Pandemic or other public health epidemics or pandemics pose the risk that we or our employees and partners may be prevented from conducting business activities at full capacity for an indefinite period of time, including due to the spread of the virus or due to shutdowns or other measures that are requested or mandated by governmental authorities.
Public health epidemics or pandemics pose the risk that we or our employees and partners may be prevented from conducting business activities at full capacity for an indefinite period of time, including due to the spread of the virus or due to shutdowns or other measures that are requested or mandated by governmental authorities.
We also began upgrading to a new cloud-based enterprise-wide operating and Enterprise Resource Planning (“ERP”) system. The continued success of these initiatives requires adjusting and strengthening our business operations, financial and talent management systems, procedures, controls and compliance, which may increase our total operating costs and adversely impact our profitability and growth.
We also began upgrading to a new cloud-based enterprise-wide operating and Enterprise Resource Planning system. The continued success of these initiatives requires adjusting and strengthening our business operations, financial and talent management systems, procedures, controls and compliance, which may increase our total operating costs and adversely impact our profitability and growth.
Any failure to comply with these covenants may constitute a breach under the New Credit Facility, which could result in the acceleration of all or a substantial portion of any outstanding indebtedness and termination of revolving credit commitments under the New Credit Facility.
Any failure to comply with these covenants may constitute a breach under the Credit Facility, which could result in the acceleration of all or a substantial portion of any outstanding indebtedness and termination of revolving credit commitments under the Credit Facility.
The recent military incursion by Russia into Ukraine could adversely impact the global economy and cause an increase in inflation and market uncertainty in a manner that could adversely affect our operations.
The military incursion by Russia into Ukraine could adversely impact the global economy and cause an increase in inflation and market uncertainty in a manner that could adversely affect our operations.
Although we attempt to comply with all taxing authority regulations, adverse findings or assessments made by taxing authorities as the result of an audit could have a material adverse effect on us. 20 Table of Contents Reclassification of our independent contractors by foreign tax or regulatory authorities could have an adverse effect on our business model and/or could require us to pay significant retroactive wages, taxes and penalties.
Although we attempt to comply with all taxing authority regulations, adverse findings or assessments made by taxing authorities as the result of an audit could have a material adverse effect on us. 21 Table of Contents Reclassification of our independent contractors by foreign tax or regulatory authorities could have an adverse effect on our business model and/or could require us to pay significant retroactive wages, taxes and penalties.
Our failure to be successful in addressing these risks or other problems encountered in connection with our past or future acquisitions could cause us to fail to realize the anticipated benefits of such acquisitions, incur unanticipated liabilities and harm our business generally. 17 Table of Contents Our recent rebranding efforts may not be successful.
Our failure to be successful in addressing these risks or other problems encountered in connection with our past or future acquisitions could cause us to fail to realize the anticipated benefits of such acquisitions, incur unanticipated liabilities and harm our business generally. 18 Table of Contents Our recent rebranding efforts may not be successful.
Failure to adequately respond to these new responsibilities and demands may adversely affect our business, financial condition and results of operations. 16 Table of Contents Our ability to serve clients internationally is integral to our strategy and our international activities expose us to additional operational challenges we might not otherwise face.
Failure to adequately respond to these new responsibilities and demands may adversely affect our business, financial condition and results of operations. 17 Table of Contents Our ability to serve clients internationally is integral to our strategy and our international activities expose us to additional operational challenges we might not otherwise face.
In fiscal 2022, we continued our Borderless Talent initiative to continue to evolve towards and facilitate a virtual operating model. With this initiative, we seek to provide borderless solutions, anytime, anywhere, bringing the best talent to meet our clients’ business needs, based on workload, not zip code.
In fiscal 2023, we continued our Borderless Talent initiative to continue to evolve towards and facilitate a virtual operating model. With this initiative, we seek to provide borderless solutions, anytime, anywhere, bringing the best talent to meet our clients’ business needs, based on workload, not zip code.
Our inability to maintain our New Credit Facility could materially and adversely affect our liquidity and our business. 21 Table of Contents Our New Credit Facility bears a variable rate of interest that is based on the Secured Overnight Financing Rate (“SOFR”) which may have consequences for us that cannot be reasonably predicted and may adversely affect our liquidity, financial condition, and earnings.
Our inability to maintain our Credit Facility could materially and adversely affect our liquidity and our business. 22 Table of Contents Our Credit Facility bears a variable rate of interest that is based on the Secured Overnight Financing Rate (“SOFR”) which may have consequences for us that cannot be reasonably predicted and may adversely affect our liquidity, financial condition, and earnings.
The billing rates of our consultants are affected by a number of factors, including: our clients’ perception of our ability to add value through our services; the market demand for the services we provide; introduction of new services by us or our competitors; 14 Table of Contents our competition and the pricing policies of our competitors; and current economic conditions.
The billing rates of our consultants are affected by a number of factors, including: our clients’ perception of our ability to add value through our services; the market demand for the services we provide; introduction of new services by us or our competitors; our competition and the pricing policies of our competitors; and current economic conditions.
The terms of our New Credit Facility impose operating and financial restrictions on us, which may limit our ability to respond to changing business and economic conditions. We currently have a $175.0 million senior secured loan (the “New Credit Facility”) which matures on November 12, 2026.
The terms of our Credit Facility impose operating and financial restrictions on us, which may limit our ability to respond to changing business and economic conditions. We currently have a $175.0 million senior secured loan (the “Credit Facility”) which matures on November 12, 2026.
Borrowings under our New Credit Facility bear interest at a rate per annum of either, at our election, (i) Term SOFR (as defined in the credit agreement evidencing the New Credit Facility (the “New Credit Agreement”)) plus a margin or (ii) the Base Rate (as defined in the New Credit Agreement), plus a margin, with the applicable margin depending on our consolidated leverage ratio.
Borrowings under our Credit Facility bear interest at a rate per annum of either, at our election, (i) Term SOFR (as defined in the credit agreement evidencing the Credit Facility (the “Credit Agreement”)) plus a margin or (ii) the Base Rate (as defined in the Credit Agreement), plus a margin, with the applicable margin depending on our consolidated leverage ratio.
While we maintain insurance coverage for cybersecurity incidents that we believe are appropriate for our operations, our insurance coverage may not cover all potential claims against us, may require us to meet a deductible or may not continue to be available to us at a reasonable cost.
While 19 Table of Contents we maintain insurance coverage for cybersecurity incidents that we believe are appropriate for our operations, our insurance coverage may not cover all potential claims against us, may require us to meet a deductible or may not continue to be available to us at a reasonable cost.
Although none of our operations are in Russia or Ukraine, the continuation or further escalation of geopolitical tensions could impact other markets where we do business, including Europe and Asia Pacific, or cause negative global economic effects which may adversely affect our business, financial condition, and results of operations.
Although none of our operations are in Russia or Ukraine, the continuation or further escalation of geopolitical tensions, or future instances of political unrest in other geographies, could impact other markets where we do business, including Europe and Asia Pacific, or cause negative global economic effects which may adversely affect our business, financial condition, and results of operations.
Recent events, including the Pandemic, the military incursion by Russia into Ukraine, inflationary conditions and rising interest rates, have caused disruptions in the U.S. and global economy, and uncertainty regarding general economic conditions within some regions and countries in which we operate, including concerns about a potential U.S. and/or global recession has led, and may continue to lead, to reluctance on the part of some companies to spend on discretionary projects.
Recent events, including increasing diplomatic and trade friction between the U.S. and China, the military incursion by Russia into Ukraine, and inflationary conditions and rising interest rates, have caused disruptions in the U.S. and global economy, and uncertainty regarding general economic conditions within some regions and countries in which we operate, including concerns about a potential U.S. and/or global recession has led, and may continue to lead, to reluctance on the part of some companies to spend on discretionary projects.
Reorganization and restructuring can impact a significant amount of management and other employees’ time and focus, which may divert attention from operating and growing our business.
Reorganization and restructuring can impact a significant amount of management and other employees’ time and focus, which may divert attention from 16 Table of Contents operating and growing our business.
One of our primary areas of focus for fiscal 2022 and fiscal 2023 is digital expansion, which includes the further development and expanded launch of HUGO, our human cloud platform aimed at introducing a new way for clients and talent alike to engage with us and expanding go-to-market penetration for the business that we acquired from Veracity.
One of our primary areas of focus in recent years is digital expansion, which includes the further development and expanded launch of HUGO, our human cloud platform aimed at introducing a new way for clients and talent alike to engage with us and expanding go-to-market penetration for the business that we acquired from Veracity.
If these conditions continue or if the financial condition of any of our clients is negatively impacted in the future by the Pandemic or any other pandemic or epidemic, the ability of these clients to pay outstanding receivables owed to us may be adversely affected.
If the financial condition of any of our clients is negatively impacted in the future by a pandemic or epidemic, the ability of these clients to pay outstanding receivables owed to us may be adversely affected.
In fiscal 2020, we launched a significant global rebranding initiative, and in fiscal 2022 we continued our global rebranding with the introduction of our new tagline ― Dare to Work Differently. However, there can be no assurance that our rebranding initiative will result in a positive return on investment.
In fiscal 2020, we launched a significant global rebranding initiative, and in fiscal 2023 we continued our global rebranding with our new tagline ― Dare to Work Differently. However, there can be no assurance that our rebranding initiative will result in a positive return on investment.
These laws, which are not uniform, do one or more of the following: regulate the collection, transfer (including in some cases, the transfer outside the country of collection), processing, storage, use and disclosure of personal information, and require notice to individuals of privacy practices; give individuals certain access, correction and deletion rights with respect to their personal information; and prevent the use or disclosure of personal information for secondary purposes such as marketing.
These laws, (“Privacy and Data Protection Requirements”) which are not uniform, do one or more of the following: regulate the collection, transfer (including in some cases, the transfer outside the country of collection), processing, storage, use and disclosure of personal information, and require notice to individuals of privacy practices and in some cases consent to collection of personal information; give individuals certain access, correction and deletion rights with respect to their personal information; and prevent the use or disclosure of personal information, or require providing opt-outs for the use and disclosure of personal information, for secondary purposes such as marketing.
In addition, the breadth and complexity of this infrastructure increases the potential risk of security incidents.
The breadth and complexity of this infrastructure increases the potential risk of security incidents.
These policies require strict compliance with U.S. and local laws and regulations applicable to our business operations, including those laws and regulations prohibiting improper payments to government officials.
These policies require strict compliance with U.S. and local laws and regulations applicable to our business operations, 20 Table of Contents including those laws and regulations prohibiting improper payments to government officials.
For example, our business is likely to be materially adversely affected if we are unable to secure new client projects because of improvements in our competitors’ service offerings, because of a change in government regulatory requirements, because of an economic downturn decreasing the demand for outsourced professional services, or for other reasons.
For example, our business is likely to be materially adversely affected if we are unable to secure new client projects because of improvements in our competitors’ service offerings, because of our customers’ use of technology or artificial intelligence instead of external experts, because of a change in government regulatory requirements, because of an economic downturn decreasing the demand for outsourced professional services, or for other reasons.
These systems are vulnerable to security breaches, natural disasters or other catastrophic events, computer viruses, ransomware attacks, or other interruptions or damage stemming from power outages, equipment failure or unintended or unauthorized usage by employees.
These systems are vulnerable to security breaches, cyber or other security incidents, natural disasters or other catastrophic events, or other interruptions or damage stemming from power outages, equipment failure or unintended or unauthorized usage by employees.
Further, upon completion of any restructuring initiatives, our business may not be more efficient or effective than prior to the implementation of the plan and we may be unable to achieve anticipated operating enhancements or cost reductions, which would adversely affect our business, competitive position, operating results and financial condition. 15 Table of Contents Our recent digital expansion and technology transformation efforts may not be successful, which could adversely impact our growth and profitability.
Further, upon completion of any restructuring initiatives, our business may not be more efficient or effective than prior to the implementation of the plan and we may be unable to achieve anticipated operating enhancements or cost reductions, which would adversely affect our business, competitive position, operating results and financial condition.
We are subject to various operating covenants under the New Credit Facility which restrict our ability to, among other things, incur liens, incur additional indebtedness, make certain restricted payments, merge or consolidate and make dispositions of assets.
We are subject to various operating covenants under the Credit Facility which restrict our ability to, among other things, incur liens, incur additional indebtedness, make certain restricted payments, merge or consolidate and make dispositions of assets. The Credit Facility also requires us to comply with financial covenants limiting our total funded debt, minimum interest coverage ratio and maximum leverage ratio.
We review and update our systems and have implemented processes and procedures to protect against security incidents and unauthorized access to our data.
We review and update our systems and have implemented processes and procedures to protect against security incidents and unauthorized access to our data, although we cannot provide assurances that these efforts will be successful.
In addition, as a corporation whose securities are registered under the Exchange Act and publicly traded on the Nasdaq Stock Market, our executive officers, outside directors, employees, consultants and independent contractors are required to comply with the prohibitions against insider trading of our securities. 19 Table of Contents Nonetheless, we cannot assure our stakeholders that our policies, procedures and related training programs will ensure full compliance with all applicable legal requirements.
In addition, as a corporation whose securities are registered under the Exchange Act and publicly traded on the Nasdaq Stock Market, our executive officers, outside directors, employees, consultants and independent contractors are required to comply with the prohibitions against insider trading of our securities.
In addition, system-wide or local failures of these information technology systems could have a material adverse effect on our business, financial condition, results of operations or cash flows. 18 Table of Contents Legal and Regulatory Risks Failure to comply with data privacy laws and regulations could have a materially adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences.
Legal and Regulatory Risks Failure to comply with data privacy laws and regulations could have a materially adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences.
We currently pay a regular quarterly dividend, subject to quarterly board of directors’ approval.
We may be unable to or elect not to pay our quarterly dividend payment. We currently pay a regular quarterly dividend, subject to quarterly Board of Directors’ approval.
Our failure to maintain or increase the hourly rates we charge our clients for our services or to pay an adequate and competitive rate to our consultants in order to maintain a suitable pay/bill ratio could compress our gross margin and adversely impact our profitability.
Our failure to maintain or increase the hourly rates we charge our clients for our services or to pay an adequate and competitive rate to our consultants in order to maintain a suitable pay/bill ratio could compress our gross margin and adversely impact our profitability. 15 Table of Contents The pay rates of our consultants are affected by a number of factors, including: the skill sets and qualifications our consultants possess; the competition for talent; and current labor market and economic conditions.
Our ability to attract and retain consultants with the requisite experience and skills depends on several factors including, but not limited to, our ability to: provide our consultants with either full-time or flexible-time employment; obtain the type of challenging and high-quality projects that our consultants seek; provide competitive compensation and benefits; and provide our consultants with flexibility as to hours worked and assignment of client engagements.
Our ability to attract and retain consultants with the requisite experience and skills depends on several factors including, but not limited to, our ability to: provide our consultants with either full-time or flexible-time employment; obtain the type of challenging and high-quality projects that our consultants seek; provide competitive compensation and benefits; and provide our consultants with flexibility as to hours worked and assignment of client engagements. 14 Table of Contents There can be no assurance we will be successful in accomplishing any of these factors and, even if we are, we cannot assure we will be successful in attracting and retaining the number of highly qualified and experienced consultants necessary to maintain and grow our business.
The replacement of members of senior management can involve significant time and expense and create uncertainties that could delay, prevent the achievement of, or make it more difficult for us to pursue and execute on our business opportunities, which could have an adverse effect on our business, financial condition and operating results. 13 Table of Contents Further, due to legal restrictions prohibiting non-compete agreements in certain jurisdictions, we generally do not have non-compete agreements with our employees, including our senior management team, and, therefore, they could terminate their employment with us at any time and obtain employment with a competitor.
The replacement of members of senior management can involve significant time and expense and create uncertainties that could delay, prevent the achievement of, or make it more difficult for us to pursue and execute on our business opportunities, which could have an adverse effect on our business, financial condition and operating results.
Although the additional tax valuation allowances and the impairment of long-lived assets and goodwill are non-cash expenses, they could materially affect our future financial results and financial condition. Our business is subject to risks arising from epidemic diseases or pandemics, such as the ongoing Pandemic.
Although the additional tax valuation allowances and the impairment of long-lived assets and goodwill are non-cash expenses, they could materially affect our future financial results and financial condition. Bank failures or other events affecting financial institutions could adversely affect our and our clients’ liquidity and financial performance.
Under the GDPR, data transfers from the European Union to the United States are generally prohibited unless certain measures are followed. The 2018 California Consumer Privacy Act (“CCPA”), which went into effect in January 2020, now imposes similar requirements. New privacy laws in California, Colorado, Connecticut, Utah and Virginia will take effect in 2023, with others likely to follow.
Under the GDPR and the United Kingdom’s version of the GDPR, data transfers from the European Union and the United Kingdom to the United States are generally prohibited unless certain measures are followed. The 2018 California Consumer Privacy Act (“CCPA”) imposes similar requirements.
It is possible that the volatility of and uncertainty around SOFR as a LIBOR replacement rate and the applicable credit adjustment would result in higher borrowing costs for us, and would adversely affect our liquidity, financial condition, and earnings. We may be unable to or elect not to pay our quarterly dividend payment.
Additionally, our Credit Agreement includes a credit adjustment on SOFR due to LIBOR representing an unsecured lending rate while SOFR represents a secured lending rate. It is possible that the volatility of SOFR and the applicable credit adjustment could result in higher borrowing costs for us, and could adversely affect our liquidity, financial condition, and earnings.
Our estimate of losses resulting from our clients’ failure to make required payments for services rendered has historically been within our expectations and the provisions established. While our overall receivable collections have not been severely impacted by the Pandemic, we cannot guarantee we will continue to experience the same credit loss rates we have in the past.
While our overall receivable collections have not been severely impacted by the softening economy or other geopolitical events, we cannot guarantee we will continue to experience the same credit loss rates we have in the past.
Several privacy bills have also been introduced in Congress. Key markets in the Asia Pacific region have also recently adopted GDPR-like legislation, including China’s new Personal Information Protection Law.
There is also the possibility of federal privacy legislation and increased enforcement by the Federal Trade Commission under its power to regulate unfair and deceptive trade practices. Key markets in the Asia Pacific region have also recently adopted GDPR-like legislation, including China’s new Personal Information Protection Law.
In addition, in connection with the Pandemic, the overall financial condition of some of our clients has been adversely impacted, at least for periods of time.
A future pandemic, epidemic, or other public health emergency could also result in a decline in productivity, which may adversely impact our ability to continue to efficiently serve our clients. In addition, in connection with the Pandemic, the overall financial condition of some of our clients was adversely impacted, at least for periods of time.
These events could cause material harm to our business, operating results or financial condition. We may not be able to grow our business, manage our growth or sustain our current business. Historically, we have grown by opening new offices and by increasing the volume of services provided through existing offices.
These events could cause material harm to our business, operating results or financial condition. We may not be able to grow our business, manage our growth or sustain our current business. In 2020, we undertook restructuring efforts in North America, APAC and Europe to analyze our physical geographic footprint and real estate spend in those areas.
In the event of a reduction in the demand for our consultants, our financial results would suffer. Economic deterioration at one or more of our clients may also affect our allowance for doubtful accounts and collectability of accounts receivable.
Economic deterioration at one or more of our clients may also affect our allowance for doubtful accounts and collectability of accounts receivable. Our estimate of losses resulting from our clients’ failure to make required payments for services rendered has historically been within our expectations and the provisions established.
Removed
In addition, the use of professional services consultants on a project-by-project basis could decline for non-economic reasons, including due to clients utilizing their own internal employees, due to competitive reasons, due to a lack of qualified consultants and for the other reasons described elsewhere in this Item 1A.
Added
We regularly maintain domestic cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured banks, which exceed the FDIC insurance limits. We also maintain cash deposits in foreign banks where we operate, some of which are not insured or are only partially insured by the FDIC or other similar agencies.
Removed
While current impacts to our business and employees resulting from the ongoing Pandemic are not material, the full extent to which the Pandemic may impact our business and financial results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact, the impacts of new variants of the virus, and the timing, distribution, efficacy and public acceptance of vaccines and other treatments for COVID-19.
Added
The failure of a bank, or events involving limited liquidity, defaults, non-performance or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances, or concerns or rumors about such events, may lead to disruptions in access to our bank deposits or otherwise adversely impact our liquidity and financial performance.
Removed
There can be no assurance we will be successful in accomplishing any of these factors and, even if we are, we cannot assure we will be successful in attracting and retaining the number of highly qualified and experienced consultants necessary to maintain and grow our business.
Added
There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or applicable foreign government, or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions or by acquisition in the event of a failure or liquidity crisis. 13 Table of Contents Our clients, including those of our clients that are banks, may be similarly adversely affected by any bank failure or other event affecting financial institutions.
Removed
The pay rates of our consultants are affected by a number of factors, including:  the skill sets and qualifications our consultants possess;  the competition for talent; and  current labor market and economic conditions.
Added
Any resulting adverse effects to our clients’ liquidity or financial performance could reduce the demand for our services or affect our allowance for doubtful accounts and collectability of accounts receivable.
Removed
Beginning late in fiscal 2017, we embarked on several new strategic initiatives, including the implementation of a new operating model to be more center-led instead of geographically focused, to drive growth and scale. In 2020, we undertook restructuring efforts in North America, APAC and Europe to analyze our physical geographic footprint and real estate spend in those areas.
Added
A significant change in the liquidity or financial position of our clients could cause unfavorable trends in receivable collections and cash flows and additional allowances for anticipated losses may be required. These additional allowances could materially affect our future financial results.
Removed
The New Credit Facility also requires us to comply with financial covenants limiting our total funded debt, minimum interest coverage ratio and maximum leverage ratio.
Added
In addition, instability, liquidity constraints or other distress in the financial markets, including the effects of bank failures, defaults, non-performance or other adverse developments that affect financial institutions, could impair the ability of one or more of the banks participating in our current or any future credit agreement from honoring their commitments.
Removed
Although SOFR has been endorsed by the Alternative Reference Rates Committee as its preferred replacement for the London Interbank Offered Rate (“LIBOR”), it remains uncertain whether or when SOFR or other alternative reference rates will be widely accepted by lenders as the replacement for LIBOR. This may, in turn, impact the liquidity of the SOFR loan market, and SOFR itself.
Added
This could have an adverse effect on our business if we were not able to replace those commitments or to locate other sources of liquidity on acceptable terms. Our business is subject to risks arising from epidemic diseases, pandemics, or other public health emergencies.
Removed
Additionally, our New Credit Agreement includes a credit adjustment on SOFR due to LIBOR representing an unsecured lending rate while SOFR represents a secured lending rate.
Added
Further, due to legal restrictions prohibiting non-compete agreements in certain jurisdictions, we generally do not have non-compete agreements with our employees, including our senior management team, and, therefore, they could terminate their employment with us at any time and obtain employment with a competitor.
Added
Our recent digital expansion and technology transformation efforts may not be successful, which could adversely impact our growth and profitability.
Added
Cyber security incidents may involve the covert introduction of malware to computers and networks, and the use of techniques or processes that change frequently, may be disguised or difficult to detect, or are designed to remain dormant until a triggering event, and may continue undetected for a period of time.
Added
Cyber incidents have in the past resulted from, and may in the future result from, social engineering or impersonation of authorized users, and may also result from efforts to discover and exploit any design flaws, bugs, security vulnerabilities or security weaknesses, intentional or unintentional acts by employees or other insiders with access privileges, intentional acts of vandalism or fraud by third parties and sabotage.
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In addition, system-wide or local failures of these information technology systems could have a material adverse effect on our business, financial condition, results of operations or cash flows.
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New privacy laws in California, Colorado, Connecticut, Utah and Virginia have either taken effect or will take effect in 2023, and new privacy laws recently enacted in Iowa, Indiana, Montana, Tennessee and Texas will take effect over the next few years.
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Nonetheless, we cannot assure our stakeholders that our policies, procedures and related training programs will ensure full compliance with all applicable legal requirements.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAll remaining offices are utilized by RGP. Our corporate offices are located in Irvine, California. We own an approximately 57,000 square foot office building in Irvine, California, of which we occupied approximately 40,000 square feet as of May 28, 2022, including space occupied by our Orange County, California practice.
Biggest changeITEM 2. PROPERTIES. Our principal executive office located in Irvine, California consists of a 57,000 square feet office building that we own, of which approximately 13,000 square feet is leased to an independent third party. The remainder of the office space is occupied by our corporate teams and our Orange County, California practice.
Approximately 13,000 square feet is leased to independent third parties, and 4,000 square feet is vacant. We believe our existing office space is suitable and adequate to meet our current requirements. We do not anticipate any significant difficulty replacing or locating additional offices to accommodate future needs. 22 Table of Contents
We do not anticipate any significant difficulty replacing or locating additional offices to accommodate future needs.
Removed
As of May 28, 2022, we maintained 20 domestic physical offices, all under operating lease agreements (except for the Irvine, California location), in the following metropolitan areas: Irvine, California Atlanta, Georgia Philadelphia, Pennsylvania Los Angeles, California (2) Chicago, Illinois Dallas, Texas Mountain View, California Indianapolis, Indiana Houston, Texas Santa Clara, California Detroit, Michigan Richmond, Virginia San Francisco, California Parsippany, New Jersey Seattle, Washington Denver, Colorado New York, New York Tampa, Florida Cleveland, Ohio As of May 28, 2022, we maintained 18 international physical offices under operating lease agreements, located in the following cities and countries: Sydney, Australia Mexico City, Mexico Manila, Philippines Munich, Germany Amsterdam (Utrecht), Netherlands Seoul, South Korea Bangalore, India Beijing, People’s Republic of China Singapore Mumbai, India Hong Kong, People’s Republic of China Zurich, Switzerland Tokyo, Japan Guangzhou, People’s Republic of China Taipei, Taiwan Petaling Jaya, Malaysia Shanghai, People’s Republic of China London, United Kingdom As of May 28, 2022, other Segments utilized our office in Germany and one of the offices in Los Angeles, California, and share our office in New York, New York with RGP.
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As of May 27, 2023, we had other major offices in many of the world’s leading business centers, including Atlanta, Beijing, Dallas-Fort Worth, Chicago, Guangzhou, Hong Kong, Houston, London, Los Angeles, New York, Mexico City, Mumbai, San Francisco, Singapore, Seoul, Sydney, Tokyo and Utrecht, among others.
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In total, we have facilities and operations in over 35 cities in 14 countries around the world. Outside of the Irvine, California location, which is owned by us, the majority of our facilities are leased under long-term leases with varying expiration dates.
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As of May 27, 2023, Sitrick which is within Other Segments utilized one of the offices in Los Angeles, California, and shared our office in New York, New York with RGP. All remaining offices are utilized by RGP. We believe our existing office locations are suitable and adequate to meet our current business needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS. We are not currently subject to any material legal proceedings; however, we are a party to various legal proceedings arising in the ordinary course of our business. ITEM 4. MINE SAFETY DISCLOSURES . Not applicable. PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS. We are not currently subject to any material legal proceedings; however, we are a party to various legal proceedings arising in the ordinary course of our business. ITEM 4. MINE SAFETY DISCLOSURES . Not applicable. 23 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePerformance Graph Set forth below is a line graph comparing the annual percentage change in the cumulative total return to the holders of our common stock against the cumulative total return of each of the Russell 3000 Index, a customized peer group consisting of eight companies listed below the following table and a combined classification of companies under Standard Industry Codes as 8742-Management Consulting Services, in each case for the five years ended May 28, 2022.
Biggest changeThe following summarizes shares of common stock repurchased by the Company during the fourth quarter of fiscal 2023: Total Number of Average Shares Approximate Dollar Total Price Purchased as Value of Shares Number Paid Part of Publicly that May Yet be of Shares per Announced Plans or Purchased Under Period Purchased Share Programs the Plans or Programs February 26, 2023— March 25, 2023 - $ - - $ 54,939,002 March 26, 2023 — April 22, 2023 296,371 $ 15.83 296,371 $ 50,246,154 April 23, 2023 — May 27, 2023 - $ - - $ 50,246,154 Total February 26, 2023 — May 27, 2023 296,371 $ 15.83 296,371 $ 50,246,154 24 Table of Contents Performance Graph Set forth below is a line graph comparing the annual percentage change in the cumulative total return to the holders of our common stock against the cumulative total return of each of the Russell 3000 Index, a customized peer group consisting of eight companies listed below the following table and a combined classification of companies under Standard Industry Codes as 8742-Management Consulting Services, in each case for the five years ended May 27, 2023.
Dividend Policy Our board of directors has established a quarterly dividend, subject to quarterly board of directors’ approval. Pursuant to declaration and approval by our board of directors, we declared a dividend of $0.14 per share of common stock during each quarter in fiscal 2022, 2021, and 2020.
Dividend Policy Our Board of Directors has established a quarterly dividend, subject to quarterly Board of Directors’ approval. Pursuant to declaration and approval by our Board of Directors, we declared a dividend of $0.14 per share of common stock during each quarter in fiscal 2023, 2022, and 2021.
Market Information and Holders Our common stock is listed on The Nasdaq Stock Market LLC and trades on the Nasdaq Global Select Market under the symbol “RGP.” As of July 21, 2022, the approximate number of holders of record of our common stock was 37 (a holder of record is the name of an individual or entity that an issuer carries in its records as the registered holder (not necessarily the beneficial owner) of the issuer’s securities).
Market Information and Holders Our common stock is listed on The Nasdaq Stock Market LLC and trades on the Nasdaq Global Select Market under the symbol “RGP.” As of July 18, 2023, the approximate number of holders of record of our common stock was 37 (a holder of record is the name of an individual or entity that an issuer carries in its records as the registered holder (not necessarily the beneficial owner) of the issuer’s securities).
Stockholder returns over the indicated period may not be indicative of future stockholder returns. 23 Table of Contents The information contained in the performance graph shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference into such filing.
The information contained in the performance graph shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference into such filing.
On April 13, 2022, our board of directors declared a regular quarterly dividend of $0.14 per share of our common stock. The dividend was paid on June 8, 2022 to stockholders of record at the close of business on May 11, 2022.
On April 20, 2023, our Board of Directors declared a regular quarterly dividend of $0.14 per share of our common stock. The dividend was paid on June 15, 2023 to stockholders of record at the close of business on May 18, 2023.
The graph assumes $100 was invested at market close on May 26, 2017 in our common stock and in each index (based on prices from the close of trading on May 26, 2017), and that all dividends are reinvested.
The graph assumes $100 was invested at market close on May 25, 2018 in our common stock and in each index (based on prices from the close of trading on May 25, 2018), and that all dividends are reinvested. Stockholder returns over the indicated period may not be indicative of future stockholder returns.
Repurchases under the program may take place in the open market or in privately negotiated transactions and may be made pursuant to a Rule 10b5-1 plan. There were no repurchases of our common stock during the fourth quarter of fiscal 2022.
Repurchases under the program may take place in the open market or in privately negotiated transactions and may be made pursuant to a Rule 10b5-1 plan.
May 26, 2017 May 26, 2018 May 25, 2019 May 30, 2020 May 29, 2021 May 28, 2022 Resources Connection, Inc. $ 100.00 $ 133.58 $ 131.28 $ 96.67 $ 133.96 $ 172.71 Russell 3000 $ 100.00 $ 115.31 $ 120.82 $ 131.19 $ 188.80 $ 183.20 SIC Code 8742 - Management Consulting $ 100.00 $ 117.14 $ 129.85 $ 124.65 $ 178.31 $ 180.75 Peer Group $ 100.00 $ 160.09 $ 165.66 $ 168.48 $ 249.61 $ 270.82 Our customized peer group includes the following eight professional services companies that we believe reflect the competitive landscape in which we operate and acquire talent: CRA International, Inc.; FTI Consulting, Inc.; Heidrick & Struggles International, Inc.; Hudson Global, Inc.; Huron Consulting Group Inc.; ICF International, Inc.; Kforce, Inc.; and Korn Ferry. ‎ 24 Table of Contents ITEM 6.
May 25, 2018 May 25, 2019 May 30, 2020 May 29, 2021 May 28, 2022 May 27, 2023 Resources Connection, Inc. $ 100.00 $ 98.28 $ 72.37 $ 100.29 $ 129.29 $ 114.24 Russell 3000 $ 100.00 $ 104.79 $ 113.78 $ 163.74 $ 158.88 $ 161.87 SIC Code 8742 - Management Consulting $ 100.00 $ 108.34 $ 106.73 $ 153.43 $ 157.35 $ 155.46 Peer Group $ 100.00 $ 100.53 $ 99.55 $ 148.33 $ 161.23 $ 171.26 Our customized peer group includes the following eight professional services companies that we believe reflect the competitive landscape in which we operate and acquire talent: Barrett Business Services, Inc.; CBIZ, Inc.; CRA International, Inc.; FTI Consulting, Inc.; Heidrick & Struggles International, Inc.; Huron Consulting Group Inc.; ICF International, Inc.; Kforce, Inc.; Korn Ferry; and MISTRAS Group, Inc. ‎ 25 Table of Contents ITEM 6.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES Three Months Ended Three Months Ended For the Years Ended Revenue by Geography May 28, February 26, May 28, May 29, May 28, May 29, 2022 2022 2022 2021 2022 2021 (Amounts in thousands, except number of business days) (Unaudited) (Unaudited) (Unaudited, except for GAAP amounts) North America As reported (GAAP) $ 183,817 $ 173,569 $ 183,817 $ 141,518 $ 676,419 $ 512,777 Currency impact (58) 16 (297) Business days impact (11,308) - 2,694 Same-day constant currency revenue $ 172,451 $ 183,833 $ 678,816 Europe As reported (GAAP) $ 19,433 $ 17,856 $ 19,433 $ 19,371 $ 76,075 $ 72,496 Currency impact 890 1,869 1,650 Business days impact 164 (172) (153) Same-day constant currency revenue $ 20,487 $ 21,130 $ 77,572 Asia Pacific As reported (GAAP) $ 13,781 $ 13,184 $ 13,781 $ 11,429 $ 52,524 $ 44,243 Currency impact 487 857 1,477 Business days impact - 119 - Same-day constant currency revenue $ 14,268 $ 14,757 $ 54,001 Total Consolidated As reported (GAAP) $ 217,031 $ 204,609 $ 217,031 $ 172,318 $ 805,018 $ 629,516 Currency impact 1,319 2,742 2,830 Business days impact (11,144) (53) 2,541 Same-day constant currency revenue $ 207,206 $ 219,720 $ 810,389 Number of Business Days North America ( 1 ) 65 61 65 65 251 252 Europe ( 2 ) 62 63 62 62 254 253 Asia Pacific ( 2 ) 62 62 62 62 247 247 (1) This represents the number of business days in the U.S.
Biggest changeRECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except number of business days) Three Months Ended For the Years Ended Revenue by Geography May 27, May 28, May 27, May 28, 2023 2022 2023 2022 (Unaudited) (Unaudited) (Unaudited, except for GAAP amounts) North America As reported (GAAP) $ 160,999 $ 183,817 $ 680,993 $ 676,419 Currency impact (333) (504) Business days impact - - Same-day constant currency revenue $ 160,666 $ 680,489 Europe As reported (GAAP) (1) $ 10,757 $ 19,433 $ 42,509 $ 76,075 Currency impact 222 4,419 Business days impact 133 871 Same-day constant currency revenue $ 11,112 $ 47,799 Asia Pacific As reported (GAAP) $ 12,693 $ 13,781 $ 52,141 $ 52,524 Currency impact 805 5,509 Business days impact 48 516 Same-day constant currency revenue $ 13,546 $ 58,166 Total Consolidated As reported (GAAP) (1) $ 184,449 $ 217,031 $ 775,643 $ 805,018 Currency impact 694 9,424 Business days impact 181 1,387 Same-day constant currency revenue $ 185,324 $ 786,454 Number of Business Days North America (2) 65 65 251 251 Europe (3) 61 62 248 254 Asia Pacific (3) 61 62 245 247 (1) Total Consolidated revenue and Europe revenue as reported under GAAP include taskforce revenue of zero and $7.7 million for the three months ended May 27, 2023 and May 28, 2022, respectively, and $0.2 million and $27.6 million for the year ended May 27, 2023 and May 28, 2022, respectively.
Stock-based compensation — Under our 2020 Performance Incentive Plan, officers, employees, and outside directors have received or may receive grants of restricted stock, restricted stock units, performance stock units, options to purchase common stock or other stock or stock-based awards.
Stock-based compensation — Under our 2020 Performance Incentive Plan, officers, employees, and outside directors have received or may receive grants of restricted stock awards, restricted stock units, performance stock units, options to purchase common stock or other stock or stock-based awards.
Vesting periods for restricted stock, restricted stock units and stock option awards range from three to four years. We estimate the fair value of stock-based payment awards on the date of grant as described below.
Vesting periods for restricted stock awards, restricted stock units and stock option awards range from three to four years. We estimate the fair value of stock-based payment awards on the date of grant as described below.
We determine the estimated value of restricted stock, restricted stock unit and performance stock unit awards using the closing price of our common stock on the date of grant.
We determine the estimated value of restricted stock awards, restricted stock unit and performance stock unit awards using the closing price of our common stock on the date of grant.
Additional variables to be considered are the expected term, expected dividends and the risk-free interest rate over the expected term of our employee stock options. We use our historical volatility over the expected life of the stock option award and ESPP option award to estimate the expected volatility of the price of our common stock.
Additional variables to be considered are the expected term, expected dividends and the risk-free interest rate over the expected term of our employee stock options. We use our historical volatility over the expected life of the stock option award and ESPP award to estimate the expected volatility of the price of our common stock.
The recovery of deferred tax assets from future taxable income must be assessed and, to the extent recovery is not likely, we will establish a valuation allowance. An increase in the valuation allowance results in recording additional tax expense and any such adjustment may materially affect our future financial result.
The recovery of deferred tax assets from future taxable income must be assessed and, to the extent recovery is not likely, we will establish a valuation allowance. An increase in the valuation allowance results in recording additional tax expense and any such adjustment may materially affect our future financial results.
While we believe that the assumptions underlying our qualitative assessment are reasonable, these assumptions could have a significant impact on whether a non-cash impairment charge is recognized and also the magnitude of such charge. The results of an impairment analysis are as of a point in time.
While we believe that the assumptions underlying our qualitative assessment are reasonable, these assumptions could have a significant impact on whether a non-cash impairment charge is recognized and the magnitude of such charge. The results of an impairment analysis are as of a point in time.
Beyond the next 12 months, if we require additional capital resources to grow our business, either organically or through acquisitions, we may seek to sell additional equity securities, increase use of our New Credit Facility, expand the size of our New Credit Facility or raise additional debt.
Beyond the next 12 months, if we require additional capital resources to grow our business, either organically or through acquisitions, we may seek to sell additional equity securities, increase use of our Credit Facility, expand the size of our Credit Facility or raise additional debt.
We believe that our current cash, ongoing cash flows from our operations and funding available under our New Credit Facility will be adequate to meet our working capital and capital expenditure needs for at least the next 12 months.
We believe that our current cash, ongoing cash flows from our operations and funding available under our Credit Facility will be adequate to meet our working capital and capital expenditure needs for at least the next 12 months.
The New Credit Facility also includes an option to increase the amount of the revolving loan up to an additional $75.0 million, subject to the terms of the agreement. The New Credit Facility matures on November 12, 2026.
The Credit Facility also includes an option to increase the amount of the revolving loan up to an additional $75.0 million, subject to the terms of the Credit Agreement. The Credit Facility matures on November 12, 2026.
Liquidity and Capital Resources Our primary sources of liquidity are cash provided by our operations, our $175.0 million senior secured revolving credit facility, as further discussed below, and, historically, to a lesser extent, stock option exercises and ESPP purchases. On an annual basis, we have generated positive cash flows from operations since inception.
Liquidity and Capital Resources Our primary sources of liquidity are cash provided by operating activities, our $175.0 million senior secured revolving credit facility (as further discussed below) and, historically, to a lesser extent, stock option exercises and ESPP purchases. On an annual basis, we have generated positive cash flows from operations since inception.
The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of our employee stock options. The impact of expected dividends ($0.14 per share for each quarter during fiscal 2022, 2021 and 2020) is also incorporated in determining the estimated value per share of employee stock option grants and purchases under our ESPP.
The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of our employee stock options. The impact of expected dividends ($0.14 per share for each quarter during fiscal 2023, 2022 and 2021) is also incorporated in determining the estimated value per share of employee stock option grants and purchases under our ESPP.
Adjusted EBITDA at the segment level excludes certain shared corporate administrative costs that are not practical to allocate. 30 Table of Contents Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by revenue. Same-Day Constant Currency Revenue Same-day constant currency revenue assists management in evaluating revenue trends on a more comparable and consistent basis.
Adjusted EBITDA at the segment level excludes certain shared corporate administrative costs that are not practical to allocate. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by revenue. 31 Table of Contents Same-Day Constant Currency Revenue Same-day constant currency revenue assists management in evaluating revenue trends on a more comparable and consistent basis.
The number of business days in each respective period is provided in the “Number of Business Days” section in the table below. Adjusted EBITDA is calculated as net income before amortization expense, depreciation expense, interest and income taxes plus stock-based compensation expense, restructuring costs, technology transformation costs, and plus or minus contingent consideration adjustments.
The number of business days in each respective period is provided in the “Number of Business Days” section in the table below. EBITDA is calculated as net income before amortization expense, depreciation expense, interest and income taxes. Adjusted EBITDA is calculated as EBITDA plus or minus stock-based compensation expense, technology transformation costs, goodwill impairment, restructuring costs, and contingent consideration adjustments.
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 28 Table of Contents resulting changes to stock compensation expense are adjusted in the period in which the change in estimates occur. Forfeitures are estimated based on historical experience.
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 29 Table of Contents resulting changes to stock compensation expense are adjusted in the period in which the change in estimates occur. Forfeitures are estimated based on historical experience.
In assessing the recoverability of goodwill, we make a series of assumptions including forecasted revenue and costs, estimates of future cash flows, discount rates and other factors, which requires significant judgment. A potential impairment in the future, although a non-cash expense, could materially affect our financial results and financial condition.
In assessing the recoverability of goodwill, we make a series of assumptions including forecasted revenue and costs, estimates of future cash flows, discount rates and other factors, which require significant judgment. A potential impairment in the future, although a non-cash expense, could materially affect our financial results and financial condition.
These changes primarily consisted of a $44.8 million increase in trade accounts receivable, mainly attributable to accelerated revenue growth throughout fiscal 2022, and a $5.5 million decrease in other liabilities, which includes the final Veracity contingent consideration payment, of which $3.7 million was categorized as operating (the remaining $3.3 million of the total $7.0 million contingent consideration payment was categorized as financing cash flow) p artially offset by a $22.0 million increase in accrued salaries and related obligations due to the significant increase in accrued incentive compensation as a result of strong business performance during the fiscal year, and a $2.1 million decrease in prepaid income taxes due to timing of estimated quarterly tax payments.
These changes primarily consisted of a $44.8 million increase in trade accounts receivable, mainly attributable to accelerated revenue growth throughout fiscal 2022, and a $5.5 million decrease in other liabilities, which includes the final Veracity contingent consideration payment, of which $3.7 million was categorized as operating activity (the remaining $3.3 million of the total $7.0 million contingent consideration payment was categorized as financing cash flow) partially offset by a $22.0 million increase in accrued salaries and related obligations due to the significant increase in accrued incentive compensation as a result of strong business performance during the fiscal year, and a $2.1 million decrease in prepaid income taxes due to the timing of estimated quarterly tax payments.
These additional allowances could materially affect our future financial results. 27 Table of Contents Income taxes — In order to prepare our Consolidated Financial Statements, we are required to make estimates of income taxes, if applicable, in each jurisdiction in which we operate.
These additional allowances could materially affect our future financial results. 28 Table of Contents Income taxes — In order to prepare our Consolidated Financial Statements, we are required to make estimates of income taxes, if applicable, in each jurisdiction in which we operate.
Borrowings under the New Credit Facility bear interest at a rate per annum of either, at the Company’s election, (i) Term SOFR (as defined in the New Credit Agreement) plus a margin ranging from 1.25% to 2.00% or (ii) the Base Rate (as defined in the New Credit Agreement), plus a margin of 0.25% to 1.00% with the applicable margin depending on the Company’s consolidated leverage ratio.
Future borrowings under the Credit Facility will bear interest at a rate per annum of either, at the Company’s election, (i) Term SOFR (as defined in the Credit Agreement) plus a margin ranging from 1.25% to 2.00% or (ii) the Base Rate (as defined in the Credit Agreement), plus a margin of 0.25% to 1.00% with the applicable margin depending on the Company’s consolidated leverage ratio.
Recent Accounting Pronouncements Information regarding recent accounting pronouncements is contained in Note 2 — Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Recent Accounting Pronouncements Information regarding recent accounting pronouncements is contained in Note 2 — Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. 40 Table of Contents
In addition to our technology transformation initiative, we expect to continue to invest in digital pathways to enhance the experience and touchpoints with our end users, including current and prospective employees (consultants and management employees) and clients. Such effort will require additional cash outlay and could further elevate our capital expenditures in the near term.
In addition to our technology transformation initiative, we expect to continue to invest in digital pathways to enhance the experience and touchpoints with our end users, including current and prospective employees (consultants and management employees) and clients. These efforts will require additional cash outlay and could further elevate our capital expenditures in the near term.
Year Ended May 29, 2021 Compared to Year Ended May 30, 2020 For a comparison of our results of operations at the consolidated and segment level for the fiscal years ended May 29, 2021 and May 30, 2020, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended May 29, 2021, filed with the SEC on July 23, 2021 (File No. 0-32113).
Year Ended May 28, 2022 Compared to Year Ended May 29, 2021 For a comparison of our results of operations at the consolidated and segment level for the fiscal years ended May 28, 2022 and May 29, 2021, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended May 28, 2022, filed with the SEC on July 28, 2022 (File No. 0-32113).
We performed our assessment of potential qualitative impairment indicators of long-lived assets, including property and equipment, ROU assets outside of exited markets, and definite-lived intangible assets as of May 28, 2022. We determined that for such long-lived assets, no impairment indicators were present as of May 28, 2022, and no impairment charge was recorded during fiscal 2022.
We performed our assessment of potential qualitative impairment indicators of long-lived assets, including property and equipment, ROU assets outside of exited markets, and definite-lived intangible assets as of May 27, 2023. We determined that for such long-lived assets, no impairment indicators were present as of May 27, 2023, and no impairment charge was recorded during fiscal 2023.
Financing Activities, Fiscal 2022 and 2021 The primary sources of cash in financing activities are borrowings under our New Credit Facility, cash proceeds from the exercise of employee stock options and proceeds from the issuance of shares purchased under our ESPP.
Financing Activities, Fiscal 2023 and 2022 The primary sources of cash in financing activities are borrowings under our Credit Facility, cash proceeds from the exercise of employee stock options and proceeds from the issuance of shares purchased under our ESPP.
For a comparison of our cash flow activities for the fiscal years ended May 29, 2021 and May 30, 2020, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended May 29, 2021, filed with the SEC on July 23, 2021 (File No. 0-32113).
For a comparison of our cash flow activities for the fiscal years ended May 28, 2022 and May 29, 2021, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended May 28, 2022, filed with the SEC on July 28, 2022 (File No. 0-32113).
Under our ESPP, eligible officers and employees may purchase our common stock at a discount in accordance with the terms of the plan. During fiscal 2022, the Company started issuing performance stock unit awards under the 2020 Performance Incentive Plan that will vest upon the achievement of certain company-wide performance targets at the end of the defined three-year performance period.
Under our ESPP, eligible officers and employees may purchase our common stock at a discount in accordance with the terms of the plan. During fiscal 2023, the Company issued performance stock unit awards under the 2020 Performance Incentive Plan that will vest upon the achievement of certain company-wide performance targets at the end of the defined three-year performance period.
The New Credit Agreement provides for a $175.0 million senior secured revolving loan, which includes a $10.0 million sublimit for the issuance of standby letters of credit and a swingline sublimit of $20.0 million .
The Credit Agreement provides for a $175.0 million senior secured revolving loan (the “Credit Facility”), which includes a $10.0 million sublimit for the issuance of standby letters of credit and a swingline sublimit of $20.0 million.
Changes in estimates would result in cumulative catch-up adjustments and could materially impact our financial results. Rebates recognized as contra-revenue for the years ended May 28, 2022, May 29, 2021 and May 30, 2020 were $3.1 million, $2.6 million and $1.4 million, respectively.
Changes in estimates would result in cumulative catch-up adjustments and could materially impact our financial results. Rebates recognized as contra-revenue for the years ended May 27, 2023, May 28, 2022 and May 29, 2021 were $3.2 million, $3.1 million and $2.6 million, respectively.
While such losses have historically been within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same credit loss rates we have in the past. As of May 28, 2022 and May 29, 2021, we had an allowance for doubtful accounts of $2.1 million and $2.0 million, respectively.
While such losses have historically been within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same credit loss rates we have in the past. As of May 27, 2023 and May 28, 2022, we had an allowance for doubtful accounts of $3.3 million and $2.1 million, respectively.
The declines in Sitrick revenue during fiscal 2022 compared to the prior year were primarily due to the closure of the U.S. courts during the Pandemic and the continued lingering impact on the court system, resulting in slower business development and revenue conversion.
The decline in Sitrick revenue during fiscal 2023 compared to the prior year was primarily due to the closure of the U.S. courts during the Pandemic and the continued lingering impact on the court system, resulting in slower business development and revenue conversion.
The primary uses of cash in financing activities are repayments under the New Credit Facility, payment of contingent consideration, repurchases of our common stock and cash dividend payments to our stockholders. Net cash used in financing activities totaled $13.4 million in fiscal 2022 compared to $59.5 million in fiscal 2021 .
The primary uses of cash in financing activities are repayments under the Credit Facility, payment of contingent consideration, repurchases of our common stock and cash dividend payments to our stockholders. Net cash used in financing activities totaled $71.9 million in fiscal 2023 compared to $13.4 million in fiscal 2022 .
Operating Activities, Fiscal 2022 and 2021 Operating activities provided cash of $49.4 million and $39.9 million in fiscal 2022 and fiscal 2021, respectively. In fiscal 2022, cash provided by operations resulted from net income of $67.2 million and non-cash adjustments of $6.9 million. Additionally, in fiscal 2022, net unfavorable changes in operating assets and liabilities totaled $24.7 million.
In fiscal 2022, cash provided by operations resulted from net income of $67.2 million and non-cash adjustments of $6.9 million. Additionally, in fiscal 2022, net unfavorable changes in operating assets and liabilities totaled $24.7 million.
For fiscal 2022, the material costs and expenses attributable to the RGP segment that are not included in computing the segment measure of Adjusted EBITDA included depreciation and amortization expense of $8.0 million and stock-based compensation expense of $7.6 million.
For fiscal 2023, the material costs and expenses attributable to the RGP segment that are not included in computing the segment measure of Adjusted EBITDA included stock-based compensation expense of $8.4 million, depreciation and amortization expense of $8.4 million and technology transformation costs of $6.4 million .
Net cash used in financing activities during fiscal 2022 consisted of $19.7 million used for the repurchase of our common stock, cash dividend payments of $18.6 million, the final Veracity contingent consideration payment, of which $3.3 million was categorized as financing (the remaining $3.7 million of the total $7.0 million final Veracity contingent consideration payment was categorized as operating) , and the Expertforce Interim Projects GmbH, LLC (“Expertence”) contingent consideration payment of $0.3 million, partially offset by $10.4 million of net borrowing under the New Credit Facility (consisting of $73.4 million of proceeds and $63.0 million of repayment), and $17.9 million in proceeds received from ESPP share purchases and employee stock option exercises. 38 Table of Contents Net cash used in financing activities in fiscal 2021 consisted of repayments under the Previous Credit Facility of $45.0 million, cash dividend payments of $18.2 million, and the first Veracity contingent consideration payment, of which $3.0 million was categorized as financing (the remaining $2.3 million of the total $5.3 million Veracity year-one contingent consideration payment was categorized as operating).
Net cash used in financing activities in fiscal 2022 consisted of $19.7 million used for the repurchase of our common stock, cash dividend payments of $18.6 million, the final Veracity contingent consideration payment, of which $3.3 million was categorized as financing (the remaining $3.7 million of the total $7.0 million final Veracity contingent consideration payment was categorized as operating), and the Expertforce Interim Projects GmbH, LLC contingent consideration payment of $0.3 million, partially offset by $10.4 million of net borrowing under the Credit Facility (consisting of $73.4 million of proceeds from borrowings and $63.0 million of repayment), and $17.9 million in proceeds received from ESPP share purchases and employee stock option exercises.
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. As of May 28, 2022 and May 29, 2021, a valuation allowance of $8.2 million and $13.3 million was established on deferred tax assets totaling $34.3 million and $38.4 million, respectively.
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. As of May 27, 2023 and May 28, 2022, a valuation allowance of $6.5 million and $8.2 million was established on deferred tax assets totaling $33.2 million and $34.3 million, respectively.
The number of consultants on assignment at the end of fiscal 2022 was 3,388 compared to 2,902 at the end of fiscal 2021. Selling, General and Administrative Expenses .
The number of consultants on assignment at the end of fiscal 2023 was 3,145 compared to 3,388 at the end of fiscal 2022. Selling, General and Administrative Expenses .
These were partially offset by $6.8 million in proceeds received from ESPP share purchases and employee stock option exercises.
These uses were partially offset by $16.1 million in proceeds received from ESPP share purchases and employee stock option exercises.
Our income tax for the years ended May 28, 2022, May 29, 2021 and May 30, 2020 was an expense of $15.8 million, a benefit of $2.5 million and an expense of $6.9 million, respectively. Our total liability for unrecognized tax benefits was $0.9 million as of both May 28, 2022 and May 29, 2021.
Our income tax for the years ended May 27, 2023, May 28, 2022 and May 29, 2021 was an expense of $18.3 million, an expense of $15.8 million and a benefit of $2.5 million, respectively. As of May 27, 2023 and May 28, 2022, our total liability for unrecognized tax benefits was $1.0 million and $0.9 million, respectively.
Our enterprise initiatives in recent years include refining the operating model for sales, talent and delivery to be more client-centric, cultivating a more robust performance culture by aligning incentives to business performance, building and commercializing our digital engagement platform, enhancing our consulting capabilities in digital transformation to align with market demand and improving our fixed-cost structure through a global restructuring initiative.
Our enterprise initiatives in recent years include refining the operating model for sales, talent and delivery to be more client-centric, cultivating a more robust performance culture by aligning incentives to business performance, building and commercializing our digital engagement platform, enhancing our consulting capabilities in digital transformation to align with market demand, improving operating leverage through pricing, operating efficiency and cost reduction, and driving growth through strategic acquisitions.
In addition, if we decide to make additional share repurchases, we may fund these through existing cash balances or use of our New Credit Facility. The sale of additional equity securities or certain forms of debt financing could result in additional dilution to our stockholders.
In addition, if we decide to make additional share repurchases, we may fund these through existing cash balances or use of our Credit Facility. The sale of additional equity securities or certain forms of debt financing could result in additional dilution to our stockholders. Our ability to secure additional financing in the future, if needed, will depend on several factors.
For fiscal 2022, the material costs and expenses attributable to the Other Segments that are not included in computing the segment measure of Adjusted EBITDA included depreciation and amortization expense of $0.5 million and stock-based compensation expense of $0.6 million.
For fiscal 2023, the material costs and expenses attributable to the Other Segments that are not included in computing the segment measure of Adjusted EBITDA included depreciation and amortization expenses of $0.2 million, stock-based compensation expense of $1.1 million and goodwill impairment of $3.0 million.
We are laser focused on driving long-term growth in our business by seizing the favorable macro shifts in workforce strategies and preferences, building an efficient and scalable operating model, and maintaining a distinctive culture and approach to professional services.
See Part I, Item 1 “Business” for further discussions about our business and operations. We are laser focused on driving long-term growth in our business by seizing the favorable macro shifts in workforce strategies and preferences, building an efficient and scalable operating model, and maintaining a distinctive culture and approach to professional services.
Based 29 Table of Contents on our assessment of these factors, we do not believe that it is more likely than not that the fair value of any of our reporting units is less than its respective carrying value, and no further testing is needed. We concluded that there was no goodwill impairment as of May 28, 2022.
Based on our assessment of these factors, we do not believe that it is more likely than not that the fair value of our reporting unit is less than its carrying value, and no further testing is needed. We concluded that there was no goodwill impairment as of May 27, 2023.
Our engagements are designed to leverage human connection and collaboration to deliver practical solutions and more impactful results that power our clients’, consultants’ and partners’ success. A disruptor within the professional services industry since its founding in 1996, today the Company finds itself enjoying a highly favorable macro environment that embraces its differentiated agile delivery model.
Our engagements are designed to leverage human connection, expertise and collaboration to deliver practical solutions and more impactful results that power our clients’, consultants’ and partners’ success. A disruptor within the professional services industry since its founding in 1996, today we embrace our differentiated agile delivery model.
Stock-based compensation expense for the years ended May 28, 2022, May 29, 2021 and May 30, 2020 was $8.2 million, $6.6 million and $6.1 million, respectively.
Stock-based compensation expense for the years ended May 27, 2023, May 28, 2022 and May 29, 2021 was $9.5 million, $8.2 million and $6.6 million, respectively.
We forecast our revenue and Adjusted EBITDA margin based on historical experience and internal forecasts about future performance. The following is a discussion of our goodwill impairment tests performed during fiscal 2022. 2022 Annual Goodwill Impairment Analysis We performed our annual goodwill impairment test as of May 28, 2022 on our three reporting units.
We forecast our revenue and Adjusted EBITDA margin based on historical experience and internal forecasts about future performance. The following is a discussion of our goodwill impairment tests performed during fiscal 2023.
Additional information regarding the New Credit Facility is included in Note 8 – Long-Term Debt in the Notes to consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K. As of May 28, 2022, we had $54.0 million outstanding under the New Credit Facility.
Additional information regarding the Credit Facility is included in Note 8 – Long-Term Debt in the Notes to consolidated financial statements included in Item 8 of Part II of this Annual Report on Form 10-K.
Investing Activities, Fiscal 2022 and 2021 Net cash used in investing activities was $3.0 million in fiscal 2022 compared to $3.8 million in fiscal 2021. Net cash used in investing activities in both periods was primarily for the development of internal-use software and acquisition of property and equipment.
Net cash used in investing activities in fiscal 2022 was primarily for the development of internal-use software and acquisition of property and equipment.
For the Years Ended May 28, % of May 29, % of May 30, % of 2022 Revenue 2021 Revenue 2020 Revenue Net income $ 67,175 8.3 % $ 25,229 4.0 % $ 28,285 4.0 % Adjustments: Amortization expense 4,908 0.6 5,228 0.8 5,745 0.8 Depreciation expense 3,575 0.4 3,897 0.6 5,019 0.7 Interest expense, net 1,064 0.2 1,600 0.3 2,061 0.3 Income tax expense (benefit) 15,793 2.0 (2,545) (0.4) 6,943 1.0 EBITDA 92,515 11.5 33,409 5.3 48,053 6.8 Stock-based compensation expense 8,168 1.0 6,613 1.1 6,057 0.9 Restructuring costs 833 0.1 8,260 1.3 4,982 0.7 Contingent consideration adjustment 166 - 4,512 0.7 794 0.1 Technology transformation costs (1) 1,449 0.2 - - - - Adjusted EBITDA $ 103,131 12.8 % $ 52,794 8.4 % $ 59,886 8.5 % (1) Technology transformation costs represent costs included in net income related to the Company’s initiative to upgrade its technology platform globally, including a cloud-based enterprise resource planning system and talent acquisition and management system.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except percentages) For the Years Ended May 27, % of May 28, % of May 29, % of 2023 Revenue 2022 Revenue 2021 Revenue Net income $ 54,359 7.0 % $ 67,175 8.3 % $ 25,229 4.0 % Adjustments: Amortization expense 5,018 0.6 4,908 0.6 5,228 0.8 Depreciation expense 3,539 0.4 3,575 0.4 3,897 0.6 Interest expense, net 552 0.1 1,064 0.2 1,600 0.3 Income tax expense (benefit) 18,259 2.4 15,793 2.0 (2,545) (0.4) EBITDA 81,727 10.5 92,515 11.5 33,409 5.3 Stock-based compensation expense 9,521 1.2 8,168 1.0 6,613 1.1 Technology transformation costs (1) 6,355 0.8 1,449 0.2 - - Goodwill impairment (2) 2,955 0.4 - - - - Restructuring costs (3) (364) - 833 0.1 8,260 1.3 Contingent consideration adjustment - - 166 - 4,512 0.7 Adjusted EBITDA $ 100,194 12.9 % $ 103,131 12.8 % $ 52,794 8.4 % (1) Technology transformation costs represent costs included in net income related to the Company’s initiative to upgrade its technology platform globally, including a cloud-based enterprise resource planning system and talent acquisition and management system.
As of May 28, 2022, we have non-cancellable purchase obligations totaling $9.9 million, which are payable as follows pursuant to the licensing arrangements that we have entered into in connection with this initiative: $3.4 million due during fiscal 2023 and 2024, $3.6 million due during fiscal 2025 and 2026, and $2.9 million due thereafter.
As of May 27, 2023, we have non-cancellable purchase obligations totaling $16.0 million, which primarily consists of payments pursuant to the licensing arrangements that we have entered into in connection with this initiative: $5.0 million due during fiscal 2024; $4.8 million due during fiscal 2025; $3.1 million due during fiscal 2026; and $3.1 million due thereafter .
Management and administrative headcount includes full-time equivalent headcount for our seller-doer group, which is determined by utilization levels achieved by the seller-doers. Any unutilized time is converted to full-time equivalent headcount. Restructuring charges .
Management and administrative headcount was 917 at the end of fiscal 2023 and 871 at the end of fiscal 2022. Management and administrative headcount includes full-time equivalent headcount for our seller-doer group, which is determined by utilization levels achieved by the seller-doers. Any unutilized time is converted to full-time equivalent headcount. Goodwill Impairment.
Based upon current economic circumstances and our business performance, management will continue to monitor the need to record additional or release existing valuation allowances in the future, primarily related to certain foreign jurisdictions.
Based upon current economic circumstances and our business performance, management will continue to monitor the need to record additional or release existing valuation allowances in the future, primarily related to deferred tax assets in certain foreign jurisdictions. Realization of the currently reserved deferred tax assets is dependent upon generating sufficient future taxable income in the domestic and foreign territories .
Overview Resources Global Professionals is a global consulting firm focused on project execution services that power clients’ operational needs and change initiatives with on demand experienced and diverse talent. As a next-generation human capital partner for our clients, we specialize in solving today’s most pressing business problems across the enterprise in the areas of transactions, regulations, and transformations.
Overview Resources Global Professionals is a global consulting firm focused on project execution services that power clients’ operational needs and change initiatives utilizing on-demand, experienced and diverse talent. As a next-generation human capital partner for our clients, we specialize in co-delivery of enterprise initiatives typically precipitated by business transformation, strategic transactions or regulatory change.
In addition, as part of our tax planning strategies, we made certain changes related to the capitalization of fixed assets effective for fiscal 2021. This strategy allowed us to carry back the NOLs of fiscal 2021 to fiscal years 2016 to 2018.
As part of the Company’s tax planning strategies, management made certain changes related to the capitalization of fixed assets effective for fiscal 2021. This strategy allowed the Company to carry back the NOLs of fiscal 2021 to fiscal years 2016 to 2018 and allowed us to request refunds for alternative minimum tax credits for fiscal years 2019 and 2020.
We elected to perform a qualitative analysis and assessed the relevant events and circumstances to determine if it is more likely than not that the fair value of any of our reporting units is less than its respective carrying amount.
We elected to perform a qualitative analysis and assessed the relevant events and circumstances to determine if it is more likely than not that the fair value of our reporting unit is less than its carrying amount. We considered such events and circumstances including macroeconomic factors, industry and market conditions, financial performance indicators and measurements, and other factors.
Being indefinitely reinvested does not require a deferred tax liability to be recognized on the foreign earnings. Management’s indefinite reinvestment position is supported by: RGP in the U.S. has generated more than enough cash to fund operations and expansion, including acquisitions.
Management’s indefinite reinvestment position is supported by: RGP in the U.S. has generated more than enough cash to fund operations and expansion, including acquisitions.
RGP uses its excess cash to, at its discretion, return cash to stockholders through dividend payments and stock repurchases. RGP has sufficient cash flow from operations in the U.S. to service its debt and other current or known obligations without requiring cash to be remitted from foreign subsidiaries. Management’s growth objectives include allowing cash to accumulate in RGP’s profitable foreign subsidiaries with the expectation of finding strategic expansion plans to further penetrate RGP’s most successful locations. The consequences of distributing foreign earnings have historically been deemed to be tax-inefficient for RGP or not materially beneficial.
RGP uses its excess cash to, at its discretion, return cash to stockholders through dividend payments and stock repurchases. RGP has sufficient cash flow from operations in the U.S. to service its debt and other current or known obligations without requiring cash to be remitted from foreign subsidiaries. Management’s growth objectives include allowing cash to accumulate in RGP’s profitable foreign subsidiaries with the expectation of finding strategic expansion plans to further penetrate RGP’s most successful locations. The consequences of distributing foreign earnings have historically been deemed to be tax-inefficient for RGP or not materially beneficial. 36 Table of Contents Operating Results of Segments As discussed in Business Segments in Item 1, Note 2 – Summary of Significant Accounting Policies and Note 18 – Segment Information and Enterprise Reporting in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, the Company divested taskforce on May 31, 2022.
In fiscal 2021, cash provided by operations resulted from net income of $25.2 million and non-cash adjustments of $33.9 million.
In fiscal 2023, cash provided by operations resulted from net income of $54.4 million and non-cash adjustments of $12.8 million.
Our unique approach to workforce strategy strongly positions us to help our clients transform their businesses and workplaces, especially in a time where high-quality talent is increasingly scarce and the usage of a flexible workforce to execute transformational projects has become the dominant operating model . See Part I, Item 1 “Business” for further discussions about our business and operations.
Our client engagement and talent delivery model offer speed and agility and strongly positions us to help our clients transform their businesses and workplaces, especially in a time where high-quality talent is increasingly scarce and the usage of a flexible workforce to execute transformational projects is becoming the dominant operating model.
Our ability to generate positive cash flow from operations in the future will be, at least in part, dependent on global economic conditions and our ability to remain resilient during economic downturns.
Our ability to generate positive cash flow from operations in the future will be, at least in part, dependent on global economic conditions and our ability to remain resilient during periods of deteriorating macroeconomic conditions and any economic downturns. As of May 27, 2023, we had $116.8 million of cash and cash equivalents, including $50.4 million held in international operations.
The number of consultants on assignment under Other Segments as of May 28, 2022 was 125 compared to 107 as of May 29, 2021. Adjusted EBITDA by Segment RGP – RGP Adjusted EBITDA increased $56.6 million, or 72.9%, to $134.2 million in fiscal 2022, compared to $77.6 million in fiscal 2021.
The number of consultants on assignment under Other Segments as of May 27, 2023 was 14 compared to 125 as of May 28, 2022. 37 Table of Contents Adjusted EBITDA by Segment RGP – RGP Adjusted EBITDA declined $1.8 million, or 1.3%, to $132.4 million in fiscal 2023 compared to $134.2 million in fiscal 2022.
For the Years Ended May 28, May 29, May 30, 2022 2021 2020 Revenue $ 805,018 100.0 % $ 629,516 100.0 % $ 703,353 100.0 % Direct cost of services 488,376 60.7 388,112 61.7 427,870 60.8 Gross profit 316,642 39.3 241,404 38.3 275,483 39.2 Selling, general and administrative expenses 224,721 27.9 209,326 33.3 228,067 32.4 Amortization expense 4,908 0.6 5,228 0.8 5,745 0.8 Depreciation expense 3,575 0.4 3,897 0.6 5,019 0.8 Income from operations 83,438 10.4 22,953 3.6 36,652 5.2 Interest expense, net 1,064 0.2 1,600 0.2 2,061 0.3 Other income (594) (0.1) (1,331) (0.2) (637) (0.1) Income before provision for income taxes 82,968 10.3 22,684 3.6 35,228 5.0 Income tax expense (benefit) 15,793 2.0 (2,545) (0.4) 6,943 1.0 Net income $ 67,175 8.3 % $ 25,229 4.0 % $ 28,285 4.0 % Non-GAAP Financial Measures We use certain non-GAAP financial measures to assess our financial and operating performance that are not defined by or calculated in accordance with GAAP.
For the Years Ended May 27, % of May 28, % of May 29, % of 2023 Revenue 2022 Revenue 2021 Revenue Revenue $ 775,643 100.0 % $ 805,018 100.0 % $ 629,516 100.0 % Direct cost of services 462,501 59.6 488,376 60.7 388,112 61.7 Gross profit 313,142 40.4 316,642 39.3 241,404 38.3 Selling, general and administrative expenses 228,842 29.5 224,721 27.9 209,326 33.3 Amortization expense 5,018 0.6 4,908 0.6 5,228 0.8 Depreciation expense 3,539 0.4 3,575 0.4 3,897 0.6 Goodwill impairment 2,955 0.4 - - - - Income from operations 72,788 9.5 83,438 10.4 22,953 3.6 Interest expense, net 552 0.1 1,064 0.2 1,600 0.3 Other income (382) - (594) (0.1) (1,331) (0.3) Income before income tax expense (benefit) 72,618 9.4 82,968 10.3 22,684 3.6 Income tax expense (benefit) 18,259 2.4 15,793 2.0 (2,545) (0.4) Net income $ 54,359 7.0 % $ 67,175 8.3 % $ 25,229 4.0 % Year Ended May 27, 2023 Compared to Year Ended May 28, 2022 Percentage change computations are based upon amounts in thousands.
(2) This represents the number of business days in the country or countries in which the revenues are most concentrated within the geography. ‎ 31 Table of Contents EBITDA, A djusted EBITDA and Adjusted EBITDA Margin EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin assist management in assessing our core operating performance.
(2) This represents the number of business days in the U.S. (3) The business days in international regions represents the weighted average number of business days. ‎ 32 Table of Contents EBITDA, A djusted EBITDA and Adjusted EBITDA Margin EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin assist management in assessing our core operating performance.
RGP is the Company’s only reportable segment. taskforce and Sitrick do not individually meet the quantitative thresholds to qualify as reportable segments. Therefore, they are combined and disclosed as Other Segments.
Effective May 31, 2022, the Company’s operating segments consist of RGP and Sitrick. RGP is the Company’s only reportable segment. Sitrick does not individually meet the quantitative threshold to qualify as a reportable segment. Therefore, Sitrick is disclosed as Other Segments.
All employee termination and facility exit costs incurred under the Restructuring Plans were associated with the RGP segment, and are recorded in selling, general and administrative expenses in the Consolidated Statements of Operations, as further discussed in Note 19 – Segment Information and Enterprise Reporting in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
All employee termination and facility exit costs incurred under the Restructuring Plans were associated with the RGP segment, and are recorded in selling, general and administrative expenses in the Consolidated Statements of Operations.
We believe this measure also provides more clarity to our investors in evaluating our core operating performance and facilitates a comparison of such performance from period to period. The following table presents a reconciliation of same-day constant currency revenue to revenue, the most directly comparable GAAP financial measure, by geography. RESOURCES CONNECTION, INC.
We believe this measure also provides more clarity to our investors in evaluating our core operating performance and facilitates a comparison of such performance from period to period.
Our ability to secure additional financing in the future, if needed, will depend on several factors. These include our future profitability and the overall condition of the credit markets. Notwithstanding these considerations, we expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements.
These include our future profitability and the overall condition of the credit markets. Notwithstanding these considerations, we expect to meet our long-term liquidity needs with cash flows from operations and financing arrangements. 39 Table of Contents Operating Activities, Fiscal 2023 and 2022 Operating activities provided cash of $81.6 million and $49.4 million in fiscal 2023 and fiscal 2022, respectively.
We also believe these measures provide investors with useful perspective on underlying business results and trends and facilitate a comparison of our performance from period to period.
We also believe these measures provide investors with useful perspective on underlying business results and trends and facilitate a comparison of our performance from period to period. The following table presents EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for the periods indicated and includes a reconciliation of such measures to net income, the most directly comparable GAAP financial measure.
Realization of the currently reserved foreign deferred tax assets is dependent upon generating sufficient future taxable income in those foreign territories. 34 Table of Contents We have maintained a position of being indefinitely reinvested in our foreign subsidiaries’ earnings by not expecting to remit foreign earnings in the foreseeable future.
We have maintained a position of being indefinitely reinvested in our foreign subsidiaries’ earnings by not expecting to remit foreign earnings in the foreseeable future. Being indefinitely reinvested does not require a deferred tax liability to be recognized on the foreign earnings.
In addition, the Company pays an unused commitment fee on the average daily unused portion of the New Credit Facility, which ranges from 0.20% to 0.30% depending upon on the Company’s consolidated leverage ratio. The New Credit Facility is available for working capital and general corporate purposes, including potential acquisitions, dividend distribution and stock repurchases.
In addition, the Company pays an unused commitment fee on the average daily unused portion of the Credit Facility, which ranges from 0.20% to 0.30% depending upon the Company’s consolidated leverage ratio. As of May 27, 2023, the Company had no borrowings outstanding and $0.8 million of outstanding letters of credit issued under the Credit Facility .
(2) A reconciliation of the Company’s net income to Adjusted EBITDA on a consolidated basis is presented above under “Non-GAAP Financial Measures--Reconciliation of GAAP to Non-GAAP Financial Measures.” 35 Table of Contents Revenue by Segment RGP – RGP revenue increased $176.7 million, or 30.1%, to $764.4 million compared to $587.6 million in fiscal 2021, primarily as a result of a 25.6% increase in billable hours and a 3.3% increase in bill rate year over year.
(3) A reconciliation of the Company’s net income to Adjusted EBITDA on a consolidated basis is presented above under “Non-GAAP Financial Measures.” Revenue by Segment RGP – RGP revenue remained consistent at $764.5 million in fiscal 2023 compared to $764.4 million in fiscal 2022.
SG&A was $224.7 million, or 27.9% as a percentage of revenue, for the year ended May 28, 2022 compared to $209.3 million, or 33.3% as a percentage of revenue, for the year ended May 29, 2021.
Selling, general and administrative expenses (“SG&A”) was $228.8 million, or 29.5% of revenue, for the year ended May 28, 2023 compared to $224.7 million, or 27.9% of revenue, for the year ended May 28, 2022.
Our initiative to upgrade our technology platform, as described in “Fiscal 2022 Strategic Focus Areas” above, requires significant investments over multiple years.
Our initiative to upgrade our technology platform, as described in “Fiscal 2023 Strategic Focus Areas” above, requires significant investments over multiple years. As of end of fiscal 2023, the amount of the investments required for this multi-year initiative was estimated to be in the range of $30.0 million to $33.0 million.
The decrease in depreciation expense was primarily due to fully-depreciated computer equipment during fiscal 2022. Income Taxes. The provision for income taxes was $15.8 million (effective tax rate of 19.0%) for the year ended May 28, 2022 compared to an income tax benefit of $2.5 million (effective benefit rate of 11.2%) for the year ended May 29, 2021.
The provision for income taxes was $18.3 million (effective tax rate of 25.1%) for the year ended May 27, 2023 compared to $15.8 million (effective tax rate of 19.0%) for the year ended May 28, 2022.
The following table presents our operating results by segment (amounts in thousands, except percentages): For the Years Ended May 28, May 29, 2022 2021 Revenue: RGP $ 764,350 94.9 % $ 587,620 93.3 % Other Segments 40,668 5.1 41,896 6.7 Total revenue $ 805,018 100.0 % $ 629,516 100.0 % Adjusted EBITDA: RGP $ 134,187 130.1 % $ 77,589 147.0 % Other Segments 3,527 3.4 3,580 6.8 Reconciling Items ( 1 ) (34,583) (33.5) (28,375) (53.8) Total Adjusted EBITDA ( 2 ) $ 103,131 100.0 % $ 52,794 100.0 % (1) Reconciling items are generally comprised of u nallocated corporate administrative costs, including management and board compensation, corporate support function costs and other general corporate costs that are not allocated to segments.
The following table presents our current operating results by segment (in thousands, except percentages): For the Years Ended May 27, % of May 28, % of 2023 Revenue 2022 Revenue Revenue: RGP $ 764,511 98.6 % $ 764,350 94.9 % Other Segments (1) 11,132 1.4 40,668 5.1 Total revenue $ 775,643 100.0 % $ 805,018 100.0 % For the Years Ended May 27, % of May 28, % of Adjusted EBITDA: 2023 Adj EBITDA 2022 Adj EBITDA RGP $ 132,377 132.1 % $ 134,187 130.1 % Other Segments (1) 1,179 1.2 3,527 3.4 Reconciling Items (2) (33,362) (33.3) (34,583) (33.5) Total Adjusted EBITDA (3) $ 100,194 100.0 % $ 103,131 100.0 % (1) Amounts reported in Other Segments for the year ended May 27, 2023 include Sitrick and an immaterial amount from taskforce from May 29, 2022 through May 31, 2022, the completion date of the sale.
The fiscal years ended May 28, 2022, May 29, 2021 and May 30, 2020 consisted of 52, 52, and 53 weeks, respectively (amounts in thousands, except percentages).
Our operating results for the periods indicated are expressed as a percentage of revenue below. The fiscal years ended May 27, 2023, May 28, 2022 and May 29, 2021 all consisted of 52 weeks (in thousands, except percentages).
The $15.4 million increase in SG&A year over year was primarily attributed to (1) a $21.0 million increase in management compensation and benefits primarily related to higher incentive compensation due to significant growth in both revenue and profitability, (2) a $1.6 million increase in stock-based compensation expense, (3) an increase of $1.4 million in technology transformation costs incurred in fiscal 2022, (4) a $1.3 million increase in other business and travel expenses as the impact of the Pandemic subsided and business travel started to resume gradually, (5) a $1.2 million increase in computer software and consulting costs, (6) $0.5 million of impairment related to exiting a real estate facility, and (7) a $1.2 million increase in all other general and administration expenses.
The $4.1 million increase in SG&A year-over-year was primarily attributed to an increase of $7.7 million in management compensation, an increase of $4.9 million in technology transformation costs, a $2.4 million increase in business and travel expenses as business travel normalizes post Pandemic to reflect a hybrid work model, a $1.4 million increase in stock-based compensation expense, a $1.3 million increase in computer software costs, an increase of $0.9 million in bad debt expenses, an increase of $0.9 million in self-insurance medical benefits, an increase of $0.9 million resulting from the adverse effect of changes in foreign currency exchange rates, and a $2.9 million increase in all other general and administration expenses to support the business.
We believe our investment in this technology initiative will accelerate our efficiency and data-led decision-making capabilities, optimize process flow and automation, scale our operations to support future growth, and create an enhanced digital experience for our consultants, clients and employees.
We believe our investment in these technology transformation initiatives will accelerate our efficiency and data-led decision-making capabilities, optimize process flow and automation, improve consultant recruitment and retention, drive business growth with operational agility, scale our operations and further support our growth, goals and vision.
On November 12, 2021, the Company and Resources Connection LLC and all domestic subsidiaries of the Company as guarantors, entered into the New Credit Agreement and concurrently terminated the Previous Credit Facility.
On November 12, 2021, the Company and Resources Connection LLC, as borrowers, and all of the Company’s domestic subsidiaries, as guarantors, entered into a credit agreement with the lenders that are party thereto and Bank of America, N.A. as administrative agent for the lenders (the “Credit Agreement”), and concurrently terminated the then existing credit facility, which provided a $120.0 million revolving loan.
Operating Results of Segment As discussed in Business Segments in Item 1, Note 2 – Summary of Significant Accounting Policies and Note 19 – Segment Information and Enterprise Reporting in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, we revised our historical one-segment position and identified the following new operating segments effective in the second quarter of fiscal 2021 to align with changes made in our internal management structure and our reporting structure of financial information used to assess performance and allocate resources: RGP, taskforce , and Sitrick.
Third Quarter 2023 Goodwill Impairment Test As further discussed in Note 2 – Summary of Significant Accounting Policies and Note 5 – Goodwill and Intangible Assets in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, during the third quarter of fiscal 2023, the Company determined the existence of impairment indicators on goodwill associated with Sitrick, one of the Company’s operating segments and reporting units, as a result of its declining business performance.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs a result, our operating results are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar. Revenues and expenses denominated in foreign currencies are translated into U.S. dollars at the monthly average exchange rates prevailing during the period.
Biggest changeFor the year ended May 27, 2023, approximately 14.3% of our revenues were generated outside of the U.S. compared to approximately 17.5% of our revenues for the year ended May 28, 2022. As a result, our operating results are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar.
ITEM 7A. QUANTITA TIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Interest Rate Risk. We are primarily exposed to market risks from fluctuations in interest rates and the effects of those fluctuations on the market values of our cash and cash equivalents and our borrowings under the New Credit Facility that bear interest at a variable market rate.
ITEM 7A. QUANTITA TIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Interest Rate Risk. We are primarily exposed to market risks from fluctuations in interest rates and the effects of those fluctuations on the market values of our cash and cash equivalents and our borrowings under the Credit Facility that bear interest at a variable market rate.
However, we cannot provide assurance that exchange rate fluctuations will not adversely affect our financial results in the future. ‎ 39 Table of Contents
However, we cannot provide assurance that exchange rate fluctuations will not adversely affect our financial results in the future. ‎ 41 Table of Contents
We are exposed to interest rate risk related to fluctuations in the term SOFR rate. See “Sources and Uses of Liquidity” above and Note 8 – Long-Term Debt in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion about the interest rate on our New Credit Facility.
See “Sources and Uses of Liquidity” above and Note 8 – Long-Term Debt in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further discussion about the interest rate on our Credit Facility. As of May 27, 2023, we had no borrowings outstanding under our Credit Facility .
At the current level of borrowing as of May 28, 2022 of $54.0 million, a 10% change in interest rates would have resulted in approximately a $0.1 million change in annual interest expense. Foreign Currency Exchange Rate Risk. For the year ended May 28, 2022, approximately 17.5% of our revenues were generated outside of the U.S.
At our level of borrowing as of May 28, 2022 of $54.0 million, a 10% change in interest rates would have resulted in approximately a $0.1 million change in annual interest expense for fiscal 2022. Foreign Currency Exchange Rate Risk.
Thus, as the value of the U.S. dollar fluctuates relative to the currencies in our non-U.S.-based operations, our reported results may vary. Assets and liabilities of our non-U.S.-based operations are translated into U.S. dollars at the exchange rate effective at the end of each monthly reporting period.
Revenues and expenses denominated in foreign currencies are translated into U.S. dollars at the monthly average exchange rates prevailing during the period. Thus, as the value of the U.S. dollar fluctuates relative to the currencies in our non-U.S.-based operations, our reported results may vary.
Approximately 66.1% of our fiscal year-end balances of cash and cash equivalents were denominated in U.S. dollars. The remaining amount of approximately 33.9% was comprised primarily of cash balances translated from Euros, Japanese Yen, Chinese Yuan, Mexican Pesos and Canadian Dollar.
This compares to approximately 66.1% of our cash and cash equivalents balances as of May 28, 2022 that were denominated in U.S. dollars and approximately 33.9% that were comprised primarily of cash balances translated from Euros, Japanese Yen, Chinese Yuan and Canadian Dollars.
As of May 28, 2022, we had approximately $104.2 million of cash and cash equivalents and $54.0 million of borrowings under our New Credit Facility.
As of May 27, 2023, we had approximately $116.8 million of cash and cash equivalents and no borrowings under our Credit Facility.
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We may become exposed to interest rate risk related to fluctuations in the term SOFR rate used under our Credit Facility.
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Assets and liabilities of our non-U.S.-based operations are translated into U.S. dollars at the exchange rate effective at the end of each monthly reporting period. Approximately 56.9% of our cash and cash equivalents balances as of May 27, 2023 were denominated in U.S. dollars.
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The remaining amount of approximately 43.1% was comprised primarily of cash balances translated from Euros, Japanese Yen, Mexican Pesos, Chinese Yuan, Canadian Dollar, Indian Rupee and British Pound Sterling.

Other RGP 10-K year-over-year comparisons