QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~December 30, 2019,~~January 4, 2021 there were approximately ~~32,139,918~~32,508,305 shares of the registrant’s common stock, $0.01 par value per share, outstanding.

RESOURCES CONNECTION, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Amounts in thousands, except per share amounts)


	Three Months Ended					Six Months Ended					Three Months Ended				Six Months Ended
	November 23,			November 24,		November 23,			November 24,		November 28,		November 23,		November 28,		November 23,
	2019			2018		2019			2018		2020		2019		2020		2019
Revenue	$	184,507		$	188,799	$	356,732		$	367,357	$	153,222	$	184,507	$	300,567	$	356,732
Direct cost of services, primarily payroll and related taxes for professional services employees		110,130			115,378		214,852			225,785

Gross margin		74,377			73,421		141,880			141,572
Direct cost of services, primarily payroll and related taxes
for professional services employees												95,044		110,130		184,493		214,852
Gross profit												58,178		74,377		116,074		141,880
Selling, general and administrative expenses		53,755			54,959		110,733			111,325		54,552		53,755		105,707		110,733
Amortization of intangible assets		1,510			952		2,604			1,907		1,393		1,510		2,923		2,604
Depreciation expense		1,424			1,197		2,793			2,266		984		1,424		1,991		2,793

Income from operations		17,688			16,313		25,750			26,074		1,249		17,688		5,453		25,750
Interest expense		551			608		1,033			1,134
Other (income)/expense		(537	)		—		(537	)		—

Interest expense, net												460		551		955		1,033
Other income												(475)		(537)		(1,007)		(537)
Income before provision for income taxes		17,674			15,705		25,254			24,940		1,264		17,674		5,505		25,254
Provision for income taxes		5,337			5,141		7,978			8,635		2,256		5,337		4,213		7,978

Net income	$	12,337		$	10,564	$	17,276		$	16,305

Net income per common share:
Net (loss) income											$	(992)	$	12,337	$	1,292	$	17,276
Net (loss) income per common share:
Basic	$	0.39		$	0.33	$	0.54		$	0.51	$	(0.03)	$	0.39	$	0.04	$	0.54

Diluted	$	0.38		$	0.33	$	0.54		$	0.50	$	(0.03)	$	0.38	$	0.04	$	0.54

Weighted average common shares outstanding:
Basic		31,984			31,721		31,852			31,731		32,356		31,984		32,270		31,852

Diluted		32,369			32,446		32,287			32,457		32,356		32,369		32,317		32,287

Cash dividends declared per common share	$	0.14		$	0.13	$	0.28		$	0.26	$	0.14	$	0.14	$	0.28	$	0.28

The accompanying notes are an integral part of these consolidated financial statements

‎

RESOURCES CONNECTION, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited)

(Amounts in thousands)

   Three Months Ended Six Months Ended
   November 23,    November 24, November 23, November 24,
   2019    2018 2019 2018
COMPREHENSIVE INCOME:

Net income
   $ 12,337    $ 10,564 $ 17,276 $ 16,305
Foreign currency translation adjustment, net of tax
   48    (1,426 ) (638 ) (2,028 )




Total comprehensive income
   $ 12,385    $ 9,138 $ 16,638 $ 14,277


	Three Months Ended					Six Months Ended
	November 28,		November 23,			November 28,	November 23,
	2020		2019			2020	2019

COMPREHENSIVE (LOSS) INCOME:
Net (loss) income	$	(992)	$	12,337	$	1,292	$	17,276
Foreign currency translation adjustment, net of tax		940		48		5,256		(638)
Total comprehensive (loss) income	$	(52)	$	12,385	$	6,548	$	16,638

The accompanying notes are an integral part of these consolidated financial statements

‎

~~RESOURCES~~

RESOURCES CONNECTION, INC.

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(Amounts in thousands)

            Accumulated
      Additional       Other Total
   Common Stock    Paid-in    Treasury Stock Comprehensive Retained Stockholders’
   Shares Amount    Capital    Shares    Amount Loss Earnings Equity
Balances as of May 25, 2019
   63,054 $ 631    $ 460,226    31,466    $ (516,103 ) $ (12,588 ) $ 350,230 $ 282,396
Exercise of stock options
   172 1    2,250       2,251
Stock-based compensation expense
      1,408       1,408
Issuance of common stock under Employee Stock Purchase Plan
   215 2    2,597       2,599
Cancellation of restricted stock
   (5 ) —      —         —
Cash dividends declared ($0.14 per share)
            (4,476 ) (4,476 )
Currency translation adjustment
            (686 ) (686 )
Net income for the three months ended August 24, 2019
            4,939 4,939








Balances as of August 24, 2019
   63,436 $ 634    $ 466,481    31,466    $ (516,103 ) $ (13,274 ) $ 350,693 $ 288,431








Exercise of stock options
   85 1    1,215       1,216
Stock-based compensation expense
      1,591       1,591
Cash dividends declared ($0.14 per share)
            (4,499 ) (4,499 )
Issuance of common stock in connection with acquisition of Accretive
   83 1    1,140       1,141
Currency translation adjustment
            48 48
Net income for the three months ended November 23, 2019
            12,337 12,337








Balances as of November 23, 2019
   63,604 $ 636    $ 470,427    31,466    $ (516,103 ) $ (13,226 ) $ 358,531 $ 300,265

               Accumulated
         Additional       Other Total
   Common Stock    Paid-in    Treasury Stock Comprehensive Retained Stockholders’
   Shares    Amount    Capital    Shares    Amount Loss Earnings Equity
Balances as of May 26, 2018
   61,252    $ 613    $ 429,578    29,638    $ (486,722 ) $ (10,385 ) $ 335,741 $ 268,825
Exercise of stock options
   186    2    2,407       2,409
Stock-based compensation expense
         1,327       1,327
Issuance of common stock under Employee Stock Purchase Plan
   166    1    2,177       2,178
Purchase of shares
            468    (7,462 ) (7,462 )
Cash dividends declared ($0.13 per share)
               (4,095 ) (4,095 )
Currency translation adjustment
               (602 ) (602 )
Net income for the three months ended August 25, 2018
               5,741 5,741










Balances as of August 25, 2018
   61,604    $ 616    $ 435,489    30,106    $ (494,184 ) $ (10,987 ) $ 337,387 $ 268,321










Exercise of stock options
   565    6    7,998       8,004
Stock-based compensation expense
         1,611       1,611
Purchase of shares
            339    (5,540 ) (5,540 )
Cash dividends declared ($0.13 per share)
               (4,124 ) (4,124 )
Currency translation adjustment
               (1,426 ) (1,426 )
Net income for the three months ended November 24, 2018
               10,564 10,564










Balances as of November 24, 2018
   62,169    $ 622    $ 445,098    30,445    $ (499,724 ) $ (12,413 ) $ 343,827 $ 277,410


	For the Three Months Ended November 28, 2020
									Accumulated
				Additional					Other				Total
	Common Stock			Paid-in		Treasury Stock			Comprehensive		Retained		Stockholders'
	Shares	Amount		Capital		Shares	Amount		Loss		Earnings		Equity
Balances as of August 29, 2020	64,199	$	642	$	481,571	31,766	$	(521,033)	$	(9,546)	$	358,294	$	309,928
Exercise of stock options
Stock-based compensation expense					1,612									1,612
Amortization of restricted stock issued out of treasury
stock to board of director members					(96)			141				(45)		-
Cash dividends declared ($0.14 per share)												(4,541)		(4,541)
Currency translation adjustment										940				940
Net loss for the three months ended November 28, 2020												(992)		(992)
Balances as of November 28, 2020	64,199	$	642	$	483,087	31,766	$	(520,892)	$	(8,606)	$	352,716	$	306,947

	For the Six Months Ended November 28, 2020
									Accumulated
				Additional					Other				Total
	Common Stock			Paid-in		Treasury Stock			Comprehensive		Retained		Stockholders'
	Shares	Amount		Capital		Shares	Amount		Loss		Earnings		Equity
Balances as of May 30, 2020	63,910	$	639	$	477,438	31,766	$	(521,088)	$	(13,862)	$	360,534	$	303,661
Exercise of stock options	44		1		503									504
Stock-based compensation expense					2,824									2,824
Issuance of common stock under Employee
Stock Purchase Plan	245		2		2,458									2,460
Amortization of restricted stock issued out of treasury
stock to board of director members					(136)			196				(60)		-
Cash dividends declared ($0.28 per share)												(9,050)		(9,050)
Currency translation adjustment										5,256				5,256
Net income for the six months ended November 28, 2020												1,292		1,292
Balances as of November 28, 2020	64,199	$	642	$	483,087	31,766	$	(520,892)	$	(8,606)	$	352,716	$	306,947

	For the Three Months Ended November 23, 2019
									Accumulated
				Additional					Other				Total
	Common Stock			Paid-in		Treasury Stock			Comprehensive		Retained		Stockholders'
	Shares	Amount		Capital		Shares	Amount		Loss		Earnings		Equity
Balances as of August 24, 2019	63,436	$	634	$	466,481	31,466	$	(516,103)	$	(13,274)	$	350,693	$	288,431
Exercise of stock options	85		1		1,215									1,216
Stock-based compensation expense					1,591									1,591
Cash dividends declared ($0.14 per share)												(4,499)		(4,499)
Issuance of common stock in connection with the
acquisition of Accretive	83		1		1,140									1,141
Currency translation adjustment										48				48
Net income for the three months ended November 23, 2019												12,337		12,337
Balances as of November 23, 2019	63,604	$	636	$	470,427	31,466	$	(516,103)	$	(13,226)	$	358,531	$	300,265

	For the Six Months Ended November 23, 2019
									Accumulated
				Additional					Other				Total
	Common Stock			Paid-in		Treasury Stock			Comprehensive		Retained		Stockholders'
	Shares	Amount		Capital		Shares	Amount		Loss		Earnings		Equity
Balances as of May 25, 2019	63,054	$	631	$	460,226	31,466	$	(516,103)	$	(12,588)	$	350,230	$	282,396
Exercise of stock options	257		2		3,465									3,467
Stock-based compensation expense					2,999									2,999
Issuance of common stock under Employee
Stock Purchase Plan	215		2		2,597									2,599
Cancellation of restricted stock	(5)				-									-
Cash dividends declared ($0.28 per share)												(8,975)		(8,975)
Issuance of common stock in connection with the
acquisition of Accretive	83		1		1,140									1,141
Currency translation adjustment										(638)				(638)
Net income for the six months ended November 23, 2019												17,276		17,276
Balances as of November 23, 2019	63,604	$	636	$	470,427	31,466	$	(516,103)	$	(13,226)	$	358,531	$	300,265

The accompanying notes are an integral part of these consolidated financial statements

‎

RESOURCES CONNECTION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Amounts in thousands)


	Six Months Ended						Six Months Ended
	November 23,			November 24,			November 28,		November 23,
	2019			2018			2020		2019
Cash flows from operating activities:
Net income	$	17,276		$	16,305		$	1,292	$	17,276
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,397			4,173			4,914		5,397
Stock-based compensation expense		3,158			3,013			3,105		3,158
Contingent consideration adjustment		(262	)		(37	)		342		(262)
Loss on disposal of assets		66			64			167		66
Bad debt expense		616			477
Impairment of operating right-of-use assets								650		-
Adjustment to allowance for doubtful accounts								(260)		616
Non-cash benefit		(46	)		—			-		(46)
Deferred income taxes		(337	)		4,620			(403)		(337)
Changes in operating assets and liabilities, net of effects of business combinations:
Trade accounts receivable		(1,383	)		(17,838	)		13,547		(1,383)
Prepaid expenses and other current assets		(499	)		205			(888)		(499)
Income taxes		2,070			(3,102	)		1,919		2,070
Other assets		(634	)		(1,042	)		58		(634)
Accounts payable and accrued expenses		(1,570	)		(458	)		3,769		(1,570)
Accrued salaries and related obligations		(7,380	)		(6,121	)		(81)		(7,380)
Other liabilities		746			1,406			1,446		746

Net cash provided by operating activities		17,218			1,665			29,577		17,218

Cash flows from investing activities:
Redemption of short-term investments		5,981			—			-		5,981
Proceeds from sale of assets		105			—			168		105
Acquisition of Veracity,net of cash acquired of $2.1 million		(30,293	)		—
Purchase of property and equipment		(1,264	)		(3,408	)

Acquisition of Veracity, net of cash acquired								-		(30,293)
Acquisition of property and equipment and internal-use software								(1,802)		(1,264)
Net cash used in investing activities		(25,471	)		(3,408	)		(1,634)		(25,471)

Cash flows from financing activities:
Proceeds from exercise of stock options		3,467			10,413			522		3,467
Proceeds from issuance of common stock under Employee Stock Purchase Plan		2,599			2,178			2,460		2,599
Purchase of common stock		—			(13,002	)
Payment of contingent consideration								(3,020)		-
Proceeds from Revolving Credit Facility		35,000			—			-		35,000
Repayment on Revolving Credit Facility		(24,000	)		(5,000	)
Repayments on Revolving Credit Facility								(20,000)		(24,000)
Cash dividends paid		(8,581	)		(7,887	)		(9,059)		(8,581)

Net cash provided by (used in) financing activities		8,485			(13,298	)

Net cash (used in) provided by financing activities								(29,097)		8,485
Effect of exchange rate changes on cash		(244	)		(606	)		2,725		(244)

Net decrease in cash		(12	)		(15,647	)
Net increase (decrease) in cash								1,571		(12)
Cash and cash equivalents at beginning of period		43,045			56,470			95,624		43,045

Cash and cash equivalents at end of period	$	43,033		$	40,823		$	97,195	$	43,033

The accompanying notes are an integral part of these consolidated financial statements

‎

RESOURCES CONNECTION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~Three and six months ended November 23, 2019 and November 24, 2018~~

1. Description of the Company and its Business

Resources Connection, Inc. (“Resources Connection”), a Delaware corporation, was incorporated on November 16, 1998. The Company’s operating entities provide services primarily under the name Resources Global Professionals ~~(“RGP” or the~~(the “Company”). ~~RGP~~Resources Connection is a global consulting firm that enables rapid business outcomes by bringing together the right people to create transformative change. As a human capital partner ~~for~~to its ~~clients,~~global client base, the Company ~~specializes in solving today’s most pressing business problems across the enterprise~~supports its clients’ needs through both professional staffing and project execution in the areas of ~~Business Strategy & Transformation, Finance & Accounting, Risk & Compliance~~transactions, regulations and ~~Technology & Digital Innovation.~~transformations. The ~~Company has offices in~~Company’s principal markets of operation are the United States (“U.S.”), Asia, Australia, Canada, Europe and Mexico.

The Company’s fiscal year consists of 52 or 53 weeks, ending on the ~~last~~ Saturday in ~~May.~~May closest to May 31. The second quarters of fiscal ~~2020~~2021 and ~~2019~~2020 each consisted of 13 weeks. The Company’s fiscal ~~2020~~2021 will consist of 5352 weeks.

2. Summary of Significant Accounting Policies

Interim Financial Information

The accompanying unaudited financial ~~information~~statements of the Company as of and for the three and six months ended November 28, 2020 and November 23, 2019 have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) for interim financial information and ~~November 24, 2018 is unaudited but includes~~the instructions to Form 10-Q and Article 10 of Regulation S-X. These financial statements include all adjustments (consisting only of normal recurring adjustments) management of the Company considers necessary for a fair presentation of its financial position at such dates and the operating results and cash flows for those periods. The fiscal ~~2019~~2020 year-end balance sheet data was derived from audited consolidated financial statements, and certain information and note disclosures normally included in annual financial statements prepared in accordance with ~~generally accepted accounting principles in the U.S. (“GAAP”)~~GAAP have been condensed or omitted pursuant to Securities and Exchange Commission (“SEC”) rules or regulations; however, the Company believes the disclosures made are adequate to make the information presented not misleading.

The unaudited consolidated results of operations for the interim periods presented are not necessarily indicative of the results of operations to be expected for the full fiscal year. These interim financial statements should be read in conjunction with the audited consolidated financial statements for the year ended May ~~25, 2019,~~30, 2020, which are included in the Company’s Annual Report on Form10-K (“Fiscal Year ~~2019~~2020 Form10-K”) ~~which was~~ filed with the SEC on July ~~19, 2019~~27, 2020 (File No.~~000-32113)~~ 0-32113).

The Company’s significant accounting policies are described in Note 2 to the audited consolidated financial statements included in the Fiscal Year ~~2019~~2020 Form 10-K. The Company has reviewed its accounting policies ~~identifying~~and identified those that it believes to be critical to the preparation and understanding of its consolidated financial statements in the list set forth below. See the disclosure under the heading “Critical Accounting Policies” in Item 7 of Part II of the Fiscal Year ~~2019~~2020 Form 10-K for a detailed description of these policies and their potential effects on the Company’s results of operations and financial condition.

Allowance for doubtful accounts

Income taxes

Revenue recognition

Stock-based compensation

Valuation of long-lived assets

Valuation of goodwill

Business combinations

With the execution of its restructuring plan in Europe, the Company changed its internal management structure and its reporting structure of financial information used to assess performance and allocate resources during the second quarter of fiscal 2021. As a result, the Company revised its segment reporting effective in the second quarter of fiscal 2021. These changes impacted the Company’s reportable segments but did not impact the Company’s consolidated financial statements. See Note 12 – Segment Information for additional information about the segment change.

Principles of Consolidation

The consolidated financial statements of the Company include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although management believes these estimates and assumptions are adequate, actual results could differ from the estimates and assumptions used.

Net (Loss) Income Per Share Information

The Company presents both basic and diluted earnings (loss) per common share (“EPS”). Basic EPS is calculated by dividing net (loss) income by the weighted average number of common shares outstanding during the period. Diluted EPS is based upon the weighted

average number of common and common equivalent shares outstanding during the period, calculated using the treasury stock ~~method for stock options and unvested restricted stock.~~method. Under the treasury stock method, assumed proceeds include the amount the employee must pay for exercising stock options and the amount of compensation cost for future services the Company has not yet ~~recognized.~~recognized for the Company’s share-based payment awards. Common equivalent shares are excluded from the computation in periods in which they have an anti-dilutive effect. Stock options for which the exercise price exceeds the average market price ~~per common share~~ over the period are anti-dilutive and are excluded from the calculation.

For the three months ended November 28, 2020, all common equivalent shares are excluded from the computation of weighted average number of common and common equivalent shares outstanding in the diluted EPS calculation due to the net loss position.

The following table summarizes the calculation of net (loss) income per common share for the periods indicated (in thousands, except per share amounts):


	Three Months Ended				Six Months Ended
	November 23,		November 24,		November 23,		November 24,		Three Months Ended				Six Months Ended
	2019		2018		2019		2018		November 28,		November 23,		November 28,		November 23,
Net income	$	12,337	$	10,564	$	17,276	$	16,305
									2020		2019		2020		2019

Net (loss) income									$	(992)	$	12,337	$	1,292	$	17,276
Basic:
Weighted average shares		31,984		31,721		31,852		31,731		32,356		31,984		32,270		31,852

Diluted:
Weighted average shares		31,984		31,721		31,852		31,731		32,356		31,984		32,270		31,852
Potentially dilutive shares		385		725		435		726		-		385		47		435

Total dilutive shares		32,369		32,446		32,287		32,457		32,356		32,369		32,317		32,287

Net income per common share:
Basic	$	0.39	$	0.33	$	0.54	$	0.51	$	(0.03)	$	0.39	$	0.04	$	0.54
Dilutive	$	0.38	$	0.33	$	0.54	$	0.50	$	(0.03)	$	0.38	$	0.04	$	0.54
Anti-dilutive shares not included above		4,809		3,248		3,684		3,112		5,083		4,809		5,185		3,684

Financial Instruments

The fair value of the Company’s financial instruments reflects the amounts that the Company estimates it will receive in connection with the sale of an asset in an orderly transaction between market participants at the measurement date (exit price). The fair value hierarchy prioritizes the use of inputs used in valuation techniques into the following three levels:

Level 1 – Quoted prices in active markets for identical assets and liabilities.

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets.

Level 3 – Unobservable inputs.

Contingent consideration liability is for estimated future contingent consideration payments related to the Company’s acquisitions. Total contingent consideration liabilities were ~~$8.3~~$3.0 million and ~~$2.2~~$7.9 million as of November ~~23, 2019~~28, 2020 and May ~~25, 2019,~~30, 2020, respectively. The fair value measurement of the liability is based on significant inputs not observed in the market and thus represents a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the contingent consideration liability are the Company’s measures of the estimated payouts based on internally generated financial projections and discount rates. The fair value of contingent consideration liability is reassessed on a quarterly basis by the Company using additional information as it becomes available, and any change in the fair value estimates are recorded in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations. See Note 3 – ~~Acquisitions and Dispositions.~~Acquisition.

The Company’s short-term investments were $6.0 million as of May 25, 2019. The short-term investments represented commercial papers with original contractual maturities between three months and one year and were considered~~“held-to-maturity”~~ ~~securities. The investments were measured using quoted prices in markets that are not active (Level 2).~~

The Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and long-term debt are carried at cost, which approximates their fair value because of the~~short-term~~ short-term maturity of these instruments or because their stated interest rates are indicative of market interest rates.

Recent Accounting Pronouncements Adopted

~~Effective as of~~

In June 2016, the ~~beginning of fiscal year 2020, the Company adopted~~Financial Accounting Standards Board issued Accounting Standards Update ~~(“ASU”) No.2016-02, Leases,~~ ~~ASU~~No. ~~2018-10,~~ ~~Codification Improvements~~2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). Under ASU 2016-13, companies are required to ~~Topic 842 (Leases)~~present financial assets, measured at amortized cost basis, at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis, such as trade receivables. The measurement of expected credit loss will be based on historical experience, current conditions, and ~~ASUNo. 2018-11,~~ ~~Targeted Improvements to Topic 842 (Leases). The guidance is intended to increase transparency~~reasonable and ~~comparability among companies for leasing transactions, including a requirement for companies~~supportable forecasts that ~~lease assets to recognize on their balance sheets~~affect the ~~assets and liabilities for~~collectability of the rights and obligations created by those leases. The guidance also provides for disclosures that allow the users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

reported amount. The Company adopted ~~the~~this guidance ~~on May 26, 2019~~ using the modified retrospective adoption method ~~without restatement~~beginning with its first quarter of ~~comparative periods. As such, periods prior~~fiscal 2021, and applied it to ~~the date~~all applicable accounts. The application of adoption are presented in accordance with ASC 840 - Leases. The Company utilized the available practical expedient that allowed the Company to not reassess whether existing contracts contain a lease under the new definition of a lease, the lease classification for existing leases, whether previously capitalized initial direct costs would qualify for capitalization under thethis new guidance ~~and recognize leases with an initial term of 12 months or less on a straight-line basis without recognizing aright-of-use~~ ~~(“ROU”) asset or operating lease liability.~~

~~The adoption of this guidance had~~did not have a material impact on the ~~Consolidated Balance Sheet beginning May 26, 2019 due to the recognition~~Company’s consolidated financial condition, results of ROU assets and lease liabilities for the Company’s portfolio of operating leases. The adoption of the guidance had an immaterial impact on the Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income and Consolidated Statements of Cash Flows for the three and six months ended November 23, 2019.operations or cash flows.

~~Additional information and disclosures required by the new standard are contained in Note 5,~~~~Leases~~.

3. ~~Acquisitions and Dispositions~~Acquisition

~~Acquisition of Veracity~~

On July 31, 2019, the Company acquired ~~VeracityConsulting~~VeracityConsulting Group, LLC (“Veracity”), with a total purchase price of approximately $38.6 million. Veracity is a fast-growing, digital transformation firm based in Richmond, Virginia, that delivers innovative solutions to the Fortune 500 and leading healthcare organizations. The ~~acquisition of Veracity is a step in accelerating the Company’s stated objective to enhance its digital capabilities and allows the Company to offer comprehensiveend-to-end~~ solutions to its clients by combining Veracity’s customer-facing offerings with the Company’s depth of experience in transforming the back office. The Company paid initial cash consideration of $30.3 million (net of $2.1 million cash acquired). The initial consideration is subject to final adjustments for the impact of the Internal Revenue Code Section 338(h)(10) joint election between the Company and former owners of Veracity and working capital as defined in the purchase agreement.

~~In addition, the~~ purchase agreement requiresearn-out payments to be made based on performance after each of the first and second anniversary of the acquisition date. The Company is obligated to pay the former owners of Veracity contingent consideration if certain earnings before interest, taxes, depreciation and amortization (“EBITDA”) requirements are achieved. In determining the fair value of the contingent consideration liability, the Company ~~used~~uses the Monte Carlo simulation modeling which ~~included~~includes the application of an appropriate discount rate (Level 3 fair value). Each reporting period, the Company ~~will estimate~~estimates changes in the fair value of contingent consideration and records any change in fair value ~~will be recognized~~in selling, general and administrative expense in the Company’s Consolidated Statements of Operations. The estimate of fair value of contingent consideration requires very subjective assumptions to be made of various potential EBITDA results and discount rates. Future revisions to these assumptions could materially change the estimate of the fair value of contingent consideration and therefore could materially affect the Company’s future operating results.

~~During the quarter ended August 24, 2019, the Company made an initial provisional allocation of the purchase price for Veracity based on the~~

The fair value of the assets acquired and liabilities assumed, with the residual amount recorded as goodwill, in accordance with Accounting Standards Codification (“ASC”) 805. The Company’s initial purchase price allocation considered a number of factors, including the valuation of identifiable intangible assets and contingent consideration. During the three months ended November 23, 2019, the Company adjusted the previously reported provisional allocation of the purchase price to reflect new information, which resulted in changes in expected future performance and cash flows as of the acquisition date.

~~The following table provides a summary of the provisional purchase price allocation previously reported in the Company’s Quarterly Report on Form10-Q~~ ~~for the quarter ended August 24, 2019 and the remeasured purchase price allocation as of the acquisition date:~~

~~Fair value of consideration transferred (in thousands):~~

   As Previously
Reported    Adjustments    As Adjusted
Cash
   $ 32,349    $ (35 )    $ 32,314
Estimated initial contingent consideration
   10,400    (4,110 )    6,290






Total
   $ 42,749    $ (4,145 )    $ 38,604

~~Recognized provisional amounts of identifiable assets acquired and liabilities assumed (in thousands):~~

Cash and cash equivalents
   $ 2,056    $ —      $ 2,056
Accounts receivable
   3,413    (114 )    3,299
Prepaid expenses and other current assets
   116    —      116
Intangible assets:

Backlog (17 months useful life)
   680    530    1,210
Customer relationships (7 years useful life)
   11,050    (1,750 )    9,300
Trademarks (3 years useful life)
   560    10    570
Property and equipment
   121    (4 )    117






Total identifiable assets
   17,996    (1,328 )    16,668






Accounts payable
   316    (11 )    305
Accrued expenses and other current liabilities
   712       712






Total liabilities assumed
   1,028    (11 )    1,017






Net identifiable assets acquired
   16,968    (1,317 )    15,651
Goodwill
   25,781    (2,828 )    22,953






Net assets acquired
   $ 42,749    $ (4,145 )    $ 38,604

The remeasured purchase price allocation above may be subject to further adjustments during the measurement period if new information is obtained about facts and circumstances that existed as of the acquisition date. A final determination of fair value of assets acquired and liabilities assumed relating to the acquisition could differ from the stated purchase price allocation. As of the acquisition date, the gross contractual amount of accounts receivable of $3.3 million was expected to be fully collected.

~~As of November 23, 2019, the Company further estimated the change in fair value of~~Veracity contingent consideration ~~from the remeasured value included in the table above. The resulting increase in fair value was~~decreased $0.2 million bringing the contingent consideration liability to $6.4 million as of November 23, 2019, of which $3.1 million was included in Other current liabilities and $3.3 million was included in Long-term liabilities in the Consolidated Balance Sheets. The change in fair value of contingent consideration from the remeasurement was recorded in selling, general and administrative expenses in the Consolidated Statement of Operations for the three months ended November 23, 2019.

Results of operations of Veracity are included in the Consolidated Statements of Operations from the date of acquisition. Veracity contributed $5.8 million and $7.2 million to consolidated revenue and $1.2 million and $1.5 million to income from operations in the three and six months ended November 23, 2019, respectively. During the six months ended November 23, 2019, the Company incurred $0.6 million in acquisition costs which were recorded in selling, general and administrative expenses in the Consolidated Statement of Operations.

~~Prior Period Acquisitions~~

During fiscal 2018, the Company completed two acquisitions: Taskforce – Management on Demand AG (“Taskforce”) and Accretive Solutions, Inc. (“Accretive”). See Note 3 to the consolidated financial statements included in Part II, Item 8 in the Fiscal Year 2019~~Form 10-K~~ ~~for additional detail.~~

During the three and six months ended November 23, 2019, the Company decreased the remaining estimated contingent consideration payment to the sellers of Taskforce by $0.3 million and $0.4 million, respectively. These amounts were included in selling, general and administrative expenses in the Consolidated Statements of Operations for the respective periods.

~~In addition,~~ during the three months ended November ~~23, 2019, the Company reached a final settlement on apre-acquisition~~ ~~claim with the seller of Accretive. As a part of the settlement, the Company issued 82,762 shares of common stock to the seller~~28, 2020 and ~~received $0.6~~increased $0.3 million ~~in cash from the escrow. The resulting gain of $0.5 million was included in Other (income) expense in the Consolidated Statements of Operations.~~

~~Dispositions~~

On September 2, 2019, the Company completed the sale of certain assets and liabilities of its foreign subsidiary, Resources Global Professionals Sweden AB, to Capacent Holding AB (publ), a Swedish public company, for SEK1,016,862 (approximately $105,000) in cash, after the final purchase price adjustment, resulting in a loss on sale of assets of approximately $38,000. As a part the sale, the Company transferred the majority of its local customer contracts, the existing office lease as well as all of its employee consultants. The Company expects to continue to serve its global client base in the Sweden market. In addition, during the first quarter of fiscal 2020, the Company substantially exited the Belgium market. The Company expects to complete the remaining exit activities in Belgium during the third quarter of fiscal 2020, including an analysis of the potential tax benefits that may result from the exit activities.

~~As a result of the foregoing sale of assets and exit activities, the Company incurred costs of approximately $0.7 million for the three and~~ six months ended November ~~23, 2019, primarily~~28, 2020, respectively, due to the remeasurement to fair value each period. In November 2020, the Company paid $5.3 million in contingent consideration to the former owners of Veracity relating to the first earn-out period. As of November 28, 2020, the contingent consideration liability related to ~~employee termination benefits.~~Veracity for the second and final earn-out period was $2.6 million, which is included in Other current liabilities in the Consolidated Balance Sheet.

~~Neither the Sweden nor the Belgium markets were considered strategic components of the Company’s operations.~~

4. Intangible Assets and Goodwill

The following table ~~summarizes details of~~sets forth the Company’s intangible assets, including acquired intangible assets and ~~related accumulated amortization~~internal-use software (amounts in thousands):

   As of November 23, 2019    As of May 25, 2019
      Accumulated       Accumulated
   Gross    Amortization Net    Gross    Amortization Net
Customer contracts and relationships(3-8 years)
   $ 23,765    $ (4,922 ) $ 18,843    $ 14,495    $ (3,439 ) $ 11,056
Tradenames(3-10 years)
   4,946    (2,116 ) 2,830    4,407    (1,563 ) 2,844
Backlog (17 months)
   1,210    (258 ) 952    —      —   —
Consultant list (3 years)
   770    (585 ) 185    783    (462 ) 321
Non-compete agreements (3 years)
   880    (669 ) 211    896    (528 ) 368








Total
   $ 31,571    $ (8,550 ) $ 23,021    $ 20,581    $ (5,992 ) $ 14,589


	As of November 28, 2020						As of May 30, 2020
			Accumulated						Accumulated
	Gross		Amortization		Net		Gross		Amortization		Net
Customer contracts and relationships (3-8 years)	$	23,914	$	(8,435)	$	15,479	$	23,779	$	(6,707)	$	17,072
Tradenames (3-10 years)		5,104		(3,420)		1,684		4,960		(2,735)		2,225
Backlog (17 months)		1,210		(1,113)		97		1,210		(694)		516
Consultant list (3 years)		838		(838)		-		776		(718)		58
Non-compete agreements (3 years)		957		(957)		-		888		(821)		67
Computer software (2-3.5 years)		3,988		(186)		3,802		185		(46)		139
Total	$	36,011	$	(14,949)	$	21,062	$	31,798	$	(11,721)	$	20,077

The Company recorded amortization expense of ~~$1.5~~$1.4 million and ~~$1.0~~$1.5 million for the three months ended November 28, 2020 and November 23, 2019, ~~and November 24, 2018,~~ respectively, and ~~$2.6~~$2.9 million and ~~$1.9~~$2.6 million for the six months ended November 28, 2020 and November 23, 2019, ~~and November 24, 2018,~~ respectively.

The following table summarizes future estimated amortization expense related to intangible assets (in thousands):

   Fiscal Years Ending
   2020    2021    2022    2023    2024
Expected amortization expense
   $ 5,699    $ 4,506    $ 3,289    $ 3,136    $ 3,100


2021 (remaining 6 months)	$	2,313
2022		4,456
2023		4,247
2024		4,124
2025		3,121
2026		2,327
Thereafter		474
Total	$	21,062

The estimates of future intangible asset amortization expense do not incorporate the potential impact of future currency fluctuations when translating the financial results of the Company’s international operations that have amortizable intangible assets into U.S. dollars.

As further described in Note 12 – Segment Information, the Company changed its segment reporting effective in the second quarter of fiscal 2021, and reallocated goodwill to the new reporting units on the relative fair value basis. Concurrent with the segment change, the Company completed a goodwill impairment assessment, and concluded that 0 goodwill impairment existed immediately before and after the change in segment reporting.

The following table summarizes the activity in the Company’s goodwill balance. The balance ~~(in thousands):~~as of May 30, 2020 was recast to reflect the impact of the preceding segment change. Amounts are in thousands.

   November 23,    November 24,
   2019    2018
Goodwill, beginning of year
   $ 190,815    $ 191,950
Acquisitions- (see Note 3)
   22,953    —
Impact of foreign currency exchange rate changes
   (436 )    (778 )




Goodwill, end of period
   $ 213,332    $ 191,172


	RGP		Other Segments		Total Company
Balance as of May 30, 2020	$	208,958	$	5,109	$	214,067
Impact of foreign currency exchange rate changes		-		2,179		2,179
Balance as of November 28, 2020	$	208,958	$	7,288	$	216,246

5. Leases

The Company currently leases office space, vehicles and certain equipment under operating ~~leases expiring through 2028. Operating leases include fixed payments plus, in some cases, scheduled base rent increases over the term~~leases. The following table summarizes components of the lease. Certain leases require variable payments of common area maintenance, operating expenses and real estate taxes applicable to the property. Variable payments are excluded from the measurements of lease liabilities and are expensed as incurred. Any tenant improvement allowances received from the lessor are recorded as a reduction to rent expense over the term of the lease. No lease agreements contain any residual value guarantees or material restrictive covenants.

~~Certain of the Company’s leases include one or more options to renew or terminate the lease at the Company’s discretion. Generally, the renewal and termination options are not included in theright-of-use~~ assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates lease renewal and termination options and when they are reasonably certain of exercise, includes the renewal or termination option in the lease term.

The Company measures the lease liability for each leased asset at the present value of lease payments, as defined in ASC 842, discounted using an incremental borrowing rate. As most of the Company’s leases do not provide an implicit interest rate, the Company utilizes its incremental borrowing rate based on the information available at the commencement date of the lease in determining the present value of lease payments. The Company has a centrally managed treasury function; therefore, a portfolio approach is applied in determining the incremental borrowing rate. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a fully collateralized basis over a similar term in an amount equal to the total lease ~~payments in a similar economic environment. The Company’sright-of-use~~ ~~assets are equal to the lease liabilities, adjusted for lease incentives received, including tenant improvement allowances, deferred rent, and prepayments made to the lessor.~~

~~In some instances, the Company subleases excess office space to third party tenants. The Company does not recognize liabilities or ROU assets for leases with an initial term of 12 months or less.~~

~~Lease~~ cost, ~~components~~which were included within selling, general and administrative expenses in the Consolidated Statements of Operations ~~were as follows~~ (in thousands):

   Three Months Ended    Six Months Ended
   November 23,
2019    November 23,
2019
Operating lease cost
   $ 3,036    $ 6,116
Short-term lease cost
   120    198
Variable lease cost
   596    1,200
Sublease income
   (185 )    (306 )




Total lease cost
   $ 3,567    $ 7,208


	Three Months Ended				Six Months Ended
	November 28, 2020		November 23, 2019		November 28, 2020		November 23, 2019
Operating lease cost	$	2,745	$	3,036	$	5,618	$	6,116
Short-term lease cost		29		120		92		198
Variable lease cost		681		596		1,248		1,200
Sublease income		(222)		(185)		(444)		(306)
Total lease cost	$	3,233	$	3,567	$	6,514	$	7,208

Supplemental cash flow information related to the Company’s operating leases were as follows (in thousands):

   Six Months Ended
   November 23,
2019
Cash paid for amounts included in the measurement of operating lease liabilities
   $ 6,559
Right-of-use assets obtained in exchange for lease obligations
   $ 4,384


	Three Months Ended				Six Months Ended
	November 28, 2020		November 23, 2019		November 28, 2020		November 23, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	3,683	$	3,230	$	6,957	$	6,559
Right-of-use assets obtained in exchange for new operating lease obligations	$	535	$	2,924	$	1,555	$	4,384

The weighted average remaining lease term and weighted average discount rate for ~~our~~the Company’s operating leases were as follows:


	~~As of November 23, 2019~~
~~Weighted average remaining lease term~~		~~4.7 years~~
~~Weighted average discount rate~~		~~4.12~~	%

The ~~maturities~~maturities of operating lease liabilities were as follows as of November 28, 2020 (in thousands):


Years Ending:	Operating Lease Maturity
May 29, 2021	$	6,301
May 28, 2022		11,291
May 27, 2023		8,923
May 25, 2024		7,156
May 31, 2025		3,474
Thereafter		3,376
Total minimum payments	$	40,521
Less: discount		(3,109)
Present value of operating lease liabilities	$	37,412

The Company owns its headquarters office building located in Irvine, California and leases approximately 13,000 square feet of the approximately 57,000 square feet building to independent third parties under operating lease agreements expiring through fiscal 2025. Rental income recognized totaled $55,000 and $70,000 for the three months ended November 28, 2020 and November 23, 2019, ~~(in thousands):~~respectively, and $110,000 and $106,000 for the six months ended November 28, 2020 and November 23, 2019, respectively. Under the terms of these operating lease agreements, rental income is expected to be $107,000, $219,000, $226,000, $232,000 and $78,000 in the remaining six months of fiscal 2021 and fiscal years 2022 through 2025, respectively. Rental income is included in selling, general and administrative expenses in the Consolidated Statements of Operations.

Years Ending:    Operating Lease Maturity
May 30, 2020 (excluding the six months ended November 23, 2019)
   $ 6,492
May 29, 2021
   12,412
May 28, 2022
   10,711
May 27, 2023
   8,378
May 25, 2024
   6,913
Thereafter
   6,432


Total operating lease payments
   $ 51,338
Less: Imputed interest
   (4,710 )


Present value of operating lease liabilities
   $ 46,628

6. Income Taxes

~~The~~

For the three months ended November 28, 2020 and November 23, 2019, respectively, the Company’s provision for income taxes was ~~$5.3~~$2.3 million, ~~(effective~~an effective tax rate of ~~approximately 30%)~~178.5%, and ~~$5.1~~$5.3 million, ~~(effective~~an effective tax rate of approximately 33%) for the three months ended November 23, 2019 and November 24, 2018, respectively and $8.0 million (effective tax rate of approximately 32%) and $8.6 million (effective tax rate of approximately 35%) for30.2%. For the six months ended November 28, 2020 and November 23, 2019, ~~and November 24, 2018, respectively. The Company records tax expense based upon an actual effective tax rate versus a forecasted tax rate because of~~respectively, the ~~volatility in its international operations that span numerous tax jurisdictions.~~

~~The~~Company’ provision for income taxes was $4.2 million, an effective tax rate of 76.5%, and $8.0 million, an effective tax rate of 31.6%. Tax provision of $2.3 million for the second quarter was primarily associated with pre-tax income from regions outside of Europe. The majority of the restructuring charges incurred during the second quarter were incurred in the ~~three~~Company’s European entities resulting in a pre-tax loss in Europe. With significant required valuation allowances on tax benefits related to these net operating losses, no tax benefits were recognized in connection with the pre-tax loss. The Company’s total liability for unrecognized tax benefits was $0.8 million as of both November 28, 2020 and ~~six months ended November 23, 2019 and November 24, 2018 results from taxes on income in the U.S. and certain other foreign jurisdictions, no benefit for losses in jurisdictions in~~May 30, 2020, which, a full valuation allowance on operating loss carryforwards had previously been established and a lower benefit for losses in certain foreign jurisdictions with tax rates lower than the U.S. statutory rates. The provision for income taxes increased whileif ultimately recognized, would impact the effective tax rate ~~decreased for~~in future periods. The unrecognized tax benefits are included in long-term liabilities in the ~~three months ended November 23, 2019 compared~~Consolidated Balance Sheets based on the closing of the statute of limitations.

7. Long-Term Debt

Pursuant to the ~~prior year quarter because~~terms of ~~improved globalpre-tax~~ ~~income. In~~ the ~~six months ended November 23, 2019,~~Credit Agreement dated October 17, 2016 between the ~~provision for income taxes decreased~~Company and Resources Connection LLC, as ~~compared to~~borrowers, and Bank of America, N.A. as lender (as amended, the ~~six months ended November 24, 2018 because of lower international related taxes and fewer stock option expirations.~~

~~The Company recognized a tax benefit of approximately $0.3 million and $0.1 million during~~“Credit Agreement”), the second quarters of fiscal 2020 and fiscal 2019, respectively, and a tax benefit of $0.7 million and $0.1 million during the six months of fiscal 2020 and fiscal 2019, respectively, related to stock-based compensation for nonqualified stock options expensed and for disqualifying dispositions under the Employee Stock Purchase Plan (“ESPP”).

~~7. Long-Term Debt~~

~~The~~ Company has a ~~$120~~$120.0 million secured revolving credit facility (“Facility”) with Bank of America, ~~consisting~~which, until September 3, 2020, consisted of (i) a ~~$90~~$90.0 million revolving loan facility (“Revolving ~~Loan”~~Commitment”), which includes a $5$5.0 million sublimit for the issuance of standby letters of credit, and (ii) a ~~$30~~$30.0 million reducing revolving loan facility (“Reducing Revolving ~~Loan”~~Commitment”), any amounts of which ~~may~~could not be reborrowed after being repaid. On September 3, 2020, the Company and Resources Connection LLC, as borrowers, entered into the Fifth Amendment to the Credit Agreement (the “Fifth Amendment”) with Bank of America, N.A. as lender, which amended the terms of the Facility pursuant to the Credit Agreement. The Fifth Amendment, among other things, modifies the commitments to (1) eliminate the $30.0 million Reducing Revolving Commitment and (2) increase the Revolving Commitment by $30.0 million to $120.0 million.

The Facility is available for working capital and general corporate purposes, including potential acquisitions and stock repurchases. The Company’s obligations under the Facility are guaranteed by all of the Company’s domestic subsidiaries and secured by essentially all assets of the Company, Resources Connection LLC and their respective domestic subsidiaries, subject to certain customary exclusions. Borrowings under the Facility bear interest at a rate per annum of either, at the Company’s option, (i) a London

Interbank Offered Rate (“LIBOR”) defined in the Facility plus a margin ~~of 1.25% or 1.50%~~ or (ii) an alternate base rate, plus a margin, ~~of 0.25% or 0.50%,~~ with the applicable margin depending on the Company’s consolidated leverage ratio. The alternate base rate is the highest of (i) Bank of America’s prime rate, (ii) the federal funds rate plus 0.50% and (iii) the Eurodollar rate plus 1.0%. Prior to entering into the Fifth Amendment, the margin for loans based on LIBOR was 1.25% to 1.50%, and the margin for loans based on the alternate base rate was 0.25% to 0.50%. Effective upon entering into the Fifth Amendment, the applicable margin increased by 0.25% and the LIBOR interest rate floor increased from 0% to 0.25%. The Company pays an unused commitment fee on the average daily unused portion of the Facility, atwhich, prior to entering into the Fifth Amendment, was a rate of 0.15% to 0.25% per annum depending ~~upon~~ on the Company’s consolidated leverage ~~ratio.~~ratio and, effective upon entering into the Fifth Amendment, is 0.25% per annum. The Facility expires on October 17, ~~2021.~~2022.

The Facility contains both affirmative and negative covenants. Covenants include, but are not limited to, limitations on the Company’s and its subsidiaries’ ability to incur liens, incur additional indebtedness, make certain restricted payments, merge or consolidate and make dispositions of assets. In addition, the Facility requires the Company to comply with financial covenants limiting the Company’s total funded debt, minimum interest coverage ratio and maximum leverage ratio. The Company was ~~in compliance~~compliant with all financial covenants under the Facility as of November ~~23, 2019.~~28, 2020.

Upon the occurrence of an event of default under the Facility, the lender may cease making loans, terminate the Facility and declare all amounts outstanding to be immediately due and payable. The Facility specifies a number of events of default (some of which are subject to applicable grace or cure periods), including, among other things,non-payment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults and material judgment defaults.

~~The Company’s borrowings~~

On September 21, 2020, the Company repaid $20.0 million on its Facility, reducing its outstanding borrowing under the Facility ~~were $54.0~~to $68.0 million as of November ~~23, 2019, all of which were under the Revolving Loan.~~28, 2020. In addition, the Company had ~~$1.5~~$1.3 million of outstanding letters of credit issued as of November 28, 2020. There was $50.7 million remaining capacity under the Revolving ~~Loan~~Commitment as of November ~~23, 2019. The Company has $34.5 million remaining to borrow under the Revolving Loan and $30.0 million remaining~~

~~under the Reducing Revolving Loan as of November 23, 2019.~~28, 2020. As of November ~~23, 2019,~~28, 2020, the interest ~~rate~~rates on the Company’s borrowings ~~were as follows (amounts in thousands, except percentages):~~under the Facility ranged from 2.00% to 2.23%.

Principal Balance
   Base Rate Libor Rate Interest Rate
$ 5,000    1.25 % 3-month    1.90 % 3.15 %
25,000    1.25 % 6-month    1.93 % 3.18 %
24,000    1.50 % 6-month    2.21 % 3.71 %
$ 54,000

8. Stockholders’ Equity

Stock Repurchase Program

In July 2015, the Company’s board of directors approved a stock repurchase program (the “July 2015 program”), authorizing the repurchase, at the discretion of the Company’s senior executives, of the Company’s common stock for an aggregate dollar limit not to exceed $150 million. Repurchases under the program may take place in the open market or in privately negotiated transactions and may be made pursuant to a Rule10b5-1 plan. ~~The Company did not repurchase shares during~~During the three orand six months ended November ~~23, 2019.~~28, 2020, the Company made 0 repurchase of its common stock. As of November ~~23, 2019,~~28, 2020, approximately ~~$90.1~~$85.1 million remained available for future repurchases of the Company’s common stock under the July 2015 program.

Quarterly Dividend

Subject to approval each quarter by its board of directors, the Company pays a regular quarterly cash dividend. On October ~~15, 2019~~22, 2020, the Company’s board of directors declared a quarterly cash dividend of $0.14 per common share. The dividend of approximately $4.5 million was paid on December ~~10, 2019~~17, 2020 to the holders of record on November ~~12, 2019~~19, 2020 and is accrued in the Company’s Consolidated Balance Sheet as of November ~~23, 2019.~~28, 2020.

Continuation of the quarterly dividend is at the discretion of the board of directors and depends upon the Company’s financial condition, results of operations, capital requirements, general business condition, contractual restrictions contained in the ~~Company’s current credit agreements~~Credit Agreement and other agreements, and other factors deemed relevant by the board of directors.

9. Restructuring Activities

The Company initiated its global restructuring and business transformation plan in North America and Asia Pacific (the “North America and APAC Plan”) in March 2020 and in Europe (the “European Plan”) in September 2020. Both the North America and APAC Plan and the European Plan consist of two key components: (i) an effort to streamline the management and organizational structure and eliminate certain positions as well as exit certain markets to focus on core solution offerings and core high growth clients; and (ii) a strategic rationalization of the Company’s physical geographic footprint and real estate spend to focus investment dollars in high growth core markets for greater impact. In connection with the execution of the European Plan, the Company changed its internal management structure and its reporting structure of financial information used to assess performance and allocate resources during the second quarter of fiscal 2021. The Company revised its operating segments accordingly effective in the second quarter of fiscal 2021, resulting in a change to the Company’s reportable segments into RGP and Other Segments. All of the employee termination and facility exit costs associated with the Company’s restructuring initiatives are within its RGP segment, and are recorded in selling, general and administrative expenses in the Company’s Consolidated Statement of Operations. See further

discussion about the Company’s segment position in Note 12 – Segment Information.

Restructuring costs for the three and six months ended November 28, 2020 and November 23, 2019 were as follows (in thousands):


	Three Months Ended				Six Months Ended
	November 28,		November 23,		November 28,		November 23,
	2020		2019		2020		2019
Employee termination costs	$	5,455	$	-	$	6,393	$	-
Real estate exit costs		1,082		-		1,104		-
Other costs		238		-		294		-
Total restructuring costs	$	6,775	$	-	$	7,791	$	-

The following table summarizes the employee termination activity under both the North America and APAC Plan and the European Plan for the year ended May 30, 2020 and the six months ended November 28, 2020 (in thousands):



Liability balance at May 25, 2019	$	-
Increase in liability (restructuring costs)		3,927
Reduction in liability (payments and others)		(2,053)
Liability balance at May 30, 2020		1,874
Increase in liability (restructuring costs)		6,393
Reduction in liability (payments and others)		(2,965)
Liability balance at November 28, 2020	$	5,302

Under the North America and APAC Plan, cumulative restructuring costs incurred as of November 28, 2020 totaled $6.8 million. This consisted of $5.0 million in employee termination costs and $1.8 million of other costs primarily related to exiting the facilities, including $1.3 million in non-cash impairment of operating right-of-use assets and $0.5 million in loss on disposal of fixed assets. The Company has substantially completed the planned employee headcount reduction under the North America and APAC Plan, and expects the remaining liability of $1.1 million as of November 28, 2020 to be paid out prior to the end of calendar 2021.

Under the European Plan, cumulative restructuring costs incurred as of November 28, 2020 totaled $6.0 million, including $5.3 million in employee termination costs and $0.7 million of other costs primarily related to exiting the facilities. The Company has substantially completed the consultation and negotiation with impacted employees under the European Plan as of November 28, 2020. The Company had $4.2 million in employee termination liability as of November 28, 2020, and expects to incur an additional $0.1 million of employee termination costs in connection with the reduction in force in Europe during the remainder of fiscal 2021. The Company expects the remaining employee termination costs under the European Plan to be paid out prior to the end of calendar 2021.

10. Supplemental Disclosure of Cash Flow Information

The following table presents information regarding income taxes paid, interest paid andnon-cash investing and financing activities (amounts in thousands):



	Six Months Ended
	November 28,		November 23,
	2020		2019
Income taxes paid	$	2,627	$	6,394
Interest paid	$	876	$	1,140
Non-cash investing and financing activities:
Capitalized leasehold improvements paid directly by landlord	$	-	$	59
Acquisition of Veracity:
Liability for contingent consideration	$	-	$	6,440
Acquisition of Accretive:
Issuance of common stock	$	-	$	1,141
Dividends declared, not paid	$	4,541	$	4,499

   Six Months Ended
   November 23,    November 24,
   2019    2018
Income taxes paid
   $ 6,394    $ 6,778




Interest paid
   $ 1,140    $ 1,227




Non-cash investing and financing activities:

Capitalized leasehold improvements paid directly by landlord
   $ 59    $ 255
Acquisition of Veracity:

Liability for contingent consideration
   $ 6,440    $ —
Acquisition of Accretive:

Issuance of common stock
   $ 1,141    $ —
Dividends declared, not paid
   $ 4,499    $ 4,124

~~10.~~11. Stock-Based Compensation Plans

~~General~~

General

The Company’s stockholders approved the 2020 Performance Incentive Plan (the “2020 Plan”) on October 22, 2020, which replaced and succeeded in its entirety the 2014 Performance Incentive Plan (the “2014 Plan”). Executive officers and certain employees, as well asnon-employee directors of the Company and certain consultants and advisors ~~to the Company,~~ are eligible to participate in the 2020 Plan. The maximum number of shares of the Company’s ~~2014 Performance Incentive~~common stock that may be issued or transferred pursuant to awards under the 2020 Plan ~~(“2014 Plan”). The~~equals: (1) 1,797,440 (which represents the number of shares that were available for additional award grant purposes under the 2014 Plan ~~was approved by stockholders on~~immediately prior to the termination of the authority to grant new awards under the 2014 Plan as of October ~~23,~~22, 2020, plus (2) the number of any shares subject to stock options granted under the 2014 ~~and replaced and succeeded in its entirety~~Plan or the Resources Connection, Inc. 2004 Performance Incentive Plan ~~and the 1999 Long Term Incentive Plan. As of November 23, 2019, 719,000 shares were available for award grant purposes under~~(collectively with the 2014 Plan, the “Prior Plans”) and outstanding as of October 22, 2020 which expire, or for any reason are cancelled or terminated, after that date without being exercised, plus (3) the number of any shares subject to ~~future increases~~restricted stock and restricted stock unit awards granted under the Prior Plans that are outstanding and unvested as ~~described in 2014 Plan.~~

of October 22, 2020 which are forfeited, terminated, cancelled, or otherwise reacquired after that date without having become vested. Awards under the ~~2014~~2020 Plan may include, but are not limited to, stock options, restricted stock units, performance stock units and restricted stock grants, including restricted stock units under the Company’s Directors Deferred Compensation Plan. ~~Stock option grants generally~~These stock awards typically vest in equal annual installments over four years, and stock option grants typically terminate ten years from the date of grant. ~~Restricted~~As of November 28, 2020, there were 1,880,646 shares available for further award grants under the 2020 Plan.

Stock-Based Compensation Expense

Stock-based compensation expense included in selling, general and administrative expenses was $1.7 million and $1.6 million for the three months ended November 28, 2020 and November 23, 2019, respectively, and $3.1 million and $3.2 million for the six months ended November 28, 2020 and November 23, 2019, respectively. These amounts consisted of stock-based compensation expense related to employee stock ~~award vesting is determined on an individual grant basis. Awards of~~options, employee stock purchases made via the Employee Stock Purchase Plan (“ESPP”), restricted stock awards, restricted stock units and stock units credited under the 2014 Plan will be counted against the available share limit as two and a half shares for every one share actually issued in connection with the award. The Company’s policy is to issue shares from its authorized shares upon the exercise of stock options.Directors Deferred Compensation Plan.

Stock Options ~~and Restricted Stock~~

The following table summarizes the stock option activity for the six months ended November ~~23, 2019 (number of shares under option and aggregate intrinsic value~~28, 2020 (amounts in ~~thousands)~~thousands, except weighted average exercise price):




	Number of		Weighted
	Shares		Average
	Under		Exercise
	Option		Price
Awards outstanding at May 30, 2020	5,755	$	16.07
Granted, at fair market value
Exercised	(44)		11.36
Forfeited	(183)		17.44
Expired	(245)		15.84
Awards outstanding at November 28, 2020	5,283	$	16.07
Exercisable at November 28, 2020	3,863	$	15.48
Vested and expected to vest at November 28, 2020	5,173	$	16.04

   Number of Shares
Under Option    Weighted
Average
Exercise Price    Weighted
Average
Remaining
Contractual
Life
(in years)    Aggregate
Intrinsic Value
Outstanding at May 25, 2019
   6,029    $ 15.95    6.06    $ 5,482
Granted, at fair market value
   1,278    17.43
Exercised
   (257 )    13.51
Forfeited
   (335 )    17.33
Expired
   (54 )    17.11



Outstanding at November 23, 2019
   6,661    $ 16.25    6.30    $ 3,841






Exercisable at November 23, 2019
   4,067    $ 15.46    4.44    $ 3,747






Vested and expected to vest at November 23, 2019
   6,311    $ 16.16    6.06    $ 3,838

The aggregate intrinsic value in the table above represents the total pretax intrinsic value, which is the difference between the Company’s closing stock price on the last trading day of the second quarter of fiscal 2020 and the exercise price multiplied by the number of shares that would have been received by the option holders if they had exercised their “in the money” options on November 23, 2019. This amount will change based on changes in the fair market value of the Company’s common stock. The total~~pre-tax~~ intrinsic value related to stock options exercised during the three months ended November 23, 2019 and November 24, 2018 was $0.2 million and $2.3 million, respectively, and during the six months ended November 23, 2019 and November 24, 2018 was $0.8 million and $3.1 million, respectively. As of November ~~23, 2019,~~28, 2020, there was ~~$10.3~~ $5.4 million of total unrecognized compensation cost related to unvested employee stock options granted. That cost is expected to be recognized over a weighted-average period of ~~2.0~~1.61 years.

The Company did not grant any shares of restricted stock during either the six months ended November 23, 2019 or November 24, 2018. As of November 23, 2019, there were 198,032 unvested restricted shares, including stock units under the Directors Deferred Compensation Plan, with approximately $1.9 million of remaining unrecognized compensation cost.

~~Stock-Based Compensation Expense~~

Stock-based compensation expense included in selling, general and administrative expenses was $1.6 million and $1.7 million for the three months ended November 23, 2019 and November 24, 2018, respectively, and $3.2 million and $3.0 million for the six months ended November 23, 2019 and November 24, 2018, respectively. These amounts consisted of stock-based compensation expense related to employee stock options, employee stock purchases made via the ESPP, restricted stock awards and stock units credited under the Directors Deferred Compensation Plan. The Company recognizes compensation expense for only the portion of stock options and restricted stock that is expected to vest, rather than recording forfeitures when they occur. If the actual number of forfeitures differs from that estimated by management, additional adjustments to compensation expense may be required in future periods. There were no capitalized share-based compensation costs during the six months ended November 23, 2019 or November 24, 2018.

Employee Stock Purchase Plan

On October 15, 2019, the Company’s stockholders approved the ~~2019 ESPP.~~ESPP which superseded the Company’s previous Employee Stock Purchase Plan. The maximum number of shares of the Company’s common stock that are authorized for issuance under the ~~plan~~ESPP is 1,825,000. ~~The remaining 6,000 unissued shares under the 2014 ESPP are no longer available for issuance.~~

The ESPP allows qualified employees (as defined in the ESPP) to purchase designated shares of the Company’s common stock at a price equal to 85% of the lesser of the fair market value of common stock at the beginning or end of each semi-annual stock purchase period. The ESPP’s term expires July 16, 2029. The Company issued ~~215,000~~ 245,000 and ~~358,000~~215,000 shares of common stock pursuant to the ESPP during the six months ended November ~~23, 2019~~28, 2020 and ~~the year ended May 25,~~November 23, 2019, respectively. There were ~~1,825,000~~1,396,000 shares of

common stock available for issuance under the ESPP as of November ~~23, 2019.~~28, 2020.

~~11.~~

Restricted Stock Awards

The following table summarizes the activities for the unvested restricted stock awards for the six months ended November 28, 2020 (amounts in thousands, except weighted average grant-date fair value):


	Shares	Weighted Average Grant-Date Fair Value
Outstanding at May 30, 2020	90	$	15.90
Granted	-		-
Vested	(41)		15.74
Forfeited/canceled	-		-
Unvested as of November 28, 2020	49	$	16.03
Expected to vest as of November 28, 2020	49	$	16.04

As of November 28, 2020, there was $0.5 million of total unrecognized compensation cost related to unvested restricted stock awards. The cost is expected to be recognized over a weighted-average period of 1.7 years.

Restricted Stock Units

The following table summarizes the activities for the unvested restricted stock units for the six months ended November 28, 2020 (amounts in thousands, except weighted average grant-date fair value):


	Shares	Weighted Average Grant-Date Fair Value
Outstanding at May 30, 2020	87	$	10.99
Granted	511		11.64
Vested	(3)		11.51
Forfeited/canceled	-		-
Unvested as of November 28, 2020	595	$	11.76
Expected to vest as of November 28, 2020	520	$	11.78

As of November 28, 2020, there was $6.6 million of total unrecognized compensation cost related to unvested restricted stock units. That cost is expected to be recognized over a weighted-average period of 2.38 years.

12. Segment Information ~~and Enterprise Reporting~~

~~The Company discloses information regarding operations outside~~

With the execution of the ~~U.S. The Company operates as one segment. The accounting policies for the domestic and international operations are the same as those described~~European Plan, discussed in Note ~~2 —~~~~Summary~~9—Restructuring Activities, the Company changed its internal management structure and its reporting structure of ~~Significant Accounting Policies~~financial information used to assess performance and allocate resources during the second quarter of fiscal 2021. As a result, the Company revised its historical one segment position and identified the following new operating segments effective in the ~~Notes~~second quarter of fiscal 2021:

RGP – a global business consulting practice which operates primarily under the RGP brand andfocuses on professional project consulting and staffing services in areas such as finance and accounting, business strategy and transformation, risk and compliance, and technology and digital;

taskforce – a German professional services firm that operates under the taskforce brand. It utilizes a distinct independent contractor/partner business model and infrastructure and focuses on providing senior interim management and project management services to ~~Consolidated Financial Statements included~~middle market clients in the ~~Company’s Fiscal Year 2019 Form10-K.~~ ~~Summarized information regarding~~German market;

Sitrick – a crisis communications and public relations firm which operates under the Sitrick brand, providing corporate, financial, transactional and crisis communication and management services.

RGP also includes the operations of Veracity, which is being integrated with the rest of the RGP business operations. RGP is the Company’s ~~domestic~~only reportable segment. taskforce and ~~international operations~~Sitrick do not individually meet the quantitative thresholds to qualify as reportable segments. Therefore, they are combined and disclosed as Other Segments.

The tables below reflect the operating results of the Company’s segments consistent with the management and performance measurement system utilized by the Company. All prior year periods presented were recast to reflect the impact of the preceding segment changes. Performance measurement is ~~shown in~~based on segment Adjusted EBITDA. Adjusted EBITDA is defined as net (loss) income before amortization of intangible assets, depreciation expense, interest and income taxes plus stock-based compensation expense, restructuring costs, and plus or minus contingent consideration adjustments. Adjusted EBITDA at the ~~following table (amounts in thousands):~~segment level excludes certain shared corporate administrative costs that are not practical to allocate. The Company’s CODM does not evaluate segments using asset information.

   Revenue for the
Three Months Ended    Revenue for the
Six Months Ended    Long-Lived Assets (1)
as of
   November 23,    November 24,    November 23,    November 24,    November 23,    May 25,
   2019    2018    2019    2018    2019    2019
United States
   $ 149,051    $ 148,901    $ 286,048    $ 290,130    $ 262,922    $ 200,385
International
   35,456    39,898    70,684    77,227    38,563    31,651












Total
   $ 184,507    $ 188,799    $ 356,732    $ 367,357    $ 301,485    $ 232,036


	Three Months Ended				Six Months Ended
	November 28,		November 23,		November 28,		November 23,
	2020		2019		2020		2019
	(Amounts in thousands)
Revenues:
RGP	$	142,002	$	173,987	$	279,111	$	335,997
Other Segments		11,220		10,520		21,456		20,735
Total revenues	$	153,222	$	184,507	$	300,567	$	356,732

Gross profit:
RGP	$	54,079	$	70,206	$	108,026	$	133,466
Other Segments		4,099		4,171		8,048		8,414
Total gross profit	$	58,178	$	74,377	$	116,074	$	141,880

Adjusted EBITDA:
RGP	$	18,401	$	28,598	$	34,859	$	48,068
Other Segments		1,251		868		2,417		2,099
Reconciling items (1)		(7,257)		(6,795)		(14,664)		(15,587)
Total Adjusted EBITDA	$	12,395	$	22,671	$	22,612	$	34,580

~~(1)~~

~~Long-lived assets are comprised of goodwill, intangible assets and property and equipment. Long-lived assets as of November 23, 2019 included the Company’s operatingright-of-use~~ ~~assets which were added as a result of the Company’s adoption of ASC 842 Leases. See Note 5 —~~ ~~Leases.~~

~~12.~~(1) Reconciling items are generally comprised of unallocated corporate administrative costs, including management and board compensation, back office support function costs and other general corporate costs that are not allocated to segments.

The below is a reconciliation of the Company's net (loss) income to adjusted EBITDA for all periods presented.


	Three Months Ended				Six Months Ended
	November 28,		November 23,		November 28,		November 23,
	2020		2019		2020		2019
Consolidated	(Amounts in thousands)
Net (loss) income	$	(992)	$	12,337	$	1,292	$	17,276
Adjustments:
Amortization of intangible assets		1,393		1,510		2,923		2,604
Depreciation expense		984		1,424		1,991		2,793
Interest expense, net		460		551		955		1,033
Provision for income taxes		2,256		5,337		4,213		7,978
EBITDA		4,101		21,159		11,374		31,684
Stock-based compensation expense		1,708		1,643		3,105		3,158
Restructuring costs		6,775		-		7,791		-
Contingent consideration adjustment		(189)		(131)		342		(262)
Total Adjusted EBITDA	$	12,395	$	22,671	$	22,612	$	34,580

13. Legal Proceedings

The Company is involved in certain legal matters arising in the ordinary course of business. In the opinion of management, ~~all~~none of such matters, if disposed of unfavorably, would ~~not~~ have a material adverse effect on the Company’s financial position, cash flows or results of operations.

ITEM 2. ~~MANAGEMENT~~’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF ~~OPERATIONS~~.OPERATIONS.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our ~~Consolidated Financial Statements~~consolidated financial statements and accompanying notes. This discussion and analysis contains “forward-looking statements,” within the meaning of Section 27A of the ~~“Securities~~Securities Act of 1933, as ~~amended”~~amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to expectations concerning matters that are not historical facts. For example, statements discussing, among other things, expected costs and liabilities, business strategies, growth strategies and initiatives, acquisition strategies, future revenues and future performance, are forward-looking statements.Such forward-looking

statements may be identified by words such as “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “remain,” “should,” or “will” or the negative of these terms or other comparable terminology.

These statements, and all phases of our operations, are subject to known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievements and those of our industry to differ materially from those expressed or implied by these forward-looking statements. ~~You are urged to review carefully the~~The disclosures we make concerning risks, uncertainties and other factors that may affect our business or operating results included in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Part I, Item 1A of our Annual Report on Form10-K for the year ended May ~~25, 2019~~30, 2020 (FileNo. ~~000-32113)~~0-32113) and our other public filings made with the Securities and Exchange Commission (“SEC”). should be reviewed carefully. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business or operating results. Readers are cautioned not to place undue reliance on the forward-looking statements included herein, which speak only as of the date of this filing. We do not intend, and undertake no obligation, to update the forward-looking statements in this filing to reflect events or circumstances after the date of this filing or to reflect the occurrence of unanticipated events, unless required by law to do so. References in this filing to “Resources Connection,” ~~“RGP,”~~ “Resources Global Professionals,” the “Company,” “we,” “us,” and “our” refer to Resources Connection, Inc. and its subsidiaries.

~~Overview~~

~~RGP~~Overview

Resources Connection is a global consulting firm that enables rapid business outcomes by bringing together the right people to create transformative change. As a human capital partner ~~for~~to our ~~clients,~~global client base, we ~~specialize in solving today’s most pressing business problems across the enterprise~~support our clients’ needs through both professional staffing and project execution in the areas of ~~Business Strategy & Transformation, Finance & Accounting, Risk & Compliance~~transactions, regulations, and ~~Technology & Digital Innovation.~~transformations. Our pioneering approach to workforce strategy and our agile human capital model quickly align the right resources for the work at hand with speed and efficiency. Our engagements are designed to leverage human connection and collaboration to deliver practical solutions and more impactful results that power our ~~clients, consultants~~clients’, consultants’ and partners’ success. Our mission as an employer is to connect our employee consultants to meaningful opportunities that further their career ambitions within the context of a supportive talent community of dedicated professionals.

~~RGP was founded~~

Headquartered in ~~1996~~Irvine, California, we are proud to ~~help finance executives with operational and special project needs. Ourfirst-to-market,~~ ~~agile human capital model quickly aligns~~have served 88 of the ~~right resources for the work at hand with speed and efficiency. Our pioneering approach to workforce strategy uniquely positions us to support our clients on their transformation journeys.~~Fortune 100. With more than ~~4,000~~3,500 professionals, we annually engage with over 2,400 clients around the ~~world from more than 70 practice offices.~~

~~To achieve our objective of being~~world. We aim to be the premier provider of agile ~~consulting services~~human capital solutions for companies facing transformation ~~change~~ and ~~compliance challenges, we have developed~~workforce gaps while being the ~~following business strategies:~~preferred employer to highly qualified and experienced consultants through our distinctive culture.

•

~~Hire and retain highly qualified, experienced consultants.~~ We believe our highly qualified, experienced consultants provide us with a distinct competitive advantage. Therefore, one of our priorities is to continue to attract and retain high-caliber consultants who are committed to solving problems.

•

~~Maintain our distinctive culture.~~Our corporate culture is the foundation of our business strategy and we believe it has been a significant component of our success. We believe our culture, “LIFE AT RGP”, representing Loyalty, Integrity, Focus, Enthusiasm, Accountability and Talent, has created a circle of quality; our culture is instrumental to our success in hiring and retaining highly qualified employees who, in turn, attract quality clients.

•

~~Build consultative relationships with clients.~~ We emphasize a relationship-oriented approach to business rather than a transaction-oriented or assignment-oriented approach. We believe the professional services experience of our management and consultants enables us to understand the needs of our clients and deliver an integrated, relationship-based approach to meeting those needs. Client relationships and needs are addressed from a client, not office, perspective. We regularly meet with our existing and prospective clients to understand their business issues and help them define their project needs.

•

~~Build the RGP brand.~~ We want to be the preferred provider in the future of work. Our primary means of building our brand is by consistently providing high-quality, value-added services to our clients. We have also focused on building a significant referral network. In addition, we have global, regional and local marketing efforts that reinforce the RGP brand.

Fiscal 2021 Strategic Focus Areas

~~Through~~

Our strategic focus areas in fiscal 2019, we completed various initiatives including cultivating a more robust sales culture, adopting a new operating model for sales, talent and delivery in North America, refreshing the RGP brand, establishing digital innovation functions focused on building and commercializing2021 are:

Furthering our digital ~~engagement platform, enhancing our consulting capabilities in~~expansion through the ~~digital transformation space, and building and commercializing digital product offerings.~~

To achieve a more robust sales culture, we aligned our sales process using tools such as Salesforce.com, established an enterprise-wide business development function, and implemented a new incentive compensation program for individuals focused on profitable revenue generation and gross margin. Finally, to complete this initiative, we expanded our Strategic Client Program, which involves dedicated account teams for certain high-profile clients with global operations.

Under the new operating model in North America, we realigned reporting relationships, largely defined by functional area rather than on an office location basis. We reorganized our Advisory and Project Services function, a team of seller-doer professionals whose primary responsibility is to shepherd sales pursuits and engagement delivery on our more complex projects. We believe this team deepens the scoping conversation, achieves value-oriented pricing and improves delivery management through greater accountability and a more seamless customer experience. While we believe these efforts have already delivered improved revenue growth and improved customer experience throughout fiscal 2019, we are focused on continued improvement from this initiative into fiscal 2020.

~~In fiscal 2019, we launched a brand refresh which emphasizes a human centered approach in how we serve our clients and engage with our consultants. We believe the development~~launch of our ~~new brand will support future revenue growth.~~

~~Our digital innovation initiatives are additional strategic components of our growth. In July 2019,~~human cloud platform and expanded go-to-market penetration for the business we acquired from VeracityConsulting Group, LLC (“Veracity”),

Growing our core business through our strategic client and industry vertical programs

Right sizing our cost structure globally and monitoring and controlling our ongoing costs for optimal efficiency

Our primary area of focus for fiscal 2021 is digital expansion and we have made solid strides in this area. We are on track to bring our human cloud platform to market by the end of this fiscal year, which would introduce a ~~full-service digital transformation firm based in Richmond, Virginia.~~new way for clients and talent alike to engage with us. Our efforts also include expanding the go-to-market penetration for Veracity ~~delivers innovative solutions~~by providing consulting services from strategy and roadmap to technical implementation. Our focus on introducing Veracity more broadly to our client base and integrating Veracity with the ~~Fortune 500 and leading healthcare organizations.~~rest of the RGP business operations has generated positive returns through the first half of the fiscal year. We believe ~~this acquisition will further our growth objective by allowing us to offer comprehensiveend-to-end~~ ~~solutions to clients by combining Veracity’s customer-facing offerings with our depth of experience in implementation (see Note 3 —~~~~Acquisitions~~COVID-19 has and ~~Dispositions~~).

~~In fiscal 2020, we~~ will continue to ~~focus on our growth strategy by further investing~~accelerate digital transformation agendas in our ~~brand~~existing client base and ~~digital innovation, as well as further refining~~will continue to create opportunities for us to engage with new clients.

The second focus area for this fiscal year is building our ~~operating model and optimizing our systems and structure. After a thorough review~~core business, including through the growth of our ~~European operations,~~strategic client and key industry vertical programs, particularly in healthcare. We are working to further penetrate these important accounts at a time when many are looking to reduce fixed costs by moving toward more flexible workforce strategies and building relationships with higher value partners for project execution needs. We are also actively extending our offerings to new buyers within these organizations – like Chief Digital, Chief People and Chief Marketing Officers. We see strong growth momentum in our client programs and robust opportunity in the healthcare industry from pharmaceutical to medical device to payor and provider, including in practice areas such as revenue cycle optimization, clinical trials process redesign and supply chain transformation. We believe these client needs align well with the capabilities of our dedicated industry group.

Finally, we ~~divested~~made substantial progress in our ~~business~~transformation journey in ~~Resources Global Professionals Sweden AB (“RGP Sweden”)~~fiscal 2021, with the execution of our restructuring plan in North America and ~~substantially exited~~Asia Pacific (the “North America and APAC Plan”), which we initiated in the ~~Belgium market during the first~~fourth quarter of fiscal 2020, ~~The Company expects to complete~~and in Europe (the “European Plan”, collectively, the ~~remaining exit activities~~“Plans”), which we initiated in ~~Belgium during~~ the ~~third~~second quarter of fiscal ~~2020, including~~2021, with the goal to

strengthen the business and right size our cost structure globally. The Plans consisted of two key components: (i) an ~~analysis~~effort to streamline the management and organizational structure and eliminate certain positions as well as exit certain markets to focus on core solution offerings and core high growth clients; and (ii) a strategic rationalization of our physical geographic footprint and real estate spend to focus investment dollars in high growth core markets for greater impact.

Through the first six months of fiscal 2021, we have substantially completed our North America and APAC Plan with respect to headcount reduction. We have also substantially completed the consultation and negotiation with impacted employees under the European Plan as of November 28, 2020. We expect to substantially complete the reduction in force in Europe by the end of calendar 2021. We also made solid progress in executing our real estate exit strategy under the Plans, although the exact amount and timing of the expenses and resulting payments are subject to a number of variables which may not be within our control, such as the condition of the real estate/leasing market.

See Note 9 – Restructuring Activities in Part I, Item 1 above and “Results of Operations” below for additional disclosures regarding the impact of the North America and APAC Plan and the European Plan on our results of operations and cash flows during the three and six months ended November 28, 2020.

COVID-19 Impact and Outlook

Since the start of calendar 2020, the COVID-19 pandemic (the “Pandemic”) has caused profound disruption in the U.S. and global economy. As a result of the disruptions caused by the Pandemic, we have experienced reduced demand for or delayed client decisions to procure our services and, in certain cases, cancellation of existing projects. We have taken precautions and steps to prevent or reduce infection among our employees, including the implementation of safety precautions and policies, limiting business travel and mandating or encouraging working from home in many of the countries in which we operate. During the first six months of fiscal 2021, our revenue declined 15.7% compared to the first six months of fiscal 2020. The full likely effects of the Pandemic remain uncertain and, among other things, we may continue to experience reduced demand for or delays in client decisions to procure our services or cancellation of existing projects.

While the detrimental financial impact of the Pandemic is undeniable, it has also accelerated certain macro trends that we believe allow us to operate from a position of strength. These include the increased use of contingent talent, virtual or remote delivery becoming mainstream and new client attitudes toward borderless talent models. As CEO and other C-suite decision-makers increasingly value workforce flexibility and agility, additional opportunity is created for our business model. The move to virtual and borderless talent helps us manage supply and demand more efficiently, which should result in faster revenue generation and reduced turnover. In strengthening our core business, we expect to continue to evolve our client engagement and talent delivery model to take advantage of these important shifts.

Additionally, we are encouraged by the revenue improvement in the second quarter of fiscal 2021. Weekly revenue grew steadily throughout the second quarter, reflecting improved buying patterns by our clients. Our pipeline, from both a volume and quality perspective, has continued to strengthen since the beginning of fiscal 2021. Until we have further visibility into the full impact of the Pandemic on the global economy, we will remain focused on the health of our balance sheet and liquidity, cost containment and strategic allocation of resources to drive key growth initiatives in core markets and the expansion of our digital capabilities. We believe the North America and APAC Plan that we initiated ahead of the Pandemic in fiscal 2020 better prepared us, and the European Plan we recently initiated will further prepare us to operate with agility and resilience and capitalize on the potential ~~tax benefits that may result from the exit activities (see Note 3 —~~~~Acquisitions and Dispositions~~).economic recovery as vaccine progress continues to mitigate uncertainty around key markets.

Critical Accounting Policies

The following discussion and analysis of our financial condition and results of operations are based upon our ~~Consolidated Financial Statements,~~consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”). The preparation of these financial statements in accordance with GAAP requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.judgments.

~~Except for the adoption of Accounting Standards Codification (“ASC”) 842 as described~~

As further discussed in ~~Item 1,~~ Note ~~2 —~~~~Summary of Significant Accounting Policies~~ ~~in the Notes to Consolidated Financial Statements included~~12 – Segment Information in Part I, Item 1 above and in the “Information about Segments” section below, effective in the second quarter of ~~this Quarterly Report~~fiscal 2021, we changed our segment reporting and reallocated goodwill to the new reporting units on ~~Form10-Q,~~the relative fair value basis. Concurrent with the segment change, we completed a goodwill impairment assessment, and concluded that no goodwill impairment existed immediately before and after the change in segment reporting.

With the exception of the change in segment and reporting units, there have been no material changes in our critical accounting policies, or in the estimates and assumptions underlying those policies, from those described under the heading “Critical Accounting Policies” in Item 7 of Part II of our Annual Report on Form10-K for the year ended May ~~25, 2019.~~30, 2020.

‎

Results of Operations

The following tables set forth, for the periods indicated, our Consolidated Statements of Operations data. These historical results are not necessarily indicative of future results.


	Three Months Ended					Six Months Ended					Three Months Ended								Six Months Ended
	November 23,			November 24,		November 23,			November 24,		November 28,				November 23,				November 28,				November 23,
	2019			2018		2019			2018		2020				2019				2020				2019
	(Amounts in thousands)										(Amounts in thousands, except percentages)
Revenue	$	184,507		$	188,799	$	356,732		$	367,357	$	153,222	100.0	%	$	184,507	100.0	%	$	300,567	100.0	%	$	356,732	100.0	%
Direct cost of services		110,130			115,378		214,852			225,785		95,044	62.0			110,130	59.7			184,493	61.4			214,852	60.2

Gross margin		74,377			73,421		141,880			141,572		58,178	38.0			74,377	40.3			116,074	38.6			141,880	39.8
Selling, general and administrative expenses		53,755			54,959		110,733			111,325		54,552	35.6			53,755	29.1			105,707	35.2			110,733	31.1
Amortization of intangible assets		1,510			952		2,604			1,907		1,393	0.9			1,510	0.8			2,923	1.0			2,604	0.7
Depreciation expense		1,424			1,197		2,793			2,266		984	0.7			1,424	0.8			1,991	0.6			2,793	0.8

Income from operations		17,688			16,313		25,750			26,074		1,249	0.8			17,688	9.6			5,453	1.8			25,750	7.2
Interest expense		551			608		1,033			1,134
Other (income)/expense		(537	)		—		(537	)		—

Interest expense, net												460	0.3			551	0.3			955	0.3			1,033	0.3
Other income												(475)	(0.3)			(537)	(0.3)			(1,007)	(0.3)			(537)	(0.2)
Income before provision for income taxes		17,674			15,705		25,254			24,940		1,264	0.8			17,674	9.6			5,505	1.8			25,254	7.1
Provision for income taxes		5,337			5,141		7,978			8,635		2,256	1.4			5,337	2.9			4,213	1.4			7,978	2.3

Net income	$	12,337		$	10,564	$	17,276		$	16,305

Net (loss) income											$	(992)	(0.6)	%	$	12,337	6.7	%	$	1,292	0.4	%	$	17,276	4.8	%

Information about Segments

With the execution of the European Plan, discussed in Note 9—Restructuring Activities, we changed our internal management structure and our reporting structure of financial information used to assess performance and allocate resources during the second quarter of fiscal 2021. We believe the new structure creates enhanced visibility and focus to enable more rapid growth and effective resource allocation. As a result, we revised our historical one segment position and identified the following new operating segments effective in the second quarter of fiscal 2021:

RGP– a global business consulting practice which operates primarily under the RGP brand and focuses on professional project consulting and staffing services in areas such as finance and accounting, business strategy and transformation, risk and compliance, and technology and digital;

RGP also ~~assess~~includes the ~~results~~operations of Veracity, which is being integrated with the rest of the RGP business operations. RGP is our ~~operations using Adjusted EBITDA~~only reportable segment. taskforce and ~~Adjusted EBITDA Margin. We define Adjusted EBITDA~~Sitrick do not individually meet the quantitative thresholds to qualify as ~~net income before amortization of intangible assets, depreciation expense, interest~~reportable segments. Therefore, they are combined and income taxes plus stock-based compensation expense and plus or minus contingent consideration adjustments. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by revenue. These measures assist management in assessing our core operating performance. disclosed as Other Segments.

The following table presents ~~Adjusted EBITDA~~our operating results by segment. All prior year periods presented were recast to reflect the impact of the preceding segment changes.


	Three Months Ended								Six Months Ended
	November 28,				November 23,				November 28,				November 23,
	2020				2019				2020				2019
	(Amounts in thousands, except percentages)
Revenues:
RGP	$	142,002	92.7	%	$	173,987	94.3	%	$	279,111	92.9	%	$	335,997	94.2	%
Other Segments		11,220	7.3			10,520	5.7			21,456	7.1			20,735	5.8
Total revenues	$	153,222	100.0	%	$	184,507	100.0	%	$	300,567	100.0	%	$	356,732	100.0	%

Gross margin:
RGP	$	54,079	93.0	%	$	70,206	94.4	%	$	108,026	93.1	%	$	133,466	94.1	%
Other Segments		4,099	7.0			4,171	5.6			8,048	6.9			8,414	5.9
Total gross margin	$	58,178	100.0	%	$	74,377	100.0	%	$	116,074	100.0	%	$	141,880	100.0	%

Adjusted EBITDA:
RGP	$	18,401	148.5	%	$	28,598	126.2	%	$	34,859	154.2	%	$	48,068	139.0	%
Other Segments		1,251	10.1			868	3.8			2,417	10.7			2,099	6.1
Reconciling Items (1)		(7,257)	(58.6)			(6,795)	(30.0)			(14,664)	(64.9)			(15,587)	(45.1)
Total Adjusted EBITDA	$	12,395	100.0	%	$	22,671	100.0	%	$	22,612	100.0	%	$	34,580	100.0	%

(1) Reconciling items are generally comprised of unallocated corporate administrative costs, including management and ~~Adjusted EBITDA Margin for the periods indicated~~board compensation, back office support function costs and ~~includes a reconciliation of such measures~~other general corporate costs that are not allocated to ~~net income, the most directly comparable GAAP financial measure:~~segments.

   Three Months Ended Six Months Ended
   November 23, November 24, November 23, November 24,
   2019 2018 2019 2018
   (Amounts in thousands, except percentages)
Net income
   $ 12,337 $ 10,564 $ 17,276 $ 16,305
Adjustments:

Amortization of intangible assets
   1,510 952 2,604 1,907
Depreciation expense
   1,424 1,197 2,793 2,266
Interest expense
   551 608 1,033 1,134
Provision for income taxes
   5,337 5,141 7,978 8,635
Stock-based compensation expense
   1,643 1,652 3,158 3,013
Contingent consideration adjustment
   (131 ) (130 ) (262 ) (33 )


Adjusted EBITDA
   $ 22,671 $ 19,984 $ 34,580 $ 33,227


Revenue
   $ 184,507 $ 188,799 $ 356,732 $ 367,357


Adjusted EBITDA Margin
   12.3 % 10.6 % 9.7 % 9.0 %

~~The~~Non-GAAP Financial Measures

We use certain non-GAAP financial measures ~~and key performance indicators we use~~ to assess our financial and operating performance ~~above~~that are not defined by, or calculated in accordance with, GAAP. Anon-GAAP financial measure is defined as a numerical measure of a company’s financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the Consolidated Statements of Operations; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable GAAP measure so calculated and presented.

Our primary non-GAAP financial measures are listed below and reflect how we evaluate our operating results.

Same day constant currency revenue is adjusted for the following items:

oCurrency impact. In order to remove the impact of fluctuations in foreign currency exchange rates, we calculate constant currency revenue, which represents the outcome that would have resulted had exchange rates in the current period been the same as those in effect in the comparable prior period.

oBusiness days impact. In order to remove the fluctuations caused by comparable periods having a different number of business days, we calculate same day revenue as current period revenue (adjusted for currency impact) divided by the number of business days in the current period, multiplied by the number of business days in the comparable prior period. 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 (loss) income before amortization of intangible assets, depreciation expense, interest and income taxes plus stock-based compensation expense, restructuring costs, and plus or minus contingent consideration adjustments. 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.

Same day constant currency revenue

Same day constant currency revenue assists management in evaluating revenue trends on a more comparable and consistent basis. 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.

‎


RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
	Three Months Ended				Six Months Ended
Revenue by Geography		November 28,		November 23,		November 28,		November 23,
		2020		2019		2020		2019
(Amounts in thousands, except number of business days)	(Unaudited)					(Unaudited)
North America
As reported (GAAP)	$	122,732	$	152,422	$	243,346	$	292,798
Currency impact		115				307
Business days impact		3,963				1,934
Same day constant currency revenue	$	126,810			$	245,587

Europe
As reported (GAAP)	$	19,082	$	19,369	$	35,374	$	38,132
Currency impact		(1,096)				(1,482)
Business days impact		(139)				(263)
Same day constant currency revenue	$	17,847			$	33,629

Asia Pacific
As reported (GAAP)	$	11,408	$	12,716	$	21,847	$	25,802
Currency impact		(344)				(323)
Business days impact		-				175
Same day constant currency revenue	$	11,064			$	21,699

Total Consolidated
As reported (GAAP)	$	153,222	$	184,507	$	300,567	$	356,732
Currency impact		(1,325)				(1,498)
Business days impact		3,824				1,846
Same day constant currency revenue	$	155,721			$	300,915

Number of Business Days
North America (1)		62		64		126		127
Europe (2)		65		64		129		128
Asia Pacific (2)		61		61		124		125

(1) This represents the number of business days in the U.S.

(2) This represents the number of business days in the country or countries in which the revenues are most concentrated within the geography.

‎

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA and Adjusted EBITDA Margin ~~arenon-GAAP~~ ~~financial measures.~~assist management in assessing our core operating performance. We also believe these measures provide investors with useful perspective on underlying business results and trends and facilitate a comparison of our performance from period to period. The following table presents Adjusted EBITDA and Adjusted EBITDA Margin ~~provide useful information~~for the periods indicated and includes a reconciliation of such measures to ~~our investors because they are~~net (loss) income, the most directly comparable GAAP financial measure:


	Three Months Ended							Six Months Ended
	November 28,			November 23,			November 28,			November 23,
	2020			2019			2020			2019
	(Amounts in thousands, except percentages)
Net (loss) income	$	(992)		$	12,337		$	1,292		$	17,276
Adjustments:
Amortization of intangible assets		1,393			1,510			2,923			2,604
Depreciation expense		984			1,424			1,991			2,793
Interest expense, net		460			551			955			1,033
Provision for income taxes		2,256			5,337			4,213			7,978
Stock-based compensation expense		1,708			1,643			3,105			3,158
Restructuring costs		6,775			-			7,791			-
Contingent consideration adjustment		(189)			(131)			342			(262)
Adjusted EBITDA	$	12,395		$	22,671		$	22,612		$	34,580
Revenue	$	153,222		$	184,507		$	300,567		$	356,732
Adjusted EBITDA Margin		8.1	%		12.3	%		7.5	%		9.7%

Our non-GAAP financial measures ~~used by management to assess the core performance of the Company. Adjusted EBITDA and Adjusted EBITDA Margin~~ are not measurements of financial performance or liquidity under GAAP and should not be considered in isolation or construed as substitutes for revenue, net (loss) income or other cash flow data prepared in accordance with GAAP for purposes of analyzing our revenue, profitability or liquidity. These measures should be considered in addition to, and not as a substitute for, revenue, net (loss) income, (loss) earnings per share, cash flows or other measures of financial performance prepared in conformity with GAAP.

Further, ~~Adjusted EBITDA and Adjusted EBITDA Margin have the following limitations:~~

~~Although depreciation and amortization arenon-cash~~ ~~charges, the assets being depreciated and amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements for such replacements;~~

~~Equity based compensation is an element~~a limitation of our ~~long-term incentive compensation program, although we~~non-GAAP financial measures is they exclude ~~it as~~items detailed above that have an ~~expense from Adjusted EBITDA when evaluating~~impact on our ~~ongoing operating performance for a particular period;~~

~~We exclude the changes in the fair value of the contingent consideration obligation related to business acquisitions from Adjusted EBITDA; and~~

GAAP reported results. Other companies in our industry may calculate ~~Adjusted EBITDA and Adjusted EBITDA Margin~~these non-GAAP financial measures differently than we do, limiting their usefulness as a comparative measure.

Because of these limitations, ~~Adjusted EBITDA and Adjusted EBITDA Margin~~these non-GAAP financial measures should not be considered a substitute for performance measures calculated in accordance with GAAP.

Consolidated Operating Results – Three Months Ended November ~~23, 2019~~28, 2020 Compared to Three Months Ended November ~~24, 2018~~23, 2019

Percentage change computations are based upon amounts in thousands.

Revenue. Revenue decreased ~~$4.3~~$31.3 million, or ~~2.3%~~17.0%, to ~~$184.5~~$153.2 million for the three months ended November 23, 2019 from $188.8 million for the three months ended November 24, 2018. On a constant currency basis, revenue decreased 1.9%. The decrease in revenue reflects the impact of less hours worked. Total hours worked during the three months ended November 23, 2019 decreased 2.0% compared to prior year quarter, while average bill rates for the three months ended November 23, 2019 had a slight decrease compared to prior year period. The decrease in hours worked in the second quarter of fiscal ~~2020 reflected the impact of the wind-down of technical accounting implementation projects in North America as well as the exit~~2021 from ~~the Nordics and Belgium markets, partially offset by the addition of hours worked from Veracity and the favorable impact due to the timing of Thanksgiving holidays.~~

~~Revenue in the second quarter of fiscal 2020 included $5.8 million of revenue attributable to Veracity.~~

As presented in the table below, revenue decreased in the first three months of fiscal 2020 compared to the same period of fiscal 2019 in North America and Europe while revenue increased in Asia Pacific (dollars in thousands):

   Revenue for the Three
Months Ended
   November 23,    November 24,    %
   2019    2018    Change
North America
   $ 152,422    82.6 % $ 153,823    81.5 % (0.9 )%
Europe
   19,369    10.5 23,163    12.3 (16.4 )%
Asia Pacific
   12,716    6.9 11,813    6.2 7.6 %






Total
   $ 184,507    100 % $ 188,799    100.0 % (2.3 )%

Our financial results are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar (“U.S. dollar”). Revenues denominated in foreign currencies are translated into U.S. dollars at the monthly average exchange rates in effect during each period. Thus, as the value of the U.S. dollar strengthens relative to the currencies of our~~non-U.S.~~ ~~based operations, our translated revenue (and expenses) will be lower; conversely, if the value of the U.S. dollar weakens relative to the currencies of ournon-U.S.~~ ~~based operations, our translated revenue (and expenses) will be higher. Using the comparable fiscal 2019 second quarter~~

~~conversion rates, international revenues would have been higher than reported under GAAP by approximately $0.7~~$184.5 million in the second quarter of fiscal 2020. ~~Using these constant currency rates, which we believe provides a more comprehensive view of trends~~Billable hours decreased 16.9% while average bill rate increased by 1.0% in ~~our business, our revenue decreased in North America and Europe by 0.9% and 13.1%, respectively, and increased in Asia Pacific by 7.1% during~~ the second quarter of fiscal ~~2020.~~2021 compared to the prior year quarter. On a sequential basis, consolidated revenue in the second quarter of fiscal 2021 increased by 4.0% compared to the first quarter of fiscal 2021.

Revenue discussion on a same day constant currency basis

On a same day constant currency basis, revenue for the second quarter of fiscal 2021 decreased by $28.8 million, or 15.6%, compared to the prior year quarter, primarily reflecting the adverse impact of the Pandemic on client demand and consumption. On a sequential basis, consolidated revenue in the second quarter of fiscal 2021 increased 6.4% compared to the first quarter of fiscal 2021, reflecting a steady improvement of weekly revenue across most markets. While decline in revenue persisted in the second quarter of fiscal 2021 compared to the prior year, the percentage of decline narrowed compared to the first fiscal quarter year over year revenue comparison.

As macro events continued to unfold in the second fiscal quarter, including the development of the COVID vaccine, mitigating some uncertainty in the macro environment, we experienced an uptick in demand for our services as well as more swift decision making by our clients. In Europe and Asia Pacific, the second quarter year-over-year decline in revenue narrowed to 7.9% and 13.0%, respectively, compared to the first quarter year-over-year decline of 16.5% and 19.4%, respectively. In North America, the second quarter year-over-year decline of 16.8% remained similar to the first quarter year-over-year comparison.

The number of consultants on assignment as of November ~~23, 2019~~28, 2020 was ~~3,072~~2,669 compared to ~~3,389 consultants engaged as of November 25, 2018. We operated 72 (23 abroad) offices~~3,072 as of November 23, ~~2019 and 74 (26 abroad) as of November 24, 2018.~~ 2019.

Our clients do not sign long-term contracts with us. As such, there can be no assurance as to future demand levels for the services we provide or that future results can be reliably predicted by considering past trends.

Direct Cost of Services. Direct cost of services decreased ~~$5.3~~$15.1 million, or ~~4.5%~~13.7%, to $95.0 million for the second quarter of fiscal 2021 from $110.1 million for the ~~three months ended November 23, 2019 from $115.4 million for the three months ended November 24, 2018.~~second quarter of fiscal 2020. The decrease in the amount of direct cost of services between periods was primarily attributable to a 16.9% decrease ~~of 2.0%~~ in ~~the number of hours worked and a decrease of 1.6% in the average pay rate per hour between the two quarters.~~billable hours.

Direct cost of services as a percentage of revenue was ~~59.7% and 61.1%~~62.0% for the ~~three months ended November 23, 2019 and November 24, 2018, respectively.~~second quarter of fiscal 2021 compared to 59.7% for the second quarter of fiscal 2020. The ~~direct cost of services~~increased percentage compared to the prior year quarter was primarily attributable to a decrease in bill/pay spread, an increase in holiday pay as a ~~percentage~~result of ~~revenue improved~~more holidays in the current fiscal quarter due to the timing of Thanksgiving in the U.S. (included in the second quarter of fiscal ~~2020 compared to prior year quarter primarily due to an improvement~~2021 but not in ~~the Company’s bill/pay ratio as well as a decrease in holiday pay for consultants in the U.S. (second quarter of fiscal 2020 included only Labor Day while~~ the second quarter of fiscal ~~2019 included Labor Day~~2020), unfavorable self-insured medical expense, and ~~Thanksgiving).~~

a decrease in executive search and conversion fee revenues, partially offset by lower passthrough revenue from client reimbursement. Consolidated average bill rate increased 1% while average pay rate also increased 2.9% in the second quarter of fiscal 2021 compared to the second quarter of fiscal 2020, resulting in a 90-basis-point decline in bill/pay spread year-over-year. Our target direct cost of services percentage is 60% ~~in all of our markets.~~.

Selling, General and Administrative Expenses. Selling, general and administrative expenses (“SG&A”) was $54.6 million, or 35.6% as a percentage of revenue, ~~was 29.1% for both the three months ended November 23, 2019 and November 24, 2018. SG&A was $53.8 million~~ for the second quarter of fiscal ~~2020 and $55.0~~2021 compared to $53.8 million, or 29.1% as a percentage of revenue, for the ~~comparable prior year period. The year-over-year decrease is~~second quarter of fiscal 2020. Excluding the $6.8 million of restructuring costs incurred in the current fiscal quarter, as further discussed below, SG&A costs decreased $6.0 million from the second quarter of fiscal 2020 to the second quarter of fiscal 2021, which was primarily attributable ~~to:~~to (1) a ~~$2.5~~$3.3 million decrease in management compensation and bonuses primarily resulting from the reduction in force as part of the global restructuring plan, as further discussed below, and a lower revenue base for incentive ~~compensation~~compensation; (2) $1.7 million of savings in travel-related business expenses attributable to cost containment measures and reduced business travel during the Pandemic; and (3) $0.8 million of savings in lease expense primarily as a result of the decrease in second quarter revenue, (2) a $0.9 million decrease in business expenses as management continues to closely manage discretionary spend and (3) $0.8 million less in severance expense, partially offset by $2.9 million in additional payroll and benefit costs due to additional headcount related to project delivery and digital transformation efforts, including Veracity.real estate exit initiatives taken.

Management and administrative headcount was 896 at the end of the second quarter of fiscal 2021 and 962 at the end of the second quarter of fiscal 2020. 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—higher levels of utilization would reduce the full-time equivalent management and administrative headcount, and lower levels would increase it.

Restructuring charges.We initiated our North America and APAC Plan in March 2020 and ~~912~~the European Plan in September 2020. All employee termination and the facility exit costs incurred under the restructuring plans were associated with the RGP segment, as further discussed in Note 12 – Segment Information, and are recorded in selling, general and administrative expenses in the Consolidated Statement of Operations. Restructuring costs for the three months ended November 28, 2020 and November 23, 2019 were as follows (in thousands):


	Three Months Ended
	November 28,		November 23,
	2020		2019
Employee termination costs	$	5,455	$	-
Real estate exit costs		1,082		-
Other costs		238		-
Total restructuring costs	$	6,775	$	-

For further information on our restructuring initiatives, please refer to Note 9 – Restructuring Activities in Part I, Item 1 above and “Fiscal 2021 Strategic Focus Areas” above.

Amortization and Depreciation Expense. Amortization of intangible assets was $1.4 million and $1.5 million in the second quarter of fiscal 2021 and fiscal 2020, respectively. The decrease in amortization expense is primarily due to certain acquired intangible assets being fully amortized at the end of the first quarter in fiscal 2021. Depreciation expense was $1.0 million and $1.4 million in the second quarter of fiscal ~~2019.~~

~~Sequential Operations~~. ~~On a sequential quarter basis,~~2021 and fiscal 2020, ~~second quarter revenues increased approximately 7.1% (7.3% constant currency), from $172.2 million~~respectively. The decrease in depreciation expense was primarily due to ~~$184.5 million. Second quarter revenue includes a full quarter of Veracity and reflects active pipeline management and business development coupled with fewer holidays~~fully-depreciated computer equipment in periods prior to the ~~U.S. as well as seasonal impact (second~~second quarter of fiscal ~~2020 included Labor Day while~~2021 and the ~~first~~write-off of leasehold improvement as part of the real estate exit initiatives executed under the Plans.

Other Income. Other income was $0.5 million in the second quarter of both fiscal 2021 and 2020. Other income in the second quarter of fiscal ~~2020 included Memorial Day and July 4~~^th holidays in the U.S. and summer holiday breaks taken by our consultants), resulting in a 6.2% increase in hours worked. Average bill rates increased 0.8% from the first quarter. The Company’s sequential revenue increased in North America and Europe by 8.6% and 3.2% respectively and decreased in Asia Pacific by 2.8%. On a constant currency basis, using the comparable first quarter fiscal 2020 conversion rates, sequential revenue increased in North America (8.6%), Europe (4.0%) and decreased in Asia Pacific (1.9%). Asia Pacific revenue decreased due2021 was primarily related to ~~the week-long holidays in both Japan and China, two of the Company’s largest markets in Asia.~~

~~Direct cost of services as a percentage of revenue was 59.7% and 60.8%~~government COVID-19 relief funds received globally. Other income in the second quarter of fiscal 2020 ~~and first quarter of fiscal 2020, respectively. The decrease in the direct cost of services percentage in the second quarter of 2020 is~~was primarily ~~due to a decrease in holiday pay for consultants in the U.S. as a result of fewer holidays (Labor Day in the second quarter of fiscal 2020 compared~~related to the ~~Memorial Day and July 4~~^th ~~holidays~~gain on the settlement of a pre-acquisition claim with the seller of Accretive, an acquisition completed in ~~the first quarter) as well as lower payroll taxes.~~fiscal 2018.

~~SG&A as a percentage~~

Income Taxes. Our provision for income taxes was $2.3 million expense (effective tax rate of ~~revenue was 29.1%~~approximately 178.5%) for the second quarter of fiscal ~~2020~~2021 compared to 33.1% for the first quarter of fiscal 2020. SG&A in the second quarter decreased $3.2 million to $53.8 million from $57.0 million in the previous quarter. The primary reasons for the decrease were: (1) severance cost of $0.4 million in the first quarter related to a former officer of the Company, (2) $0.7 million of costs related to exit activities in Sweden and Belgium in the first quarter, (3) $0.6 million of acquisition costs related to Veracity in the first quarter, (4) $0.5 million in retention bonuses in the first quarter and (5) a decrease of $0.7 million in business expenses as management continues to closely manage discretionary spend.

~~Amortization and Depreciation Expense.~~ Amortization of intangible assets was $1.5 million and $1.0 million in the second quarter of fiscal 2020 and fiscal 2019, respectively. The increase in amortization expense is primarily due to the amortization of identifiable intangible assets acquired from Veracity during the first quarter of fiscal 2020.

Depreciation expense was $1.4 million and $1.2 million in the second quarter of fiscal 2020 and fiscal 2019, respectively. The increase is primarily the result of depreciation of our fiscal 2019 investments in new office furniture and fixtures as we transition to an open office footprint to enhance the ability to internally collaborate.

~~Interest Expense~~. ~~Interest expense was approximately $0.6 million in the second quarters of fiscal 2020 and fiscal 2019.~~

~~Income Taxes.~~~~The Company’s provision for income taxes was~~ $5.3 million (effective tax rate of approximately ~~30%) and $5.1 million (effective tax rate of approximately 33%~~30.2%) for the ~~three months ended November 23, 2019 and November 24, 2018, respectively. The Company records~~second quarter of fiscal 2020. We record tax expense based upon an actual ~~effective tax rate~~results versus a forecasted tax rate because of the volatility in its international operations that span numerous tax jurisdictions.

~~The~~ Tax provision for income taxes in the three months ended November 23, 2019 and November 24, 2018 results from taxes on income in the U.S. and certain other foreign jurisdictions, no benefit for losses in jurisdictions in which a full valuation allowance on operating loss carryforwards had previously been established and a lower benefit for losses in certain foreign jurisdictions with tax rates lower than the U.S. statutory rates. The provision for income taxes increasedof $2.3 million for the ~~three months ended November 23, 2019 compared~~second quarter was primarily associated with

pre-tax income from regions outside of Europe. The majority of the restructuring charges incurred during the second quarter were incurred in our European entities resulting in a pre-tax loss in Europe. With significant required valuation allowances on tax benefits related to these net operating losses, no tax benefits were recognized in connection with the ~~prior year quarter because~~pre-tax loss, resulting in an effective tax rate of ~~improved global income.~~178.5%.

~~The Company~~

We recognized a net tax benefit of approximately ~~$0.3~~$0.1 million and ~~$0.1~~$0.3 million related to stock-based compensation for nonqualified stock options expensed and for disqualifying dispositions under ~~the ESPP~~our Employee Stock Purchase Plan (“ESPP”) during the second quarter of fiscal ~~2020~~2021 and fiscal ~~2019,~~2020, respectively.

Periodically, ~~the Company reviews~~we review the components of both book and taxable income to analyze the adequacy of the tax provision. There can be no assurance that ~~the Company’s~~our effective tax rate will remain constant in the future because of the lower benefit from the U.S. statutory rate for losses in certain foreign jurisdictions, the limitation on the benefit for losses in jurisdictions in which a valuation allowance for operating loss carryforwards has previously been established, and the unpredictability of timing and the amount of eligible disqualifying incentive stock options ~~exercises.~~exercise.

Adjusted EBITDA. Adjusted EBITDA decreased $10.3 million, or 45.3%, to $12.4 million in the second quarter of fiscal 2021, compared to $22.7 million in the second quarter of fiscal 2020. The decrease was primarily attributable to a $16.2 million decline in gross profit as a result of the decline in revenue as well as gross margin, partially offset by a $5.9 million reduction in SG&A in the second quarter of 2021 compared to the prior year quarter. SG&A used to derive Adjusted EBITDA does not include contingent consideration, stock-based compensation expense and restructuring charges.

Comparability of Quarterly Results. Our quarterly results have fluctuated in the past and we believe they will continue to do so in the future. Certain factors that could affect our quarterly operating results are described in Part II, Item 1A.—Risk Factors of our Annual Report on Form10-K for the year ended May ~~25, 2019.~~30, 2020. Due to these and other factors, we believequarter-to-quarter comparisons of our results of operations may not be meaningful indicators of future performance.

Consolidated Operating Results – Six Months Ended November ~~23, 2019~~28, 2020 Compared to Six Months Ended November ~~24, 2018~~23, 2019

Percentage change computations are based upon amounts in thousands.

Revenue. Revenue decreased ~~$10.7~~$56.2 million, or ~~2.9%~~15.7%, to $300.6 million for the six months ended November 28, 2020 from $356.7 million for the six months ended November 23, ~~2019 from $367.4~~2019. Billable hours decreased 16.1% while average bill rate increased by 1.4% compared to the first half of fiscal 2020. Veracity contributed $11.7 million and $7.2 million of revenue in first half of fiscal 2021 and fiscal 2020, respectively. On a same day constant currency basis, revenue for the first half of fiscal 2021 decreased by $55.8 million, or 15.6%, compared to the same period of fiscal 2020. The decline in revenue for the first half of the fiscal 2021 was due primarily to the adverse impact of the Pandemic.

Direct Cost of Services. Direct cost of services decreased $30.4 million, or 14.1%, to $184.5 million for the six months ended November ~~24, 2018. On a constant currency basis, revenue decreased 2.4%. Revenue in the first half of fiscal~~28, 2020 included $7.2 million of revenue in North America attributable to Veracity and reflected the impact of the Company exiting the Sweden and Belgium markets and the wind-down of technical accounting implementation projects.

As presented in the table below, revenue decreased in the first six months of fiscal 2020 compared to the same period of fiscal 2019 in North America and Europe while revenue increased in Asia Pacific (dollars in thousands):

   Revenue for the Six
Months Ended
   November 23,    November 24,    %
   2019    2018    Change
North America
   $ 292,798    82.1 % $ 299,994    81.7 % (2.4 )%
Europe
   38,132    10.7 43,847    11.9 (13.0 )%
Asia Pacific
   25,802    7.2 23,516    6.4 9.7 %






Total
   $ 356,732    100.0 % $ 367,357    100.0 % (2.9 )%

Our financial results are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar. Revenues denominated in foreign currencies are translated into U.S. dollars at the monthly average exchange rates in effect during each period. Thus, as the value of the U.S. dollar strengthens relative to the currencies of our~~non-U.S.~~ ~~based operations, our translated revenue (and expenses) will be lower; conversely, if the value of the U.S. dollar weakens relative to the currencies of ournon-U.S.~~ ~~based operations, our translated revenue (and expenses) will be higher. Using the comparable fiscal 2019 conversion rates,~~

international revenues would have been higher than reported under GAAP by approximately $1.6 million in the first six months of fiscal 2020. Using these constant currency rates, which we believe provides a more comprehensive view of trends in our business, our revenue decreased in North America and Europe by 2.4% and 9.5%, respectively, and increased in Asia Pacific by 10.0% during the first six months of fiscal 2020.

~~Direct Cost of Services~~. ~~Direct cost of services decreased $10.9 million, or 4.8%, to~~from $214.9 million for the six months ended November 23, ~~2019 from $225.8 million for the six months ended November 24, 2018.~~2019. The decrease in the amount of direct cost of services between periods was primarily attributable to a decrease of ~~2.0%~~16.1% in ~~the number of hours worked as well as a decrease of 2.4% in the average pay rate per hour between the two periods.~~billable hours.

Direct cost of services as a percentage of revenue was 61.4% for the six months ended November 28, 2020 compared to 60.2% ~~and 61.5%~~ for the six months ended November 23, ~~2019 and November 24, 2018, respectively.~~2019. The ~~direct cost of services as a~~increased percentage ~~of revenue improved in fiscal 2020 primarily due to an improvement in the Company’s bill/pay ratio~~ compared to the prior year ~~period as well as~~was primarily due to a decrease in bill/pay spread, unfavorable self-insured medical expense, and increased holiday pay ~~for consultants~~primarily due to ~~fewer~~more holidays in the ~~U.S. (first~~first half of fiscal ~~2020 included two less holidays~~2021 due to the timing of Thanksgiving in the ~~Thanksgiving holiday).~~

U.S. (included in the second quarter of fiscal 2021 but not in the second quarter of fiscal 2020), partially offset by lower passthrough revenue from client reimbursement. Consolidated average bill rate increased 1.4% while average pay rate increased 2.4% in the first half of fiscal 2021 compared to the first half of fiscal 2020, resulting in a 50-basis-point decline in bill/pay spread year-over-year. Our target direct cost of services percentage is 60% ~~in all our markets.~~.

Selling, General and Administrative Expenses. SG&A expenses were $105.7 million, or 35.2% as a percentage of revenue, ~~was 31.0% and 30.3%~~for the six months ended November 28, 2020 compared to $110.7 million, or 31.1% as a percentage of revenue, for the six months ended November 23, ~~2019 and November 24, 2018, respectively. SG&A was $110.7 million for~~2019. Excluding the first half of fiscal 2020 and $111.3 million for the comparable prior year period. The year over year decrease is primarily attributable to: (1) a decrease of $3.3 million in incentive compensation expense as a result of the decrease in revenue during the first six months of fiscal 2020, (2) a decrease of $1.3 million in transformation and system implementation costs, and (3) a decrease of $1.2 million in business expenses as management continues to closely manage discretionary spend, partially offset by an increase of $4.3 million in payroll and benefits due to additional headcount related to project delivery and digital transformation efforts, including Veracity and $0.8$7.8 million of ~~acquisition~~restructuring costs incurred in the first half of fiscal ~~2020.~~

~~Amortization~~2021, as further discussed below, year-over-year SG&A costs decreased $12.8 million, which was primarily attributable to: (1) a $4.8 million decrease in management compensation and ~~Depreciation Expense.~~ ~~Amortization~~bonuses primarily resulting from the reduction in force as part of ~~intangible assets was $2.6~~the global restructuring plan and a lower revenue base for incentive compensation; (2) $4.1 million of savings in travel-related business expenses attributable to cost containment measures and ~~$1.9~~reduced business travel during the Pandemic; (3) a $1.5 million net reduction in legal expenses primarily due to the recovery of $1.0 million of legal costs during the first quarter of fiscal 2021 related to a receivable collection case; (4) a $1.1 million decrease in personnel severance costs, which were $1.3 million in the first six months of fiscal 2020, related primarily to exiting the Nordic markets and the departure of several former executives, as compared to $0.2 million in the first six months of fiscal 2021; (5) costs of $0.8 million incurred in the first six months of fiscal 2020 associated with the acquisition of Veracity; and (6) $1.4 million of savings in lease expense primarily as a result of the real estate exit initiatives taken. These decreases were partially offset by a change in contingent consideration related expense/benefit over the two periods, which was an expense of $0.3 million in the first

six months of fiscal 2021 as compared to a benefit of $0.3 million in the first six months of fiscal 2020.

Restructuring charges. We initiated our North America and APAC Plan in March 2020 and the European Plan in September 2020. All employee termination and the facility exit costs incurred under the restructuring plans were associated with the RGP segment, as further discussed in Note 12 – Segment Information. Restructuring costs for the six months ended November 28, 2020 and November 23, 2019 were as follows (in thousands):


	Three Months Ended				Six Months Ended
	November 28,		November 23,		November 28,		November 23,
	2020		2019		2020		2019
Employee termination costs	$	5,455	$	-	$	6,393	$	-
Real estate exit costs		1,082		-		1,104		-
Other costs		238		-		294		-
Total restructuring costs	$	6,775	$	-	$	7,791	$	-

For further information on our restructuring initiatives, please refer to Note 9 – Restructuring Activities in Part I, Item 1 above and “Fiscal 2021 Strategic Focus Areas” above.



Liability balance at May 25, 2019	$	-
Increase in liability (restructuring costs)		3,927
Reduction in liability (payments and others)		(2,053)
Liability balance at May 30, 2020		1,874
Increase in liability (restructuring costs)		6,393
Reduction in liability (payments and others)		(2,965)
Liability balance at November 28, 2020	$	5,302

Amortization and Depreciation Expense. Amortization of intangible assets was $2.9 million and $2.6 million in the first six months of fiscal 2021 and fiscal ~~2019,~~2020, respectively. The increase in amortization expense is primarily due to the amortization of identifiable intangible assets acquired ~~during~~through Veracity partially offset by certain acquired intangible assets being fully amortized at the end of the first quarter ofin fiscal ~~2020 from Veracity.~~

2021. Depreciation expense was ~~$2.8~~$2.0 million and ~~$2.3~~$2.8 million in the first six months of fiscal ~~2020~~2021 and fiscal ~~2019,~~2020, respectively. The ~~increase is~~decrease in depreciation expense was primarily due to fully-depreciated computer equipment in periods prior to the ~~result~~second quarter of ~~depreciation~~fiscal 2021 and the write-off of ~~our fiscal 2019 investments~~leasehold improvement as part of the real estate exit initiatives executed under the Plans.

Other Income. Other income was $1.0 million in ~~new office furniture and fixtures as we transition to an open office footprint to enhance the ability to internally collaborate.~~

~~Interest Expense~~. ~~Interest expense for~~ the first ~~half~~six months of fiscal 2021 compared to $0.5 million in the first six months of fiscal 2020. Other income in the current fiscal year was primarily related to government COVID-19 relief funds received globally. Other income in the first six months of fiscal 2020 was ~~approximately $1.0 million compared~~primarily related to ~~$1.1 million~~the gain on the settlement of a pre-acquisition claim with the seller of Accretive, an acquisition completed in ~~the same period of~~ fiscal ~~2019.~~2018.

Income Taxes.~~The Company’s~~Our provision for income taxes was $4.2 million expense (effective tax rate of approximately 76.5%) for the six months ended November 28, 2020 compared to $8.0 million (effective tax rate of approximately ~~32%) and $8.6 million (effective tax rate of approximately 35%~~31.6%) for the six months ended November 23, ~~2019 and November 24, 2018, respectively. The Company records~~2019. We record tax expense based upon an actual ~~effective tax rate~~results versus a forecasted tax rate because of the volatility in its international operations that span numerous tax jurisdictions.

Tax provision of $4.2 million for the first half of fiscal 2021 was primarily associated with pre-tax income from regions outside of Europe. The ~~provision for income taxes~~majority of the restructuring charges incurred during the second quarter were incurred in the ~~six months ended November 23, 2019 and November 24, 2018 results from taxes~~Company’s European entities resulting in a pre-tax loss in Europe. With significant required valuation allowances on ~~income~~tax benefits related to these net operating losses, no tax benefits were recognized in connection with the ~~U.S. and certain other foreign jurisdictions, no benefit for losses~~pre-tax loss, resulting in ~~jurisdictions in which a full valuation allowance on operating loss carryforwards had previously been established and a lower benefit for losses in certain foreign jurisdictions with~~an effective tax ~~rates lower than the U.S. statutory rates. The provision for income taxes decreased for the six months ended November 23, 2019 compared to the prior year quarter because~~rate of ~~lower international related taxes and fewer stock expirations.~~76.5%.

~~The Company~~

We recognized a net tax benefit of approximately ~~$0.7~~$0.3 million and ~~$0.1~~$0.7 million related to stock-based compensation for nonqualified stock options expensed and for disqualifying dispositions under ~~the~~our ESPP during the first half of fiscal ~~2020~~2021 and fiscal ~~2019,~~2020, respectively.

Adjusted EBITDA. Adjusted EBITDA decreased $12.0 million, or 34.6%, to $22.6 million in the first half of fiscal 2021, compared to $34.6 million in the first half of fiscal 2020. The decrease was primarily attributable to a $25.8 million decline in gross profit as a result of the decline in revenue as well as gross margin, partially offset by a $13.4 million reduction in SG&A in the first

half of 2021 compared to the prior year period. SG&A used to derive Adjusted EBITDA does not include contingent consideration, stock-based compensation expense and restructuring charges.

Operating Results by Segment

All prior year periods referenced below were recast to reflect the impact of the segment changes as discussed in “Information about Segments” above.

Revenue by segment

RGP — Revenue decreased $32.0 million, or 18.4%, to $142.0 million in the second quarter of fiscal 2021 from $174.0 million in the second quarter of fiscal 2020. RGP revenue improvement on a sequential basis is similar to that at the consolidated level. Through the first half of fiscal 2021, RGP revenue decreased $56.9 million, or 16.9%, to $279.1 million compared to $336.0 million in the first half of fiscal 2020. Revenue from RGP represents more than 90% of total consolidated revenue and generally reflects the overall consolidated revenue trend. Please refer to discussion of consolidated operating results.

Other Segments — Revenue for the second fiscal quarter of 2021 increased $0.7 million, or 6.7%, to $11.2 million from $10.5 million in the second quarter of fiscal 2020. Through the first half of fiscal 2021, revenue from Other Segments increased $0.7 million, or 3.5%, to $21.5 million from $20.7 million in the first half of fiscal 2020. The improvement in revenue is the result of combining RGP Germany to operate under taskforce generating additional revenue synergy.

Gross Profit by segment

RGP — Gross margin trends in RGP for the three and six months ended November 28, 2020 are similar with the trends of consolidated operating results. Please refer to discussion of consolidated revenue and direct cost of services.

Adjusted EBITDA by segment

RGP — Adjusted EBITDA decreased $10.2 million or 35.7% to $18.4 million in the second quarter of fiscal 2021, compared to $28.6 million in the second quarter of fiscal 2020. The decrease was primarily attributable to a $16.1 million decline in gross profit as a result of the decline in revenue as well as gross margin, partially offset by a $6.0 million reduction in SG&A in the second quarter of 2021 compared to the prior year quarter.

Adjusted EBITDA decreased $13.2 million or 27.5% to $34.9 million in the first half of fiscal 2021, compared to $48.1 million in the first half of fiscal 2020. The decrease was primarily attributable to the $25.4 million decline in gross profit as a result of the decline in revenue and as well as gross margin, partially offset by a reduction of $11.8 million in SG&A in the first half of fiscal 2021 compared to the prior year period.

SG&A reductions for the three and six months ended November 28, 2020 are primarily due to a decrease in management compensation costs as a result of the reduction in force under the Plans, a decrease in variable compensation due to lower revenue and favorable SG&A expenses reflecting the impact of the new virtual operating model, a reduction in real estate footprint and overall discipline in discretionary spend. SG&A used to derive Adjusted EBITDA does not include contingent consideration, stock-based compensation expense and restructuring charges.

Other Segments — Adjusted EBITDA improved in both the three and six months ended November 28, 2020 compared to the same periods in fiscal 2020. The improvements in both periods are primarily due to more favorable SG&A related to the recovery of legal costs associated with a receivable collection case.

Liquidity and Capital Resources

Our primary sources of liquidity are cash provided by our operations, our ~~$120~~$120.0 million secured revolving credit facility (“Facility”) with Bank of America and, historically, to a lesser extent, stock option exercises and ESPP purchases. We On an annual basis, we have generated ~~annual~~ positive cash flows from operations since inception.Our ability to generate positive cash flow from operations in the future will be, at least in part, dependent on ~~continued stable~~ global economic ~~conditions.~~ conditions and our ability to remain resilient during economic downturns, such as the one we are currently in caused by the Pandemic. As of November ~~23, 2019, the Company~~28, 2020, we had ~~$43.0~~$97.2 million of cash and cash equivalents including ~~$26.2~~$31.3 million held in international operations.

~~In October 2016, we entered into the~~

Our Facility ~~which~~ is available for working capital and general corporate purposes, including potential acquisitions and stock repurchases. ~~The~~Our Facility ~~allows~~consists of a $120 million revolving loan facility (“Revolving Commitment”), which includes a $5.0 million sublimit for the ~~Company to choose the interest rate applicable to advances. Borrowings~~issuance of standby letters of credit. At November 28, 2020, we had borrowings of $68.0 million outstanding under the Facility, ~~bear~~bearing an interest ~~at a~~ rate per annum of either, at the Company’s option, (i) LIBOR plus a margin of 1.25% or 1.50% or (ii) an alternate base rate, plus margin of 0.25% or 0.50% with the applicable margin depending on the Company’s consolidated leverage ratio. The alternate base rate is the highest of (i) Bank of America’s prime rate, (ii) the federal funds rate plus 0.50% and (iii) the Eurodollar rate plus 1.0%. The Company pays an unused commitment fee on the average daily unused portion of the Facility at a rate of 0.15%ranging from 2.00% to ~~0.25% depending upon on the Company’s consolidated leverage ratio. The Facility expires October 17, 2021.~~2.23%. Additional information regarding the Facility is included in Note 7 —~~Long Term~~–Long-Term Debtin the Notes to ~~Consolidated Financial Statements~~consolidated financial statements included in Part I, Item 1 of this Quarterly

Report on Form 10-Q.

We undertook a number of restructuring actions across our geographies beginning in the fourth quarter of fiscal 2020. We expect the execution of the restructuring actions to continue through the remainder of fiscal 2021, which requires substantial liquidity. Through the first half of fiscal 2021, we paid approximately $3.0 million related to employee termination costs, including $1.9 million under the North America and APAC Plan and $1.1 million under the European Plan. We currently estimate the cash requirement for completing the remaining restructuring actions to be in the range of $6.5 million to $9.5 million. The exact amount and timing of the expenses and resulting payments are subject to a number of variables which may not be within our control, such as the condition of the real estate/leasing market.

As described in Note 3 – Acquisition in the Notes to consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form~~10-Q.~~

As 10-Q and Note 3 – Acquisitions and Dispositions in the Notes to consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended May 30, 2020, the purchase agreements for Veracity and Expertence require cash earn-out payments to be made when certain performance conditions are met. We estimated the fair value of the obligation to pay contingent consideration based on a number of different projections of the estimated EBITDA and estimated revenue. The estimated fair value of the contingent consideration as of November 23, 2019, the Company had borrowings of $54.0 million under the Facility and directed Bank of America to issue approximately $1.5 million of outstanding letters of credit for the benefit of third parties related to operating leases and guarantees. As of November 23, 2019, the Company28, 2020 was ~~in compliance with the financial covenants in the Facility.~~$3.0 million.

Our ongoing operations and growth strategy may require us to continue to make investments in critical markets and in systems and technology. In addition, we may consider making strategic ~~acquisitions.~~acquisitions or initiating additional restructuring initiatives, which could require significant liquidity. We currently believe that our current cash, ongoing cash flows from our operations and funding available under our Facility will be adequate to meet our working capital, ~~and~~ capital expenditure needs and funding for our restructuring initiatives and potential future contingent consideration payments associated with our acquisitions for at least the next 12 months. If we require additional capital resources to grow our business, either internally or through acquisition, we may seek to sell additional equity securities, increase use of our Facility or raise additional debt. In addition, if we decide to make additional share repurchases, we may fund these through existing cash balances or use of our Facility. The sale of additional equity securities or certain forms of debt financing could result in additional dilution to our stockholders. We may not be able to obtain financing arrangements in amounts or on terms acceptable to us in the future. In the event we are unable to obtain additional financing when needed, we may be compelled to delay or curtail our plans to develop our business or to pay dividends on our capital stock, which could have a material adverse effect on our operations, market position and competitiveness.

Operating Activities

Operating activities for the six months ended November ~~23, 2019~~28, 2020 provided cash of ~~$17.2~~$29.6 million compared to ~~$1.7~~$17.2 million in cash provided by operating activities for the six months ended November ~~24, 2018. Cash~~23, 2019. In the first six months of fiscal 2021, cash provided by operations resulted from net income of $1.3 million and non-cash adjustments of $8.5 million. Additionally, net favorable changes in operating assets and liabilities totaled $19.8 million, primarily consisting of a $13.5 million decrease in trade accounts receivable and a $3.8 million increase in accounts payable and accrued expenses. In the first six months of fiscal 2020, cash provided by operations resulted from net income of $17.3 million andnon-cash ~~items~~ adjustments of $8.6 million. These amounts were partially offset by a net increase in operating assets and liabilities of $8.7 million primarily due to a decrease in accrued salaries and related ~~obligations. In~~obligations. The overall improvement in cash flow from operating activities for the first ~~six months~~half of fiscal ~~2019, cash provided by operations resulted from net income~~2021 compared to the first half of ~~$16.3~~fiscal 2020 was primarily attributable to (i) a $8.2 million payroll tax payment deferral under the Coronavirus Aid, Relief, and ~~non-cash items~~Economic Security Act that went effective in our fourth quarter of ~~$12.3 million, partially offset by an increase~~fiscal 2020, and (ii) overall favorable changes in ~~operating assets and liabilities of $27.0 million primarily related to an increase in accounts receivable and a decrease in accrued salary and related obligations.~~working capital.

Investing Activities

Net cash used in investing activities was ~~$25.5~~$1.6 million for the first six months of fiscal ~~2020,~~2021 compared to ~~$3.4~~$25.5 million in the comparable prior year period. ~~The Company~~We used ~~$30.3~~$1.6 million of cash ~~(net of cash acquired) to acquire Veracity. There were no acquisitions~~ in the first six months of fiscal ~~2019.~~2021 to develop internal-use software and acquire property and equipment, net of $0.2 million proceeds from the sale of assets. In the first half of fiscal 2020, we used net cash of $30.3 million to acquire Veracity, redeemed short-term investments of $6.0 million, and purchased ~~$2.1~~$1.2 million ~~less~~of property and equipment, ~~compared to~~net of $0.1 million in proceeds from the ~~first half~~sale of ~~fiscal 2019.~~assets.

Financing Activities

~~The primary sources of~~

Net cash used in financing activities ~~are borrowings under~~totaled $29.1 million for the ~~Company’s revolving credit facility,~~six months ended November 28, 2020 compared to cash ~~proceeds from~~provided by financing activities of $8.5 million for the ~~exercise of employee stock options and proceeds from issuance of Employee Stock Purchase Plan (“ESPP”). The primarily uses of~~six months ended November 23, 2019. Net cash used in financing activities ~~are~~during the six months ended November 28, 2020 consisted of repayments ~~under~~on the ~~Company revolving credit facility, repurchase~~Facility of ~~the Company’s common stock and~~$20.0 million, cash dividend payments ~~to shareholders.~~

of $9.1 million, and the Veracity year one contingent consideration payment, of which $3.0 million was categorized as financing (and the remaining $2.3 million of the total $5.3 million Veracity year one contingent consideration payment was categorized as operating). These were partially offset by $3.0 million in proceeds received from ESPP share purchases and employee stock option exercises. Net cash provided by financing activities ~~totaled~~of $8.5 million for the six months ended November 23, 2019 ~~compared to a use of cash of $13.3 million during the six months ended November 24, 2018. Net cash provided by financing activities during the six months ended November 23, 2019 consisted of $6.0~~included $6.1 million of proceeds from employee stock option exercises and purchases of shares under the ESPP, and $35.0 million of borrowings to finance the acquisition of Veracity, partially offset by principal repayments of $24.0 million under the ~~revolving credit facility~~Facility and $8.6 million of cash dividend ~~payments.~~

payments.

Net cash used in financing activities during the six months ended November 24, 2018 consisted of $13.0 million of cash paid to repurchase the Company’s own common stock, a principal repayment of $5.0 million under the revolving credit facility and $7.9 million of cash dividend payments, partially offset by $12.6 million of proceeds from employee stock option exercises and purchases of shares under the ESPP.

~~The increase in dividends paid was due to an increase in dividends declared from $0.13 per share to $0.14 per share beginning in fiscal 2020.~~

~~As described~~Recent Accounting Pronouncements

Information regarding recent accounting pronouncements is contained in Note ~~3 —~~~~Acquisitions and Dispositions,~~2 – Summary of Significant Accounting Policiesin the Notes to ~~Consolidated Financial Statements~~consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form~~10-Q,~~ ~~the purchase agreement for Veracity requiresearn-out~~ ~~payments to be made. The Company estimated the fair value~~ 10-Q.

Contractual Obligations

Other than a $20.0 million repayment of the ~~obligation~~Facility during the six months ended November 28, 2020, there have been no material changes to ~~pay contingent consideration based on a number of different projections of~~ the ~~estimated EBITDA. The estimated fair value of the contingent consideration as of November 23, 2019 was $6.4 million.~~

~~Recent Accounting Pronouncements~~

~~Information regarding recent accounting pronouncements is contained~~contractual obligations reported in ~~Note 2 —~~~~Summary of Significant Accounting Policies~~ ~~in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly~~our Annual Report on Form~~10-Q.~~ 10-K for the year ended May 30, 2020.

Off-Balance Sheet Arrangements

The Company has nooff-balance sheet arrangements.

ITEM 3.QUANTITATIVE 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 our Facility that bear interest at a variable market rate.

As of November ~~23, 2019,~~28, 2020, we had approximately ~~$43.0~~$97.2 million of cash and cash equivalents and ~~$54.0~~$68.0 million of borrowings under our Facility. The earnings on investments are subject to changes in interest rates; however, assuming a constant balance available for investment, a 10% decline in interest rates would reduce our interest income but would not have a material impact on our consolidated financial position or results of operations.

~~Borrowings~~

Additional information regarding the interest on our borrowings under the Facility ~~bear interest at a rate per annum~~is included in Note 7 – Long-Term Debtin the Notes to consolidated financial statements included in Part I, Item 1 of ~~either, at the Company’s option, (i) LIBOR plus a margin of 1.25% or 1.50% or (ii) an alternate base rate, plus margin of 0.25% or 0.50% with the applicable margin depending~~this Quarterly Report on the Company’s consolidated leverage ratio. The alternate base rate is the highest of (i) Bank of America’s prime rate, (ii) the federal funds rate plus 0.50% and (iii) the Eurodollar rate plus 1.0%. Form 10-Q.We are exposed to interest rate risk related to fluctuations in the LIBOR ~~rate primarily;~~rate; at the current level of borrowing as of November ~~23, 2019~~28, 2020 of ~~$54.0~~$68.0 million, a 10% change in interest rates would have resulted in approximately a $0.2 million change in annual interest expense.

Foreign Currency Exchange Rate Risk. For the ~~three~~six months ended November ~~23, 2019,~~28, 2020, approximately ~~19.2%~~20.4% of the Company’s revenues were generated outside of the U.S. As a result, our operating results are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar. 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 ournon-U.S. based operations, our reported results may vary.

Assets and liabilities of ournon-U.S. based operations are translated into U.S. dollars at the exchange rate effective at the end of each monthly reporting period. Approximately ~~39%~~67.7% of our balances of cash and cash equivalents as of November ~~23, 2019~~28, 2020 were denominated in U.S. dollars. The remaining amount of approximately ~~61%~~32.3% was comprised primarily of cash balances translated from Euros, Japanese Yen, Chinese Yuan, Mexican Pesos, Canadian Dollar, British Pound Sterling ~~Japanese Yen, Canadian Dollar~~ and ~~Chinese Yuan.~~the Hong Kong Dollar. The difference resulting from the translation each period of assets and liabilities of ournon-U.S. based operations is recorded as a component of stockholders’ equity in ~~other~~ accumulated other comprehensive income or loss.

Although we intend to monitor our exposure to foreign currency fluctuations, we do not currently use financial hedging techniques to mitigate risks associated with foreign currency fluctuations including in a limited number of circumstances when we may be asked to transact with our client in one currency but are obligated to pay our consultant in another currency. We cannot provide assurance that exchange rate fluctuations will not adversely affect our financial results in the future.

ITEM 4.CONTROLS AND PROCEDURES.

As required by Rule13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and ~~Interim~~ Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rule13a-15(e) under the Exchange Act) as of November ~~23, 2019.~~28, 2020. Based on that evaluation, the Company’s Chief Executive Officer and ~~Interim~~ Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of November ~~23, 2019.~~28, 2020. There was no change in the Company’s internal control over financial reporting, as such term is defined in Rule13a-15(f) promulgated under the Exchange Act, during the Company’s quarter ended November ~~23, 2019~~28, 2020 that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART ~~II —~~ II—OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS.

We are not a party to any material legal proceedings, although we are from time to time party to legal proceedings that arise in the ordinary course of our business.

ITEM 1A.RISK FACTORS.

There have been no material changes in our risk factors from those disclosed in Part 1, Item 1A of our Annual Report on Form10-K for the fiscal year ended May ~~25, 2019,~~30, 2020, which was filed with the Securities and Exchange Commission on July ~~19, 2019.~~27, 2020. See “Risk Factors” in Item 1A of Part I of such Annual Report on Form10-K for a complete description of the material risks we ~~face.~~face.

~~ITEM 2.~~~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.~~

On October 14, 2019, in connection with the final settlement of a pre-acquisition claim with the seller of Accretive, the Company issued 82,762 shares of its common stock to certain stockholders of Accretive. The issuance of common stock was not registered under the Securities Act. Such shares were issued in a private placement exempt from the registration requirements of the Securities Act, in reliance on the exemptions set forth in Section 4(a)(2) of the Securities Act and Rule 506 under Regulation D.

~~The Company did not purchase any shares of its common stock during the three months ended November 23, 2019.~~

~~ITEM 5.~~~~OTHER INFORMATION~~.

~~None.~~

ITEM 6.EXHIBITS.

The exhibits listed in the Exhibit Index are filed with, or incorporated by reference in, this Report.

‎

EXHIBIT INDEX


~~Exhibit~~ ~~Number~~

Exhibit Number	Description of Document
10.1	Resources Connection, Inc. 2020 Performance Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed by Resources Connection, Inc. on October 29, 2020).
31.1* 10.2*	Form of Restricted Stock Unit Award Notice and Restricted Stock Unit Award Agreement under the Resources Connection, Inc. 2020 Performance Incentive Plan.
31.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
31.2*		Certification of ~~Interim~~ Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32**
32**		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101**	The following unaudited interim consolidated financial statements from the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended November 28, 2020, formatted in Inline XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Comprehensive (Loss) Income, (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.
101.INS*		~~XBRL Instance.~~

101.SCH*		~~XBRL Taxonomy Extension Schema.~~

101.CAL*		~~XBRL Taxonomy Extension Calculation.~~

101.DEF*		~~XBRL Taxonomy Extension Definition.~~

101.LAB*		~~XBRL Taxonomy Extension Labels.~~

101.PRE*		~~XBRL Taxonomy Extension Presentation.~~

104*

*	~~Filed herewith.~~

**	~~Furnished herewith.~~Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

_________

* Filed herewith.

** Furnished herewith.

‎

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		RESOURCES CONNECTION, INC.

Date: January ~~2, 2020~~		7, 2021	/s/ KATE W. DUCHENE
	Kate W. Duchene
			~~Kate W. Duchene~~ President, Chief Executive Officer (Principal Executive Officer)

Date: January 7, 2021	/s/ JENNIFER RYU
	Jennifer Ryu
	Executive Vice President and Chief ~~Executive Officer~~ ~~(Principal Executive Officer)~~



~~Date: January 2, 2020~~				~~/s/ Jennifer Ryu~~
				~~Jennifer Ryu~~
				~~Interim Chief~~ Financial Officer (Principal Financial Officer and Principal Accounting Officer)


~~Delaware~~		~~33-0832424~~

Delaware	33-0832424
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)



Large accelerated filer		☐	Accelerated filer	☒ 

Non-accelerated filer		☐	Smaller reporting company	☐ 

			Emerging growth company	☐


	November 23, 2019			May 25, 2019
				(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	43,033		$	43,045
Short-term investments		—			5,981
Trade accounts receivable, net of allowance for doubtful accounts of $2,701 and $2,520 as of November 23, 2019 and May 25, 2019, respectively		137,371			133,304
Prepaid expenses and other current assets		7,725			7,103
Income taxes receivable		1,313			2,224

Total current assets		189,442			191,657
Goodwill		213,332			190,815
Intangible assets, net		23,021			14,589
Property and equipment, net		25,162			26,632
Operatingright-of-use assets		39,970			—
Deferred income taxes		1,613			1,497
Other assets		3,812			3,180

Total assets	$	496,352		$	428,370

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	20,057		$	21,634
Accrued salaries and related obligations		51,835			58,628
Operating lease liabilities, current		11,203			—
Other liabilities		14,828			11,154

Total current liabilities		97,923			91,416
Long-term debt		54,000			43,000
Operating lease liabilities, noncurrent		35,425			—
Deferred income taxes		4,925			5,146
Other long-term liabilities		3,814			6,412

Total liabilities		196,087			145,974

Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 5,000 shares authorized; zero shares issued and outstanding		—			—
Common stock, $0.01 par value, 70,000 shares authorized; 63,604 and 63,054 shares issued, and 32,138 and 31,588 shares outstanding as of November 23, 2019 and May 25, 2019, respectively		636			631
Additionalpaid-in capital		470,427			460,226
Accumulated other comprehensive loss		(13,226	)		(12,588	)
Retained earnings		358,531			350,230
Treasury stock at cost, 31,466 shares as of November 23, 2019 and May 25, 2019		(516,103	)		(516,103	)

Total stockholders’ equity		300,265			282,396

Total liabilities and stockholders’ equity	$	496,352		$	428,370


	November 28,		May 30,
	2020		2020
		(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents	$	97,195	$	95,624
Trade accounts receivable, net of allowance for doubtful accounts of $2,361
and $3,067 as of November 28, 2020 and May 30, 2020, respectively		111,686		124,986
Prepaid expenses and other current assets		7,084		6,222
Income taxes receivable		2,593		4,167
Total current assets		218,558		230,999
Goodwill		216,246		214,067
Intangible assets, net		21,062		20,077
Property and equipment, net		22,270		23,644
Operating right-of-use assets		30,009		34,287
Deferred income taxes		1,908		1,597
Other assets		1,913		4,510
Total assets	$	511,966	$	529,181

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	20,340	$	15,799
Accrued salaries and related obligations		46,680		52,407
Operating lease liabilities, current		10,970		11,223
Other liabilities		13,646		15,472
Total current liabilities		91,636		94,901
Long-term debt		68,000		88,000
Operating lease liabilities, noncurrent		26,442		30,672
Deferred income taxes		6,123		6,215
Other long-term liabilities		12,818		5,732
Total liabilities		205,019		225,520
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 5,000 shares authorized; 0 shares
issued and outstanding		-		-
Common stock, $0.01 par value, 70,000 shares authorized; 64,199 and
63,910 shares issued, and 32,433 and 32,144 shares outstanding as of
November 28, 2020 and May 30, 2020, respectively		642		639
Additional paid-in capital		483,087		477,438
Accumulated other comprehensive loss		(8,606)		(13,862)
Retained earnings		352,716		360,534
Treasury stock at cost, 31,766 shares as of both November 28, 2020 and
May 30, 2020		(520,892)		(521,088)
Total stockholders’ equity		306,947		303,661
Total liabilities and stockholders’ equity	$	511,966	$	529,181


				~~Page~~ ~~No.~~
~~PART I — FINANCIAL INFORMATION~~
			Page
		No.


PART I—FINANCIAL INFORMATION

ITEM 1.		Consolidated Financial Statements (Unaudited)			3

		Consolidated Balance Sheets as of November ~~23, 2019~~28, 2020 and May ~~25, 2019~~30, 2020			3

		Consolidated Statements of Operations for the Three and Six Months Ended November ~~23, 2019~~28, 2020 and November ~~24, 2018~~23, 2019			4

		Consolidated Statements of Comprehensive (Loss) Income for the Three and Six Months Ended November ~~23, 2019~~28, 2020 and November ~~24, 2018~~23, 2019			5

		Consolidated ~~Statement~~Statements of Stockholders’ Equity for the Three and Six Months Ended November ~~23, 2019~~28, 2020 and November ~~24, 2018~~23, 2019			6

		Consolidated Statements of Cash Flows for the Six Months Ended November ~~23, 2019~~28, 2020 and November ~~24, 2018~~23, 2019			7

		Notes to Consolidated Financial Statements			8


ITEM 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
			17

ITEM 3.		Quantitative and Qualitative Disclosures About Market Risk			27
			29

ITEM 4.		Controls and Procedures			28	29

PART II—OTHER INFORMATION

ITEM 1.	Legal Proceedings	29

ITEM 1A.	Risk Factors	30

ITEM 6.	Exhibits	30

~~PART II — OTHER INFORMATION~~Signatures.

~~ITEM 1.~~		~~Legal Proceedings~~			28

~~ITEM 1A.~~32		~~Risk Factors~~			28

~~ITEM 2.~~		~~Unregistered Sales of Equity Securities and Use of Proceeds~~			28

~~ITEM 5.~~		~~Other Information~~			28

~~ITEM 6.~~		~~Exhibits~~			28

~~Signatures.~~					30


	As Previously Reported		Adjustments			As Adjusted
Cash	$	32,349	$	(35	)	$	32,314
Estimated initial contingent consideration		10,400		(4,110	)		6,290

Total	$	42,749	$	(4,145	)	$	38,604


Cash and cash equivalents	$	2,056	$	—		$	2,056
Accounts receivable		3,413		(114	)		3,299
Prepaid expenses and other current assets		116		—			116
Intangible assets:
Backlog (17 months useful life)		680		530			1,210
Customer relationships (7 years useful life)		11,050		(1,750	)		9,300
Trademarks (3 years useful life)		560		10			570
Property and equipment		121		(4	)		117

Total identifiable assets		17,996		(1,328	)		16,668

Accounts payable		316		(11	)		305
Accrued expenses and other current liabilities		712					712

Total liabilities assumed		1,028		(11	)		1,017

Net identifiable assets acquired		16,968		(1,317	)		15,651
Goodwill		25,781		(2,828	)		22,953

Net assets acquired	$	42,749	$	(4,145	)	$	38,604


	As of November 23, 2019							As of May 25, 2019
			Accumulated							Accumulated
	Gross		Amortization			Net		Gross		Amortization			Net
Customer contracts and relationships(3-8 years)	$	23,765	$	(4,922	)	$	18,843	$	14,495	$	(3,439	)	$	11,056
Tradenames(3-10 years)		4,946		(2,116	)		2,830		4,407		(1,563	)		2,844
Backlog (17 months)		1,210		(258	)		952		—		—			—
Consultant list (3 years)		770		(585	)		185		783		(462	)		321
Non-compete agreements (3 years)		880		(669	)		211		896		(528	)		368

Total	$	31,571	$	(8,550	)	$	23,021	$	20,581	$	(5,992	)	$	14,589


	Fiscal Years Ending
	2020		2021		2022		2023		2024
Expected amortization expense	$	5,699	$	4,506	$	3,289	$	3,136	$	3,100


Years Ending:	Operating Lease Maturity
May 30, 2020 (excluding the six months ended November 23, 2019)	$	6,492
May 29, 2021		12,412
May 28, 2022		10,711
May 27, 2023		8,378
May 25, 2024		6,913
Thereafter		6,432

Total operating lease payments	$	51,338
Less: Imputed interest		(4,710	)

Present value of operating lease liabilities	$	46,628


Principal Balance		Base Rate			Libor Rate				Interest Rate
$	5,000		1.25	%		3-month	1.90	%		3.15	%
	25,000		1.25	%		6-month	1.93	%		3.18	%
	24,000		1.50	%		6-month	2.21	%		3.71	%
$	54,000


	Number of Shares Under Option			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Outstanding at May 25, 2019		6,029		$	15.95		6.06	$	5,482
Granted, at fair market value		1,278			17.43
Exercised		(257	)		13.51
Forfeited		(335	)		17.33
Expired		(54	)		17.11

Outstanding at November 23, 2019		6,661		$	16.25		6.30	$	3,841

Exercisable at November 23, 2019		4,067		$	15.46		4.44	$	3,747

Vested and expected to vest at November 23, 2019		6,311		$	16.16		6.06	$	3,838


	Revenue for the Three Months Ended				Revenue for the Six Months Ended				Long-Lived Assets (1) as of
	November 23,		November 24,		November 23,		November 24,		November 23,		May 25,
	2019		2018		2019		2018		2019		2019
United States	$	149,051	$	148,901	$	286,048	$	290,130	$	262,922	$	200,385
International		35,456		39,898		70,684		77,227		38,563		31,651

Total	$	184,507	$	188,799	$	356,732	$	367,357	$	301,485	$	232,036

November 28, 2020

May 30, 2020

Weighted average remaining lease term

Weighted average discount rate