We acknowledge the Staff’s request to include a risk factor regarding potential goodwill impairment and the affect on our future financial results. Specifically, in subsequent filings, we will expand the third paragraph in our first risk factor on page 16 of our Form 10-K titled “A continuation of the economic downturn or change in the use of outsourced professional services consultants could adversely affect our business”, which describes our requirement to periodically assess the recoverability of certain long-lived assets, to include a direct reference to goodwill and to also state that any future impairment could materially impact our future financial results.

In subsequent filings, we will also expand the risk factor titled “We have acquired, and may continue to acquire, companies, and these acquisitions could disrupt our business” on page 18 of our Form 10-K and include a statement regarding the potential incurrence of significant charges to specifically address goodwill and that any future impairment could materially impact our future financial results.

We assess goodwill and other intangible assets with indefinite lives for impairment annually or, as with amortizing intangible assets, if there is an event or change in circumstance indicating that the asset might be impaired. Specifically, our methodology for determining if there are indicators of goodwill impairment is a comparison of the market capitalization of the parent entity, Resources Connection, Inc., to its book value throughout the fiscal year. In the absence of any other evidence to the contrary, we determined that the first step of the goodwill impairment test is satisfied and that further testing of goodwill was not required. In future filings, we will include a description in our Critical Accounting Policies of the methodology utilized.

We have determined that we have a single reporting unit for our assessment of goodwill impairment. Resources Global Professionals (“RGP”) operates in a single operating segment comprised of individual offices that combine into a single reporting unit. Our 85 offices are organized to serve multinational clients seamlessly throughout the major trading regions of the world. The majority of our significant clients, which are large multinational companies, are served from multiple geographic locations, engaging numerous service line capabilities. Our chief operating decision maker, CEO Don Murray, allocates resources based upon client requirements, versus a geographic or individual office focus. Discrete financial information is maintained by country/office for statutory purposes, but is not utilized nor regularly reviewed by Mr. Murray to make resource allocation decisions. Resource allocation decisions, which are generally acquisition decisions, as well as hiring decisions, are driven by identification of skill sets that will augment RGP’s ability to serve multi-national clients, without regard to geography. Operating success and resource allocation is determined by Mr. Murray (as well as our Board of Directors) from the size of business relationships with clients globally, which correlates to consolidated operating results.

The key elements of our past and current growth strategy, as set forth in “Resources Global Professionals’ Strategy — Our Growth Strategy” (Form 10-K, page 4), are consistent with this operating/resource allocation methodology. In summary, our growth strategy consists of: expanding work for existing clients; growing our client base — with a focus on large multi-national companies; expanding geographically — when our existing clients have a need or if there is a new opportunity; and to provide additional professional service offerings to our clients. Each of our historical acquisitions was made to augment our global service capabilities to large multi-national companies. These multi-national companies tend to have initiative-based work requiring the assistance of a professional service provider throughout their global operations and, in most cases, select a service provider with an integrated service platform to help meet their specific intellectual capital requirements. Consequently, each of our acquisitions was completed to meet the integrated service demands of our multinational clients around the world.

We have determined each component office of our single operating segment combine as one reporting unit. We determined that we operate as one reporting unit as our component offices are economically similar across the enterprise as described in ASC 350-20-35-35. These similar characteristics include:

The long-term financial performance of our offices are similar. Because we operate using a variable cost model, meaning the majority of our consultants are paid hourly for each client service hour worked and we can negotiate client hourly bill rates and consultant pay rates on a project by project basis, we believe each of our office level reporting units will achieve the Company’s target of an average long term gross margin of 39%, which includes the impact of reimbursable direct client expenses (travel) on which no margin is earned. Each of our offices uses an automated tool to assist the client service teams to determine the client bill rate required to achieve this gross margin on each client engagement. Our strategy is to establish long-term professional relationships with our clients, which in part are formed by a consistent and fair pricing mechanism with our clients that does not attempt to take advantage of “market conditions”. We believe the use of a standard target gross margin of 39% helps the Company achieve this goal.

For the seven fiscal years in the period ended with fiscal 2009, the average gross margin of our office-level reporting units was 39%. Approximately 78% of our offices have average gross margins during this period within a ten percent range of the average gross margin (35% to 43%). With respect to the 22% of offices with gross margins outside this range, the differential primarily stems from the maturity of the office or from personnel or office management issues versus geographic or “business model” differences. We expect that on a long-term basis, these offices will revert or fall into the range as specific personnel and office management issues are addressed.

Based upon the foregoing, we believe each of our office level reporting units have similar long-term financial performance.

The nature of products and services is the same within offices, with our professionals assisting client initiatives overlapping numerous service capabilities. For example, we may assist a multinational client in implementing a new payroll system throughout each geography in which they operate. Not only would this engagement be executed from several of our offices, this engagement would overlap several of our service lines, for example finance and accounting, information management, human resources and legal and regulatory service capabilities. Through our third quarter of fiscal 2010, 74% of our top fifty clients (which consist of multinational companies) used three or more service lines. As a further example, each of our top five clients in fiscal 2009 were served by an average of 18 different offices spread throughout our global footprint and 87% of our top 100 clients in fiscal 2009 were served by two or more offices.

The type or class of customer is the same for products and services, with RGP offices organized to serve large multi-national clients. As stated, each of our acquisitions was completed to enhance our professional service capabilities to our multinational clients.

The methods used to provide services are the same between offices, with the focus on client specific service teams utilizing the worldwide RGP consultant base. In addition, it is not uncommon for the Company to enter into global service agreements with our multinational clients.

The manner in which we operate our business is the same across all our offices, evidenced by the recent or pending consolidation of three of the four Sitrick Brincko Group (“SBG”) offices into existing RGP offices and office consolidations following prior acquisitions.

Based upon our acquisition strategy, goodwill recovery is dependent on our component businesses working in concert. Most recently, this is evidenced by the SBG acquisition, which enhances RGP’s specialized skill set for bankruptcy and reorganization services but relies upon the existing worldwide RGP consultant network and geographic footprint for execution. Recent client engagement wins support this premise.

Component offices share assets and other resources to jointly serve clients and share personnel with specialized skill sets.

While the guidance suggests that the Financial Accounting Standards Board did not intend that all factors be met to demonstrate the economic similarity, we believe our operating model and our current and past acquisition strategy indicate that our office level components combine into a single reporting unit.

In subsequent filings we will state that we operate in a single reporting unit resulting from the combination of our practice offices. We will also more fully describe the methods used to assess goodwill and intangible assets (with indefinite and finite lives) for impairment.

We considered the disclosure requirements of ASC 718-10-50 and determined that our restricted stock grants, which aggregate approximately 5,500 restricted shares in fiscal 2010 to date (aggregate compensation expense of approximately $99,000), approximately 5,100 restricted shares in fiscal 2009 (aggregate compensation expense of approximately $68,000) and no restricted shares in fiscal 2008, are not material for disclosure.

We acknowledge the Staff’s request to disclose the reasons the Company paid a purchase price for Sitrick Brincko Group, LLC leading to the recognition of goodwill. Specifically, in subsequent filings, we will expand the discussion in the first paragraph of Financial Statement Footnote 5 “Acquisitions”, which currently states the acquisition allows the Company to expand its service offerings, to include:

“By combining the specialized skill sets of the Sitrick Brincko Group with the Company’s existing consultant capabilities, geographic footprint and client base, the Company believes it will greatly increase its ability to assist clients during challenging periods. This expected synergy gives rise to goodwill being recorded as part of the purchase price of the Sitrick Brincko Group.”

In accordance with ASC 805-30-50-1 (a & c), the second and third paragraph of Financial Statement Footnote 5 discloses the contingent consideration recognized as of the acquisition date; a description of the arrangement and the basis for determining the estimated amount of payment; and an estimate of the range of outcomes.

As described in Footnote 5 and for the further clarification to the Staff, contingent consideration will be payable in lump sum following the fourth anniversary of the acquisition only if the average (calculated from each of the four one-year periods following the acquisition date) earnings before interest, taxes, depreciation and amortization (EBITDA) exceed $11.3 million. To the extent the average annual EBITDA exceeds $11.3 million, the contingent consideration payable is determined by multiplying the average annual EBITDA by 3.15 (average annual EBITDA x 7 x 45%). Because the contingent consideration is not subject to a ceiling and future EBITDA is theoretically unlimited, we concluded, in applying the disclosure requirements of ASC 805-30-50-1 (a & c), the maximum amount of the payment is unlimited.

In subsequent filings, we will revise Footnote 5 to improve the clarity of the Company’s description of the terms resulting in payment of the contingent consideration and the Company’s exposure under the arrangement.

We acknowledge the Staff’s request and in subsequent filings, and as appropriate, will include a discussion of any anticipated effects on our future operating results and liquidity stemming from global economic trends, including a more detailed discussion of sequential trends or changes noted.

As set forth in the Membership Interest Purchase Agreement and the Goodwill Purchase Agreement filed as Exhibits to our Form 8-K/A, as of the acquisition date, Mike Sitrick and Nancy Sitrick were the sole shareholders of Sitrick and Company (Sitrick) and John Brincko was the sole shareholder of Brincko Associates, Inc. (Brincko). As such, these two entities were not related parties or under common control prior to the contribution of certain assets and liabilities of each of the respective businesses to Sitrick Brincko Group LLC. Such contribution occurred immediately prior to the acquisition of Sitrick Brincko Group LLC by the Company. In subsequent filings, we will clarify the respective ownership of Sitrick and Brincko prior to the acquisition date.

The two primary business reasons for structuring the transaction as an acquisition of Sitrick Brincko Group LLC versus acquiring the businesses separately are as follows.

First, the Company did not have an interest in acquiring either of Sitrick or Brincko individually. We believe the combined business advisory capabilities of Sitrick and Brincko coupled with the Company’s geographic footprint and the Company’s consultant capabilities each contribute significantly to the synergies of the transaction. Because of the importance of the combined capabilities, we believed it was important to have a transaction structure that forced “three-way” negotiations, versus two “one on one” negotiations.

Second, the formation of Sitrick Brincko Group LLC established an entity with a clearly defined ownership (in terms of relative applicable ownership percentages between Sitrick and Brincko, which had to be mutually agreeable to them upon its formation) upon which the initial purchase price and contingent consideration, if any, would be allocated to the selling shareholders at the date of acquisition and after the four-year earn out period.

From a legal standpoint, the Company’s purchase of Mike Sitrick’s personal goodwill comprised his business relationships, reputation, referral network, trade secrets and media contacts. Prior to its acquisition by the Company, Sitrick and Company paid a royalty to Mike Sitrick for the nonexclusive and revocable right to use his personal goodwill (see footnote 6 to Sitrick and Company Inc. financial statements included in Form 8-K).

For financial reporting purposes and as set forth in the introductory comments included in notes to unaudited pro forma condensed combined financial information (Form 8-K/A) and in footnote 5 to notes to consolidated financial statements for the three and six months ended November 28, 2009, and November 29, 2008 (Form 10-Q), the Company allocated the aggregate estimated purchase price based on the fair value of the assets acquired and liabilities assumed, with the residual recorded as goodwill. As such, for financial reporting purposes, the personal goodwill acquired for legal purposes was not separately accounted for in the allocation of the acquisition purchase price. In subsequent filings, we will incorporate a definitive statement that no portion of the aggregate estimated purchase price was allocated to personal goodwill.

To determine whether the contingent consideration or some portion thereof, represented future compensation, we completed the following assessment.

First, it is important to note the transaction structure (specifically the contingent consideration arrangement) resulted from the parties being unable to agree as to the fair value of the Sitrick Brincko Group LLC, as each party had vastly differing views of fair value, determined from various measures. The contingent consideration arrangement allowed the parties to overcome this significant obstacle in the negotiations.

The Company considered the following eight indicators set forth in ASC 805-10-55-25:

Anthony Cherbak (President and Chief Operating Officer) — $400,000 per annum

Kate Duchene (Chief Legal Officer) — $330,000 per annum

Nate Franke (Chief Financial Officer) — $330,000 per annum

Under the guidance, the fact that the annual compensation of John Brincko and Mike Sitrick is at a level comparable or in excess of other key employees of the Company indicates the contingent payments are additional consideration rather than compensation.

We determined the schedules and exhibits mentioned to not be material. As requested by the Staff, we will provide the requested items to the Staff under separate cover.

In preparing the interim financial statements for Sitrick and Company and Brincko Associates, Inc., for the year ended December 31, 2008 and for the six months ended June 30, 2009, we relied upon the guidance provided in Rule 3-01 “Consolidated Balance Sheets” and Rule 3-02 “Consolidated Statements of Income and Changes in Financial Condition” of Article 3 of Regulation S-X which requires filing of a balance sheet within 135 days of filing the initial Form 8-K reporting the acquisition and the corresponding statements of operations and cash flows for the corresponding period. However, we incorrectly applied the 135 days measuring from the initial Form 8-K reporting the acquisition (reporting required for Form 8-K Item 1.01 “Entry into a Material Definitive Agreement” and measured from October 29, 2009). Marking from that October 29, 2009 date, we determined the 135 days previous to be June 16, 2009 and that the June 30, 2009, interim financial statements provided would fulfill the disclosure requirement. However, upon further consideration, we should have measured from the 8-K Item 2.01 “Completion of Acquisition or Disposition of Assets” filing on November 23, 2009. If we had done so, the 135 days from filing would have been July 10, 2009, resulting in the need to present unaudited Balance Sheets as of September 30, 2009, and Statements of Operations and Cash Flows for the nine months ended September 30, 2009, for both Sitrick and Company and Brincko Associates, Inc. As we have now recognized this inadvertent error in application of dates, we will amend our 8-K/A filing to include unaudited financial statements as of and for the nine months ended September 30, 2009 and 2008 of Sitrick and Company and Brincko Associates, Inc. and update our unaudited pro forma condensed combined statements of operation for the three months ended August 30, 2009 to include the results of operation of Sitrick and Company and Brincko Associates for the three months ended September 30, 2009.

The nature of the intangible property comprised his business relationships, reputation, referral network, trade secrets and media contacts. While there is not a specific written agreement between Sitrick and Company and Mike Sitrick, the Sitrick and Company board of directors’ minutes state the purpose and terms of such payment. In addition, Mike Sitrick was paid an annual salary of $240,000. No bonus or stock compensation was paid to Mike Sitrick during the year ended December 31, 2008 or the interim period ended June 30, 2009. In the interim financial statements to be included in the Form 8-K/A to be filed, we will expand the disclosure of the royalty agreement to include these items.

As noted, for purposes of calculation of total purchase consideration for the acquisition, a value of $19.63 per share for restricted stock was used. The third paragraph of the introductory comments states “The unaudited pro forma condensed combined balance sheet as of August 29, 2009, combines the historical consolidated balance sheet of the Company as of August 29, 2009, with the historical balance sheets of Sitrick and Company and Brincko as of June 30, 2009, giving effect to the acquisition as if it had occurred on August 29, 2009. The historical consolidated financial information has been adjusted in the unaudited pro forma condensed combined financial statements to only give effect to pro forma events that are (1) directly attributable to the merger; (2) factually supportable; and (3) expected to have a continuing impact on the combined results.”

Since the pro forma financial statements were prepared after the acquisition had closed, we determined the actual closing date share price of $19.63 was the appropriate share price to use since it was the share price most factually supportable and was the share price most directly attributable to the merger. We also considered the guidance in the SEC’s Staff Financial Reporting Manual (Section 3250.1.e); this section requires “registrants (to) use the most recent stock price at the time of filing for determining the value of stock to be issued in a transaction that has not yet consummated”. By analogy, we determined the most relevant information to be the actual stock price used in measuring the consideration in an already closed transaction. Because the transaction had closed prior to the date of the Form 8-K containing the pro forma disclosures, we did not believe further discussion of the share price used for the pro forma financial statements was warranted.

The pro forma financial statements do not include any adjustments to reflect the acquired tangible assets and liabilities at fair value as required under FASB ASC 805-20-30-1 (“The acquirer shall measure the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at their acquisition-date fair values.”) as we determined net accounts receivable and the $161,000 of property and equipment (remaining after pro forma adjustments for assets we did not acquire) represented the fair value of accounts receivable and furniture, equipment and computer hardware acquired. The $3.3 million of trade payables, accrued salaries and related obligations represented fair value due to the short duration until ultimate payment to either the vendor or the respective employees.

We acknowledge the Staff’s comment. We concluded we could not factually support making a statement regarding whether any of the contingent consideration, including any portion that would be classified as employee compensation, would have been earned for the year ended May 30, 2009, if the acquisition had occurred on June 1, 2008 for the following reasons. First, under the terms of the contingent consideration arrangement, the actual amount earned is not actually measureable or earned until the end of the four year period following the acquisition date. At that time, the actual average annual EBITDA (Earn-out EBITDA) during the four-year period can be computed and compared to the base year EBITDA. If the Earn-out EBITDA is equal to or greater than the base year EBITDA, contingent consideration of seven times Earn-out EBITDA times 45% (Earn-out EBITDA times 3.15) would be earned. Therefore, no portion of the contingent consideration is “earned” until the end of the four year earn out period. Second, it is uncertain what base year EBITDA would have been had the acquisition occurred on June 1, 2008. Based upon these determining factors, we concluded that we could not factually support a statement regarding whether any portion of the contingent consideration, including any portion that would be classified as employee compensation, was or was not earned To insure clarity of this matter with our investors, we will include a statement in the pro forma footnotes stating that no portion of the contingent consideration is actually earned until the end of the four-year period and that no pro forma adjustment was made with respect to any amount of the contingent consideration that would be classified as employee compensation, as any such amount could not be factually supported based upon the terms of the Membership Interest Purchase Agreement.

We acknowledge the staff’s comment that we included the results of Sitrick and Company and Brincko Associates, Inc. for the three months ended June 30, 2009 in the presentations of both annual and interim result in our pro forma disclosures for the year ended May 30, 2009 and August 29, 2009. As noted in response 11, we will update the unaudited pro forma condensed combined statements of operation for the three months ended August 30, 2009 to include the results of operation of Sitrick and Company and Brincko Associates for the three months ended September 30, 2009 to address this point.

We acknowledge the Staff’s comment, and in future filings, we propose to disclose any similar pre-determined quantitative performance. Commencing with our Definitive Proxy Statement on Schedule 14A for 2010, we will include a disclosure item identifying the following information:

Revenue

 

Operating Income

As we will be providing disclosure of the specific performance targets used to determine the bonus amount, we have not submitted a supplemental letter to the Staff regarding omitting the amounts of the specific performance targets.

We acknowledge the Staff’s comment, and in future filings, we propose to include additional discussion and analysis concerning the qualitative or discretionary component of the bonus awards for the named executive officers. Commencing with our Definitive Proxy Statement on Schedule 14A for 2010, we will include a disclosure item setting forth the key team objectives and individual contributions and achievements for the named executive officers upon which the Board determined the qualitative bonus amount.

We acknowledge the Staff’s comment, and in future filings, we will provide additional explanation regarding the factors used to determine the size of each named executive officer’s stock option award. On page 21 of our Definitive Proxy Statement on Schedule 14A for 2009, we included a listing of six factors considered by the Board of Directors in granting stock option awards to the named executive officers. While these decisions are inherently subjective, commencing with our Definitive Proxy Statement on Schedule 14A for 2010, we will discuss in further detail the specific Company performance and individual officer performance achievements that contributed to the specific award number.

There were no changes in internal control over financial reporting that materially affected the Company’s internal control over financial reporting during the Company’s quarter ended November 28, 2009. Our disclosure in the second paragraph was intended to convey that we were not yet required to evaluate, and had not fully evaluated, Sitrick Brincko Group LLC’s internal control over financial reporting. Management’s intent, in accordance with SEC guidelines, is to exclude Sitrick Brincko Group LLC from management’s assessment of internal control over financial reporting for the fiscal year ending May 29, 2010. Our Item 4 disclosure on Controls and Procedures included in our Form 10-Q filing for the quarter ended February 27, 2010 did not include the reference to Sitrick Brincko Group’s internal controls that was included in the previous Form 10-Q. In accordance with Questions and Answers 3 and 7 of “Management’s Report on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports (revised Sept. 24, 2007),” if there are any changes to the Company’s internal control over financial reporting relating to its acquisition of Sitrick Brincko Group that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting, the Company will disclose such changes in its Form 10-K containing the Company’s annual management report on internal control over financial reporting that first encompasses Sitrick Brincko Group.