• information management services, such as financial system/enterprise resource planning implementation and post implementation optimization;

• human capital services, such as change management and compensation program design and implementation;

• risk management and internal audit services (provided via our subsidiary Resources Audit Solutions), including compliance reviews, internal audit co-sourcing and assisting clients with their compliance efforts under the Sarbanes-Oxley Act of 2002 ("Sarbanes");

• supply chain management services, such as leading strategic sourcing efforts, contract negotiations and purchasing strategy;

• actuarial services, such as for pension and life insurance companies; and

• legal services such as providing attorneys, paralegals and contract managers to assist clients (including law firms) with project-based or peak period needs.

We were founded in June 1996 as a division of Deloitte & Touche and operated as Resources Connection, LLC, a wholly owned subsidiary of Deloitte & Touche, from January 1997 until April 1999. In November 1998, our management formed RC Transaction Corp., renamed Resources Connection, Inc., to raise capital for an intended management-led buyout. In April 1999, we completed the management-led buyout in partnership with several investors. In December 2000, we completed our initial public offering of common stock and began trading on the NASDAQ. We currently trade on the NASDAQ Global Select Market. In January 2005, we announced the change of our operating entity name to Resources Global Professionals to better reflect the Company's international capabilities. We operated solely in the United States until fiscal year 2000, when we began to expand geographically to meet the demand for project professional services across the world and opened our first three international offices. Our most significant international transaction was the acquisition of our Netherlands practice in fiscal year 2004. As of February 28, 2009, the Company served clients through 56 offices in the United States and 33 offices abroad. Critical Accounting Policies
The following discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements 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.
The following represents a summary of our critical accounting policies, defined as those policies that we believe: (a) are the most important to the portrayal of our financial condition and results of operations and (b) involve inherently uncertain issues that require management's most difficult, subjective or complex judgments.
Valuation of long-lived assets-We assess the potential impairment of long-lived tangible and intangible assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Under the current accounting standard, our goodwill and certain other intangible assets are not subject to periodic amortization. These assets are now considered to have an indefinite life and their carrying values are required to be assessed by us for impairment at least annually. Depending on future market values of our stock, our operating performance and other factors, these assessments could potentially result in impairment reductions of these intangible assets in the future and this adjustment could materially affect the Company's future financial results. Allowance for doubtful accounts-We maintain an allowance for doubtful accounts for estimated losses resulting from our clients failing to make required payments for services rendered. We estimate this allowance based upon our knowledge of the financial condition of our clients, review of historical receivable and reserve trends and other pertinent information. While such losses have historically been within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same credit loss rates that we have in the past. A significant change in the liquidity or financial position of our clients could cause unfavorable trends in receivable collections and additional allowances may be required. These additional allowances could materially affect the Company's future financial results. Income taxes-In order to prepare our consolidated financial statements, we are required to make estimates of income taxes, if applicable, in each jurisdiction in which we operate. The process incorporates an assessment of any current tax exposure together with temporary differences resulting from different treatment of transactions for tax and financial statement purposes. These differences result in deferred tax assets and liabilities that are included in our Consolidated Balance Sheets. The recovery of deferred tax assets from future taxable income must be assessed and, to the extent recovery is not likely, we will establish a valuation allowance. An increase in the valuation allowance results in recording additional tax expense and any such adjustment may materially affect the Company's future financial results. If the ultimate tax liability differs from the amount of tax expense we have reflected in the Consolidated Statements of Income, an adjustment of tax expense may need to be recorded and this adjustment could materially affect the Company's future financial results.

Revenue recognition-We primarily charge our clients on an hourly basis for the professional services of our consultants. We recognize revenue once services have been rendered and invoice the majority of our clients in the United States on a weekly basis. Some of our clients served by our international operations are billed on a monthly basis. Our clients are contractually obligated to pay us for all hours billed. To a much lesser extent, we also earn revenue if a client hires one of our consultants. This type of contractually non-refundable revenue is recognized at the time our client completes the hiring process. Stock-based Compensation-Under our 2004 Performance Incentive Plan, officers, employees and outside directors have received or may receive grants of restricted stock, stock units, options to purchase common stock or other stock or stock-based awards. Under our Employee Stock Purchase Plan ("ESPP"), eligible officers and employees may purchase our common stock in accordance with the terms of the plan. Effective May 28, 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards ("SFAS") No. 123 (revised), "Share-Based Payment" ("SFAS 123 (R)"). SFAS 123 (R) requires that the Company estimate the value of employee stock options on the date of grant using an option-pricing model. We have elected to use the Black-Scholes option-pricing model which takes into account assumptions regarding a number of highly complex and subjective variables. These variables include the expected stock price volatility over the term of the awards and actual and projected employee stock option exercise behaviors. Additional variables to be considered are the expected term and risk-free interest rate over the expected term of our employee stock options. In addition, because stock-based compensation expense recognized in the Statement of Income is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS 123 (R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures are estimated based on historical experience. If facts and circumstances change and we employ different assumptions in the application of SFAS 123 (R) in future periods, the compensation expense recorded under SFAS 123 (R) may differ materially from the amount recorded in the current period. The weighted average estimated value per share of employee stock options granted during the three months ended February 28, 2009 was $5.97 using the Black-Scholes model with the following assumptions:

                                            Three months ended
                                             February 28, 2009
                  Expected volatility          40.6 to 43.6%
                  Risk-free interest rate      1.72% - 1.89%
                  Expected dividends               0.0%
                  Expected life              5.1 to 6.7 years

The risk-free interest rate assumption is based upon observed interest rates appropriate for the term of our employee stock options. The dividend yield assumption is based on our previous history of not paying dividends and our expectation that the special dividend paid in August 2007 was an isolated event and not the commencement of a regular dividend. The Company's historical expected life of stock option grants this quarter is approximately 5.1 years for non-officers and 6.7 for officers. As permitted under Staff Accounting Bulletin No. 107 ("SAB No. 107"), the Company uses its historical volatility over the expected life of the stock option award to estimate the expected volatility of the price of its common stock.
We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.
Three Months Ended February 28, 2009 Compared to Three Months Ended February 23, 2008
Computations of percentage change period over period are based upon our results, as rounded and presented herein.
Revenue. Revenue decreased $46.8 million, or 23.1%, to $156.0 million for the three months ended February 28, 2009 from $202.8 million for the three months ended February 23, 2008. Our revenue was adversely affected by a decline in the number of hours worked by our consultants as well as a decrease in the average bill rate per hour in comparison to the prior year comparable quarter. We believe the primary cause of the decrease in hours worked by our consultants is the result of client uncertainties about the global economic environment which is causing our clients to approach their business more cautiously and

either defer, downsize or eliminate projects. The number of consultants on assignment at the end of the third quarter of fiscal 2009 was 2,363 compared to the 3,272 assigned at the end of the third quarter of fiscal 2008. The number of hours worked in the third quarter of fiscal 2009 declined about 21.1% from the prior year's third quarter, while average bill rates fell by 2.6% compared to the same period in the prior year. Although we believe we have improved the awareness of our service offerings since our founding in 1996 with clients and prospective clients through our work (including Sarbanes or related internal accounting control services), and that the significant changes taking place in the capital markets may present new opportunities going forward, there can be no assurance about the timing of such opportunities or whether we can successfully capitalize on them, especially given the current uncertain economic climate in the United States and international markets. In addition, 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.
On a constant currency basis, international revenues would have been higher by $6.1 million in the third quarter of fiscal 2009 but lower by $4.3 million in the third quarter of fiscal 2008, using the comparable fiscal 2008 and fiscal 2007 conversion rates. The Company operated 89 offices during both the third quarters of fiscal 2009 and fiscal 2008.
Revenue for the Company's major practice areas across the globe consisted of the following (in thousands):

                     Revenue for the Three
                          Months Ended                                      % of Total
                February 28,       February 23,         %         February 28,      February 23,
                    2009               2008          Change           2009              2008
North America   $     114,726     $      150,919       (24.0 %)            73.5 %            74.4 %
Europe                 33,305             42,808       (22.2 %)            21.4 %            21.1 %
Asia Pacific            7,958              9,076       (12.3 %)             5.1 %             4.5 %

Total           $     155,989     $      202,803       (23.1 %)           100.0 %           100.0 %

Direct Cost of Services. Direct cost of services decreased $29.3 million, or 23.0%, to $98.0 million for the three months ended February 28, 2009 from $127.3 million for the three months ended February 23, 2008. Direct cost of services decreased for similar reasons to revenue: a decrease in hours worked and a 3.2% decrease in our consultant's average pay rate. The direct cost of services as a percentage of revenue (the "direct cost of services percentage") was essentially flat at 62.8% for both the three months ended February 28, 2009 and February 23, 2008.
The cost of compensation and related benefits offered to the consultants of our international offices has been greater as a percentage of revenue than our domestic operations. In addition, international offices use independent contractors more extensively. Thus, the direct cost of services percentage of our international offices has usually exceeded our domestic operation's targeted direct cost of services percentage of 60%.
Selling, General and Administrative Expenses. Selling, general and administrative expenses ("S, G & A") as a percentage of revenue was 32.6% and 28.4% for the quarters ended February 28, 2009 and February 23, 2008, respectively. S, G &A decreased $6.7 million, or 11.7%, to $50.8 million for the three months ended February 28, 2009 from $57.5 million for the three months ended February 23, 2008. Management and administrative headcount decreased from 887 at the end of the third quarter of fiscal 2008 to 848 at the end of the third quarter of fiscal 2009. S, G & A decreases in the third quarter of fiscal 2009 included: a reduction in recruiting and related expenses, salary, benefit and related costs and in stock based compensation expense. These decreases were partially offset by an increase of $543,000 in the Company's allowance for doubtful accounts after an evaluation of the Company's client base, receivable balances and the current economic environment.
Subsequent to the third quarter of fiscal 2009, the Company announced a reduction in headcount and the closure of seven offices whose clients could be served from other offices within a close proximity. These actions will cost approximately $3.4 million, related to severance costs, leasehold improvement write-offs and estimated lease termination accruals to be recognized in the fourth quarter of fiscal 2009.
Amortization and Depreciation Expense. Amortization of intangible assets increased to $271,000 in the third quarter of fiscal 2009 compared to $211,000 in the prior year's third quarter as a result of amortization related to identifiable intangibles assets of the Compliance Solutions (UK) Ltd. and Domenica acquisitions made in fiscal 2008. Based upon identified intangible assets recorded at February 28, 2009 (including those that will be fully amortized during fiscal 2009), the Company anticipates amortization expense related to identified intangible assets to be approximately $1.2 million during the fiscal year ending May 30, 2009.

Depreciation expense remained relatively unchanged at $2.2 million for the three months ended February 28, 2009 and February 23, 2008. The consistency in depreciation is attributable to the Company operating the same number of offices in fiscal 2009 and 2008.
Interest Income. Interest income was $458,000 in the third quarter of fiscal 2009 compared to $952,000 in the third quarter of fiscal 2008. The decrease in interest income in the third quarter of fiscal 2009 is primarily the result of declining interest rates as compared to the prior year's third quarter. Currently, the Company has invested available cash primarily in a prime institutional money market fund, short-term United States government-bonds, certificates of deposit and, to a lesser extent, A1+ rated commercial paper that has been classified as cash equivalents due to the short maturities of these investments. As of February 28, 2009, the Company had $25.0 million of investments in commercial paper with original maturity dates between three and six months from the purchase date, which are classified as short-term investments and considered "held-to-maturity" securities.
Income Taxes. The provision for income taxes decreased from $7.9 million for the three months ended February 23, 2008 to $3.1 million for the three months ended February 28, 2009. The provision decreased primarily because of a decrease in the Company's pretax income in the third quarter of 2009 compared to the third quarter of fiscal 2008. The effective tax rate was 60.0% for the third quarter of fiscal 2009 and 47.7% for the third quarter of fiscal 2008. The effective tax rate increased because the Company's lower pre-tax income disproportionally magnifies the effect of ISOs and other non-deductible permanent differences on the Company's effective rate. The proportion of expense related to non-qualified stock option grants (for which the Company may recognize a tax benefit in the same quarter as the related compensation expense in most instances) increased during the third quarter of fiscal 2009 as compared to expense related to incentive stock options ("ISOs").
Under SFAS 123 (R), the Company cannot recognize a tax benefit for certain ISOs unless and until the holder exercises his or her option and then sells the shares within a certain period of time. In addition, the Company can only recognize a potential tax benefit for employees' acquisition and subsequent sale of shares purchased through the ESPP if the sale occurs within a certain defined period. As a result, the Company's provision for income taxes is likely to fluctuate from historical rates for the foreseeable future. Further, under SFAS
123 (R), those tax benefits associated with ISO grants fully vested at the date of adoption of SFAS 123 (R) will be recognized as additions to paid-in capital when and if those options are exercised and not as a reduction to the Company's tax provision. The Company recognized a benefit of approximately $984,000 and $1.2 million related to stock-based compensation for nonqualified stock options expensed and for eligible disqualifying ISO exercises during the third quarter of fiscal 2009 and 2008, respectively. The timing and amount of eligible disqualifying ISO exercises cannot be predicted. The Company predominantly grants nonqualified stock options to employees in the United States. Periodically, the Company reviews the components of both book and taxable income to analyze the adequacy of the tax provision. There can be no assurance, particularly because of the unpredictability of timing and amount of eligible disqualifying ISO exercises, that the Company's effective tax rate will not increase in the future.
Nine Months Ended February 28, 2009 Compared to Nine Months Ended February 23, 2008
Computations of percentage change period over period are based upon our results, as rounded and presented herein.
Revenue. Revenue decreased $50.1 million, or 8.3%, to $553.5 million for the nine months ended February 28, 2009 from $603.6 million for the nine months ended February 23, 2008. Although our average bill rate per hour increased slightly year over year and we benefited from incremental revenue from the December 2007 acquisition of Domenica B.V., our revenue was adversely affected by a decline in number of hours worked by our consultants in comparison to the prior year nine month period. On a constant currency basis, international revenues would have been higher by approximately $5.6 million for the nine months ended February 28, 2009 if we had translated our international results using the comparable fiscal 2008 conversion rates; this compares to an approximate decrease of $11.5 million in revenue for the nine months ended February 23, 2008 using the comparable fiscal 2007 conversion rates. Average bill rates for the nine months ended February 28, 2009 improved by 1.8% from the same period in the prior year. However, the number of consultants on assignment at the end of the third quarter of fiscal 2009 of 2,363 was less than the 3,272 at the end of the third quarter of fiscal 2008 and the number of hours worked in the first three quarters of fiscal 2009 declined about 10.4% from the same period in the prior fiscal year.

Revenue for the Company's major practice areas across the globe consisted of the following (in thousands):

                                   Revenue for the Nine
                                       Months Ended                                            % of Total
                             February 28,        February 23,           %           February 28,       February 23,
                                 2009                2008            Change             2009               2008
North America               $      402,846      $      455,032          (11.5 %)             72.8 %             75.4 %
Europe                             121,085             120,805            0.2 %              21.9 %             20.0 %
Asia Pacific                        29,596              27,724            6.8 %               5.3 %              4.6 %

Total                       $      553,527      $      603,561           (8.3 %)            100.0 %            100.0 %

Direct Cost of Services. Direct cost of services decreased $34.3 million, or 9.1%, to $340.6 million for the nine months ended February 28, 2009 from $374.9 million for the nine months ended February 23, 2008. Although our consultants average pay rates were flat in the first three quarters of fiscal 2009 compared to the same period in fiscal 2008, direct cost of services decreased due to a reduction in hours worked. The direct cost of services as a percentage of revenue (the "direct cost of services percentage") was 61.5% and 62.1% for the nine months ended February 28, 2009 and February 23, 2008, respectively. The direct cost of services percentage improved in fiscal 2009 primarily because of an improvement in the ratio of hourly revenue to consultant salary expense.
Selling, General and Administrative Expenses. Selling, general and administrative expenses ("S, G & A") as a percentage of revenue was 29.2% and 27.5% for the nine months ended February 28, 2009 and February 23, 2008, respectively. S, G &A decreased $4.4 million, or 2.6%, to $161.7 million for the nine months ended February 28, 2009 from $166.1 million for the nine months ended February 23, 2008. The change in S, G & A primarily stems from: a decrease in stock-based compensation expense of $3.4 million resulting from a reduction in our stock price and in the number of options granted; a decrease in bonus related accruals of $1.1 million; and a decrease of approximately $1.4 million in marketing and recruiting expenses; partially offset by an increase of $1.8 million in the Company's allowance for doubtful accounts after an evaluation of the Company's client base receivable balances and the current economic environment; and occupancy and related costs from relocated or expanded offices.
Amortization and Depreciation Expense. Amortization of intangible assets increased to $928,000 in the first nine months of fiscal 2009 compared to $549,000 in the prior year's first nine months as a result of two acquisitions made in fiscal 2008. The Company completed its valuation study during fiscal 2008 of its June 2007 purchase of Compliance Solutions (UK) Ltd. and its December 2007 purchase of Domenica.
Depreciation expense increased from $6.1 million for the nine months ended February 23, 2008 to $6.8 million for the nine months ended February 28, 2009. The increase in depreciation was related to a slightly higher asset base due to the recent acquisitions, investments made in offices relocated or expanded since May 2007 and investments in the Company's operating systems and other information technology.
Interest Income. Interest income was $1.4 million in the nine months ended February 28, 2009 compared to $5.1 million for the nine months ended . . .