10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 26, 2014

OR

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

For the transition period from              to             

Commission File Number 0-24343

The Hackett Group, Inc.

(Exact name of registrant as specified in its charter)

FLORIDA	65-0750100
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1001 Brickell Bay Drive, Suite 3000 Miami, Florida	33131
(Address of principal executive offices)	(Zip Code)

(305) 375-8005

(Registrant’s telephone number, including area code)

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 requirement for the past 90 days.    YES  ☒    NO  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES  ☒    NO  ☐

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☐	Accelerated Filer	☒
Non-Accelerated Filer	☐ (Do not check if a smaller reporting company)	Smaller Reporting Company	☐

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES    NO  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of November1, 2014,  there were 29,199,287 shares of common stock outstanding.

The Hackett Group, Inc.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		Page
Item 1.	Financial Statements
	Consolidated Balance Sheets as of September 26, 2014 and December 27, 2013 (unaudited)	3
	Consolidated Statements of Operations for the Quarters and Nine Months Ended September 26, 2014 and September 27, 2013 (unaudited)	4
	Consolidated Statements of Comprehensive Income for the Quarters and Nine Months Ended September 26, 2014 and September 27, 2013 (unaudited)	5
	Consolidated Statements of Cash Flows for the Nine Months Ended September 26, 2014 and September 27, 2013 (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.	Controls and Procedures	17
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 6.	Exhibits	18
SIGNATURES		19
INDEX TO EXHIBITS		20

2

PART I — FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

The Hackett Group, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

	September 26,		December 27,
	2014		2013
ASSETS
Current assets:
Cash and cash equivalents	$	10,552	$	18,199
Accounts receivable and unbilled revenue, net of allowance of $1,547 and $1,674 at
September 26, 2014 and December 27, 2013, respectively		44,438		34,011
Deferred tax asset, net		2,499		5,130
Prepaid expenses and other current assets		2,688		2,283
Total current assets		60,177		59,623
Restricted cash		355		354
Property and equipment, net		13,211		13,019
Other assets		3,445		1,039
Goodwill, net		83,628		76,283
Total assets	$	160,816	$	150,318
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	5,410	$	8,080
Accrued expenses and other liabilities		33,643		25,646
Current portion of long-term debt		4,606		—
Total current liabilities		43,659		33,726
Long-term deferred tax liability, net		4,466		4,387
Long-term debt		22,423		19,029
Total liabilities		70,548		57,142
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.001 par value, 1,250,000 shares authorized; none issued and outstanding		—		—
Common stock, $.001 par value, 125,000,000 shares authorized; 53,167,266, and 52,143,103 shares
issued at September 26, 2014 and December 27, 2013, respectively		53		52
Additional paid-in capital		264,505		261,861
Treasury stock, at cost, 23,881,663 and 22,189,409 shares at September 26, 2014 and
December 27, 2013, respectively		(90,678)		(80,406)
Accumulated deficit		(78,860)		(83,880)
Accumulated comprehensive loss		(4,752)		(4,451)
Total shareholders' equity		90,268		93,176
Total liabilities and shareholders' equity	$	160,816	$	150,318

The accompanying notes are an integral part of the consolidated financial statements.

3

The Hackett Group, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Quarter Ended				Nine Months Ended
	September 26,		September 27,		September 26,		September 27,
	2014		2013		2014		2013
Revenue:
Revenue before reimbursements	$	54,550	$	51,976	$	158,968	$	153,188
Reimbursements		5,887		5,940		17,426		18,038
Total revenue		60,437		57,916		176,394		171,226
Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses
(includes $628 and $854 and $2,028 and $2,540 of stock compensation expense in the quarters and nine months ended September 26, 2014 and September 27, 2013, respectively)		34,068		33,970		101,674		99,375
Reimbursable expenses		5,887		5,940		17,426		18,038
Total cost of service		39,955		39,910		119,100		117,413
Selling, general and administrative costs
(includes $814 and $681 and $2,158 and $2,162 of stock compensation expense in the quarters and nine months ended September 26, 2014 and September 27, 2013, respectively)		15,423		13,289		45,285		40,482
Restructuring costs		—		—		3,604		—
Total costs and operating expenses		55,378		53,199		167,989		157,895
Income from operations		5,059		4,717		8,405		13,331
Other income (expense):
Interest income		2		2		4		6
Interest expense		(173)		(94)		(463)		(361)
Income from continuing operations before income taxes		4,888		4,625		7,946		12,976
Income tax expense		1,297		1,926		2,926		5,318
Income from continuing operations		3,591		2,699		5,020		7,658
Loss from discontinued operations		—		(64)		—		(135)
Net income	$	3,591	$	2,635	$	5,020	$	7,523
Basic net income per common share:
Income per common share from continuing operations	$	0.13	$	0.09	$	0.17	$	0.25
Loss per common share from discontinued operations		—		—		—		—
Net income per common share	$	0.13	$	0.09	$	0.17	$	0.25
Diluted net income per common share:
Income per common share from continuing operations	$	0.12	$	0.08	$	0.17	$	0.24
Loss per common share from discontinued operations		—		—		—		(0.01)
Net income per common share	$	0.12	$	0.08	$	0.17	$	0.23
Weighted average common shares outstanding:
Basic		28,558		30,627		28,872		30,484
Diluted		29,800		32,797		29,884		32,174

The accompanying notes are an integral part of the consolidated financial statements.

4

The Hackett Group, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

	Quarter Ended				Nine Months Ended
	September 26,		September 27,		September 26,		September 27,
	2014		2013		2014		2013
Net income	$	3,591	$	2,635	$	5,020	$	7,523
Foreign currency translation adjustment		(786)		1,088		(301)		(308)
Total comprehensive income	$	2,805	$	3,723	$	4,719	$	7,215

The accompanying notes are an integral part of the consolidated financial statements.

5

The Hackett Group, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended
	September 26,		September 27,
	2014		2013
Cash flows from operating activities:
Net income	$	5,020	$	7,523
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation expense		1,731		1,416
Amortization expense		1,700		451
Amortization of debt issuance costs		68		73
Restructuring costs		3,604		—
Provision for doubtful accounts		728		478
Loss on foreign currency translation		91		28
Non-cash stock compensation expense		4,185		4,702
Changes in assets and liabilities, net of acquisition:
Increase in accounts receivable and unbilled revenue		(9,581)		(1,252)
(Increase) decrease in prepaid expenses and other current and non-current assets		(503)		1,792
Decrease in accounts payable		(2,670)		(2,858)
Decrease in accrued expenses and other liabilities		(5,862)		(3,322)
Net cash (used in) provided by operating activities		(1,489)		9,031
Cash flows from investing activities:
Purchases of property and equipment		(1,924)		(1,619)
Cash consideration paid for acquisition		(2,877)		—
Cash acquired in acquisition of business		522		—
Decrease in restricted cash		—		161
Net cash used in investing activities		(4,279)		(1,458)
Cash flows from financing activities:
Proceeds from borrowings		10,500		—
Repayment of borrowings		(2,721)		(9,974)
Proceeds from issuance of common stock		620		924
Repurchases of common stock		(10,298)		(594)
Net cash used in financing activities		(1,899)		(9,644)
Effect of exchange rate on cash		20		16
Net decrease in cash and cash equivalents		(7,647)		(2,055)
Cash and cash equivalents at beginning of year		18,199		16,906
Cash and cash equivalents at end of period	$	10,552	$	14,851
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	687	$	451
Cash paid for interest	$	389	$	262
Supplemental disclosure of non-cash investing and financing activities:
Shares issued to sellers of acquired business	$	1,000	$	—

The accompanying notes are an integral part of the consolidated financial statements.

6

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation and General Information

Basis of Presentation

The accompanying consolidated financial statements of The Hackett Group,  Inc. (“Hackett” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the Company’s accounts and those of its wholly-owned subsidiaries which the Company is required to consolidate. All intercompany transactions and balances have been eliminated in consolidation.

In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments which are necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods presented. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 27, 2013, included in the Annual Report on Form 10-K filed by the Company with the SEC. The consolidated results of operations for the quarter and nine months ended September 26, 2014, are not necessarily indicative of the results to be expected for any future period or for the full fiscal year.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Fair Value

The Company’s financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable and unbilled revenue, accounts payable, accrued expenses and other liabilities and debt. As of September 26, 2014 and December 27, 2013, the carrying amount of each financial instrument, with the exception of debt, approximated the instrument’s respective fair value due to the short-term nature and maturity of these instruments.

The Company uses significant other observable market data or assumptions (Level 2 inputs as defined in accounting guidance) that it believes market participants would use in pricing debt. The fair value of the debt approximated the carrying amount, using Level 2 inputs, due to the short-term variable interest rates based on market rates.

Business Combinations

The Company applies the provisions of ASC 805, Business Combinations, in the accounting for its acquisitions, which requires recognition of the assets acquired and the liabilities assumed at their acquisition date fair values, separately from goodwill. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition date fair values of the tangible and identifiable intangible assets acquired and liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, that may be up to 12 months from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with a corresponding adjustment to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, the impact of any subsequent adjustments is included in the consolidated statements of operations.

Recently Issued Accounting Standards

In May 2014, the FASB issued guidance on revenue recognition, which provides for a single, principles-based model for revenue recognition and replaces the existing revenue recognition guidance. The guidance is effective for annual and interim periods beginning on or after December 15, 2016 and will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective. It permits the use of either a retrospective or cumulative effect transition method and early adoption is not permitted. The Company has not yet selected a transition method and is in the process of evaluating the effect this standard will have on its consolidated financial statements and related disclosures.

7

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation and General Information (continued)

Reclassifications

Certain prior period amounts in the consolidated financial statements, and notes thereto, have been reclassified to conform to current period presentation.

2. Net Income per Common Share

Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. With regard to common stock subject to vesting requirements and restricted stock units issued to the Company’s employees and non-employee members of its Board of Directors, the calculation includes only the vested portion of such stock and units.

Dilutive net income per common share is computed by dividing net income by the weighted average number of common shares outstanding, increased by the assumed conversion of other potentially dilutive securities during the period.

The following table reconciles basic and dilutive weighted average common shares:

	Quarter Ended		Nine Months Ended
	September 26,	September 27,	September 26,	September 27,
	2014	2013	2014	2013
Basic weighted average common shares outstanding	28,557,528	30,626,838	28,872,043	30,483,544
Effect of dilutive securities:
Unvested restricted stock units and common stock subject to
vesting requirements issued to employees and non-employees	1,232,971	2,159,234	1,002,642	1,676,932
Common stock issuable upon the exercise of stock options	9,826	10,572	9,589	13,392
Dilutive weighted average common shares outstanding	29,800,325	32,796,644	29,884,274	32,173,868

Approximately 0.4 million and 0.8 million shares of common stock equivalents were excluded from the computations of diluted net income per common share for the quarters ended September 26, 2014 and September 27, 2013, respectively, as their inclusion would have had an anti-dilutive effect on diluted net income per common share.

3. Accounts Receivable and Unbilled Revenue, Net

Accounts receivable and unbilled revenue, net, consisted of the following (in thousands):

	September 26,		December 27,
	2014		2013
Accounts receivable	$	34,713	$	27,147
Unbilled revenue		11,272		8,538
Allowance for doubtful accounts		(1,547)		(1,674)
Accounts receivable and unbilled revenue, net	$	44,438	$	34,011

Accounts receivable is net of uncollected advanced billings. Unbilled revenue includes recognized recoverable costs and accrued profits on contracts for which billings had not been presented to clients.

8

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

4. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following (in thousands):

		September 26,		December 27,
		2014		2013
Accrued compensation and benefits	$	5,642	$	5,163
Accrued bonuses		4,652		5,899
Accrued restructuring related expenses		750		134
Deferred revenue		7,949		8,345
Accrued sales, use, franchise and VAT tax		2,308		1,393
Acquisition-related contingent consideration		8,000		-
Other accrued expenses		4,342		4,712
Total accrued expenses and other liabilities	$	33,643	$	25,646

5. Restructuring Costs

The Company recorded restructuring costs of $3.6 million during the nine months ended September 26, 2014,  primarily for reductions in consultants and functional support personnel in Europe. These actions were taken as a result of the continued decline in demand in its European markets. The Company took steps to reduce its costs to better align its overall cost structure and organization with anticipated demand for its services.

The following table sets forth the activity in the restructuring expense accruals (in thousands):

		Severance and Other
		Employee Costs
Accrual balance at December 27, 2013	$	-
Accrual		3,604
Expenditures		(2,854)
Accrual balance at September 26, 2014	$	750

6. Credit Facility

On February 21, 2012, the Company entered into a credit agreement with Bank of America, N.A. ("Bank of America"), pursuant to which Bank of America agreed to lend the Company up to $20.0 million pursuant to a revolving line of credit (the “Revolver”) and up to $30.0 million pursuant to afive-year term loan (the “Term Loan”),which was used to finance the Company's $55.0 million tender offer for its shares in March 2012. See Note10 for further information.  

On August 27, 2013, the Company amended and restated the credit agreement (the "Credit Agreement") with Bank of America to finance a  tender offer for shares of its common stock completedin October 2013. See Note 10 for further information. The Credit Agreement was amended and restated to:

· To provide for up toan additional $17.0 million of borrowing under the Term Loan (the "Amended Term Loan" and together with the Revolver, the "Credit Facility"). As of September 26, 2014, the Amended Term Loanhad $24.5 million principal amount outstanding with no additional availability remaining and the Revolver had $2.5 million principal amount outstanding with an additional $17.5 million availability remaining.

· To extend the maturity date on the Revolver and the Amended Term Loan to August 27, 2018,  five years from the date of the amendment and restatement of the Credit Agreement.

The obligations of the Company under the Credit Facility are guaranteed by the active existing and future material U.S. subsidiaries of the Company and are secured by substantially all of the existing and future property and assets of the Company (subject to certain exceptions).

9

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

6. Credit Facility (continued)

The interest rates per annum applicable to loans under the Credit Facility will be, at the Company’s option, equal to either a base rate or a LIBOR base rate, plus an applicable margin percentage. The applicable margin percentage is based on the consolidated leverage ratio, as defined in the Credit Agreement. As of September 26, 2014, the applicable margin percentage was 2.00% per annum based on the consolidated leverage ratio, in the case of LIBOR rate advances, and 1.00% per annum, in the case of base rate advances.

The Term Loan requires the amortization of principal payments in equal quarterly installments beginning December 31, 2013 through August 27, 2018, unless payments are made in advance. The Company is subject to certain covenants, including total consolidated leverage, fixed cost coverage and liquidity requirements, each as set forth in the Credit Agreement, subject to certain exceptions.

7. Acquisition

During the quarter ended March 28, 2014, the Company acquired the U.S., Canada and Uruguay operations of Technolab International Corporation ("Technolab"). The purchase price for the assets acquired and liabilities assumed was $2.9 million in cashand $1.0 million in shares of the Company's common stock, which are subject to a four-year vesting provision. The sellers will have the ability to earn an additional $8.0 million in contingent consideration in cash and stock subject to an earn-out based on actual results achieved.

Management's initial purchase price allocation resulted in $7.6 million which exceeded the estimated fair value of tangible and intangible assets and liabilities and which was therefore allocated to goodwill. The acquired intangible assets with definite lives of $4.1 million will be amortized over periods ranging from 2 years to 5 years.

Management's preliminary determination of the fair value of the tangible and intangible assets acquired and liabilities assumed is based on estimates and assumptions that are subject to change. During the measurement period, if information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively. The measurement period can extend as long as one year from the acquisition date.

8. Discontinued Operations

During the quarter ended March 29, 2013, the Company exited the Oracle ERP implementation business. This transaction was not material to the Company’s consolidated financial statements.

9. Stock Based Compensation

During the nine months ended September 26, 2014, the Company issued 839,031 restricted stock units at a weighted average grant-date fair value of $5.91 per share. As of September 26, 2014, the Company had 2,293,058 restricted stock units outstanding at a weighted average grant-date fair value of $5.33 per share. As of September 26, 2014,  $7.3 million of total restricted stock unit compensation expense related to unvested awards had not been recognized and is expected to be recognized over a weighted average period of approximately 2.1 years.

During the nine months ended September 26, 2014, the Company issued 164,474shares of common stock subject to vesting requirements related to the Technolab acquisition at a weighted average grant-date fair value of $6.04 per share. See Note 7 for further information.As of September 26, 2014, the Company had 264,474 shares of common stock subject to vesting requirements outstanding at a weighted average grant-date fair value of $7.54 per share. As of September 26, 2014,  $1.0 million of compensation expense related to common stock subject to vesting requirements had not been recognized and is expected to be recognized over a weighted average period of approximately 3.3 years.  

On February 8, 2012, the Compensation Committee approved the fiscal year 2012 through 2015 equity compensation target for the Company’s Chief Executive Officer and Chief Operating Officer. Under this target, a single performance-based option grant was made to the Company’s Chief Executive Officer and the Chief Operating Officer of 1,912,500 options and 1,004,063 options, respectively, totaling 2,916,563 options, each with an exercise price of $4.00 and a fair value of $0.96. One-half of the options vest upon the achievement of at least 50% growth of pro forma earnings per share and the remaining half vest upon the achievement of at least 50% pro forma EBITDA growth. Each metric can be achieved at any time during the six-year term of the award based on a trailing twelve month period measured quarterly.

In March of 2013 these performance-based stock option grants were surrendered by the Company’s Chief Executive Officer and Chief Operating Officer and replaced with performance-based SARs, equal to the number of options. The terms and conditions and the specific performance targets applicable to the SARs are the same as those applicable to the replaced options, with the exception that the SARs will be settled in cash, stock or any combination thereof, at the Company’s discretion.

10

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

9. Stock Based Compensation (continued)

Although the targets for the performance-based SARs have not been achieved as of September 26, 2014, the Company recorded $0.1 millionand $0.4 million of compensation expense related to these SARs for bothof the quarters and nine months ended September 26, 2014 and September 27, 2013, respectively.

10. Shareholders’ Equity

Tender Offer

On August 28, 2013, the Company announced a tender offer to purchase up to $35.75 million in value of shares of its common stock, $0.001 par value per share, at a price neither greater than $6.50 nor less than $5.75 per share, to the seller in cash, less any applicable withholding taxes and without interest (the "Offer"). On September 26, 2013, the Company amended the Offer (the "Amended Offer") to increase the price range at which it would purchase its common stock to a range of neither greater than $7.00 nor less than $6.50 per share and to decrease the dollar amount of the Offer to $25.0 million. The Amended Offer was completed onOctober 15, 2013, with the Company purchasing approximately1.0 million shares of its common stock at a purchase price of $7.00 per share, for an aggregate cost of approximately $6.9 million, excluding fees and expenses related to the Amended Offer.  The 1.0 million shares represented approximately3.1% of the Company's issued and outstanding shares of common stock at that time. The Company financed the Amended Offer from borrowings under the Amended Term Loanunder its existing Credit Facility. See Note 6 for further information. 

On March 21, 2012, the Company completed a tender offer to purchase 11.0 million shares of its common stock at a purchase price of $5.00 per share, for an aggregate cost of approximately $55.0 million, excluding fees and expenses relating to the tender offer The 11.0 million shares accepted for purchase represented approximately 27% of the Company’s issued and outstanding shares of common stock at that time.

Share Repurchase Plan

Under the Company’s share repurchase plan, the Company may buy back shares of its outstanding stock either on the open market or through privately negotiated transactions subject to market conditions and trading restrictions. During thequarter ended September 26, 2014, the Company repurchased approximately 485 thousandsharesof its common stock at an average price of $6.13per sharefor a total cost of approximately $3.0 million.  During the nine months ended September 26, 2014, the Company repurchased approximately 1.7 million shares of its common stock at an average price of $6.07 per share for a total cost of approximately $10.3 million. As of September 26, 2014, the Company had approximately $4.3 million available under its share repurchase plan authorization.During the quarter ended September 27, 2013, the Company did not buy back any shares under its share repurchase plan.  During the nine monthsended September 27, 2013, the Company repurchased approximately 124 thousand shares of its common stock at an average price of $4.80 per share for a total cost of approximately $594 thousand.

11. Litigation

The Company is involved in legal proceedings, claims, and litigation arising in the ordinary course of business not specifically discussed herein. In the opinion of management, the final disposition of such matters will not have a material adverse effect on the Company’s financial position, cash flows or results of operations.

12. Geographic and Group Information

Revenue is primarily based on the country of the contracting entity and was attributed to the following geographical areas (in thousands):

	Quarter Ended				Nine Months Ended
	September 26,		September 27,		September 26,		September 27,
	2014		2013		2014		2013
Revenue:
North America	$	48,094	$	47,377	$	142,797	$	136,323
International (primarily European countries)		12,343		10,539		33,597		34,903
Total revenue	$	60,437	$	57,916	$	176,394	$	171,226

11

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

12. Geographic and Group Information (continued)

Long-lived assets are attributable to the following geographic areas (in thousands):

	September 26,		December 27,
	2014		2013
Long-lived assets:
North America	$	84,204	$	74,095
International (primarily European countries)		16,080		16,246
Total long-lived assets	$	100,284	$	90,341

As of September 26, 2014, foreign assets included $15.7 million of goodwill related to the REL and Archstone acquisitions. As of December 27, 2013, foreign assets included $15.8 million of goodwill related to the REL and Archstone acquisitions.

The Company’s revenue was derived from the following service groups (in thousands):

	Quarter Ended				Nine Months Ended
	September 26,		September 27,		September 26,		September 27,
	2014		2013		2014		2013
The Hackett Group	$	51,370	$	48,689	$	146,654	$	139,960
ERP Solutions		9,067		9,227		29,740		31,266
Total revenue	$	60,437	$	57,916	$	176,394	$	171,226

12

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

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements. All statements regarding our expected financial position and operating results, our business strategy, our financing plans and forecasted demographic and economic trends relating to our industry are forward-looking statements. These statements can sometimes be identified by our use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” or “intend” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. We cannot promise you that our expectations reflected in such forward-looking statements will turn out to be correct. Factors that impact such forward-looking statements include, among others, our ability to effectively integrate acquisitions into our operations, our ability to retain existing business, our ability to attract additional business, our ability to effectively market and sell our product offerings and other services, the timing of projects and the potential for contract cancellation by our customers, changes in expectations regarding the business consulting and information technology industries, our ability to attract and retain skilled employees, possible changes in collections of accounts receivable due to the bankruptcy or financial difficulties of our customers, risks of competition, price and margin trends, foreign currency fluctuations and changes in general economic conditions, interest rates and our ability to obtain debt financing through additional borrowings under an amendment to our existing credit facility. An additional description of our risk factors is set forth in our Annual Report on Form 10-K for the year ended December 27, 2013. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

OVERVIEW

The Hackett Group, Inc. (“Hackett” or the “Company”) is a leading strategic advisory and technology consulting firm that enables companies to achieve world-class business performance. By leveraging the proprietary Hackett benchmarking database, the world’s leading repository of enterprise business process performance metrics and best practice intellectual capital, our business and technology solutions help clients optimize performance and returns on business transformation investments. Only Hackett empirically defines world-class performance in sales, general and administrative and supply chain activities with analysis gained through more than 10,000 benchmark studies over 21 years at over 3,500 of the world’s leading companies.

In the following discussion, “The Hackett Group” encompasses our Benchmarking, Business Transformation, Executive Advisory, Enterprise Performance Management("EPM") groups and Technolab Application Maintenance and Support ("AMS"). “ERPSolutions” encompasses our SAP ERP Technology and SAP maintenance groups.  

During the quarter ended March 29, 2013, we exited the Oracle ERP implementation business. The transaction was not material to our consolidated financial statements, however, the following information has been recast to exclude activity related to the business.

13

The following table sets forth, for the periods indicated, our results of operations and the percentage relationship to revenue before reimbursements of such results (in thousands):

	Quarter Ended						Nine Months Ended
	September 26,			September 27,			September 26,			September 27,
	2014			2013			2014			2013
Revenue:
Revenue before reimbursements	$	54,550	100.0%	$	51,976	100.0%	$	158,968	100.0%	$	153,188	100.0%
Reimbursements		5,887			5,940			17,426			18,038
Total revenue		60,437			57,916			176,394			171,226
Costs and expenses:
Cost of service:
Personnel costs before reimbursable
expenses		34,068	62.5%		33,970	65.4%		101,674	64.0%		99,375	64.9%
Reimbursable expenses		5,887			5,940			17,426			18,038
Total cost of service		39,955			39,910			119,100			117,413
Selling, general and administrative costs		15,423	28.2%		13,289	25.6%		45,285	28.4%		40,482	26.4%
Restructuring expense		—			—			3,604	2.3%		—
Total costs and operating expenses		55,378			53,199			167,989			157,895
Income from operations		5,059	9.3%		4,717	9.0%		8,405	5.3%		13,331	8.7%
Other expense:
Interest expense, net		(171)	-0.3%		(92)	-0.2%		(459)	-0.2%		(355)	-0.2%
Income from continuing operations before income taxes		4,888	9.0%		4,625	8.9%		7,946	5.1%		12,976	8.5%
Income tax expense		1,297	2.4%		1,926	3.7%		2,926	1.8%		5,318	3.5%
Income from continuing operations		3,591	6.6%		2,699	5.2%		5,020	3.2%		7,658	5.0%
Loss from discontinued operations		—			(64)			—			(135)
Net income	$	3,591	6.6%	$	2,635	5.1%	$	5,020	3.2%	$	7,523	4.9%

Revenue. We are a global company with operations located primarily in the United States and Western Europe. Our revenue is denominated in multiple currencies, primarily the U.S. Dollar, British Pound and Euro, and as a result is affected by currency exchange rate fluctuations. Our results for the quarters and nine months ended September 26, 2014 and September 27, 2013, were not materially impacted by foreign currency exchange rate fluctuations.

Total Company revenue increased 4% and 3%during the quarterand nine monthsended September 26, 2014, respectively,  as compared to the quarter and nine monthsended September 27, 2013. The following table summarizes revenue (in thousands):

	Quarter Ended				Nine Months Ended
	September 26,		September 27,		September 26,		September 27,
	2014		2013		2014		2013
The Hackett Group	$	51,370	$	48,689	$	146,654	$	139,960
ERP Solutions		9,067		9,227		29,740		31,266
Total revenue	$	60,437	$	57,916	$	176,394	$	171,226

The Hackett Group U.S revenue increased 2%  and 8% during the quarter and nine months ended September 26, 2014, respectively, as compared to the quarter and nine months ended September 27, 2013.  The Hackett Group’s International revenue increased 17% and decreased by 4% during the quarter and nine months ended September 26, 2014, respectively, as compared to the quarter and nine months ended September 27, 2013.   Excluding the acquisition of Technolab, The Hackett Group’s International revenue increased 7% and decreased 12% during the quarter and nine months ended September 26, 2014, respectively, as compared to the quarter and nine months ended September 27, 2013. The Hackett Group’s international revenue, which is primarily based on the country of the contracting entity, accounted for 20% and 19%  of total Company revenue for the quarter and nine months ended September 26, 2014, respectively, and 18% and 20% of total Company revenue for the quarter and nine monthsended September 27, 2013, respectively.

14

ERP Solutions revenue decreased 2%  and 5% for the quarter and nine months ended September 26, 2014,  respectively, as compared to the quarter and nine months ended September 27, 2013.This revenue decrease reflectstransitional movement in the SAP sales channelover the past 18 months.

During the quarters and nine months ended September 26, 2014 andSeptember 27, 2013, no customer accounted for more than 5% of total Company revenue.

Cost of Service. Cost of service primarily consists of salaries, benefits and incentive compensation for consultants, subcontractor fees and reimbursable expenses associated with projects. Cost of service before reimbursable expenses remained relatively flat for the quarter ended September 26, 2014, and increased 2.3%, or $2.3 million, for thenine monthsended September 26, 2014,  as compared to the quarter and nine monthsended September 27, 2013. Total cost of service before reimbursable expenses, as a percentage of revenue before reimbursements, was 63% and 64% forthe quarter and nine monthsended September 26, 2014, respectively, as compared to 65%for both the quarter and nine months ended September 27, 2013.  The decrease during the quarterand nine months ended September 26, 2014, as compared to September 27, 2013,was primarily due to the leverage from increased revenue and lower utilization of subcontractors.

As a percentage of revenue before reimbursements, or net revenue, The Hackett Group generated gross marginsof 35% and 32% in the quarter and nine monthsended September 26, 2014, respectively,which were favorably impacted by the restructuring efforts to reduce the workforce in the first quarter of 2014, as well as improving revenue in the third quarter of 2014. As a percentage of net revenue, ERP Solutions generated gross margins of 38% and 42% for the quarter and nine months ended September 26, 2014, respectively.  The higher year to date net margins for ERP Solutions were primarily driven by SAP license sales during the year.

Selling, General and Administrative. Selling, general and administrative costs were $15.4 millionand $45.3 million for the quarter and nine monthsended September 26, 2014, respectively,  as compared to $13.3 million and $40.5 million for the quarter and nine monthsended September 27, 2013, respectively. Selling, general and administrative costs as a percentage of revenue before reimbursements increased to 28%for boththe quarter and nine months ended September 26, 2014, respectively, as compared to 26% forboth the quarter and nine months ended September 27, 2013.The increase in selling, general and administrative costs was primarily due to the incremental costs resulting from the Technolab acquisitionand higher selling-related expense and incentive compensation accruals commensurate with our improved Company performance.

Restructuring Costs.During the nine months ended September 26, 2014, we recorded restructuring costs of $3.6 million, primarily for reductions in consultants and functional support personnel in Europe. These actions were taken as a result of our continued decline in demand in our European markets.  Weeffected these changes to reduce our costs to better align our overall cost structure and organization with anticipated demand for our services.

Income Taxes. In the quarter and nine months ended September 26, 2014, we recorded income tax expense of $1.3 million and $2.9 million, respectively, which reflected a tax rate of 26.5% and 36.8% for certain federal, foreign and state taxes. In the quarter and nine months ended September 27, 2013, we recorded income tax expense of $1.9 million and $5.3 million, respectively, which reflected a tax rate of 41.6% and 41.0% for certain federal, foreign and state taxes. The decrease in the tax rate for the quarter and nine monthsended September 26, 2014, as compared to the quarter and nine months endedSeptember 27, 2013, was primarily the result of a more favorable geographical mix of taxable earnings.

Liquidity and Capital Resources

As of September 26, 2014 and December 27, 2013, we had $10.6 million and $18.2 million, respectively, classified in cash and cash equivalents on the consolidated balance sheets. As of the same dates, we had $0.4 million on deposit with financial institutions that primarily related to certain employee compensation agreements.These deposit accounts have been classified as restricted cash on the consolidated balance sheets.

15

The following table summarizes our cash flow activity (in thousands):

	Nine Months Ended
	September 26,		September 27,
	2014			2013
Cash flows (used in) provided by operating activities	$	(1,489)	$	9,031
Cash flows used in investing activities	$	(4,279)	$	(1,458)
Cash flows used in financing activities	$	(1,899)	$	(9,644)

Cash Flows from Operating Activities

Net cash used in operating activities was $1.5 million during the nine months ended September 26, 2014, as compared to net cash provided by operating activities of $9.0 million during the nine months ended September 27, 2013.  Excluding the noncash impact of the assets and liabilities acquired in the Technolab acquisition, the increased use of cash primarily related to increased accounts receivable and unbilled balances.  

Cash Flows from Investing Activities

Net cash used in investing activities was $4.3 million and $1.5 million during the nine months ended September 26, 2014 and September 27, 2013, respectively. The usage of cash during the nine months ended September 26, 2014, was primarily related to the cash consideration paid for the Technolab acquisition and the global rollout of new laptops for our associates which occurs every three to four years; partially offset by cash acquired in the acquisition.  In addition, cash was utilized during both periods on capital expenditures for the development of the Hackett Performance Exchange. 

Cash Flows from Financing Activities

Net cash used from financing activities was $1.9 million and $9.6 million during the nine months ended September 26, 2014 and September 27, 2013, respectively.  The net cash used from financing activities during the nine months ended September 26, 2014 was primarily due to the repurchase of $10.3 million of Company stock, partially offset by net borrowings of $8.0 million under our Credit Facility. Net cash used from financing activities during the nine months ended September 27, 2013was primarilyattributable to the repayment of borrowings outstanding under the Credit Facility of $10.0 million.See Note 6 to the consolidated financial statements for further information on the Credit Facility.  

On October 15, 2013, we completed a tender offer to purchase approximately 1.0 million shares of our common stock at a purchase price of $7.00 per share, for an aggregate cost of approximately $6.9 million, excluding fees and expenses related to the tender offer. See Note 10 to the consolidated financial statements for further information on the Tender Offer.  

We currently believe that available funds (including the cash on hand and $17.5 million in funds available for borrowing under the Revolver), and cash flows generated by operations will be sufficient to fund our working capital and capital expenditure requirements for at least the next twelve months. We may decide to raise additional funds in order to fund expansion, to develop new or further enhance products and services, to respond to competitive pressures, or to acquire complementary businesses or technologies. There is no assurance, however, that additional financing will be available when needed or desired.

Recently Issued Accounting Standards

For a discussion of recently issued accounting standards, see Note 1, "Basis of Presentation and General Information," to our consolidated financial statements included in this Quarterly Report on Form 10-Q and Note 1, "Basis of Presentation and General Information," to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 27, 2013.

Item  3.Quantitative and Qualitative Disclosures About Market Risk.

As ofSeptember 26, 2014, our exposure to market risk related primarily to changes in interest rates and foreign currency exchange rate risks.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to the Credit Facility, which is subject to variable interest rates. The interest rates per annum applicable to loans under the Credit Facility will be, at our option, equal to either a base rate or a LIBOR rate for one-, two-, three- or nine-month interest periods chosen by us in each case, plus an applicable margin percentage. A 100 basis point increase in our interest rate under our Credit Facility would not have had a material impact on our results of operations for thequarter and nine months ended September 26, 2014.

16

Exchange Rate Sensitivity

We face exposure to adverse movements in foreign currency exchange rates as a portion of our revenue, expenses, assets and liabilities are denominated in currencies other than the U.S. Dollar, primarily the British Pound, the Euro and the Australian Dollar. These exposures may change over time as business practices evolve. Our results for thequarter and nine months ended September 26, 2014 were not materially impacted by foreign currency exchange rate fluctuations.

Item  4.Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

Changes in Internal Control Over Financial Markets

There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

17

PART II — OTHER INFORMATION

Item 1.         Legal Proceedings.

The Company is involved in legal proceedings, claims, and litigation arising in the ordinary course of business not specifically discussed herein. In the opinion of management, the final disposition of such matters will not have a material adverse effect on the Company’s financial position, cash flows or results of operations.

Item  1A.Risk Factors.

There have been no material changes to any of the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 27, 2013.  

Item  2.         Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

During the quarter ended September 26, 2014, the Company repurchased approximately 485 thousand shares of its common stock at an average price of $6.13 per share, for a total cost of approximately $3.0million, under the repurchase plan approved by the Company's Board of Directors. During the third quarter of 2014, the Board of Directors increased the aggregate size of the plan by $5.0 million, to a total of $95.0 million. As of of September 26, 2014, the Company had approximately $4.3 million of authorization under the plan.

				Total Number		Maximum Dollar
				of Shares as Part		Value That May
				of Publicly		Yet be Purchased
	Total Number		Average Price	Announced		Under the
Period	of Shares		Paid per Share	Program		Program
Balance as of June 27, 2014	-	$	-	-	$	2,295,650
June 28, 2014 to July 25, 2014	177,655	$	6.12	177,655	$	1,207,977
July 26, 2014 to August 22, 2014	153,459	$	6.12	153,459	$	5,268,228
August 23, 2014 to September 26, 2014	153,701	$	6.16	153,701	$	4,321,933
	484,815	$	6.13	484,815

Item  6.Exhibits.

See Index to Exhibits on page 20, which is incorporated herein by reference.

18

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.

	The Hackett Group, Inc.
Date:November 5, 2014	/s/ Robert A. Ramirez
	Robert A. Ramirez
	Executive Vice President, Finance and Chief Financial Officer

19

INDEX TO EXHIBITS

Exhibit No.	Exhibit Description
31.1	Certification by CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (exhibits filed herewith).
31.2	Certification by CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (exhibits filed herewith).
32	Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (exhibits filed herewith).
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

20

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Ted A. Fernandez, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of The Hackett Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2014	/s/ Ted A. Fernandez
	Ted A. Fernandez
	Chairman of the Board and Chief Executive Officer
	The Hackett Group, Inc.

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Robert A. Ramirez, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of The Hackett Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2014	/s/ Robert A. Ramirez
	Robert A. Ramirez
	Executive Vice President, Finance and Chief Financial Officer
	The Hackett Group, Inc.

EX-32

Exhibit 32

THE HACKETT GROUP, INC

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Hackett Group, Inc. (the “Company”) on Form 10-Q for the period ended September 26, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Ted A. Fernandez, Chairman of the Board and Chief Executive Officer, and Robert A. Ramirez, Executive Vice President, Finance and Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(1) The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Ted A. Fernandez

Ted A. Fernandez

Chairman of the Board and Chief Executive Officer

November 5, 2014

/s/ Robert A. Ramirez

Robert A. Ramirez

Executive Vice President, Finance and Chief Financial Officer

November 5, 2014

A signed original of this statement required by Section 906 has been provided to The Hackett Group, Inc. and will be retained by The Hackett Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Geographic And Group Information (Revenue By Service Group) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 26, 2014	Sep. 27, 2013	Sep. 26, 2014	Sep. 27, 2013
Segment Reporting Information [Line Items]
Total revenue	$ 60,437	$ 57,916	$ 176,394	$ 171,226
The Hackett Group [Member]
Segment Reporting Information [Line Items]
Total revenue	51,370	48,689	146,654	139,960
ERP Solutions [Member]
Segment Reporting Information [Line Items]
Total revenue	$ 9,067	$ 9,227	$ 29,740	$ 31,266

XML

Acquisition (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended
	Mar. 28, 2014	Sep. 26, 2014 Minimum [Member]	Sep. 26, 2014 Maximum [Member]
Assets acquired and liabilities assumed	$ 2.9
Purchase price, common stock	1.0
Vesting pervision	4 years
Contingent consideration	8.0
Purchase price	7.6
Acquired intangible assets	$ 4.1
Amortization period		2 years	5 years

XML

Geographic And Group Information (Tables)

9 Months Ended

Sep. 26, 2014

Geographic And Group Information [Abstract]

Geographic Revenue

	Quarter Ended				Nine Months Ended
	September 26,		September 27,		September 26,		September 27,
	2014		2013		2014		2013
Revenue:
North America	$	48,094	$	47,377	$	142,797	$	136,323
International (primarily European countries)		12,343		10,539		33,597		34,903
Total revenue	$	60,437	$	57,916	$	176,394	$	171,226

Long-Lived Assets Attributable To Geographic Area

	September 26,		December 27,
	2014		2013
Long-lived assets:
North America	$	84,204	$	74,095
International (primarily European countries)		16,080		16,246
Total long-lived assets	$	100,284	$	90,341

Revenue By Service Group

	Quarter Ended				Nine Months Ended
	September 26,		September 27,		September 26,		September 27,
	2014		2013		2014		2013
The Hackett Group	$	51,370	$	48,689	$	146,654	$	139,960
ERP Solutions		9,067		9,227		29,740		31,266
Total revenue	$	60,437	$	57,916	$	176,394	$	171,226

XML

Geographic And Group Information (Geographic Revenue) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 26, 2014	Sep. 27, 2013	Sep. 26, 2014	Sep. 27, 2013
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 60,437	$ 57,916	$ 176,394	$ 171,226
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	48,094	47,377	142,797	136,323
International Primarily European Countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 12,343	$ 10,539	$ 33,597	$ 34,903

XML

Net Income Per Common Share

9 Months Ended

Sep. 26, 2014

Net Income Per Common Share [Abstract]

Net (Loss) Income Per Common Share

2. Net Income per Common Share

Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. With regard to common stock subject to vesting requirements and restricted stock units issued to the Company’s employees and non-employee members of its Board of Directors, the calculation includes only the vested portion of such stock and units.

Dilutive net income per common share is computed by dividing net income by the weighted average number of common shares outstanding, increased by the assumed conversion of other potentially dilutive securities during the period.

The following table reconciles basic and dilutive weighted average common shares:

	Quarter Ended		Nine Months Ended
	September 26,	September 27,	September 26,	September 27,
	2014	2013	2014	2013
Basic weighted average common shares outstanding	28,557,528	30,626,838	28,872,043	30,483,544
Effect of dilutive securities:
Unvested restricted stock units and common stock subject to
vesting requirements issued to employees and non-employees	1,232,971	2,159,234	1,002,642	1,676,932
Common stock issuable upon the exercise of stock options	9,826	10,572	9,589	13,392
Dilutive weighted average common shares outstanding	29,800,325	32,796,644	29,884,274	32,173,868

Approximately 0.4 million and 0.8 million shares of common stock equivalents were excluded from the computations of diluted net income per common share for the quarters ended September 26, 2014 and September 27, 2013, respectively, as their inclusion would have had an anti-dilutive effect on diluted net income per common share.

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Accrued Expenses And Other Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 26, 2014	Dec. 27, 2013
Accrued Expenses And Other Liabilities [Abstract]
Accrued compensation and benefits	$ 5,642	$ 5,163
Accrued bonuses	4,652	5,899
Accrued restructuring related expenses	750	134
Deferred revenue	7,949	8,345
Accrued sales, use, franchise and VAT tax	2,308	1,393
Acquisition-related contingent consideration	8,000
Other accrued expenses	4,342	4,712
Total accrued expenses and other liabilities	$ 33,643	$ 25,646

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Accounts Receivable And Unbilled Revenue (Details) (USD $) In Thousands, unless otherwise specified	Sep. 26, 2014	Dec. 27, 2013
Accounts Receivable And Unbilled Revenue, Net [Abstract]
Accounts receivable	$ 34,713	$ 27,147
Unbilled revenue	11,272	8,538
Allowance for doubtful accounts	(1,547)	(1,674)
Accounts receivable and unbilled revenue, net	$ 44,438	$ 34,011

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Restructuring Costs (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 26, 2014
Restructuring Costs [Abstract]
Restructuring costs	$ 3,604,000

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Restructuring Costs (Summary Of Restructuring Expense Accruals) (Details) (Severance And Other Employee Costs [Member], USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 26, 2014
Severance And Other Employee Costs [Member]
Restructuring Cost and Reserve [Line Items]
Accrual	$ 3,604
Expenditures	(2,854)
Accrual balance	$ 750

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Basis of Presentation and General Information

9 Months Ended

Sep. 26, 2014

Basis of Presentation and General Information [Abstract]

Basis Of Presentation And General Information

1. Basis of Presentation and General Information

Basis of Presentation

The accompanying consolidated financial statements of The Hackett Group,  Inc. (“Hackett” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the Company’s accounts and those of its wholly-owned subsidiaries which the Company is required to consolidate. All intercompany transactions and balances have been eliminated in consolidation.

In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments which are necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods presented. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 27, 2013, included in the Annual Report on Form 10-K filed by the Company with the SEC. The consolidated results of operations for the quarter and nine months ended September 26, 2014, are not necessarily indicative of the results to be expected for any future period or for the full fiscal year.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Fair Value

The Company’s financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable and unbilled revenue, accounts payable, accrued expenses and other liabilities and debt. As of September 26, 2014 and December 27, 2013, the carrying amount of each financial instrument, with the exception of debt, approximated the instrument’s respective fair value due to the short-term nature and maturity of these instruments.

The Company uses significant other observable market data or assumptions (Level 2 inputs as defined in accounting guidance) that it believes market participants would use in pricing debt. The fair value of the debt approximated the carrying amount, using Level 2 inputs, due to the short-term variable interest rates based on market rates.

Business Combinations

The Company applies the provisions of ASC 805, Business Combinations, in the accounting for its acquisitions, which requires recognition of the assets acquired and the liabilities assumed at their acquisition date fair values, separately from goodwill. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition date fair values of the tangible and identifiable intangible assets acquired and liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, that may be up to 12 months from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with a corresponding adjustment to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, the impact of any subsequent adjustments is included in the consolidated statements of operations.

Recently Issued Accounting Standards

In May 2014, the FASB issued guidance on revenue recognition, which provides for a single, principles-based model for revenue recognition and replaces the existing revenue recognition guidance. The guidance is effective for annual and interim periods beginning on or after December 15, 2016 and will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective. It permits the use of either a retrospective or cumulative effect transition method and early adoption is not permitted. The Company has not yet selected a transition method and is in the process of evaluating the effect this standard will have on its consolidated financial statements and related disclosures.

1. Basis of Presentation and General Information (continued)

Reclassifications

Certain prior period amounts in the consolidated financial statements, and notes thereto, have been reclassified to conform to current period presentation.

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Credit Facility (Details) (USD $) In Millions, unless otherwise specified			9 Months Ended		9 Months Ended		9 Months Ended
	Sep. 26, 2014 Revolving line of credit facility [Member]	Feb. 21, 2012 Revolving line of credit facility [Member]	Sep. 26, 2014 Term Loan [Member]	Feb. 21, 2012 Term Loan [Member]	Sep. 26, 2014 Revolving Line Of Credit Facility And Term Loan [Member]	Aug. 27, 2013 Revolving Line Of Credit Facility And Term Loan [Member]	Sep. 26, 2014 LIBOR Rate [Member]	Sep. 26, 2014 Base Rate [Member]	Mar. 21, 2012 2012 Tender Offer [Member]
Line of Credit Facility [Line Items]
Borrowing capacity under credit facility		$ 20.0		$ 30.0
Credit facility amount outstanding	2.5		24.5
Availability remaining	17.5		0
Term of debt			5 years		5 years
Stock repurchase cost of tender offer net of fees and expenses related to tender offer									55.0
Additional borrowing capacity						$ 17.0
Maturity date			Aug. 27, 2018		Aug. 27, 2018
Margin percentage base rate							2.00%	1.00%

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Consolidated Balance Sheets (USD $)	Sep. 26, 2014	Dec. 27, 2013
Current assets:
Cash and cash equivalents	$ 10,552,000	$ 18,199,000
Accounts receivable and unbilled revenue, net of allowance of $1,547 and $1,674 at September 26, 2014 and December 27, 2013, respectively	44,438,000	34,011,000
Deferred tax asset, net	2,499,000	5,130,000
Prepaid expenses and other current assets	2,688,000	2,283,000
Total current assets	60,177,000	59,623,000
Restricted cash	355,000	354,000
Property and equipment, net	13,211,000	13,019,000
Other assets	3,445,000	1,039,000
Goodwill, net	83,628,000	76,283,000
Total assets	160,816,000	150,318,000
Current liabilities:
Accounts payable	5,410,000	8,080,000
Accrued expenses and other liabilities	33,643,000	25,646,000
Current portion of long-term debt	4,606,000
Total current liabilities	43,659,000	33,726,000
Long-term deferred tax liability, net	4,466,000	4,387,000
Long-term debt	22,423,000	19,029,000
Total liabilities	70,548,000	57,142,000
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.001 par value, 1,250,000 shares authorized; none issued and outstanding
Common stock, $.001 par value, 125,000,000 shares authorized; 53,167,266, and 52,143,103 shares issued at September 26, 2014 and December 27, 2013, respectively	53,000	52,000
Additional paid-in capital	264,505,000	261,861,000
Treasury stock, at cost, 23,881,663 and 22,189,409 shares at September 26, 2014 and December 27, 2013, respectively	(90,678,000)	(80,406,000)
Accumulated deficit	(78,860,000)	(83,880,000)
Accumulated comprehensive loss	(4,752,000)	(4,451,000)
Total shareholders' equity	90,268,000	93,176,000
Total liabilities and shareholders' equity	$ 160,816,000	$ 150,318,000

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 26, 2014	Sep. 27, 2013	Sep. 26, 2014	Sep. 27, 2013
Consolidated Statements of Comprehensive (Loss) Income [Abstract]
Net income	$ 3,591	$ 2,635	$ 5,020	$ 7,523
Foreign currency translation adjustment	(786)	1,088	(301)	(308)
Total comprehensive income	$ 2,805	$ 3,723	$ 4,719	$ 7,215

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Shareholders' Equity (Details) (USD $)	3 Months Ended	9 Months Ended				0 Months Ended						3 Months Ended	9 Months Ended	0 Months Ended
	Sep. 27, 2013	Sep. 26, 2014	Sep. 27, 2013	Dec. 27, 2013	Mar. 21, 2012 2012 Tender Offer [Member]	Sep. 26, 2013 2013 Tender Offer [Member]	Aug. 28, 2013 2013 Tender Offer [Member]	Sep. 26, 2013 2013 Tender Offer [Member] Minimum [Member]	Aug. 28, 2013 2013 Tender Offer [Member] Minimum [Member]	Sep. 26, 2013 2013 Tender Offer [Member] Maximum [Member]	Aug. 28, 2013 2013 Tender Offer [Member] Maximum [Member]	Sep. 26, 2014 Stock Repurchase A [Member]	Sep. 26, 2014 Stock Repurchase B [Member]	Oct. 15, 2013 Subsequent Event [Member] 2013 Tender Offer [Member]
Equity, Class of Treasury Stock [Line Items]
Stock repurchase authorized						$ 25,000,000	$ 35,750,000							$ 6,900,000
Stock repurchase shares authorized														1,000,000
Common stock, par value		$ 0.001		$ 0.001			$ 0.001
Purchase price per share			$ 4.80					$ 6.50	$ 5.75	$ 7.00	$ 6.50	$ 6.13	$ 6.07	$ 7.00
Percentage of issued and outstanding shares repurchased in tender offer					27.00%									3.10%
Number of stock repurchased in tender offer					11,000,000
Price per share repurchased in tender offer					$ 5.00
Stock repurchase cost of tender offer net of fees and expenses related to tender offer					55,000,000
Repurchase of common stock	0		124,000									485,000	1,700,000
Total cost			594,000									3,000,000	10,300,000
Amount available under repurchase plan		$ 4,300,000

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Accounts Receivable And Unbilled Revenue, Net (Tables)

9 Months Ended

Sep. 26, 2014

Accounts Receivable And Unbilled Revenue, Net [Abstract]

Accounts Receivable And Unbilled Revenue, Net

	September 26,		December 27,
	2014		2013
Accounts receivable	$	34,713	$	27,147
Unbilled revenue		11,272		8,538
Allowance for doubtful accounts		(1,547)		(1,674)
Accounts receivable and unbilled revenue, net	$	44,438	$	34,011

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Geographic And Group Information (Narrative) (Details) (USD $) In Millions, unless otherwise specified	Sep. 26, 2014	Dec. 27, 2013
Geographic And Group Information [Abstract]
Goodwill included in foreign assets	$ 15.7	$ 15.8

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Restructuring Costs (Tables)

9 Months Ended

Sep. 26, 2014

Restructuring Costs [Abstract]

Summary Of Restructuring Expense Accruals

		Severance and Other
		Employee Costs
Accrual balance at December 27, 2013	$	-
Accrual		3,604
Expenditures		(2,854)
Accrual balance at September 26, 2014	$	750

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Consolidated Statements of Cash Flows (USD $)	9 Months Ended
	Sep. 26, 2014	Sep. 27, 2013
Cash flows from operating activities:
Net income	$ 5,020,000	$ 7,523,000
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation expense	1,731,000	1,416,000
Amortization expense	1,700,000	451,000
Amortization of debt issuance costs	68,000	73,000
Restructuring costs	3,604,000
Provision for doubtful accounts	728,000	478,000
Loss on foreign currency translation	91,000	28,000
Non-cash stock compensation expense	4,185,000	4,702,000
Changes in assets and liabilities, net of acquisition:
Increase in accounts receivable and unbilled revenue	(9,581,000)	(1,252,000)
(Increase) decrease in prepaid expenses and other current and non-current assets	(503,000)	1,792,000
Decrease in accounts payable	(2,670,000)	(2,858,000)
Decrease in accrued expenses and other liabilities	(5,862,000)	(3,322,000)
Net cash (used in) provided by operating activities	(1,489,000)	9,031,000
Cash flows from investing activities:
Purchases of property and equipment	(1,924,000)	(1,619,000)
Cash consideration paid for acquisition	(2,877,000)
Cash acquired in acquisition of business	522,000
Decrease in restricted cash		161,000
Net cash used in investing activities	(4,279,000)	(1,458,000)
Cash flows from financing activities:
Proceeds from borrowings	10,500,000
Repayment of borrowings	(2,721,000)	(9,974,000)
Proceeds from issuance of common stock	620,000	924,000
Repurchases of common stock	(10,298,000)	(594,000)
Net cash used in financing activities	(1,899,000)	(9,644,000)
Effect of exchange rate on cash	20,000	16,000
Net decrease in cash and cash equivalents	(7,647,000)	(2,055,000)
Cash and cash equivalents at beginning of year	18,199,000	16,906,000
Cash and cash equivalents at end of period	10,552,000	14,851,000
Supplemental disclosure of cash flow information:
Cash paid for income taxes	687,000	451,000
Cash paid for interest	$ 389,000	$ 262,000
Supplemental disclosure of non-cash investing and financing activities:
Shares issued to sellers of acquired business	1,000,000

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 26, 2014	Dec. 27, 2013
Consolidated Balance Sheets [Abstract]
Accounts receivable and unbilled revenue, allowance	$ 1,547	$ 1,674
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,250,000	1,250,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	125,000,000	125,000,000
Common stock, shares issued	53,167,266	52,143,103
Treasury stock, at cost, shares	23,881,663	22,189,409

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Shareholders' Equity

9 Months Ended

Sep. 26, 2014

Shareholders' Equity [Abstract]

Shareholders' Equity

10. Shareholders’ Equity

Tender Offer

On August 28, 2013, the Company announced a tender offer to purchase up to $35.75 million in value of shares of its common stock, $0.001 par value per share, at a price neither greater than $6.50 nor less than $5.75 per share, to the seller in cash, less any applicable withholding taxes and without interest (the "Offer"). On September 26, 2013, the Company amended the Offer (the "Amended Offer") to increase the price range at which it would purchase its common stock to a range of neither greater than $7.00 nor less than $6.50 per share and to decrease the dollar amount of the Offer to $25.0 million. The Amended Offer was completed on October 15, 2013, with the Company purchasing approximately 1.0 million shares of its common stock at a purchase price of $7.00 per share, for an aggregate cost of approximately $6.9 million, excluding fees and expenses related to the Amended Offer. The 1.0 million shares represented approximately 3.1% of the Company's issued and outstanding shares of common stock at that time. The Company financed the Amended Offer from borrowings under the Amended Term Loan under its existing Credit Facility. See Note 6 for further information. 

On March 21, 2012, the Company completed a tender offer to purchase 11.0 million shares of its common stock at a purchase price of $5.00 per share, for an aggregate cost of approximately $55.0 million, excluding fees and expenses relating to the tender offer The 11.0 million shares accepted for purchase represented approximately 27% of the Company’s issued and outstanding shares of common stock at that time.

Share Repurchase Plan

Under the Company’s share repurchase plan, the Company may buy back shares of its outstanding stock either on the open market or through privately negotiated transactions subject to market conditions and trading restrictions. During the quarter ended September 26, 2014, the Company repurchased approximately 485 thousand shares of its common stock at an average price of $6.13 per share for a total cost of approximately $3.0 million. During the nine months ended September 26, 2014, the Company repurchased approximately 1.7 million shares of its common stock at an average price of $6.07 per share for a total cost of approximately $10.3 million. As of September 26, 2014, the Company had approximately $4.3 million available under its share repurchase plan authorization. During the quarter ended September 27, 2013, the Company did not buy back any shares under its share repurchase plan.  During the nine months ended September 27, 2013, the Company repurchased approximately 124 thousand shares of its common stock at an average price of $4.80 per share for a total cost of approximately $594 thousand.

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Document and Entity Information	9 Months Ended
	Sep. 26, 2014	Nov. 01, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	HACKETT GROUP, INC.
Entity Central Index Key	0001057379
Document Type	10-Q
Document Period End Date	Sep. 26, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--01-02
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		29,199,287

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Litigation

9 Months Ended

Sep. 26, 2014

Litigation [Abstract]

Litigation

11. Litigation

The Company is involved in legal proceedings, claims, and litigation arising in the ordinary course of business not specifically discussed herein. In the opinion of management, the final disposition of such matters will not have a material adverse effect on the Company’s financial position, cash flows or results of operations.

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Consolidated Statements of Operations (USD $)	3 Months Ended		9 Months Ended
	Sep. 26, 2014	Sep. 27, 2013	Sep. 26, 2014	Sep. 27, 2013
Revenue:
Revenue before reimbursements	$ 54,550,000	$ 51,976,000	$ 158,968,000	$ 153,188,000
Reimbursements	5,887,000	5,940,000	17,426,000	18,038,000
Total revenue	60,437,000	57,916,000	176,394,000	171,226,000
Cost of service:
Personnel costs before reimbursable expenses (includes $628 and $854 and $2,028 and $2,540 of stock compensation expense in the quarters and nine months ended September 26, 2014 and September 27, 2013, respectively)	34,068,000	33,970,000	101,674,000	99,375,000
Reimbursable expenses	5,887,000	5,940,000	17,426,000	18,038,000
Total cost of service	39,955,000	39,910,000	119,100,000	117,413,000
Selling, general and administrative costs (includes $814 and $681 and $2,158 and $2,162 of stock compensation expense in the quarters and nine months ended September 26, 2014 and September 27, 2013, respectively)	15,423,000	13,289,000	45,285,000	40,482,000
Restructuring costs			3,604,000
Total costs and operating expenses	55,378,000	53,199,000	167,989,000	157,895,000
Income from operations	5,059,000	4,717,000	8,405,000	13,331,000
Other income (expense):
Interest income	2,000	2,000	4,000	6,000
Interest expense	(173,000)	(94,000)	(463,000)	(361,000)
Income from continuing operations before income taxes	4,888,000	4,625,000	7,946,000	12,976,000
Income tax expense	1,297,000	1,926,000	2,926,000	5,318,000
Income from continuing operations	3,591,000	2,699,000	5,020,000	7,658,000
Loss from discontinued operations		(64,000)		(135,000)
Net income	$ 3,591,000	$ 2,635,000	$ 5,020,000	$ 7,523,000
Basic net income per common share:
Income per common share from continuing operations	$ 0.13	$ 0.09	$ 0.17	$ 0.25
Loss per common share from discontinued operations
Net income per common share	$ 0.13	$ 0.09	$ 0.17	$ 0.25
Diluted net income per common share:
Income per common share from continuing operations	$ 0.12	$ 0.08	$ 0.17	$ 0.24
Loss per common share from discontinued operations				$ (0.01)
Net income per common share	$ 0.12	$ 0.08	$ 0.17	$ 0.23
Weighted average common shares outstanding:
Basic	28,557,528	30,626,838	28,872,043	30,483,544
Diluted	29,800,325	32,796,644	29,884,274	32,173,868

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Restructuring Costs

9 Months Ended

Sep. 26, 2014

Restructuring Costs [Abstract]

Restructuring Costs

5. Restructuring Costs

The Company recorded restructuring costs of $3.6 million during the nine months ended September 26, 2014,  primarily for reductions in consultants and functional support personnel in Europe. These actions were taken as a result of the continued decline in demand in its European markets. The Company took steps to reduce its costs to better align its overall cost structure and organization with anticipated demand for its services.

The following table sets forth the activity in the restructuring expense accruals (in thousands):

		Severance and Other
		Employee Costs
Accrual balance at December 27, 2013	$	-
Accrual		3,604
Expenditures		(2,854)
Accrual balance at September 26, 2014	$	750

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Accrued Expenses And Other Liabilities

9 Months Ended

Sep. 26, 2014

Accrued Expenses And Other Liabilities [Abstract]

Accrued Expenses And Other Liabilities

4. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consisted of the following (in thousands):

		September 26,		December 27,
		2014		2013
Accrued compensation and benefits	$	5,642	$	5,163
Accrued bonuses		4,652		5,899
Accrued restructuring related expenses		750		134
Deferred revenue		7,949		8,345
Accrued sales, use, franchise and VAT tax		2,308		1,393
Acquisition-related contingent consideration		8,000		-
Other accrued expenses		4,342		4,712
Total accrued expenses and other liabilities	$	33,643	$	25,646

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Accrued Expenses And Other Liabilities (Tables)

9 Months Ended

Sep. 26, 2014

Accrued Expenses And Other Liabilities [Abstract]

Components Of Accrued Expenses And Other Liabilities

		September 26,		December 27,
		2014		2013
Accrued compensation and benefits	$	5,642	$	5,163
Accrued bonuses		4,652		5,899
Accrued restructuring related expenses		750		134
Deferred revenue		7,949		8,345
Accrued sales, use, franchise and VAT tax		2,308		1,393
Acquisition-related contingent consideration		8,000		-
Other accrued expenses		4,342		4,712
Total accrued expenses and other liabilities	$	33,643	$	25,646

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Geographic And Group Information

9 Months Ended

Sep. 26, 2014

Geographic And Group Information [Abstract]

Geographic And Group Information

12. Geographic and Group Information

 Revenue is primarily based on the country of the contracting entity and was attributed to the following geographical areas (in thousands):

	Quarter Ended				Nine Months Ended
	September 26,		September 27,		September 26,		September 27,
	2014		2013		2014		2013
Revenue:
North America	$	48,094	$	47,377	$	142,797	$	136,323
International (primarily European countries)		12,343		10,539		33,597		34,903
Total revenue	$	60,437	$	57,916	$	176,394	$	171,226

Long-lived assets are attributable to the following geographic areas (in thousands):

	September 26,		December 27,
	2014		2013
Long-lived assets:
North America	$	84,204	$	74,095
International (primarily European countries)		16,080		16,246
Total long-lived assets	$	100,284	$	90,341

  As of September 26, 2014, foreign assets included $15.7 million of goodwill related to the REL and Archstone acquisitions. As of December 27, 2013, foreign assets included $15.8 million of goodwill related to the REL and Archstone acquisitions.

  The Company’s revenue was derived from the following service groups (in thousands):

	Quarter Ended				Nine Months Ended
	September 26,		September 27,		September 26,		September 27,
	2014		2013		2014		2013
The Hackett Group	$	51,370	$	48,689	$	146,654	$	139,960
ERP Solutions		9,067		9,227		29,740		31,266
Total revenue	$	60,437	$	57,916	$	176,394	$	171,226

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Discontinued Operations

9 Months Ended

Sep. 26, 2014

Discontinued Operations [Abstract]

Discontinued Operations

8. Discontinued Operations

During the quarter ended March 29, 2013, the Company exited the Oracle ERP implementation business. This transaction was not material to the Company’s consolidated financial statements.

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Credit Facility

9 Months Ended

Sep. 26, 2014

Credit Facility [Abstract]

Credit Facility

6. Credit Facility

On February 21, 2012, the Company entered into a credit agreement with Bank of America, N.A. ("Bank of America"), pursuant to which Bank of America agreed to lend the Company up to $20.0 million pursuant to a revolving line of credit (the “Revolver”) and up to $30.0 million pursuant to a five-year term loan (the “Term Loan”), which was used to finance the Company's $55.0 million tender offer for its shares in March 2012. See Note10 for further information.

On August 27, 2013, the Company amended and restated the credit agreement (the "Credit Agreement") with Bank of America to finance a tender offer for shares of its common stock completed in October 2013. See Note 10 for further information. The Credit Agreement was amended and restated to:

· To provide for up to an additional $17.0 million of borrowing under the Term Loan (the "Amended Term Loan" and together with the Revolver, the "Credit Facility"). As of September 26, 2014, the Amended Term Loan had $24.5 million principal amount outstanding with no additional availability remaining and the Revolver had $2.5 million principal amount outstanding with an additional $17.5 million availability remaining.

· To extend the maturity date on the Revolver and the Amended Term Loan to August 27, 2018,  five years from the date of the amendment and restatement of the Credit Agreement.

The obligations of the Company under the Credit Facility are guaranteed by the active existing and future material U.S. subsidiaries of the Company and are secured by substantially all of the existing and future property and assets of the Company (subject to certain exceptions).

The interest rates per annum applicable to loans under the Credit Facility will be, at the Company’s option, equal to either a base rate or a LIBOR base rate, plus an applicable margin percentage. The applicable margin percentage is based on the consolidated leverage ratio, as defined in the Credit Agreement. As of September 26, 2014, the applicable margin percentage was 2.00% per annum based on the consolidated leverage ratio, in the case of LIBOR rate advances, and 1.00% per annum, in the case of base rate advances.

The Term Loan requires the amortization of principal payments in equal quarterly installments beginning December 31, 2013 through August 27, 2018, unless payments are made in advance. The Company is subject to certain covenants, including total consolidated leverage, fixed cost coverage and liquidity requirements, each as set forth in the Credit Agreement, subject to certain exceptions.

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Acquisition

9 Months Ended

Sep. 26, 2014

Acquisition [Abstract]

Acquisition

7. Acquisition

During the quarter ended March 28, 2014, the Company acquired the U.S., Canada and Uruguay operations of Technolab International Corporation ("Technolab"). The purchase price for the assets acquired and liabilities assumed was $2.9 million in cash and $1.0 million in shares of the Company's common stock, which are subject to a four-year vesting provision. The sellers will have the ability to earn an additional $8.0 million in contingent consideration in cash and stock subject to an earn-out based on actual results achieved.

Management's initial purchase price allocation resulted in $7.6 million which exceeded the estimated fair value of tangible and intangible assets and liabilities and which was therefore allocated to goodwill. The acquired intangible assets with definite lives of $4.1 million will be amortized over periods ranging from 2 years to 5 years.

Management's preliminary determination of the fair value of the tangible and intangible assets acquired and liabilities assumed is based on estimates and assumptions that are subject to change. During the measurement period, if information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively. The measurement period can extend as long as one year from the acquisition date.

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Stock Based Compensation

9 Months Ended

Sep. 26, 2014

Stock Based Compensation [Abstract]

Stock Based Compensation

9. Stock Based Compensation

During the nine months ended September 26, 2014, the Company issued 839,031 restricted stock units at a weighted average grant-date fair value of $5.91 per share. As of September 26, 2014, the Company had 2,293,058 restricted stock units outstanding at a weighted average grant-date fair value of $5.33 per share. As of September 26, 2014, $7.3 million of total restricted stock unit compensation expense related to unvested awards had not been recognized and is expected to be recognized over a weighted average period of approximately 2.1 years.

During the nine months ended September 26, 2014, the Company issued 164,474 shares of common stock subject to vesting requirements related to the Technolab acquisition at a weighted average grant-date fair value of $6.04 per share. See Note 7 for further information. As of September 26, 2014, the Company had 264,474 shares of common stock subject to vesting requirements outstanding at a weighted average grant-date fair value of $7.54 per share. As of September 26, 2014, $1.0 million of compensation expense related to common stock subject to vesting requirements had not been recognized and is expected to be recognized over a weighted average period of approximately 3.3 years.

On February 8, 2012, the Compensation Committee approved the fiscal year 2012 through 2015 equity compensation target for the Company’s Chief Executive Officer and Chief Operating Officer. Under this target, a single performance-based option grant was made to the Company’s Chief Executive Officer and the Chief Operating Officer of 1,912,500 options and 1,004,063 options, respectively, totaling 2,916,563 options, each with an exercise price of $4.00 and a fair value of $0.96. One-half of the options vest upon the achievement of at least 50% growth of pro forma earnings per share and the remaining half vest upon the achievement of at least 50% pro forma EBITDA growth. Each metric can be achieved at any time during the six-year term of the award based on a trailing twelve month period measured quarterly.

In March of 2013 these performance-based stock option grants were surrendered by the Company’s Chief Executive Officer and Chief Operating Officer and replaced with performance-based SARs, equal to the number of options. The terms and conditions and the specific performance targets applicable to the SARs are the same as those applicable to the replaced options, with the exception that the SARs will be settled in cash, stock or any combination thereof, at the Company’s discretion.

Although the targets for the performance-based SARs have not been achieved as of September 26, 2014, the Company recorded $0.1 million and $0.4 million of compensation expense related to these SARs for both of the quarters and nine months ended September 26, 2014 and September 27, 2013, respectively.

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Stock Based Compensation (Details) (USD $)	0 Months Ended	9 Months Ended			9 Months Ended	0 Months Ended	9 Months Ended	0 Months Ended		3 Months Ended		9 Months Ended
	Feb. 08, 2012	Sep. 26, 2014	Sep. 27, 2013	Sep. 26, 2014 Technolab [Member]	Sep. 26, 2014 Restricted Stock Units (RSUs) [Member]	Feb. 08, 2012 Performance Shares [Member]	Sep. 26, 2014 Performance Shares [Member]	Feb. 08, 2012 Performance Shares [Member] Chief Executive Officer [Member]	Feb. 08, 2012 Performance Shares [Member] Chief Operating Officer [Member]	Sep. 26, 2014 Stock Appreciation Rights (SARs) [Member]	Sep. 27, 2013 Stock Appreciation Rights (SARs) [Member]	Sep. 26, 2014 Stock Appreciation Rights (SARs) [Member]	Sep. 27, 2013 Stock Appreciation Rights (SARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Growth of Pro-forma EPS Percentage	50.00%
Growth of Pro-forma EBITDA percentage	50.00%
Restricted stock units granted					839,031
Weighted average grant-date fair value					$ 5.91	$ 0.96
Weighted average period, Restricted stock units					2 years 1 month 6 days
Weighted average period, Common stock		3 years 3 months 18 days
Performance based stock option grant, Exercise price	$ 4.00
Trailing period							12 months
Performance based stock option grant						2,916,563		1,912,500	1,004,063
Total share based compensation		$ 4,185,000	$ 4,702,000							$ 100,000	$ 400,000	$ 100,000	$ 400,000
Restricted stock units outstanding					2,293,058
Nonvested weighted average grant-date fair value					$ 5.33
Compensation expenses related to unvested restricted stock unit based awards				164,474	7,300,000
Shares subject to vesting requirements		264,474		6.04
Nonvested weighted average grant-date fair value, Common stock		$ 7.54
Compensation expense related to common stock subject to vesting requirements		$ 1,000,000
Term of the award							6 years

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Net Income Per Common Share (Tables)

9 Months Ended

Sep. 26, 2014

Net Income Per Common Share [Abstract]

Basic And Diluted Weighted Average Shares

	Quarter Ended		Nine Months Ended
	September 26,	September 27,	September 26,	September 27,
	2014	2013	2014	2013
Basic weighted average common shares outstanding	28,557,528	30,626,838	28,872,043	30,483,544
Effect of dilutive securities:
Unvested restricted stock units and common stock subject to
vesting requirements issued to employees and non-employees	1,232,971	2,159,234	1,002,642	1,676,932
Common stock issuable upon the exercise of stock options	9,826	10,572	9,589	13,392
Dilutive weighted average common shares outstanding	29,800,325	32,796,644	29,884,274	32,173,868

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Net Income Per Common Share (Narrative) (Details) In Millions, unless otherwise specified	3 Months Ended
	Sep. 26, 2014	Sep. 27, 2013
Net Income Per Common Share [Abstract]
Antidilutive common share equivalents	0.4	0.8

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Consolidated Statements of Operations (Parenthetical) (USD $)	3 Months Ended		9 Months Ended
	Sep. 26, 2014	Sep. 27, 2013	Sep. 26, 2014	Sep. 27, 2013
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share based compensation			$ 4,185,000	$ 4,702,000
Cost of Sales [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share based compensation	628,000	854,000	2,028,000	2,540,000
Selling General and Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share based compensation	$ 814,000	$ 681,000	$ 2,158,000	$ 2,162,000

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Accounts Receivable And Unbilled Revenue, Net

9 Months Ended

Sep. 26, 2014

Accounts Receivable And Unbilled Revenue, Net [Abstract]

Accounts Receivable And Unbilled Revenue, Net

3. Accounts Receivable and Unbilled Revenue, Net

Accounts receivable and unbilled revenue, net, consisted of the following (in thousands):

	September 26,		December 27,
	2014		2013
Accounts receivable	$	34,713	$	27,147
Unbilled revenue		11,272		8,538
Allowance for doubtful accounts		(1,547)		(1,674)
Accounts receivable and unbilled revenue, net	$	44,438	$	34,011

Accounts receivable is net of uncollected advanced billings. Unbilled revenue includes recognized recoverable costs and accrued profits on contracts for which billings had not been presented to clients.

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Net Income Per Common Share (Basic And Diluted Weighted Average Shares) (Details)	3 Months Ended		9 Months Ended
	Sep. 26, 2014	Sep. 27, 2013	Sep. 26, 2014	Sep. 27, 2013
Net Income Per Common Share [Abstract]
Basic weighted average common shares outstanding	28,557,528	30,626,838	28,872,043	30,483,544
Unvested restricted stock units and common stock subject to vesting requirements issued to employees and non-employees	1,232,971	2,159,234	1,002,642	1,676,932
Common stock issuable upon the exercise of stock options	9,826	10,572	9,589	13,392
Diluted weighted average common shares outstanding	29,800,325	32,796,644	29,884,274	32,173,868

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Geographic And Group Information (Long-Lived Assets Attributable To Geographic Area) (Details) (USD $)	Sep. 26, 2014	Dec. 27, 2013
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets	$ 100,284,000	$ 90,341,000
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets	84,204,000	74,095,000
International Primarily European Countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets	$ 16,080,000	$ 16,246,000

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Basis of Presentation and General Information (Policies)

9 Months Ended

Sep. 26, 2014

Basis of Presentation and General Information [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements of The Hackett Group,  Inc. (“Hackett” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the Company’s accounts and those of its wholly-owned subsidiaries which the Company is required to consolidate. All intercompany transactions and balances have been eliminated in consolidation.

In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments which are necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods presented. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 27, 2013, included in the Annual Report on Form 10-K filed by the Company with the SEC. The consolidated results of operations for the quarter and nine months ended September 26, 2014, are not necessarily indicative of the results to be expected for any future period or for the full fiscal year.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Fair Value

Fair Value

The Company’s financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable and unbilled revenue, accounts payable, accrued expenses and other liabilities and debt. As of September 26, 2014 and December 27, 2013, the carrying amount of each financial instrument, with the exception of debt, approximated the instrument’s respective fair value due to the short-term nature and maturity of these instruments.

The Company uses significant other observable market data or assumptions (Level 2 inputs as defined in accounting guidance) that it believes market participants would use in pricing debt. The fair value of the debt approximated the carrying amount, using Level 2 inputs, due to the short-term variable interest rates based on market rates.

Business Combinations

Business Combinations

The Company applies the provisions of ASC 805, Business Combinations, in the accounting for its acquisitions, which requires recognition of the assets acquired and the liabilities assumed at their acquisition date fair values, separately from goodwill. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition date fair values of the tangible and identifiable intangible assets acquired and liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, that may be up to 12 months from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with a corresponding adjustment to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, the impact of any subsequent adjustments is included in the consolidated statements of operations.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In May 2014, the FASB issued guidance on revenue recognition, which provides for a single, principles-based model for revenue recognition and replaces the existing revenue recognition guidance. The guidance is effective for annual and interim periods beginning on or after December 15, 2016 and will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective. It permits the use of either a retrospective or cumulative effect transition method and early adoption is not permitted. The Company has not yet selected a transition method and is in the process of evaluating the effect this standard will have on its consolidated financial statements and related disclosures.

Reclassifications

Reclassifications

Certain prior period amounts in the consolidated financial statements, and notes thereto, have been reclassified to conform to current period presentation.