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 June 28, 2019

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 333-48123

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)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.001 per share	HCKT	NASDAQ Stock Market

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 every Interactive Data File required to be submitted 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 such files).    YES  ☒    NO  ☐

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

Large Accelerated Filer	☐	Accelerated Filer	☒
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

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

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

As of July 31, 2019, there were 29,856,247 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 June 28, 2019 and December 28, 2018 (unaudited)	3
	Consolidated Statements of Operations for the Three and Six Months Ended June 28, 2019 and June 29, 2018 (unaudited)	4
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 28, 2019 and June 29, 2018 (unaudited)	5
	Consolidated Statements of Cash Flows for the Six Months Ended June 28, 2019 and June 29, 2018 (unaudited)	6
	Consolidated Statements of Equity for the Three and Six Months Ended June 28, 2019 and June 29, 2018 (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 6.	Exhibits	24
SIGNATURES		25

2

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The Hackett Group, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

	June 28,			December 28,
	2019			2018
ASSETS
Current assets:
Cash	$	16,682		$	13,808
Accounts receivable and unbilled revenue, net of allowance of $992 and $1,441 at June 28, 2019 and December 28, 2018, respectively		54,547			54,807
Prepaid expenses and other current assets		4,086			4,339
Assets related to discontinued operations		—			137
Total current assets		75,315			73,091
Property and equipment, net		21,112			19,750
Other assets		3,116			3,704
Goodwill, net		84,213			84,207
Operating lease right-of-use assets		7,613			—
Total assets	$	191,369		$	180,752
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,767		$	7,429
Accrued expenses and other liabilities		33,114			34,498
Operating lease liabilities		2,376			—
Liabilities related to discontinued operations		31			2,300
Total current liabilities		42,288			44,227
Long-term deferred tax liability, net		8,143			6,435
Long-term debt		4,500			6,500
Operating lease liabilities		5,237			—
Total liabilities		60,168			57,162
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.001 par value, 1,250,000 shares authorized; none    issued and outstanding		—			—
Common stock, $0.001 par value, 125,000,000 shares authorized 57,129,647    and 56,607,622 shares issued at June 28, 2019 and December 28, 2018,    respectively		58			57
Additional paid-in capital		299,342			296,955
Treasury stock, at cost, 27,280,200 and 27,086,782 shares June 28, 2019    and December 28, 2018, respectively		(139,660	)		(136,604	)
Accumulated deficit		(17,130	)		(25,424	)
Accumulated other comprehensive loss		(11,409	)		(11,394	)
Total shareholders' equity		131,201			123,590
Total liabilities and shareholders' equity	$	191,369		$	180,752

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						Six Months Ended
	June 28,			June 29,			June 28,			June 29,
	2019			2018			2019			2018
Revenue:
Revenue before reimbursements	$	67,976		$	68,706		$	130,346			134,745
Reimbursements		5,545			5,821			10,330			10,889
Total revenue		73,521			74,527			140,676			145,634
Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses		40,661			41,944			79,466			81,963
Stock compensation expense		1,311			898			2,310			2,721
Reimbursable expenses		5,545			5,821			10,330			10,889
Total cost of service		47,517			48,663			92,106			95,573
Selling, general and administrative costs		15,413			15,370			29,754			30,446
Stock compensation expense		787			804			1,492			1,645
Acquisition-related contingent consideration liability		45			(4,553	)		(1,025	)		(4,553	)
Total costs and operating expenses		63,762			60,284			122,327			123,111
Income from operations		9,759			14,243			18,349			22,523
Other expense:
Interest expense		(105	)		(178	)		(206	)		(357	)
Income from operations before income taxes		9,654			14,065			18,143			22,166
Income tax expense		2,614			2,393			4,054			3,193
Income from continuing operations		7,040			11,672			14,089			18,973
Loss from discontinued operations		(51	)		(151	)		(6	)		(85	)
Net income	$	6,989		$	11,521		$	14,083		$	18,888
Basic net income per common share:
Income per common share from continuing operations	$	0.23		$	0.40		$	0.47		$	0.65
Loss per common share from discontinued operations		(0.00	)		(0.01	)		(0.00	)		(0.00	)
Net income per common share	$	0.23		$	0.39		$	0.47		$	0.65
Diluted net income per common share:
Income per common share from continuing operations	$	0.22		$	0.36		$	0.44		$	0.59
Loss per common share from discontinued operations		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Net income per common share	$	0.22		$	0.36		$	0.44		$	0.59
Weighted average common shares outstanding:
Basic		29,823			29,430			29,753			29,260
Diluted		32,374			32,235			32,334			32,025

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						Six Months Ended
	June 28,			June 29,			June 28,			June 29,
	2019			2018			2019			2018
Net income	$	6,989		$	11,521		$	14,083		$	18,888
Foreign currency translation adjustment		(672	)		(2,346	)		(15	)		(1,194	)
Total comprehensive income	$	6,317		$	9,175		$	14,068		$	17,694

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)

	Six Months Ended
	June 28,			June 29,
	2019			2018
Cash flows from operating activities:
Net income	$	14,083		$	18,888
Less loss from discontinued operations		(6	)		(85	)
Net income from continuing operations		14,089			18,973
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		1,435			1,204
Amortization expense		553			1,204
Amortization of debt issuance costs		46			46
Non-cash stock compensation expense		3,802			4,412
Provision for doubtful accounts		606			196
Gain on foreign currency translation		(57	)		(297	)
Release of valuation allowance		1,714			1,860
Changes in assets and liabilities:
Increase in accounts receivable and unbilled revenue		(246	)		(1,551	)
(Increase) decrease in prepaid expenses and other assets		324			(953	)
Decrease in accounts payable		(661	)		(34	)
Decrease in accrued expenses and other liabilities		(4,311	)		(5,895	)
Increase (decrease) in income tax payable		744			(4,247	)
Net cash provided by operating activities		18,032			14,833
Cash flows from investing activities:
Purchases of property and equipment		(2,819	)		(5,161	)
Net cash used in investing activities		(2,819	)		(5,161	)
Cash flows from financing activities:
Proceeds from issuance of common stock		418			387
Proceeds from borrowings		1,000			—
Repayment of borrowings		(3,000	)		(5,500	)
Dividends paid		(5,407	)		(4,656	)
Repurchase of common stock		(5,443	)		(4,149	)
Net cash used in financing activities		(12,432	)		(13,918	)
Effect of exchange rate on cash		93			4
Net increase (decrease) in cash and cash equivalents		2,874			(4,242	)
Cash at beginning of period		13,808			17,512
Cash at end of period	$	16,682		$	13,270
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	1,578		$	5,400
Cash paid for interest	$	149		$	296

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

6

The Hackett Group, Inc.

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands)

(unaudited)

																	Accumulated
					Additional												Other			Total
	Common Stock				Paid in			Treasury Stock						Accumulated			Comprehensive			Shareholders'
	Shares		Amount		Capital			Shares			Amount			Deficit			Loss			Equity
Balance at December 28, 2018		56,615	$	57	$	296,955			(27,086	)	$	(136,604	)	$	(25,424	)	$	(11,394	)	$	123,590
Issuance of common stock		394		1		(2,373	)		—			—			—			—			(2,372	)
Treasury stock purchased		—		—		—			(102	)		(1,616	)		—			—			(1,616	)
Amortization of restricted stock units and common stock subject to
vesting requirements		—		—		2,394			—			—			—			—			2,394
Dividends declared		—		—		—			—			—			—			—			—
Net income		—		—		—			—			—			7,094			—			7,094
Foreign currency translation		—		—		—			—			—			—			657			657
Balance at March 29, 2019		57,009	$	58	$	296,976			(27,188	)	$	(138,220	)	$	(18,330	)	$	(10,737	)	$	129,747
Issuance of common stock		121		—		405			—			—			—			—			405
Treasury stock purchased		—		—		—			(92	)		(1,440	)		—			—			(1,440	)
Amortization of restricted stock units and common stock subject to
vesting requirements		—		—		1,961			—			—			—			—			1,961
Dividends declared		—		—		—			—			—			(5,789	)		—			(5,789	)
Net income		—		—		—			—			—			6,989			—			6,989
Foreign currency translation		—		—		—			—			—			—			(672	)		(672	)
Balance at June 28, 2019		57,130	$	58	$	299,342			(27,280	)	$	(139,660	)	$	(17,130	)	$	(11,409	)	$	131,201
																	Accumulated
					Additional												Other			Total
	Common Stock				Paid in			Treasury Stock						Accumulated			Comprehensive			Shareholders'
	Shares		Amount		Capital			Shares			Amount			Deficit			Loss			Equity
Balance at December 29, 2017		55,745	$	56	$	288,297			(26,945	)	$	(134,054	)	$	(38,515	)	$	(8,509	)	$	107,275
Issuance of common stock		721		1		(3,004	)		—			—			—			—			(3,003	)
Treasury stock purchased		—		—		1,346			(126	)		(2,310	)		—			—			(964	)
Amortization of restricted stock units and common stock subject to
vesting requirements		—		—		3,557			—			—			—			—			3,557
Dividends declared		—		—		—			—			—			—			—			—
Net income		—		—		—			—			—			7,367			—			7,367
Foreign currency translation		—		—		—			—			—			—			1,152			1,152
Balance at March 30, 2018		56,466	$	57	$	290,196			(27,071	)	$	(136,364	)	$	(31,148	)	$	(7,357	)	$	115,384
Issuance of common stock		56		—		205			—			—			—			—			205
Treasury stock purchased		—		—		—			—			—			—			—			—
Amortization of restricted stock units and common stock subject to
vesting requirements		—		—		2,264			—			—			—			—			2,264
Dividends declared		—		—		—			—			—			(5,396	)		—			(5,396	)
Net income		—		—		—			—			—			11,521			—			11,521
Foreign currency translation		—		—		—			—			—			—			(2,346	)		(2,346	)
Balance at June 29, 2018		56,522	$	57	$	292,665			(27,071	)	$	(136,364	)	$	(25,023	)	$	(9,703	)	$	121,632

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

7

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 28, 2018, included in the Annual Report on Form 10-K filed by the Company with the SEC on March 8, 2019. The consolidated results of operations for the quarter and six months ended June 28, 2019, 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.

Revenue Recognition

We generate substantially all of our revenue from providing professional services to our clients. We also generate revenue from software licenses, software support, maintenance and subscriptions to our executive and best practices advisory programs. A single contract could include one or multiple performance obligations. For those contracts that have multiple performance obligations, we allocate the total transaction price to each performance obligation based on its relative standalone selling price.  We determine the standalone selling price based on the respective selling price of the individual elements when they are sold separately.  

Revenue is recognized when control of the goods and services provided are transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods and services using the following steps: 1) identify the contract, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue as or when we satisfy the performance obligations.  

We typically satisfy our performance obligations for professional services over time as the related services are provided. The performance obligations related to software support, maintenance and subscriptions to our executive and best practice advisory programs are typically satisfied evenly over the course of the service period. Other performance obligations, such as software licenses, are satisfied at a point in time.

We generate our revenue under four types of billing arrangements: fixed-fee (including software license revenue); time-and-materials; executive and best practice advisory services; and software sales, maintenance and support.

In fixed-fee billing arrangements, which would also include contracts with capped fees, we agree to a pre-established fee or fee cap in exchange for a predetermined set of professional services. We set the fees based on our estimates of the costs and timing for completing the engagements. We generally recognize revenue under fixed-fee or capped fee arrangements using a proportionate performance approach, which is based on work completed to-date as compared to estimates of the total services to be provided under the engagement. Estimates of total engagement revenue and cost of services are monitored regularly during the term of the engagement. If our estimates indicate a potential loss, such loss is recognized in the period in which the loss first becomes probable and reasonably estimable. The customer is invoiced based on the contractual agreement between the parties, typically bi-weekly, monthly or mile-stone driven, with net thirty-day terms.

Time-and-material billing arrangements require the client to pay based on the number of hours worked by our consultants at agreed upon hourly rates. We recognize revenue under time-and-material arrangements as the related services or goods are provided, using the right to invoice practical expedient which allows us to recognize revenue in the amount based on the number of hours worked and the agreed upon hourly rates.  The customer is invoiced based on the contractual agreement between the parties, typically bi-weekly, monthly or milestone driven, with net thirty-day terms.

8

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation and General Information (continued)

Advisory services contracts are typically in the form of a subscription agreement which allows the customer access to the Company’s executive and best practice advisory programs.  There is typically a single performance obligation and the transaction price is the contractual amount of the subscription agreement.  Revenue from advisory service contracts is recognized ratably over the life of the agreements.  Customers are typically invoiced at the inception of the contract, with net thirty-day terms.

The resale of software and maintenance contracts are in the form of SAP America software license or maintenance agreements provided by SAP America.  SAP is the principal and the Company is the agent in these transactions as the Company does not obtain title to the software and the maintenance is sold simultaneously.  The transaction price is the Company’s agreed-upon percentage of the software license or maintenance amount in the contract with the vendor.  Revenue for the resale of software licenses is recognized upon contract execution and customer’s receipt of the software. Revenue from maintenance contracts is recognized ratably over the life of the agreements.  The customer is typically invoiced at contract inception, with net thirty-day terms.

Expense reimbursements that are billable to clients are included in total revenue, and are substantially all billed as time-and-material billing arrangements.  Therefore, the Company recognizes all reimbursable expenses as revenue as the related services are provided, using the right to invoice practical expedient. Reimbursable expenses are recognized as expenses in the period in which the expense is incurred.  Any expense reimbursements that are billable to clients under fixed-fee billing arrangements are recognized in line with the proportionate performance approach.  

The payment terms and conditions in our customer contracts vary. The agreements entered into in connection with a project, whether time-and-materials-based or fixed-fee or capped-fee based, typically allow clients to terminate early due to breach or for convenience with 30 days’ notice. In the event of termination, the client is typically contractually required to pay for all time, materials and expenses incurred by the Company through the effective date of the termination. In addition, from time to time the Company enters into agreements with its clients that limit its right to enter into business relationships with specific competitors of that client for a specific time period. These provisions typically prohibit the Company from performing a defined range of services which it might otherwise be willing to perform for potential clients. These provisions are generally limited to six to twelve months and usually apply only to specific employees or the specific project team.

Sales tax collected from customers and remitted to the applicable taxing authorities is accounted for on a net basis, with no impact to revenue.

Differences between the timing of billings and the recognition of revenue are recognized as either unbilled services or deferred revenue in the accompanying consolidated balance sheets. Revenue recognized for services performed but not yet billed to clients are recorded as unbilled services. Revenue recognized, but for which are not yet entitled to bill because certain events, such as the completion of the measurement period, are recorded as contract assets and included within unbilled services. Client prepayments are classified as deferred revenue and recognized over future periods as earned in accordance with the applicable engagement agreement. See Note 3 for the accounts receivable and unbilled revenue balances and see Note 4 for the deferred revenue balances. During the quarter and six months ended June 28, 2019, the Company recognized $4.3 million and $8.3 million, respectively, of revenue as a result of changes in deferred revenue liability balance, as compared to $5.0 million and $9.8 million for the quarter and six months ended June 29, 2018, respectively. 

The following table reflects the Company’s disaggregation of total revenue including reimbursable expenses for the quarters and six months ended June 28, 2019 and June 29, 2018:

	Quarter Ended				Six Months Ended
	June 28,		June 29,		June 28,		June 29,
	2019		2018		2019		2018
Consulting	$	66,908	$	67,962	$	128,739	$	133,289
Software License Sales		1,068		744		1,607		1,456
Revenue before reimbursements from continuing operations	$	67,976	$	68,706	$	130,346	$	134,745

9

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation and General Information (continued)

Capitalized Sales Commissions

Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized as project revenue is recognized.  We determined the period of amortization by taking into consideration the customer contract period, which are generally less than 12 months. Commission expense is included in Selling, General and Administrative Costs in the accompanying condensed consolidated statements of operations. As of December 28, 2018, and December 29, 2017, the Company had $1.2 million and $1.4 million, respectively, of deferred commissions, of which $0.3 million and $0.5 million was amortized during the quarter and six months of each respective year. No impairment loss was recognized relating to the capitalization of deferred commission.

Practical Expedients

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be less than one year.

Discontinued Operations

The Company’s European REL Working Capital group’s sales had declined over the past several years as European countries have experienced continued economic recoveries and improved cash balances.  Companies are holding high cash reserves which drove working capital project sales of this group down across all of Europe. The REL practice had a limited pipeline of potential client engagements; therefore, the Company made the strategic decision to exit the business at the end of fiscal year 2018.

The following table includes the carrying amounts of the major classes of assets and liabilities presented in discontinued operations in our consolidated balance sheet:

	June 28,		December 28,
	2019		2018
ASSETS
Accounts receivable and unbilled revenue (no allowance as of June 28, 2019 and December 28, 2018)	$	—	$	137
Assets related to discontinued operations	$	-	$	137
LIABILITIES
Accrued expenses and other liabilities (1)	$	31	$	2,300
Liabilities related to discontinued operations	$	31	$	2,300
(1) The balance at December 28, 2018, primarily represents the accrued severance related to terminated employees.

10

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation and General Information (continued)

The following table presents the gain and loss results for the Company’s discontinued operations:

	Quarter Ended						Six Months Ended
	June 28,			June 29,			June 28,			June 29,
	2019			2018			2019			2018
Revenue:
Revenue before reimbursements	$	(17	)	$	908		$	75		$	2,344
Reimbursements		—			214			17			404
Total revenue		(17	)		1,122			92			2,748
Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses		(15	)		870			24			1,907
Reimbursable expenses		—			214			17			404
Total cost of service		(15	)		1,084			41			2,311
Selling, general and administrative costs		61			243			56			602
Total costs and operating expenses		46			1,327			97			2,913
Loss from discontinued operations before income taxes		(63	)		(205	)		(5	)		(165	)
Income tax expense (benefit)		(12	)		(54	)		1			(80	)
Loss from discontinued operations	$	(51	)	$	(151	)	$	(6	)	$	(85	)

Fair Value

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable and unbilled revenue, accounts payable, accrued expenses and other liabilities and debt. As of June 28, 2019 and December 28, 2018, the carrying amount of each financial instrument 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 February 2016, the FASB issued guidance on leases which supersedes the current lease guidance. The core principle establishes a right-of-use model (ROU) that requires lessees to recognize the assets and liabilities that arise from nearly all leases on the balance sheet. Accounting applied by lessees has remain largely consistent with previous guidance. The Company adopted the amended guidance effective December 29, 2018, including interim periods within this fiscal year, using the effective date as the date of initial application. Consequently, on adoption, the Company recognized additional operating liabilities of approximately $9.0 million, with corresponding ROU assets of approximately the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. The amended guidance did not have a material impact on the Company’s consolidated statements of comprehensive income or its consolidated statements of cash flows. See Note 5 for additional information.

11

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation and General Information (continued)

In July 2018, the FASB issued ASU 2018-09, which affects a wide variety of Topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance.  The amendments in the ASU represent changes that clarify, correct errors in, or make minor improvements to the Codification.  Ultimately, the amendments make the Codification easier to understand and apply by eliminating inconsistencies and providing clarifications.  Some of the amendments in this ASU do not require transition guidance and are effective upon issuance of the ASU, while many of the amendments have transition guidance with effective dates for annual periods beginning after December 15, 2018.  The adoption of the amendments in this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, which eliminates Step 2 from the goodwill impairment test. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted for interim and annual goodwill impairment test with a measurement date after January 1, 2017. The Company does not expect the guidance to have a material impact on the Company’s consolidated financial statements.  

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.

Diluted 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				Six Months Ended
	June 28,		June 29,		June 28,		June 29,
	2019		2018		2019		2018
Basic weighted average common shares outstanding		29,822,917		29,429,925		29,752,903		29,259,641
Effect of dilutive securities:
Unvested restricted stock units and common stock subject to vesting requirements issued to employees and non-employees		222,438		469,702		230,742		420,020
Common stock issuable upon the exercise of stock options and SARs		2,328,797		2,335,458		2,350,656		2,345,288
Dilutive weighted average common shares outstanding		32,374,152		32,235,085		32,334,301		32,024,949

Approximately 9 thousand shares and 13 thousand shares of common stock equivalents were excluded from the computations of diluted net income per common share for the quarter and six months ended June 28, 2019, respectively, as compared to 843  shares and 864 shares for the quarter and six months ended  June 29, 2018, respectively,   as their inclusion would have had an anti-dilutive effect on diluted net income per common share.   

12

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

3. Accounts Receivable and Unbilled Revenue, Net

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

	June 28,			December 28,
	2019			2018
Accounts receivable	$	32,686		$	35,794
Unbilled revenue		22,853			20,454
Allowance for doubtful accounts		(992	)		(1,441	)
Accounts receivable and unbilled revenue, net	$	54,547		$	54,807

Accounts receivable is net of uncollected advanced billings. Unbilled revenue represents revenue for services performed that have not been invoiced.

4. Accrued Expenses and Other Liabilities

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

	June 28,		December 28,
	2019		2018
Accrued compensation and benefits	$	7,609	$	5,012
Accrued bonuses		950		5,064
Accrued dividend payable		5,788		5,407
Acquisition earnout accruals		1,251		2,559
Deferred revenue		10,498		8,259
Accrued sales, use, franchise and VAT tax		2,222		3,077
Non-cash stock compensation accrual		538		872
Income tax payable		2,535		1,769
Other accrued expenses		1,723		2,479
Total accrued expenses and other liabilities	$	33,114	$	34,498

5. Leases

As described in Note 1 “Recently Issued Accounting Standards”, effective December 29, 2018, the Company adopted the new lease accounting standard. The Company has operating leases for office space and, to a much lesser extent, operating leases for equipment. The Company’s office leases are between terms of 1 and 10 years. Rents usually increase annually in accordance with defined rent steps or are based on current year consumer price index adjustments. Some of the lease agreements contain one or more of the following provisions or clauses: tenant allowances, rent holidays, lease premiums, and rent escalation clauses. There are typically no purchase options, residual value guarantees or restrictive covenants. When renewal options exist, the Company generally does not deem them to be reasonably certain to be exercised, and therefore the amounts are not recognized as part of our lease liability nor our right of use asset.

The components of lease expense during the three and six months ended June 28, 2019, were as follows (in thousands):

	Three Months		Six Months
Operating lease cost	$	708	$	1,398
Total net lease costs	$	708	$	1,398

The weighted average remaining lease term is 5.3 years.  Assuming the Company exercises its opt-out option in year 5 for the London office lease, the weighted average remaining lease term would be 3.2 years. The weighted average discount rate utilized is 4%. The discount rates applied to each lease, reflects the Company’s estimated incremental borrowing rate. This includes an assessment of the Company’s credit rating to determine the rate that the Company would have to pay to borrow, on a collateralized basis for a similar term, an amount equal to our lease payments in a similar economic environment. For the quarter and six months ended June 28, 2019, the Company paid $0.7 million and $1.4 million, respectively, from operating cash flows for operating leases.

13

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

5. Leases (continued)

Future minimum lease payments under non-cancellable operating leases as of June 28, 2019, were as follows (in thousands):

2019 (excluding the six months ended June 28, 2019	$	1,259
2020		2,057
2021		1,613
2022		1,371
2023		492
2024 and thereafter		1,705
Total lease payments		8,497
Less imputed interest		(884	)
Total	$	7,613

As of June 28, 2019, the Company does not have any additional operating leases that have not yet commenced that create significant rights and obligations for the Company.

6. Credit Facility

In February 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 $47.0 million pursuant to a term loan (the “Term Loan”, and together with the Revolver, the “Credit Facility”).  The Company has fully utilized and repaid its Term Loan.

On May 9, 2016, the Company amended and restated the credit agreement with Bank of America (the “Credit Agreement”) to:

• Provide for up to an additional $25.0 million of borrowing under the Revolver for a total borrowing capacity of $45.0 million; and

• Extend the maturity date on the Revolver to May 9, 2021.

The obligations of Hackett under the Revolver are guaranteed by active existing and future material U.S. subsidiaries of Hackett (the “U.S. Subsidiaries”), and are secured by substantially all of the existing and future property and assets of Hackett and the U.S. Subsidiaries, a 100% pledge of the capital stock of the U.S. Subsidiaries, and a 66% pledge of the capital stock of Hackett’s direct foreign subsidiaries (subject to certain exceptions).

During the quarter and six months ended June 28, 2019, the Company paid down $3.0 million and a net $2.0 million under the Revolver, respectively,which had a balance of $4.5 million outstanding as of June 28, 2019. The interest rates per annum applicable to borrowings under Revolver 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 June 28, 2019, the applicable margin percentage was 1.50% per annum based on the consolidated leverage ratio, in the case of LIBOR rate advances, and 0.75% per annum, in the case of base rate advances. The interest rate as of June 28, 2019, was 3.9%.

The Company is subject to certain covenants, including total consolidated leverage, fixed cost coverage, adjusted fixed cost coverage and liquidity requirements, each as set forth in the Credit Agreement, subject to certain exceptions.  As of June 28, 2019, the Company was in compliance with all covenants.

7. Stock Based Compensation

During the six months ended June 28, 2019, the Company issued 413,636 restricted stock units at a weighted average grant-date fair value of $18.53 per share. As of June 28, 2019, the Company had 985,258 restricted stock units outstanding at a weighted average grant-date fair value of $17.38 per share. As of June 28, 2019, $12.4 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 2.4 years.

During the quarter ended June 28, 2019, 21,276 shares of common stock subject to vesting requirements were issued at a weighted average grant-date fair value of $15.29 per share. As of June 28, 2019, the Company had 109,293 shares of common stock subject to vesting requirements outstanding at a weighted average grant-date fair value of $18.94 per share. As of June 28, 2019, $1.8 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 2.0 years.

Forfeitures for all of the Company’s outstanding equity are recognized as incurred.

14

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

8. Shareholders’ Equity

Stock Appreciation Rights (“SARs”)

As of June 28, 2019, the Company had 2.9 million SARs outstanding with an exercise price of $4.00 per share and an expiration date of February 2022.           

Treasury Stock

Under the Company’s share repurchase plan, the Company may repurchase shares of its outstanding common stock either on the open market or through privately negotiated transactions subject to market conditions and trading restrictions. During the three months and six months ended June 28, 2019, the Company repurchased 92 thousand and 193 thousand shares, respectively, of its common stock at an average price of $15.59 and $15.80 per share, respectively, for a total cost of $1.4 million and $3.1 million, respectively.As of June 28, 2019, the Company had a total authorization remaining of $3.9 million under its repurchase plan with a total authorization of $142.2 million.

During the six months ended June 29, 2018, the Company repurchased 53 thousand shares of its common stock at an average price of $18.33 per share for a total cost of $1.0 million.  

The shares repurchased under the share repurchase plan during the quarter and six months ended June 28, 2019, do not include 825 shares and 124 thousand shares, respectively, which the Company bought back to satisfy employee net vesting obligations for a cost of $14 thousand and $2.4 million, respectively.   During the quarter and six months ended June 29, 2018, the Company bought back 11 thousand and 184 thousand shares, respectively, at a cost of $0.2 million and $3.1 million, respectively, to satisfy employee net vesting obligations.       

Dividend Program

In early 2019, the Company increased the 2019 annual dividend from $0.34 per share to $0.36 per share to be paid on a semi-annual basis. During the second quarter of 2019, the Company declared its semi-annual dividend of $0.18 per share, which was paid on July 10, 2019, for a total of $5.8 million.These dividends were paid from U.S. domestic sources and are accounted for as an increase to accumulated deficit.

9. Transactions with Related Parties

During the six months ended June 28, 2019, the Company bought back 28 thousand shares of its common stock from members of its Board of Directors for $0.5 million, or $16.25 per share.

10. 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.

11. Geographic and Group Information

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

	Quarter Ended				Six Months Ended
	June 28,		June 29,		June 28,		June 29,
	2019		2018		2019		2018
Revenue before reimbursements:
North America	$	56,750	$	57,245	$	109,287	$	110,770
International (primarily European countries)		11,226		11,461		21,059		23,975
Revenue before reimbursements from continuing operations	$	67,976	$	68,706	$	130,346	$	134,745

15

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

11. Geographic and Group Information (continued)

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

	June 28,		December 28,
	2019		2018
Long-lived assets:
North America	$	92,758	$	88,317
International (primarily European countries)		23,296		19,344
Total long-lived assets	$	116,054	$	107,661

As of June 28, 2019 and December 28, 2018, foreign assets included $14.2 million and $14.5 million, respectively, of goodwill related to acquisitions. As of June 28, 2019, foreign assets included $4.8 million of operating lease right of use assets.   

In the following table, Strategy and Business Transformation Group (S&BT) includes the results of our Executive Advisory Programs, Benchmarking Services, and Business Transformation Practices.  ERP, EPM and Analytics Solutions (EEA) includes the results of our Oracle EEA and SAP Solutions Practices (in thousands):

	Quarter Ended				Six Months Ended
	June 28,		June 29,		June 28,		June 29,
	2019		2018		2019		2018
S&BT	$	35,718	$	37,816	$	68,988	$	72,955
EEA		32,258		30,890		61,358		61,790
Revenue before reimbursements from continuing operations	$	67,976	$	68,706	$	130,346	$	134,745

12. Acquisitions

Jibe Consulting, Inc.

Effective May 1, 2017, the Company acquired certain assets and liabilities of Jibe Consulting, Inc. (“Jibe”), a U.S.-based Oracle E-Business Suite (“EBS”) and Oracle Cloud Business Application implementation firm. The acquisition of Jibe enhances the Company’s Cloud Application capabilities and strongly complements its market leading EPM transformation and technology implementation group.

The sellers’ purchase consideration was $5.4million in cash, not subject to vesting, and $3.6 million in shares of the Company’s common stock, subject to vesting. The initial cash consideration was funded from borrowings under the Revolver. The equity that was issued has a four-year vesting term and will be recorded as compensation expense over the respective vesting period. In addition, the sellers had the opportunity to earn an additional $6.6 million in cash and $4.4 million in Company common stock based on the achievement of the performance targets over the 18 month period following closing for a total of $11.0 million in contingent consideration, a portion of which will be allocated to key employees in both cash and Company stock. 

The cash related to the contingent consideration, which is to be paid to the sellers, is not subject to service vesting and has been accounted for as part of the purchase consideration. The cash related to the contingent consideration, which is to be paid to the key employees, is subject to service vesting and is being accounted for as compensation expense. During the second quarter and six months ended June 28, 2019, the Company recorded expense of $45 thousand and a benefit of $1.0 million, respectively. During both the second quarter and six months ended June 29, 2018, the Company recorded a benefit of $4.6 millionin earnings from operations on the consolidated statement of operations related to the contingent earnout liability for the Jibe acquisition earnout expectations.  

During the six months ended June 28, 2019, the Company recorded, in personnel costs before reimbursements on the consolidated statement of operations, a benefit of $0.1 million, related to the key employees’ portion of the cash related contingent consideration.  Management utilized the most recent financial results from which to base these estimates. These contingent liabilities have been recorded in the consolidated balance sheet as current accrued expenses and other liabilities.  

16

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

12. Acquisitions (continued)

The equity related to the contingent consideration will be subject to service vesting and will be recorded as compensation expense over the respective vesting period. As mentioned above, due to the projected results, the Company recorded a $0.2 million benefit during the six months ended June 28, 2019, ofacquisition-related non-cash stock compensation in cost of sales on the consolidated statement of operations.

Aecus Limited

Effective April 6, 2017, the Company acquired 100% of the equity of the U.K.-based operations of Aecus Limited (“Aecus”), a European Outsourcing Advisory and RPA consulting firm. This acquisition complements the global strategy and business transformation offerings of the Hackett Group.

The sellers’ purchase consideration was £3.2 million in cash. The closing purchase consideration was funded with the Company’s available funds. In addition, the sellers had the opportunity to earn an additional £2.4 million in contingent consideration in cash based on the achievement of performance targets achieved over the next 12 months, and key personnel had the opportunity to earn £0.3 million in cash and £0.3 million in the Company’s common stock. The contingent consideration for the selling shareholders and key personnel is subject to performance and service periods and will be accounted for as compensation expense and in non-current accrued expenses and other liabilities.

Chartered Institute of Management Accountants

Effective October 2017, Hackett-REL, Ltd., a subsidiary of the Company located in the United Kingdom, acquired The Chartered Institute of Management Accountants' share of the Certified GBS Professionals program.   This acquisition allows those studying under the program and their employers to benefit further from the Company’s sector specific expertise and focus on the growing global business services market.  Purchase consideration was $2.0 million in cash and was funded with the Company’s available funds.  Also in connection with this transaction, the Alliance and Program Development Agreement between the Company, Hackett-REL, Ltd. and The Chartered Institute of Management Accountants was terminated.

17

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 additional debt financing if needed. An additional description of our risk factors is set forth in our Annual Report on Form 10-K for the year ended December 28, 2018. 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 IP-based strategic advisory and technology consulting firm that enables companies to achieve world-class business performance. By leveraging the comprehensive Hackett database, the world’s leading repository of enterprise business process performance metrics and best practice intellectual capital, our business and technology solutions help clients improve performance and maximize returns on technology investments. Only Hackett empirically defines world-class performance in sales, general and administrative and certain supply chain activities with analysis gained through more than 16,500 benchmark and performance studies over 25 years at over 5,900 of the world’s leading companies.

In the following discussion, Strategy and Business Transformation Group (S&BT) includes the results of our Executive Advisory Programs, Benchmarking Services, Business Transformation Practices and IP as a Service.  ERP, EPM and Analytics Solutions (EEA) includes the results of our Oracle EEA and SAP Solutions Practices. 

18

RESULTS OF OPERATIONS

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 and unaudited):

	Quarter Ended										Six Months Ended
	June 28,					June 29,					June 28,					June 29,
	2019					2018					2019					2018
Revenue:
Revenue before reimbursements	$	67,976		100.0	%	$	68,706		100.0	%	$	130,346		100.0	%	$	134,745		100.0	%
Reimbursements		5,545					5,821					10,330					10,889
Total revenue		73,521					74,527					140,676					145,634
Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses		40,820		60.1	%		42,148		61.3	%		79,754		61.2	%		82,752		61.4	%
Stock compensation expense		1,022					977					1,942					2,000
Acquisition-related compensation benefit		(159	)				(204	)				(288	)				(789	)
Acquisition-related non-cash stock compensation expense		289					(79	)				368					721
Reimbursable expenses		5,545					5,821					10,330					10,889
Total cost of service		47,517					48,663					92,106					95,573
Selling, general and administrative costs		15,159		22.3	%		14,779		21.5	%		29,201		22.4	%		29,242		21.7	%
Non-cash stock compensation expense		787					804					1,492					1,645
Amortization of intangible assets		254					591					553					1,204
Acquisition-related contingent consideration liability		45					(4,553	)				(1,025	)				(4,553	)
Total selling, general, and administrativeexpenses		16,245					11,621					30,221					27,538
Total costs and operating expenses		63,762					60,284					122,327					123,111
Income from operations		9,759		14.4	%		14,243		20.7	%		18,349		14.1	%		22,523		16.7	%
Other expense:
Interest expense		(105	)				(178	)				(206	)				(357	)
Income from continuing operations before income taxes		9,654		14.2	%		14,065		20.5	%		18,143		13.9	%		22,166		16.5	%
Income tax expense		2,614		3.8	%		2,393		3.5	%		4,054		3.1	%		3,193		2.4	%
Income from continuing operations (net of taxes)		7,040					11,672					14,089					18,973
Loss from discontinued operations		(51	)				(151	)				(6	)				(85	)
Net income	$	6,989		10.3	%	$	11,521		16.8	%	$	14,083		10.8	%	$	18,888		14.0	%
Diluted net income per common share	$	0.22				$	0.36				$	0.44				$	0.59

Revenue. We are a global company with operations located in North and South America, Western Europe, Australia and India. Our revenue is denominated in multiple currencies, primarily the U.S. Dollar, British Pound, Euro and Australian Dollar and as a result is affected by currency exchange rate fluctuations. The impact of currency fluctuations did not have a significant impact on comparisons between the second quarter and six months ended June 28, 2019 and the comparable periods of 2018. Revenue is analyzed based on geographical location of engagement team personnel.  

Our total Company net revenue from continuing operations, or revenue before reimbursements, decreased by 1.1%, to $68.0 million and 3.3% to $130.3 million in the second quarter and first six months of 2019, respectively, as compared to $68.7 million and $134.7 million in the same periods of 2018, respectively. In the second quarter of 2018, one customer accounted for more than 5% of our total revenue, and during the first six months of 2018 and both periods in 2019, no customer accounted for more than 5% of our total revenue.

19

S&BT net revenue decreased 5.6%, to $35.7 million, and 5.4%, to $69.0 million during the second quarter and first six months of 2019,respectively, as compared to $37.8 million and $73.0 million in the same periods of 2018, respectively. This decrease is primarily due to weaker than expected international revenue, which was down 21%, as the uncertainties surrounding Brexit appear to have impacted client decision making. S&BT U.S. revenue was up 1.5%, to $26.3 million, during the second quarter of 2019, and slightly down in the first six months of 2019 to $50.6 million, as compared to the same periods in 2018.  

EEA net revenue increased 4.4%, to $32.3 million, and down 0.7%, to $61.4 million, during the second quarter and first six months of 2019, respectively, as compared to the same periods in 2018, primarily driven by strong Oracle Cloud revenue growth offsetting our Oracle on-premise declines, and better than expected growth from our SAP practice.

Total Company international net revenue accounted for 16% of total Company net revenue during both the second quarter and first six months of 2019, respectively, as compared to 19% and 18% for the same periods in 2018, respectively.

Reimbursements as a percentage of total net revenue were 8% during the second quarters and first six months of 2019 and 2018. Reimbursements are project travel-related expenses passed through to a client with no associated margin.

Cost of Service. Cost of service primarily consists of salaries, benefits and incentive compensation for consultants and subcontractor fees; acquisition-related cash and stock compensation costs; non-cash stock compensation expense; and reimbursable expenses associated with projects.

Personnel costs before reimbursable expenses decreased 3%, to $40.8 million, and 4%, to $79.8 million, for the second quarter and first six months of 2019, respectively, from $42.1 million and $82.8 million in the same periods of 2018, respectively. The decrease was primarily a result of lower utilization of subcontractors and lower 2019 incentive compensation accruals in all periods.  Personnel costs before reimbursable expenses, as a percentage of revenue before reimbursements, were 60% and 61% for the second quarter and first six months of 2019, respectively, as compared to 61% for the same periods in 2018.

Non-cash stock compensation expense was $1.0 million and $1.9 million for the second quarter and first six months of 2019, respectively, as compared to $1.0 million and $2.0 million for the same periods of 2018, respectively.

The acquisition-related compensation benefit in all periods relates to the accrual for the cash portion of the Aecus contingent consideration to be paid to the selling shareholders and key personnel, and the cash portion of the Jibe contingent consideration that is to be paid to key employees, all of which is subject to service vesting and as a result has been recorded as compensation expense. The Jibe earnout was adjusted in the first three months of 2019, resulting in a benefit. In 2018, the acquisition-related compensation expense for Aecus resulted in a benefit. All benefits related to Jibe and Aecus were a result of the decrease in the amount of estimated earnout achieved. See Note 12, “Acquisitions” to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Acquisition related non-cash stock compensation expense in 2019 and 2018 primarily related to our EPM AMS acquisition of Technolab in fiscal 2014 and the Jibe and Aecus acquisitions in 2017. The equity portion of the earnout for Jibe and Aecus resulted in adjustments based on the estimated and final earnout achieved. See Note 12, “Acquisitions” to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further information on the Jibe and Aecus acquisitions.

Selling, General and Administrative Costs (“SG&A”). SG&A primarily consists of salaries, benefits and incentive compensation for the selling, marketing, administrative and executive employees; non-cash compensation expense, amortization of intangible assets, acquisition related costs and various other overhead expenses.

SG&A costs were $15.2 million and $29.2 million for the second quarter and first six months of 2019, respectively, as compared to $14.8 million and $29.2 million for the same periods in 2018, respectively. These SG&A costs as a percentage of revenue before reimbursements were 22% during all periods presented in 2019 and 2018.

Amortization expense was $0.3 million and $0.6 million in the second quarter and first six months of 2019, respectively, as compared to $0.6 million and $1.2 million in the same periods in 2018. The amortization expense in 2019 and 2018 relate to the amortization of the intangible assets acquired in our acquisitions of Jibe and Aecus in the second quarter of 2017, and the buyout of our partner’s joint venture interest in the CGBS Training and Certification Programs in the fourth quarter of 2017. The 2018 amortization expense also includes the amortization of the intangible assets acquired in our 2014 EPM AMS acquisition of Technolab. The intangible assets relate to customer relationships, customer backlog and non-compete agreements. The Jibe and Aecus intangible assets will continue to amortize until 2022, and CGBS Training and Certification Program intangible assets will continue to amortize until 2021.

Non-cash stock compensation expense was $0.8 million and $1.5 million in the second quarter and first six months of 2019, respectively, as compared to $0.8 million and $1.6 million in the same periods in 2018, respectively.

Acquisition-related Contingent Consideration Liability. The acquisition-related contingent consideration liability relates to the cash portion of the Jibe acquisition contingent consideration due to the selling shareholders, which was not subject to vesting, resulted in a benefit due to the reduction of the contingent earnout liability during the second quarter and first six months of 2018 and during the first six months of 2019.   These adjustments are based on estimated earnout achieved.

20

Income Taxes. During the second quarter and first six months of 2019, we recorded $2.6 million and $4.0 million, respectively, of income tax expense related to certain federal, foreign and state taxes which reflected an effective tax rate of 27% and 22%, respectively. In the second quarter and first six months of 2018, we recorded $2.4 million and $3.2 million, respectively, of income tax expense related to certain federal, foreign and state taxes which reflected an effective tax rate of 17% and 14%, respectively.  

Liquidity and Capital Resources

As of June 28, 2019, and December 28, 2018, we had $16.7 million and $13.8 million, respectively, of cash on the consolidated balance sheets.  We currently believe that available funds (including the cash on hand and funds available for borrowing capacity under our revolving line of credit (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 that additional financing would be available when needed or desired.

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

	Six Months Ended
	June 28,			June 29,
	2019			2018
Cash flows provided by operating activities	$	18,032		$	14,833
Cash flows used in investing activities	$	(2,819	)	$	(5,161	)
Cash flows used in financing activities	$	(12,432	)	$	(13,918	)

Cash Flows from Operating Activities

Net cash provided by operating activities was $18.0 million during the first six months of 2019, as compared to $14.8 million during the same period in 2018. In 2019, the net cash provided by operating activities was primarily due to net income adjusted for non-cash items, partially offset by a decrease accrued expenses and liabilities after the payout of incentive compensation. In 2018, the net cash provided by operating activities was primarily driven by net income adjusted for non-cash items, partially offset by decreases in accrued expenses and other accruals after the payout of the 2017 incentive compensation, a decrease in the income tax payable accruals due to the estimated federal tax payments, and an increase in accounts receivable and unbilled revenue.

Cash Flows from Investing Activities

Net cash used in investing activities was $2.8 million and $5.2 million during the first six months of 2019 and 2018, respectively. During 2019 and 2018, cash flows used in investing activities included investments relating to investments in internal corporate systems, the rollout of new laptops which occurs every three to four years, and our investments relating to the development of our Quantum Leap benchmark technology.  

Cash Flows from Financing Activities

Net cash used in financing activities was $12.4 million and $13.9 million during the first six months of 2019 and 2018, respectively. The usage of cash in 2019 primarily related to the dividend payment of $5.4 million, the repurchase of $5.4 million of the Company’s common stock and net principal paydown under the Revolver of $2.0 million. The usage of cash in 2018 was primarily related to the dividend payment of $4.7 million, principal paydown under the Revolver $5.5 million and the repurchase of $4.0 million of the Company’s common stock.

As of June 28, 2019, we had $4.5 million outstanding under the Revolver, with a remaining capacity of approximately $40.5 million. See Note 6, “Credit Facility,” to our consolidated financial statements included in this Quarterly Report on Form 10-Q for more information.  

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 28, 2018.

21

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As of June 28, 2019, 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 Revolver, which is subject to variable interest rates. The interest rates per annum applicable to loans under the Revolver 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 Revolver did not have had a material impact on our results of operations for the quarter and six months ended June 28, 2019.

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.

Item 4. Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief 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 Chief Executive Officer and Chief 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 Controls

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.  

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 28, 2018.

22

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

Issuer Purchases of Equity Securities

During the quarter ended June 28, 2019, the Company repurchased 92 thousand shares of its common stock under the repurchase plan approved by the Company's Board of Directors. As of June 28, 2019, the Company had $3.9 million of authorization remaining under the repurchase 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 March 29, 2019							$	5,317,933
March 30, 2019 to April 26, 2019		82,354	$	15.56		82,354	$	4,036,726
April 27, 2019 to May 24, 2019		10,000	$	15.88		10,000	$	3,877,922
May 25, 2019 to June 28, 2019		—	$	—		—	$	3,877,922
		92,354	$	15.59		92,354

Shares repurchased during the quarter and six months ended June 28, 2019 under the repurchase plan approved by the Company's Board of Directors do not include 825 shares and 124 thousand shares, respectively, for a cost of $14 thousand and $2.4 million, respectively, that the Company bought back to satisfy employee net vesting obligations.  

23

Item 6. Exhibits

Exhibit No.	Exhibit Description
3.1	Second Amended and Restated Articles of Incorporation of the Registrant, as amended (incorporated herein by reference to the Registrant's Form 10-K for the year ended December 29, 2000).
3.2	Articles of Amendment of the Articles of Incorporation of the Registrant (incorporated herein by reference to the Registrant's Form 10-K for the year ended December 28, 2007).
3.3	Amended and Restated Bylaws of the Registrant, as amended (incorporated herein by reference to the Registrant's Form 10-K for the year ended December 29, 2000).
3.4	Amendment to Amended and Restated Bylaws of the Registrant (incorporated herein by reference to the Registrant's Form 8-K filed on March 31, 2008).
3.5	Amendment to Amended and Restated Bylaws of the Registrant (incorporated herein by reference to the Registrant's Form 8-K filed on January 21, 2015).
31.1*	Certification by CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification by CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32*	Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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

* Filed herewith

24

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: August 7, 2019	/s/ Robert A. Ramirez
	Robert A. Ramirez
	Executive Vice President, Finance and Chief Financial Officer

25

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

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:  August 7, 2019	By:	/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 PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

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:  August 7, 2019	By:	/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 Annual Report of The Hackett Group, Inc. (the “Company”) on Form 10- Q for the period ended June 28, 2019, 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.

By:	/s/ Ted A. Fernandez
	Ted A. Fernandez
	Chairman of the Board and Chief Executive Officer
	August 7, 2019
By:	/s/ Robert A. Ramirez
	Robert A. Ramirez
	Executive Vice President, Finance and Chief Financial Officer
	August 7, 2019

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

Document and Entity Information - shares	6 Months Ended
	Jun. 28, 2019	Jul. 31, 2019
Document And Entity Information [Abstract]
Trading Symbol	HCKT
Entity Registrant Name	HACKETT GROUP, INC.
Entity Central Index Key	0001057379
Document Type	10-Q
Document Period End Date	Jun. 28, 2019
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-27
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		29,856,247
Entity Shell Company	false
Entity Current Reporting Status	Yes
Entity File Number	333-48123
Entity Tax Identification Number	650750100
Entity Address, Address Line One	1001 Brickell Bay Drive
Entity Address, Address Line Two	Suite 3000
Entity Address, City or Town	Miami
Entity Address, State or Province	Florida
Entity Address, Postal Zip Code	33131
City Area Code	305
Local Phone Number	375-8005

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 28, 2019	Dec. 28, 2018
Current assets:
Cash	$ 16,682	$ 13,808
Accounts receivable and unbilled revenue, net of allowance of $992 and $1,441 at June 28, 2019 and December 28, 2018, respectively	54,547	54,807
Prepaid expenses and other current assets	4,086	4,339
Assets related to discontinued operations		137
Total current assets	75,315	73,091
Property and equipment, net	21,112	19,750
Other assets	3,116	3,704
Goodwill, net	84,213	84,207
Operating lease right-of-use assets	7,613
Total assets	191,369	180,752
Current liabilities:
Accounts payable	6,767	7,429
Accrued expenses and other liabilities	33,114	34,498
Operating lease liabilities	2,376
Liabilities related to discontinued operations	31	2,300
Total current liabilities	42,288	44,227
Long-term deferred tax liability, net	8,143	6,435
Long-term debt	4,500	6,500
Operating lease liabilities	5,237
Total liabilities	60,168	57,162
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.001 par value, 1,250,000 shares authorized; none issued and outstanding
Common stock, $0.001 par value, 125,000,000 shares authorized 57,129,647 and 56,607,622 shares issued at June 28, 2019 and December 28, 2018, respectively	58	57
Additional paid-in capital	299,342	296,955
Treasury stock, at cost, 27,280,200 and 27,086,782 shares June 28, 2019 and December 28, 2018, respectively	(139,660)	(136,604)
Accumulated deficit	(17,130)	(25,424)
Accumulated other comprehensive loss	(11,409)	(11,394)
Total shareholders' equity	131,201	123,590
Total liabilities and shareholders' equity	$ 191,369	$ 180,752

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 28, 2019	Dec. 28, 2018
Statement Of Financial Position [Abstract]
Accounts receivable and unbilled revenue, allowance	$ 992	$ 1,441
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	57,129,647	56,607,622
Treasury stock, at cost, shares	27,280,200	27,086,782

XML

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 28, 2019	Jun. 29, 2018	Jun. 28, 2019	Jun. 29, 2018
Revenue:
Total revenue	$ 73,521	$ 74,527	$ 140,676	$ 145,634
Cost of service:
Total cost of service	47,517	48,663	92,106	95,573
Stock compensation expense	1,311	898	2,310	2,721
Selling, general and administrative costs	15,413	15,370	29,754	30,446
Stock compensation expense	787	804	1,492	1,645
Acquisition-related contingent consideration liability	45	(4,553)	(1,025)	(4,553)
Total costs and operating expenses	63,762	60,284	122,327	123,111
Income from operations	9,759	14,243	18,349	22,523
Other expense:
Interest expense	(105)	(178)	(206)	(357)
Income from operations before income taxes	9,654	14,065	18,143	22,166
Income tax expense	2,614	2,393	4,054	3,193
Income from continuing operations	7,040	11,672	14,089	18,973
Loss from discontinued operations	(51)	(151)	(6)	(85)
Net income	$ 6,989	$ 11,521	$ 14,083	$ 18,888
Basic net income per common share:
Income per common share from continuing operations	$ 0.23	$ 0.40	$ 0.47	$ 0.65
Loss per common share from discontinued operations	0.00	(0.01)	0.00	0.00
Net income per common share	0.23	0.39	0.47	0.65
Diluted net income per common share:
Income per common share from continuing operations	0.22	0.36	0.44	0.59
Loss per common share from discontinued operations	0.00	0.00	0.00	0.00
Net income per common share	$ 0.22	$ 0.36	$ 0.44	$ 0.59
Weighted average common shares outstanding:
Basic	29,822,917	29,429,925	29,752,903	29,259,641
Diluted	32,374,152	32,235,085	32,334,301	32,024,949
Revenue Before Reimbursements [Member]
Revenue:
Total revenue	$ 67,976	$ 68,706	$ 130,346	$ 134,745
Reimbursements [Member]
Revenue:
Total revenue	5,545	5,821	10,330	10,889
Cost of service:
Total cost of service	5,545	5,821	10,330	10,889
Cost Before Reimbursements [Member]
Cost of service:
Total cost of service	$ 40,661	$ 41,944	$ 79,466	$ 81,963

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 28, 2019	Jun. 29, 2018	Jun. 28, 2019	Jun. 29, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 6,989	$ 11,521	$ 14,083	$ 18,888
Foreign currency translation adjustment	(672)	(2,346)	(15)	(1,194)
Total comprehensive income	$ 6,317	$ 9,175	$ 14,068	$ 17,694

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 28, 2019	Jun. 29, 2018
Cash flows from operating activities:
Net income	$ 14,083	$ 18,888
Less loss from discontinued operations	(6)	(85)
Net income from continuing operations	14,089	18,973
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	1,435	1,204
Amortization expense	553	1,204
Amortization of debt issuance costs	46	46
Non-cash stock compensation expense	3,802	4,412
Provision for doubtful accounts	606	196
Gain on foreign currency translation	(57)	(297)
Release of valuation allowance	1,714	1,860
Changes in assets and liabilities:
Increase in accounts receivable and unbilled revenue	(246)	(1,551)
(Increase) decrease in prepaid expenses and other assets	324	(953)
Decrease in accounts payable	(661)	(34)
Decrease in accrued expenses and other liabilities	(4,311)	(5,895)
Increase (decrease) in income tax payable	744	(4,247)
Net cash provided by operating activities	18,032	14,833
Cash flows from investing activities:
Purchases of property and equipment	(2,819)	(5,161)
Net cash used in investing activities	(2,819)	(5,161)
Cash flows from financing activities:
Proceeds from issuance of common stock	418	387
Proceeds from borrowings	1,000
Repayment of borrowings	(3,000)	(5,500)
Dividends paid	(5,407)	(4,656)
Repurchase of common stock	(5,443)	(4,149)
Net cash used in financing activities	(12,432)	(13,918)
Effect of exchange rate on cash	93	4
Net increase (decrease) in cash and cash equivalents	2,874	(4,242)
Cash at beginning of period	13,808	17,512
Cash at end of period	16,682	13,270
Supplemental disclosure of cash flow information:
Cash paid for income taxes	1,578	5,400
Cash paid for interest	$ 149	$ 296

XML

Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]
Balance at Dec. 29, 2017	$ 107,275	$ 56	$ 288,297	$ (134,054)	$ (38,515)	$ (8,509)
Balance, Shares at Dec. 29, 2017		55,745		(26,945)
Issuance of common stock	(3,003)	$ 1	(3,004)
Issuance of common stock, Shares		721
Treasury stock purchased	(964)		1,346	$ (2,310)
Treasury stock purchased, Shares				(126)
Amortization of restricted stock units and common stock subject to vesting requirements	3,557		3,557
Net income	7,367				7,367
Foreign currency translation	1,152					1,152
Balance at Mar. 30, 2018	115,384	$ 57	290,196	$ (136,364)	(31,148)	(7,357)
Ending Balance, Shares at Mar. 30, 2018		56,466		(27,071)
Balance at Dec. 29, 2017	107,275	$ 56	288,297	$ (134,054)	(38,515)	(8,509)
Balance, Shares at Dec. 29, 2017		55,745		(26,945)
Net income	18,888
Foreign currency translation	(1,194)
Balance at Jun. 29, 2018	121,632	$ 57	292,665	$ (136,364)	(25,023)	(9,703)
Ending Balance, Shares at Jun. 29, 2018		56,522		(27,071)
Balance at Mar. 30, 2018	115,384	$ 57	290,196	$ (136,364)	(31,148)	(7,357)
Balance, Shares at Mar. 30, 2018		56,466		(27,071)
Issuance of common stock	205		205
Issuance of common stock, Shares		56
Amortization of restricted stock units and common stock subject to vesting requirements	2,264		2,264
Dividends declared	(5,396)				(5,396)
Net income	11,521				11,521
Foreign currency translation	(2,346)					(2,346)
Balance at Jun. 29, 2018	121,632	$ 57	292,665	$ (136,364)	(25,023)	(9,703)
Ending Balance, Shares at Jun. 29, 2018		56,522		(27,071)
Balance at Dec. 28, 2018	123,590	$ 57	296,955	$ (136,604)	(25,424)	(11,394)
Balance, Shares at Dec. 28, 2018		56,615		(27,086)
Issuance of common stock	(2,372)	$ 1	(2,373)
Issuance of common stock, Shares		394
Treasury stock purchased	(1,616)			$ (1,616)
Treasury stock purchased, Shares				(102)
Amortization of restricted stock units and common stock subject to vesting requirements	2,394		2,394
Net income	7,094				7,094
Foreign currency translation	657					657
Balance at Mar. 29, 2019	129,747	$ 58	296,976	$ (138,220)	(18,330)	(10,737)
Ending Balance, Shares at Mar. 29, 2019		57,009		(27,188)
Balance at Dec. 28, 2018	123,590	$ 57	296,955	$ (136,604)	(25,424)	(11,394)
Balance, Shares at Dec. 28, 2018		56,615		(27,086)
Net income	14,083
Foreign currency translation	(15)
Balance at Jun. 28, 2019	131,201	$ 58	299,342	$ (139,660)	(17,130)	(11,409)
Ending Balance, Shares at Jun. 28, 2019		57,130		(27,280)
Balance at Mar. 29, 2019	129,747	$ 58	296,976	$ (138,220)	(18,330)	(10,737)
Balance, Shares at Mar. 29, 2019		57,009		(27,188)
Issuance of common stock	405		405
Issuance of common stock, Shares		121
Treasury stock purchased	(1,440)			$ (1,440)
Treasury stock purchased, Shares				(92)
Amortization of restricted stock units and common stock subject to vesting requirements	1,961		1,961
Dividends declared	(5,789)				(5,789)
Net income	6,989				6,989
Foreign currency translation	(672)					(672)
Balance at Jun. 28, 2019	$ 131,201	$ 58	$ 299,342	$ (139,660)	$ (17,130)	$ (11,409)
Ending Balance, Shares at Jun. 28, 2019		57,130		(27,280)

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Basis of Presentation and General Information

6 Months Ended

Jun. 28, 2019

Organization Consolidation And Presentation Of Financial Statements [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 28, 2018, included in the Annual Report on Form 10-K filed by the Company with the SEC on March 8, 2019. The consolidated results of operations for the quarter and six months ended June 28, 2019, 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.

Revenue Recognition

We generate substantially all of our revenue from providing professional services to our clients. We also generate revenue from software licenses, software support, maintenance and subscriptions to our executive and best practices advisory programs. A single contract could include one or multiple performance obligations. For those contracts that have multiple performance obligations, we allocate the total transaction price to each performance obligation based on its relative standalone selling price.  We determine the standalone selling price based on the respective selling price of the individual elements when they are sold separately.  

Revenue is recognized when control of the goods and services provided are transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods and services using the following steps: 1) identify the contract, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue as or when we satisfy the performance obligations.  

We typically satisfy our performance obligations for professional services over time as the related services are provided. The performance obligations related to software support, maintenance and subscriptions to our executive and best practice advisory programs are typically satisfied evenly over the course of the service period. Other performance obligations, such as software licenses, are satisfied at a point in time.

We generate our revenue under four types of billing arrangements: fixed-fee (including software license revenue); time-and-materials; executive and best practice advisory services; and software sales, maintenance and support.

In fixed-fee billing arrangements, which would also include contracts with capped fees, we agree to a pre-established fee or fee cap in exchange for a predetermined set of professional services. We set the fees based on our estimates of the costs and timing for completing the engagements. We generally recognize revenue under fixed-fee or capped fee arrangements using a proportionate performance approach, which is based on work completed to-date as compared to estimates of the total services to be provided under the engagement. Estimates of total engagement revenue and cost of services are monitored regularly during the term of the engagement. If our estimates indicate a potential loss, such loss is recognized in the period in which the loss first becomes probable and reasonably estimable. The customer is invoiced based on the contractual agreement between the parties, typically bi-weekly, monthly or mile-stone driven, with net thirty-day terms.

Time-and-material billing arrangements require the client to pay based on the number of hours worked by our consultants at agreed upon hourly rates. We recognize revenue under time-and-material arrangements as the related services or goods are provided, using the right to invoice practical expedient which allows us to recognize revenue in the amount based on the number of hours worked and the agreed upon hourly rates.  The customer is invoiced based on the contractual agreement between the parties, typically bi-weekly, monthly or milestone driven, with net thirty-day terms.

1. Basis of Presentation and General Information (continued)

Advisory services contracts are typically in the form of a subscription agreement which allows the customer access to the Company’s executive and best practice advisory programs.  There is typically a single performance obligation and the transaction price is the contractual amount of the subscription agreement.  Revenue from advisory service contracts is recognized ratably over the life of the agreements.  Customers are typically invoiced at the inception of the contract, with net thirty-day terms.

The resale of software and maintenance contracts are in the form of SAP America software license or maintenance agreements provided by SAP America.  SAP is the principal and the Company is the agent in these transactions as the Company does not obtain title to the software and the maintenance is sold simultaneously.  The transaction price is the Company’s agreed-upon percentage of the software license or maintenance amount in the contract with the vendor.  Revenue for the resale of software licenses is recognized upon contract execution and customer’s receipt of the software. Revenue from maintenance contracts is recognized ratably over the life of the agreements.  The customer is typically invoiced at contract inception, with net thirty-day terms.

Expense reimbursements that are billable to clients are included in total revenue, and are substantially all billed as time-and-material billing arrangements.  Therefore, the Company recognizes all reimbursable expenses as revenue as the related services are provided, using the right to invoice practical expedient. Reimbursable expenses are recognized as expenses in the period in which the expense is incurred.  Any expense reimbursements that are billable to clients under fixed-fee billing arrangements are recognized in line with the proportionate performance approach.  

The payment terms and conditions in our customer contracts vary. The agreements entered into in connection with a project, whether time-and-materials-based or fixed-fee or capped-fee based, typically allow clients to terminate early due to breach or for convenience with 30 days’ notice. In the event of termination, the client is typically contractually required to pay for all time, materials and expenses incurred by the Company through the effective date of the termination. In addition, from time to time the Company enters into agreements with its clients that limit its right to enter into business relationships with specific competitors of that client for a specific time period. These provisions typically prohibit the Company from performing a defined range of services which it might otherwise be willing to perform for potential clients. These provisions are generally limited to six to twelve months and usually apply only to specific employees or the specific project team.

Sales tax collected from customers and remitted to the applicable taxing authorities is accounted for on a net basis, with no impact to revenue.

Differences between the timing of billings and the recognition of revenue are recognized as either unbilled services or deferred revenue in the accompanying consolidated balance sheets. Revenue recognized for services performed but not yet billed to clients are recorded as unbilled services. Revenue recognized, but for which are not yet entitled to bill because certain events, such as the completion of the measurement period, are recorded as contract assets and included within unbilled services. Client prepayments are classified as deferred revenue and recognized over future periods as earned in accordance with the applicable engagement agreement. See Note 3 for the accounts receivable and unbilled revenue balances and see Note 4 for the deferred revenue balances. During the quarter and six months ended June 28, 2019, the Company recognized $4.3 million and $8.3 million, respectively, of revenue as a result of changes in deferred revenue liability balance, as compared to $5.0 million and $9.8 million for the quarter and six months ended June 29, 2018, respectively. 

The following table reflects the Company’s disaggregation of total revenue including reimbursable expenses for the quarters and six months ended June 28, 2019 and June 29, 2018:

	Quarter Ended				Six Months Ended
	June 28,		June 29,		June 28,		June 29,
	2019		2018		2019		2018
Consulting	$	66,908	$	67,962	$	128,739	$	133,289
Software License Sales		1,068		744		1,607		1,456
Revenue before reimbursements from continuing operations	$	67,976	$	68,706	$	130,346	$	134,745

1. Basis of Presentation and General Information (continued)

Capitalized Sales Commissions

Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized as project revenue is recognized.  We determined the period of amortization by taking into consideration the customer contract period, which are generally less than 12 months. Commission expense is included in Selling, General and Administrative Costs in the accompanying condensed consolidated statements of operations. As of December 28, 2018, and December 29, 2017, the Company had $1.2 million and $1.4 million, respectively, of deferred commissions, of which $0.3 million and $0.5 million was amortized during the quarter and six months of each respective year. No impairment loss was recognized relating to the capitalization of deferred commission.

Practical Expedients

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.  The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be less than one year.

Discontinued Operations

The Company’s European REL Working Capital group’s sales had declined over the past several years as European countries have experienced continued economic recoveries and improved cash balances.  Companies are holding high cash reserves which drove working capital project sales of this group down across all of Europe. The REL practice had a limited pipeline of potential client engagements; therefore, the Company made the strategic decision to exit the business at the end of fiscal year 2018.

The following table includes the carrying amounts of the major classes of assets and liabilities presented in discontinued operations in our consolidated balance sheet:

	June 28,		December 28,
	2019		2018
ASSETS
Accounts receivable and unbilled revenue (no allowance as of June 28, 2019 and December 28, 2018)	$	—	$	137
Assets related to discontinued operations	$	-	$	137
LIABILITIES
Accrued expenses and other liabilities (1)	$	31	$	2,300
Liabilities related to discontinued operations	$	31	$	2,300
(1) The balance at December 28, 2018, primarily represents the accrued severance related to terminated employees.

1. Basis of Presentation and General Information (continued)

The following table presents the gain and loss results for the Company’s discontinued operations:

	Quarter Ended						Six Months Ended
	June 28,			June 29,			June 28,			June 29,
	2019			2018			2019			2018
Revenue:
Revenue before reimbursements	$	(17	)	$	908		$	75		$	2,344
Reimbursements		—			214			17			404
Total revenue		(17	)		1,122			92			2,748
Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses		(15	)		870			24			1,907
Reimbursable expenses		—			214			17			404
Total cost of service		(15	)		1,084			41			2,311
Selling, general and administrative costs		61			243			56			602
Total costs and operating expenses		46			1,327			97			2,913
Loss from discontinued operations before income taxes		(63	)		(205	)		(5	)		(165	)
Income tax expense (benefit)		(12	)		(54	)		1			(80	)
Loss from discontinued operations	$	(51	)	$	(151	)	$	(6	)	$	(85	)

Fair Value

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable and unbilled revenue, accounts payable, accrued expenses and other liabilities and debt. As of June 28, 2019 and December 28, 2018, the carrying amount of each financial instrument 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 February 2016, the FASB issued guidance on leases which supersedes the current lease guidance. The core principle establishes a right-of-use model (ROU) that requires lessees to recognize the assets and liabilities that arise from nearly all leases on the balance sheet. Accounting applied by lessees has remain largely consistent with previous guidance. The Company adopted the amended guidance effective December 29, 2018, including interim periods within this fiscal year, using the effective date as the date of initial application. Consequently, on adoption, the Company recognized additional operating liabilities of approximately $9.0 million, with corresponding ROU assets of approximately the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. The amended guidance did not have a material impact on the Company’s consolidated statements of comprehensive income or its consolidated statements of cash flows. See Note 5 for additional information.

1. Basis of Presentation and General Information (continued)

In July 2018, the FASB issued ASU 2018-09, which affects a wide variety of Topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance.  The amendments in the ASU represent changes that clarify, correct errors in, or make minor improvements to the Codification.  Ultimately, the amendments make the Codification easier to understand and apply by eliminating inconsistencies and providing clarifications.  Some of the amendments in this ASU do not require transition guidance and are effective upon issuance of the ASU, while many of the amendments have transition guidance with effective dates for annual periods beginning after December 15, 2018.  The adoption of the amendments in this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, which eliminates Step 2 from the goodwill impairment test. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted for interim and annual goodwill impairment test with a measurement date after January 1, 2017. The Company does not expect the guidance to have a material impact on the Company’s consolidated financial statements.  

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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Net Income Per Common Share

6 Months Ended

Jun. 28, 2019

Earnings Per Share [Abstract]

Net 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.

Diluted 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				Six Months Ended
	June 28,		June 29,		June 28,		June 29,
	2019		2018		2019		2018
Basic weighted average common shares outstanding		29,822,917		29,429,925		29,752,903		29,259,641
Effect of dilutive securities:
Unvested restricted stock units and common stock subject to vesting requirements issued to employees and non-employees		222,438		469,702		230,742		420,020
Common stock issuable upon the exercise of stock options and SARs		2,328,797		2,335,458		2,350,656		2,345,288
Dilutive weighted average common shares outstanding		32,374,152		32,235,085		32,334,301		32,024,949

Approximately 9 thousand shares and 13 thousand shares of common stock equivalents were excluded from the computations of diluted net income per common share for the quarter and six months ended June 28, 2019, respectively, as compared to 843  shares and 864 shares for the quarter and six months ended  June 29, 2018, respectively,   as their inclusion would have had an anti-dilutive effect on diluted net income per common share.   

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Accounts Receivable and Unbilled Revenue, Net

6 Months Ended

Jun. 28, 2019

Receivables Net Current [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):

	June 28,			December 28,
	2019			2018
Accounts receivable	$	32,686		$	35,794
Unbilled revenue		22,853			20,454
Allowance for doubtful accounts		(992	)		(1,441	)
Accounts receivable and unbilled revenue, net	$	54,547		$	54,807

Accounts receivable is net of uncollected advanced billings. Unbilled revenue represents revenue for services performed that have not been invoiced.

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Accrued Expenses and Other Liabilities

6 Months Ended

Jun. 28, 2019

Accrued Liabilities And Other Liabilities Current [Abstract]

Accrued Expenses and Other Liabilities

4. Accrued Expenses and Other Liabilities

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

	June 28,		December 28,
	2019		2018
Accrued compensation and benefits	$	7,609	$	5,012
Accrued bonuses		950		5,064
Accrued dividend payable		5,788		5,407
Acquisition earnout accruals		1,251		2,559
Deferred revenue		10,498		8,259
Accrued sales, use, franchise and VAT tax		2,222		3,077
Non-cash stock compensation accrual		538		872
Income tax payable		2,535		1,769
Other accrued expenses		1,723		2,479
Total accrued expenses and other liabilities	$	33,114	$	34,498

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Leases

6 Months Ended

Jun. 28, 2019

Leases [Abstract]

Leases

5. Leases

As described in Note 1 “Recently Issued Accounting Standards”, effective December 29, 2018, the Company adopted the new lease accounting standard. The Company has operating leases for office space and, to a much lesser extent, operating leases for equipment. The Company’s office leases are between terms of 1 and 10 years. Rents usually increase annually in accordance with defined rent steps or are based on current year consumer price index adjustments. Some of the lease agreements contain one or more of the following provisions or clauses: tenant allowances, rent holidays, lease premiums, and rent escalation clauses. There are typically no purchase options, residual value guarantees or restrictive covenants. When renewal options exist, the Company generally does not deem them to be reasonably certain to be exercised, and therefore the amounts are not recognized as part of our lease liability nor our right of use asset.

The components of lease expense during the three and six months ended June 28, 2019, were as follows (in thousands):

	Three Months		Six Months
Operating lease cost	$	708	$	1,398
Total net lease costs	$	708	$	1,398

The weighted average remaining lease term is 5.3 years.  Assuming the Company exercises its opt-out option in year 5 for the London office lease, the weighted average remaining lease term would be 3.2 years. The weighted average discount rate utilized is 4%. The discount rates applied to each lease, reflects the Company’s estimated incremental borrowing rate. This includes an assessment of the Company’s credit rating to determine the rate that the Company would have to pay to borrow, on a collateralized basis for a similar term, an amount equal to our lease payments in a similar economic environment. For the quarter and six months ended June 28, 2019, the Company paid $0.7 million and $1.4 million, respectively, from operating cash flows for operating leases.

5. Leases (continued)

Future minimum lease payments under non-cancellable operating leases as of June 28, 2019, were as follows (in thousands):

2019 (excluding the six months ended June 28, 2019	$	1,259
2020		2,057
2021		1,613
2022		1,371
2023		492
2024 and thereafter		1,705
Total lease payments		8,497
Less imputed interest		(884	)
Total	$	7,613

As of June 28, 2019, the Company does not have any additional operating leases that have not yet commenced that create significant rights and obligations for the Company.

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Credit Facility

6 Months Ended

Jun. 28, 2019

Debt Disclosure [Abstract]

Credit Facility

6. Credit Facility

In February 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 $47.0 million pursuant to a term loan (the “Term Loan”, and together with the Revolver, the “Credit Facility”).  The Company has fully utilized and repaid its Term Loan.

On May 9, 2016, the Company amended and restated the credit agreement with Bank of America (the “Credit Agreement”) to:

• Provide for up to an additional $25.0 million of borrowing under the Revolver for a total borrowing capacity of $45.0 million; and

• Extend the maturity date on the Revolver to May 9, 2021.

The obligations of Hackett under the Revolver are guaranteed by active existing and future material U.S. subsidiaries of Hackett (the “U.S. Subsidiaries”), and are secured by substantially all of the existing and future property and assets of Hackett and the U.S. Subsidiaries, a 100% pledge of the capital stock of the U.S. Subsidiaries, and a 66% pledge of the capital stock of Hackett’s direct foreign subsidiaries (subject to certain exceptions).

During the quarter and six months ended June 28, 2019, the Company paid down $3.0 million and a net $2.0 million under the Revolver, respectively,which had a balance of $4.5 million outstanding as of June 28, 2019. The interest rates per annum applicable to borrowings under Revolver 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 June 28, 2019, the applicable margin percentage was 1.50% per annum based on the consolidated leverage ratio, in the case of LIBOR rate advances, and 0.75% per annum, in the case of base rate advances. The interest rate as of June 28, 2019, was 3.9%.

The Company is subject to certain covenants, including total consolidated leverage, fixed cost coverage, adjusted fixed cost coverage and liquidity requirements, each as set forth in the Credit Agreement, subject to certain exceptions.  As of June 28, 2019, the Company was in compliance with all covenants.

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Stock Based Compensation

6 Months Ended

Jun. 28, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Based Compensation

7. Stock Based Compensation

During the six months ended June 28, 2019, the Company issued 413,636 restricted stock units at a weighted average grant-date fair value of $18.53 per share. As of June 28, 2019, the Company had 985,258 restricted stock units outstanding at a weighted average grant-date fair value of $17.38 per share. As of June 28, 2019, $12.4 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 2.4 years.

During the quarter ended June 28, 2019, 21,276 shares of common stock subject to vesting requirements were issued at a weighted average grant-date fair value of $15.29 per share. As of June 28, 2019, the Company had 109,293 shares of common stock subject to vesting requirements outstanding at a weighted average grant-date fair value of $18.94 per share. As of June 28, 2019, $1.8 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 2.0 years.

Forfeitures for all of the Company’s outstanding equity are recognized as incurred.

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Shareholders' Equity

6 Months Ended

Jun. 28, 2019

Stockholders Equity Note [Abstract]

Shareholders' Equity

8. Shareholders’ Equity

Stock Appreciation Rights (“SARs”)

As of June 28, 2019, the Company had 2.9 million SARs outstanding with an exercise price of $4.00 per share and an expiration date of February 2022.           

Treasury Stock

Under the Company’s share repurchase plan, the Company may repurchase shares of its outstanding common stock either on the open market or through privately negotiated transactions subject to market conditions and trading restrictions. During the three months and six months ended June 28, 2019, the Company repurchased 92 thousand and 193 thousand shares, respectively, of its common stock at an average price of $15.59 and $15.80 per share, respectively, for a total cost of $1.4 million and $3.1 million, respectively. As of June 28, 2019, the Company had a total authorization remaining of $3.9 million under its repurchase plan with a total authorization of $142.2 million.

During the six months ended June 29, 2018, the Company repurchased 53 thousand shares of its common stock at an average price of $18.33 per share for a total cost of $1.0 million.  

The shares repurchased under the share repurchase plan during the quarter and six months ended June 28, 2019, do not include 825 shares and 124 thousand shares, respectively, which the Company bought back to satisfy employee net vesting obligations for a cost of $14 thousand and $2.4 million, respectively.   During the quarter and six months ended June 29, 2018, the Company bought back 11 thousand and 184 thousand shares, respectively, at a cost of $0.2 million and $3.1 million, respectively, to satisfy employee net vesting obligations.       

Dividend Program

In early 2019, the Company increased the 2019 annual dividend from $0.34 per share to $0.36 per share to be paid on a semi-annual basis. During the second quarter of 2019, the Company declared its semi-annual dividend of $0.18 per share, which was paid on July 10, 2019, for a total of $5.8 million.These dividends were paid from U.S. domestic sources and are accounted for as an increase to accumulated deficit.

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Transactions with Related Parties

6 Months Ended

Jun. 28, 2019

Related Party Transactions [Abstract]

Transactions with Related Parties

9. Transactions with Related Parties

During the six months ended June 28, 2019, the Company bought back 28 thousand shares of its common stock from members of its Board of Directors for $0.5 million, or $16.25 per share.

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Litigation

6 Months Ended

Jun. 28, 2019

Commitments And Contingencies Disclosure [Abstract]

Litigation

10. 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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Geographic and Group Information

6 Months Ended

Jun. 28, 2019

Segment Reporting [Abstract]

Geographic and Group Information

11. Geographic and Group Information

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

	Quarter Ended				Six Months Ended
	June 28,		June 29,		June 28,		June 29,
	2019		2018		2019		2018
Revenue before reimbursements:
North America	$	56,750	$	57,245	$	109,287	$	110,770
International (primarily European countries)		11,226		11,461		21,059		23,975
Revenue before reimbursements from continuing operations	$	67,976	$	68,706	$	130,346	$	134,745

11. Geographic and Group Information (continued)

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

	June 28,		December 28,
	2019		2018
Long-lived assets:
North America	$	92,758	$	88,317
International (primarily European countries)		23,296		19,344
Total long-lived assets	$	116,054	$	107,661

As of June 28, 2019 and December 28, 2018, foreign assets included $14.2 million and $14.5 million, respectively, of goodwill related to acquisitions. As of June 28, 2019, foreign assets included $4.8 million of operating lease right of use assets.   

In the following table, Strategy and Business Transformation Group (S&BT) includes the results of our Executive Advisory Programs, Benchmarking Services, and Business Transformation Practices.  ERP, EPM and Analytics Solutions (EEA) includes the results of our Oracle EEA and SAP Solutions Practices (in thousands):

	Quarter Ended				Six Months Ended
	June 28,		June 29,		June 28,		June 29,
	2019		2018		2019		2018
S&BT	$	35,718	$	37,816	$	68,988	$	72,955
EEA		32,258		30,890		61,358		61,790
Revenue before reimbursements from continuing operations	$	67,976	$	68,706	$	130,346	$	134,745

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Acquisitions

6 Months Ended

Jun. 28, 2019

Business Combinations [Abstract]

Acquisitions

12. Acquisitions

Jibe Consulting, Inc.

Effective May 1, 2017, the Company acquired certain assets and liabilities of Jibe Consulting, Inc. (“Jibe”), a U.S.-based Oracle E-Business Suite (“EBS”) and Oracle Cloud Business Application implementation firm. The acquisition of Jibe enhances the Company’s Cloud Application capabilities and strongly complements its market leading EPM transformation and technology implementation group.

The sellers’ purchase consideration was $5.4million in cash, not subject to vesting, and $3.6 million in shares of the Company’s common stock, subject to vesting. The initial cash consideration was funded from borrowings under the Revolver. The equity that was issued has a four-year vesting term and will be recorded as compensation expense over the respective vesting period. In addition, the sellers had the opportunity to earn an additional $6.6 million in cash and $4.4 million in Company common stock based on the achievement of the performance targets over the 18 month period following closing for a total of $11.0 million in contingent consideration, a portion of which will be allocated to key employees in both cash and Company stock. 

The cash related to the contingent consideration, which is to be paid to the sellers, is not subject to service vesting and has been accounted for as part of the purchase consideration. The cash related to the contingent consideration, which is to be paid to the key employees, is subject to service vesting and is being accounted for as compensation expense. During the second quarter and six months ended June 28, 2019, the Company recorded expense of $45 thousand and a benefit of $1.0 million, respectively. During both the second quarter and six months ended June 29, 2018, the Company recorded a benefit of $4.6 millionin earnings from operations on the consolidated statement of operations related to the contingent earnout liability for the Jibe acquisition earnout expectations.  

During the six months ended June 28, 2019, the Company recorded, in personnel costs before reimbursements on the consolidated statement of operations, a benefit of $0.1 million, related to the key employees’ portion of the cash related contingent consideration.  Management utilized the most recent financial results from which to base these estimates. These contingent liabilities have been recorded in the consolidated balance sheet as current accrued expenses and other liabilities.  

12. Acquisitions (continued)

The equity related to the contingent consideration will be subject to service vesting and will be recorded as compensation expense over the respective vesting period. As mentioned above, due to the projected results, the Company recorded a $0.2 million benefit during the six months ended June 28, 2019, ofacquisition-related non-cash stock compensation in cost of sales on the consolidated statement of operations.

Aecus Limited

Effective April 6, 2017, the Company acquired 100% of the equity of the U.K.-based operations of Aecus Limited (“Aecus”), a European Outsourcing Advisory and RPA consulting firm. This acquisition complements the global strategy and business transformation offerings of the Hackett Group.

The sellers’ purchase consideration was £3.2 million in cash. The closing purchase consideration was funded with the Company’s available funds. In addition, the sellers had the opportunity to earn an additional £2.4 million in contingent consideration in cash based on the achievement of performance targets achieved over the next 12 months, and key personnel had the opportunity to earn £0.3 million in cash and £0.3 million in the Company’s common stock. The contingent consideration for the selling shareholders and key personnel is subject to performance and service periods and will be accounted for as compensation expense and in non-current accrued expenses and other liabilities.

Chartered Institute of Management Accountants

Effective October 2017, Hackett-REL, Ltd., a subsidiary of the Company located in the United Kingdom, acquired The Chartered Institute of Management Accountants' share of the Certified GBS Professionals program.   This acquisition allows those studying under the program and their employers to benefit further from the Company’s sector specific expertise and focus on the growing global business services market.  Purchase consideration was $2.0 million in cash and was funded with the Company’s available funds.  Also in connection with this transaction, the Alliance and Program Development Agreement between the Company, Hackett-REL, Ltd. and The Chartered Institute of Management Accountants was terminated.

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Basis of Presentation and General Information (Policies)

6 Months Ended

Jun. 28, 2019

Organization Consolidation And Presentation Of Financial Statements [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 28, 2018, included in the Annual Report on Form 10-K filed by the Company with the SEC on March 8, 2019. The consolidated results of operations for the quarter and six months ended June 28, 2019, 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.

Revenue Recognition

Revenue Recognition

We generate substantially all of our revenue from providing professional services to our clients. We also generate revenue from software licenses, software support, maintenance and subscriptions to our executive and best practices advisory programs. A single contract could include one or multiple performance obligations. For those contracts that have multiple performance obligations, we allocate the total transaction price to each performance obligation based on its relative standalone selling price.  We determine the standalone selling price based on the respective selling price of the individual elements when they are sold separately.  

Revenue is recognized when control of the goods and services provided are transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods and services using the following steps: 1) identify the contract, 2) identify the performance obligations, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue as or when we satisfy the performance obligations.  

We typically satisfy our performance obligations for professional services over time as the related services are provided. The performance obligations related to software support, maintenance and subscriptions to our executive and best practice advisory programs are typically satisfied evenly over the course of the service period. Other performance obligations, such as software licenses, are satisfied at a point in time.

We generate our revenue under four types of billing arrangements: fixed-fee (including software license revenue); time-and-materials; executive and best practice advisory services; and software sales, maintenance and support.

In fixed-fee billing arrangements, which would also include contracts with capped fees, we agree to a pre-established fee or fee cap in exchange for a predetermined set of professional services. We set the fees based on our estimates of the costs and timing for completing the engagements. We generally recognize revenue under fixed-fee or capped fee arrangements using a proportionate performance approach, which is based on work completed to-date as compared to estimates of the total services to be provided under the engagement. Estimates of total engagement revenue and cost of services are monitored regularly during the term of the engagement. If our estimates indicate a potential loss, such loss is recognized in the period in which the loss first becomes probable and reasonably estimable. The customer is invoiced based on the contractual agreement between the parties, typically bi-weekly, monthly or mile-stone driven, with net thirty-day terms.

Time-and-material billing arrangements require the client to pay based on the number of hours worked by our consultants at agreed upon hourly rates. We recognize revenue under time-and-material arrangements as the related services or goods are provided, using the right to invoice practical expedient which allows us to recognize revenue in the amount based on the number of hours worked and the agreed upon hourly rates.  The customer is invoiced based on the contractual agreement between the parties, typically bi-weekly, monthly or milestone driven, with net thirty-day terms.

1. Basis of Presentation and General Information (continued)

Advisory services contracts are typically in the form of a subscription agreement which allows the customer access to the Company’s executive and best practice advisory programs.  There is typically a single performance obligation and the transaction price is the contractual amount of the subscription agreement.  Revenue from advisory service contracts is recognized ratably over the life of the agreements.  Customers are typically invoiced at the inception of the contract, with net thirty-day terms.

The resale of software and maintenance contracts are in the form of SAP America software license or maintenance agreements provided by SAP America.  SAP is the principal and the Company is the agent in these transactions as the Company does not obtain title to the software and the maintenance is sold simultaneously.  The transaction price is the Company’s agreed-upon percentage of the software license or maintenance amount in the contract with the vendor.  Revenue for the resale of software licenses is recognized upon contract execution and customer’s receipt of the software. Revenue from maintenance contracts is recognized ratably over the life of the agreements.  The customer is typically invoiced at contract inception, with net thirty-day terms.

Expense reimbursements that are billable to clients are included in total revenue, and are substantially all billed as time-and-material billing arrangements.  Therefore, the Company recognizes all reimbursable expenses as revenue as the related services are provided, using the right to invoice practical expedient. Reimbursable expenses are recognized as expenses in the period in which the expense is incurred.  Any expense reimbursements that are billable to clients under fixed-fee billing arrangements are recognized in line with the proportionate performance approach.  

The payment terms and conditions in our customer contracts vary. The agreements entered into in connection with a project, whether time-and-materials-based or fixed-fee or capped-fee based, typically allow clients to terminate early due to breach or for convenience with 30 days’ notice. In the event of termination, the client is typically contractually required to pay for all time, materials and expenses incurred by the Company through the effective date of the termination. In addition, from time to time the Company enters into agreements with its clients that limit its right to enter into business relationships with specific competitors of that client for a specific time period. These provisions typically prohibit the Company from performing a defined range of services which it might otherwise be willing to perform for potential clients. These provisions are generally limited to six to twelve months and usually apply only to specific employees or the specific project team.

Sales tax collected from customers and remitted to the applicable taxing authorities is accounted for on a net basis, with no impact to revenue.

Differences between the timing of billings and the recognition of revenue are recognized as either unbilled services or deferred revenue in the accompanying consolidated balance sheets. Revenue recognized for services performed but not yet billed to clients are recorded as unbilled services. Revenue recognized, but for which are not yet entitled to bill because certain events, such as the completion of the measurement period, are recorded as contract assets and included within unbilled services. Client prepayments are classified as deferred revenue and recognized over future periods as earned in accordance with the applicable engagement agreement. See Note 3 for the accounts receivable and unbilled revenue balances and see Note 4 for the deferred revenue balances. During the quarter and six months ended June 28, 2019, the Company recognized $4.3 million and $8.3 million, respectively, of revenue as a result of changes in deferred revenue liability balance, as compared to $5.0 million and $9.8 million for the quarter and six months ended June 29, 2018, respectively. 

The following table reflects the Company’s disaggregation of total revenue including reimbursable expenses for the quarters and six months ended June 28, 2019 and June 29, 2018:

	Quarter Ended				Six Months Ended
	June 28,		June 29,		June 28,		June 29,
	2019		2018		2019		2018
Consulting	$	66,908	$	67,962	$	128,739	$	133,289
Software License Sales		1,068		744		1,607		1,456
Revenue before reimbursements from continuing operations	$	67,976	$	68,706	$	130,346	$	134,745

1. Basis of Presentation and General Information (continued)

Capitalized Sales Commissions

Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized as project revenue is recognized.  We determined the period of amortization by taking into consideration the customer contract period, which are generally less than 12 months. Commission expense is included in Selling, General and Administrative Costs in the accompanying condensed consolidated statements of operations. As of December 28, 2018, and December 29, 2017, the Company had $1.2 million and $1.4 million, respectively, of deferred commissions, of which $0.3 million and $0.5 million was amortized during the quarter and six months of each respective year. No impairment loss was recognized relating to the capitalization of deferred commission.

Practical Expedients

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.  The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be less than one year.

Discontinued Operations

Discontinued Operations

The Company’s European REL Working Capital group’s sales had declined over the past several years as European countries have experienced continued economic recoveries and improved cash balances.  Companies are holding high cash reserves which drove working capital project sales of this group down across all of Europe. The REL practice had a limited pipeline of potential client engagements; therefore, the Company made the strategic decision to exit the business at the end of fiscal year 2018.

The following table includes the carrying amounts of the major classes of assets and liabilities presented in discontinued operations in our consolidated balance sheet:

	June 28,		December 28,
	2019		2018
ASSETS
Accounts receivable and unbilled revenue (no allowance as of June 28, 2019 and December 28, 2018)	$	—	$	137
Assets related to discontinued operations	$	-	$	137
LIABILITIES
Accrued expenses and other liabilities (1)	$	31	$	2,300
Liabilities related to discontinued operations	$	31	$	2,300
(1) The balance at December 28, 2018, primarily represents the accrued severance related to terminated employees.

1. Basis of Presentation and General Information (continued)

The following table presents the gain and loss results for the Company’s discontinued operations:

	Quarter Ended						Six Months Ended
	June 28,			June 29,			June 28,			June 29,
	2019			2018			2019			2018
Revenue:
Revenue before reimbursements	$	(17	)	$	908		$	75		$	2,344
Reimbursements		—			214			17			404
Total revenue		(17	)		1,122			92			2,748
Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses		(15	)		870			24			1,907
Reimbursable expenses		—			214			17			404
Total cost of service		(15	)		1,084			41			2,311
Selling, general and administrative costs		61			243			56			602
Total costs and operating expenses		46			1,327			97			2,913
Loss from discontinued operations before income taxes		(63	)		(205	)		(5	)		(165	)
Income tax expense (benefit)		(12	)		(54	)		1			(80	)
Loss from discontinued operations	$	(51	)	$	(151	)	$	(6	)	$	(85	)

Fair Value

Fair Value

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable and unbilled revenue, accounts payable, accrued expenses and other liabilities and debt. As of June 28, 2019 and December 28, 2018, the carrying amount of each financial instrument 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 February 2016, the FASB issued guidance on leases which supersedes the current lease guidance. The core principle establishes a right-of-use model (ROU) that requires lessees to recognize the assets and liabilities that arise from nearly all leases on the balance sheet. Accounting applied by lessees has remain largely consistent with previous guidance. The Company adopted the amended guidance effective December 29, 2018, including interim periods within this fiscal year, using the effective date as the date of initial application. Consequently, on adoption, the Company recognized additional operating liabilities of approximately $9.0 million, with corresponding ROU assets of approximately the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. The amended guidance did not have a material impact on the Company’s consolidated statements of comprehensive income or its consolidated statements of cash flows. See Note 5 for additional information.

1. Basis of Presentation and General Information (continued)

In July 2018, the FASB issued ASU 2018-09, which affects a wide variety of Topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance.  The amendments in the ASU represent changes that clarify, correct errors in, or make minor improvements to the Codification.  Ultimately, the amendments make the Codification easier to understand and apply by eliminating inconsistencies and providing clarifications.  Some of the amendments in this ASU do not require transition guidance and are effective upon issuance of the ASU, while many of the amendments have transition guidance with effective dates for annual periods beginning after December 15, 2018.  The adoption of the amendments in this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, which eliminates Step 2 from the goodwill impairment test. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted for interim and annual goodwill impairment test with a measurement date after January 1, 2017. The Company does not expect the guidance to have a material impact on the Company’s consolidated financial statements.  

Reclassifications

Reclassifications

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

XML

Basis of Presentation and General Information (Tables)

6 Months Ended

Jun. 28, 2019

Summary of Disaggregation of Total Revenue Including Reimbursable Expenses

The following table reflects the Company’s disaggregation of total revenue including reimbursable expenses for the quarters and six months ended June 28, 2019 and June 29, 2018:

	Quarter Ended				Six Months Ended
	June 28,		June 29,		June 28,		June 29,
	2019		2018		2019		2018
Consulting	$	66,908	$	67,962	$	128,739	$	133,289
Software License Sales		1,068		744		1,607		1,456
Revenue before reimbursements from continuing operations	$	67,976	$	68,706	$	130,346	$	134,745

European REL Working Capital group [Member]

Summary of Discontinued Operations

The following table includes the carrying amounts of the major classes of assets and liabilities presented in discontinued operations in our consolidated balance sheet:

	June 28,		December 28,
	2019		2018
ASSETS
Accounts receivable and unbilled revenue (no allowance as of June 28, 2019 and December 28, 2018)	$	—	$	137
Assets related to discontinued operations	$	-	$	137
LIABILITIES
Accrued expenses and other liabilities (1)	$	31	$	2,300
Liabilities related to discontinued operations	$	31	$	2,300
(1) The balance at December 28, 2018, primarily represents the accrued severance related to terminated employees.

1. Basis of Presentation and General Information (continued)

The following table presents the gain and loss results for the Company’s discontinued operations:

	Quarter Ended						Six Months Ended
	June 28,			June 29,			June 28,			June 29,
	2019			2018			2019			2018
Revenue:
Revenue before reimbursements	$	(17	)	$	908		$	75		$	2,344
Reimbursements		—			214			17			404
Total revenue		(17	)		1,122			92			2,748
Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses		(15	)		870			24			1,907
Reimbursable expenses		—			214			17			404
Total cost of service		(15	)		1,084			41			2,311
Selling, general and administrative costs		61			243			56			602
Total costs and operating expenses		46			1,327			97			2,913
Loss from discontinued operations before income taxes		(63	)		(205	)		(5	)		(165	)
Income tax expense (benefit)		(12	)		(54	)		1			(80	)
Loss from discontinued operations	$	(51	)	$	(151	)	$	(6	)	$	(85	)

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Net Income Per Common Share (Tables)

6 Months Ended

Jun. 28, 2019

Earnings Per Share [Abstract]

Reconciliation Of Basic And Diluted Weighted Average Shares

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

	Quarter Ended				Six Months Ended
	June 28,		June 29,		June 28,		June 29,
	2019		2018		2019		2018
Basic weighted average common shares outstanding		29,822,917		29,429,925		29,752,903		29,259,641
Effect of dilutive securities:
Unvested restricted stock units and common stock subject to vesting requirements issued to employees and non-employees		222,438		469,702		230,742		420,020
Common stock issuable upon the exercise of stock options and SARs		2,328,797		2,335,458		2,350,656		2,345,288
Dilutive weighted average common shares outstanding		32,374,152		32,235,085		32,334,301		32,024,949

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Accounts Receivable and Unbilled Revenue, Net (Tables)

6 Months Ended

Jun. 28, 2019

Receivables Net Current [Abstract]

Accounts Receivable and Unbilled Revenue, Net

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

	June 28,			December 28,
	2019			2018
Accounts receivable	$	32,686		$	35,794
Unbilled revenue		22,853			20,454
Allowance for doubtful accounts		(992	)		(1,441	)
Accounts receivable and unbilled revenue, net	$	54,547		$	54,807

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Accrued Expenses and Other Liabilities (Tables)

6 Months Ended

Jun. 28, 2019

Accrued Liabilities And Other Liabilities Current [Abstract]

Components Of Accrued Expenses And Other Liabilities

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

	June 28,		December 28,
	2019		2018
Accrued compensation and benefits	$	7,609	$	5,012
Accrued bonuses		950		5,064
Accrued dividend payable		5,788		5,407
Acquisition earnout accruals		1,251		2,559
Deferred revenue		10,498		8,259
Accrued sales, use, franchise and VAT tax		2,222		3,077
Non-cash stock compensation accrual		538		872
Income tax payable		2,535		1,769
Other accrued expenses		1,723		2,479
Total accrued expenses and other liabilities	$	33,114	$	34,498

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Leases (Tables)

6 Months Ended

Jun. 28, 2019

Leases [Abstract]

Components of Lease Expense

The components of lease expense during the three and six months ended June 28, 2019, were as follows (in thousands):

	Three Months		Six Months
Operating lease cost	$	708	$	1,398
Total net lease costs	$	708	$	1,398

Future Minimum Lease Payments Under Non-Cancellable Operating Leases

Future minimum lease payments under non-cancellable operating leases as of June 28, 2019, were as follows (in thousands):

2019 (excluding the six months ended June 28, 2019	$	1,259
2020		2,057
2021		1,613
2022		1,371
2023		492
2024 and thereafter		1,705
Total lease payments		8,497
Less imputed interest		(884	)
Total	$	7,613

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Geographic and Group Information (Tables)

6 Months Ended

Jun. 28, 2019

Segment Reporting [Abstract]

Geographic Revenue before Reimbursement

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

	Quarter Ended				Six Months Ended
	June 28,		June 29,		June 28,		June 29,
	2019		2018		2019		2018
Revenue before reimbursements:
North America	$	56,750	$	57,245	$	109,287	$	110,770
International (primarily European countries)		11,226		11,461		21,059		23,975
Revenue before reimbursements from continuing operations	$	67,976	$	68,706	$	130,346	$	134,745

Long-Lived Assets Attributable To Geographic Area

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

	June 28,		December 28,
	2019		2018
Long-lived assets:
North America	$	92,758	$	88,317
International (primarily European countries)		23,296		19,344
Total long-lived assets	$	116,054	$	107,661

Revenue By Service Group

In the following table, Strategy and Business Transformation Group (S&BT) includes the results of our Executive Advisory Programs, Benchmarking Services, and Business Transformation Practices.  ERP, EPM and Analytics Solutions (EEA) includes the results of our Oracle EEA and SAP Solutions Practices (in thousands):

	Quarter Ended				Six Months Ended
	June 28,		June 29,		June 28,		June 29,
	2019		2018		2019		2018
S&BT	$	35,718	$	37,816	$	68,988	$	72,955
EEA		32,258		30,890		61,358		61,790
Revenue before reimbursements from continuing operations	$	67,976	$	68,706	$	130,346	$	134,745

XML

Basis of Presentation and General Information (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 28, 2019	Jun. 29, 2018	Jun. 28, 2019	Jun. 29, 2018	Dec. 29, 2018	Dec. 28, 2018	Dec. 29, 2017
Basis Of Presentation And General Information [Line Items]
Revenue recognized as a result of change in contract liability	$ 4,300,000	$ 5,000,000	$ 8,300,000	$ 9,800,000
Deferred commissions						$ 1,200,000	$ 1,400,000
Commissions expense	300,000	300,000	500,000	500,000
Impairment loss recognized to capitalization of deferred commission	0	$ 0	0	$ 0
Additional operating liabilities	7,613,000		7,613,000		$ 9,000,000
Additional operating ROU	$ 7,613,000		$ 7,613,000		$ 9,000,000
Minimum [Member]
Basis Of Presentation And General Information [Line Items]
Business relationship agreement period			6 months
Maximum [Member]
Basis Of Presentation And General Information [Line Items]
Business relationship agreement period			12 months
Customer contract period			12 months

XML

Basis of Presentation and General Information (Summary of Disaggregation of Total Revenue Including Reimbursable Expenses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 28, 2019	Jun. 29, 2018	Jun. 28, 2019	Jun. 29, 2018
Disaggregation Of Revenue [Line Items]
Revenue before reimbursements from continuing operations	$ 73,521	$ 74,527	$ 140,676	$ 145,634
Consulting [Member]
Disaggregation Of Revenue [Line Items]
Revenue before reimbursements from continuing operations	66,908	67,962	128,739	133,289
Software License Sales [Member]
Disaggregation Of Revenue [Line Items]
Revenue before reimbursements from continuing operations	1,068	744	1,607	1,456
Revenue Before Reimbursements [Member]
Disaggregation Of Revenue [Line Items]
Revenue before reimbursements from continuing operations	$ 67,976	$ 68,706	$ 130,346	$ 134,745

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Basis of Presentation and General Information (Carrying Amounts of Major Classes of Assets and Liabilities Presented in Discontinued Operations) (Details) - USD ($) $ in Thousands	Jun. 28, 2019	Dec. 28, 2018
ASSETS
Assets related to discontinued operations		$ 137
LIABILITIES
Liabilities related to discontinued operations	$ 31	2,300
European REL Working Capital group [Member]
ASSETS
Accounts receivable and unbilled revenue (no allowance as of June 28, 2019 and December 28, 2018)		137
Assets related to discontinued operations		137
LIABILITIES
Accrued expenses and other liabilities	31	2,300
Liabilities related to discontinued operations	$ 31	$ 2,300

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Basis of Presentation and General Information (Carrying Amounts of Major Classes of Assets and Liabilities Presented in Discontinued Operations) (Parenthetical) (Details) - USD ($) $ in Thousands	Jun. 28, 2019	Dec. 28, 2018
European REL Working Capital group [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Accounts receivable and unbilled revenue, allowance	$ 0	$ 0

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Basis of Presentation and General Information (Gain and Loss Results for Discontinued Operations) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 28, 2019	Jun. 29, 2018	Jun. 28, 2019	Jun. 29, 2018
Cost of service:
Loss from discontinued operations	$ (51)	$ (151)	$ (6)	$ (85)
European REL Working Capital group [Member]
Revenue:
Total revenue	(17)	1,122	92	2,748
Cost of service:
Total cost of service	(15)	1,084	41	2,311
Selling, general and administrative costs	61	243	56	602
Total costs and operating expenses	46	1,327	97	2,913
Loss from discontinued operations before income taxes	(63)	(205)	(5)	(165)
Income tax expense (benefit)	(12)	(54)	1	(80)
Loss from discontinued operations	(51)	(151)	(6)	(85)
European REL Working Capital group [Member] | Revenue Before Reimbursements [Member]
Revenue:
Total revenue	(17)	908	75	2,344
European REL Working Capital group [Member] | Reimbursements [Member]
Revenue:
Total revenue		214	17	404
Cost of service:
Total cost of service		214	17	404
European REL Working Capital group [Member] | Cost Before Reimbursements [Member]
Cost of service:
Total cost of service	$ (15)	$ 870	$ 24	$ 1,907

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Net Income Per Common Share (Reconciliation of Basic and Diluted Weighted Average Shares) (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 28, 2019	Jun. 29, 2018	Jun. 28, 2019	Jun. 29, 2018
Earnings Per Share [Abstract]
Basic weighted average common shares outstanding	29,822,917	29,429,925	29,752,903	29,259,641
Unvested restricted stock units and common stock subject to vesting requirements issued to employees and non-employees	222,438	469,702	230,742	420,020
Common stock issuable upon the exercise of stock options and SARs	2,328,797	2,335,458	2,350,656	2,345,288
Dilutive weighted average common shares outstanding	32,374,152	32,235,085	32,334,301	32,024,949

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Net Income Per Common Share (Narrative) (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 28, 2019	Jun. 29, 2018	Jun. 28, 2019	Jun. 29, 2018
Earnings Per Share [Abstract]
Antidilutive common share equivalents	9,000	843	13,000	864

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Accounts Receivable and Unbilled Revenue, Net (Details) - USD ($) $ in Thousands	Jun. 28, 2019	Dec. 28, 2018
Receivables Net Current [Abstract]
Accounts receivable	$ 32,686	$ 35,794
Unbilled revenue	22,853	20,454
Allowance for doubtful accounts	(992)	(1,441)
Accounts receivable and unbilled revenue, net	$ 54,547	$ 54,807

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Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands	Jun. 28, 2019	Dec. 28, 2018
Accrued Liabilities And Other Liabilities Current [Abstract]
Accrued compensation and benefits	$ 7,609	$ 5,012
Accrued bonuses	950	5,064
Accrued dividend payable	5,788	5,407
Acquisition earnout accruals	1,251	2,559
Deferred revenue	10,498	8,259
Accrued sales, use, franchise and VAT tax	2,222	3,077
Non-cash stock compensation accrual	538	872
Income tax payable	2,535	1,769
Other accrued expenses	1,723	2,479
Total accrued expenses and other liabilities	$ 33,114	$ 34,498

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Leases (Narrative) (Details) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 28, 2019 USD ($)	Jun. 28, 2019 USD ($)
Lessee Lease Description [Line Items]
Weighted average remaining lease term	5 years 3 months 18 days	5 years 3 months 18 days
Weighted average discount rate	4.00%	4.00%
Operating lease payments	$ 0.7	$ 1.4
Lessee, operating lease not yet commenced description		As of June 28, 2019, the Company does not have any additional operating leases that have not yet commenced that create significant rights and obligations for the Company.
Five Year Opt-Out Option for London Office Lease [Member]
Lessee Lease Description [Line Items]
Weighted average remaining lease term	3 years 2 months 12 days	3 years 2 months 12 days
London Office Lease [Member]
Lessee Lease Description [Line Items]
Operating lease opt-out option	5 years	5 years
Minimum [Member]
Lessee Lease Description [Line Items]
Operating leases terms	1 year	1 year
Maximum [Member]
Lessee Lease Description [Line Items]
Operating leases terms	10 years	10 years

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Leases (Components of Lease Expense) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 28, 2019	Jun. 28, 2019
Leases [Abstract]
Operating lease cost	$ 708	$ 1,398
Total net lease costs	$ 708	$ 1,398

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Leases (Future Minimum Lease Payments Under Non-Cancellable Operating Leases) (Details) - USD ($) $ in Thousands	Jun. 28, 2019	Dec. 29, 2018
Leases [Abstract]
2019 (excluding the six months ended June 28, 2019	$ 1,259
2020	2,057
2021	1,613
2022	1,371
2023	492
2024 and thereafter	1,705
Total lease payments	8,497
Less imputed interest	(884)
Total	$ 7,613	$ 9,000

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Credit Facility (Narrative) (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 28, 2019	Jun. 28, 2019	May 09, 2016	Feb. 28, 2012
Revolving line of credit facility [Member]
Line of Credit Facility [Line Items]
Borrowing capacity under credit facility			$ 45,000,000	$ 20,000,000
Additional borrowing capacity			$ 25,000,000
Maturity date		May 09, 2021
Pledge of capital stock to U.S. subsidiaries		100.00%
Pledge of capital stock to direct foreign subsidiaries		66.00%
Payment of principal	$ 3,000,000	$ 2,000,000
Outstanding balance	$ 4,500,000	$ 4,500,000
Interest rate	3.90%	3.90%
Revolving line of credit facility [Member] | London Interbank Offered Rate (LIBOR) [Member]
Line of Credit Facility [Line Items]
Margin percentage base rate		1.50%
Revolving line of credit facility [Member] | Base Rate [Member]
Line of Credit Facility [Line Items]
Margin percentage base rate		0.75%
Term Loan [Member]
Line of Credit Facility [Line Items]
Borrowing capacity under credit facility				$ 47,000,000

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Stock Based Compensation (Narrative) (Details) $ / shares in Units, $ in Millions	3 Months Ended	6 Months Ended
	Jun. 28, 2019 USD ($) $ / shares shares	Jun. 28, 2019 USD ($) $ / shares shares
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted | shares		413,636
Weighted average grant-date fair value | $ / shares		$ 18.53
Shares outstanding | shares	985,258	985,258
Nonvested weighted average grant-date fair value | $ / shares	$ 17.38	$ 17.38
Compensation expense | $	$ 12.4	$ 12.4
Weighted average period		2 years 4 months 24 days
Common Stock Subject to Vesting Requirements [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares granted | shares	21,276
Weighted average grant-date fair value | $ / shares	$ 15.29
Shares outstanding | shares	109,293	109,293
Nonvested weighted average grant-date fair value | $ / shares	$ 18.94	$ 18.94
Compensation expense | $	$ 1.8	$ 1.8
Weighted average period		2 years

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Shareholders' Equity (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands	3 Months Ended				6 Months Ended
	Jun. 28, 2019	Mar. 29, 2019	Jun. 29, 2018	Mar. 30, 2018	Jun. 28, 2019	Jun. 29, 2018
Equity, Class of Treasury Stock [Line Items]
Total cost	$ 1,440,000	$ 1,616,000		$ 964,000
Amount available under repurchase plan	3,900,000				$ 3,900,000
Stock repurchase authorized	$ 142,200,000				$ 142,200,000
Shares repurchased for employee net vesting obligations, shares	825		11		124	184
Shares repurchased for employee net vesting obligations, value	$ 14,000		$ 200,000		$ 2,400,000	$ 3,100,000
Dividend declared	$ 0.18
Dividend payment	$ 5,789,000		$ 5,396,000
Dividend declared, date of payment	Jul. 10, 2019
Minimum [Member]
Equity, Class of Treasury Stock [Line Items]
Dividend declared					$ 0.34
Maximum [Member]
Equity, Class of Treasury Stock [Line Items]
Dividend declared					$ 0.36
Share Repurchase Plan [Member]
Equity, Class of Treasury Stock [Line Items]
Repurchase of common stock	92				193	53
Purchase price per share	$ 15.59				$ 15.80	$ 18.33
Total cost	$ 1,400,000				$ 3,100,000	$ 1,000,000
Stock Appreciation Rights (SARs) [Member]
Equity, Class of Treasury Stock [Line Items]
SARs outstanding	2,900				2,900
Exercise price	$ 4.00				$ 4.00
Expiration date					Feb. 28, 2022

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Transactions with Related Parties (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 28, 2019	Mar. 29, 2019	Mar. 30, 2018	Jun. 28, 2019
Related Party Transaction [Line Items]
Total cost	$ 1,440	$ 1,616	$ 964
Director [Member]
Related Party Transaction [Line Items]
Repurchase of common stock				28
Total cost				$ 500
Purchase price per share				$ 16.25

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Geographic and Group Information (Geographic Revenue before Reimbursements) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 28, 2019	Jun. 29, 2018	Jun. 28, 2019	Jun. 29, 2018
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue before reimbursements from continuing operations	$ 73,521	$ 74,527	$ 140,676	$ 145,634
Revenue Before Reimbursements [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue before reimbursements from continuing operations	67,976	68,706	130,346	134,745
Revenue Before Reimbursements [Member] | North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue before reimbursements from continuing operations	56,750	57,245	109,287	110,770
Revenue Before Reimbursements [Member] | International (Primarily European Countries) [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue before reimbursements from continuing operations	$ 11,226	$ 11,461	$ 21,059	$ 23,975

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Geographic and Group Information (Long-Lived Assets Attributable To Geographic Area) (Details) - USD ($) $ in Thousands	Jun. 28, 2019	Dec. 28, 2018
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets	$ 116,054	$ 107,661
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets	92,758	88,317
International (Primarily European Countries) [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets	$ 23,296	$ 19,344

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Geographic and Group Information (Narrative) (Details) - USD ($) $ in Millions	Jun. 28, 2019	Dec. 28, 2018
Segment Reporting [Abstract]
Goodwill included in foreign assets	$ 14.2	$ 14.5
Operating lease right of use assets included in foreign assets	$ 4.8

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Geographic and Group Information (Revenue By Service Group) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 28, 2019	Jun. 29, 2018	Jun. 28, 2019	Jun. 29, 2018
Segment Reporting Information [Line Items]
Revenue before reimbursements from continuing operations	$ 73,521	$ 74,527	$ 140,676	$ 145,634
Revenue Before Reimbursements [Member]
Segment Reporting Information [Line Items]
Revenue before reimbursements from continuing operations	67,976	68,706	130,346	134,745
S&BT [Member] | Revenue Before Reimbursements [Member]
Segment Reporting Information [Line Items]
Revenue before reimbursements from continuing operations	35,718	37,816	68,988	72,955
EEA [Member] | Revenue Before Reimbursements [Member]
Segment Reporting Information [Line Items]
Revenue before reimbursements from continuing operations	$ 32,258	$ 30,890	$ 61,358	$ 61,790

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Acquisitions (Narrative) (Details) $ in Thousands, £ in Millions			1 Months Ended	3 Months Ended		6 Months Ended
	May 01, 2017 USD ($)	Apr. 06, 2017 GBP (£)	Oct. 31, 2017 USD ($)	Jun. 28, 2019 USD ($)	Jun. 29, 2018 USD ($)	Jun. 28, 2019 USD ($)	Jun. 29, 2018 USD ($)
Business Acquisition [Line Items]
Non-cash stock compensation expense						$ 3,802	$ 4,412
Jibe Consulting, Inc [Member]
Business Acquisition [Line Items]
Effective date of acquisition	May 01, 2017
Purchase consideration	$ 5,400
Purchase consideration, common stock	$ 3,600
Common stock vesting period	4 years
Contingent consideration	$ 11,000
Contingent consideration performance period	18 months
Jibe Consulting, Inc [Member] | Cost of Sales [Member]
Business Acquisition [Line Items]
Non-cash stock compensation expense						200
Jibe Consulting, Inc [Member] | Selling Shareholder's [Member]
Business Acquisition [Line Items]
Cash compensation (expense) benefit				$ (45)	$ 4,600	1,000	$ 4,600
Jibe Consulting, Inc [Member] | Key Employees [Member]
Business Acquisition [Line Items]
Cash compensation (expense) benefit						$ 100
Jibe Consulting, Inc [Member] | Cash Contingent Consideration [Member]
Business Acquisition [Line Items]
Contingent consideration	$ 6,600
Jibe Consulting, Inc [Member] | Stock Based Contingent Consideration [Member]
Business Acquisition [Line Items]
Contingent consideration	$ 4,400
Aecus Limited [Member]
Business Acquisition [Line Items]
Effective date of acquisition		Apr. 06, 2017
Purchase consideration | £		£ 3.2
Contingent consideration performance period		12 months
Acquired percentage		100.00%
Aecus Limited [Member] | Cash Contingent Consideration [Member] | Sellers [Member]
Business Acquisition [Line Items]
Contingent consideration | £		£ 2.4
Aecus Limited [Member] | Cash Contingent Consideration [Member] | Key Personnel [Member]
Business Acquisition [Line Items]
Contingent consideration | £		0.3
Aecus Limited [Member] | Stock Based Contingent Consideration [Member] | Key Personnel [Member]
Business Acquisition [Line Items]
Contingent consideration | £		£ 0.3
The Chartered Institute of Management Accountants [Member]
Business Acquisition [Line Items]
Purchase consideration			$ 2,000