THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Business and Significant Accounting Policies
Nature of Business
On December 21, 2007 the shareholders of Answerthink, Inc. (Answerthink) approved an
amendment to Answerthinks Articles of Incorporation, officially changing the name of the organization to The Hackett Group, Inc. (Hackett, or the Company) effective January 1, 2008. All prior references to
Answerthink will now be reflected as Hackett as if the name change was effected for all years presented. Hackett is a leading strategic advisory and technology consulting firm that enables companies to achieve world-class business performance.
Hacketts combined capabilities include business advisory programs, benchmarking, business transformation, working capital management and technology solutions, with corresponding offshore support.
Basis of Presentation and Consolidation
The accompanying consolidated financial statements include the Companys accounts and those of its wholly owned subsidiaries which the Company is required to consolidate. The Company consolidates the assets, liabilities, and results of
operations of its entities in accordance with Accounting Research bulletin (ARB) No. 51,
Consolidated Financial Statements
, Statement of Financial Accounting Standards (SFAS) No. 94,
Consolidation of All
Majority-Owned Subsidiaries an amendment of ARB No. 51, with related amendments of Accounting Principles Board (APB) Opinion No. 18 and ARB No. 43, Chapter 12
, and the Financial Accounting Standards Board
(FASB) Interpretation (FIN) No. 46,
Consolidation of Variable Interest Entities
, as revised.
Fiscal
Year
The Companys fiscal year generally consists of a 52-week period and periodically consists of a 53-week period because the
fiscal year ends on the Friday closest to December 31st. Fiscal years 2007, 2006, and 2005 ended on December 28, 2007, December 29, 2006 and December 30, 2005, respectively. References to a year included in the consolidated
financial statements refer to a fiscal year rather than a calendar year.
Cash and Cash Equivalents and Restricted Cash
The Company considers all short-term investments with maturities of three months or less when purchased to be cash equivalents. Due to the short
maturity period of cash equivalents, the carrying amount of these instruments approximate fair market value. The Company places its temporary cash investments with high credit quality financial institutions. At times, such investments may be in
excess of the F.D.I.C. insurance limits. The Company has not experienced any loss to date on these investments. Restricted cash in 2007 and 2006 primarily related to a letter of credit to secure the Companys obligations in various operating
leases.
Marketable Investments
Marketable investments are accounted for in accordance with SFAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities.
This standard requires that debt and equity securities be classified as trading,
available-for-sale or held-to-maturity. At December 28, 2007, December 29, 2006 and December 30, 2005 all of the Companys marketable securities were available-for-sale securities which are recorded at fair market value.
Unrealized gains and losses on these investments are reported in comprehensive income or loss and are accumulated as a separate component of shareholders equity, net of any related tax effect. Declines in value that are judged to be other than
temporary result in a reduction of the carrying amount of the investment to fair value and the recognition of a loss in other income (expense). For the purpose of determining realized gains and losses, the cost of securities sold is based upon
specific identification. Interest on marketable investments is recognized when earned and is reported as a component of interest income in the accompanying consolidated statements of operations.
As of December 28, 2007 and December 29, 2006, the Company had $7.0 million and $10.8 million, respectively, in Bank of Americas Columbia
Strategic Cash Portfolio (Portfolio). Since the Companys initial participation in 2003, the Portfolio had been categorized as cash and cash equivalents on the consolidated balance sheets. On December 7, 2007, the Portfolio was
closed for redemptions and to new investors and is currently under liquidation. As a result, the Company reclassified the current and prior period balances to marketable investments on the accompanying consolidated balance sheets.
35
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Business and Significant Accounting Policies (continued)
Based on Portfolio information available to the Company, the market outlook and the expected timing
of the remaining redemptions, the Company estimated the fair value of the remaining Portfolio shares to be $0.94 per share (par value representing $1.00) and as such, recorded a realized loss on the marketable investments of $450 thousand in 2007.
Accounts Receivable and Allowance for Doubtful Accounts
The Company maintains allowances for doubtful accounts for estimated losses resulting from its clients not making required payments. Management makes
estimates of the collectibility of the accounts receivables. Management critically reviews accounts receivable and analyzes historical bad debts, past-due accounts, client credit-worthiness and current economic trends when evaluating the adequacy of
the allowance for doubtful accounts.
Property and Equipment, Net
Property and equipment are recorded at cost. Depreciation is calculated to amortize the depreciable assets over their useful lives using the straight-line
method and commences when the asset is placed in service. The range of estimated useful lives is three to five years. Leasehold improvements are amortized on a straight-line basis over the term of the lease or the estimated useful life of the
improvement, whichever is shorter. Expenditures for repairs and maintenance are charged to expense as incurred. Expenditures for betterments and major improvements are capitalized. The carrying amount of assets sold or retired and related
accumulated depreciation are removed from the balance sheet in the year of disposal and any resulting gains or losses are included in the statement of operations.
The Company capitalizes the costs of internal-use software in accordance with Statement of Position (SOP) No. 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use
. SOP No. 98-1 provides guidance on applying generally accepted accounting principles in addressing whether and under what conditions the costs of internal-use software should be capitalized. The Company capitalizes certain costs, which
generally include hardware, software, and payroll related costs for employees who are directly associated with and who devote time to the development of internal-use computer software.
Long-Lived Assets (excluding Goodwill)
The Company accounts for long-lived assets in accordance with the provisions of SFAS No. 144,
Accounting for the Impairment of Long-Lived Assets,
which requires that long-lived assets be reviewed for impairment whenever events
or circumstances indicate that the carrying amount of an asset may not be fully recoverable. An impairment loss is recognized if the sum of the long-term undiscounted cash flows is less than the carrying amount of the long-lived assets being
evaluated.
Goodwill and Other Intangible Assets
All of the Companys goodwill and intangible assets have been accounted for under the provisions of SFAS No. 142,
Goodwill and Other Intangible Assets.
SFAS No. 142 requires that goodwill and
intangible assets deemed to have indefinite lives not be amortized, but rather be tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate potential impairment. Finite-lived intangible assets are
required to be amortized over their useful lives and are subject to impairment evaluation under the provisions of SFAS No. 144. The excess cost of the acquisition over the fair value of the net assets acquired is recorded as goodwill.
Goodwill is tested at least annually for impairment and other intangible assets are tested for potential impairment whenever events or
changes in circumstances suggest that the carrying value of an asset may not be fully recoverable in accordance with SFAS No. 144. Other intangible assets arise from business combinations and consist of customer relationships, restricted
covenants related to employment agreements, customer backlog and trademarks that are amortized, on a straight-line basis, over periods of up to five years. Goodwill is tested for impairment at the reporting unit level at least annually utilizing a
fair value methodology. The Company evaluates
36
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Business and Significant Accounting Policies (continued)
the fair values of its reporting units utilizing various techniques. The reporting units consist of The Hackett Group and Hackett Technology Solutions. In
assessing the recoverability of goodwill and intangible assets, the Company makes assumptions regarding various factors to determine if impairment tests are met. These estimates contain managements best estimates, using appropriate and
customary assumptions available at the time. The Company performed its annual impairment test of goodwill in the fourth quarter of fiscal years 2007, 2006 and 2005 and determined that goodwill was not impaired.
Revenue Recognition
The
Company principally derives revenues from fees for services generated on a project-by-project basis which are recognized in accordance with SEC Staff Accounting Bulletin (SAB) No. 101,
Revenue Recognition in Financial
Statements
, as amended by SAB No. 104,
Revenue Recognition
, and are recognized net of sales tax. Revenues for services rendered are recognized on a time and materials basis or on a fixed-fee or capped-fee basis.
Revenues for time and materials contracts are recognized based on the number of hours worked by the Companys consultants at an agreed upon
rate per hour and are recognized in the period in which services are performed.
Revenues related to fixed-fee or capped-fee
contracts are recognized on the proportional performance method of accounting based on the ratio of labor hours incurred to estimated total labor hours. This percentage is multiplied by the contracted dollar amount of the project to determine the
amount of revenue to recognize in an accounting period. The contracted amount used in this calculation excludes the amount the client pays for reimbursable expenses. There are situations where the number of hours to complete projects may exceed the
Companys original estimate. These increases can be as a result of an increase in project scope, unforeseen events that arise, or the inability of the client or the delivery team to fulfill their responsibilities. On an on-going basis, the
Companys project delivery, Office of Risk Management and finance personnel review hours incurred and estimated total labor hours to complete projects and any revisions in these estimates are reflected in the period in which they become known.
Additionally the Company earns revenues from the sale of software, software licenses and maintenance contracts.
Revenue for
contracts with multiple elements is allocated based on the fair value of the elements and is recognized in accordance with our accounting policies for each element pursuant to Emerging Issues Task Force (EITF) Issue No. 00-21,
Accounting for Revenue Arrangements with Multiple Deliverables.
Additionally, the Company earns revenue from the sale of software,
software licenses and maintenance contracts which is recognized in accordance with SOP No. 97-2,
Software Revenue Recognition
. Revenue for the sale of software and software licenses is recognized upon contract execution and customer
receipt of software. Revenue from maintenance contracts and advisory services is recognized ratably over the life of the agreements.
Unbilled revenues represent revenues for services performed that have not been invoiced. If the Company does not accurately estimate the scope of the work to be performed, or does not manage the projects properly within the planned periods
of time or does not meet the clients expectations under the contracts, then future consulting margins may be negatively affected or losses on existing contracts may need to be recognized. Any such resulting reductions in margins or contract
losses could be material to the Companys results of operations.
Revenues before reimbursements exclude reimbursable expenses charged
to clients. Reimbursements, which include travel and out-of-pocket expenses, are included in revenues, and an equivalent amount of reimbursable expenses is included in cost of service.
The agreements entered into in connection with a project, whether on a time and materials basis or fixed-fee or capped-fee basis, typically allow the
Companys clients to terminate early due to breach or for convenience with 30 days notice. In the event of termination, the client is 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 clients that limit the Companys 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 that 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.
37
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Business and Significant Accounting Policies (continued)
Stock Based Compensation
In December 2004, the Financial Accounting Standards Board FASB issued SFAS No. 123R,
Share-Based Payment
. This Statement is a revision of
SFAS No. 123,
Accounting for Stock-Based Compensation
and supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees
and its related implementation guidance. On December 31, 2005, the Company adopted the
provisions of SFAS No. 123R using the modified-prospective-transition method. Under this transition method, compensation expense recognized during the years ended December 28, 2007 and December 29, 2006 included: (a) compensation
expense for all share-based awards granted prior to, but not yet vested as of December 31, 2005, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation expense for
all share-based awards granted subsequent to December 31, 2005, based on the grant date fair value estimated in accordance with the provisions of SFAS No. 123R. In accordance with the modified-prospective-transition method, results from
prior periods have not been restated.
The Statement requires entities to recognize compensation expense for awards of equity instruments
to employees based on the grant-date fair value of those awards (with limited exceptions). SFAS No. 123R also requires the benefits of tax deductions in excess of recognized compensation expense to be reported as a financing cash flow, rather
than as an operating cash flow as prescribed under the prior accounting rules. This requirement reduces net operating cash flows and increases net financing cash flows in periods after adoption. Total cash flow remains unchanged from what would have
been reported under prior accounting rules. Upon the adoption of SFAS No. 123R, the Company recognized an immaterial one-time gain based on SFAS No. 123Rs requirement to apply an estimated forfeiture rate to unvested restricted stock
and restricted stock unit awards. Previously, the Company recorded forfeitures as incurred for such awards.
In November 2005, the FASB
issued Staff Position (FSP) No. 123(R)-3,
Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards
. This pronouncement provides an alternative transition method of calculating the excess tax
benefits available to absorb any tax deficiencies recognized subsequent to the adoption of SFAS No. 123(R). The Company has elected to adopt the alternative transition method.
As a result of adopting SFAS No. 123R, the charge to net earnings for the years ended December 28, 2007 and December 29, 2006 were $204
thousand and $486 thousand, respectively. The impact of adopting SFAS No. 123R on basic and diluted earnings per share for the years ended December 28, 2007 and December 29, 2006 was $0.00 and $0.01 per share, respectively.
Prior to the adoption of SFAS No. 123R, the Company followed the intrinsic value method in accordance with APB No. 25 to account
for its employee stock plans. Accordingly, no compensation expense was recognized for the issuance of stock options or shares granted through the Employee Share Purchase Plan (the ESPP); however, the Company recognized the full
fair-value of the shares of nonvested restricted stock awards and common stock subject to vesting requirements and recorded an offsetting deferred compensation balance within equity for the unrecognized cost. SFAS No. 123R prohibits this
gross up of shareholders equity. As a result, the Company reclassified the unearned compensation balance into equity upon the effective date of the adoption of SFAS No. 123R; compensation expense is recognized over the
requisite service period with an offsetting credit to equity; and the full fair-value of the share-based payment is not recognized until the instrument is vested. The adoption of SFAS No. 123R primarily resulted in the Company estimating
forfeitures for all unvested common stock subject to vesting requirements and restricted stock unit awards and the recognition of compensation expense for the unvested portion of previously granted stock options.
38
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Business and Significant Accounting Policies (continued)
The following table illustrates the effect on net earnings and earnings per share for the year ended
December 30, 2005, if the Company had applied the fair value recognition provisions of SFAS No. 123, as amended by SFAS No. 148,
Accounting for Stock-Based Compensation-Transition and Disclosure
, to stock option awards granted
under the Companys stock-based compensation plans. The assumptions underlying the fair value calculations of the stock option grants are presented in Note 12. Had the Company adopted SFAS No. 123 in accounting for its stock option plans,
the Companys consolidated net income and net income per share for the year ended December 30, 2005 would have been adjusted to the pro forma amounts indicated as follows (in thousands, except per share data):
|
|
|
|
|
Net income, as reported
|
|
$
|
604
|
|
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects
|
|
|
3,392
|
|
Deduct: Total stock-based employee pro forma compensation expense determined under fair value based method for all awards, net of related tax
effects
|
|
|
(5,195
|
)
|
|
|
|
|
|
Pro forma net loss
|
|
$
|
(1,199
|
)
|
|
|
|
|
|
Basic net income (loss) per common share:
|
|
|
|
|
As reported
|
|
$
|
0.01
|
|
Pro forma
|
|
$
|
(0.03
|
)
|
Diluted net income (loss) per common share:
|
|
|
|
|
As reported
|
|
$
|
0.01
|
|
Pro forma
|
|
$
|
(0.03
|
)
|
Income Taxes
Income taxes are accounted for in accordance with SFAS No. 109,
Accounting for Income Taxes
. Under SFAS No. 109, deferred tax assets and liabilities are determined based on differences between the
financial reporting carrying values and tax bases of assets and liabilities, and are measured by using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to reverse. Deferred income taxes also
reflect the impact of certain state operating loss and tax credit carryforwards. A valuation allowance is provided if the Company believes it is more likely than not that all or some portion of the deferred tax asset will not be realized. An
increase or decrease in the valuation allowance, if any, that results from a change in circumstances, and which causes a change in the Companys judgment about the realizability of the related deferred tax asset, is included in the current tax
provision.
Effective December 30, 2006, the Company adopted FIN No. 48,
Accounting for Uncertainty in Income Taxes
. FIN
No. 48 prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This interpretation also provides guidance on derecognition of income tax
assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods and income tax disclosures. The
Company reports penalties and tax-related interest expense as a component of income tax expense (see Note 11).
Net Income (Loss) Per
Common Share
Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of
common shares outstanding during the period. With regard to restricted stock units issued to employees, the calculation includes only the vested portion of such stock. Net income (loss) per share assuming dilution is computed by dividing the net
income (loss) by the weighted average number of common shares outstanding, increased by the assumed conversion of other potentially dilutive securities during the period.
39
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Business and Significant Accounting Policies (continued)
The following table reconciles basic and dilutive weighted average shares:
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
December 28,
2007
|
|
December 29,
2006
|
|
December 30,
2005
|
Basic weighted average common shares outstanding
|
|
44,126,720
|
|
44,652,893
|
|
43,574,815
|
Effect of dilutive securities:
|
|
|
|
|
|
|
Unvested restricted stock units issued to employees
|
|
768,007
|
|
|
|
1,506,707
|
Common stock issuable upon the exercise of stock options
|
|
83,146
|
|
|
|
220,832
|
|
|
|
|
|
|
|
Dilutive weighted average common shares outstanding
|
|
44,977,873
|
|
44,652,893
|
|
45,302,354
|
|
|
|
|
|
|
|
Dilutive securities not included in diluted weighted average common shares outstanding:
|
|
|
|
|
|
|
Unvested restricted stock units issued to employees
|
|
|
|
1,171,208
|
|
|
Common stock issuable upon the exercise of stock options
|
|
|
|
177,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,001,243
|
|
|
|
|
|
|
|
|
|
Fair Value of Financial Instruments
The Companys financial instruments consist of cash and cash equivalents, restricted cash, marketable investments, accounts receivable and unbilled
revenue, accounts payable, loan payable and accrued expenses and other liabilities.
At December 28, 2007, the Company had $7.0
million in Bank of Americas Columbia Strategic Cash Portfolio (Portfolio) which was closed to redemptions and to new investors effective December 7, 2007 and is currently under liquidation. The Company recorded the Portfolio
at fair market value in the accompanying consolidated balance sheets which includes an estimated realized loss of $450 thousand in 2007.
As of December 28, 2007 and December 29, 2006 the fair value of all financial instruments approximated their carrying value.
Concentration of Credit Risk
The Company provides services primarily to Global 2000 companies and other sophisticated
buyers of business consulting and information technology services. The Company performs ongoing credit evaluations of its major customers and maintains reserves for potential credit losses. In fiscal years 2007 and 2006, no customer accounted for
more than 4% of total revenues. In fiscal year 2005, one customer had revenues that accounted for approximately 5% of total revenues.
40
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Business and Significant Accounting Policies (continued)
Managements Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Other Comprehensive Income (Loss)
The Company reports its comprehensive income (loss) in accordance with SFAS No. 130,
Reporting Comprehensive Income
, which establishes
standards for reporting and presenting comprehensive income (loss) and its components in a full set of financial statements. Other comprehensive income (loss) consists of unrealized gains and losses on available-for-sale securities, and cumulative
currency translation adjustments.
Translation of Non-U.S. Currency Amounts
The assets and liabilities held by the Companys foreign entities with a functional currency other than the U.S. Dollar are translated into U.S.
Dollars at exchange rates in effect at the end of each reporting period. Foreign entity revenues and expenses are translated into U.S. Dollars at the average rates that prevailed during the period. The resulting net translation gains and losses are
reported as foreign currency translation adjustments in shareholders equity as a component of accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions are included in net income (loss).
Segment Reporting
The Company
reports business segment information under the provisions of SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information
. In accordance with this standard, the Company engages in business activities in one operating
segment, which provides business and technology consulting services.
Recent Accounting Pronouncements
In December 2007, the FASB issued SFAS No. 141 (revised 2007),
Business Combinations
. This standard establishes principles and requirements
for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired. This standard also establishes disclosure
requirements to enable the evaluation of the nature and financial effects of the business combination. This standard is effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company does not expect
that the implementation of this statement will have a material impact on its results of operations, financial position, or liquidity.
In
December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statements
. This standard improves the relevance, comparability, and transparency of the financial information that a reporting entity
provides in its consolidated financial statements. Under the new standard, noncontrolling interests are to be treated as a separate component of stockholders equity, not as a liability or other item outside of stockholders equity. This
standard also requires that increases and decreases in the noncontrolling ownership be accounted for as equity transactions. This statement is effective for fiscal years beginning on or after December 15, 2008. The Company does not expect that
the implementation of this statement will have a material impact on its results of operations, financial position, or liquidity.
In
February 2007, the FASB issued SFAS No. 159,
The Fair Value Option for Financial Assets and Financial Liabilities
. The standard permits entities to choose to measure many financial instruments and certain other items at fair value. This
standard is effective for the Companys fiscal year beginning December 29, 2007 and the Company does not expect that the implementation will have a material impact on its results of operations, financial position, or liquidity.
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements
. This standard defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This standard is effective for the Companys fiscal year beginning
41
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Business and Significant Accounting Policies (continued)
December 29, 2007; however, the FASB has deferred the implementation of the provisions of SFAS No. 157 relating to nonfinancial assets and
liabilities until January 1, 2009. The Company does not expect that the implementation of this statement will have a material impact on its results of operations, financial position, or liquidity.
Reclassifications
Certain prior year
amounts in the consolidated financial statements have been reclassified to conform to current year presentation.
2. Acquisitions and Investing
Activities
During the year ended December 30, 2005, the Company completed the acquisition of two businesses which provide
information technology services (collectively, the Acquired Entities). Aggregate consideration for the Acquired Entities was $35.0 million. This amount has been allocated, on an entity-by-entity basis, to the assets acquired and
liabilities assumed based on their respective fair values on the dates of acquisition.
The components of the purchase price allocation for
the Acquired Entities, contingent consideration earned for previous acquisitions, and fees and expenses incurred are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
2006
|
|
2005
|
|
Fair value of net assets (excluding cash) acquired
|
|
$
|
|
|
$
|
|
|
$
|
(4,146
|
)
|
Goodwill
|
|
|
1,276
|
|
|
2,050
|
|
|
27,690
|
|
Intangible assets
|
|
|
|
|
|
|
|
|
5,332
|
|
Deferred payment accrued
|
|
|
|
|
|
|
|
|
(7,120
|
)
|
Deferred payment paid
|
|
|
|
|
|
8,431
|
|
|
1,500
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash used in acquisition of businesses, net of cash acquired
|
|
$
|
1,276
|
|
$
|
10,481
|
|
$
|
23,256
|
|
|
|
|
|
|
|
|
|
|
|
|
Accordingly, the results of the acquisitions are included in the Companys consolidated
results of operations from the respective dates of acquisition. For each acquisition, the excess of the purchase price including any contingent consideration over the estimated fair value of the net identifiable tangible and intangible assets
acquired has been recorded as goodwill. For each of the acquisitions made, goodwill is deductible for tax purposes except in the case of goodwill for the REL Consultancy Group Limited (REL) acquisition, which amounted to $25.8 million.
In November 2005, the Company purchased REL, a privately-held UK company that provides working capital management advisory services
primarily in Europe and the U.S. Under the terms of the Share Purchase Agreement, the stockholders of REL received aggregate cash of $21.3 million upon closing. During 2006, $6.9 million of deferred consideration was paid and during 2007, $1.3
million was paid to the stockholders for final payment of the purchase price. The excess of the purchase price of the acquisition over the estimated fair value of the net identifiable assets acquired has been recorded as $5.3 million of intangible
assets and $25.8 million of goodwill. The intangible assets are being amortized over periods ranging from 6 months to 5 years.
In
connection with the acquisition, the Company recorded liabilities of $2.6 million for termination obligations, in accordance with EITF No. 95-3,
Recognition of Liabilities in Connection with a Purchase Business Combination
. The Company
has recognized these obligations as a liability assumed as of the acquisition date. These termination obligations consisted of $1.4 million of employee separation costs and $1.2 million related to the closure of redundant REL real estate facilities.
The majority of these obligations were paid during 2006.
42
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Acquisitions and Investing Activities (continued)
The following unaudited pro forma consolidated information for the year ended December 30, 2005
is provided for the REL acquisition assuming it occurred as of January 1, 2005 (in thousands, except per share amounts):
|
|
|
|
|
|
|
2005
|
|
Total revenues
|
|
$
|
200,075
|
|
Net loss
|
|
$
|
(3,768
|
)
|
Basic and diluted net loss per share
|
|
$
|
(0.09
|
)
|
As of December 28, 2007, all deferred payments and consideration related to acquisitions have
been settled.
Other Acquisitions
In
January 2005, the Company purchased the operations of Active Interest, Inc., a company that specializes in the implementation of Hyperion Brio data warehouse software. The purchase price for this acquisition was $607 thousand in cash. The excess of
the purchase price of the acquisition over the estimated fair value of the net identifiable assets acquired has been recorded as $42 thousand of intangible assets and $565 thousand of goodwill.
The Company includes its acquired intangible assets with definitive lives in other assets in the accompanying consolidated balance sheets. As of
December 28, 2007 and December 29, 2006, intangible assets totaled $2.2 million and $3.5 million, respectively, which is net of accumulated amortization of $8.6 million and $7.5 million, respectively. Acquired intangible assets with
definite lives are amortized over periods ranging from 6 months to 5 years. Amortization expense for such intangible assets was $1.4 million, $2.6 million and $1.8 million for the fiscal years ended December 28, 2007, December 29,
2006 and December 30, 2005, respectively.
All of the Companys intangible assets are expected to be fully depreciated by the end
of 2010. The estimated future amortization expense of intangible assets as of December 28, 2007 is as follows (in thousands): $762 thousand in 2008, $752 thousand in 2009 and $690 thousand in 2010.
3. Loss (Collections) from Misappropriation, net
As
described in the Form 8-K filed on November 1, 2006, on or about October 26, 2006, the Company learned of a misappropriation by its former UK disbursement agent which related to funds earmarked for payroll taxes due to the United Kingdom
Inland Revenue. The disbursement agent had been utilized from early 2003 to January 2006 to make payroll, payroll tax and vendor disbursements for our UK operations. The Company initiated a review of the matter, and concluded that the total loss
resulting from the misappropriation was $2.2 million (at historical foreign currency exchange rates), of which $1.9 million related to 2005, 2004 and 2003. The total loss was comprised of payroll taxes that were not disbursed to the United Kingdom
Inland Revenue of $1.8 million, interest owing on past due payroll tax amounts of $0.1 million, and the write-off of funds owed back to the Company from the agent of $0.3 million.
The Company and its former disbursement agent agreed to settlement terms that resulted in an initial cash payment to the Company in January 2007 of $350
thousand and the final cash payment of $2.2 million (using foreign currency exchange rate at December 28, 2007) in October 2007. The collections were accounted for as income in the period collected.
43
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Marketable Investments
As of December 28, 2007 and December 29, 2006, the Company had $7.0 million and $10.8 million, respectively, in Bank of Americas Columbia
Strategic Cash Portfolio (Portfolio). Since the Companys initial participation in 2003, the Portfolio had been categorized as cash and cash equivalents on the consolidated balance sheets. On December 7, 2007, the Portfolio was
closed for redemptions and to new investors and is currently under liquidation. As a result, the Company reclassified the current and prior period balances to marketable investments on the accompanying consolidated balance sheets.
As of December 28, 2007, the Company had received a redemption from the Portfolio of 740 thousand shares, or 9% of its investment, for $731
thousand, or a par value of $0.99 per share (par value representing $1.00), from which the Company recorded a realized loss of $9 thousand. Subsequent to year-end, the Company received a redemption from the Portfolio of 2.5 million shares, or
31% of its investment, for $2.5 million or a par value of $0.99 per share. The Portfolio is continuing to accrue and pay interest which the Company is recording as income only after the interest is received.
Based on Portfolio information available to the Company, the market outlook and the expected timing of the remaining redemptions, the Company estimated
the fair value of the remaining Portfolio shares to be $0.94 per share (par value representing $1.00) and as such, recorded a realized loss on the marketable investments of $450 thousand in 2007.
As of December 28, 2007 and December 29, 2006, the Companys marketable investments did not have any gross unrealized gains or losses.
5. Accounts Receivable and Unbilled Revenue, Net
Accounts receivable and unbilled revenues, net consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 28,
2007
|
|
|
December 29,
2006
|
|
Accounts receivable
|
|
$
|
31,076
|
|
|
$
|
32,974
|
|
Unbilled revenue
|
|
|
143
|
|
|
|
4,695
|
|
Allowance for doubtful accounts
|
|
|
(1,484
|
)
|
|
|
(1,851
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
29,735
|
|
|
$
|
35,818
|
|
|
|
|
|
|
|
|
|
|
Unbilled revenue represents revenue for services performed that have not been invoiced, offset by uncollected
advanced billings.
44
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Property and Equipment, net
Property and equipment, net consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 28,
2007
|
|
|
December 29,
2006
|
|
Equipment
|
|
$
|
10,829
|
|
|
$
|
10,160
|
|
Software
|
|
|
8,172
|
|
|
|
7,425
|
|
Leasehold improvements
|
|
|
1,726
|
|
|
|
1,716
|
|
Furniture and fixtures
|
|
|
697
|
|
|
|
1,076
|
|
Automobile
|
|
|
40
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,464
|
|
|
|
20,412
|
|
Less accumulated depreciation
|
|
|
(15,755
|
)
|
|
|
(15,229
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,709
|
|
|
$
|
5,183
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense for the years ended December 28, 2007, December 29, 2006 and
December 30, 2005 was $2.1 million, $2.5 million and $3.1 million, respectively, and is included in selling, general and administrative costs on the accompanying consolidated statements of operations.
7. Accrued Expenses and Other Liabilities
Accrued
expenses and other liabilities consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
December 28,
2007
|
|
December 29,
2006
|
Accrued compensation and benefits
|
|
$
|
2,838
|
|
$
|
3,110
|
Accrued bonuses
|
|
|
5,195
|
|
|
2,496
|
Accrued restructuring related expenses
|
|
|
2,273
|
|
|
2,655
|
Deferred revenue
|
|
|
10,487
|
|
|
9,498
|
Accrued sales, use, franchise and VAT tax
|
|
|
2,711
|
|
|
1,677
|
Other accrued expenses
|
|
|
5,543
|
|
|
5,139
|
Acquisition related deferred payments
|
|
|
|
|
|
198
|
|
|
|
|
|
|
|
Current accrued expenses and other liabilities
|
|
$
|
29,047
|
|
$
|
24,773
|
|
|
|
Accrued restructuring related expensesnon-current
|
|
|
3,414
|
|
|
4,611
|
Other accrued expensesnon-current
|
|
|
209
|
|
|
|
|
|
|
|
|
|
|
Non-current accrued expenses and other liabilities
|
|
|
3,623
|
|
|
4,611
|
|
|
|
|
|
|
|
Total accrued expenses and other liabilities
|
|
$
|
32,670
|
|
$
|
29,384
|
|
|
|
|
|
|
|
8. Loan Payable
At December 28, 2007 and December 29, 2006, the Company did not have any outstanding loans. At December 30, 2005, the Company had a loan with a financial institution of $3.7 million, classified as short
term borrowings. The loan was secured by $3.7 million of cash and was classified as current restricted cash. This bank loan carried interest on the balance, net of restricted cash, of 2% over National Westminster Banks base rate, which was
4.5% at December 30, 2005. The loan was repaid in March 2006.
9. Letters of Credit
At December 28, 2007 and December 29, 2006, the Company had outstanding letters of credit of $600 thousand to secure the Companys
obligations on various operating leases. The Company had $600 thousand deposited at December 28, 2007 and December 29, 2006 with a financial institution as collateral for these letters of credit and has classified this deposit as
restricted cash on the accompanying consolidated balance sheets.
45
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Lease Commitments
The Company has operating lease agreements for its premises that expire on various dates through December 2016. Rent expense, net of subleases for the
years ended December 28, 2007, December 29, 2006 and December 30, 2005 was $1.5 million, $1.3 million and $2.0 million, respectively.
Future minimum lease commitments and sublease receipts under non-cancelable operating leases for premises having a remaining term in excess of one year at December 28, 2007 are as follows (in thousands):
|
|
|
|
|
|
|
|
|
Rental
Payments
|
|
Sublease
Receipts
|
2008
|
|
$
|
3,494
|
|
$
|
1,262
|
2009
|
|
|
3,557
|
|
|
1,275
|
2010
|
|
|
3,229
|
|
|
1,219
|
2011
|
|
|
1,817
|
|
|
721
|
Thereafter
|
|
|
1,819
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
13,916
|
|
$
|
4,477
|
|
|
|
|
|
|
|
11. Income Taxes
The Company files federal income tax returns, as well as multiple state, local and foreign jurisdiction tax returns. A number of years may elapse before an uncertain tax position is audited and finally resolved. While
it is often difficult to predict the final outcome or the timing of resolution on any particular uncertain tax position, the Company believes that its reserves for income taxes reflect the most probable outcome. The Company adjusts these reserves,
as well as the related interest, in light of changing facts and circumstances. The resolution of a matter would be recognized as an adjustment to the provision for income taxes and the effective tax rate in the period of resolution. The Company is
no longer subject to examinations of its federal income tax returns by the Internal Revenue Service for years through 2003. All significant state, local and foreign matters have been concluded for years through 2003.
The components of income (loss) before income taxes are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 28,
2007
|
|
December 29,
2006
|
|
|
December 30,
2005
|
|
Domestic
|
|
$
|
3,215
|
|
$
|
3,194
|
|
|
$
|
3,259
|
|
Foreign
|
|
|
6,058
|
|
|
(7,329
|
)
|
|
|
(2,661
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
$
|
9,273
|
|
$
|
(4,135
|
)
|
|
$
|
598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Income Taxes (continued)
The components of income tax expense (benefit) are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 28,
2007
|
|
December 29,
2006
|
|
December 30,
2005
|
|
Current tax expense (benefit):
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
123
|
|
$
|
588
|
|
$
|
(204
|
)
|
State
|
|
|
131
|
|
|
291
|
|
|
110
|
|
Foreign
|
|
|
24
|
|
|
34
|
|
|
88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
278
|
|
|
913
|
|
|
(6
|
)
|
Deferred tax expense:
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
|
|
|
|
|
|
|
|
State
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit)
|
|
$
|
278
|
|
$
|
913
|
|
$
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of the federal statutory tax rate with the effective tax rate is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 28,
2007
|
|
|
December 29,
2006
|
|
|
December 30,
2005
|
|
U.S statutory income tax (benefit) rate
|
|
35.0
|
%
|
|
(35.0
|
)%
|
|
35.0
|
%
|
Sate income taxes, net of federal income tax benefit
|
|
0.9
|
|
|
4.6
|
|
|
11.9
|
|
Valuation allowance (reduction)
|
|
(66.9
|
)
|
|
20.9
|
|
|
(124.2
|
)
|
Meals and entertainment
|
|
2.0
|
|
|
5.0
|
|
|
41.2
|
|
Intangible amortization
|
|
5.0
|
|
|
16.0
|
|
|
11.8
|
|
Foreign exchange loss (gain)
|
|
7.4
|
|
|
(3.9
|
)
|
|
|
|
Section 162(m)
|
|
9.7
|
|
|
5.9
|
|
|
|
|
Other, net
|
|
9.9
|
|
|
8.7
|
|
|
23.3
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
3.0
|
%
|
|
22.2
|
%
|
|
(1.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
The recognition of the $378 thousand of FIN No. 48 tax liabilities would have an impact on
the effective tax rate.
The components of the net deferred income tax asset (liability) are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 28,
2007
|
|
|
December 29,
2006
|
|
Deferred income tax assets:
|
|
|
|
|
|
|
|
|
Purchased research and development
|
|
$
|
500
|
|
|
$
|
606
|
|
Allowance for doubtful accounts
|
|
|
586
|
|
|
|
711
|
|
Net operating loss and tax credits carryforward
|
|
|
30,450
|
|
|
|
34,922
|
|
Accrued expenses and other liabilities
|
|
|
5,279
|
|
|
|
6,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,815
|
|
|
|
43,188
|
|
Valuation allowance
|
|
|
(31,554
|
)
|
|
|
(38,059
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
5,261
|
|
|
|
5,129
|
|
Deferred income tax liabilities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
(4,860
|
)
|
|
|
(4,188
|
)
|
Other items
|
|
|
(401
|
)
|
|
|
(941
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,261
|
)
|
|
|
(5,129
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred income tax asset (liability)
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
47
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Income Taxes (continued)
At December 28, 2007, the Company had $65.1 million, of U.S. federal net operating loss
carryforwards available for tax purposes, most of which expire in 2022 if not utilized. Additionally, at December 28, 2007, the Company had approximately $11.9 million of foreign net operating loss carryforwards, of which $5.4 million related
to operations in the UK. Most of the foreign net operating losses may be carried forward indefinitely.
In 2002, the Company discontinued
its interactive marketing business which was acquired with THINK New Ideas. As a result, the Company claimed a worthless stock deduction for its investment in its 2002 tax return from which it was determined by the Internal Revenue Service that the
Company was entitled to a worthless stock deduction of $77.3 million.
The liability method of accounting for deferred income taxes
requires a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. At December 28, 2007 and December 29,
2006, the Company had established a valuation allowance of $31.6 million and $38.1 million, respectively, to reduce deferred income tax assets primarily related to net operating loss carryforwards.
Penalties and tax-related interest expense are reported as a component of income tax expense. As of December 28, 2007 and December 29, 2006,
the total amount of accrued income tax-related interest and penalties was $241 thousand and $263 thousand, respectively.
Effective
December 30, 2006, the Company adopted FIN No. 48. FIN No. 48 prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This
interpretation also provides guidance on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting
for income taxes in interim periods and income tax disclosures.
As a result of the implementation of FIN No. 48, the Company
performed a comprehensive review of its portfolio of uncertain tax positions in accordance with recognition standards established by FIN No. 48. In this regard, an uncertain tax position represents the Companys expected treatment of a tax
position taken in a filed tax return, or planned to be taken in a future tax return, that has not been reflected in measuring income tax expense for financial reporting purposes. As a result of this review, on December 30, 2006, the Company
adjusted the estimated value of its uncertain tax positions by recognizing additional liabilities totaling $481 thousand through a charge to retained earnings, which primarily related to potential state and federal tax exposure. The $481 thousand
liability included $311 thousand, which was not expected to be paid within one year, and as such was classified as a non-current liability and included in the non-current portion of accrued expenses and other liabilities in the balance sheet as
of December 30, 2006. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months.
The following table set forth the detail and activity of the FIN No. 48 liability during the twelve months ended December 28, 2007 (in thousands):
|
|
|
|
|
Balance at December 30, 2006
|
|
$
|
481
|
|
Additions for tax positions of prior years
|
|
|
12
|
|
Reductions due to lapse of applicable statue of limitations
|
|
|
(115
|
)
|
|
|
|
|
|
Balance at December 28, 2007
|
|
$
|
378
|
|
|
|
|
|
|
The $378 thousand FIN No. 48 liability included $209 thousand, which was not expected to be paid within one
year, and as such was classified as a non-current liability and included in the non-current portion of the accrued expenses and other liabilities in the accompanying consolidated balance sheet as of December 28, 2007.
48
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Stock Based Compensation
In December 2004, the FASB issued SFAS No. 123R, which is a revision of SFAS No. 123 and supersedes APB Opinion No. 25 and its related
implementation guidance. On December 31, 2005, the Company adopted the provisions of SFAS No. 123R using the modified-prospective-transition method. Under this transition method, compensation expense recognized during the years ended
December 28, 2007 and December 29, 2006 included: (a) compensation expense for all share-based awards granted prior to, but not yet vested as of December 31, 2005, based on the grant date fair value estimated in accordance with
the original provisions of SFAS No. 123, and (b) compensation expense for all share-based awards granted subsequent to December 31, 2005, based on the grant date fair value estimated in accordance with the provisions of SFAS
No. 123R. In accordance with the modified-prospective-transition method, results from prior periods have not been restated.
The
Statement requires entities to recognize compensation expense for awards of equity instruments to employees based on the grant-date fair value of those awards (with limited exceptions). SFAS No. 123R also requires the benefits of tax deductions
in excess of recognized compensation expense to be reported as a financing cash flow, rather than as an operating cash flow as prescribed under the prior accounting rules. This requirement reduces net operating cash flows and increases net financing
cash flows in periods after adoption. Total cash flow remains unchanged from what would have been reported under prior accounting rules. Upon the adoption of SFAS No. 123R, the Company recognized an immaterial one-time gain based on SFAS
No. 123Rs requirement to apply an estimated forfeiture rate to unvested restricted stock and restricted stock unit awards. Previously, the Company recorded forfeitures as incurred for such awards.
As a result of adopting SFAS No. 123R, the charges to net earnings for the years ended December 28, 2007 and December 29, 2006 were $204
thousand and $486 thousand, respectively. The impact of adopting SFAS No. 123R on basic and diluted earnings per share for the years ended December 28, 2007 and December 29, 2006 was $0.00 per share and $0.01 per share, respectively.
Prior to the adoption of SFAS No. 123R, the Company followed the intrinsic value method in accordance with APB No. 25 to account
for its employee stock plans. Accordingly, no compensation expense was recognized for the issuance of stock options or shares granted through the Employee Share Purchase Plan (the ESPP); however, the Company recognized the full
fair-value of the shares of nonvested restricted stock awards and common stock subject to vesting requirements and recorded an offsetting deferred compensation balance within equity for the unrecognized cost. SFAS No. 123R prohibits this
gross up of shareholders equity. As a result, the Company reclassified the unearned compensation balance into equity upon the effective date of the adoption of SFAS No. 123R, compensation expense is recognized over the
requisite service period with an offsetting credit to equity, and the full fair-value of the share-based payment is not recognized until the instrument is vested. The adoption of SFAS No. 123R primarily resulted in the Company estimating
forfeitures for all unvested common stock subject to vesting requirements and restricted stock unit awards and the recognition of compensation expense for the unvested portion of previously granted stock options.
49
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Stock Based Compensation (continued)
Stock Plans
Total share based compensation included in net income for the year ended December 28, 2007 was $4.0 million. The number of shares available for future issuance under the plans at December 28, 2007 is
10,576,549 shares. The Company issues new shares as shares are required to be delivered under the plan.
Stock Options
The Company has granted stock options to employees and directors of the Company at exercise prices equal to the market value of the stock at the date
of grant. The options generally vest ratably over four years, based on continued employment, with a maximum term of 10 years.
Stock option
activity under the Companys stock option plans as of December 28, 2007 is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Shares
|
|
|
Weighted
Average
Exercise Price
|
|
Weighted
Average
Remaining
Contractual Term
|
|
Aggregate
Intrinsic Value
|
Outstanding at December 29, 2006
|
|
1,999,517
|
|
|
$
|
5.80
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
(77,683
|
)
|
|
|
2.69
|
|
|
|
|
|
|
Forfeited or expired
|
|
(354,236
|
)
|
|
|
5.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 28, 2007
|
|
1,567,598
|
|
|
$
|
5.97
|
|
$
|
4.80
|
|
$
|
585,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 28, 2007
|
|
1,381,790
|
|
|
$
|
5.96
|
|
$
|
4.61
|
|
$
|
577,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A summary of the Companys stock option activity for the years ended December 29, 2006
and December 30, 2005 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 29, 2006
|
|
December 30, 2005
|
|
|
Option Shares
|
|
|
Weighted Average
Exercise Price
|
|
Option Shares
|
|
|
Weighted Average
Exercise Price
|
Outstanding at beginning of year
|
|
2,445,321
|
|
|
$
|
5.63
|
|
3,259,452
|
|
|
$
|
5.68
|
Granted
|
|
|
|
|
|
|
|
45,000
|
|
|
|
3.96
|
Exercised
|
|
(141,043
|
)
|
|
|
3.55
|
|
(107,649
|
)
|
|
|
2.82
|
Forfeited or expired
|
|
(304,761
|
)
|
|
|
5.39
|
|
(751,482
|
)
|
|
|
6.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of year
|
|
1,999,517
|
|
|
$
|
5.80
|
|
2,445,321
|
|
|
$
|
5.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of year
|
|
1,547,070
|
|
|
$
|
5.85
|
|
1,488,362
|
|
|
$
|
5.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Stock Based Compensation (continued)
Other information pertaining to option activity during the years ended December 28, 2007, December
29, 2006 and December 30, 2005 was as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
December 28,
2007
|
|
December 29,
2006
|
|
December 30,
2005
|
Weighted average grant-date fair value of stock options granted
|
|
$
|
|
|
$
|
|
|
$
|
2.30
|
Total fair value of stock options vested
|
|
$
|
907
|
|
$
|
1,475
|
|
$
|
1,796
|
Total intrinsic value of stock options exercised
|
|
$
|
57
|
|
$
|
306
|
|
$
|
127
|
No options were granted during the years ended December 28, 2007 and December 29, 2006.
SFAS No. 123R requires the use of a valuation model to calculate the fair value of stock option awards. The Company has elected to
use the Black-Scholes option-pricing model, which incorporates various assumptions including volatility, expected life, and interest rates. The expected volatility is based on the historical volatility of the Companys common stock over the
most recent period commensurate with the estimate expected life of the Companys stock options. The expected life of an award is based on historical experience and on the terms and conditions of the stock awards granted to employees. The
following assumptions were used by the Company to determine the fair value of stock options granted during the year ended December 30, 2005 using the Black-Scholes options-pricing model:
|
|
|
Expected volatility
|
|
75%
|
Average expected option life
|
|
4 years
|
Risk-free rate
|
|
3.9%
|
Dividend yield
|
|
0%
|
The following table summarizes information about the Companys stock options outstanding at
December 28, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
Range of Exercise Prices
|
|
Number
Outstanding
|
|
Weighted Average
Remaining Contractual
Life (Years)
|
|
Weighted
Average
Exercise Price
|
|
Number
Exercisable
|
|
Weighted
Average
Exercise Price
|
$3.15 - $4.06
|
|
366,480
|
|
4.7
|
|
$
|
2.92
|
|
351,480
|
|
$
|
2.88
|
$4.07 - $8.13
|
|
1,080,020
|
|
5.1
|
|
|
6.09
|
|
909,212
|
|
|
6.07
|
$8.14 - $12.19
|
|
71,289
|
|
2.5
|
|
|
9.97
|
|
71,289
|
|
|
9.97
|
$12.20 - $16.25
|
|
7,623
|
|
2.3
|
|
|
14.28
|
|
7,623
|
|
|
14.28
|
$16.26 - $20.32
|
|
27,836
|
|
2.4
|
|
|
17.68
|
|
27,836
|
|
|
17.68
|
$20.33 - $24.38
|
|
3,350
|
|
1.1
|
|
|
21.98
|
|
3,350
|
|
|
21.98
|
$24.39 - $28.44
|
|
5,750
|
|
2.0
|
|
|
25.11
|
|
5,750
|
|
|
25.11
|
$28.45 - $36.57
|
|
5,250
|
|
2.1
|
|
|
32.56
|
|
5,250
|
|
|
32.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,567,598
|
|
4.8
|
|
$
|
5.97
|
|
1,381,790
|
|
$
|
5.96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units
Under the stock plans, participants may be granted restricted stock units, each of which represents a conditional right to receive a common share in the
future. The restricted stock units granted under this plan
51
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Stock Based Compensation (continued)
generally vest over a four-year period, with 50% vesting on the second anniversary and 25% of the shares vesting on the third and fourth anniversaries of the
grant date. Upon vesting, the restricted stock units will convert into an equivalent number of shares of common stock. The amount of expense relating to the restricted stock units is based on the closing market price of the Companys common
stock on the date of grant and is amortized on a straight-line basis over the four-year requisite service period. Restricted stock unit activity for the year ended December 28, 2007 was as follows:
|
|
|
|
|
|
|
|
|
Number of
Restricted Stock
Units
|
|
|
Weighted Average
Grant-Date Fair
Value
|
Nonvested balance at December 29, 2006
|
|
2,121,527
|
|
|
$
|
4.02
|
Granted
|
|
681,226
|
|
|
|
3.45
|
Vested
|
|
(1,096,627
|
)
|
|
|
3.42
|
Forfeited
|
|
(246,353
|
)
|
|
|
4.23
|
|
|
|
|
|
|
|
Nonvested balance at December 28, 2007
|
|
1,459,773
|
|
|
$
|
4.20
|
|
|
|
|
|
|
|
The Company recorded stock based compensation expense of $3.5 million and $3.4 million,
respectively, in 2007 and 2006, based on the vesting provisions of the restricted stock units and the fair market value of the stock on the grant date. As of December 28, 2007, there was $3.4 million of total restricted stock unit compensation
expense related to the nonvested awards not yet recognized, which is expected to be recognized over a weighted average period of 1.25 years.
As of July 1, 2005, the Company had 169,295 stock options which were accounted for under variable plan accounting pursuant to FIN No. 28,
Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award
Plans
. During the year ended December 28, 2007, 84,569 of these vested shares were cancelled and 27,433 were exercised. Variable plan accounting resulted in a reduction of stock compensation expense of approximately $11 thousand for the
year ended December 30, 2005 and no reduction of stock compensation expense was recorded for the years ended December 28, 2007 and December 29, 2006.
Common Stock Subject to Vesting Requirements
Shares of common stock subject to vesting requirements
were issued in connection with an acquisition to the employees of REL. Employees of the acquired company vest in these shares over a period of four years. Compensation was based on the market value of the Companys common stock at the time of
grant and is recognized on a straight-line basis. Restricted stock activity for the year ended December 28, 2007 was as follows:
|
|
|
|
|
|
|
|
|
Number of Shares of
Common Stock
Subject to Vesting
Requirements
|
|
|
Weighted
Average Grant-
Date Fair Value
|
Nonvested balance at December 29, 2006
|
|
676,695
|
|
|
$
|
3.99
|
Granted
|
|
|
|
|
|
|
Vested
|
|
(213,034
|
)
|
|
|
3.99
|
Forfeited
|
|
(250,628
|
)
|
|
|
3.99
|
|
|
|
|
|
|
|
Nonvested balance at December 28, 2007
|
|
213,033
|
|
|
$
|
3.99
|
|
|
|
|
|
|
|
52
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Stock Based Compensation (continued)
The recorded compensation expense totaling $336 thousand during the year ended December 28, 2007
related to common stock subject to vesting requirements. As of December 28, 2007, there was $779 thousand of total stock based compensation expense related to common stock subject to vesting requirements not yet recognized, which is expected to
be recognized over a weighted average period of 1.42 years.
13. Shareholders Equity
Employee Stock Purchase Plan
Effective July 1, 1998, the Company adopted an Employee Stock Purchase Plan to provide substantially all employees who have completed three months of service as of the beginning of an offering period an opportunity to purchase shares
of its common stock through payroll deductions. Purchases on any one grant are limited to 10% of eligible compensation. Participant account balances are used to purchase shares of stock at the lesser of 85% of the fair market value of shares on the
first trading day of the six-month offering period or on the last trading day of such offering period. The aggregate fair market value, determined as of the first trading date of the offering period, as to shares purchased by an employee may not
exceed $25,000 annually. The Employee Stock Purchase Plan expires on July 1, 2008. A total of 4,275,000 shares of common stock are available for purchase under the plan with a limit of 400,000 shares of common stock to be issued per offering
period. During the fourth quarter of fiscal 2005, the Board of Directors approved a change to the common stock purchase discount and approved the elimination of the related look back period. As a result, effective beginning in fiscal year 2006,
shares of the Companys common stock may be purchased by employees at six months intervals at 95% of the fair market value on the last trading day of each six month period. For plan years 2007, 2006 and 2005, 49,553 shares, 138,911 shares and
460,735 shares, respectively, were issued.
Common Stock
The delivery of 403,751 shares of the Companys common stock, classified as issued as of December 29, 2006 in the accompanying balance sheet,
was deferred by employees entitled to receive these shares in connection with the vesting of restricted stock units. The shares were delivered to the employees at the expiration of the deferral period elected by the employees or upon their
termination of employment. All of these shares of common stock were issued in 2007 and no additional shares were deferred in 2007.
Treasury Stock
On July 30, 2002, the Company announced that its Board of Directors approved the repurchase of up to
$5.0 million of the Companys common stock. In 2003, 2004, 2005 and 2007, the Board of Directors approved the repurchase of an additional $35.0 million of the Companys common stock, thereby increasing the total program size to $40.0
million. Under the repurchase plans, the Company may buy back shares of its outstanding stock from time to time either on the open market or through privately negotiated transactions, subject to market conditions and trading restrictions. As of
December 28, 2007 and December 29, 2006, the Company had repurchased 9,882,781 shares and 7,157,655 shares of its common stock at an average price of $3.43 and $3.33 per share, respectively. The Company holds repurchased shares of its
common stock as treasury stock and accounts for treasury stock under the cost method.
Subsequent to December 28, 2007, the Board of
Directors approved the repurchase of an additional $5.0 million of the Companys common stock, thereby increasing the total approval for repurchase to $45.0 million.
Shareholder Rights Plan
On February 13, 2004, the Board of Directors of the Company adopted a
Shareholder Rights Plan. Under the plan, a dividend of one preferred share purchase right (a Right) was declared for each share of common stock of the Company that was outstanding on February 26, 2004. Each Right entitles the holder
to purchase from the Company one one-thousandth of a share of Series A Junior Preferred Stock at a purchase price of $32.50, subject to adjustment.
53
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Shareholders Equity (continued)
The Rights will trade automatically with the common stock and will not be exercisable until a person
or group has become an acquiring person by acquiring 15% or more of the Companys outstanding common stock, or a person or group commences or publicly announces a tender offer that will result in such a person or group owning 15% or
more of the Companys outstanding common stock. However, Liberty Wanger Asset Management, L.P. (now known as Columbia Wanger Asset Management, L.P.), together with its affiliates and associates will be permitted to acquire up to 20% of the
common stock without making the rights exercisable. Upon announcement that any person or group has become an acquiring person, each Right will entitle all rightholders (other than the acquiring person) to purchase, for the exercise price of $32.50,
a number of shares of the Companys common stock having a market value equal to twice the exercise price. Rightholders would also be entitled to purchase common stock of the acquiring person having a value of twice the exercise price if, after
a person had become an acquiring person, the Company were to enter into certain mergers or other transactions. If any person becomes an acquiring person, the Board of Directors may, at its option and subject to certain limitations, exchange one
share of common stock for each Right.
The Rights have certain anti-takeover effects, in that they would cause substantial dilution to a
person or group that attempts to acquire a significant interest in the Company on terms not approved by the Board of Directors. In the event that the Board of Directors determines a transaction to be in the best interests of the Company and its
stockholders, the Board of Directors may redeem the Rights for $0.001 per share at any time prior to a person or group becoming an acquiring person. The Rights will expire on February 13, 2014.
Equity Related Commitments
In the
event of an Initial Public Offering (IPO) or sale of The Hackett Group and subject to meeting certain performance criteria, certain employees of The Hackett Group may elect to convert on a 1:1 to 3:1 basis, the in-the-money cash value of
each of their The Hackett Group options or restricted stock units to an equivalent number of options or shares of The Hackett Group common stock at the IPO price.
14. Benefit Plan
The Company maintains a 401(k) plan covering all eligible employees. Subject to certain dollar limits,
eligible employees may contribute up to 15% of their pre-tax annual compensation to the plan. The Company may make discretionary contributions on an annual basis. During fiscal years 2007, 2006 and 2005, the Company made matching contributions of
25% of employee contributions up to 4% of their gross salaries. The Companys matching contributions were $0.3 million in each of the fiscal years ended December 28, 2007, December 29, 2006 and December 30, 2005.
15. Restructuring Costs
The Company recorded
restructuring costs of $10.9 million and $5.6 million in fiscal years 2002 and 2001, respectively, for reductions in consultants and functional support personnel and for the closure and consolidation of facilities and related exit costs. These
actions were taken as a result of the continued decline in demand for technology services throughout 2001 and 2002. The Company took steps to reduce its costs to better align its overall cost structure and organization with anticipated demand for
its services.
In 2004 and 2003, the Company recorded restructuring costs of $3.7 million and $4.9 million, respectively, to increase
existing reserves to account for potentially higher estimated losses on the sublease of facilities as a result of lower than expected sublease rates and longer than expected time estimates to sublease excess facilities. The 2004 and 2003
restructuring costs consisted of additions of $1.8 million and $3.1 million, respectively, to the 2002 restructuring accrual and $1.9 million and $1.8 million, respectively, to the 2001 restructuring accrual. Also in 2004, the 2002 restructuring
accrual was reduced by $370 thousand relating to the final settlement of a lease obligation which was recorded as income from discontinued operations in the accompanying consolidated statement of operations for year ended December 31, 2004.
In 2005, the Company recorded restructuring costs of $2.9 million which related to $1.1 million for the consolidation of additional
facilities and related exit costs not included in previously established reserves, primarily
54
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Restructuring Costs (continued)
as a result of the REL acquisition on November 29, 2005, and $1.8 million for increases in previously established reserves in 2002 and 2001 for the
closure and consolidation of facilities, of which $1.1 million is specifically related to the increase of previously established reserves in order to reflect the negotiated buyout of our New York City lease obligation. As a result of the buyout, the
Company was fully released from $20.0 million of future lease obligations, assigned two subleases to the lessor, wrote-off $1.4 million receivable from the lessor, and paid $3.1 million in cash to the lessor. The remaining $700 thousand related to
increases in the reserves to account for higher estimated losses on the sublease of facilities as a result of lower than expected sublease rates and longer than expected times estimates to sublease facilities based on current market conditions. The
2005 restructuring costs of $1.8 million related to previously established reserves consisted of additions of $1.2 million and $600 thousand to the 2002 and 2001 restructuring accruals, respectively.
In 2006, the Company recorded restructuring costs of $6.3 million, which was comprised of $2.8 million relating to the 2005 restructuring for the
consolidation of additional facilities and related exit costs primarily as a result of the REL acquisition and $3.5 million for increases in previously established reserves in 2002 and 2001 for the closure and consolidation of facilities to account
for higher estimated losses on the sublease of facilities as a result of lower than expected sublease rates and longer than expected time estimates to sublease facilities based on current market conditions. Included in the $2.8 million is a further
reduction of occupied space in our technology focused facility in Philadelphia and related severance costs for a senior executive as the Companys primary business model shifts to a proprietary best practice and intellectual capital and
strategic advisory services firm.
No restructuring costs were incurred in 2007.
The following tables set forth the detail and activity in the restructuring expense accruals during the years ended December 28,
2007, December 29, 2006 and December 30, 2005 (in thousands):
2001 Restructuring Accrual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and other
employee costs
|
|
|
Closure and
consolidation of facilities
and related exit costs
|
|
|
Total
|
|
Accrual balance at December 29, 2000
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Additions to accrual from continuing operations
|
|
|
3,694
|
|
|
|
6,528
|
|
|
|
10,222
|
|
Additions to accrual from discontinued operations
|
|
|
559
|
|
|
|
2,311
|
|
|
|
2,870
|
|
2004 asset write-offs
|
|
|
|
|
|
|
(1,205
|
)
|
|
|
(1,205
|
)
|
Expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
2001
|
|
|
(3,186
|
)
|
|
|
(248
|
)
|
|
|
(3,434
|
)
|
2002
|
|
|
(1,067
|
)
|
|
|
(1,965
|
)
|
|
|
(3,032
|
)
|
2003
|
|
|
|
|
|
|
(933
|
)
|
|
|
(933
|
)
|
2004
|
|
|
|
|
|
|
(839
|
)
|
|
|
(839
|
)
|
2005
|
|
|
|
|
|
|
(645
|
)
|
|
|
(645
|
)
|
2006
|
|
|
|
|
|
|
(878
|
)
|
|
|
(878
|
)
|
2007
|
|
|
|
|
|
|
(454
|
)
|
|
|
(454
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrual balance at December 28, 2007
|
|
$
|
|
|
|
$
|
1,672
|
|
|
$
|
1,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Restructuring Costs (continued)
2002 Restructuring Accrual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and other
employee costs
|
|
|
Closure and
consolidation of facilities
and related exit costs
|
|
|
Total
|
|
Accrual balance at December 28, 2001
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Additions to accrual from continuing operations
|
|
|
1,528
|
|
|
|
18,311
|
|
|
|
19,839
|
|
Additions to accrual from discontinued operations
|
|
|
616
|
|
|
|
2,747
|
|
|
|
3,363
|
|
2002 asset write-offs
|
|
|
|
|
|
|
(5,217
|
)
|
|
|
(5,217
|
)
|
2005 write-offs of lessor receivables
|
|
|
|
|
|
|
(1,374
|
)
|
|
|
(1,374
|
)
|
Expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
2002
|
|
|
(855
|
)
|
|
|
(584
|
)
|
|
|
(1,439
|
)
|
2003
|
|
|
(1,289
|
)
|
|
|
(2,198
|
)
|
|
|
(3,487
|
)
|
2004
|
|
|
|
|
|
|
(3,362
|
)
|
|
|
(3,362
|
)
|
2005
|
|
|
|
|
|
|
(4,078
|
)
|
|
|
(4,078
|
)
|
2006
|
|
|
|
|
|
|
(528
|
)
|
|
|
(528
|
)
|
2007
|
|
|
|
|
|
|
(633
|
)
|
|
|
(633
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrual balance at December 28, 2007
|
|
$
|
|
|
|
$
|
3,084
|
|
|
$
|
3,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 Restructuring Accrual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and other
employee costs
|
|
|
Closure and
consolidation of facilities
and related exit costs
|
|
|
Total
|
|
Accrual balance at December 31, 2004
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Additions to accrual from continuing operations
|
|
|
1,278
|
|
|
|
2,620
|
|
|
|
3,898
|
|
2006 asset write-offs
|
|
|
|
|
|
|
(719
|
)
|
|
|
(719
|
)
|
Expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
(35
|
)
|
|
|
|
|
|
|
(35
|
)
|
2006
|
|
|
(1,096
|
)
|
|
|
(625
|
)
|
|
|
(1,721
|
)
|
2007
|
|
|
|
|
|
|
(493
|
)
|
|
|
(493
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrual balance at December 28, 2007
|
|
$
|
147
|
|
|
$
|
783
|
|
|
$
|
930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16. Transactions with Related Parties
In connection with the Companys repurchase of common stock in 2007, the Board of Directors approved the Companys buy back of 276,654 shares of
outstanding common stock from members of the Companys management team at market value of $4.19 per share. These shares were included in the Companys treasury stock on the accompanying consolidated balance sheet at December 28, 2007.
17. 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
Companys financial position, cash flows or results of operations.
56
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. Geographic and Service Group Information
Revenues are attributed to geographic areas as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
December 28,
2007
|
|
December 29,
2006
|
|
December 30,
2005
|
Total Revenues:
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
142,000
|
|
$
|
158,926
|
|
$
|
152,421
|
Foreign
|
|
|
35,008
|
|
|
21,629
|
|
|
10,897
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
177,008
|
|
$
|
180,555
|
|
$
|
163,318
|
|
|
|
|
|
|
|
|
|
|
Long-lived assets are attributed to geographic areas as follows (in thousands):
|
|
|
|
|
|
|
|
|
December 28,
2007
|
|
December 29,
2006
|
Long-Lived Assets:
|
|
|
|
|
|
|
Domestic
|
|
$
|
57,066
|
|
$
|
57,148
|
Foreign
|
|
|
19,379
|
|
|
18,557
|
|
|
|
|
|
|
|
Total
|
|
$
|
76,445
|
|
$
|
75,705
|
|
|
|
|
|
|
|
In 2007, foreign assets included $18.8 million of goodwill and intangible assets related to REL.
The Companys revenue is derived from the following service groups (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
December 28,
2007
|
|
December 29,
2006
|
|
December 30,
2005
|
The Hackett Group:
|
|
|
|
|
|
|
|
|
|
Benchmarking and Business Transformation
|
|
$
|
95,094
|
|
$
|
80,950
|
|
$
|
62,287
|
Executive Advisory Programs
|
|
|
15,187
|
|
|
11,879
|
|
|
7,824
|
|
|
|
|
|
|
|
|
|
|
Total The Hackett Group
|
|
|
110,281
|
|
|
92,829
|
|
|
70,111
|
|
|
|
|
Hackett Technology Solutions
|
|
|
66,727
|
|
|
87,726
|
|
|
93,207
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
$
|
177,008
|
|
$
|
180,555
|
|
|
163,318
|
|
|
|
|
|
|
|
|
|
|
57
THE HACKETT GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. Quarterly Financial Information (unaudited)
The following table presents unaudited supplemental quarterly financial information for the years ended December 28, 2007 and
December 29, 2006 (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
March 30,
2007
|
|
|
June 29,
2007
|
|
September 28,
2007
|
|
December 28,
2007
|
|
Total revenues
|
|
$
|
39,877
|
|
|
$
|
45,512
|
|
$
|
46,729
|
|
$
|
44,890
|
|
Income (loss) from operations
|
|
$
|
(2,509
|
)
|
|
$
|
1,395
|
|
$
|
3,493
|
|
$
|
6,569
|
|
Income (loss) before income taxes
|
|
$
|
(2,271
|
)
|
|
$
|
1,519
|
|
$
|
3,698
|
|
$
|
6,327
|
|
Net income (loss)
|
|
$
|
(2,338
|
)
|
|
$
|
1,451
|
|
$
|
3,586
|
|
$
|
6,296
|
|
|
|
|
|
|
Basic net income (loss) per common share
|
|
$
|
(0.05
|
)
|
|
$
|
0.03
|
|
$
|
0.08
|
|
$
|
0.15
|
|
Diluted net income (loss) per common share
|
|
$
|
(0.05
|
)
|
|
$
|
0.03
|
|
$
|
0.08
|
|
$
|
0.14
|
|
|
|
|
|
Quarter Ended
|
|
|
|
March 31,
2006
|
|
|
July 1,
2006
|
|
September 30,
2006
|
|
December 29,
2006
|
|
Total revenues
|
|
$
|
49,831
|
|
|
$
|
48,996
|
|
$
|
43,552
|
|
$
|
38,176
|
|
Income (loss) from operations
|
|
$
|
(5,951
|
)
|
|
$
|
2,328
|
|
$
|
627
|
|
$
|
(1,644
|
)
|
Income (loss) before income taxes
|
|
$
|
(5,868
|
)
|
|
$
|
2,453
|
|
$
|
722
|
|
$
|
(1,442
|
)
|
Net income (loss)
|
|
$
|
(6,233
|
)
|
|
$
|
2,121
|
|
$
|
473
|
|
$
|
(1,409
|
)
|
|
|
|
|
|
Basic and diluted net income (loss) per common share
|
|
$
|
(0.14
|
)
|
|
$
|
0.05
|
|
$
|
0.01
|
|
$
|
(0.03
|
)
|
Quarterly basic and diluted net income or loss per common share were computed independently for
each quarter and do not necessarily total to the year to date basic and diluted net income (loss) per common share.
58