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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FLORIDA |
65-0750100 |
|||||
(State or other
jurisdiction of |
(I.R.S.
Employer |
|||||
incorporation or
organization) |
Identification Number) |
|||||
1001 Brickell Bay Drive,
Suite 3000 |
||||||
Miami,
Florida |
33131 |
|||||
(Address of principal
executive offices) |
(Zip
Code) |
(305) 375-8005
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
Page |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|
PART I |
||||||||||
ITEM
1. |
Business |
3 | ||||||||
ITEM
2. |
Properties |
13 | ||||||||
ITEM
3. |
Legal Proceedings |
14 | ||||||||
ITEM
4. |
Submission of Matters to a Vote of Security Holders |
14 | ||||||||
PART II |
||||||||||
ITEM
5. |
Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
15 | ||||||||
ITEM
6. |
Selected Financial Data |
16 | ||||||||
ITEM
7. |
Managements Discussion and Analysis of Financial Condition and Results of Operations |
17 | ||||||||
ITEM
7A. |
Quantitative and Qualitative Disclosures about Market Risk |
24 | ||||||||
ITEM
8. |
Financial Statements and Supplementary Data |
25 | ||||||||
ITEM
9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures |
48 | ||||||||
ITEM
9A. |
Control and Procedures |
48 | ||||||||
ITEM
9B. |
Other Information |
48 | ||||||||
PART III |
||||||||||
ITEM
10. |
Directors and Executive Officers of the Registrant |
48 | ||||||||
ITEM
11. |
Executive Compensation |
48 | ||||||||
ITEM
12. |
Security Ownership of Certain Beneficial Owners and Management |
48 | ||||||||
ITEM
13. |
Certain Relationships and Related Transactions |
48 | ||||||||
ITEM
14. |
Principal Accountant Fees and Services |
48 | ||||||||
PART IV |
||||||||||
ITEM
15. |
Exhibits and Financial Statement Schedules |
49 | ||||||||
Signatures |
50 | |||||||||
Index to Exhibits |
51 |
-2-
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
PART I
ITEM 1. | BUSINESS |
GENERAL
INDUSTRY BACKGROUND
-3-
OUR APPROACH
COMPETITION
-4-
STRATEGY
|
Continue to rapidly grow The Hackett Group with new and renewable multi-year offerings. Our benchmarking offerings help companies identify and quantify opportunities for operational improvements and efficiently measure and track the degree of improvement against specific internal and peer performance targets over multi-year periods. Our business advisory services target executives seeking guidance and proven strategies on operational and strategic issues. During 2004 we experienced strong growth in our Hackett benchmarking and subscription based advisory programs. We continue to develop subscription advisory products that will allow clients to efficiently realize the benefits identified in the Hackett benchmarking services. As subscription sales continue to grow an increasing number of sales will involve multi-year commitments which will improve the predictability of our results. |
|
Continue to expand our Best Practices Implementation tools. BPI incorporates intellectual capital from The Hackett Group into our implementation tools and techniques. For clients, the end results are tangible cost and performance gains and the improved return on investment. Our clients attribute their decision to use us to our Best Practice Implementation (BPI) approach and tools. Our objective is to help clients make smarter business process and software configuration decisions as a result of our Best Practice Implementation methods and knowledge. The recent launch of version two of our BPI tools resulted in an expanded best practice repository along with key revisions in business process areas that have been impacted by emerging information technologies. We expect this new and expanded version of our tools and methods to further differentiate our ability to serve our clients. We will continue to train associates in all of our practices about BPI so they are equipped with the knowledge and tools necessary to share our vision with existing and prospective clients. |
|
Continue to leverage our unique best practice knowledge through select strategic alliances. Because of our understanding of how to optimize processes and software configuration with proven best practices, a relationship with a larger provider of comprehensive business and IT services represents a logical opportunity to expand our client base. Our strategic relationship with Accenture, L.L.P., a leading provider of consulting services, gives them the exclusive right to collaborate with Answerthink and The Hackett Group in offering best practices benchmarking services and our BPI tools in designated functional areas, including finance, accounting, performance management, business intelligence and procurement. In situations where Accenture uses our intellectual capital, we have an opportunity to staff up to 15% of the project positions of each engagement jointly pursued. If we are the lead source on jointly pursued opportunities with Accenture, then we will have the opportunity to staff up to 25% of the positions. Our strategy is to execute on this current alliance and expand to other functional areas as well as geographic locations outside of North America. In addition, we continue to build upon joint marketing initiatives with Oracle, SAP, Lawson, and Hyperion and other strategic business and IT providers. |
|
Seek out strategic acquisitions. We will continue to pursue strategic acquisitions that strengthen our ability to compete. We believe that our unique Hackett access and our BPI approach coupled with our strong balance sheet and infrastructure can be utilized to support a larger organization. Acquisitions must be accretive or have strong growth prospects, but most importantly, have strong synergy with our best practice intellectual capital focus. |
|
Expand our dual shore capabilities. Developing an offshore resource capability to support all of our offerings has been a key strategy for our organization. In late 2004, we opened our new facility in Hyderabad, India which will allow us to more aggressively market this capability in our proposals in 2005. With this improved infrastructure in place, we are expecting our headcount and utilization of India resources to expand in 2005. |
-5-
OUR SOLUTION
The Hackett Group
|
Benchmarking & Executive Advisory Programs |
|
Business Transformation |
Best Practices Solutions
|
Business Applications |
|
Business Intelligence |
-6-
clients in improving business performance by rationalizing IT infrastructures, and selecting the right enabling technologies, such as Web services, portals and BPM software, to complement enterprise systems and facilitate information sharing and process integration inside and outside the enterprise. |
CLIENTS
BUSINESS DEVELOPMENT AND MARKETING AND MARKET SEGMENTATION
BUSINESS DEVELOPMENT RESOURCES
|
The Leadership Team |
|
The Sales Organization |
|
The Solution Strategist Network |
|
Lead Generation Specialists |
|
The Delivery Organization |
The Leadership Team is comprised of our senior leaders who have a combination of executive, functional, practice and anchor account responsibilities. In addition to their management responsibilities, this group of associates is responsible for growing business by fostering executive level relationships within accounts and leveraging their existing contacts in the marketplace. |
The Sales Organization is comprised of associates who are 100% dedicated to generating sales. They are deployed geographically in key markets and are primarily focused on developing new relationships within their target accounts. Each sales associate has between two and ten target accounts split between existing clients and select Global 2000 prospects. They represent our entire offering. They also handle geographic-related opportunities as they arise. |
The Solution Strategist Network is comprised of associates throughout our various practices who are primarily dedicated to developing new business. Solution strategists possess deep subject matter expertise within a specific discipline and receive incentive compensation on the amount of revenue they generate in addition to other criteria. Solution strategists sell new business in geographic accounts and collaborate with the sales organization on specific account opportunities to provide content expertise. |
Lead Generation Specialists are comprised of trained groups of lead development specialists who are conversant with its various solution areas. Lead generation is coordinated with our marketing and sales groups to ensure that our inbound and outbound efforts are synchronized with targeted marketing and sales programs. |
-7-
The Delivery Organization is comprised of our billable associates who work at client locations. We encourage associates to pursue additional business development opportunities through their normal course of delivering existing projects and help us expand our business within existing accounts. |
|
Top 25 Accounts |
|
Target Accounts |
|
Geographic Focus Accounts |
|
Strategic Alliance Accounts |
Top 25 Accounts are a mix of our largest existing clients and our most strategic prospects. To facilitate proper account management, each top 25 account has a leadership team member assigned to perform the role of client executive, an associate from the sales, solution strategist or delivery organizations to perform the role of account manager, and an associate from the delivery organizations to perform the role of delivery leader. |
Target Accounts are comprised of prospects and clients who are geographically situated where a sales representative resides. Criteria for inclusion as a target account includes the size of the company, industry affiliation, propensity to buy external consulting services and contacts within the account. The sales representative is primarily responsible for identifying business opportunities in the account, acting as the single point of coordination for the client, and performing the general duties of account manager. |
Geographic Focus Accounts are accounts within a specified geographic location that fall neither within the top 25 or target account lists. These accounts can include large prospects, dormant clients, existing medium-sized clients and mid-tier market accounts. This account set is handled primarily on an opportunistic basis, except for active clients where delivery teams are focused on driving additional revenue. |
Strategic Alliance Accounts are accounts that allow us to partner with organizations with greater scale or different skill sets or with software developers so that all parties can jointly market their products and services to prospective clients. An example of this type of alliance is the agreement with Accenture that was signed in late 2003. This agreement gives Accenture the exclusive right to collaborate with us in offering its clients our best practice benchmarking programs and best practices solutions in designated functional areas, including finance, accounting, performance management, business intelligence and procurement. Under the agreement, we have the ability to expand into additional enterprise functional areas and geographic locations. The agreement gives us access to Accentures global client base and sales distribution channel. By working with more clients, The Hackett Group will be able to broaden the base of critical metrics and best practices, thereby creating even richer benchmark data to help companies achieve world-class performance. Our alliance allows us to staff a portion of the consulting positions for each engagement that is jointly closed with Accenture. We continue to seek alliances that broaden our distribution channel. |
MANAGEMENT SYSTEMS
HUMAN RESOURCES
-8-
|
Development of our associates our unique content business model and knowledge base creates a highly unique learning opportunity |
|
Diversity of backgrounds, skills and experiences |
|
Knowledge capture, contribution and utilization |
|
Collaboration with one another, with our partners and with our clients |
COMMUNITY INVOLVEMENT
AVAILABLE INFORMATION
-9-
RISK FACTORS
|
the number, size, timing and scope of client engagements; |
|
customer concentration; |
|
long and unpredictable sales cycles; |
|
contract terms of client engagements; |
|
degrees of completion of client engagements; |
|
client engagement delays or cancellations; |
|
competition for and utilization of employees; |
|
how well we estimate the resources and effort we need to complete client engagements; |
|
the integration of acquired businesses; |
|
pricing changes in the industry; |
|
economic conditions specific to business and information technology consulting; and |
|
general economic conditions. |
-10-
acquire in the future without substantial expense, delays or other operational or financial problems. We may not be able to identify, acquire or profitably manage additional businesses. Also, acquisitions may involve a number of risks, including:
|
diversion of managements attention; |
|
failure to retain key personnel; |
|
failure to retain existing clients; |
|
unanticipated events or circumstances; |
|
unknown claims or liabilities; and |
|
amortization of certain acquired intangible assets. |
-11-
|
stockholders must comply with advance notice requirements before raising a matter at a meeting of stockholders or nominating a director for election; |
|
our board of directors is staggered into three classes and the members may be removed only for cause upon the affirmative vote of holders of at least two-thirds of the shares entitled to vote; |
|
we would not be required to hold a special meeting to consider a takeover proposal unless holders of more than a majority of the shares entitled to vote on the matter were to submit a written demand or demands for us to do so; and |
|
our board of directors may, without obtaining stockholder approval, classify and issue up to 1,250,000 shares of preferred stock with powers, preferences, designations and rights that may make it more difficult for a third party to acquire us. |
-12-
|
future announcements concerning us or our competitors; |
|
quarterly fluctuations in operating results; |
|
announcements of acquisitions or technological innovations; or |
|
changes in earnings estimates or recommendations by analysts. |
ITEM 2. | PROPERTIES |
-13-
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
-14-
PART II
ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
High |
Low |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
2004 |
||||||||||
Fourth
Quarter |
$ | 5.49 | $ | 3.51 | ||||||
Third
Quarter |
$ | 6.35 | $ | 3.87 | ||||||
Second
Quarter |
$ | 8.45 | $ | 4.22 | ||||||
First
Quarter |
$ | 8.19 | $ | 5.50 | ||||||
2003 |
||||||||||
Fourth
Quarter |
$ | 6.35 | $ | 3.21 | ||||||
Third
Quarter |
$ | 4.03 | $ | 2.19 | ||||||
Second
Quarter |
$ | 2.59 | $ | 1.75 | ||||||
First
Quarter |
$ | 2.97 | $ | 1.95 |
Company Dividend Policy
Purchases of Equity Securities
Period
|
Total
Number of Shares Purchased |
Average
Price paid per Share |
Total
Number of Shares Purchased as Part of the Repurchase Program |
Approximate
Dollar Value of Shares that May Yet Be Purchased Under the Repurchase Program |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
October
2, 2004 to October 29, 2004 |
433,950 | $ | 3.96 | 433,950 | $ | 7,425,645 | |||||||||||||
October
30, 2004 to November 26, 2004 |
82,200 | $ | 4.48 | 82,200 | $ | 7,057,098 | |||||||||||||
November
27, 2004 to December 31, 2004 |
52,000 | $ | 4.52 | 52,000 | $ | 6,822,058 | |||||||||||||
Total |
568,150 | $ | 4.09 | 568,150 |
-15-
ITEM 6. | SELECTED FINANCIAL DATA |
Year Ended |
|||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2004 |
January 2, 2004 |
January 3, 2003 |
December 28, 2001 |
December 29, 2000 |
|||||||||||||||||||
(in thousands, except per share data) |
|||||||||||||||||||||||
Consolidated Statement of Operations Data: |
|||||||||||||||||||||||
Revenues: |
|||||||||||||||||||||||
Revenues
before reimbursements |
$ | 129,339 | $ | 117,945 | $ | 156,357 | $ | 220,966 | $ | 260,892 | |||||||||||||
Reimbursements |
14,208 | 14,442 | 20,490 | 29,377 | 35,811 | ||||||||||||||||||
Total
revenues |
143,547 | 132,387 | 176,847 | 250,343 | 296,703 | ||||||||||||||||||
Costs and
expenses: |
|||||||||||||||||||||||
Project
personnel and expenses: |
|||||||||||||||||||||||
Project
personnel and expenses before reimbursable expenses |
75,774 | 73,061 | 104,981 | 132,843 | 147,040 | ||||||||||||||||||
Reimbursable
expenses |
14,208 | 14,442 | 20,490 | 29,377 | 35,811 | ||||||||||||||||||
Total project
personnel and expenses |
89,982 | 87,503 | 125,471 | 162,220 | 182,851 | ||||||||||||||||||
Selling,
general and administrative expenses |
48,491 | 43,951 | 53,416 | 77,087 | 92,321 | ||||||||||||||||||
Impairment of
goodwill |
| | 20,000 | | | ||||||||||||||||||
Restructuring
costs |
3,749 | 4,875 | 10,886 | 5,619 | 3,268 | ||||||||||||||||||
Stock
compensation expense |
2,321 | 1,236 | | 4,855 | 853 | ||||||||||||||||||
Total costs
and operating expenses |
144,543 | 137,565 | 209,773 | 249,781 | 279,293 | ||||||||||||||||||
Income (loss)
from operations |
(996 | ) | (5,178 | ) | (32,926 | ) | 562 | 17,410 | |||||||||||||||
Other income
(expense): |
|||||||||||||||||||||||
Litigation
settlement |
| | | | 1,850 | ||||||||||||||||||
Non-cash
investment losses |
| | | | (2,350 | ) | |||||||||||||||||
Interest
income (expense), net |
802 | 706 | 570 | 843 | 589 | ||||||||||||||||||
Income (loss)
before income taxes, income (loss) from discontinued operations, and cumulative effect of change in accounting principle |
(194 | ) | (4,472 | ) | (32,356 | ) | 1,405 | 17,499 | |||||||||||||||
Income
taxes |
324 | 350 | (3,508 | ) | 1,807 | 8,571 | |||||||||||||||||
Income (loss)
from continuing operations |
(518 | ) | (4,822 | ) | (28,848 | ) | (402 | ) | 8,928 | ||||||||||||||
Income (loss)
from discontinued operations, net of income taxes |
370 | | (8,911 | ) | (8,117 | ) | (1,027 | ) | |||||||||||||||
Income (loss)
before cumulative effect of change in accounting principle |
(148 | ) | (4,822 | ) | (37,759 | ) | (8,519 | ) | 7,901 | ||||||||||||||
Cumulative
effect of change in accounting principle |
| | (31,200 | ) | | | |||||||||||||||||
Net income
(loss) |
$ | (148 | ) | $ | (4,822 | ) | $ | (68,959 | ) | $ | (8,519 | ) | $ | 7,901 | |||||||||
Basic net
income (loss) per common share: |
|||||||||||||||||||||||
Income (loss)
from continuing operations |
$ | (0.01 | ) | $ | (0.11 | ) | $ | (0.62 | ) | $ | (0.01 | ) | $ | 0.22 | |||||||||
Income (loss)
from discontinued operations, net of income taxes |
$ | 0.01 | $ | | $ | (0.19 | ) | $ | (0.18 | ) | $ | (0.02 | ) | ||||||||||
Cumulative
effect of change in accounting principle |
$ | | $ | | $ | (0.68 | ) | $ | | $ | | ||||||||||||
Net income
(loss) per common share |
$ | (0.00 | ) | $ | (0.11 | ) | $ | (1.49 | ) | $ | (0.19 | ) | $ | 0.20 | |||||||||
Weighted
average common shares outstanding |
44,188 | 45,140 | 46,348 | 43,999 | 40,262 | ||||||||||||||||||
Diluted net
income (loss) per common share: |
|||||||||||||||||||||||
Income (loss)
from continuing operations |
$ | (0.01 | ) | $ | (0.11 | ) | $ | (0.62 | ) | $ | (0.01 | ) | $ | 0.20 | |||||||||
Income (loss)
from discontinued operations, net of income taxes |
$ | 0.01 | $ | | $ | (0.19 | ) | $ | (0.18 | ) | $ | (0.02 | ) | ||||||||||
Cumulative
effect of change in accounting principle |
$ | | $ | | $ | (0.68 | ) | $ | | $ | | ||||||||||||
Net income
(loss) per common share |
$ | (0.00 | ) | $ | (0.11 | ) | $ | (1.49 | ) | $ | (0.19 | ) | $ | 0.18 | |||||||||
Weighted
average common shares and common share equivalents |
44,188 | 45,140 | 46,348 | 43,999 | 45,137 |
-16-
December 31, 2004 |
January 2, 2004 |
January 3, 2003 |
December 28, 2001 |
December 29, 2000 |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) |
|||||||||||||||||||||||
Consolidated Balance Sheet Data: |
|||||||||||||||||||||||
Cash and cash
equivalents |
$ | 38,890 | $ | 54,441 | $ | 35,369 | $ | 35,679 | $ | 35,862 | |||||||||||||
Restricted
cash |
$ | 3,000 | $ | 3,000 | $ | 2,909 | $ | | $ | | |||||||||||||
Marketable
investments |
$ | 9,902 | $ | 10,000 | $ | 28,050 | $ | 24,209 | $ | 15,800 | |||||||||||||
Working
capital |
$ | 49,860 | $ | 58,826 | $ | 72,851 | $ | 81,313 | $ | 74,787 | |||||||||||||
Total
assets |
$ | 128,733 | $ | 135,223 | $ | 145,361 | $ | 211,919 | $ | 228,676 | |||||||||||||
Shareholders equity |
$ | 99,854 | $ | 105,235 | $ | 113,047 | $ | 177,701 | $ | 172,054 |
ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS |
Overview
Critical Accounting Policies
-17-
-18-
Results of Operations
Year
Ended
|
||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December
31, 2004
|
January
2, 2004
|
January
3, 2003
|
||||||||||||||||||||||||
(in
thousands, except percentage data) |
||||||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||
Revenues
before reimbursements |
$ | 129,339 | 90.1 | % | $ | 117,945 | 89.1 | % | $ | 156,357 | 88.4 | % | ||||||||||||||
Reimbursements |
14,208 | 9.9 | % | 14,442 | 10.9 | % | 20,490 | 11.6 | % | |||||||||||||||||
Total
revenues |
143,547 | 100.0 | % | 132,387 | 100.0 | % | 176,847 | 100.0 | % | |||||||||||||||||
Costs
and expenses: |
||||||||||||||||||||||||||
Project
personnel and expenses: |
||||||||||||||||||||||||||
Project
personnel and expenses before reimbursable expenses |
75,774 | 52.8 | % | 73,061 | 55.2 | % | 104,981 | 59.4 | % | |||||||||||||||||
Reimbursable
expenses |
14,208 | 9.9 | % | 14,442 | 10.9 | % | 20,490 | 11.6 | % | |||||||||||||||||
Total
project personnel and expenses |
89,982 | 62.7 | % | 87,503 | 66.1 | % | 125,471 | 71.0 | % | |||||||||||||||||
Selling,
general and administrative expenses |
48,491 | 33.8 | % | 43,951 | 33.2 | % | 53,416 | 30.2 | % | |||||||||||||||||
Impairment
of goodwill |
| | | | 20,000 | 11.3 | % | |||||||||||||||||||
Restructuring
costs |
3,749 | 2.6 | % | 4,875 | 3.7 | % | 10,886 | 6.2 | % | |||||||||||||||||
Stock
compensation expense |
2,321 | 1.6 | % | 1,236 | 0.9 | % | | | ||||||||||||||||||
Total
costs and operating expenses |
144,543 | 100.7 | % | 137,565 | 103.9 | % | 209,773 | 118.7 | % | |||||||||||||||||
Loss
from operations |
(996 | ) | (0.7 | %) | (5,178 | ) | (3.9 | %) | (32,926 | ) | (18.7 | %) | ||||||||||||||
Other
income (expense): |
||||||||||||||||||||||||||
Interest
income (expense), net |
802 | 0.6 | % | 706 | 0.5 | % | 570 | 0.4 | % | |||||||||||||||||
Loss
before income taxes, income (loss) from discontinued operations and cumulative effect of change in accounting principle |
(194 | ) | (0.1 | %) | (4,472 | ) | (3.4 | %) | (32,356 | ) | (18.3 | %) | ||||||||||||||
Income
taxes |
324 | 0.3 | % | 350 | 0.2 | % | (3,508 | ) | (2.0 | %) | ||||||||||||||||
Loss
from continuing operations |
(518 | ) | (0.4 | %) | (4,822 | ) | (3.6 | %) | (28,848 | ) | (16.3 | %) | ||||||||||||||
Income
(loss) from discontinued operations, net of income taxes |
370 | 0.3 | % | | | (8,911 | ) | (5.1 | %) | |||||||||||||||||
Loss
before cumulative effect of change in accounting principle |
(148 | ) | (0.1 | %) | (4,822 | ) | (3.6 | %) | (37,759 | ) | (21.4 | %) | ||||||||||||||
Cumulative
effect of change in accounting principle |
| | | | (31,200 | ) | (17.6 | %) | ||||||||||||||||||
Net
loss |
$ | (148 | ) | (0.1 | %) | $ | (4,822 | ) | (3.6 | %) | $ | (68,959 | ) | (39.0 | %) |
Comparison of 2004 to 2003
-19-
-20-
Comparison of 2003 to 2002
-21-
Liquidity and Capital Resources
Less than 1
year |
$ | 5,240 | ||||
13
years |
10,050 | |||||
45
years |
9,096 | |||||
After 5
years |
14,558 | |||||
38,944 | ||||||
Less:
sublease income |
8,581 | |||||
Total minimum
lease payments, less sublease income |
$ | 30,363 |
-22-
Recently Issued Accounting Standards
-23-
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-24-
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Page |
||||||
---|---|---|---|---|---|---|
Report of
Independent Registered Certified Public Accounting Firm |
26 | |||||
Consolidated
Balance Sheets as of December 31, 2004 and January 2, 2004 |
27 | |||||
Consolidated
Statements of Operations for the Years Ended December 31, 2004, January 2, 2004 and January 3, 2003 |
28 | |||||
Consolidated
Statements of Shareholders Equity and Comprehensive Income (Loss) for the Years Ended December 31, 2004, January 2, 2004 and January 3,
2003 |
29 | |||||
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2004, January 2, 2004 and January 3, 2003 |
30 | |||||
Notes to
Consolidated Financial Statements |
31 | |||||
Schedule
IIValuation and Qualifying Accounts and Reserves |
47 |
-25-
Report of Independent Registered Certified Public Accounting Firm
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of shareholders equity and comprehensive income (loss) and of cash flows present fairly, in all material respects, the financial position of Answerthink, Inc. and its subsidiaries at December 31, 2004 and January 2, 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
-26-
ANSWERTHINK, INC.
December 31, 2004 |
January 2, 2004 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
ASSETS |
||||||||||
Current
assets: |
||||||||||
Cash and cash
equivalents |
$ | 38,890 | $ | 54,441 | ||||||
Accounts
receivable and unbilled revenue, net of allowance of $2,109 and $1,757 in 2004 and 2003, respectively |
28,883 | 24,877 | ||||||||
Prepaid
expenses and other assets |
3,459 | 4,260 | ||||||||
Total current
assets |
71,232 | 83,578 | ||||||||
Marketable
investments |
9,902 | 10,000 | ||||||||
Restricted
cash |
3,000 | 3,000 | ||||||||
Property and
equipment, net |
7,568 | 8,714 | ||||||||
Other
assets |
3,245 | 3,211 | ||||||||
Goodwill,
net |
33,786 | 26,720 | ||||||||
Total
assets |
$ | 128,733 | $ | 135,223 | ||||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||||
Current
liabilities: |
||||||||||
Accounts
payable |
$ | 3,462 | $ | 3,793 | ||||||
Accrued
expenses and other liabilities |
17,910 | 20,959 | ||||||||
Total current
liabilities |
21,372 | 24,752 | ||||||||
Accrued
expenses and other liabilities, non-current |
7,507 | 5,236 | ||||||||
Total
liabilities |
28,879 | 29,988 | ||||||||
Commitments
and contingencies |
||||||||||
Shareholders equity: |
||||||||||
Preferred
stock, $.001 par value, 1,250,000 shares authorized, none issued and outstanding |
| | ||||||||
Common stock,
$.001 par value, authorized 125,000,000 shares; issued: 48,969,181 shares at December 31, 2004; 48,290,640 shares at January 2, 2004 |
49 | 48 | ||||||||
Additional
paid-in capital |
277,356 | 274,481 | ||||||||
Unearned
compensation |
(6,011 | ) | (8,367 | ) | ||||||
Treasury
stock, at cost, 5,526,855 shares at December 31, 2004 and 3,550,279 shares at January 2, 2004 |
(18,178 | ) | (7,686 | ) | ||||||
Accumulated
deficit |
(153,389 | ) | (153,241 | ) | ||||||
Accumulated
other comprehensive income |
27 | | ||||||||
Total
shareholders equity |
99,854 | 105,235 | ||||||||
Total
liabilities and shareholders equity |
$ | 128,733 | $ | 135,223 |
The accompanying notes are an integral part of the consolidated financial
statements.
-27-
ANSWERTHINK, INC.
Year Ended |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2004 |
January 2, 2004 |
January 3, 2003 |
|||||||||||||
Revenues: |
|||||||||||||||
Revenues
before reimbursements |
$ | 129,339 | $ | 117,945 | $ | 156,357 | |||||||||
Reimbursements |
14,208 | 14,442 | 20,490 | ||||||||||||
Total
revenues |
143,547 | 132,387 | 176,847 | ||||||||||||
Costs and
expenses: |
|||||||||||||||
Project
personnel and expenses: |
|||||||||||||||
Project
personnel and expenses before reimbursable expenses |
75,774 | 73,061 | 104,981 | ||||||||||||
Reimbursable
expenses |
14,208 | 14,442 | 20,490 | ||||||||||||
Total project
personnel and expenses |
89,982 | 87,503 | 125,471 | ||||||||||||
Selling,
general and administrative expenses |
48,491 | 43,951 | 53,416 | ||||||||||||
Impairment of
goodwill |
| | 20,000 | ||||||||||||
Restructuring
costs |
3,749 | 4,875 | 10,886 | ||||||||||||
Stock
compensation expense |
2,321 | 1,236 | | ||||||||||||
Total costs
and operating expenses |
144,543 | 137,565 | 209,773 | ||||||||||||
Loss from
operations |
(996 | ) | (5,178 | ) | (32,926 | ) | |||||||||
Other income
(expense): |
|||||||||||||||
Interest
income |
866 | 706 | 766 | ||||||||||||
Interest
expense |
(64 | ) | | (196 | ) | ||||||||||
Loss before
income taxes, income (loss) from discontinued operations and cumulative effect of change in accounting principle |
(194 | ) | (4,472 | ) | (32,356 | ) | |||||||||
Income
taxes |
324 | 350 | (3,508 | ) | |||||||||||
Loss from
continuing operations |
(518 | ) | (4,822 | ) | (28,848 | ) | |||||||||
Income (loss)
from discontinued operations, net of income taxes |
370 | | (8,911 | ) | |||||||||||
Loss before
cumulative effect of change in accounting principle |
(148 | ) | (4,822 | ) | (37,759 | ) | |||||||||
Cumulative
effect of change in accounting principle |
| | (31,200 | ) | |||||||||||
Net
loss |
$ | (148 | ) | $ | (4,822 | ) | $ | (68,959 | ) | ||||||
Basic net
loss per common share: |
|||||||||||||||
Loss from
continuing operations |
$ | (0.01 | ) | $ | (0.11 | ) | $ | (0.62 | ) | ||||||
Income (loss)
from discontinued operations, net of income taxes |
$ | 0.01 | $ | | $ | (0.19 | ) | ||||||||
Cumulative
effect of change in accounting principle |
$ | | $ | | $ | (0.68 | ) | ||||||||
Net loss per
common share |
$ | (0.00 | ) | $ | (0.11 | ) | $ | (1.49 | ) | ||||||
Weighted
average common shares outstanding |
44,188 | 45,140 | 46,348 | ||||||||||||
Diluted net
loss per common share: |
|||||||||||||||
Loss from
continuing operations |
$ | (0.01 | ) | $ | (0.11 | ) | $ | (0.62 | ) | ||||||
Income (loss)
from discontinued operations, net of income taxes |
$ | 0.01 | $ | | $ | (0.19 | ) | ||||||||
Cumulative
effect of change in accounting principle |
$ | | $ | | $ | (0.68 | ) | ||||||||
Net loss per
common share |
$ | (0.00 | ) | $ | (0.11 | ) | $ | (1.49 | ) | ||||||
Weighted
average common and common equivalent shares outstanding |
44,188 | 45,140 | 46,348 |
The accompanying notes are an integral part of the consolidated financial
statements.
-28-
ANSWERTHINK, INC.
Common
Stock
|
Additional Paid-In Capital |
Treasury
Stock
|
Unearned Compensation |
Accumulated Deficit |
Accumulated Other Comprehensive Income |
Total Shareholders Equity |
Comprehensiv Income (Loss) |
|||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||||||
Balance
at December 28, 2001 |
45,880 | $ | 46 | $ | 257,115 | | $ | | $ | | $ | (79,460 | ) | $ | | $ | 177,701 | |||||||||||||||||||||||
Issuance
of common stock |
1,848 | 2 | 6,511 | | | | | | 6,513 | |||||||||||||||||||||||||||||||
Treasury
stock purchased |
| | | (1,146 | ) | (2,208 | ) | | | | (2,208 | ) | ||||||||||||||||||||||||||||
Net
loss |
| | | | | | (68,959 | ) | | (68,959 | ) | $ | (68,959 | ) | ||||||||||||||||||||||||||
Total
Comprehensive Loss |
| | | | | | | | | $ | (68,959 | ) | ||||||||||||||||||||||||||||
Balance
at January 3, 2003 |
47,728 | $ | 48 | $ | 263,626 | (1,146 | ) | $ | (2,208 | ) | $ | | $ | (148,419 | ) | $ | | $ | 113,047 | |||||||||||||||||||||
Issuance
of common stock |
563 | | 1,252 | | | | | | 1,252 | |||||||||||||||||||||||||||||||
Treasury
stock purchased |
| | | (2,404 | ) | (5,478 | ) | | | | (5,478 | ) | ||||||||||||||||||||||||||||
Issuance
of restricted stock units, net of cancellations |
| | 9,487 | | | (9,487 | ) | | | | ||||||||||||||||||||||||||||||
Amortization
of restricted stock units |
| | | | | 1,120 | | | 1,120 | |||||||||||||||||||||||||||||||
Stock
compensation expense |
| | 13 | | | | | | 13 | |||||||||||||||||||||||||||||||
Variable
stock options |
| | 103 | | | | | | 103 | |||||||||||||||||||||||||||||||
Net
loss |
| | | | | | (4,822 | ) | | (4,822 | ) | $ | (4,822 | ) | ||||||||||||||||||||||||||
Total
Comprehensive Loss |
| | | | | | | | | $ | (4,822 | ) | ||||||||||||||||||||||||||||
Balance
at January 2, 2004 |
48,291 | $ | 48 | $ | 274,481 | (3,550 | ) | $ | (7,686 | ) | $ | (8,367 | ) | $ | (153,241 | ) | $ | | $ | 105,235 | ||||||||||||||||||||
Issuance
of common stock |
678 | 1 | 2,910 | | | | | | 2,911 | |||||||||||||||||||||||||||||||
Treasury
stock purchased |
| | | (1,977 | ) | (10,492 | ) | | | | (10,492 | ) | ||||||||||||||||||||||||||||
Issuance
of restricted stock units, net of cancellations |
| | (97 | ) | | | 97 | | | | ||||||||||||||||||||||||||||||
Amortization
of restricted stock units |
| | | | | 2,259 | | | 2,259 | |||||||||||||||||||||||||||||||
Variable
stock options |
| | 62 | | | | | | 62 | |||||||||||||||||||||||||||||||
Net
loss |
| | | | | | (148 | ) | | (148 | ) | $ | (148 | ) | ||||||||||||||||||||||||||
Unrealized
holding losses on available for sale marketable investments |
| | | | | | | (98 | ) | (98 | ) | (98 | ) | |||||||||||||||||||||||||||
Foreign
currency translations |
| | | | | | | 125 | 125 | 125 | ||||||||||||||||||||||||||||||
Total
Comprehensive Loss |
| | | | | | | | | $ | (121 | ) | ||||||||||||||||||||||||||||
Balance
at December 31, 2004 |
48,969 | $ | 49 | $ | 277,356 | (5,527 | ) | $ | (18,178 | ) | $ | (6,011 | ) | $ | (153,389 | ) | $ | 27 | $ | 99,854 |
The accompanying notes are an integral part of the consolidated financial
statements.
-29-
ANSWERTHINK, INC.
Year Ended |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2004 |
January 2, 2004 |
January 3, 2003 |
|||||||||||||
Cash flows
from operating activities: |
|||||||||||||||
Net
loss |
$ | (148 | ) | $ | (4,822 | ) | $ | (68,959 | ) | ||||||
Adjustments
to reconcile net loss to net cash provided by operating activities: |
|||||||||||||||
Cumulative
effect of change in accounting principle |
| | 31,200 | ||||||||||||
Impairment of
goodwill |
| | 20,000 | ||||||||||||
Write-off of
leasehold improvements and other assets |
| | 5,217 | ||||||||||||
Depreciation
and amortization |
5,177 | 4,954 | 5,327 | ||||||||||||
Non-cash
compensation expense |
2,321 | 1,236 | | ||||||||||||
Provision for
doubtful accounts |
1,060 | (235 | ) | 779 | |||||||||||
Deferred
income taxes |
| | 4,961 | ||||||||||||
Changes in
assets and liabilities, net of effects from acquisitions: |
|||||||||||||||
Decrease
(increase) in accounts receivable and unbilled revenue |
(3,210 | ) | 1,309 | 18,930 | |||||||||||
Decrease
(increase) in prepaid expenses and other assets |
920 | 10,075 | (5,419 | ) | |||||||||||
Decrease in
accounts payable |
(707 | ) | (2,066 | ) | (230 | ) | |||||||||
Decrease in
accrued expenses and other liabilities |
(2,974 | ) | (586 | ) | (4,776 | ) | |||||||||
Net cash
provided by operating activities |
2,439 | 9,865 | 7,030 | ||||||||||||
Cash flows
from investing activities: |
|||||||||||||||
Purchases of
property and equipment |
(3,199 | ) | (1,225 | ) | (4,044 | ) | |||||||||
Increase in
restricted cash |
| (91 | ) | (2,909 | ) | ||||||||||
Purchases of
marketable investments |
(39,750 | ) | (58,458 | ) | (43,191 | ) | |||||||||
Proceeds from
sales, calls and maturities of marketable investments |
39,750 | 76,508 | 39,350 | ||||||||||||
Cash used in
acquisition of businesses, net of cash acquired |
(7,210 | ) | (3,301 | ) | (851 | ) | |||||||||
Net cash
provided by (used in) investing activities |
(10,409 | ) | 13,433 | (11,645 | ) | ||||||||||
Cash flows
from financing activities: |
|||||||||||||||
Proceeds from
issuance of common stock |
2,911 | 1,252 | 6,513 | ||||||||||||
Repurchases
of common stock |
(10,492 | ) | (5,478 | ) | (2,208 | ) | |||||||||
Net cash
provided by (used in) financing activities |
(7,581 | ) | (4,226 | ) | 4,305 | ||||||||||
Net increase
(decrease) in cash and cash equivalents |
(15,551 | ) | 19,072 | (310 | ) | ||||||||||
Cash and cash
equivalents at beginning of year |
54,441 | 35,369 | 35,679 | ||||||||||||
Cash and cash
equivalents at end of year |
$ | 38,890 | $ | 54,441 | $ | 35,369 | |||||||||
Supplemental
disclosure of cash flow information: |
|||||||||||||||
Cash paid for
interest |
$ | | $ | | $ | 72 | |||||||||
Cash paid for
income taxes |
$ | 193 | $ | 110 | $ | 133 |
The accompanying notes are an integral part of the consolidated financial
statements.
-30-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
1. | Nature of Business and Significant Accounting Policies |
-31-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
1. Nature of Business and Significant Accounting Policies
(continued)
-32-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
1. Nature of Business and Significant Accounting Policies
(continued)
Year Ended |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2004 |
January 2, 2004 |
January 3, 2003 |
|||||||||||||
Net loss, as
reported |
$ | (148 | ) | $ | (4,822 | ) | $ | (68,959 | ) | ||||||
Add:
Stock-based employee compensation expense included in reported net loss, net of related tax effects |
2,321 | 1,236 | | ||||||||||||
Deduct: Total
stock-based employee pro forma compensation expense determined under fair value based method for all awards, net of related tax
effects |
(5,354 | ) | (6,702 | ) | (27,802 | ) | |||||||||
Pro forma net
loss |
$ | (3,181 | ) | $ | (10,288 | ) | $ | (96,761 | ) | ||||||
Basic net
loss per common share |
|||||||||||||||
As
reported |
$ | (0.00 | ) | $ | (0.11 | ) | $ | (1.49 | ) | ||||||
Pro
forma |
$ | (0.07 | ) | $ | (0.23 | ) | $ | (2.09 | ) | ||||||
Diluted net
loss per common share |
|||||||||||||||
As
reported |
$ | (0.00 | ) | $ | (0.11 | ) | $ | (1.49 | ) | ||||||
Pro
forma |
$ | (0.07 | ) | $ | (0.23 | ) | $ | (2.09 | ) |
-33-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
1. Nature of Business and Significant Accounting Policies
(continued)
-34-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
1. Nature of Business and Significant Accounting Policies
(continued)
2. | Acquisitions and Investing Activities |
2004 |
2003 |
2002 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Fair value of
net assets (excluding cash) acquired |
$ | 1,121 | $ | 1,264 | $ | 851 | ||||||||
Goodwill |
7,066 | | | |||||||||||
Intangible
assets |
1,943 | 2,287 | | |||||||||||
Deferred
payment |
(2,920 | ) | | | ||||||||||
Accrued
earn-out |
| (250 | ) | | ||||||||||
Cash used in
acquisitions of businesses, net of cash acquired |
$ | 7,210 | $ | 3,301 | $ | 851 |
-35-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
2. Acquisitions and Investing Activities
(continued)
3. | Accounts Receivable and Unbilled Revenue, Net |
December 31, 2004 |
January 2, 2004 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Accounts
receivable |
$ | 24,932 | $ | 18,632 | ||||||
Unbilled
revenue |
6,060 | 8,002 | ||||||||
Allowance for
doubtful accounts |
(2,109 | ) | (1,757 | ) | ||||||
$ | 28,883 | $ | 24,877 |
-36-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
4. | Marketable investments |
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Market Value |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 |
||||||||||||||||||
U.S.
Government Agencies |
$ | 10,000 | $ | | $ | (98 | ) | $ | 9,902 | |||||||||
2003 |
||||||||||||||||||
U.S.
Government Agencies |
$ | 10,000 | $ | | $ | | $ | 10,000 |
Amortized Cost |
Market Value |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Less than one
year |
$ | | $ | | ||||||
Due in
12 years |
10,000 | 9,902 | ||||||||
Due in
35 years |
| | ||||||||
Due after 5
years |
| | ||||||||
$ | 10,000 | $ | 9,902 |
5. | Property and Equipment |
December 31, 2004 |
January 2, 2004 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Equipment |
$ | 8,997 | $ | 12,736 | ||||||
Furniture and
fixtures |
149 | 385 | ||||||||
Software |
5,478 | 6,892 | ||||||||
Leasehold
improvements |
3,310 | 5,123 | ||||||||
17,934 | 25,136 | |||||||||
Less
accumulated depreciation |
(10,366 | ) | (16,422 | ) | ||||||
$ | 7,568 | $ | 8,714 |
-37-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
6. | Accrued Expenses and Other Liabilities |
December 31, 2004 |
January 2, 2004 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Accrued
compensation and benefits |
$ | 4,418 | $ | 5,364 | ||||||
Accrued
restructuring related expenses |
2,021 | 4,835 | ||||||||
Deferred
revenue |
4,680 | 4,850 | ||||||||
Other accrued
expenses |
5,355 | 5,910 | ||||||||
Acquisition
related deferred payment |
1,436 | | ||||||||
Current
accrued expenses and other liabilities |
17,910 | 20,959 | ||||||||
Accrued
restructuring related expenses non-current |
6,023 | 5,236 | ||||||||
Acquisition
related deferred payment non-current |
1,484 | | ||||||||
Non-current
accrued expenses and other liabilities |
7,507 | 5,236 | ||||||||
Total accrued
expenses and other liabilities |
$ | 25,417 | $ | 26,195 |
7. | Letters of Credit |
8. | Lease Commitments |
2005 |
$ | 5,240 | ||||
2006 |
5,246 | |||||
2007 |
4,804 | |||||
2008 |
4,573 | |||||
2009 |
4,523 | |||||
Thereafter |
14,558 | |||||
38,944 | ||||||
Less:
sublease income |
8,581 | |||||
Total minimum
lease payments, less sublease income |
$ | 30,363 |
-38-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
9. | Income Taxes |
Year Ended |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2004 |
January 2, 2004 |
January 3, 2003 |
|||||||||||||
Current tax
expense (benefit) |
|||||||||||||||
Federal |
$ | | $ | | $ | (8,469 | ) | ||||||||
State |
231 | 262 | | ||||||||||||
Foreign |
93 | 88 | | ||||||||||||
324 | 350 | (8,469 | ) | ||||||||||||
Deferred tax
expense |
|||||||||||||||
Federal |
| | 4,697 | ||||||||||||
State |
| | | ||||||||||||
Foreign |
| | 264 | ||||||||||||
| | 4,961 | |||||||||||||
Income
taxes |
$ | 324 | $ | 350 | $ | (3,508 | ) |
Year Ended |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December 31, 2004 |
January 2, 2004 |
January 3, 2003 |
|||||||||||||
U.S.
statutory income tax (benefit) rate |
(35.0 | ) % | (35.0 | ) % | (35.0 | ) % | |||||||||
State income
taxes, net of Federal income tax benefit |
77.7 | 3.8 | | ||||||||||||
Loss on
investment in subsidiary |
2,573.4 | (129.6 | ) | (85.2 | ) | ||||||||||
Valuation
allowance |
(2,559.2 | ) | 166.4 | 87.2 | |||||||||||
Impairment of
goodwill |
| | 21.6 | ||||||||||||
Other,
net |
110.7 | 2.2 | 0.6 | ||||||||||||
Effective
rate |
167.6 | % | 7.8 | % | (10.8 | ) % |
December 31, 2004 |
January 2, 2004 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Deferred
income tax assets: |
||||||||||
Purchased
research and development |
$ | 817 | $ | 921 | ||||||
Allowance for
doubtful accounts |
833 | 615 | ||||||||
Net operating
loss and tax credits carryforward |
30,581 | 36,121 | ||||||||
Accrued
expenses and other liabilities |
6,373 | 5,906 | ||||||||
38,604 | 43,563 | |||||||||
Valuation
allowance |
(35,360 | ) | (40,818 | ) | ||||||
3,244 | 2,745 | |||||||||
Deferred
income tax liabilities: |
||||||||||
Depreciation
and amortization |
(2,060 | ) | (1,627 | ) | ||||||
Other
items |
(1,184 | ) | (1,118 | ) | ||||||
(3,244 | ) | (2,745 | ) | |||||||
Net deferred
income tax asset |
$ | | $ | |
-39-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
9. Income Taxes (continued)
10. | Shareholders Equity |
-40-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
10. Shareholders Equity (continued)
Year
Ended
|
|||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December
31, 2004
|
January
2, 2004
|
January
3, 2003
|
|||||||||||||||||||||||||||
Option Shares |
Weighted Average Exercise Price |
Option Shares |
Weighted Average Exercise Price |
Option Shares |
Weighted Average Exercise Price |
||||||||||||||||||||||||
Outstanding
at beginning of year |
3,013,625 | $ | 5.69 | 8,263,971 | $ | 6.78 | 6,812,444 | $ | 8.42 | ||||||||||||||||||||
Granted |
1,425,744 | 6.19 | 2,149,238 | 2.96 | 5,594,518 | 5.46 | |||||||||||||||||||||||
Exercised |
(361,652 | ) | 4.26 | (125,779 | ) | 5.29 | (824,356 | ) | 3.47 | ||||||||||||||||||||
Canceled |
(818,265 | ) | 7.19 | (7,273,805 | ) | 6.15 | (3,318,635 | ) | 8.69 | ||||||||||||||||||||
Outstanding
at end of year |
3,259,452 | $ | 5.68 | 3,013,625 | $ | 5.69 | 8,263,971 | $ | 6.78 | ||||||||||||||||||||
Weighted
average fair value of options granted during the period |
$ | 4.33 | $ | 2.08 | $ | 3.83 |
-41-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
10. Shareholders Equity (continued)
Year
Ended
|
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
December
31, 2004 |
January
2, 2004 |
January
3, 2003 |
|||||||||||
Expected
volatility |
75%
to 100% |
100% |
100% |
||||||||||
Average
expected option life |
4
years |
4
years |
4
years |
||||||||||
Risk-free
rate |
3.5% |
2.5% |
3.0% |
||||||||||
Dividend
yield |
0% |
0% |
0% |
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 |
|||||||||||||||
$1.45$2.74 |
400,661 | 7.6 | $ | 2.19 | 158,829 | $ | 2.17 | |||||||||||||
$2.75$3.79 |
493,725 | 6.6 | 3.34 | 340,420 | 3.52 | |||||||||||||||
$3.80$5.35 |
195,499 | 8.0 | 4.85 | 56,832 | 4.98 | |||||||||||||||
$5.36$5.99 |
392,868 | 7.8 | 5.58 | 180,126 | 5.55 | |||||||||||||||
$6.00$6.20 |
408,948 | 4.4 | 6.03 | 405,450 | 6.03 | |||||||||||||||
$6.21$6.25 |
817,500 | 9.1 | 6.25 | |
|
|||||||||||||||
$6.26$6.99 |
216,146 | 8.5 | 6.42 | 21,297 | 6.68 | |||||||||||||||
$7.00$9.99 |
186,099 | 6.4 | 8.34 | 112,562 | 8.73 | |||||||||||||||
$10.00$32.56 |
148,006 | 4.2 | 15.82 | 148,006 | 15.82 | |||||||||||||||
3,259,452 | 7.3 | $ | 5.68 | 1,423,522 | $ | 6.14 |
-42-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
10. Shareholders Equity (continued)
11. | Benefit Plan |
-43-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
12. | Restructuring Costs |
2001 Restructuring Accrual
Accrual Balance at December 29, 2000 |
Additions to Accrual from Continuing Operations |
Additions to Accrual from Discontinued Operations |
2001 Expenditures |
2002 Expenditures |
2003 Expenditures |
2004 Expenditures |
2004 Asset Write-offs |
Accrual Balance at December 31, 2004 |
||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Severance and
other employee costs |
$ | | $ | 3,694 | $ | 559 | $ | (3,186 | ) | $ | (1,067 | ) | $ | | $ | | $ | | $ | | ||||||||||||||||||
Closure and
consolidation of facilities and related exit costs |
| 5,553 | 2,311 | (248 | ) | (1,965 | ) | (933 | ) | (839 | ) | (1,205 | ) | 2,674 | ||||||||||||||||||||||||
Total
restructuring accrual |
$ | | $ | 9,247 | $ | 2,870 | $ | (3,434 | ) | $ | (3,032 | ) | $ | (933 | ) | $ | (839 | ) | $ | (1,205 | ) | $ | 2,674 |
2002 Restructuring Accrual
Accrual Balance at December 28, 2001 |
Additions to Accrual from Continuing Operations |
Additions to Accrual from Discontinued Operations |
2002 Asset Write-offs |
2002 Expenditures |
2003 Expenditures |
2004 Expenditures |
Accrual Balance at December 31, 2004 |
|||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Severance and
other employee costs |
$ | | $ | 1,528 | $ | 616 | $ | | $ | (855 | ) | $ | (1,289 | ) | $ | | $ | | ||||||||||||||||||||
Closure and
consolidation of facilities and related exit costs |
$ | | $ | 13,984 | $ | 2,747 | $ | (5,217 | ) | $ | (584 | ) | $ | (2,198 | ) | $ | (3,362 | ) | $ | 5,370 | ||||||||||||||||||
Total
restructuring accrual |
$ | | $ | 15,512 | $ | 3,363 | $ | (5,217 | ) | $ | (1,439 | ) | $ | (3,487 | ) | $ | (3,362 | ) | $ | 5,370 |
-44-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
13. | Discontinued Operations |
December 31, 2004 |
January 2, 2004 |
January 3, 2003 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Revenues |
$ | | $ | | $ | 7,235 | ||||||||
Pre-tax
income (loss) from discontinued operations |
$ | 370 | $ | | $ | (8,911 | ) | |||||||
Income tax
benefit |
$ | | $ | | $ | | ||||||||
Income (loss)
from discontinued operations |
$ | 370 | $ | | $ | (8,911 | ) |
14. | Litigation |
-45-
ANSWERTHINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
15. Related Party Transactions
16. | Quarterly Financial Information (unaudited) |
Quarter
Ended
|
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
April
2, 2004 |
July
2, 2004 |
October
1, 2004 |
December
31, 2004 |
|||||||||||||
Total
revenues |
$ | 35,089 | $ | 37,649 | $ | 37,131 | $ | 33,678 | ||||||||
Income
(loss) from operations |
820 | (1,871 | ) | 806 | (751 | ) | ||||||||||
Income
(loss) before income taxes and income from discontinued operations |
1,010 | (1,675 | ) | 950 | (479 | ) | ||||||||||
Income
(loss) from continuing operations |
967 | (1,579 | ) | 824 | (730 | ) | ||||||||||
Income
from discontinued operations |
| 370 | | | ||||||||||||
Net
income (loss) |
$ | 967 | $ | (1,209 | ) | $ | 824 | $ | (730 | ) | ||||||
Basic
and diluted income (loss) per common share |
||||||||||||||||
Income
(loss) from continuing operations |
$ | 0.02 | $ | (0.04 | ) | $ | 0.02 | $ | (0.02 | ) | ||||||
Income
from discontinued operations |
$ | | $ | 0.01 | $ | | $ | | ||||||||
Net
income (loss) |
$ | 0.02 | $ | (0.03 | ) | $ | 0.02 | $ | (0.02 | ) | ||||||
Quarter
Ended
|
||||||||||||||||
April
4, 2003 |
July
4, 2003 |
October
3, 2003 |
January
2, 2004 |
|||||||||||||
Total
revenues |
$ | 36,785 | $ | 31,497 | $ | 32,918 | $ | 31,187 | ||||||||
Income
(loss) from operations |
(1,246 | ) | (5,962 | ) | 1,055 | 975 | ||||||||||
Income
(loss) before income taxes |
(1,022 | ) | (5,824 | ) | 1,210 | 1,164 | ||||||||||
Net
income (loss) |
$ | (1,022 | ) | $ | (5,974 | ) | $ | 1,135 | $ | 1,039 | ||||||
Basic
net income (loss) per common share |
$ | (0.02 | ) | $ | (0.13 | ) | $ | 0.03 | $ | 0.02 | ||||||
Diluted
net income (loss) per common share |
$ | (0.02 | ) | $ | (0.13 | ) | $ | 0.02 | $ | 0.02 |
-46-
ANSWERTHINK, INC.
SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Allowance for Doubtful Accounts |
Balance at Beginning of Year |
Charge to Expense |
Write-offs |
Balance at Ending of Year |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year Ended
December 31, 2004 |
$ | 1,757 | $ | 1,060 | $ | (708 | ) | $ | 2,109 | |||||||||
Year Ended
January 2, 2004 |
$ | 3,526 | $ | (235 | ) | $ | (1,534 | ) | $ | 1,757 | ||||||||
Year Ended
January 3, 2003 |
$ | 6,810 | $ | 779 | $ | (4,063 | ) | $ | 3,526 |
-47-
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES |
ITEM 9A. | CONTROL AND PROCEDURES |
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Managements Report on Internal Control Over Financial Reporting
ITEM 9B. | OTHER INFORMATION |
PART III
ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT |
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
-48-
PART IV
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
(a) | The following documents are filed as a part of this Form: |
1. | Financial Statements |
2. | Financial Statement Schedules. |
3. | Exhibits: See Index to Exhibits on page 51. |
-49-
SIGNATURES
ANSWERTHINK,
INC. |
Pursuant to the requirements of the Securities Act of 1934, this Form 10-K has been signed by the following persons in the capacities and on the date indicated.
Signatures
|
Title
|
Date
|
||||||
---|---|---|---|---|---|---|---|---|
/s/
Ted A. Fernandez Ted A. Fernandez |
Chief Executive Officer and Chairman (Principal Executive Officer) |
March
16, 2005 |
||||||
/s/
John F. Brennan John F. Brennan |
Executive Vice President, Finance and Chief Financial Officer (Principal
Financial and Accounting Officer) |
March
16, 2005 |
||||||
/s/
Allan R. Frank Allan R. Frank |
President and Director |
March
16, 2005 |
||||||
/s/
David N. Dungan David N. Dungan |
Chief Operating Officer and Director |
March
16, 2005 |
||||||
/s/
Richard Hamlin Richard Hamlin |
Director |
March
16, 2005 |
||||||
/s/
Edwin A. Huston Edwin A. Huston |
Director |
March
16, 2005 |
||||||
/s/
Jeffrey E. Keisling Jeffrey E. Keisling |
Director |
March
16, 2005 |
||||||
/s/
Alan T. G. Wix Alan T. G. Wix |
Director |
March
16, 2005 |
-50-
INDEX TO EXHIBITS
Exhibit No. |
Exhibit Description |
|||||
---|---|---|---|---|---|---|
3.1++++ |
Second Amended and Restated Articles of Incorporation of the Registrant, as amended |
|||||
3.2++++ |
Amended and Restated Bylaws of the Registrant, as amended |
|||||
9.1+ |
Shareholders Agreement dated April 23, 1997 among the Registrant, GTCR V, MG, the Miller Group, Messrs. Fernandez, Frank, Knotts and Miller
and certain other shareholders of the Registrant parties thereto |
|||||
9.2+ |
Amendment No. 1 to Shareholders Agreement dated February 24, 1998 |
|||||
9.3+ |
Letter Agreement dated as of March 15, 1998 to amend Shareholders Agreement |
|||||
9.4+ |
Form
of Restricted Securities Agreement dated April 23, 1997 among the Initial Investors and each of Messrs. Fernandez, Frank, Knotts and
Miller |
|||||
10.1+ |
Purchase Agreement dated April 23, 1997 among the Registrant, GTCR V, MG, Gator and Tara |
|||||
10.2+ |
Series A Preferred Stock Purchase Agreement dated February 24, 1998 among the Registrant, GTCR V, GTCR Associates and Miller
Capital |
|||||
10.3+ |
Stock Purchase Agreement dated March 5, 1998 between the Registrant and FSC |
|||||
10.4+ |
Second Amended and Restated Registration Rights Agreement dated as of May 5, 1998 among the Registrant, GTCR V, MG, GTCR Associates, Miller
Capital, FSC, Messrs. Fernandez, Frank, Knotts and Miller and certain other shareholders of the Registrant named therein |
|||||
10.5+ |
Second Amended and Restated Registration Rights Agreement dated as of May 5, 1998 among the Registrant and the eight former shareholders of
RTI |
|||||
10.6*+ |
Registrants 1998 Stock Option and Incentive Plan |
|||||
10.7*+++++ |
Amendment to Registrants 1998 Stock Option and Incentive Plan |
|||||
10.8*+ |
Form
of Senior Management Agreement dated April 23, 1997 between the Registrant and each of Messrs. Fernandez, Frank and Knotts |
|||||
10.9*++++ |
Senior Management Agreement dated July 11, 1997 between Registrant and Mr. Dungan |
|||||
10.10*+++++ |
Form
of Employment Agreement entered into between the Registrant and Mr. Dungan |
|||||
10.11*+ |
Form
of Employment Agreement entered into between the Registrant and each of Messers. Fernandez, Frank and Knotts |
|||||
10.12+ |
Amendment No. 2 dated as of May 5, 1998 to Purchase Agreement dated April 23, 1997 among the Registrant, GTCR V, MG, Gator and
Tara |
|||||
10.13+ |
Amendment No. 2 dated as of May 5, 1998 to Stock Purchase Agreement dated March 5, 1998 between the Registrant and FSC |
|||||
10.14*+ |
Amendment to Certain Senior Management Agreements dated March 27, 1998 among the Company, the Board of Directors and each of Messrs.
Fernandez, Frank, Knotts and Dungan |
|||||
10.15*+ |
Second Amendment to Certain Senior Management Agreements dated May 26, 1998 among the Company, the Board of Directors and each of Messrs.
Fernandez, Frank, Knotts and Dungan |
|||||
10.16*++ |
AnswerThink Consulting Group, Inc. Employee Stock Purchase Plan |
|||||
10.17*+++++ |
Amendment to Registrants Employee Stock Purchase Plan dated February 16, 2001 |
|||||
10.18*+++ |
Employment Agreement dated March 23, 1999 between the Registrant and Mr. Brennan |
|||||
10.19*+++ |
Restricted Stock Agreement dated July 31, 1997 between the Registrant and Mr. Brennan |
-51-
Exhibit No. |
Exhibit
Description
|
|||
---|---|---|---|---|
10.20*+++ |
Amendment to Restricted Stock Agreement dated March 27, 1998 between
the Registrant and Mr. Brennan |
|||
10.21*+++ |
Form
of Senior Management Agreement dated July 31, 1997 between the Registrant
and Mr. Brennan |
|||
10.22++++++ |
Securities Purchase Agreement by and among THINK New Ideas, Inc., Capital
Ventures International and Marshall Capital Management, Inc. |
|||
10.23++++++ |
Registration Rights Agreement dated as of March 3, 1999 by and among
THINK New Ideas, Inc., Capital Ventures International and Marshall Capital
Management, Inc. |
|||
10.24+++++++ |
Joint Marketing and Alliance Agreement, dated October 7, 2003, by and
among Answerthink, Inc., The Hackett Group, Inc. and Accenture, L.L.P. |
|||
11.1++++++++ |
Amendment to Executive Agreement between Answerthink, Inc. and Ted A.
Fernandez |
|||
11.2++++++++ |
Amendment to Executive Agreement between Answerthink, Inc. and David
N. Dungan |
|||
11.3++++++++ |
Amendment to Executive Agreement between Answerthink, Inc. and Allan
R. Frank |
|||
11.4++++++++ |
Amendment to Executive Agreement between Answerthink, Inc. and John F.
Brennan |
|||
21.1ˆ |
Subsidiaries of the Registrant |
|||
23.1ˆ |
Consent of PricewaterhouseCoopers LLP |
|||
31.1ˆ |
Certification by CEO pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 |
|||
31.2ˆ |
Certification by CFO pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 |
|||
32ˆ |
Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 |
* | Management agreement or compensatory plan or arrangement |
ˆ | Exhibits filed herewith. |
+ | Incorporated herein by reference to the Companys Registration Statement on Form S-1 (333-48123). |
++ | Incorporated herein by reference to the Companys Registration Statement on Form S-8 (333-69951). |
+++ | Incorporated herein by reference to the Companys Form 10-K for the year ended January 1, 1999. |
++++ | Incorporated herein by reference to the Companys Form 10-K for the year ended December 29, 2000. |
+++++ | Incorporated herein by reference to the Companys Form 10-K for the year ended December 28, 2001. |
++++++ | Incorporated herein by reference to THINK New Ideas, Inc.s Form 8-K dated March 12, 1999. |
+++++++ | Incorporated herein by reference to the Companys Form 8-K dated October 14, 2003. |
++++++++ | Incorporated herein by reference to the Companys Form 10-Q dated November 10, 2004 |
-52-
Exhibit 21.1
ANSWERTHINK, INC.
LISTING OF SUBSIDIARIES
JURISDICTION OF |
||||||
---|---|---|---|---|---|---|
ANSWERTHINK,
INC. |
FLORIDA |
|||||
SUBSIDIARIES |
||||||
UbiComs
EOOD |
Bulgaria |
|||||
Scott Mednick &
Associates |
California |
|||||
Answerthink
Ltd. |
Canada |
|||||
AnswerThink Florida, Inc.
f/k/a UbiComs, Inc. |
Delaware |
|||||
EZCommerce Global
Solutions |
Delaware |
|||||
Net Cube of Delaware f/k/a
Anzen Corporation |
Delaware |
|||||
THINK New Ideas,
Inc. |
Delaware |
|||||
UbiCube Acquisition
Corp. |
Delaware |
|||||
UbiCube Group,
Inc. |
Delaware |
|||||
Beacon Analytics,
Inc. |
Florida |
|||||
CFT Consulting,
Inc. |
Florida |
|||||
GCSB Acquisition
Corporation |
Florida |
|||||
Epic Acquisition
Corporation |
Florida |
|||||
Laznar Acquisition
Corporation |
Florida |
|||||
Answerthink Europe
GmbH |
Germany |
|||||
Infinity Consulting Group,
Inc. |
Indiana |
|||||
NetComs Entertainment,
Inc. |
Maine |
|||||
NetComs USA,
Inc. |
Maine |
|||||
Advis Acquisition
Corporation |
Massachusetts |
|||||
Legacy Technology,
Inc. |
Massachusetts |
|||||
Answerthink
BV |
Netherlands |
|||||
Delphi Partners,
Inc. |
New
Jersey |
|||||
Net Cube of New Jersey f/k/a
Office of the Future |
New
Jersey |
|||||
On Ramp,
Inc. |
New
York |
|||||
SD Goodman Group,
Inc. |
New
York |
|||||
The Hackett Group,
Inc. |
Ohio |
|||||
triSpan,
Inc. |
Pennsylvania |
|||||
Group Cortex,
Inc. |
Pennsylvania |
|||||
EZCommerce India
Limited |
Republic of
India |
|||||
Answerthink
AG |
Switzerland |
|||||
Answerthink,
Ltd. |
United
Kingdom |
|||||
NetComs Entertainment,
Ltd. |
United
Kingdom |
|||||
RDI UbiComs
Limited |
United
Kingdom |
|||||
The Hackett Group
Limited |
United
Kingdom |
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED REGISTERED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-69951, 333-90635 and 333-39460), and in the Registration Statements on Form S-3 (Nos. 333-87749 and 333-32342), of Answerthink, Inc. of our report dated March 14, 2005, relating to the financial statements and financial statement schedule, which appears in this Annual Report on Form 10-K.
/s/ PricewaterhouseCoopers LLP
Miami, Florida
March 14, 2005
Exhibit 31.1
1. | I have reviewed this Annual Report on Form 10-K of Answerthink, Inc. (the Registrant); |
2. | Based on my knowledge, this Annual 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 Annual Report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this Annual 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 Annual Report; |
4. | The Registrants other certifying officer 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)) for the Registrant and have: |
(a) |
designed such disclosure controls and procedures, or caused such disclosures 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 Annual Report is being prepared; |
(b) |
evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Annual Report based on such evaluation; and |
(c) |
disclosed in this Annual Report any change in the Registrants internal control over financial reporting that occurred during the registrants most recent fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting |
5. | The Registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the audit committee of Registrants board of directors (or persons performing the equivalent function): |
(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 Registrants 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 Registrants internal control over financial reporting. |
Date: March 16,
2005 |
/s/ Ted A. Fernandez Ted A. Fernandez Chairman and Chief Executive Officer Answerthink, Inc. |
Exhibit 31.2
1. | I have reviewed this Annual Report on Form 10-K of Answerthink, Inc. (the Registrant); |
2. | Based on my knowledge, this Annual 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 Annual Report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this Annual 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 Annual Report; |
4. | The Registrants other certifying officer 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)) 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 Annual Report is being prepared; |
(b) |
evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Annual Report based on such evaluation; and |
(c) |
disclosed in this Annual Report any change in the Registrants internal control over financial reporting that occurred during the registrants most recent fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting |
5. | The Registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrants auditors and the audit committee of Registrants board of directors (or persons performing the equivalent function): |
(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 Registrants 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 Registrants internal control over financial reporting. |
Date: March 16,
2005 |
/s/ John F. Brennan John F. Brennan Executive Vice President, Finance and Chief Financial Officer Answerthink, Inc. |