10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended October 2, 2015

OR

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

For the transition period from              to             

Commission File Number 0-24343

The Hackett Group, Inc.

(Exact name of registrant as specified in its charter)

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

(305) 375-8005

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days.    YES  ☒    NO  ☐

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

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

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

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

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

As of November  6, 2015,  there were 29,382,893 shares of common stock outstanding.

The Hackett Group, Inc.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		Page
Item 1.	Financial Statements
	Consolidated Balance Sheets as of October 2, 2015 (unaudited) and January 2, 2015	3
	Consolidated Statements of Operations for the Quarters and Nine Months Ended October 2, 2015	4
	and September 26, 2014 (unaudited)
	Consolidated Statements of Comprehensive Income for the Quarters and Nine Months Ended October 2, 2015 and
	September 26, 2014 (unaudited)	5
	Consolidated Statements of Cash Flows for the Nine Months Ended October 2, 2015 and September 26, 2014	6
	(unaudited)
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 6.	Exhibits	19
SIGNATURES		20
INDEX TO EXHIBITS		21

2

PART I — FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

The Hackett Group, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	October 2,		January 2,
	2015		2015
ASSETS		(Unaudited)
Current assets:
Cash and cash equivalents	$	16,338	$	14,608
Accounts receivable and unbilled revenue, net of allowance of $1,211 and $1,330 at
October 2, 2015 and January 2, 2015, respectively		43,993		37,421
Deferred tax asset, net		486		2,828
Prepaid expenses and other current assets		2,131		2,199
Total current assets		62,948		57,056
Property and equipment, net		14,189		13,753
Other assets		4,796		6,548
Goodwill, net		74,961		75,429
Total assets	$	156,894	$	152,786
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	5,950	$	7,909
Accrued expenses and other liabilities		34,230		30,901
Total current liabilities		40,180		38,810
Long-term deferred tax liability, net		8,276		5,925
Long-term debt		9,263		18,263
Total liabilities		57,719		62,998
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.001 par value, 1,250,000 shares authorized; none issued and outstanding		-		-
Common stock, $.001 par value, 125,000,000 shares authorized; 53,504,524 and 52,836,011
shares issued at October 2, 2015 and January 2, 2015, respectively		54		53
Additional paid-in capital		270,054		264,912
Treasury stock, at cost, 24,138,694 and 23,989,776 shares at October 2, 2015 and January 2, 2015,
respectively		(92,691)		(91,335)
Accumulated deficit		(70,991)		(77,677)
Accumulated comprehensive loss		(7,251)		(6,165)
Total shareholders' equity		99,175		89,788
Total liabilities and shareholders' equity	$	156,894	$	152,786

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

3

The Hackett Group, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Quarter Ended				Nine Months Ended
	October 2,		September 26,		October 2,		September 26,
	2015		2014		2015		2014
Revenue:
Revenue before reimbursements ("net revenue")	$	59,992	$	54,550	$	174,320	$	158,968
Reimbursements		7,225		5,887		20,266		17,426
Total revenue		67,217		60,437		194,586		176,394
Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses
(includes $1,623 and $842 and $4,140 and $2,527 of stock compensation
expense in the quarters and nine months ended October 2, 2015 and
September 26, 2014, respectively)		37,854		35,142		110,412		104,753
Reimbursable expenses		7,225		5,887		20,266		17,426
Total cost of service		45,079		41,029		130,678		122,179
Selling, general and administrative costs
(includes $2,068 and $814 and $3,123 and $2,158 of stock compensation
expense in the quarters and nine months ended October 2, 2015 and
September 26, 2014, respectively)		17,195		15,422		48,281		45,264
Bargain purchase gain from acquisition		—		—		—		(3,015)
Restructuring costs		—		—		—		3,604
Total costs and operating expenses		62,274		56,451		178,959		168,032
Income from operations		4,943		3,986		15,627		8,362
Other income (expense):
Interest income		1		2		3		4
Interest expense		(102)		(173)		(351)		(463)
Income from operations before income taxes		4,842		3,815		15,279		7,903
Income tax expense		1,784		879		5,525		1,734
Net income	$	3,058	$	2,936	$	9,754	$	6,169
Basic net income per common share:
Income per common share	$	0.11	$	0.10	$	0.34	$	0.21
Weighted average common shares outstanding		28,755		28,558		28,675		28,872
Diluted net income per common share:
Income per common share	$	0.10	$	0.10	$	0.32	$	0.21
Weighted average common and common equivalent shares outstanding		31,488		29,800		30,765		29,884

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

4

The Hackett Group, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

	Quarter Ended				Nine Months Ended
	October 2,		September 26,		October 2,		September 26,
	2015		2014		2015		2014
Net income	$	3,058	$	2,936	$	9,754	$	6,169
Foreign currency translation adjustment		(922)		(786)		(1,086)		(301)
Total comprehensive income	$	2,136	$	2,150	$	8,668	$	5,868

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

5

The Hackett Group, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended
	October 2,		September 26,
	2015		2014
Cash flows from operating activities:
Net income	$	9,754	$	6,169
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation expense		1,926		1,731
Amortization expense		1,642		1,679
Amortization of debt issuance costs		73		68
Non-cash compensation expense		7,263		4,685
Acquisition consideration reflected as compensation expense		(3,440)		—
Bargain purchase gain from acquisition		—		(3,015)
Restructuring costs		—		3,604
Provision for doubtful accounts		165		728
Loss on foreign currency translation		214		91
Provision for deferred tax liability		4,694		2,710
Changes in assets and liabilities, net of effects from acquisitions:
Increase in accounts receivable and unbilled revenue		(6,958)		(9,581)
Decrease (increase) in prepaid expenses and other assets		118		(503)
Decrease in accounts payable		(1,959)		(2,670)
Increase (decrease) in accrued expenses and other liabilities		5,459		(2,730)
Decrease in income tax payable		270		(1,772)
Net cash provided by operating activities		19,221		1,194
Cash flows from investing activities:
Purchases of property and equipment		(2,428)		(1,924)
Cash consideration paid for acquisition		—		(2,877)
Cash acquired in acquisition of business		—		522
Net cash used in investing activities		(2,428)		(4,279)
Cash flows from financing activities:
Proceeds from issuance of common stock		573		620
Proceeds from borrowings		2,500		10,500
Repayment of borrowings		(11,500)		(2,721)
Dividends paid		(3,067)		—
Purchases of common stock		(3,598)		(12,981)
Net cash used in financing activities		(15,092)		(4,582)
Effect of exchange rate on cash		29		20
Net increase (decrease) in cash and cash equivalents		1,730		(7,647)
Cash and cash equivalents at beginning of year		14,608		18,199
Cash and cash equivalents at end of period	$	16,338	$	10,552
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	260	$	687
Cash paid for interest	$	292	$	389

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

6

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation and General Information

Basis of Presentation

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

In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments which are necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods presented. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended January 2, 2015, included in the Annual Report on Form 10-K filed by the Company with the SEC. The consolidated results of operations for the quarter and nine monthsended October 2, 2015, are not necessarily indicative of the results to be expected for any future period or for the full fiscal year.

Use of Estimates

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

Fair Value

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable and unbilled revenue, accounts payable, accrued expenses and other liabilities and debt. As of October 2, 2015 and January 2, 2015, the carrying amount of each financial instrument, with the exception of debt, approximated the instrument’s respective fair value due to the short-term nature and maturity of these instruments.

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

Business Combinations

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

Recently Issued Accounting Standards

In May 2014, the FASB issued guidance on revenue recognition, which provides for a single, principles-based model for revenue recognition and replaces the existing revenue recognition guidance. The guidance is effective for annual and interim periods beginning on or after December 15, 2017 and will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective. It permits the use of either a retrospective or cumulative effect transition method.  Early adoption is permitted, but not before December 15, 2016.  The Company has not yet selected a transition method and is in the process of evaluating the effect this standard will have on its consolidated financial statements and related disclosures.

7

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation and General Information (continued)

In April 2015, the FASB issued amendments to ASU 2015-03, which are intended to simplify the balance sheet presentation of debt issuance costs.  These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts.  The recognition and measurement guidance for debt issuance costs are not affected by this update.  The amendments are effective for annual and interim periods beginning after December 15, 2015 and requires a retrospective transition method.  Early adoption is permitted for financial statements that have not been previously issued.   The Company does not expect the adoption to have a material impact on its consolidated financial statements.

Reclassifications

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

2. Net Income per Common Share

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

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

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

	Quarter Ended		Nine Months Ended
	October 2,	September 26,	October 2,		September 26,
	2015	2014	2015		2014
Basic weighted average common shares outstanding	28,755,225	28,557,528		28,674,838		28,872,043
Effect of dilutive securities:
Unvested restricted stock units and common stock subject to
vesting requirements issued to employees and non-employees	1,919,882	1,232,971		1,419,441		1,002,642
Common stock issuable upon the exercise of stock options	813,283	9,826		670,454		9,589
Dilutive weighted average common shares outstanding	31,488,390	29,800,325		30,764,732		29,884,274

Approximately 0.5 million and 0.4 million shares of common stock equivalents were excluded from the computations of diluted net income per common share for the quarters ended October 2, 2015 and September 26, 2014, respectively, as their inclusion would have had an anti-dilutive effect on diluted net income per common share.

3. Accounts Receivable and Unbilled Revenue, Net

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

	October 2,		January 2,
	2015		2015
Accounts receivable	$	35,643	$	28,154
Unbilled revenue		9,561		10,597
Allowance for doubtful accounts		(1,211)		(1,330)
Accounts receivable and unbilled revenue, net	$	43,993	$	37,421

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

8

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

4. Accrued Expenses and Other Liabilities

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

		October 2,		January 2,
		2015		2015
Accrued compensation and benefits	$	7,449	$	3,266
Accrued bonuses		9,578		7,682
Accrued restructuring related expenses		-		270
Deferred revenue		9,277		8,896
Accrued sales, use, franchise and VAT tax		2,110		1,977
Accrued Technolab earnout liability		-		3,440
Other accrued expenses		5,816		5,370
Total accrued expenses and other liabilities	$	34,230	$	30,901

5. Restructuring Costs

The Company recorded restructuring costs of $3.6 million during the quarter ended March 28, 2014,  primarily for reductions in consultants and functional support personnel in Europe. These actions were taken as a result of the continued decline in demand in its European markets. The Company took steps to reduce its costs to better align its overall cost structure and organization with anticipated demand for its services.

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

		Severance and Other
		Employee Costs
Accrual balance at January 2, 2015	$	270
Expenditures		(270)
Accrual balance at October 2, 2015	$	-

6. Credit Facility

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

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

· Provide for up toan additional $17.0 million of borrowing under the Term Loan (the "Amended Term Loan" and together with the Revolver, the "Credit Facility"). As of October 2, 2015, the Company had $9.3 million principal amount outstanding on the Amended Term Loan and no outstanding balance on the Revolver.

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

The Amended Term Loan was used to finance the Company’s $6.9 million tender offer for its shares in October 2013.

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

9

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

6. Credit Facility (continued)

The interest rates per annum applicable to loans under the Credit Facility will be, at the Company’s option, equal to either a base rate or a LIBOR base rate, plus an applicable margin percentage. The applicable margin percentage is based on the consolidated leverage ratio, as defined in the Credit Agreement. As of October 2, 2015, the applicable margin percentage was 1.50% per annum based on the consolidated leverage ratio, in the case of LIBOR rate advances, and 0.75% per annum, in the case of base rate advances.

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

7. Acquisition

During the quarter ended March 28, 2014, the Company acquired the U.S., Canada and Uruguay operations of Technolab International Corporation ("Technolab").  

At closing, the Seller received $3.0 million in cash, not subject to vesting, and $1.0 million in shares subject to vesting, which is being recorded as non-cash compensation over the service vesting period.  The seller also had the ability to earn an additional $8.0 million in a combination of cash, not subject to service vesting, and stock, subject to service vesting, based on a one-year profitability-based earn-out contingent upon actual results achieved.  The entire cash portion of the earn-out was recorded as compensation expense in 2014, of which $0.9 million and $2.6  million was recorded in the third quarter and first nine months of 2014,  respectively.  The stock portion of the earn-out is being recorded as compensation expense over the service vesting period.During the third quarter of 2015, the Company settled the contingent earn-out with cash and stock issuances in accordance with the agreement.

The purchase accounting resulted in a bargain purchase gain of $3.0 million on the acquisition and intangible assets with definite lives of $7.7 million which will be amortized over periods ranging from 2 years to 5 years.

8. Stock Based Compensation

During the nine months ended October 2, 2015, the Company issued 730,237 restricted stock units at a weighted average grant-date fair value of $8.36 per share. As of October 2, 2015, the Company had 2,185,728 restricted stock units outstanding at a weighted average grant-date fair value of $6.73 per share. As of October 2, 2015,  $8.1 million of total restricted stock unit compensation expense related to unvested awards had not been recognized and is expected to be recognized over a weighted average period of approximately 1.95 years.

During the quarter ended October 2, 2015,  483,051 shares of common stock subject to vesting requirementswere granted for the settlement of the contingent earn-out consideration related to the 2014 acquisition of Technolab.  As of October 2, 2015, the Company had 747,525 shares of common stock subject to vesting requirements outstanding at a weighted average grant-date fair value of $8.77 per share. As of October 2, 2015,  $4.5 million of compensation expense related to common stock subject to vesting requirements had not been recognized and is expected to be recognized over a weighted average period of approximately 2.9 years.  

On February 8, 2012, the Compensation Committee approved the fiscal year 2012 through 2015 equity compensation target for the Company’s Chief Executive Officer and Chief Operating Officer. Under this target, a single performance-based option grant was made to the Company’s Chief Executive Officer and the Chief Operating Officer of 1,912,500 options and 1,004,063 options, respectively, totaling 2,916,563 options, each with an exercise price of $4.00 and a fair value of $1.31.  One-half of the options would have vested upon the achievement of at least 50% growth of pro forma earnings per share and the remaining half would have vested upon the achievement of at least 50% pro forma EBITDA growth. Each metric could have been achieved at any time during the six-year term of the award based on a trailing twelve month period measured quarterly. The grants would have expired if neither target were achieved during the six-year term. The base year for the performance calculation was fiscal 2011 for both pro forma earnings per share and pro forma EBITDA performance targets.

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

Subsequent to year end 2014, in connection with the Company’s achievement of over 50% growth of pro forma net earnings per share since fiscal 2011 base year and upon the approval of the Audit Committee’s review of the Company’s 2014 financial statements and Annual Report on Form 10-K, 50% of the outstanding SARs awards granted to the CEO and COO became vested. In the third quarter of 2015, the Company recorded $1.3 million of compensation expense related to the SARs awards tied to the pro formaEBITDA performance target, which represented 50% of the total non-cash compensation expense assuming the awards fully vest. These awards have not yet vested. 

10

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. Shareholders’ Equity

         Treasury Stock

Under the Company’s share repurchase plan, the Company may buy back shares of its outstanding stock either on the open market or through privately negotiated transactions subject to market conditions and trading restrictions. During the nine months ended October 2, 2015, the Company repurchased approximately 149 thousand shares of its common stock at an average price of $9.10 per share for a total cost of approximately $1.4 million.The shares repurchased under the share repurchase plan during the nine months ended October 2, 2015, do not include 281 thousand shares for a cost of $2.2 million that the Company bought back to satisfy employee net vesting obligations.   During the quarter ended October 2, 2015, the Company bought back 5 thousand shares at a cost of $65 thousand to satisfy employee net vesting obligations and no shares were repurchased under the share repurchase plan.  As of October 2, 2015, the Company had approximately $2.3 million available under its share repurchase plan authorization.

During the quarterended September 26, 2014, the Company repurchasedapproximately 485 thousand shares of its common stock at an average price of $6.13 per share for a total cost of approximately $3.0 million under the share repurchase plan.  During the nine months ended September 26, 2014, the Company repurchasedapproximately 1.7 million shares of its common stock at an average price of $6.07 per share for a total cost of approximately $10.3 million under the share repurchase plan.  The shares repurchased during the quarter and nine months ended September 26, 2014, do not include2 thousand shares at a cost of $12 thousand and 446thousand shares at a cost of $2.7 million, respectively, that the Company bought back to satisfy employee net vesting obligations.

Dividend Program

During the quarter ended October 2, 2015, the Company paid its first semi-annual dividend of $0.10 per share totaling $3.1 million to shareholders on record as of June 29, 2015. Subsequent to the quarter ended October 2, 2015, the Company declared its second semi-annual dividend of $0.10 per share for holders of record on December 28, 2015. The dividend will be paid on January 8, 2016.

10. Litigation

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

11. Geographic and Group Information

Revenue,which is primarily based on the country of the contracting entity anddiffers from the Company’s non-GAAP reporting, was attributed to the following geographical areas (in thousands):

	Quarter Ended				Nine Months Ended
	October 2,		September 26,		October 2,		September 26,
	2015		2014		2015		2014
Revenue:
North America	$	57,060	$	48,094	$	161,025	$	142,797
International (primarily European countries)		10,157		12,343		33,561		33,597
Total revenue	$	67,217	$	60,437	$	194,586	$	176,394

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

	October 2,		January 2,
	2015		2015
Long-lived assets:
North America	$	78,882	$	80,152
International (primarily European countries)		15,064		15,578
Total long-lived assets	$	93,946	$	95,730

11

The Hackett Group, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

11.  Geographic and Group Information (continued)

As of October 2, 2015 and January 2, 2015, foreign assets included $14.5 million and $15.0 million, respectively, of goodwill related to the REL and Archstone acquisitions.  

In the following table, the Hackett Group service group encompasses Benchmarking, Business Transformation, Executive Advisory and EPM and EPM Application Maintenance and Support groups.  The ERP Solutions service group encompasses SAP ERP Technology and SAP Maintenancegroups (in thousands):

	Quarter Ended				Nine Months Ended
	October 2,		September 26,		October 2,		September 26,
	2015		2014		2015		2014
The Hackett Group	$	58,174	$	51,370	$	165,757	$	146,654
ERP Solutions		9,043		9,067		28,829		29,740
Total revenue	$	67,217	$	60,437	$	194,586	$	176,394

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

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements. All statements regarding our expected financial position and operating results, our business strategy, our financing plans and forecasted demographic and economic trends relating to our industry are forward-looking statements. These statements can sometimes be identified by our use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” or “intend” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. We cannot promise you that our expectations reflected in such forward-looking statements will turn out to be correct. Factors that impact such forward-looking statements include, among others, our ability to effectively integrate acquisitions into our operations, our ability to retain existing business, our ability to attract additional business, our ability to effectively market and sell our product offerings and other services, the timing of projects and the potential for contract cancellation by our customers, changes in expectations regarding the business consulting and information technology industries, our ability to attract and retain skilled employees, possible changes in collections of accounts receivable due to the bankruptcy or financial difficulties of our customers, risks of competition, price and margin trends, foreign currency fluctuations and changes in general economic conditions, interest rates and our ability to obtain debt financing through additional borrowings under an amendment to our existing credit facility. An additional description of our risk factors is set forth in our Annual Report on Form 10-K for the year ended January 2, 2015. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

OVERVIEW

The Hackett Group, Inc. (“Hackett” or the “Company”) is a leading strategic advisory and technology consulting firm that enables companies to achieve world-class business performance. By leveraging the comprehensive Hackett database, the world’s leading repository of enterprise business process performance metrics and best practice intellectual capital, our business and technology solutions help clients improve performance and maximize returns on technology investments. Only Hackett empirically defines world-class performance in sales, general and administrative and certain supply chain activities with analysis gained through more than 11,000 benchmark studies over 21 years at over 3,500 of the world’s leading companies.

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

RESULTS OF OPERATIONS

Adjusted non-GAAP information is provided to enhance the understanding of the Company’s financial performance and is reconciled to the Company’s GAAP information in the tables below.  In our quarterly earnings announcements, we refer to adjusted non-GAAP information as “pro-forma”, which is unaudited. 

References to adjusted non-GAAP results in the table below exclude non-cash stock compensation expense, intangible asset amortization expense, other one-time acquisition related income and expense and restructuring charges,  and assume a normalized tax rate, which is our long term projected cash tax rate.These non-GAAP results are provided to enhance investors’ understanding of the Company's current financial performance and its prospects for the future. The Company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses that it believes are not indicative of its core operating results. The non-GAAP measures are included to provide investors and management with an alternative method for assessing operating results in a manner that is focused on the performance of ongoing operations and to provide a more consistent basis for comparison between quarters.  Further, these non-GAAP results are one of the primary indicators management uses for planning and forecasting in future periods.  In addition, since the Company has historically reported non-GAAP results to the investment community, it believes the continued inclusion of non-GAAP results provides consistency in its financial reporting. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP.

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

	Quarter Ended						Nine Months Ended
	October 2,			September 26,			October 2,			September 26,
	2015			2014			2015			2014
Revenue:
Revenue before reimbursements ("net revenue")	$	59,992	100.0%	$	54,550	100.0%	$	174,320	100.0%	$	158,968	100.0%
Reimbursements		7,225			5,887			20,266			17,426
Total revenue		67,217			60,437			194,586			176,394
Costs and expenses:
Cost of service:
Personnel costs before reimbursable
expenses		36,231	60.4%		33,440	61.3%		106,272	61.0%		99,646	62.7%
Non-cash stock compensation expense		1,372			566			3,463			1,904
Acquisition-related non-cash stock compensation expense		251			276			677			623
Acquisition consideration reflected as
compensation expense		—			860			—			2,580
Reimbursable expenses		7,225			5,887			20,266			17,426
Total cost of service		45,079			41,029			130,678			122,179
Selling, general and administrative costs		14,579	24.3%		14,055	25.8%		43,516	25.0%		41,307	26.0%
Non-cash stock compensation expense		2,068			814			3,123			2,158
Acquisition-related costs		—			—			—			120
Amortization of intangible assets		548			553			1,642			1,679
Total selling, general, and administrative expenses		17,195			15,422			48,281			45,264
Bargain purchase gain from acquisition		—			—			—			(3,015)
Restructuring expense		—			—			—			3,604
Total costs and operating expenses		62,274			56,451			178,959			168,032
Income from operations		4,943	8.2%		3,986	7.3%		15,627	9.0%		8,362	5.3%
Other income (expense):
Interest income		1			2			3			4
Interest expense		(102)	-0.2%		(173)	-0.3%		(351)	-0.2%		(463)	-0.3%
Income from operations before income taxes		4,842	8.1%		3,815	7.0%		15,279	8.8%		7,903	5.0%
Income tax expense		1,784	3.0%		879	1.6%		5,525	3.2%		1,734	1.1%
Net income	$	3,058	5.1%	$	2,936	5.4%	$	9,754	5.6%	$	6,169	3.9%
Diluted net income per common share	$	0.10		$	0.10		$	0.32		$	0.21
Adjusted non-GAAP data (unaudited):
Income from operations before income taxes	$	4,842		$	3,815		$	15,279		$	7,903
Bargain purchase gain from acquisition		—			—			—			(3,015)
Non-cash stock compensation expense		3,440			1,380			6,586			4,062
Acquisition-related non-cash stock compensation expense		251			276			677			623
Acquisition-related  cash compensation expense		—			860			—			2,580
Acquisition-related costs		—			—			—			120
Restructuring costs		—			—			—			3,604
Amortization of intangible assets		548			553			1,642			1,679
Adjusted non-GAAP income before income taxes		9,081			6,884			24,184			17,556
Adjusted non-GAAP income tax expense		2,724	30.0%		2,067	30.0%		7,255	30.0%		5,705	32.5%
Adjusted non-GAAP net income	$	6,357		$	4,817		$	16,929		$	11,851
Adjusted non-GAAP diluted net income per share	$	0.20		$	0.16		$	0.55		$	0.40
Adjusted non-GAAP gross margin (1)		23,761	39.6%		21,110	38.7%		68,048	39.0%		59,322	37.3%
(1)   Adjusted non-GAAP gross margin is revenue before reimbursable expenses less personnel costs before reimbursable expenses.

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Revenue. We are a global company with operations located primarily in the United States and Western Europe. Our revenue is denominated in multiple currencies, primarily the U.S. Dollar, British Pound, Euro and Australian Dollar and as a result is affected by currency exchange rate fluctuations. Variances excluding the impact of currency fluctuations are reflected as constant currency.  The ERP Solutions group was not impacted by foreign currency rate fluctuations. In addition, revenue is analyzed based on geographical location of engagement team personnel. 

Total Company revenue increased 11%,or 13% when adjusting for constant currency,to $67.2 millionduring the quarterended October 2, 2015,  as compared to $60.4 million during the quarterended September 26, 2014.  Total Company revenue increased 10%,or 13% when adjusting for constant currency,to $194.6 million during the nine months ended October 2, 2015, as compared to $176.4 million during the nine months ended September 26, 2014.

The Hackett Group U.S.revenue increased 25%and 18%  during the quarterand nine months ended October 2, 2015,  respectively, as compared to the quarterand nine months ended September 26, 2014.  The Hackett Group’s international revenue decreased 23%and 3% during the quarterand nine months ended October 2, 2015,  respectively, as compared to the quarterand nine months ended September 26, 2014.  The Hackett Group’s international revenue accounted for 14%, or 16% in constant currency,of total Company revenue forthe quarterended October 2, 2015, as compared to21%of total Company revenue for the quarter ended September 26, 2014.  The Hackett Group’s international revenue accounted for 16%, or 18% in constant currency, of total Company revenue for the nine months ended October 2, 2015, as compared to 18%of total Company revenue for the nine months ended September 26, 2014.

ERP Solutions revenue was flat when comparing the quarters ended October 2, 2015 and September 26, 2014 and down 3% when comparing the nine months ended October 2, 2015 and September 26, 2014.The decrease in the comparison of the nine month periods wasprimarilydue to a significant software sale transactionin 2014.  Assumingnormalized software sales, ERP Solutions revenue grew 9%  during the nine months ended October 2, 2015,as compared to the nine months ended September 26, 2014.

During the quarterand nine months ended October 2, 2015,and September 26, 2014, no customer accounted for more than 5% of total Company revenue.

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

Personnel costs beforereimbursable expensesincreased 8%, or $2.8 million,and 7%, or $6.6 million for thequarterand nine months ended October 2, 2015,  respectively, as compared to the quarterand nine months ended September 26, 2014.  This increase primarily reflected increased employee headcount and higher subcontractor costs to support increasing revenue and higher incentive compensation commensurate with Company performance.  Total personnel costs before reimbursable expenses, as a percentage of revenue before reimbursements, were 60%and 61% forthe quarterand nine months ended October 2, 2015, respectively,as compared to 61%and 63% for thequarterand nine months ended September 26, 2014, respectively.  

Total company adjusted non-GAAP gross margin was 39.6% of net revenue in the quarter ended October 2, 2015, as compared to 38.7% for the quarter ended September 26, 2014. Total Company adjusted non-GAAP gross margin was 39.0% of net revenue for the nine months ended October 2, 2015, as compared to 37.3% for the nine months ended September 26, 2014.  In 2014, we had a significant software sale transaction in our ERP Solutions groups. Assuming normalized software sales in 2014, the total company non-GAAP gross margins would have been 36.0% for the nine months ended September 26, 2014. The comparison to this normalized gross margin better reflects the margin improvements achieved primarily as a result of increased utilization and rates as compared to the prior year.

Non-cash compensation expense, included in cost of service, increased $0.8 million and $1.6 million during the quarter and nine months ended October 2, 2015, respectively, primarily due to a one-time acceleration of an unvested award to a terminated employee, as well as the impact of historical equity awards on the current year.

Selling, General and Administrative Costs (SG&A).  SG&A costs were $14.6 million and $43.5 millionfor the quarterand nine months ended October 2, 2015,  respectively, as compared to $14.1 million and $41.3 millionfor thequarterand nine months ended September 26, 2014, respectively.  The increase for the nine months comparison is primarily due to higher selling-related expenses and incentive compensation accruals commensurate with Company performance. SG&A costs as a percentage of revenue before reimbursements were 24% and 25%forthe quarter and nine months ended October 2, 2015,  respectively, as compared to 26% for both the quarter and nine months endedSeptember 26, 2014 due to the improved leverage from increased revenue.

Non-cash compensation expense, included in SG&A, increased $1.3 million and $1.0 million during the quarter and nine months ended October 2, 2015, respectively, primarily due to the accrual related to the unvested SARs tied to the pro-forma EBITDA performance target of $1.3 million,which represented 50% of the total non-cash compensation expense assumingthe awards fully vest. See Note 8, "Stock Based Compensation," to our consolidated financial statements included in this Quarterly Report on Form 10-Q for more information.

Bargain Purchase Gain from Acquisition. During the first quarter of 2014, we acquired and accounted for certain assets and liabilities of Technolab International Corporation (“Technolab”).  At closing, the Seller received $3.0 million in cash, not subject to

15

vesting, and $1.0 million in stock, subject to service vesting. Additionally, the seller had the ability to earn up to $8.0 million in a combination of cash, not subject to service vesting, and stock, subject to service vesting, based on a one year profitability based earn-out.  The amounts paid to the Seller at closing in stock, as well as the amounts earned as part of the earn-out due to the Seller in cash, not subject to service vesting, and stock, subject to service vesting, were accounted for as compensation expense.During the quarter ended October 2, 2015, we settled the contingent earn-out with cash and issued equity in accordance with the purchase agreement.

Restructuring Costs.During the quarter ended March 28, 2014, we recorded restructuring costs of $3.6 million, primarily for reductions of consultants and office leases in Europe. These actions were taken as a result of our continued volatility in demand in our European markets.  

Income Taxes.In the quarterand nine months ended October 2, 2015, we recorded income tax expense of $1.8 millionand $5.5 million, respectively, which reflected a tax rate of 37% and 36%, respectively, for certain federal, foreign and state taxes. In the quarterand nine months ended September 26, 2014, we recorded income tax expense of $0.9 million and $1.7 million, respectively, which reflected a tax rate of 23%  and 22%, respectively, for certain federal, foreign and state taxes.The increase in tax for the quarter and nine months ended October 2, 2015, as compared to the quarter and nine months ended September 26, 2014, was primarily the result of the geographical mix of taxable earnings.

Liquidity and Capital Resources

As of October 2, 2015 and January 2, 2015, we had $16.3 million and $14.6 million, respectively, classified in cash and cash equivalents on the consolidated balance sheets.

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

	Nine Months Ended
	October 2,		September 26,
	2015			2014
Cash flows provided by operating activities	$	19,221	$	1,194
Cash flows used in investing activities	$	(2,428)	$	(4,279)
Cash flows used in financing activities	$	(15,092)	$	(4,582)

Cash Flows from Operating Activities

Net cash provided by operating activities was $19.2 million during the nine months ended October 2, 2015, as compared to $1.2 million during the nine months ended September 26, 2014.  In 2015, the net cash  provided was primarily due to net income adjusted for non-cash items and increased accrued liabilities related to higher incentive compensation accruals, partially offset by an increase in accounts receivable and unbilled revenue.In addition, the 2015 cash flow from operations was negatively impacted by the $3.4 million settlement of the cash portion of the EPM AMS acquisition consideration which was reflected as compensation expense.  In 2014,  the net cash provided was primarily due to net income adjusted for non-cash items, primarily offset by an increase in accounts receivable and unbilled revenue.

Cash Flows from Investing Activities

Net cash used in investing activities was $2.4 million and $4.3 million during the nine months ended October 2, 2015 and September 26, 2014, respectively. Net cash used in investing activities during the nine months ended October 2, 2015was primarily due tocapital expendituresfor the continued development of benchmark technology.  Net cash used in investing activities during the nine monthsended September 26, 2014,  was primarily related tonet cash consideration paid for the EPM AMS acquisition and capital expenditures for the development of the Hackett Performance Exchange. 

Cash Flows from Financing Activities

Net cash used in financing activities was $15.1 million during the nine months ended October 2, 2015,primarily due to the principal pay-down of $11.5 million of debt under our Credit Facility, the cost of share purchases to satisfy employee net vesting requirements of $2.2 million and the repurchase of $1.4million of Company stock.  Net cash used in financing activities during the nine months ended September 26, 2014,  was primarilydue to the repurchase of $10.3 million of Company stock and the cost of share purchases to satisfy employee net vesting requirements of $2.7 million, partially offset by net $7.8 million of borrowings under our Credit Facility.

The Company is party to an amended and restated the credit agreement (the "Credit Agreement") dated August 27, 2013 with Bank of America, N.A.  The Credit Agreement provides for a term loan (the “Amended Term Loan”) and a revolving line of credit (the “Revolver” and together with the Amended Term Loan, the “Credit Facility”).  As of October 2, 2015, the Company had $9.3 million principal amount outstanding on the Amended Term Loan and no outstanding balance on the Revolver.  See Note 6, "Credit Facility," to our consolidated financial statements included in this Quarterly Report on Form 10-Q for more information.

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We believe that available funds (including the cash on hand and $20.0 million in borrowing capacity under the Revolver), and cash flows generated by operations will be sufficient to fund our working capital and capital expenditure requirements for at least the next twelve months. We may decide to raise additional funds in order to fund expansion, to develop new or further enhance products and services, to respond to competitive pressures, or to acquire complementary businesses or technologies. There is no assurance, however, that additional financing will be available when needed or desired.

Recently Issued Accounting Standards

For a discussion of recently issued accounting standards, see Note 1, "Basis of Presentation and General Information," to our consolidated financial statements included in this Quarterly Report on Form 10-Q and Note 1, "Basis of Presentation and General Information," to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended January 2, 2015.  

Item  3.Quantitative and Qualitative Disclosures About Market Risk.

As ofOctober 2, 2015, our exposure to market risk related primarily to changes in interest rates and foreign currency exchange rate risks.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to the Credit Facility, which is subject to variable interest rates. The interest rates per annum applicable to loans under the Credit Facility will be, at our option, equal to either a base rate or a LIBOR rate for one-, two-, three- or nine-month interest periods chosen by us in each case, plus an applicable margin percentage. A 100 basis point increase in our interest rate under our Credit Facility would not have had a material impact on our results of operations for the quarterended October 2, 2015.  

Exchange Rate Sensitivity

We face exposure to adverse movements in foreign currency exchange rates as a portion of our revenue, expenses, assets and liabilities are denominated in currencies other than the U.S. Dollar, primarily the British Pound, the Euro and the Australian Dollar. These exposures may change over time as business practices evolve.

Item 4.Controls and Procedures

The Company maintains disclosure controls and procedures (“DCP”) that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (“the Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), as appropriate, to allow for timely decisions regarding required disclosure.

The Company, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s DCP as of the end of the period covered by this report. Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by the Quarterly Report on Form 10-Q.

At the time that the Company’s Annual Report on Form 10-K for the year ended January 2, 2015 was filed on March 18, 2015, the Company’s Chief Executive Officer and Chief Financial Officer concluded that its DCP were effective as of January 2, 2015. However, at that time, the Company’s independent registered certified public accounting firm identified a material weakness in the Company’s internal controls over financial reporting (“ICFR”) due to the Company’s failure to design and maintain controls related to accounting for business combinations. On May 13, 2015 and August 12, 2015 when the Company’s Quarterly Reports on Form 10-Q for the quarters ended April 3, 2015 and July 3, 2015 were filed, the Company’s Chief Executive Officer and Chief Financial Officer concluded that its DCP were effective as of April 3, 2015 and July 3, 2015.

Subsequent to these evaluations, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, re-evaluated its conclusions reached and have now determined that the control deficiency previously identified rose to the level of a material weakness in ICFR as of January 2, 2015, April 3, 2015 and July 3, 2015, and therefore concluded that its ICFR were not effective at those times. See below for a discussion of the material weakness in ICFR.  Therefore, management concluded that the Company’s DCP were also not effective as of January 2, 2015, April 3, 2015 and July 3, 2015 because of the material weakness in the Company’s ICFR.

As described below, since the Company’s management concluded that the material weakness had been remediated, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s DCP were effective as of October 2, 2015.

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Material weakness in internal control over financial reporting (ICFR)

A material weakness is a deficiency, or combination of deficiencies, in ICFR, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management identified the following control deficiency that constituted a material weakness in the Company’s ICFR as of January 2, 2015. Management also determined that this material weakness existed as of April 3, 2015 and July 3, 2015:

The Company did not design and maintain controls to analyze and record appropriate adjustments related to accounting for business combinations. During the first quarter of 2014, the Company acquired and accounted for certain assets and liabilities of Technolab International Corporation. Subsequent to fiscal year end 2014, the amounts paid to the Seller at closing in stock, subject to service vesting, as well as the amounts earned as part of the earn-out due to the Seller in cash, not subject to service vesting, and stock, subject to service vesting, which were each originally treated as purchase consideration were adjusted and accounted for as compensation expense.

This material weakness resulted in adjustments the Company recorded in the fourth quarter, as well as additional disclosures in the consolidated financial statements. This control deficiency did not result in a material misstatement to the Company’s consolidated financial statements for the year ended January 2, 2015 or to the unaudited interim condensed consolidated financial statements for the quarters ended April 3, 2015 and July 3, 2015. However, management concluded that this control deficiency, if un-remediated, could have, in future reporting periods, resulted in a material misstatement to the annual or interim consolidated financial statements that would not have been prevented or detected by its controls. Accordingly, management has determined that this control deficiency constituted a material weakness.

Changes in internal control over financial reporting

As a result of the material weakness in ICFR, during the third quarter of fiscal 2015, the Company’s management implemented changes to its ICFR to improve the control environment, specifically with regard to business combinations.  The changes to the control environment include, but are not limited to, the following:

· For future business combinations, the Company will retain third party specialists to augment internal resources utilized for due diligence and analysis of the technical accounting aspects of the transaction.   Such resources will be retained by management at the direction of the audit committee.

· For future business combinations, the Company’s management will retain a third party valuation expert and the Company’s Chief Executive Officer and Chief Financial Officer will review the assumptions and calculations used by the valuation expert for reasonableness and the findings will be documented in a valuation analysis memorandum.

· For future business combinations, the Company will prepare a purchase accounting memorandum for each acquired company to address the guidance outlined in ASC 805 ‘Business Combinations’ and ASC 350 ‘Intangible – Goodwill and Other’ as necessary, as well as other acquisition related accounting literature, that will be reviewed by the Chief Financial Officer and presented to the audit committee.

These remediation initiatives enhanced the Company's ICFR by establishing a formal process and specific control activities with regard to business combinations.  Management believes that the measures described above implemented during the period have remediated the material weakness identified above.  Other than as noted above, there were no other changes in the Company’s ICFR during our most recently completed fiscal quarter.     

PART II — OTHER INFORMATION

Item 1.         Legal Proceedings.

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

Item  1A.Risk Factors.

There have been no material changes to any of the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended January 2, 2015.  

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

Issuer Purchases of Equity Securities

During the quarter ended October 2, 2015, the Company did not repurchase any shares of its common stockunder the repurchase plan approved by the Company's Board of Directors. As of October 2, 2015, the Company had approximately $2.3 million of authorization under the plan.

				Total Number		Maximum Dollar
				of Shares as Part		Value That May
				of Publicly		Yet be Purchased
	Total Number		Average Price	Announced		Under the
Period	of Shares		Paid per Share	Program		Program
Balance as of July 3, 2015					$	2,309,345
July 4, 2015 to July 31, 2015	-	$	-	-	$	2,309,345
August 1, 2015 to August 28, 2015	-	$	-	-	$	2,309,345
August 29, 2015 to October 2, 2015	-	$	-	-	$	2,309,345
	-	$	-	-

Shares repurchasedunder the repurchase plan approved by the Company's Board of Directors do not include  5 thousand shares for a cost of $65 thousand and 281 thousand shares for cost of $2.2 million, thatthe Company bought back  to satisfy employee net vesting obligations for the quarter and nine months ended October 2, 2015, respectively. 

Item  6.Exhibits.

See Index to Exhibits on page 21, which is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	The Hackett Group, Inc.
Date:November 12, 2015	/s/ Robert A. Ramirez
	Robert A. Ramirez
	Executive Vice President, Finance and Chief Financial Officer

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INDEX TO EXHIBITS

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

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Ted A. Fernandez, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: November 12, 2015	/s/ Ted A. Fernandez
	Ted A. Fernandez
	Chairman of the Board and Chief Executive Officer
	The Hackett Group, Inc.

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Robert A. Ramirez, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: November  12, 2015	/s/ Robert A. Ramirez
	Robert A. Ramirez
	Executive Vice President, Finance and Chief Financial Officer
	The Hackett Group, Inc.

EX-32

Exhibit 32

THE HACKETT GROUP, INC

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of The Hackett Group, Inc. (the “Company”) on Form 10-Q for the period ended October 2, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Ted A. Fernandez, Chairman of the Board and Chief Executive Officer, and Robert A. Ramirez, Executive Vice President, Finance and Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

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

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

/s/ Ted A. Fernandez

Ted A. Fernandez

Chairman of the Board and Chief Executive Officer

November 12, 2015

/s/ Robert A. Ramirez

Robert A. Ramirez

Executive Vice President, Finance and Chief Financial Officer

November 12, 2015

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

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Stock Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions			3 Months Ended	9 Months Ended	12 Months Ended
	Feb. 08, 2012	Feb. 08, 2012	Oct. 02, 2015	Oct. 02, 2015	Jan. 02, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Growth of Pro-forma EPS Percentage	50.00%
Growth of Pro-forma EBITDA percentage	50.00%
Weighted average period, Common stock				2 years 10 months 24 days
Number of shares granted subject to vesting requirements			483,051
Shares subject to vesting requirements			747,525	747,525
Nonvested weighted average grant-date fair value, Common stock			$ 8.77	$ 8.77
Compensation expense related to common stock subject to vesting requirements			$ 4.5	$ 4.5
Chief Executive Officer And Chief Operating Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards vested					50.00%
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units granted				730,237
Weighted average grant-date fair value				$ 8.36
Weighted average period, Restricted stock units				1 year 11 months 12 days
Restricted stock units outstanding			2,185,728	2,185,728
Nonvested weighted average grant-date fair value			$ 6.73	$ 6.73
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant-date fair value		$ 1.31
Performance based stock option grant, Exercise price		$ 4.00
Performance based stock option grant		2,916,563
Performance Shares [Member] | Chief Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance based stock option grant		1,912,500
Performance Shares [Member] | Chief Operating Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance based stock option grant		1,004,063
Stock Appreciation Rights (SARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense			$ 1.3

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Net Income Per Common Share (Narrative) (Details) - shares shares in Millions	3 Months Ended
	Oct. 02, 2015	Sep. 26, 2014
Net Income Per Common Share [Abstract]
Antidilutive common share equivalents	0.5	0.4

XML

Geographic And Group Information (Long-Lived Assets Attributable To Geographic Area) (Details) - USD ($)	Oct. 02, 2015	Jan. 02, 2015
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets	$ 93,946,000	$ 95,730,000
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets	78,882,000	80,152,000
International Primarily European Countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets	$ 15,064,000	$ 15,578,000

XML

Net Income Per Common Share

9 Months Ended

Oct. 02, 2015

Net Income Per Common Share [Abstract]

Net Income Per Common Share

2. Net Income per Common Share

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

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

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

	Quarter Ended		Nine Months Ended
	October 2,	September 26,	October 2,		September 26,
	2015	2014	2015		2014
Basic weighted average common shares outstanding	28,755,225	28,557,528		28,674,838		28,872,043
Effect of dilutive securities:
Unvested restricted stock units and common stock subject to
vesting requirements issued to employees and non-employees	1,919,882	1,232,971		1,419,441		1,002,642
Common stock issuable upon the exercise of stock options	813,283	9,826		670,454		9,589
Dilutive weighted average common shares outstanding	31,488,390	29,800,325		30,764,732		29,884,274

Approximately 0.5 million and 0.4 million shares of common stock equivalents were excluded from the computations of diluted net income per common share for the quarters ended October 2, 2015 and September 26, 2014, respectively, as their inclusion would have had an anti-dilutive effect on diluted net income per common share.

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Restructuring Costs (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 28, 2014	Sep. 26, 2014
Restructuring Costs [Abstract]
Restructuring costs	$ 3,600	$ 3,604

XML

Accrued Expenses And Other Liabilities (Details) - USD ($) $ in Thousands	Oct. 02, 2015	Jan. 02, 2015
Accrued Expenses And Other Liabilities [Abstract]
Accrued compensation and benefits	$ 7,449	$ 3,266
Accrued bonuses	9,578	7,682
Accrued restructuring related expenses		270
Deferred revenue	9,277	8,896
Accrued sales, use, franchise and VAT tax	2,110	1,977
Accrued Technolab earn-out liability		3,440
Other accrued expenses	5,816	5,370
Total accrued expenses and other liabilities	$ 34,230	$ 30,901

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Restructuring Costs (Summary Of Restructuring Expense Accruals) (Details) - Severance And Other Employee Costs [Member] $ in Thousands	9 Months Ended
	Oct. 02, 2015 USD ($)
Restructuring Cost and Reserve [Line Items]
Accrual balance	$ 270
Expenditures	$ (270)
Accrual balance

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Credit Facility (Details) - USD ($) $ in Millions	9 Months Ended
	Oct. 02, 2015	Oct. 31, 2013	Aug. 27, 2013	Mar. 21, 2012	Feb. 21, 2012
Revolving line of credit facility [Member]
Line of Credit Facility [Line Items]
Borrowing capacity under credit facility					$ 20.0
Term Loan [Member]
Line of Credit Facility [Line Items]
Borrowing capacity under credit facility					$ 30.0
Credit facility amount outstanding	$ 9.3
Term of debt	5 years
Maturity date	Aug. 27, 2018
Revolving Line Of Credit Facility And Term Loan [Member]
Line of Credit Facility [Line Items]
Term of debt	5 years
Additional borrowing capacity			$ 17.0
Maturity date	Aug. 27, 2018
LIBOR Rate [Member]
Line of Credit Facility [Line Items]
Margin percentage base rate	1.50%
Base Rate [Member]
Line of Credit Facility [Line Items]
Margin percentage base rate	0.75%
2012 Tender Offer [Member]
Line of Credit Facility [Line Items]
Stock repurchase cost of tender offer net of fees and expenses related to tender offer				$ 55.0
2013 Tender Offer [Member]
Line of Credit Facility [Line Items]
Stock repurchase cost of tender offer net of fees and expenses related to tender offer		$ 6.9

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Basis of Presentation and General Information

9 Months Ended

Oct. 02, 2015

Basis of Presentation and General Information [Abstract]

Basis Of Presentation And General Information

1. Basis of Presentation and General Information

Basis of Presentation

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

In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments which are necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods presented. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended January 2, 2015, included in the Annual Report on Form 10-K filed by the Company with the SEC. The consolidated results of operations for the quarter and nine months ended October 2, 2015, are not necessarily indicative of the results to be expected for any future period or for the full fiscal year.

Use of Estimates

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

Fair Value

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable and unbilled revenue, accounts payable, accrued expenses and other liabilities and debt. As of October 2, 2015 and January 2, 2015, the carrying amount of each financial instrument, with the exception of debt, approximated the instrument’s respective fair value due to the short-term nature and maturity of these instruments.

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

Business Combinations

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

Recently Issued Accounting Standards

In May 2014, the FASB issued guidance on revenue recognition, which provides for a single, principles-based model for revenue recognition and replaces the existing revenue recognition guidance. The guidance is effective for annual and interim periods beginning on or after December 15, 2017 and will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective. It permits the use of either a retrospective or cumulative effect transition method.  Early adoption is permitted, but not before December 15, 2016.  The Company has not yet selected a transition method and is in the process of evaluating the effect this standard will have on its consolidated financial statements and related disclosures.

1. Basis of Presentation and General Information (continued)

In April 2015, the FASB issued amendments to ASU 2015-03, which are intended to simplify the balance sheet presentation of debt issuance costs.  These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts.  The recognition and measurement guidance for debt issuance costs are not affected by this update.  The amendments are effective for annual and interim periods beginning after December 15, 2015 and requires a retrospective transition method.  Early adoption is permitted for financial statements that have not been previously issued.   The Company does not expect the adoption to have a material impact on its consolidated financial statements.

Reclassifications

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

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Acquisition (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 26, 2014	Mar. 28, 2014	Oct. 02, 2015	Sep. 26, 2014
Business Acquisition [Line Items]
Purchase price		$ 3,000
Shares granted to sellers		1,000
Contingent consideration		8,000
Compensation expense	$ 900			$ 2,600
Bargain purchase gain from acquisition				$ 3,015
Acquired intangible assets		$ 7,700
Minimum [Member]
Business Acquisition [Line Items]
Amortization period			2 years
Maximum [Member]
Business Acquisition [Line Items]
Amortization period			5 years

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Consolidated Balance Sheets - USD ($)	Oct. 02, 2015	Jan. 02, 2015
Current assets:
Cash and cash equivalents	$ 16,338,000	$ 14,608,000
Accounts receivable and unbilled revenue, net of allowance of $1,211 and $1,330 at October 2, 2015 and January 2, 2015, respectively	43,993,000	37,421,000
Deferred tax asset, net	486,000	2,828,000
Prepaid expenses and other current assets	2,131,000	2,199,000
Total current assets	62,948,000	57,056,000
Property and equipment, net	14,189,000	13,753,000
Other assets	4,796,000	6,548,000
Goodwill, net	74,961,000	75,429,000
Total assets	156,894,000	152,786,000
Current liabilities:
Accounts payable	5,950,000	7,909,000
Accrued expenses and other liabilities	34,230,000	30,901,000
Total current liabilities	40,180,000	38,810,000
Long-term deferred tax liability, net	8,276,000	5,925,000
Long-term debt	9,263,000	18,263,000
Total liabilities	$ 57,719,000	$ 62,998,000
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.001 par value, 1,250,000 shares authorized; none issued and outstanding
Common stock, $.001 par value, 125,000,000 shares authorized; 53,504,524 and 52,836,011 shares issued at October 2, 2015 and January 2, 2015, respectively	$ 54,000	$ 53,000
Additional paid-in capital	270,054,000	264,912,000
Treasury stock, at cost, 24,138,694 and 23,989,776 shares at October 2, 2015 and January 2, 2015, respectively	(92,691,000)	(91,335,000)
Accumulated deficit	(70,991,000)	(77,677,000)
Accumulated comprehensive loss	(7,251,000)	(6,165,000)
Total shareholders' equity	99,175,000	89,788,000
Total liabilities and shareholders' equity	$ 156,894,000	$ 152,786,000

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Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 3,058	$ 2,936	$ 9,754	$ 6,169
Foreign currency translation adjustment	(922)	(786)	(1,086)	(301)
Total comprehensive income	$ 2,136	$ 2,150	$ 8,668	$ 5,868

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Geographic And Group Information (Narrative) (Details) - USD ($) $ in Millions	Oct. 02, 2015	Jan. 02, 2015
Geographic And Group Information [Abstract]
Goodwill included in foreign assets	$ 14.5	$ 15.0

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Accrued Expenses And Other Liabilities (Tables)

9 Months Ended

Oct. 02, 2015

Accrued Expenses And Other Liabilities [Abstract]

Components Of Accrued Expenses And Other Liabilities

		October 2,		January 2,
		2015		2015
Accrued compensation and benefits	$	7,449	$	3,266
Accrued bonuses		9,578		7,682
Accrued restructuring related expenses		-		270
Deferred revenue		9,277		8,896
Accrued sales, use, franchise and VAT tax		2,110		1,977
Accrued Technolab earnout liability		-		3,440
Other accrued expenses		5,816		5,370
Total accrued expenses and other liabilities	$	34,230	$	30,901

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Geographic And Group Information (Geographic Revenue) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 67,217	$ 60,437	$ 194,586	$ 176,394
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	57,060	48,094	161,025	142,797
International Primarily European Countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 10,157	$ 12,343	$ 33,561	$ 33,597

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Geographic And Group Information (Tables)

9 Months Ended

Oct. 02, 2015

Geographic And Group Information [Abstract]

Geographic Revenue

	Quarter Ended				Nine Months Ended
	October 2,		September 26,		October 2,		September 26,
	2015		2014		2015		2014
Revenue:
North America	$	57,060	$	48,094	$	161,025	$	142,797
International (primarily European countries)		10,157		12,343		33,561		33,597
Total revenue	$	67,217	$	60,437	$	194,586	$	176,394

Long-Lived Assets Attributable To Geographic Area

	October 2,		January 2,
	2015		2015
Long-lived assets:
North America	$	78,882	$	80,152
International (primarily European countries)		15,064		15,578
Total long-lived assets	$	93,946	$	95,730

Revenue By Service Group

	Quarter Ended				Nine Months Ended
	October 2,		September 26,		October 2,		September 26,
	2015		2014		2015		2014
The Hackett Group	$	58,174	$	51,370	$	165,757	$	146,654
ERP Solutions		9,043		9,067		28,829		29,740
Total revenue	$	67,217	$	60,437	$	194,586	$	176,394

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014
Cash flows from operating activities:
Net income	$ 9,754	$ 6,169
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	1,926	1,731
Amortization expense	1,642	1,679
Amortization of debt issuance costs	73	68
Non-cash compensation expense	7,263	4,685
Acquisition consideration reflected as compensation expense	(3,440)
Bargain purchase gain from acquisition		(3,015)
Restructuring costs		3,604
Provision for doubtful accounts	165	728
Loss on foreign currency translation	214	91
Provision for deferred tax liability	4,694	2,710
Changes in assets and liabilities, net of effects from acquisitions:
Increase in accounts receivable and unbilled revenue	(6,958)	(9,581)
Decrease (increase) in prepaid expenses and other assets	118	(503)
Decrease in accounts payable	(1,959)	(2,670)
Increase (decrease) in accrued expenses and other liabilities	5,459	(2,730)
Decrease in income tax payable	270	(1,772)
Net cash provided by operating activities	19,221	1,194
Cash flows from investing activities:
Purchases of property and equipment	(2,428)	(1,924)
Cash consideration paid for acquisition		(2,877)
Cash acquired in acquisition of business		522
Net cash used in investing activities	(2,428)	(4,279)
Cash flows from financing activities:
Proceeds from issuance of common stock	573	620
Proceeds from borrowings	2,500	10,500
Repayment of borrowings	(11,500)	(2,721)
Dividends paid	(3,067)
Purchases of common stock	(3,598)	(12,981)
Net cash used in financing activities	(15,092)	(4,582)
Effect of exchange rate on cash	29	20
Net increase (decrease) in cash and cash equivalents	1,730	(7,647)
Cash and cash equivalents at beginning of year	14,608	18,199
Cash and cash equivalents at end of period	16,338	10,552
Supplemental disclosure of cash flow information:
Cash paid for income taxes	260	687
Cash paid for interest	$ 292	$ 389

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Oct. 02, 2015	Jan. 02, 2015
Consolidated Balance Sheets [Abstract]
Accounts receivable and unbilled revenue, allowance	$ 1,211	$ 1,330
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,250,000	1,250,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	125,000,000	125,000,000
Common stock, shares issued	53,504,524	52,836,011
Treasury stock, at cost, shares	24,138,694	23,989,776

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Litigation

9 Months Ended

Oct. 02, 2015

Litigation [Abstract]

Litigation

10. Litigation

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

XML

Document and Entity Information - shares	9 Months Ended
	Oct. 02, 2015	Nov. 06, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	HACKETT GROUP, INC.
Entity Central Index Key	0001057379
Document Type	10-Q
Document Period End Date	Oct. 02, 2015
Amendment Flag	false
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--01-01
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		29,382,893

XML

Geographic And Group Information

9 Months Ended

Oct. 02, 2015

Geographic And Group Information [Abstract]

Geographic And Group Information

11. Geographic and Group Information

Revenue,which is primarily based on the country of the contracting entity and differs from the Company’s non-GAAP reporting, was attributed to the following geographical areas (in thousands):

	Quarter Ended				Nine Months Ended
	October 2,		September 26,		October 2,		September 26,
	2015		2014		2015		2014
Revenue:
North America	$	57,060	$	48,094	$	161,025	$	142,797
International (primarily European countries)		10,157		12,343		33,561		33,597
Total revenue	$	67,217	$	60,437	$	194,586	$	176,394

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

	October 2,		January 2,
	2015		2015
Long-lived assets:
North America	$	78,882	$	80,152
International (primarily European countries)		15,064		15,578
Total long-lived assets	$	93,946	$	95,730

As of October 2, 2015 and January 2, 2015, foreign assets included $14.5 million and $15.0 million, respectively, of goodwill related to the REL and Archstone acquisitions.  

In the following table, the Hackett Group service group encompasses Benchmarking, Business Transformation, Executive Advisory and EPM and EPM Application Maintenance and Support groups.  The ERP Solutions service group encompasses SAP ERP Technology and SAP Maintenancegroups (in thousands):

	Quarter Ended				Nine Months Ended
	October 2,		September 26,		October 2,		September 26,
	2015		2014		2015		2014
The Hackett Group	$	58,174	$	51,370	$	165,757	$	146,654
ERP Solutions		9,043		9,067		28,829		29,740
Total revenue	$	67,217	$	60,437	$	194,586	$	176,394

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Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Revenue:
Revenue before reimbursements ("net revenue")	$ 59,992	$ 54,550	$ 174,320	$ 158,968
Reimbursements	7,225	5,887	20,266	17,426
Total revenue	67,217	60,437	194,586	176,394
Cost of service:
Personnel costs before reimbursable expenses (includes $1,623 and $842 and $4,140 and $2,527 of stock compensation expense in the quarters and nine months ended October 2, 2015 and September 26, 2014, respectively)	37,854	35,142	110,412	104,753
Reimbursable expenses	7,225	5,887	20,266	17,426
Total cost of service	45,079	41,029	130,678	122,179
Selling, general and administrative costs (includes $2,068 and $814 and $3,123 and $2,158 of stock compensation expense in the quarters and nine months ended October 2, 2015 and September 26, 2014, respectively)	17,195	15,422	48,281	45,264
Bargain purchase gain from acquisition				(3,015)
Restructuring costs				3,604
Total costs and operating expenses	62,274	56,451	178,959	168,032
Income from operations	4,943	3,986	15,627	8,362
Other income (expense):
Interest income	1	2	3	4
Interest expense	(102)	(173)	(351)	(463)
Income from operations before income taxes	4,842	3,815	15,279	7,903
Income tax expense	1,784	879	5,525	1,734
Net income	$ 3,058	$ 2,936	$ 9,754	$ 6,169
Basic net income per common share:
Income per common share	$ 0.11	$ 0.10	$ 0.34	$ 0.21
Weighted average common shares outstanding	28,755,225	28,557,528	28,674,838	28,872,043
Diluted net income per common share:
Income per common share	$ 0.10	$ 0.10	$ 0.32	$ 0.21
Weighted average common and common equivalent shares outstanding	31,488,390	29,800,325	30,764,732	29,884,274

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Restructuring Costs

9 Months Ended

Oct. 02, 2015

Restructuring Costs [Abstract]

Restructuring Costs

5. Restructuring Costs

The Company recorded restructuring costs of $3.6 million during the quarter ended March 28, 2014, primarily for reductions in consultants and functional support personnel in Europe. These actions were taken as a result of the continued decline in demand in its European markets. The Company took steps to reduce its costs to better align its overall cost structure and organization with anticipated demand for its services.  

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

		Severance and Other
		Employee Costs
Accrual balance at January 2, 2015	$	270
Expenditures		(270)
Accrual balance at October 2, 2015	$	-

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Accrued Expenses And Other Liabilities

9 Months Ended

Oct. 02, 2015

Accrued Expenses And Other Liabilities [Abstract]

Accrued Expenses And Other Liabilities

4. Accrued Expenses and Other Liabilities

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

		October 2,		January 2,
		2015		2015
Accrued compensation and benefits	$	7,449	$	3,266
Accrued bonuses		9,578		7,682
Accrued restructuring related expenses		-		270
Deferred revenue		9,277		8,896
Accrued sales, use, franchise and VAT tax		2,110		1,977
Accrued Technolab earnout liability		-		3,440
Other accrued expenses		5,816		5,370
Total accrued expenses and other liabilities	$	34,230	$	30,901

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Restructuring Costs (Tables)

9 Months Ended

Oct. 02, 2015

Restructuring Costs [Abstract]

Summary Of Restructuring Expense Accruals

		Severance and Other
		Employee Costs
Accrual balance at January 2, 2015	$	270
Expenditures		(270)
Accrual balance at October 2, 2015	$	-

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Basis of Presentation and General Information (Policies)

9 Months Ended

Oct. 02, 2015

Basis of Presentation and General Information [Abstract]

Basis of Presentation

Basis of Presentation

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

In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments which are necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods presented. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended January 2, 2015, included in the Annual Report on Form 10-K filed by the Company with the SEC. The consolidated results of operations for the quarter and nine months ended October 2, 2015, are not necessarily indicative of the results to be expected for any future period or for the full fiscal year.

Use of Estimates

Use of Estimates

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

Fair Value

Fair Value

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable and unbilled revenue, accounts payable, accrued expenses and other liabilities and debt. As of October 2, 2015 and January 2, 2015, the carrying amount of each financial instrument, with the exception of debt, approximated the instrument’s respective fair value due to the short-term nature and maturity of these instruments.

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

Business Combinations

Business Combinations

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

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In May 2014, the FASB issued guidance on revenue recognition, which provides for a single, principles-based model for revenue recognition and replaces the existing revenue recognition guidance. The guidance is effective for annual and interim periods beginning on or after December 15, 2017 and will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective. It permits the use of either a retrospective or cumulative effect transition method.  Early adoption is permitted, but not before December 15, 2016.  The Company has not yet selected a transition method and is in the process of evaluating the effect this standard will have on its consolidated financial statements and related disclosures.

1. Basis of Presentation and General Information (continued)

In April 2015, the FASB issued amendments to ASU 2015-03, which are intended to simplify the balance sheet presentation of debt issuance costs.  These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts.  The recognition and measurement guidance for debt issuance costs are not affected by this update.  The amendments are effective for annual and interim periods beginning after December 15, 2015 and requires a retrospective transition method.  Early adoption is permitted for financial statements that have not been previously issued.   The Company does not expect the adoption to have a material impact on its consolidated financial statements.

Reclassifications

Reclassifications

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

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Stock Based Compensation

9 Months Ended

Oct. 02, 2015

Stock Based Compensation [Abstract]

Stock Based Compensation

8. Stock Based Compensation

During the nine months ended October 2, 2015, the Company issued 730,237 restricted stock units at a weighted average grant-date fair value of $8.36 per share. As of October 2, 2015, the Company had 2,185,728 restricted stock units outstanding at a weighted average grant-date fair value of $6.73 per share. As of October 2, 2015,  $8.1 million of total restricted stock unit compensation expense related to unvested awards had not been recognized and is expected to be recognized over a weighted average period of approximately 1.95 years.

During the quarter ended October 2, 2015, 483,051 shares of common stock subject to vesting requirements were granted for the settlement of the contingent earn-out consideration related to the 2014 acquisition of Technolab.  As of October 2, 2015, the Company had 747,525 shares of common stock subject to vesting requirements outstanding at a weighted average grant-date fair value of $8.77 per share. As of October 2, 2015,  $4.5 million of compensation expense related to common stock subject to vesting requirements had not been recognized and is expected to be recognized over a weighted average period of approximately 2.9 years.

On February 8, 2012, the Compensation Committee approved the fiscal year 2012 through 2015 equity compensation target for the Company’s Chief Executive Officer and Chief Operating Officer. Under this target, a single performance-based option grant was made to the Company’s Chief Executive Officer and the Chief Operating Officer of 1,912,500 options and 1,004,063 options, respectively, totaling 2,916,563 options, each with an exercise price of $4.00 and a fair value of $1.31.  One-half of the options would have vested upon the achievement of at least 50% growth of pro forma earnings per share and the remaining half would have vested upon the achievement of at least 50% pro forma EBITDA growth. Each metric could have been achieved at any time during the six-year term of the award based on a trailing twelve month period measured quarterly. The grants would have expired if neither target were achieved during the six-year term. The base year for the performance calculation was fiscal 2011 for both pro forma earnings per share and pro forma EBITDA performance targets.

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

Subsequent to year end 2014, in connection with the Company’s achievement of over 50% growth of pro forma net earnings per share since fiscal 2011 base year and upon the approval of the Audit Committee’s review of the Company’s 2014 financial statements and Annual Report on Form 10-K, 50% of the outstanding SARs awards granted to the CEO and COO became vested. In the third quarter of 2015, the Company recorded $1.3 million of compensation expense related to the SARs awards tied to the pro forma EBITDA performance target, which represented 50% of the total non-cash compensation expense assuming the awards fully vest. These awards have not yet vested. 

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Credit Facility

9 Months Ended

Oct. 02, 2015

Credit Facility [Abstract]

Credit Facility

6. Credit Facility

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

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

· Provide for up to an additional $17.0 million of borrowing under the Term Loan (the "Amended Term Loan" and together with the Revolver, the "Credit Facility"). As of October 2, 2015, the Company had $9.3 million principal amount outstanding on the Amended Term Loan and no outstanding balance on the Revolver.

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

The Amended Term Loan was used to finance the Company’s $6.9 million tender offer for its shares in October 2013.

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

The interest rates per annum applicable to loans under the Credit Facility will be, at the Company’s option, equal to either a base rate or a LIBOR base rate, plus an applicable margin percentage. The applicable margin percentage is based on the consolidated leverage ratio, as defined in the Credit Agreement. As of October 2, 2015, the applicable margin percentage was 1.50% per annum based on the consolidated leverage ratio, in the case of LIBOR rate advances, and 0.75% per annum, in the case of base rate advances.

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

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Acquisition

9 Months Ended

Oct. 02, 2015

Acquisition [Abstract]

Acquisition

7. Acquisition

During the quarter ended March 28, 2014, the Company acquired the U.S., Canada and Uruguay operations of Technolab International Corporation ("Technolab").

At closing, the Seller received $3.0 million in cash, not subject to vesting, and $1.0 million in shares subject to vesting, which is being recorded as non-cash compensation over the service vesting period.  The seller also had the ability to earn an additional $8.0 million in a combination of cash, not subject to service vesting, and stock, subject to service vesting, based on a one-year profitability-based earn-out contingent upon actual results achieved.  The entire cash portion of the earn-out was recorded as compensation expense in 2014, of which $0.9 million and $2.6 million was recorded in the third quarter and first nine months of 2014, respectively. The stock portion of the earn-out is being recorded as compensation expense over the service vesting period. During the third quarter of 2015, the Company settled the contingent earn-out with cash and stock issuances in accordance with the agreement.

The purchase accounting resulted in a bargain purchase gain of $3.0 million on the acquisition and intangible assets with definite lives of $7.7 million which will be amortized over periods ranging from 2 years to 5 years.

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Shareholders' Equity

9 Months Ended

Oct. 02, 2015

Shareholders' Equity [Abstract]

Shareholders' Equity

9. Shareholders’ Equity

         Treasury Stock

Under the Company’s share repurchase plan, the Company may buy back shares of its outstanding stock either on the open market or through privately negotiated transactions subject to market conditions and trading restrictions. During the nine months ended October 2, 2015, the Company repurchased approximately 149 thousand shares of its common stock at an average price of $9.10 per share for a total cost of approximately $1.4 million.   The shares repurchased under the share repurchase plan during the nine months ended October 2, 2015, do not include 281 thousand shares for a cost of $2.2 million that the Company bought back to satisfy employee net vesting obligations.   During the quarter ended October 2, 2015, the Company bought back 5 thousand shares at a cost of $65 thousand to satisfy employee net vesting obligations and no shares were repurchased under the share repurchase plan.  As of October 2, 2015, the Company had approximately $2.3 million available under its share repurchase plan authorization.

During the quarter ended September 26, 2014, the Company repurchased approximately 485 thousand shares of its common stock at an average price of $6.13 per share for a total cost of approximately $3.0 million under the share repurchase plan. During the nine months ended September 26, 2014, the Company repurchased approximately 1.7 million shares of its common stock at an average price of $6.07 per share for a total cost of approximately $10.3 million under the share repurchase plan.  The shares repurchased during the quarter and nine months ended September 26, 2014, do not include2 thousand shares at a cost of $12 thousand and 446 thousand shares at a cost of $2.7 million, respectively, that the Company bought back to satisfy employee net vesting obligations.

Dividend Program

During the quarter ended October 2, 2015, the Company paid its first semi-annual dividend of $0.10 per share totaling $3.1 million to shareholders on record as of June 29, 2015. Subsequent to the quarter ended October 2, 2015, the Company declared its second semi-annual dividend of $0.10 per share for holders of record on December 28, 2015. The dividend will be paid on January 8, 2016.

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Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014	Oct. 03, 2015
Equity, Class of Treasury Stock [Line Items]
Purchase price per share		$ 6.13		$ 6.07
Repurchase of common stock	0	485,000		1,700,000
Total cost		$ 3,000		$ 10,300
Amount available under repurchase plan	$ 2,300		$ 2,300
Dividend paid, per share	$ 0.10
Dividend paid, cash value	$ 3,100
Shares repurchased for employee net vesting obligations, shares	5,000	2,000	281,000	446,000
Shares repurchased for employee net vesting obligations, value	$ 65	$ 12	$ 2,200	$ 2,700
Stock Repurchase A [Member]
Equity, Class of Treasury Stock [Line Items]
Purchase price per share			$ 9.10
Repurchase of common stock			149,000
Total cost			$ 1,400
Subsequent Event [Member]
Equity, Class of Treasury Stock [Line Items]
Dividend declared					$ 0.10

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Accounts Receivable And Unbilled Revenue, Net (Tables)

9 Months Ended

Oct. 02, 2015

Accounts Receivable And Unbilled Revenue, Net [Abstract]

Accounts Receivable And Unbilled Revenue, Net

	October 2,		January 2,
	2015		2015
Accounts receivable	$	35,643	$	28,154
Unbilled revenue		9,561		10,597
Allowance for doubtful accounts		(1,211)		(1,330)
Accounts receivable and unbilled revenue, net	$	43,993	$	37,421

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Net Income Per Common Share (Basic And Diluted Weighted Average Shares) (Details) - shares	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Net Income Per Common Share [Abstract]
Basic weighted average common shares outstanding	28,755,225	28,557,528	28,674,838	28,872,043
Unvested restricted stock units and common stock subject to vesting requirements issued to employees and non-employees	1,919,882	1,232,971	1,419,441	1,002,642
Common stock issuable upon the exercise of stock options	813,283	9,826	670,454	9,589
Diluted weighted average common shares outstanding	31,488,390	29,800,325	30,764,732	29,884,274

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Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share based compensation			$ 7,263	$ 4,685
Cost of Sales [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share based compensation	$ 1,623	$ 842	4,140	2,527
Selling General and Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total share based compensation	$ 2,068	$ 814	$ 3,123	$ 2,158

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Accounts Receivable And Unbilled Revenue, Net

9 Months Ended

Oct. 02, 2015

Accounts Receivable And Unbilled Revenue, Net [Abstract]

Accounts Receivable And Unbilled Revenue, Net

3. Accounts Receivable and Unbilled Revenue, Net

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

	October 2,		January 2,
	2015		2015
Accounts receivable	$	35,643	$	28,154
Unbilled revenue		9,561		10,597
Allowance for doubtful accounts		(1,211)		(1,330)
Accounts receivable and unbilled revenue, net	$	43,993	$	37,421

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

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Accounts Receivable And Unbilled Revenue, Net (Details) - USD ($) $ in Thousands	Oct. 02, 2015	Jan. 02, 2015
Accounts Receivable And Unbilled Revenue, Net [Abstract]
Accounts receivable	$ 35,643	$ 28,154
Unbilled revenue	9,561	10,597
Allowance for doubtful accounts	(1,211)	(1,330)
Accounts receivable and unbilled revenue, net	$ 43,993	$ 37,421

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Geographic And Group Information (Revenue By Service Group) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2015	Sep. 26, 2014	Oct. 02, 2015	Sep. 26, 2014
Segment Reporting Information [Line Items]
Total revenue	$ 67,217	$ 60,437	$ 194,586	$ 176,394
The Hackett Group [Member]
Segment Reporting Information [Line Items]
Total revenue	58,174	51,370	165,757	146,654
ERP Solutions [Member]
Segment Reporting Information [Line Items]
Total revenue	$ 9,043	$ 9,067	$ 28,829	$ 29,740

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Net Income Per Common Share (Tables)

9 Months Ended

Oct. 02, 2015

Net Income Per Common Share [Abstract]

Basic And Diluted Weighted Average Shares

	Quarter Ended		Nine Months Ended
	October 2,	September 26,	October 2,		September 26,
	2015	2014	2015		2014
Basic weighted average common shares outstanding	28,755,225	28,557,528		28,674,838		28,872,043
Effect of dilutive securities:
Unvested restricted stock units and common stock subject to
vesting requirements issued to employees and non-employees	1,919,882	1,232,971		1,419,441		1,002,642
Common stock issuable upon the exercise of stock options	813,283	9,826		670,454		9,589
Dilutive weighted average common shares outstanding	31,488,390	29,800,325		30,764,732		29,884,274