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~~ Yes☒ NO 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~~ Yes☒ NO No☐

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

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

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ~~YES NO~~ 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 ~~1, 2017,~~5, 2021, there were ~~28,656,338~~29,792,171 shares of common stock outstanding.

	September 29,			December 30,			October 1,			January 1,
	2017			2016			2021			2021
ASSETS
Current assets:
Cash	$	16,226		$	19,710		$	52,939		$	49,455
Accounts receivable and unbilled revenue, net of allowance of $2,686 and $2,574 at September 29, 2017 and December 30, 2016, respectively		55,552			47,399
Accounts receivable and contract assets, net of allowance of $1,930 and $605 at October 1, 2021 and January 1, 2021, respectively								49,609			32,778
Prepaid expenses and other current assets		2,897			1,704			3,168			2,599
Total current assets		74,675			68,813			105,716			84,832

Property and equipment, net		17,854			14,774			17,853			18,158
Other assets		4,679			3,336			840			1,680
Goodwill, net		84,966			72,376
Goodwill								85,089			85,297
Operating lease right-of-use assets								1,862			2,578
Total assets	$	182,174		$	159,299		$	211,360		$	192,545

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,597		$	9,089		$	5,027		$	6,098
Accrued expenses and other liabilities		35,971			46,725			35,615			25,084
Contract liabilities (deferred revenue)								11,959			8,765
Operating lease liabilities								2,338			2,620
Total current liabilities		44,568			55,814			54,939			42,567
Non-current accrued expenses and other liabilities		6,936			—
Long-term deferred tax liability, net		10,591			10,216
Long-term debt		22,000			7,000
Non-current deferred tax liability, net								5,950			5,588
Operating lease liabilities								1,962			3,503
Total liabilities		84,095			73,030			62,851			51,658

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; 55,600,776 and 54,785,193 shares issued at September 29, 2017 and December 30, 2016, respectively		57			55
Preferred stock, $0.001 par value, 1,250,000 shares authorized; NaN issued and outstanding								—			—
Common stock, $0.001 par value, 125,000,000 shares authorized; 58,127,763 and 57,600,158 shares issued at October 1, 2021 and January 1, 2021, respectively								58			58
Additional paid-in capital		284,628			277,100			317,734			312,039
Treasury stock, at cost, 26,945,776 and 26,197,981 shares September 29, 2017 and December 30, 2016, respectively		(134,053	)		(122,756	)
Treasury stock, at cost, 28,346,796 and 27,609,752 shares October 1, 2021 and January 1, 2021, respectively								(157,070	)		(144,254	)
Accumulated deficit		(43,301	)		(56,581	)		(2,037	)		(17,388	)
Accumulated comprehensive loss		(9,252	)		(11,549	)
Accumulated other comprehensive loss								(10,176	)		(9,568	)
Total shareholders' equity		98,079			86,269			148,509			140,887
Total liabilities and shareholders' equity	$	182,174		$	159,299		$	211,360		$	192,545

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

	Quarter Ended						Nine Months Ended
	October 1,			September 25,			October 1,			September 25,
	2021			2020			2021			2020
Revenue:
Revenue before reimbursements	$	71,400		$	57,769		$	207,807			175,587
Reimbursements		494			148			770			4,614
Total revenue		71,894			57,917			208,577			180,201
Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses		43,552			37,801			124,323			117,597
Stock compensation expense		1,670			1,751			5,296			5,204
Reimbursable expenses		494			148			770			4,614
Total cost of service		45,716			39,700			130,389			127,415
Selling, general and administrative costs		13,872			12,979			41,198			38,765
Stock compensation expense		901			711			2,515			1,830
Restructuring costs		—			—			—			5,034
Total costs and operating expenses		60,489			53,390			174,102			173,044
Income from operations		11,405			4,527			34,475			7,157

Other expense:
Interest expense		(26	)		(22	)		(76	)		(100	)
Income from operations before income taxes		11,379			4,505			34,399			7,057
Income tax expense		3,248			1,362			9,368			2,312
Income from continuing operations		8,131			3,143			25,031			4,745
Loss from discontinued operations		—			(157	)		(7	)		(165	)
Net income	$	8,131		$	2,986		$	25,024		$	4,580

Basic net income per common share:
Income per common share from continuing operations	$	0.27		$	0.11		$	0.83		$	0.16
Loss per common share from discontinued operations	(0.00)				(0.01	)		(0.00	)		(0.01	)
Net income per common share	$	0.27		$	0.10		$	0.83		$	0.15

Diluted net income per common share:
Income per common share from continuing operations	$	0.25		$	0.10		$	0.76		$	0.15
Loss per common share from discontinued operations	(0.00)				(0.01	)		(0.00	)		(0.01	)
Net income per common share	$	0.25		$	0.09		$	0.76		$	0.14

Weighted average common shares outstanding:
Basic		29,814			30,053			30,038			29,986
Diluted		32,876			32,403			32,871			32,335

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

Quarter Ended

Nine Months Ended

September 29,

September 30,

September 29,

September 30,

2017

2016

2017

2016

Revenue:

Revenue before reimbursements

$
65,947

66,810

$
198,742

196,961

Reimbursements

5,515

7,308

17,719

21,548

Total revenue

71,462

74,118

216,461

218,509

Costs and expenses:

Cost of service:

Personnel costs before reimbursable expenses (includes $1,876 and $1,450 and $5,160 and $4,216 of stock compensation expense in the quarters and nine months ended September 29, 2017 and September 30, 2016, respectively)

42,302

42,071

127,108

125,082

Reimbursable expenses

5,515

7,308

17,719

21,548

Total cost of service

47,817

49,379

144,827

146,630

Selling, general and administrative costs (includes $894 and $793 and $2,427 and $2,251 of stock compensation expense in the quarters and nine months ended September 29, 2017 and September 30, 2016, respectively)

15,771

15,732

48,039

46,994

Restructuring costs

—

—

1,293

—

Total costs and operating expenses

63,588

65,111

194,159

193,624

Income from operations

7,874

9,007

22,302

24,885

Other expense:

Interest expense

(184
)

(137
)

(401
)

(288
)
Income from operations before income taxes

7,690

8,870

21,901

24,597

Income tax expense

2,401

3,382

3,988

9,281

Net income

$
5,289

$
5,488

$
17,913

$
15,316

Basic net income per common share:

Income per common share from operations

$
0.18

$
0.19

$
0.62

$
0.52

Weighted average common shares outstanding

28,765

28,579

28,891

29,251

Diluted net income per common share:

Income per common share from operations

$
0.17

$
0.17

$
0.56

$
0.47

Weighted average common and common equivalent shares outstanding

31,958

32,375

32,254

32,870

	Nine Months Ended
	October 1,			September 25,
	2021			2020
Cash flows from operating activities:
Net income	$	25,024		$	4,580
Plus net loss from discontinued operations		7			165
Net income from continuing operations		25,031			4,745
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		2,552			2,600
Amortization expense		783			723
Amortization of debt issuance costs		33			58
Non-cash stock compensation expense		7,811			7,034
Provision for doubtful accounts		168			413
Gain on foreign currency translation		(62	)		(165	)
Deferred income tax expense (benefit)		300			(417	)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable and contract assets		(17,061	)		13,248
Decrease (increase) in prepaid expenses and other assets		253			(328	)
Decrease in accounts payable		(1,071	)		(3,449	)
Increase in accrued expenses and other liabilities and operating lease liabilities		1,572			6,257
Increase in contract liabilities (deferred revenue)		3,194			409
Increase in income tax payable		2,973			193
Net cash provided by operating activities		26,469			31,156
Cash flows from investing activities:
Purchases of property and equipment		(2,255	)		(1,498	)
Net cash used in investing activities		(2,255	)		(1,498	)
Cash flows from financing activities:
Proceeds from ESPP		391			374
Debt issuance costs					(21	)
Dividends paid		(6,481	)		(8,854	)
Repurchase of common stock		(14,614	)		(4,025	)
Net cash used in financing activities		(20,704	)		(12,526	)
Effect of exchange rate on cash		(26	)		81
Net increase in cash and cash equivalents		3,484			17,213
Cash at beginning of period		49,455			25,954
Cash at end of period	$	52,939		$	43,167
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	6,371		$	2,385
Cash paid for interest	$	43		$	43

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

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

Nine Months Ended

September 29,

September 30,

2017

2016

Cash flows from operating activities:

Net income

$
17,913

$
15,316

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation expense

1,841

1,875

Amortization expense

1,475

825

Amortization of debt issuance costs

68

84

Non-cash stock compensation expense

7,588

6,467

Provision (reversal) for doubtful accounts

142

(11
)
Loss (gain) on foreign currency translation

530

(566
)
Release of valuation allowance

1,815

2,590

Changes in assets and liabilities:

Increase in accounts receivable and unbilled revenue

(4,935
)

(5,474
)
Increase in prepaid expenses and other assets

(1,172
)

(405
)
Decrease in accounts payable

(902
)

(2,090
)
Decrease in accrued expenses and other liabilities

(3,938
)

(10
)
(Decrease) increase in income tax payable

(1,474
)

2,211

Net cash provided by operating activities

18,951

20,812

Cash flows from investing activities:

Purchases of property and equipment

(4,919
)

(2,068
)
Cash consideration paid for acquisitions

(9,268
)

—

Cash acquired in acquisitions

261

—

Net cash used in investing activities

(13,926
)

(2,068
)

Cash flows from financing activities:

Proceeds from ESPP

562

519

Proceeds from borrowings

26,000

30,000

Repayment of borrowings

(11,000
)

(17,000
)
Debt issuance costs

—

(237
)
Dividends paid

(8,670
)

(7,163
)
Exercise of stock options

200

—

Repurchase of common stock

(15,598
)

(33,976
)
Net cash used in financing activities

(8,506
)

(27,857
)

Effect of exchange rate on cash

(3
)

(30
)

Net decrease in cash and cash equivalents

(3,484
)

(9,143
)
Cash at beginning of period

19,710

23,503

Cash at end of period

$
16,226

$
14,360

Supplemental disclosure of cash flow information:

Cash paid for income taxes

$
3,696

$
4,473

Cash paid for interest

$
292

$
187

Supplemental disclosure of non-cash acquisition financing activities:

Shares issued to sellers of Jibe Consulting

$
3,600,000

$
—

																	Accumulated
					Additional												Other			Total
	Common Stock				Paid in			Treasury Stock						Accumulated			Comprehensive			Shareholders'
	Shares		Amount		Capital			Shares			Amount			Deficit			Loss			Equity
Balance at January 1, 2021		57,693	$	58	$	312,039			(27,609	)	$	(144,254	)	$	(17,388	)	$	(9,568	)	$	140,887
Issuance of common stock		294		—		(1,605	)		—			—			—			—			(1,605	)
Treasury stock purchased		—		—		—			(136	)		(2,110	)		—			—			(2,110	)
Amortization of restricted stock units and common stock subject to vesting requirements		—		—		2,633			—			—			—			—			2,633
Dividends declared		—		—		—			—			—			(3,254	)		—			(3,254	)
Net income		—		—		—			—			—			6,361			—			6,361
Foreign currency translation		—		—		—			—			—			—			269			269
Balance at April 2, 2021		57,987	$	58	$	313,067			(27,745	)	$	(146,364	)	$	(14,281	)	$	(9,299	)	$	143,181
Issuance of common stock		73		—		354			—			—			—			—			354
Treasury stock purchased		—		—		—			(489	)		(8,603	)		—			—			(8,603	)
Amortization of restricted stock units and common stock subject to vesting requirements		—		—		2,258			—			—			—			—			2,258
Dividends declared		—		—		—			—			—			(3,227	)		—			(3,227	)
Net income		—		—		—			—			—			10,532			—			10,532
Foreign currency translation		—		—		—			—			—			—			(132	)		(132	)
Balance at July 2, 2021		58,060	$	58	$	315,679			(28,234	)	$	(154,967	)	$	(6,976	)	$	(9,431	)	$	144,363
Issuance of common stock		67		—		(156	)		—			—			—			—			(156	)
Treasury stock purchased		—		—		—			(113	)		(2,103	)		—			—			(2,103	)
Amortization of restricted stock units and common stock subject to vesting requirements		—		—		2,211			—			—			—			—			2,211
Dividends declared		—		—		—			—			—			(3,192	)		—			(3,192	)
Net income		—		—		—			—			—			8,131			—			8,131
Foreign currency translation		—		—		—			—			—			—			(745	)		(745	)
Balance at October 1, 2021		58,127	$	58	$	317,734			(28,347	)	$	(157,070	)	$	(2,037	)	$	(10,176	)	$	148,509

					Additional												Other			Total
	Common Stock				Paid in			Treasury Stock						Accumulated			Comprehensive			Shareholders'
	Shares		Amount		Capital			Shares			Amount			Deficit			Loss			Equity
Balance at December 27, 2019		57,181	$	58	$	303,707			(27,425	)	$	(141,887	)	$	(13,714	)	$	(10,550	)	$	137,614
Issuance of common stock		291		—		(1,962	)		—			—			—			—			(1,962	)
Treasury stock purchased		—		—		—			(73	)		(1,006	)		—			—			(1,006	)
Amortization of restricted stock units and common stock subject to vesting requirements		—		—		2,469			—			—			—			—			2,469
Dividends declared		—		—		—			—			—			(13	)		—			(13	)
Net income		—		—		—			—			—			5,527			—			5,527
Foreign currency translation		—		—		—			—			—			—			(1,830	)		(1,830	)
Balance at March 27, 2020		57,472	$	58	$	304,214			(27,498	)	$	(142,893	)	$	(8,200	)	$	(12,380	)	$	140,799
Issuance of common stock		75		—		359			—			—			—			—			359
Amortization of restricted stock units and common stock subject to vesting requirements		—		—		2,362			—			—			—			—			2,362
Dividends declared		—		—		—			—			—			(3,050	)		—			(3,050	)
Net loss		—		—		—			—			—			(3,933	)		—			(3,933	)
Foreign currency translation		—		—		—			—			—			—			44			44
Balance at June 26, 2020		57,547	$	58	$	306,935			(27,498	)	$	(142,893	)	$	(15,183	)	$	(12,336	)	$	136,581
Issuance of common stock		13		—		(109	)		—			—			—			—			(109	)
Treasury stock purchased		—		—		—			(75	)		(932	)		—			—			(932	)
Amortization of restricted stock units and common stock subject to vesting requirements		—		—		2,238			—			—			—			—			2,238
Dividends declared		—		—		—			—			—			(3,024	)		—			(3,024	)
Net income		—		—		—			—			—			2,986			—			2,986
Foreign currency translation		—		—		—			—			—			—			907			907
Balance at September 25, 2020		57,560	$	58	$	309,064			(27,573	)	$	(143,825	)	$	(15,221	)	$	(11,429	)	$	138,647

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

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 fiscal year ended ~~December 30, 2016,~~January 1, 2021, included in the Annual Report on Form 10-K filed by the Company with the SEC on March ~~10, 2017.~~12, 2021. The consolidated results of operations for the quarter and nine months ended ~~September 29, 2017,~~October 1, 2021, are not necessarily indicative of the results to be expected for any future period or for the full fiscal year.

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.

The Company’s revenue is substantially generated from providing professional services to its clients. The Company also generates revenue from software sales, software support, maintenance and subscriptions to its executive and best practices advisory programs. A single contract could include one or multiple performance obligations. For those contracts that have multiple performance obligations, the Company allocates the total transaction price to each performance obligation based on its relative standalone selling price. The Company determines the standalone selling price based on the respective selling price of the individual elements when they are sold separately.

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

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

The Company generates its revenue under four types of arrangements: fixed-fee; time-and-materials; executive and best practice advisory services; and software sales, maintenance and support.

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

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

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

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

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

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

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

Differences between the timing of billings and the recognition of revenue are recognized as either contract assets (unbilled revenue) or contract liabilities (deferred revenue) in the accompanying consolidated balance sheets. Revenue recognized for services performed but not yet billed to clients or for which are not yet entitled to bill because certain events, such as the completion of the measurement period, are recorded as contract assets. Client prepayments are classified as contract liabilities and recognized over future periods as earned in accordance with the applicable engagement agreement. See Note 3 for the accounts receivable and contract asset balances. During the quarter and nine months ended October 1, 2021, the Company recognized $1.7 million and $7.7 million, respectively, of revenue as a result of changes in the contract liability balance, as compared to $6.0 million and $15.8 million for the quarter and nine months ended September 25, 2020, respectively.

The following table reflects the Company’s disaggregation of total revenue including reimbursable expenses for the quarters and nine months ended October 1, 2021 and September 25, 2020:

Sales commissions earned by the Company’s sales force are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized as project revenue is recognized. We determined the period of amortization by taking into consideration the customer contract period, which are generally less than 12 months. Commission expense is included in Selling, General and Administrative Costs in the accompanying consolidated statements of operations. As of January 1, 2021, and December 27, 2019, the Company had $1.5 million and $1.6 million, respectively, of deferred commissions, of which $0.2 million and $0.8 million was amortized during the quarter and nine months ended October 1, 2021, respectively, and $0.3 million and $1.2 million for the same periods in 2020, respectively. NaN impairment loss was recognized relating to the capitalization of deferred commission.

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

The Company’s financial instruments consist of cash, ~~and cash equivalents,~~ accounts receivable and ~~unbilled revenue,~~contract assets, accounts payable, accrued expenses and other liabilities and ~~debt.~~contract liabilities. As of ~~September 29, 2017~~October 1, 2021 and ~~December 30, 2016,~~January 1, 2021, the carrying amount of each financial instrument approximated the instrument’s respective fair value due to the short-term nature and maturity of these instruments.

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

The level of revenue the Company achieves is based on the Company’s ability to deliver market leading services and solutions and to deploy skilled teams of professionals quickly. The Company’s results of operations are affected by economic conditions, including macroeconomic conditions and levels of business confidence. Despite the disruption beginning in March 2020, the COVID-19 pandemic did not have a significant impact on the Company’s consolidated results of operations during the first quarter of 2020. However, net revenue and diluted earnings per share were negatively impacted for the remainder of 2020, due to adverse economic conditions as a result of the COVID-19 pandemic. In the first three quarters of 2021, the Company’s net revenue and diluted earnings per share grew when compared to the fourth quarter of 2020 reflecting a continuation of improved economic conditions. However, any reversal of these trends or a prolonged economic downturn as a result of the impact of COVID-19 variants or otherwise, weak or uncertain economic conditions or similar factors could adversely affect the Company’s clients’ financial condition which may further reduce the clients’ demand for the Company’s services.

The Company ~~applies the provisions of ASC 805, Business Combinations, in the accounting for~~continues to actively manage 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 assumptionsbusiness 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~~respond 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~~the COVID-19 pandemic. At the onset of the pandemic the Company reduced employee headcount and restricted employee travel to only essential business needs. While headcount has increased and some select non-essential travel is ~~included~~being allowed, most of the Company’s employees continue to work remotely from home. The Company is generally following the requirements, recommendations and protocols published by the U.S. Centers for Disease Control and the World Health Organization, and state and local governments.

As a response to the ongoing COVID-19 pandemic, the Company implemented plans to manage its costs and preserve cash at the onset of the pandemic. The Company significantly limited the addition of new employees and third party contracted services, eliminated all travel except where necessary to meet customer needs, and limited discretionary spending. At the end of June 2020, the Company reduced its global workforce by approximately 10% and recorded a $5.0 million restructuring charge. During the fourth quarter of 2020, as a result of and in consideration of the COVID-19 pandemic, and the changing nature of its use of office space for its workforce, the Company evaluated its existing office leases as part of the Company’s transformation initiatives related to real estate. This evaluation resulted in the ~~consolidated statements~~complete and partial abandonment of ~~operations.~~certain leased office spaces and an asset impairment charge of $3.9 million for certain lease right-of-use assets and certain property, equipment and leasehold improvements. All client concessions and accounts receivable allowances have been appropriately reflected in our financial statements. To the extent that economic conditions do not continue to improve and our business is again disrupted, the reinstatement of cost management actions will be considered. Future asset impairment charges, increases in allowance for doubtful accounts, or restructuring charges will be dependent on the severity and duration of the COVID-19 pandemic.

In ~~May 2014,~~light of the ~~Financial Accounting Standards Board (“FASB”) issued guidance~~evolving health, social, economic and business environment, governmental regulations or mandates, and business disruptions that could occur, the potential impact that the COVID-19 pandemic could have on ~~revenue recognition, which provides for a single, principles-based model for revenue recognition~~the Company’s financial condition and ~~replaces~~operating results in 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 and early adoption is permitted, however not before December 15, 2016.future remain uncertain.

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2019-12, which enhances and simplifies various aspects of income tax accounting guidance. Among other things, the amendment removes the year-to-date loss limitation in interim period tax accounting and requires entities to reflect the effect of an ~~initial assessment of~~enacted change in tax laws in the ~~impact~~interim period that includes the enactment date of the new ~~guidance on its existing revenue recognition policies and plans to adopt the rule on December 30, 2017, using the cumulative effect method of adoption.~~legislation. The ~~guidance requires significantly expanded disclosures around the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, which the Company~~standard is currently compiling. While the Company has not fully completed its assessment of the impact of the standard, based on the analysis completed to date, the Company does not currently anticipate that the new rule will have a material impact on its consolidated financial statements.

In February 2016, the FASB issued guidance on leases which supersedes the current lease guidance. The core principle requires lessees to recognize the assets and liabilities that arise from nearly all leases on the balance sheet. Accounting applied by lessors will remain largely consistent with previous guidance. The amendments are effective for fiscal years beginning after December 15, ~~2018, including~~2020, and interim periods within those fiscal years. ~~Early~~The adoption ~~is permitted. The Company is assessing the impact of this standard on its consolidated financial statements and related disclosures.~~

In March 2016, the FASB issued guidance simplifying the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities and classification on the statements of cash flows. Under the new standard, all excess tax benefits and tax deficiencies should be recognized as income tax expense or benefit on the statements of income. An excess income tax benefit arises when the tax deduction of a share-based award for income tax purposes exceeds the compensation cost recognized for financial reporting purposes and, a tax deficiency arises when the compensation cost exceeds the tax deduction. Under current GAAP, excess tax benefits are recognized as additional paid-in capital while tax deficiencies are recognized either as an offset to accumulated excess tax benefits, if any, or on the statements of income.

Management adopted the guidance effective December 31, 2016. As a result of the adoption of this guidance, management made an accounting policy election to recognize the effect of forfeitures in compensation cost when they occur, which had an immaterial impact on results of operations and financial position and no impact on cash flows at adoption. In the first quarter of 2017, the Company recorded no income tax expense as a result of the adoption of the new guidance relating to the accounting on the vesting of share-based awards. Excluding the effect of the new guidance, the effective tax rate would have been 34% for certain federal, foreign and state taxes during the nine months ended September 29, 2017.

In August 2016, the FASB issued guidance on the classification of certain cash receipts and cash payments. The guidance provides specific clarification on eight cash flow classification issues, including contingent consideration payments made after a business combination. The guidance is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted and the guidance requires a retrospective transition. We dodid not ~~expect the guidance to~~ have a material impact on ~~our~~the Company’s consolidated financial statements.

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

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

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

	Quarter Ended				Nine Months Ended				Quarter Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,		October 1,		September 25,		October 1,		September 25,
	2017		2016		2017		2016		2021		2020		2021		2020
Basic weighted average common shares outstanding		28,764,661		28,579,237		28,891,301		29,251,459		29,813,530		30,053,457		30,038,249		29,985,879

Effect of dilutive securities:
Unvested restricted stock units and common stock subject to vesting requirements issued to employees and non-employees		928,103		1,472,927		1,008,159		1,327,491		625,680		204,747		460,058		142,223
Common stock issuable upon the exercise of stock options and SARs		2,264,901		2,323,333		2,354,767		2,291,271		2,436,600		2,145,238		2,373,075		2,206,450
Dilutive weighted average common shares outstanding		31,957,665		32,375,498		32,254,227		32,870,220		32,875,810		32,403,442		32,871,382		32,334,552

Approximately ~~0.9 million and 0.8 million~~2 thousand shares of common stock equivalents were excluded from the computations of diluted net income per common share for both the quarter and nine months ended October 1, 2021, as compared to 9 thousand shares and 14 thousand shares for the quarter and nine months ended September ~~29, 2017,~~25, 2020, respectively, as ~~compared to 0.8 million and 0.9 million for the same periods in 2016, as their~~ inclusion would have had an anti-dilutive effect on diluted net income per common share.

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

	September 29,			December 30,			October 1,			January 1,
	2017			2016			2021			2021
Accounts receivable	$	39,614		$	39,335		$	30,755		$	23,898
Unbilled revenue		18,624			10,638
Contract assets (unbilled revenue)								20,784			9,485
Allowance for doubtful accounts		(2,686	)		(2,574	)		(1,930	)		(605	)
Accounts receivable and unbilled revenue, net	$	55,552		$	47,399
Accounts receivable and contract assets, net							$	49,609		$	32,778

Accounts receivable is net of uncollected advanced billings. ~~Unbilled~~Contract assets represents revenue ~~includes recognized recoverable costs and accrued profits on contracts~~ for ~~which billings had~~services performed that have not yet been ~~presented to clients.~~invoiced.

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

	September 29,		December 30,		October 1,		January 1,
	2017		2016		2021		2021
Accrued compensation and benefits	$	10,062	$	4,412	$	7,794	$	6,696
Deferred employer's payroll taxes						1,781		3,560
Accrued bonuses		3,318		13,038		11,369		4,767
Accrued dividend payable		—		4,023		3,206		-
Deferred revenue		11,959		10,975
Restructuring liability						825		2,292
Accrued sales, use, franchise and VAT tax		2,647		3,791		1,398		2,550
Non-cash stock compensation accrual		2,507		4,225		1,005		295
Income tax payable		2,953		4,437		5,218		2,308
Other accrued expenses		2,525		1,824		3,019		2,616
Total accrued expenses and other liabilities	$	35,971	$	46,725	$	35,615	$	25,084

~~In the prior quarter ended June 30, 2017,~~During 2020, the Company recorded restructuring costs of ~~$1.3~~$10.5 million, of which $5.7 million was primarily related to the ~~transition~~reduction of ~~resources driven by our migration from on-premise software to cloud-based implementations, as well as the Jibe acquisition,~~staff in Europe and ~~the rationalization of global resources as a result of the emergence of RPA (“Robotic Process Automation”) related engagements from the Aecus acquisition.~~Australia. As of ~~September 29, 2017,~~October 1, 2021, the Company ~~did not have any~~had $825 thousandof remaining commitments related to ~~restructuring.~~the restructuring charge.

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

The Company has operating leases for office space and, to a much lesser extent, operating leases for equipment. The Company’s office leases are between terms of 1 year and 4 years. Rents usually increase annually in accordance with defined rent steps or are based on current year consumer price index adjustments. Some of the lease agreements contain one or more of the following provisions: tenant allowances, rent holidays, lease premiums, and rent escalation clauses. There are typically no purchase options, residual value guarantees or restrictive covenants. When renewal options exist, the Company generally does not deem them to be reasonably certain to be exercised, and therefore the amounts are not recognized as part of the lease liability nor the right of use asset.

The components of lease expense were as follows for the nine months ended October 1, 2021 (in thousands):

The weighted average remaining lease term is 2.2 years. The weighted average discount rate utilized is 4%. The discount rates applied to each lease, reflects the Company’s estimated incremental borrowing rate. This includes an assessment of the Company’s credit rating to determine the rate that the Company would have to pay to borrow, on a collateralized basis for a similar term, an amount equal to our lease payments in a similar economic environment. For the quarter and nine months ended October 1, 2021, the Company paid $0.6 million and $1.9 million, respectively, from operating cash flows for its operating leases.

Future minimum lease payments under non-cancellable operating leases as of October 1, 2021, were as follows (in thousands):

As of October 1, 2021, the Company does not have any additional operating leases that have not yet commenced.

~~In February 2012, the~~The Company ~~entered into~~has a credit agreement with Bank of America, N.A. ~~(“Bank of America”)~~, ~~pursuant to~~ which ~~Bank of America agreed to lend the Company~~provides for borrowing up to ~~$20.0~~$45.0 million pursuant to a revolving line of credit (the “Revolver”) ~~and up to $47.0 million pursuant to~~which has a ~~term loan (the “Term Loan”). The Company has fully utilized and repaid its Term Loan.~~

~~On May 9, 2016, the Company amended and restated the credit agreement with Bank of America to:~~

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

~~During~~As of the quarter and nine months ended ~~September 29, 2017,~~October 1, 2021, the Company ~~had net borrowings of $2.0 million and $15.0 million, respectively,~~ did 0t have any outstanding balanceunder the ~~Revolver and had a balance of $22.0 million outstanding as of September 29, 2017.~~ Revolver.The interest rates per annum applicable to borrowings under Revolver will be, at the Company’s option, equal to either a base rate or a LIBOR base rate, plus an applicable margin percentage. The applicable margin percentage is based on the consolidated leverage ratio, as defined in the

Credit Agreement. As of ~~September 29, 2017,~~October 1, 2021, the applicable margin percentage was 1.50% per annum based on the consolidated leverage ratio, in the case of LIBOR rate advances, and 0.75% per annum, in the case of base rate advances. The interest rate of the commitment fees as of ~~September 29, 2017,~~October 1, 2021, was ~~2.73%~~0.125%.

The Company is subject to certain covenants, including total consolidated leverage, fixed cost coverage, adjusted fixed cost coverage and liquidity requirements, each as set forth in the Credit Agreement, subject to certain exceptions. As of ~~September 29, 2017,~~October 1, 2021, the Company was in compliance with all covenants.

During the quarter and nine months ended ~~September 29, 2017,~~October 1, 2021, the Company issued ~~672,592~~14,357 and 482,031 restricted stock units at a weighted average grant-date fair value of ~~$16.61~~$18.15 and $14.70 per ~~share.~~share, respectively. As of ~~September 29, 2017,~~October 1, 2021, the Company had ~~1,553,240~~1,196,952 restricted stock units outstanding at a weighted average grant-date fair value of ~~$12.81~~$15.75 per share. As of ~~September 29, 2017, $11.2~~October 1, 2021, $10.9 million of total restricted stock unit compensation expense related to unvested awards had not been recognized and is expected to be recognized over a weighted average period of approximately ~~2.0~~2.2 years.

During the nine months ended September 29, 2017, 182,279 shares of common stock subject to vesting requirements were issued. These shares were issued to settle the equity portion of the closing consideration to the sellers in the acquisition of Jibe Consulting in May 2017 and will vest over four years. See Note 12 “Acquisitions” for further details.

As of ~~September 29, 2017,~~October 1, 2021, the Company had ~~531,024~~12,866 shares of common stock subject to vesting requirements outstanding at a weighted average grant-date fair value of ~~$12.85~~$16.17 per share. As of ~~September 29, 2017, $4.8 million~~October 1, 2021, $61 thousand of compensation expense related to common stock subject to vesting requirements had not been recognized and is expected to be recognized over a weighted average period of approximately ~~3.1~~1.3 years.

~~The Hackett Group, Inc.~~Forfeitures for all of the Company’s outstanding equity awards are recognized as incurred.

~~In 2012,~~As of October 1, 2021, the Company’s Chief Executive Officer (“CEO”) and Chief Operating Officer (“COO”) agreed to give up 50% of their equity incentive compensation awards under the 1998 Stock Option and Incentive Plan for the years 2012 through 2015 in exchange forCompany had 2.9 million SARs outstanding with an exercise price of $4.00 ~~only to be earned upon the achievement of 50% growth in pro forma earnings~~ per share and ~~50% growth in pro forma EBITDA from a base year~~an expiration date of ~~2011. The grants would have expired if neither target were achieved during a six-year term.~~

In the first quarter of 2015, the outstanding SARs awards for the achievement of 50% growth in pro forma earnings per share vested with the Audit Committee’s approval of the Company’s 2014 financial statements. In the first quarter of 2016, the outstanding SARs awards for the Company’s achievement of over 50% growth of pro forma EBITDA vested with the Audit Committee’s approval of the Company’s 2015 financial statements. As of September 29, 2017, no SARs had been exercised. By the end of 2015, all non-cash stock compensation expense relating to the outstanding SARs had been expensed.February 8, 2022.

Under the Company’s share repurchase plan, the Company may ~~buy back~~repurchase shares of its outstanding common stock either on the open market or through privately negotiated transactions subject to market conditions and trading restrictions. During the quarter and nine months ended ~~September 29, 2017,~~October 1, 2021, the Company repurchased ~~182~~113 thousand and 738 thousand shares of its common stock at an average price of ~~$13.73~~$18.68 and $17.35 per share, respectively, for a total cost of ~~$2.5~~$2.1 million and $12.8 million, respectively. As of October 1, 2021 the Company had a total authorization remaining of $11.5 million under it’s repurchase plan with atotal authorization of $167.2 million.

During the quarter and nine months ended September ~~29, 2017,~~25, 2020, the Company repurchased ~~748~~75 thousand and 148 thousand shares of its common stock at an average price of ~~$15.11~~$12.41 and $13.09 per share for a total cost of ~~$11.3 million. During the quarter ended September 29, 2017, the Company’s Board of Directors approved an additional $5.0~~$0.9 million ~~authorization under the repurchase plan increasing the total authorization to $137.2 million. As of September 29, 2017, the Company had $3.1~~and $1.9 million, ~~available under its share repurchase plan authorization.~~

During the quarter ended September 30, 2016, the Company repurchased 30 thousand shares of its common stock at an average price of $14.84 per share for a total cost of $449 thousand. During the nine months ended September 30, 2016, the Company repurchased 2.1 million shares of its common stock at an average price of $14.60 per share for a total cost of $30.1 million.respectively.

The shares repurchased under the share repurchase plan during the quarter and nine months ended ~~September 29, 2017,~~October 1, 2021, do not include 688 thousand shares and ~~262~~118 thousand shares, respectively, which the Company bought back to satisfy employee net vesting obligations for a cost of ~~$1.0 million~~$155 thousand and ~~$4.3~~$1.8 million, respectively. During the quarter and nine months ended September ~~30, 2016,~~25, 2020, the Company bought back 48 thousand shares and ~~288~~135 thousand shares, respectively, at a cost of ~~$50~~$111 thousand and ~~$3.9~~$2.1 million, respectively, to satisfy employee net vesting obligations.

On May 6, 2016, the Company’s Board of Directors approved the repurchase of 697 thousand shares of its common stock from the Company’s CEO, 732 thousand shares of its common stock from the Company’s COO, and 73 thousand shares of its common stock from the Company’s Chief Financial Officer (“CFO”) for a total of approximately 1.5 million shares at a purchase price of $14.77 per share. The transaction was approved by the Audit Committee of the Board of Directors which is comprised solely of independent directors and was effected as part of the Company’s share repurchase program. Following the transaction, Mr. Fernandez, Mr. Dungan and Mr. Ramirez remained the beneficial owners of 11.8%, 4.9% and 0.9% shares, respectively, of the outstanding common stock. Following the transaction, approximately $3.1 million remained available under the Company’s share repurchase program. One of the primary reasons for this transaction was to lower the Company’s weighted average shares outstanding which had increased by 11% from the first quarter of 2016 as a result of the vesting of the SARs and appreciation in share price. The repurchase reduced weighted average shares outstanding by approximately 4% and is $0.03 to $0.04 accretive on an annualized basis. Based on the most recent SEC filings, including shares of Company common stock beneficially owned and shares that could be acquired upon the exercise of the SARs, Mr. Fernandez continues to be the single largest beneficial shareholder of the Company.

In reviewing and approving the transaction, the independent directors of the Board considered, among other factors, the benefits to the Company’s stockholders of this transaction such as the fact that (i) the share repurchase transaction is expected to be accretive to earnings per share, and (ii) the transaction was a unique opportunity to repurchase a large block of shares in an orderly manner. The transaction was funded from borrowings under the Company’s Revolver which was amended on May 9, 2016 in order to provide an additional $25.0 million in borrowing capacity for an aggregate amount of up to $45.0 million from time to time.

In ~~2016,~~2020, the Company increased the annual dividend from ~~$0.20~~$0.36 per share to ~~$0.26~~$0.38 per share to be paid on a ~~semi-annual~~quarterly basis ~~which resulted in aggregate dividends~~and during the first quarter of ~~$4.0 million paid~~2021, the Company further increased the annual dividend to $0.40 per share. During the first quarter of 2021, the Company declared its first quarterly dividend to shareholders of ~~record on~~$3.3 million, which was paid in April 2021. During the second quarter of 2021, the Company declared its second quarterly dividend to shareholders of $3.2 million, which was paid in July ~~11, 2016 and December 22, 2016, respectively.~~2021. During the third quarter of 2021, the Company declared its third quarterly dividend to shareholders of $3.2 million, which was paid in October 2021. These dividends were paid from U.S. domestic sources and are accounted for as an increase to accumulated deficit. The dividend declared in December 2016 was paid in January 2017. During the quarter ended March 31, 2017, the Company increased its annual dividend to $0.30 per share to be paid on a semi-annual basis. The first semi-annual dividend for 2017 was paid on July 10, 2017, for a total of $4.6 million. Subsequent to ~~quarter end,~~October 1, 2021, the Company declared its ~~semi-annual~~fourth quarterly dividend ~~of $0.15 per share for shareholders of record as of December 22, 2017, which is~~in 2021 to be paid ~~on January 5, 2018.~~in December 2021.

During the nine months ended ~~September 29, 2017,~~October 1, 2021, the Company bought back 5924 thousand shares of its common stock from members of its Board of Directors for ~~$1.2~~$0.4 million, or ~~$20.13~~$16.05 per share.

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.

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

	Quarter Ended				Nine Months Ended				Quarter Ended				Nine Months Ended
	September 29,		September 30,		September 29,		September 30,		October 1,		September 25,		October 1,		September 25,
	2017		2016		2017		2016		2021		2020		2021		2020
Revenue:
Revenue before reimbursements:
North America	$	60,148	$	64,136	$	174,015	$	188,666	$	64,664	$	51,343	$	188,371	$	155,912
International (primarily European countries)		11,314		9,982		42,446		29,843		6,736		6,426		19,436		19,675
Total revenue	$	71,462	$	74,118	$	216,461	$	218,509
Revenue from continuing operations before reimbursements									$	71,400	$	57,769	$	207,807	$	175,587

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

	September 29,		December 30,		October 1,		January 1,
	2017		2016		2021		2021
Long-lived assets:
North America	$	90,218	$	78,200	$	89,297	$	90,384
International (primarily European countries)		17,281		12,286		16,347		17,329
Total long-lived assets	$	107,499	$	90,486	$	105,644	$	107,713

As of ~~September 29, 2017~~October 1, 2021 and ~~December 30, 2016,~~January 1, 2021, foreign assets included ~~$15.0~~$15.1 million and ~~$11.9~~$15.3 million, respectively, of goodwill related to acquisitions.

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

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

The sellers’ purchase consideration was $5.4 million in cash, not subject to vesting, and $3.6 million in shares of the Company’s common stock, subject to vesting. The equity that was issued has a four-year vesting term and will be recorded as compensation expense over the respective vesting period. In addition, the sellers have the opportunity to earn an additional $6.6 million in cash and $4.4 million in Company common stock based on the achievement of performance targets over the 18 months period following closing for a total of $11.0 million in contingent consideration; a portion of which will be allocated to key employees in both cash and Company stock. The cash related to the contingent consideration which is to be paid to the sellers is not subject to service vesting and has been accounted for as part of the purchase consideration. The cash related to the contingent consideration, which is to be paid to the key employees, is subject to service vesting and is being accounted for as compensation expense. This contingent liability has been recorded in the consolidated balance sheet as non-current accrued expenses and other liabilities. The equity related to the contingent consideration will be subject to service vesting and will be recorded as compensation expense over the respective vesting period. As of September 29, 2017, the Company had recorded $1.0 million of acquisition-related compensation expense and non-cash stock compensation related to the equity portion of the closing consideration and the equity portion of the contingent consideration. The initial cash consideration was funded from borrowings under the Company’s Revolver.

The purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The fair value of identifiable intangible assets acquired was based on estimates and assumptions made by management at the time of the acquisition. Management is currently working to complete the valuation of identified intangible assets, goodwill and related deferred income taxes. As additional information, as of the acquisition date, becomes available and as management completes its evaluation, the preliminary purchase price allocation may be revised during the remainder of the measurement period (which will not exceed 12 months from the acquisition date). Any such revisions or changes may be material as the fair values of the tangible and intangible assets acquired and liabilities assumed are finalized. The following table presents the preliminary purchase price allocation of the assets acquired and liabilities assumed, based on the fair values (in thousands):

~~The recognized goodwill is primarily attributable to the benefits the Company expects to derive from enhanced market opportunities.~~ ~~The acquired intangible assets with definite lives are amortized over periods ranging from 2 to 5 years. The following table presents the preliminary intangible assets acquired from Jibe:~~

The acquisition was not material to the Company's results of operations, financial position, or cash flows and therefore, the pro forma impact of these acquisitions is not presented. Since the acquisition date through September 29, 2017, Jibe contributed $7.6 million of revenue before reimbursable expenses and contribution before depreciation, amortization, interest, corporate overhead allocation and taxes of $0.7 million. The acquisition related costs incurred in the second quarter of 2017 totaled $0.2 million and were all classified in selling, general and administrative costs in the Company’s consolidated statements of operations. All goodwill is expected to be deductible for tax purposes.

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

The sellers’ purchase consideration was £3.2 million in cash. In addition, the sellers have the opportunity to earn an additional £2.4 million in contingent consideration in cash based on the achievement of performance targets achieved over the next 12 months and key personnel have the opportunity to earn £0.3 million in cash and £0.3 million in the Company’s common stock. The contingent consideration for the selling shareholders and key personnel is subject to performance and service periods and will be accounted for as compensation expense and in non-current accrued expenses and other liabilities. As of September 29, 2017, the Company had recorded a total of $0.9 million of acquisition-related compensation expense and acquisition non-cash stock compensation expense for the cash and equity portion of the contingent consideration. The closing purchase consideration was funded with the Company’s available funds.

~~The acquisition was not material to the Company's results of operations, financial position, or cash flows and therefore, the pro forma impact of these acquisitions is not presented.~~ ~~From acquisition date through the month ended September 29, 2017, Aecus has contributed $2.6 million of revenue before reimbursable expenses and~~ contribution before depreciation, amortization, interest, corporate overhead allocation and taxes of $0.5 million. The acquisition related costs incurred during the first nine months of 2017 totaled $0.1 million and were all classified in selling, general and administrative costs in the Company’s consolidated statements of operations. The goodwill and intangibles resulting from this transaction are not expected to be deductible under UK tax regulations.

Subsequent to the quarter ended September 29, 2017, Hackett-REL, Ltd., a subsidiary of the Company located in the United Kingdom, acquired The Chartered Institute of Management Accountants' share of the Certified GBS Professionals program. This acquisition allows those studying under the program and their employers to benefit further from the Company’s sector specific expertise and focus on the growing global business services market. Purchase consideration was $2.0 million in cash and was funded with the Company’s available funds. Also in connection with this transaction, the Alliance and Program Development Agreement between the Company, Hackett-REL, Ltd and The Chartered Institute of Management Accountants was terminated.

As a result of the short period between the acquisition date and the date of the issuance of the Company’s third quarter consolidated financial statements, all of the information required to be disclosed by ASC 805 has not yet been completed.

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 could impact such forward-looking statements include, among others, the impact of the coronavirus (COVID-19) pandemic and changes in worldwide and U.S. economic conditions that impact business confidence and the demand for our products and services, our ability to mitigate or manage disruptions posed by the COVID-19 pandemic, 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, the impact of any federally-mandated vaccine, testing or other COVID-19 related requirements on employee retention and our results of operations, 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, the impact of Brexit on our business and changes in general economic conditions, interest rates and our ability to obtain additional debt financing ~~through additional borrowings~~if needed. For a discussion of risks and actions taken in response to the COVID-19 pandemic, see “Our results of operations have been adversely affected and could in the future be materially adversely impacted by the coronavirus pandemic (COVID-19)” under ~~an amendment to our existing credit facility. An additional description~~Item 1A, “Risk Factors” of ~~our risk factors is set forth in~~ our Annual Report on Form ~~10-K for the year ended December 30, 2016.~~10-K. 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. Many of the risks, uncertainties and other factors identified in our Annual Report on Form 10-K for the year ended January 1, 2021 have been amplified by the COVID-19 pandemic.

The Hackett Group, Inc. (“Hackett” or the “Company”) is a leading IP-based strategic advisory and technology consulting firm that enables companies to achieve world-class business performance. By leveraging the comprehensive Hackett database, the world’s leading repository of enterprise business process performance metrics and best practice intellectual capital, our business and technology solutions help clients improve performance and maximize returns on technology investments. Only Hackett empirically defines world-class performance in sales, general and administrative and certain supply chain activities with analysis gained through ~~more than 13,000~~nearly 20,000 benchmark and performance studies over 2327 years at over ~~5,100~~7,000 of the world’s leading companies.

In the following discussion, ~~“The Hackett Group” encompasses our Benchmarking,~~Strategy and Business Transformation Group includes the results of our North America IP as-a-service offerings, which include our Executive Advisory ~~Enterprise Performance Management (“EPM”),~~Programs and Benchmarking Services, and our Business Transformation Practices (S&BT). ERP, EPM ~~Application Maintenance~~ and ~~Support (“AMS”) and~~Analytics Solutions includes the results of our North America Oracle ~~Cloud Applications groups. “SAP Solutions” encompasses our SAP ERP Implementation~~EEA and SAP ~~Maintenance groups.~~Solutions Practices (EEA). International includes results of our S&BT and EEA Practices primarily in Europe.

The level of revenue we achieve is ~~provided~~based on our ability to ~~enhance~~deliver market leading services and solutions and to deploy skilled teams of professionals quickly. Our results of operations are affected by economic conditions, including macroeconomic conditions and levels of business confidence. Despite the ~~understanding~~disruption beginning in March 2020, the COVID-19 pandemic did not have a significant impact on our consolidated results of operations during the first quarter of 2020. However, our net revenue and diluted earnings per share were negatively impacted for the remainder of 2020, due to adverse economic conditions as a result of the COVID-19 pandemic. In the first three quarters of 2021, our net revenue and diluted earnings per share grew when compared to the fourth quarter of 2020 reflecting a continuation of improved economic conditions. However, any reversal of these trends or a prolonged economic downturn as a result of the impact of COVID-19 variants, or otherwise, weak or uncertain economic conditions or similar factors could adversely affect our clients’ financial ~~performance~~condition which may further reduce our clients’ demand for our services.

We continue to actively manage our business to respond to the impact of the COVID-19 pandemic. At the onset of the pandemic, we reduced employee headcount and restricted employee travel to only essential business needs. While headcount has increased and some select non-essential travel is being allowed, most of our ~~business compared~~employees continue to ~~prior periods~~work remotely from home. We are generally following the requirements, recommendation and ~~is reconciled~~protocols published by the U.S. Centers for Disease Control and the World Health Organization, and state and local governments.

As a response to the ongoing COVID-19 pandemic, we implemented plans to manage our ~~GAAP information~~costs and preserve cash at the onset of the COVID-19 pandemic. We significantly limited the addition of new employees and third party contracted services, eliminated all travel except where necessary to meet customer needs, and limited discretionary spending. At the end of June 2020, we reduced our global workforce by approximately 10% and recorded a $5.0 million restructuring charge. During the fourth quarter of 2020, as a result of and in consideration of the COVID-19 pandemic, and the changing nature of our use of office space for its workforce, we evaluated our existing office leases as part of our transformation initiatives related to real estate. This evaluation resulted in the ~~tables below. In~~complete and partial abandonment of certain leased office spaces and an asset impairment charge of $3.9 million for certain lease right-of-use assets and certain property, equipment and leasehold improvements. All client concessions and accounts receivable allowances have been appropriately reflected in our ~~quarterly earnings announcements, we refer~~financial statements. To the extent that economic conditions do not continue to ~~adjusted non-GAAP information as “pro-forma”, which~~improve and our business is ~~unaudited. We also present earnings before income taxes, interest, depreciation and amortization expense (EBITDA), and other one-time acquisition-related and~~again disrupted the reinstatement of cost management actions will be considered. Future asset impairment charges, increases in allowance for doubtful accounts, or restructuring charges ~~(Adjusted EBITDA), both~~will be dependent on the severity and duration of ~~which are non-GAAP measures. These measures are used by management to evaluate~~the COVID-19 pandemic.

In light of the evolving health, social, economic and business environment, governmental regulations or mandates, and business disruptions that could occur, the potential impact that the COVID-19 pandemic could have on our financial ~~performance.~~condition and operating results in the future remains uncertain.

References to adjusted non-GAAP results below specifically exclude non-cash stock compensation expense, intangible asset amortization expense, other one-time acquisition related income and expense, restructuring charges and assumes a normalized long-term cash tax rate.

All non-GAAP information presented herein should be considered in addition to, and not as substitute for or superior to, any measure of performance, cash flows, or liquidity prepared in accordance with GAAP.

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

	Quarter Ended										Nine Months Ended										Quarter Ended										Nine Months Ended
	September 29,					September 30,					September 29,					September 30,					October 1,					September 25,					October 1,					September 25,
	2017					2016					2017					2016					2021					2020					2021					2020
Revenue:
Revenue before reimbursements	$	65,947		100.0	%	$	66,810		100.0	%	$	198,742		100.0	%	$	196,961		100.0	%	$	71,400		100.0	%	$	57,769		100.0	%	$	207,807		100.0	%	$	175,587		100.0	%
Reimbursements		5,515					7,308					17,719					21,548					494					148					770					4,614
Total revenue		71,462					74,118					216,461					218,509					71,894					57,917					208,577					180,201

Costs and expenses:
Cost of service:
Personnel costs before reimbursable expenses		39,807		60.4	%		40,621		60.8	%		120,906		60.8	%		120,866		61.4	%		43,552		61.0	%		37,791		65.4	%		124,312		59.8	%		117,558		67.0	%
Stock compensation expense																						1,651					1,508					4,918					4,449
Acquisition-related compensation expense		619					—					1,042					—					—					10					11					39
Non-cash stock compensation expense		1,082					1,135					3,440					3,318
Acquisition-related non-cash stock compensation expense		794					315					1,720					898					19					243					378					755
Reimbursable expenses		5,515					7,308					17,719					21,548					494					148					770					4,614
Total cost of service		47,817					49,379					144,827					146,630					45,716					39,700					130,389					127,415

Selling, general and administrative costs		14,209		21.5	%		14,664		21.9	%		43,759		22.0	%		43,918		22.3	%		13,613		19.1	%		12,732		22.0	%		40,415		19.4	%		38,042		21.7	%
Non-cash stock compensation expense		894					793					2,427					2,251					901					711					2,515					1,830
Acquisition-related costs		111					—					378					—
Amortization of intangible assets		557					275					1,475					825					259					247					783					723
Restructuring costs		—					—					1,293					—					—					—					—					5,034
Total selling, general, and administrative expenses		15,771					15,732					49,332					46,994					14,773					13,690					43,713					45,629
Total costs and operating expenses		63,588					65,111					194,159					193,624					60,489					53,390					174,102					173,044

Income from operations		7,874		11.9	%		9,007		13.5	%		22,302		11.2	%		24,885		12.6	%		11,405		16.0	%		4,527		7.8	%		34,475		16.6	%		7,157		4.1	%

Other expense:
Interest expense		(184	)				(137	)				(401	)				(288	)				(26	)				(22	)				(76	)				(100	)

Income from operations before income taxes		7,690		11.7	%		8,870		13.3	%		21,901		11.0	%		24,597		12.5	%
Income from continuing operations before income taxes																						11,379		15.9	%		4,505		7.8	%		34,399		16.6	%		7,057		4.0	%
Income tax expense		2,401		3.6	%		3,382		5.1	%		3,988		2.0	%		9,281		4.7	%		3,248		4.5	%		1,362		2.4	%		9,368		4.5	%		2,312		1.3	%
Income from continuing operations (net of taxes)																						8,131					3,143					25,031					4,745
Loss from discontinued operations																						—					(157	)				(7	)				(165	)
Net income	$	5,289		8.0	%	$	5,488		8.2	%	$	17,913		9.0	%	$	15,316		7.8	%	$	8,131		11.4	%	$	2,986		5.2	%	$	25,024		12.0	%	$	4,580		2.6	%

Diluted net income per common share	$	0.17				$	0.17				$	0.56				$	0.47				$	0.25				$	0.09				$	0.76				$	0.14

Adjusted non-GAAP data (unaudited):
Income from operations before income taxes	$	7,690				$	8,870				$	21,901				$	24,597
Acquisition-related compensation expense		619					—					1,042					—
Non-cash stock compensation expense		1,976					1,928					5,867					5,569
Acquisition-related non-cash stock compensation expense		794					315					1,720					898
Acquisition-related costs		111					—					378					—
Restructuring costs		—					—					1,293					—
Amortization of intangible assets		557					275					1,475					825
Adjusted non-GAAP income before income taxes		11,747					11,388					33,676					31,889
Adjusted non-GAAP income tax expense		3,524		30.0	%		3,416		30.0	%		10,103		30.0	%		9,567		30.0	%
Adjusted non-GAAP net income	$	8,223				$	7,972				$	23,573				$	22,322

Adjusted non-GAAP diluted net income per share	$	0.26				$	0.25				$	0.73				$	0.68
EBITDA: (non-GAAP)
Income from operations before income taxes		7,690					8,870					21,901					24,597
Interest expense		184					137					401					288
Depreciation expense		590					618					1,841					1,875
Amortization of intangible assets		557					275					1,475					825
EBITDA (non-GAAP)	$	9,021				$	9,900				$	25,618				$	27,585

Reconciliation to adjusted non-GAAP EBITDA:
EBITDA		9,021					9,900					25,618					27,585
Acquisition-related compensation expense		619					—					1,042					—
Non-cash stock compensation expense		1,976					1,928					5,867					5,569
Acquisition-related non-cash stock compensation expense		794					315					1,720					898
Acquisition-related costs		111					—					378					—
Restructuring costs		—					—					1,293					—
Adjusted non-GAAP EBITDA	$	12,521				$	12,143				$	35,918				$	34,052

~~Overview.~~ References to adjusted non-GAAP results specifically exclude non-cash stock compensation expense, intangible asset amortization expense, acquisition-related cash and stock compensation expenses, acquisition and restructuring related charges and assumes a normalized long-term cash tax rate of 30%.

During the second quarter of 2017, we completed the acquisitions of Jibe Consulting, Inc. and Aecus Limited. See Note 12, “Acquisitions” to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

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~~Euro, and as a result is affected by currency exchange rate fluctuations. The impact of currency fluctuations did not have a significant impact on comparisons between the ~~third~~ quarter and ~~first~~ nine months ~~of 2017~~ended October 1, 2021 and the comparable ~~period~~periods of ~~2016.~~2020. Revenue is analyzed based on geographical location of engagement team personnel.

The following table sets forth revenue by group for the periods indicated (in thousands):

Our total Company net revenue from continuing operations, or revenue before reimbursements, ~~decreased by 1%~~increased 24%, to ~~$65.9~~$71.4 million, ~~in the third quarter of 2017, as compared~~and 18% to ~~$66.8~~$207.8 million in ~~the third quarter of 2016. Our total Company net revenue increased 1%, to $198.7 million in the first nine months of 2017, as compared to $197.0 million during the same period in 2016. In both~~ the third quarter and first nine months of ~~2017~~2021, respectively, as compared to $57.8 million and ~~2016,~~$175.6 million, in the same periods of 2020, respectively. The nine month growth includes a $5.3 million software sale transaction which was recorded in the second quarter of 2021. Our total Company net revenue excluding this software sale transaction was $202.5 million for the first nine months of 2021.

Our North America revenue before reimbursements was $65.8 million and $190.7 million in the third quarter and first nine months of 2021, respectively, as compared to $51.9 million and $157.8 million in the third quarter and first nine months of 2020, respectively. North America revenue excluding the impact of the software sale transaction was $185.4 million for the first nine months of 2021. Net revenue in 2020 and reimbursable expenses in both 2021 and 2020 were affected from the economic disruption of the COVID-19 pandemic as we transitioned to a remote service delivery model throughout the U.S. and Europe. In the third quarter and first nine months of both 2021 and 2020, no ~~one~~ customer accounted for more than 5% of our total revenue.

~~The Hackett Group~~S&BT net revenue ~~decreased less than a percent, to $56.1~~was $27.6 million and $79.8 million during the third quarter and first nine months of ~~2017,~~2021, respectively, as compared to ~~$56.3~~$22.2 million and $65.6 million in the same periods of 2020, respectively, due to the improved demand for enterprise digital transformation initiatives experienced since the end of the third quarter of ~~2016. The Hackett Group~~2020.

EEA net revenue ~~increased less than a percent,~~was $38.2 million and $110.9 million during the third quarter and first nine months of 2021, respectively, as compared to ~~$168.8~~$29.7 million ~~during~~and $92.5 million in the same periods of 2020, respectively, primarily driven by strong growth across all of our practices. In addition, included in net revenue in the first nine months of ~~2017,~~2021 was the $5.3 million software sale transaction referenced above. EEA net revenue excluding the software sale transaction was $105.6 million for the first nine months of 2021.

Hackett international net revenue from continuing operations decreased 5% in both the third quarter and first nine months of 2021, as compared to ~~$168.0 million during~~ the same ~~period~~periods in ~~2016. Hackett domestic~~2020. Europe continues to be impacted by lengthened client decision-making from economic uncertainty which has been further impacted by the COVID-19 pandemic. Total Company international net revenue ~~was down 7%~~accounted for 8% of total Company net revenue during both the third quarter and first nine months of 2017, as revenue was adversely impacted as a result of the transition from on- premise to cloud application migration activity and slightly lower than anticipated activity in some of our other Hackett domestic practices. The decrease of the domestic Hackett revenue was offset by strong Hackett international growth of 36% and 39%, primarily in Europe, during the third quarter and first nine months of 2017, respectively,2021, as compared to 10% for the same periods in ~~the prior year.~~ 2020.

~~SAP Solutions~~The low percentage of reimbursements to net revenue ~~decreased 6%,~~is directly attributable to ~~$9.8 million, during~~ the ~~third quarter of 2017, as compared to $10.5 million~~decreases in ~~the third quarter of 2016. SAP Solutions net revenue increased 3%, to $30.0 million, during the first nine months of 2017, as compared $29.0 million during the same period of 2016.~~

Total Company international net revenue accounted for 19% of total Company net revenue during the third quarter and first nine months of 2017, as compared to 13% and 14% during the same periods in 2016, respectively.

Reimbursements as a percentage of total net revenue were 8% and 9% during the third quarter and first nine months of 2017, respectively, as compared to 11% during both of the same periods in 2016. This decrease primarily related to lower expense ratiostravel requirements resulting from the ~~recent acquisitions~~COVID-19 pandemic during 2021 and ~~the increase in IP as a service which both historically drive lower levels of reimbursable expenses.~~2020. Reimbursements are ~~engagement travel related~~project travel-related expenses ~~which are billed~~passed through to ~~clients and have~~a client with no associated impact onto gross margins or profitability.

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

Personnel costs ~~decreased 2%,~~increased to $39.8 million, for the third quarter of 2017, from $40.6 million in the third quarter of 2016. The decrease in absolute dollar was primarily a result of lower incentive compensation accruals, partially offset by higher use of subcontractors during the quarter and higher fringe and payroll taxes. Personnel costs were $120.9 million, in both the first nine months of 2017 and 2016. Personnel costs before reimbursable expenses, a non-GAAP metric, as a percentage of revenue before reimbursements, were 60% and 61% for the third quarter and first nine months of 2017, respectively, as compared to 61% for both of the same periods in 2016.

~~Acquisition related compensation costs of $0.6~~$43.6 million and ~~$1.0~~$124.3 million for the third quarter and first nine months of ~~2017,~~2021, respectively, ~~relate~~as compared to $37.8 million and $117.6 million during the ~~accrual~~same periods in 2020, respectively. The increase was primarily a result of increased hiring and utilization of subcontractors to support revenue growth in 2021, as well as increases in incentive compensation accruals commensurate with Company performance. Personnel costs before reimbursable expenses, as a percentage of revenue before reimbursements, were 61% and 60% for the ~~cash portion~~third quarter and first nine months of 2021, respectively, as compared to 65% and 67% for the ~~Aecus contingent consideration to be paid to the selling shareholders and key personnel, and the cash portion~~same periods of the Jibe contingent consideration that is to be paid to key employees, all of which are subject to service vesting and as a result is recorded as compensation expense. See Note 12, “Acquisitions” to our consolidated financial statements included in this Quarterly Report on Form 10-Q.2020, respectively.

Non-cash stock compensation expense was ~~$1.1~~$1.7 million and ~~$3.4~~$4.9 million for the third quarter and first nine months of 2021, respectively, as compared to $1.5 million and $4.4 million for the same periods of 2020, respectively. This increase was primarily driven by higher non-cash incentive compensation plans.

Acquisition related non-cash stock compensation expense in 2021 and 2020 primarily related to equity issued in relation to acquisitions.

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

SG&A costs were $13.6 million and $40.4 million for the third quarter and first nine months of 2021, respectively, as compared to $12.7 million and $38.0 million for the same periods in 2020, respectively. This increase was primarily due to higher sales commissions and incentive compensation accruals associated with increased Company performance. These SG&A costs as a percentage of revenue before reimbursements were 19% during both the third quarter and first nine months of 2021 and 22% for both of the same two periods in 2020.

Amortization expense was $0.3 million and $0.8 million in the third quarter and first nine months of ~~2017,~~2021, respectively, as compared to ~~$1.1~~$0.2 million and ~~$3.3 million during the same period in 2016.~~

Acquisition related non-cash stock compensation expense in 2017 primarily relates to our EPM AMS acquisition of Technolab in fiscal 2014 and the Jibe and Aecus acquisitions in 2017. See Note 12, “Acquisitions” to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

~~Total company adjusted non-GAAP gross margin was 40% and 39% of net revenue in the third quarter and first nine months of 2017, respectively, and 39% for both of the same periods in 2016.~~

~~Selling, General and Administrative Costs (SG&A)~~. SG&A excluding non-cash compensation expense, the amortization of intangible assets and acquisition related costs was $14.2 million and $43.8 million for the third quarter and first nine months of 2017, as compared to $14.7 million and $43.9 million for the same periods in 2016, respectively. SG&A as a percentage of revenue before reimbursements was 22% for both the third quarter and first nine months of 2017 and 2016.

~~Amortization expense was $0.6 million and $1.5 million in the third quarter and first nine months 2017, respectively, as compared to $0.3 million and $0.8~~$0.7 million in the same periods in ~~2016.~~2020, respectively. The amortization expense ~~in 2017~~ relates to the amortization of the intangible assets acquired in our ~~2014 EPM AMS acquisition~~acquisitions and the buyout of ~~Technolab and~~ our ~~acquisitions of Jibe and Aecus~~partner’s joint venture interest in the ~~second quarter of~~CGBS Training and Certification Programs in 2017. The ~~intangible assets relate to the customer relationship, customer backlog and non-compete agreements. The Technolab intangible assets will continue to amortize through 2018 and the Jibe and Aecus~~ intangible assets will continue to amortize until 2022.

~~Restructuring Costs.~~ In the second quarter of 2017, we recorded restructuring costs primarily related to the transition of resources driven by our migration from on premise software to cloud-based implementations as well as the Jibe acquisition, and the rationalization of global resources as a result of the emergence of RPA related engagements from our Aecus acquisition. There were no restructuring costs related to employee severance costs recorded in the third quarter of 2017.

Income Taxes. During the third quarter and the first nine months of ~~2017,~~2021, we recorded ~~$2.4~~$3.2 million and ~~$4.0~~$9.4 million ~~respectively,~~ of income tax expense, respectively, related to ~~for~~ certain federal, foreign and state taxes which reflected an effective tax rate of ~~31%~~29% and ~~18%~~27%, respectively. During the first quarter of 2017, we recorded no income tax expense as a result of the adoption of a new pronouncement relating to the accounting on the vesting of share-based awards. Excluding the effect of the new pronouncement, the effective tax rate would have been 34% for certain federal, foreign and state taxes for the nine months ended September 29, 2017. In the third quarter and first nine months of ~~2016,~~2020, we recorded $1.4 million and $2.3 million of income tax expense, ~~of $3.4 million~~respectively, related to certain federal, foreign and ~~$9.3 million,~~state taxes which reflected an effective tax rate benefit of ~~38% in both periods for certain federal, foreign~~30% and ~~state taxes.~~expense of 33%, respectively.

As of ~~September 29, 2017~~October 1, 2021, and ~~December 30, 2016,~~January 1, 2021, we had ~~$16.2~~$52.9 million and ~~$19.7~~$49.5 million, respectively, classified in cash on the consolidated balance sheets. We currently believe that available funds (including the cash on hand and funds available for borrowing capacity under ~~the Revolver),~~our credit facility) 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~~would be available when needed or desired.

	Nine Months Ended						Nine Months Ended
	September 29,			September 30,			October 1,			September 25,
	2017			2016			2021			2020
Cash flows provided by operating activities	$	18,952		$	20,812		$	26,469		$	31,156
Cash flows used in investing activities	$	(13,926	)	$	(2,068	)	$	(2,255	)	$	(1,498	)
Cash flows used in financing activities	$	(8,507	)	$	(27,857	)	$	(20,704	)	$	(12,526	)

Net cash provided by operating activities was ~~$19.0~~$26.5 million during the first nine months of ~~2017,~~2021, as compared to ~~$20.8~~$31.2 million during the same period in ~~2016.~~2020. In 2017 the net cash provided by operating activities was primarily due to net income adjusted for non-cash items, offset by a decrease in accrued expenses and other liabilities due to the payout of the 2016 incentive compensation and a decrease in income tax payable and an increase in accounts receivable and unbilled revenue. ~~In 2016,~~2021, the net cash provided by operating activities was primarily due to net income adjusted for non-cash items and an increase in incentive compensation and income ~~taxes payable,~~tax accruals, partially offset by ~~increased~~an increase in accounts receivable and ~~unbilled revenue,~~contract assets. In 2020, the net cash provided by operating activities was primarily due to net income adjusted for non-cash items, partially offset by decreases in accounts receivable and contract assets and increases in accrued expenses and other liabilities, partially offset by decreases in accounts payable ~~related~~due to the timing of vendor payments and decreases in ~~accrued income taxes~~employee reimbursable expenses resulting from ~~the 2016 income tax payment.~~decreased travel.

Net cash used in investing activities was ~~$13.9~~$2.3 million and ~~$2.1~~$1.5 million during the first nine months of ~~2017~~2021 and ~~2016,~~2020, respectively. ~~Net cash used in investing activities during the first nine months of 2017 primarily related to the cash paid for the Jibe and Aecus acquisitions. Additionally, during 2017,~~During both periods, cash flows used in investing activities ~~also included~~was primarily driven by investments ~~relating~~related to the development of ~~the Hackett Academy and~~ our Quantum Leap benchmark ~~technology, as well as further investments in internal corporate systems. During 2016, investing activities related to capital expenditures on the continued development of our benchmark technology.~~ technologies.

Net cash used in financing activities was ~~$8.5~~$20.7 million and ~~$27.9~~$12.5 million during ~~2017~~the first nine months 2021 and ~~2016,~~2020, respectively. The usage of cash in ~~2017 was~~2021 primarily related to the repurchase of ~~$11.3~~$14.6 million of ~~Company~~the Company’s common stock and the ~~cost~~dividend payments of ~~share purchases to satisfy employee net vesting requirements of $4.3 million, the payment of the second 2016 semi-annual dividend, and first 2017 semi-annual dividend totaling $8.7~~$6.5 million. ~~These uses of cash were partially offset by the net drawdown on the Revolver of $15.0 million (as defined below).~~ The usage of cash in ~~2016~~2020 was primarily related to the ~~cost~~dividend payment of $8.9 million and the repurchase of ~~$30.1~~$4.0 million of ~~Company common stock under~~ the Company’s ~~share repurchase program, $3.9 million to satisfy employee net vesting-related tax requirements, and $7.2 million was utilized to payout dividends. These uses~~common stock.

As of ~~cash were partially offset by the net~~October 1, 2021, we did not have any outstanding borrowings ~~of $13.0 million.~~

~~The Company is party to a credit agreement with Bank of America, N.A, dated as of May 9, 2016, (the “Credit Agreement”). The Credit Agreement provides for a~~under our revolving line of credit (the “Revolver”), leaving us with a ~~total~~ borrowing capacity of approximately $45.0 ~~million. As of September 29, 2017, we had a remaining capacity under our Revolver of $23.0~~ million. See Note 6,7, “Credit Facility,” to our consolidated financial statements included in this Quarterly Report on Form 10-Q for more information.

In the fourth quarter of 2021, the Company expects to pay approximately $21 million to $23 million in cash for employee withholding taxes related to the expected net share settlement of outstanding stock appreciation rights (“SARs”) that expire in February 2022. We have been advised by the holders of the SARs that they intend to exercise the awards in the fourth quarter of 2021. In connection with the net share settlement of the SARs, we anticipate issuing an aggregate of approximately 1.5 million shares of common stock. The maximum number of shares issuable under the SARs as of October 1, 2021 was approximately $2.4 million which number was included in the calculation of diluted weighted average common shares outstanding for the quarter and nine months ended October 1, 2021. As a result of the net share settlement, we expect diluted weighted average common shares outstanding to decrease in 2022. The estimated amount of the cash payment and number of shares to be withheld and issued upon the net share settlement of the SARs, as well as the impact on diluted weighted average shares outstanding, depends on the timing of the exercise by the holder and price per share of our common stock at that time.

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 fiscal year ended ~~December 30, 2016.~~January 1, 2021.

As of ~~September 29, 2017,~~October 1, 2021, our exposure to market risk related primarily to changes in interest rates and foreign currency exchange rate risks.

Our exposure to market risk for changes in interest rates relates primarily to the Revolver, which is subject to variable interest rates. The interest rates per annum applicable to loans under the Revolver will be, at our option, equal to either a base rate or a LIBOR rate for one-, two-, three- or nine-month interest periods chosen by us in each case, plus an applicable margin percentage. A 100-basis point increase in our interest rate under our Revolver would not have had a material impact on our results of operations for the quarter and nine months ended ~~September 29, 2017.~~October 1, 2021.

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.

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

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

For a discussion of our potential risks and uncertainties, see the risk factor below and the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended January 1, 2021 (the “Annual Report”).

There have been no material changes to any of the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended ~~December 30, 2016.~~January 1, 2021.

During the quarter ended ~~September 29, 2017,~~October 1, 2021, the Company repurchased ~~182~~113 thousand shares of its common stock ~~at an average price of $13.73 per share, for a total cost of $2.5 million,~~ under the repurchase plan approved by the Company's Board of ~~Directors.~~Directors for $2.1 million at an average price of $18.68. During the nine months ended October 1, 2021, the Company repurchased 738 thousand shares of its common stock under the repurchase plan approved by the Company’s Board of Directors for $12.8 million at an average price of $17.35. As of ~~September 29, 2017,~~October 1, 2021, the Company had ~~$3.1~~$11.5 million of authorization remaining under the repurchase plan.

*During the third quarter of 2017, the Company’s Board of Directors approved an additional $5.0 million increase to the repurchase plan.

Shares repurchased during the quarter and nine months ended ~~September 29, 2017~~October 1, 2021 under the repurchase plan approved by the Company's Board of Directors do not include 688 thousand shares and 118 thousand shares, respectively, for a cost of ~~$1.0~~$155 thousand and $1.8 million, respectively, that the Company bought back to satisfy employee net vesting obligations.

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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.

~~FLORIDA~~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)


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

Large Accelerated Filer	☐	Accelerated Filer	☒

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

		Emerging Growth Company	☐

PART I - FINANCIAL INFORMATION		Page

Item 1.	Financial Statements

	Consolidated Balance Sheets as of ~~September 29, 2017~~October 1, 2021 (unaudited) and ~~December 30, 2016~~ ~~(unaudited)~~January 1, 2021	3

	Consolidated Statements of Operations for the ~~Quarters~~Three and Nine Months Ended ~~September 29, 2017~~October 1, 2021 and September ~~30, 2016~~ 25, 2020 (unaudited)	4

	Consolidated Statements of Comprehensive Income for the ~~Quarters~~Three and Nine Months Ended ~~September 29, 2017~~October 1, 2021 and September ~~30, 2016~~ 25, 2020 (unaudited)	5

	Consolidated Statements of Cash Flows for the Nine Months Ended ~~September 29, 2017~~October 1, 2021 and September ~~30, 2016~~ 25, 2020 (unaudited)	6

	Consolidated Statements of Equity for the Three and Nine Months Ended October 1, 2021 and September 25, 2020 (unaudited)	7

	Notes to Consolidated Financial Statements (unaudited)	78

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1716

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21

Item 4.	Controls and Procedures	21

PART II - OTHER INFORMATION		22

Item 1.	Legal Proceedings	22

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 6.	Exhibits	23

SIGNATURES		24

Operating lease cost	$	787

Total net lease costs	$	787


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


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

2021 (excluding the nine months ended October 1, 2021)	$	593
2022		2,298
2023		988
2024		585
2025 and thereafter		-
Total lease payments		4,464
Less imputed interest		(164	)
Total	$	4,300

	Purchase Price
	Allocation
Total purchase consideration	$	11,293
Accounts receivable		1,932
Other current assets		59
Total current assets acquired		1,991
Intangible assets		931
Goodwill		9,538
Total assets		12,460
Other accrued expenses		1,167
Total liabilities acquired		1,167
Purchase consideration on acquisition	$	11,293

	Amount		Useful Life
Category	(in thousands)		(in years)
Customer Base	$	140	5
Customer Backlog		325	2
Non-Compete		466	5
	$	931

	~~Purchase Price~~
	~~Allocation~~
~~Total purchase consideration~~	£	~~3,173~~
~~Cash~~		~~209~~
~~Accounts receivable~~		~~898~~
~~Other current assets~~		46
~~Total current assets acquired~~		~~1,153~~
~~Intangible assets~~		~~1,515~~
~~Goodwill~~		~~1,306~~
~~Total assets~~		~~3,974~~
~~Other accrued expenses~~		~~801~~
~~Total liabilities acquired~~		~~801~~
~~Purchase consideration on acquisition~~	£	~~3,173~~

					Total Number		Maximum Dollar
					of Shares as Part		Value That May
					of Publicly		Yet be Purchased
	Total Number		Average Price		Announced		Under the
Period	of Shares		Paid per Share		Program		Program
Balance as of June 30, 2017		—	$	—		—	$	630,006
July 1, 2017 to July 28, 2017		—	$	—		—	$	630,006
July 29, 2017 to August 25, 2017		166,516	$	13.73		166,516	$	3,343,305	*
August 26, 2017 to September 29, 2017		15,000	$	13.70		15,000	$	3,137,863
		181,516	$	13.73		181,516

Exhibit No.		Exhibit Description
3.1		Second Amended and Restated Articles of Incorporation of the Registrant, as amended (incorporated herein by reference to the Registrant's Form 10-K for the year ended December 29, 2000).

3.2		Articles of Amendment of the Articles of Incorporation of the Registrant (incorporated herein by reference to the Registrant's Form 10-K for the year ended December 28, 2007).

3.3		Amended and Restated Bylaws of the Registrant, as amended (incorporated herein by reference to the Registrant's Form 10-K for the year ended December 29, 2000).

3.4		Amendment to Amended and Restated Bylaws of the Registrant (incorporated herein by reference to the Registrant's Form 8-K filed on March 31, 2008).

3.5		Amendment to Amended and Restated Bylaws of the Registrant (incorporated herein by reference to the Registrant's Form 8-K filed on January 21, 2015).

31.1*		Certification by CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification by CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32*		Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101.INS~~101.INS**		Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document.

~~101.SCH~~101.SCH**		Inline XBRL Taxonomy Extension Schema

~~101.CAL~~101.CAL**		Inline XBRL Taxonomy Extension Calculation Linkbase

~~101.DEF~~101.DEF**		Inline XBRL Taxonomy Extension Definition Linkbase

~~101.LAB~~101.LAB**		Inline XBRL Taxonomy Extension Label Linkbase

~~101.PRE~~101.PRE**		Inline XBRL Taxonomy Extension Presentation Linkbase

		The Hackett Group, Inc.

Date: November ~~8, 2017~~10, 2021		/s/ Robert A. Ramirez
		Robert A. Ramirez
		Executive Vice President, Finance and Chief Financial Officer