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 requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Indicate by check mark whether the 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 the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

As of ~~July 31, 2020,~~April 30, 2021, the latest practicable date, the registrant had ~~51,622,394~~52,122,879 shares of common stock outstanding.

	July 3, 2020			January 3, 2020			April 2, 2021			January 1, 2021
Assets
Current assets:
Cash and cash equivalents	$	155,932		$	176,436		$	184,521		$	197,525
Short-term investments		34,220			55,165			29,999			45,001
Accounts receivable, net of allowance for contract losses and doubtful accounts of $6,155 and $4,295 at July 3, 2020 and January 3, 2020, respectively		109,341			120,138
Accounts receivable, net of allowance for contract losses and doubtful accounts of $4,481 and $3,995 at April 2, 2021 and January 1, 2021, respectively								124,211			111,565
Prepaid expenses and other current assets		14,777			12,305			14,824			12,741
Total current assets		314,270			364,044			353,555			366,832

Property, equipment and leasehold improvements, net		60,301			61,587			60,473			59,823
Operating lease right-of-use assets		20,124			23,003			18,467			19,322
Goodwill		8,607			8,607			8,607			8,607
Deferred income taxes		37,233			36,821			39,315			40,539
Deferred compensation plan assets		71,895			68,400			94,395			83,731
Other assets		757			949			2,210			1,242
Total assets	$	513,187		$	563,411		$	577,022		$	580,096

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	16,218		$	18,583		$	18,411		$	16,327
Accrued payroll and employee benefits		59,295			86,723			54,490			83,194
Deferred revenues		8,910			12,710			8,906			11,800
Operating lease liabilities		5,360			5,944			6,135			5,987
Total current liabilities		89,783			123,960			87,942			117,308

Other liabilities		2,939			2,669			3,470			2,986
Deferred compensation plan liabilities		72,564			68,373			95,289			83,961
Operating lease liabilities		15,334			18,158			12,713			14,343
Total liabilities		180,620			213,160			199,414			218,598
Stockholders’ equity:
Common stock, $0.001 par value; 120,000 shares authorized; 65,707 at July 3, 2020 and January 3, 2020		66			66
Common stock, $0.001 par value; 120,000 shares authorized; 65,707 shares issued at April 2, 2021 and January 1, 2021								66			66
Additional paid-in capital		259,617			244,935			274,012			265,328
Accumulated other comprehensive income (loss)
Investment securities, available-for-sale		259			302			61			65
Foreign currency translation adjustments		(3,664	)		(2,062	)		(1,754	)		(1,997	)
		(3,405	)		(1,760	)		(1,693	)		(1,932	)
Retained earnings		401,956			384,668			439,717			421,809
Treasury stock, at cost; 14,084 and 13,951 shares held at July 3, 2020 and January 3, 2020, respectively		(325,667	)		(277,658	)
Treasury stock, at cost; 13,584 and 13,903 shares held at April 2, 2021 and January 1, 2021, respectively								(334,494	)		(323,773	)
Total stockholders’ equity		332,567			350,251			377,608			361,498
Total liabilities and stockholders’ equity	$	513,187		$	563,411		$	577,022		$	580,096

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

For the Three ~~and Six~~ Months Ended ~~July~~April 2, 2021 and April 3, 2020 ~~and June 28, 2019~~

	Three Months Ended				Six Months Ended					Three Months Ended
	July 3, 2020		June 28, 2019		July 3, 2020			June 28, 2019		April 2, 2021			April 3, 2020
Revenues:
Revenues before reimbursements	$	87,863	$	100,263	$	187,583		$	193,664	$	109,579		$	99,720
Reimbursements		4,182		6,243		10,415			11,873		6,902			6,233
Revenues		92,045		106,506		197,998			205,537		116,481			105,953
Operating expenses:
Compensation and related expenses		68,137		61,997		118,122			127,090		74,538			49,985
Other operating expenses		7,681		8,095		15,897			16,103		7,710			8,216
Reimbursable expenses		4,182		6,243		10,415			11,873		6,902			6,233
General and administrative expenses		2,925		5,348		8,456			9,894		3,273			5,531
Total operating expenses		82,925		81,683		152,890			164,960		92,423			69,965
Operating income		9,120		24,823		45,108			40,577		24,058			35,988
Other income, net:
Interest income, net		305		924		1,180			1,979		29			875
Miscellaneous income, net		11,989		3,104		(819	)		9,617
Total other income, net		12,294		4,028		361			11,596
Miscellaneous income (loss), net											6,039			(12,808	)
Total other income (loss), net											6,068			(11,933	)
Income before income taxes		21,414		28,851		45,469			52,173		30,126			24,055
Income taxes		5,068		7,857		2,841			8,467		(722	)		(2,227	)
Net income	$	16,346	$	20,994	$	42,628		$	43,706	$	30,848		$	26,282
Net income per share:
Basic	$	0.31	$	0.40	$	0.81		$	0.83	$	0.59		$	0.50
Diluted	$	0.31	$	0.39	$	0.80		$	0.81	$	0.58		$	0.49
Shares used in per share computations:
Basic		52,259		52,745		52,417			52,641		52,536			52,575
Diluted		53,139		53,872		53,404			53,849		53,333			53,657
Cash dividends declared per common share	$	0.19	$	0.16	$	0.38		$	0.32	$	0.20		$	0.19

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements

For the Three ~~and Six~~ Months Ended ~~July~~April 2, 2021 and April 3, 2020 ~~and June 28, 2019~~

	Three Months Ended						Six Months Ended						Three Months Ended
	July 3, 2020			June 28, 2019			July 3, 2020			June 28, 2019			April 2, 2021			April 3, 2020
Net income	$	16,346		$	20,994		$	42,628		$	43,706		$	30,848		$	26,282
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax		71			(241	)		(1,602	)		(124	)		243			(1,673	)
Unrealized gains (losses) on available- for-sale investment securities arising during the period, net of tax		(211	)		249			(43	)		403
Unrealized gain/(loss) on available-for-sale investment securities arising during the period, net of tax														(4	)		168
Comprehensive income	$	16,206		$	21,002		$	40,983		$	43,985		$	31,087		$	24,777

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements

Three and Six Months Ended July 3, 2020

Common Stock

Additional
paid-in

Accumulated
other
comprehensive

Retained

Treasury Stock

(In thousands)

Shares

Amount

capital

income (loss)

earnings

Shares

Amount

Total

Balance at January 3, 2020

65,707

$
66

$
244,935

$
(1,760
)

$
384,668

13,951

$
(277,658
)

$
350,251

Employee stock purchase plan

-

-

400

-

-

(7
)

73

473

Exercise of stock options

-

-

64

-

-

(60
)

608

672

Amortization of unrecognized stock-based
compensation

-

-

4,095

-

-

-

-

4,095

Purchase of treasury stock

-

-

-

-

-

636

(40,049
)

(40,049
)
Foreign currency translation adjustments

-

-

-

(1,673
)

-

-

-

(1,673
)
Grant of restricted stock units to settle accrued bonus

-

-

8,645

-

-

-

-

8,645

Settlement of restricted stock units

-

-

(1,261
)

-

(4,538
)

(359
)

(9,313
)

(15,112
)
Unrealized gain on investments

-

-

-

168

-

-

-

168

Dividends and dividend equivalent rights

-

-

511

-

(10,766
)

-

-

(10,255
)
Net income

-

-

-

-

26,282

-

-

26,282

Balance at April 3, 2020

65,707

$
66

$
257,389

$
(3,265
)

$
395,646

14,161

$
(326,339
)

$
323,497

Employee stock purchase plan

-

-

374

-

-

(6
)

58

432

Exercise of stock options

-

-

390

-

-

(54
)

566

956

Amortization of unrecognized stock-based
compensation

-

-

1,663

-

-

-

-

1,663

Foreign currency translation adjustments

-

-

-

71

-

-

-

71

Settlement of restricted stock units

-

-

(199
)

-

-

(17
)

48

(151
)
Unrealized loss on investments

-

-

-

(211
)

-

-

-

(211
)
Dividends and dividend equivalent rights

-

-

-

-

(10,036
)

-

-

(10,036
)
Net income

-

-

-

-

16,346

-

-

16,346

Balance at July 3, 2020

65,707

$
66

$
259,617

$
(3,405
)

$
401,956

14,084

$
(325,667
)

$
332,567

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

	Three and Six Months Ended June 28, 2019																						Three Months Ended April 2, 2021
	Common Stock				Additional paid-in			Accumulated other comprehensive			Retained			Treasury Stock									Common Stock				Additional paid-in			Accumulated other comprehensive			Retained			Treasury Stock
(In thousands)	Shares		Amount		capital			income (loss)			earnings			Shares			Amount			Total
Balance at December 28, 2018		65,707	$	66	$	227,283		$	(2,853	)	$	342,024			14,208		$	(252,611	)	$	313,909
																							Shares		Amount		capital			income (loss)			earnings			Shares			Amount			Total
Balance at January 1, 2021																								65,707	$	66	$	265,328		$	(1,932	)	$	421,809			13,903		$	(323,773	)	$	361,498
Employee stock purchase plan		-		-		302			-			-			(7	)		70			372			-		-		485			-			-			(6	)		58			543
Amortization of unrecognized stock-based compensation		-		-		3,663			-			-			-			-			3,663			-		-		3,738			-			-			-			-			3,738
Foreign currency translation adjustments		-		-		-			117			-			-			-			117			-		-		-			243			-			-			-			243
Grant of restricted stock units to settle accrued bonus		-		-		7,947			-			-			-			-			7,947			-		-		7,637			-			-			-			-			7,637
Settlement of restricted stock units		-		-		(860	)		-			(5,146	)		(395	)		(5,188	)		(11,194	)		-		-		(3,176	)		-			(1,679	)		(313	)		(10,779	)		(15,634	)
Unrealized gain on investments		-		-		-			154			-			-			-			154			-		-		-			(4	)		-			-			-			(4	)
Dividends and dividend equivalent rights		-		-		581			-			(9,084	)		-			-			(8,503	)		-		-		-			-			(11,261	)		-			-			(11,261	)
Net income		-		-		-			-			22,712			-			-			22,712			-		-		-			-			30,848			-			-			30,848
Balance at March 29, 2019		65,707	$	66	$	238,916		$	(2,582	)	$	350,506			13,806		$	(257,729	)	$	329,177
Balance at April 2, 2021																								65,707	$	66	$	274,012		$	(1,693	)	$	439,717			13,584		$	(334,494	)	$	377,608

																							Three Months Ended April 3, 2020
																							Common Stock				Additional paid-in			Accumulated other comprehensive			Retained			Treasury Stock
(In thousands)																							Shares		Amount		capital			income (loss)			earnings			Shares			Amount			Total
Balance at January 3, 2020																								65,707	$	66	$	244,935		$	(1,760	)	$	384,668			13,951		$	(277,658	)	$	350,251
Employee stock purchase plan		-		-		385			-			-			(8	)		88			473			-		-		400			-			-			(7	)		73			473
Exercise of stock options																												64									(60	)		608			672
Amortization of unrecognized stock-based compensation		-		-		1,685			-			-			-			-			1,685			-		-		4,095			-			-			-			-			4,095
Purchase of treasury shares																																					636			(40,049	)		(40,049	)
Foreign currency translation adjustments		-		-		-			(241	)		-			-			-			(241	)		-		-		-			(1,673	)		-			-			-			(1,673	)
Grant of restricted stock units to settle accrued bonus																								-		-		8,645			-			-			-			-			8,645
Settlement of restricted stock units		-		-		(101	)		-			-			(10	)		112			11			-		-		(1,261	)		-			(4,538	)		(359	)		(9,313	)		(15,112	)
Unrealized gain on investments		-		-		-			249			-			-			-			249			-		-		-			168			-			-			-			168
Dividends and dividend equivalent rights		-		-		45			-			(8,541	)		-			-			(8,496	)		-		-		511			-			(10,766	)		-			-			(10,255	)
Net income		-		-		-			-			20,994			-			-			20,994			-		-		-			-			26,282			-			-			26,282
Balance at June 28, 2019		65,707	$	66	$	240,930		$	(2,574	)	$	362,959			13,788		$	(257,529	)	$	343,852
Balance at April 3, 2020																								65,707	$	66	$	257,389		$	(3,265	)	$	395,646			14,161		$	(326,339	)	$	323,497

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

For the ~~Six~~Three Months Ended ~~July~~April 2, 2021 and April 3, 2020 ~~and June 28, 2019~~

	Six Months Ended						Three Months Ended
	July 3, 2020			June 28, 2019			April 2, 2021			April 3, 2020
Cash flows from operating activities:
Net income	$	42,628		$	43,706		$	30,848		$	26,282
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization of property, equipment and leasehold improvements		3,487			3,232			1,656			1,786
Amortization of premiums and accretion of discounts on short-term investments		(112	)		(298	)		(7	)		(60	)
Provision for contract losses and doubtful accounts		2,817			1,786			645			2,383
Stock-based compensation		9,600			9,741			6,282			6,138
Deferred income tax provision		(398	)		(141	)		1,226			1,614
Changes in operating assets and liabilities:
Accounts receivable		7,980			(25,707	)		(13,291	)		(9,457	)
Prepaid expenses and other current assets		(10,666	)		(1,760	)		(8,142	)		(12,561	)
Change in operating leases		(529	)		(209	)		(627	)		(707	)
Accounts payable and accrued liabilities		(1,992	)		6,846			3,451			(4,110	)
Accrued payroll and employee benefits		(14,816	)		(11,761	)		(17,862	)		(24,117	)
Deferred revenues		(3,800	)		(616	)		(2,894	)		(1,026	)
Net cash provided by operating activities		34,199			24,819
Net cash provided by (used in) operating activities								1,285			(13,835	)
Cash flows from investing activities:
Capital expenditures		(2,467	)		(12,494	)		(2,515	)		(1,293	)
Purchase of short-term investments		-			(38,693	)		(9,997	)		-
Maturity of short-term investments		21,000			31,000			25,000			9,000
Net cash provided by/(used in) investing activities		18,533			(20,187	)
Net cash provided by investing activities								12,488			7,707
Cash flows from financing activities:
Payroll taxes for restricted stock units		(15,263	)		(11,183	)		(15,634	)		(15,112	)
Repurchase of common stock		(40,049	)		-			-			(40,049	)
Exercise of stock-based payment awards		2,534			845			543			1,145
Dividends and dividend equivalents rights		(20,128	)		(16,899	)		(11,935	)		(10,308	)
Net cash used in financing activities		(72,906	)		(27,237	)		(27,026	)		(64,324	)
Effect of foreign currency exchange rates on cash and cash equivalents		(330	)		(2	)		249			(390	)
Net decrease in cash and cash equivalents		(20,504	)		(22,607	)		(13,004	)		(70,842	)
Cash and cash equivalents at beginning of period		176,436			127,059			197,525			176,436
Cash and cash equivalents at end of period	$	155,932		$	104,452		$	184,521		$	105,594

The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

Exponent, Inc. (referred to as the “Company” or “Exponent”) is an engineering and scientific consulting firm that provides solutions to complex problems. The Company operates on a 52-53 week fiscal year ending on the Friday closest to the last day of December.

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission. Accordingly, they do not contain all the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments which are necessary for the fair presentation of the condensed consolidated financial statements have been included and all such adjustments are of a normal and recurring nature. The operating results for the three ~~and six~~ months ended ~~July 3, 2020~~April 2, 2021 are not necessarily representative of the results of future quarterly or annual periods. The following information should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January ~~3, 2020,~~1, 2021, which was filed with the U.S. Securities and Exchange Commission on February ~~28, 2020.~~26, 2021.

The unaudited condensed consolidated financial statements include the accounts of Exponent, Inc. and its subsidiaries, which are all wholly owned. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Items subject to such estimates and assumptions include accounting for revenue recognition and estimating the allowance for contract losses and doubtful accounts. Actual results could differ from those estimates. The Company’s estimate of its allowance for contract losses and doubtful accounts takes into consideration the macroeconomic effect of global events such as the COVID-19 pandemic which may impact the ability of its customers to pay.

~~Recently Adopted Accounting Pronouncements.~~ ~~In June 2016, the Financial Accounting Standards Board (“FASB”) established Topic 326,~~ ~~Measurement of Credit Losses on Financial Instruments, by issuing Accounting Standard Update (“ASU”) No. 2016-13,~~ ~~Financial Instruments – Credit Losses,~~ which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of the expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost where there is a contractual right to received cash, including, accounts receivables, loan receivables and held-to-maturity debt securities. The Company adopted ASU No. 2016-13 in the first quarter of 2020 and the impact of the adoption was not material the Company’s condensed consolidated financial statements.

Substantially all of the Company’s engagements are performed under time and materials or fixed-price arrangements. For time and materials contracts, the Company utilizes the practical expedient under Accounting Standards Codification 606 – Revenue from Contracts with Customers, which states that if an entity has a right to consideration from a customer in an amount that corresponds directly with the value of the entity’s performance completed to date (for example, a service contract in which an entity bills a fixed amount for each hour of service provided), then the entity may recognize revenue in the amount to which the entity has a right to invoice.

The following table discloses the ~~percent~~percentage of the Company’s revenue generated from time and materials contracts:

For fixed-price contracts, the Company recognizes revenue over time because of the continuous transfer of control to the customer. The customer typically controls the work in process as evidenced either by contractual termination clauses or by the Company’s rights to payment for work performed to date to deliver services that do not have an alternative use to the Company. Revenue for fixed-price contracts is recognized based on the relationship of incurred labor hours at standard rates to the Company’s estimate of the total labor hours at standard rates it expects to incur over the term of the contract. The Company believes this methodology achieves a reliable measure of the revenue from the consulting services it provides to its customers under fixed-price contracts given the nature of the consulting services the Company provides.

The following table discloses the ~~percent~~percentage of the Company’s revenue generated from fixed price contracts:

	Three Months Ended						Six Months Ended						Three Months Ended
	July 3, 2020			June 28, 2019			July 3, 2020			June 28, 2019			April 2, 2021			April 3, 2020
Engineering & other scientific		18	%		14	%		16	%		14	%		20	%		14	%
Environmental and health		1	%		1	%		1	%		1	%		1	%		1	%
Total fixed price revenues		19	%		15	%		17	%		15	%		21	%		15	%

Deferred revenues represent amounts billed to clients in advance of services provided. During the ~~second~~first quarter of ~~2020, $3,466,000~~2021, $6,015,000 of revenues were recognized that were included in the deferred revenue balance at ~~April 3, 2020.~~January 1, 2021. During the first ~~six months~~quarter of 2020, ~~$6,281,000~~$4,791,000 of revenues were recognized that were included in the deferred revenue balance at January 3, 2020.

Reimbursements, including those related to travel and other out-of-pocket expenses, and other similar third- party costs such as the cost of materials and certain subcontracts, are included in revenues, and an equivalent amount of reimbursable expenses are included in operating expenses. Any mark-up on reimbursable expenses is included in revenues before reimbursements. The Company reports revenues net of subcontractor fees for certain subcontracts where the Company has determined that it is acting as an agent because its performance obligation is to arrange for the provision of goods or services by another party. The total amount of subcontractor fees not included in revenues because the Company was acting as an agent were ~~$3,590,000~~$3,644,000 and ~~$6,157,000 during the second quarter of 2020 and 2019, respectively and $7,371,000 and $10,399,000~~$3,781,000 during the first ~~six months~~quarter of ~~2020~~2021 and ~~2019,~~2020, respectively.

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including available-for-sale fixed income securities, trading fixed income and equity securities held in its deferred compensation plan and the liability associated with its deferred compensation plan. There were no transfers between fair value measurement levels during the three ~~and six~~ months ended ~~July~~April 2, 2021 and April 3, ~~2020 and June 28, 2019.~~2020. Any transfers between fair value measurement levels would be recorded on the actual date of the event or change in circumstances that caused the transfer. The fair value of these certain financial assets and liabilities was determined using the following inputs at ~~July 3, 2020:~~April 2, 2021 (in thousands):

	Fair Value Measurements at Reporting Date Using								Fair Value Measurements at Reporting Date Using
(In thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
									Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money market securities ⁽¹⁾	$	63,024	$	63,024	$	-	$	-	$	71,569	$	71,569	$	0	$	0
Fixed income available-for-sale securities ⁽²⁾		34,220		-		34,220		-		29,999		0		29,999		0
Fixed income trading securities held in deferred compensation plan ⁽³⁾		26,524		26,524		-		-		30,559		30,559		0		0
Equity trading securities held in deferred compensation plan ⁽³⁾		48,614		48,614		-		-		71,135		71,135		0		0
Total	$	172,382	$	138,162	$	34,220	$	-	$	203,262	$	173,263	$	29,999	$	0
Liabilities
Deferred compensation plan ⁽⁴⁾		75,807		75,807		-		-		102,488		102,488		0		0
Total	$	75,807	$	75,807	$	-	$	-	$	102,488	$	102,488	$	0	$	0

The fair value of these certain financial assets and liabilities was determined using the following inputs at January ~~3, 2020:~~1, 2021 (in thousands):

	Fair Value Measurements at Reporting Date Using								Fair Value Measurements at Reporting Date Using
(In thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
									Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money market securities⁽¹⁾	$	41,211	$	41,211	$	-	$	-	$	51,442	$	51,442	$	0	$	0
Fixed income available for sale securities ⁽²⁾		55,165		-		55,165		-		45,001		0		45,001		0
Fixed income trading securities held in deferred compensation plan ⁽³⁾		22,010		22,010		-		-		26,274		26,274		0		0
Equity trading securities held in deferred compensation plan ⁽³⁾		53,924		53,924		-		-		62,473		62,473		0		0
Total	$	172,310	$	117,145	$	55,165	$	-	$	185,190	$	140,189	$	45,001	$	0
Liabilities
Deferred compensation plan ⁽⁴⁾		76,357		76,357		-		-		88,977		88,977		0		0
Total	$	76,357	$	76,357	$	-	$	-	$	88,977	$	88,977	$	0	$	0

Fixed income available-for-sale securities as of ~~July 3, 2020~~April 2, 2021 and January ~~3, 2020~~1, 2021 represent obligations of the United States Treasury. Fixed income and equity trading securities represent mutual funds held in the Company’s deferred compensation plan. See Note 76 for additional information about the Company’s deferred compensation plan.

Cash, cash equivalents and short-term investments consisted of the following as of ~~July 3, 2020:~~April 2, 2021 (in thousands):

			Gross		Gross						Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated		Amortized		Unrealized		Unrealized		Estimated
(In thousands)	Cost		Gains		Losses		Fair Value
									Cost		Gains		Losses		Fair Value
Classified as current assets:
Cash	$	92,908	$	-	$	-	$	92,908	$	112,952	$	0	$	0	$	112,952
Cash equivalents:
Money market securities		63,024		-		-		63,024		71,569		0		0		71,569
Total cash equivalents		63,024		-		-		63,024		71,569		0		0		71,569
Total cash and cash equivalents		155,932		-		-		155,932		184,521		0		0		184,521
Short-term investments:
U.S. Treasury securities		33,954		266		-		34,220
U.S. Treasury and agency securities										29,997		2				29,999
Total short-term investments		33,954		266		-		34,220		29,997		2		0		29,999
Total cash, cash equivalents and short-term investments	$	189,886	$	266	$	-	$	190,152	$	214,518	$	2	$	0	$	214,520

Cash, cash equivalents and short-term investments consisted of the following as of January ~~3, 2020:~~1, 2021 (in thousands):

	Amortized		Unrealized		Unrealized		Estimated		Amortized		Unrealized			Unrealized		Estimated
(In thousands)	Cost		Gains		Losses		Fair Value
									Cost		Gains			Losses		Fair Value
Classified as current assets:
Cash	$	135,225	$	-	$	-	$	135,225	$	146,083	$	0	��	$	0	$	146,083
Cash equivalents:
Money market securities		41,211		-		-		41,211		51,442		0			0		51,442
Total cash equivalents		41,211		-		-		41,211		51,442		0			0		51,442
Total cash and cash equivalents		176,436		-		-		176,436		197,525		0			0		197,525
Short-term investments:
U.S. Treasury and agency securities		54,841		324		-		55,165		44,993		8					45,001
Total short-term investments		54,841		324		-		55,165		44,993		8			0		45,001
Total cash, cash equivalents and short-term investments	$	231,277	$	324	$	-	$	231,601	$	242,518	$	8		$	0	$	242,526

At ~~July 3, 2020~~April 2, 2021 the stated effective maturities of all short-term fixed income securities classified as short-term investments were due within one year.

At ~~July 3, 2020~~April 2, 2021 and January ~~3, 2020,~~1, 2021, the Company did not have any assets or liabilities valued using significant unobservable inputs.

The following financial instruments are not measured at fair value on the Company's unaudited condensed consolidated balance sheet at ~~July 3, 2020~~April 2, 2021 and January ~~3, 2020~~1, 2021 but require disclosure of their fair values: accounts receivable, other assets and accounts payable. The estimated fair value of such instruments at ~~July 3, 2020~~April 2, 2021 and January ~~3, 2020~~1, 2021 approximates their carrying value as reported on the Company’s unaudited condensed consolidated balance sheet.

There were no other-than-temporary impairments or credit losses related to available-for-sale securities during the three ~~and six~~ months ended ~~July~~April 2, 2021 and April 3, ~~2020 and June 28, 2019.~~2020.

Basic per share amounts are computed using the weighted-average number of common shares outstanding during the period. Diluted per share amounts are calculated using the weighted-average number of common shares outstanding during the period and, when dilutive, the weighted-average number of potential common shares from the issuance of common stock to satisfy outstanding restricted stock units and the exercise of outstanding options to purchase common stock using the treasury stock method.

The following schedule reconciles the shares used to calculate basic and diluted net income per share:

	Three Months Ended				Six Months Ended				Three Months Ended
(In thousands)	July 3, 2020		June 28, 2019		July 3, 2020		June 28, 2019		April 2, 2021		April 3, 2020
Shares used in basic per share computation		52,259		52,745		52,417		52,641		52,536		52,575
Effect of dilutive common stock options outstanding		340		470		360		463		236		379
Effect of dilutive restricted stock units outstanding		540		657		627		745		561		703
Shares used in diluted per share computation		53,139		53,872		53,404		53,849		53,333		53,657

Common stock options to purchase ~~40,000~~18,742 shares and 22,418 shares were excluded from the diluted per share calculation for the three months ended ~~July~~April 2, 2021 and April 3, 2020, respectively, due to their anti-dilutive effect. Common stock options to purchase 31,209 shares were excluded from the diluted per share calculation for the six months ended July 3, 2020 due to their anti-dilutive effect. There were 0 options excluded from the diluted per share calculations for the three and six months ended June 28, 2019.

Restricted stock unit grants are designed to attract and retain employees, and to better align employee interests with those of the Company’s stockholders. For a select group of employees, up to 40% of their annual bonus is settled with fully vested restricted stock unit awards. Under these fully vested restricted stock unit awards, the holder of each award has the right to receive one share of the Company’s common stock for each fully vested restricted stock unit four years from the date of grant. Each individual who receives a fully vested restricted stock unit award is also granted a matching number of unvested restricted stock unit awards. Unvested restricted stock unit awards are also granted for select new hires and promotions. These unvested restricted stock unit awards generally cliff vest four years from the date of grant, at which time the holder of each award will have the right to receive one share of the Company’s common stock for each restricted stock unit award provided the holder of each award has met certain employment conditions. In the case of retirement at 59½ years or older, all unvested restricted stock unit awards will continue to vest, provided that the holder of each award does all consulting work through the Company and does not become an employee for a past or present client, beneficial party or competitor of the Company.

The value of these restricted stock unit awards is determined based on the market price of the Company’s common stock on the date of grant. The value of fully vested restricted stock unit awards issued is recorded as a reduction to accrued bonuses. The portion of bonus expense that the Company expects to settle with fully vested restricted stock unit awards is recorded as stock-based compensation during the period the bonus is earned. The Company recorded stock-based compensation expense associated with accrued bonus awards of ~~$1,799,000~~$2,544,000 and ~~$2,325,000~~$2,043,000 during the three months ended ~~July~~April 2, 2021 and April 3, 2020, and June 28, 2019, respectively. For the six months ended July 3, 2020 and June 28, 2019, the Company recorded stock-based compensation expense associated with accrued bonus awards of $3,842,000 and $4,393,000, respectively. The value of the unvested restricted stock unit awards granted is recognized on a straight-line basis over the shorter of the four-year vesting period or the period between the grant date and the date the award recipient turns 59½. If the award recipient is 59½ years or older on the date of grant, the value of the entire award is expensed upon grant. The Company recorded stock-based compensation expense associated with the unvested restricted stock unit awards of ~~$1,476,000~~$3,562,000 and ~~$1,535,000~~$3,927,000 during the three months ended ~~July~~April 2, 2021 and April 3, 2020, and June 28, 2019, respectively. The Company recorded stock-based compensation expense associated with the unvested restricted stock unit awards of $5,403,000 and $5,065,000 during the six months ended July 3, 2020 and June 28, 2019, respectively.

Stock options are granted for terms of ten years and generally vest 25% per year over a four-year period from the grant date. Unvested stock option awards will continue to vest in the case of retirement at 59½ years or older, provided that the holder of each award does all consulting work through the Company and does not become an employee for a past or present client, beneficial party or competitor of the Company. The value of the unvested stock option awards granted is recognized on a straight-line basis over the shorter of the four-year vesting period or the period between the grant date and the date the award recipient turns 59½. If the award recipient is 59½ years or older on the date of grant, the value of the entire award is expensed upon grant. The Company recorded stock-based compensation expense associated with stock option grants of ~~$187,000~~$176,000 and ~~$150,000~~$168,000 during the three months ended ~~July~~April 2, 2021 and April 3, 2020, and June 28, 2019, respectively. The Company recorded stock-based compensation expense associated with stock option grants of $355,000 and $283,000 during the six months ended July 3, 2020 and June 28, 2019, respectively.

The Company uses the Black-Scholes option-pricing model to determine the fair value of options granted. The determination of the fair value of stock option awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include expected stock price volatility over the term of the award, actual and projected employee stock option exercise behaviors, the risk-free interest rate and expected dividends.

The Company used historical exercise, forfeiture, and post-vesting expiration data to estimate the expected term of options granted. The historical volatility of the Company’s common stock over a period of time equal to the expected term of the options granted was used to estimate expected volatility. The risk-free interest rate used in the option-pricing model was based on United States Treasury zero-coupon issues with remaining terms similar to the expected term of the options. The dividend yield assumption considers the expectation of continued declaration of dividends, offset by option holders’ dividend equivalent rights.

The Company accounts for forfeitures of stock-based awards when they occur. All stock-based payment awards are recognized on a straight-line basis over the requisite service periods of the awards.

On January 31, 2019, the Company’s Board of Directors announced $75,000,000 for the repurchase of shares of the Company’s common stock. On May 29, 2020, the Company’s Board of Directors announced an additional $45,000,000 for the repurchase of shares of the Company’s common stock. These repurchase programs have no expiration date.

The Company repurchased 636,000 of its common stock for $40,049,000 during the six months ended July 3, 2020. As of July 3, 2020, the Company had remaining authorization under its stock repurchase plans of $75,455,000 to repurchase shares of common stock.

The Company maintains nonqualified deferred compensation plans for the benefit of a select group of highly compensated employees. Under these plans, participants may elect to defer up to 100% of their compensation. Company assets that are earmarked to pay benefits under the plans are held in a rabbi trust and are subject to the claims of the Company’s creditors. As of ~~July 3, 2020,~~April 2, 2021, and January ~~3, 2020,~~1, 2021, the invested amounts under the plans totaled ~~$75,138,000~~$101,694,000 and ~~$75,934,000,~~$88,747,000, respectively, and are recorded in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet. These assets are classified as trading securities and are recorded at fair value with changes recorded as adjustments to miscellaneous income (loss), net.

As of ~~July 3, 2020,~~April 2, 2021, and January ~~3, 2020,~~1, 2021, vested amounts due under the plans totaled ~~$75,807,000~~$102,488,000 and ~~$76,357,000,~~$88,977,000, respectively, and are recorded within accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance ~~sheet.~~sheets. Changes in the liability are recorded as adjustments to compensation expense. During the three months ended ~~July 3, 2020 and June 28, 2019,~~April 2, 2021, the Company recognized additional compensation expense of ~~$11,003,000 and $2,184,000, respectively,~~$5,579,000 as a result of changes in the market value of the trust assets with the same amount being recorded as income in miscellaneous income (loss), net. During the ~~six~~three months ended ~~July~~April 3, 2020 the Company recognized a reduction to compensation expense of ~~$3,619,000. During the six months ended June 28, 2019, the Company recorded compensation expense~~$(14,622,000) as a result of ~~$8,053,000. The change in compensation expense was recorded due to~~ changes in the market value of the trust assets with the same amount being recorded as ~~income~~a loss in miscellaneous income (loss), net.

	Six Months Ended					Three Months Ended
(In thousands)	July 3, 2020			June 28, 2019		April 2, 2021			April 3, 2020
Cash paid during period:
Income taxes	$	7,556		$	5,972	$	381		$	1,231
Non-cash investing and financing activities:
Unrealized gain (loss) on short-term investments	$	(43	)	$	403
Unrealized (loss)/gain on short-term investments						$	(4	)	$	168
Vested stock unit awards issued to settle accrued bonuses	$	8,645		$	7,947	$	7,637		$	8,645
Accrual for capital expenditures as of period end	$	216		$	1,978
Accrual for capital expenditures						$	393		$	229
Right-of-use asset obtained in exchange for operating lease obligations	$	492		$	26,152	$	573		$	-

At ~~July 3, 2020~~April 2, 2021 and January ~~3, 2020,~~1, 2021, accounts receivable, net, was comprised of the following:

	July 3,			January 3,			April 2,			January 1,
(In thousands)	2020			2020			2021			2021
Billed accounts receivable	$	73,242		$	85,579		$	78,805		$	80,298
Unbilled accounts receivable		42,254			38,854			49,887			35,262
Allowance for contract losses and doubtful accounts		(6,155	)		(4,295	)		(4,481	)		(3,995	)
Total accounts receivable, net	$	109,341		$	120,138		$	124,211		$	111,565

The Company maintains allowances for estimated losses over the remaining contractual life of its receivables resulting from the inability of customers to meet their financial obligations or for disputes that affect the ~~Company's~~Company’s ability to fully collect amounts due. In circumstances where the Company is aware of a specific ~~customer's~~customer’s inability to meet its financial obligations or aware of a dispute with a specific customer, a specific allowance is recorded to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers the Company recognizes allowances for doubtful accounts based upon historical write-offs, customer concentration, customer creditworthiness, current economic conditions, aging of amounts due and future expectations.

A reconciliation of the beginning and ending amount of the allowance for contract losses and doubtful accounts is as follows (in thousands):

Balance at January 3, 2020	$	4,295
Balance at January 1, 2021				$	3,995
Provision for contract losses and doubtful accounts		2,817			645
Write-offs		(957	)		(159	)
Balance at July 3, 2020	$	6,155
Balance at April 2, 2021				$	4,481

The provision for contract losses as of July 3, 2020 includes approximately $1,450,000 as a result of the economic uncertainty associated with the COVID-19 pandemic. Recoveries of accounts receivable previously written-off were not material during the six months ended July 3, 2020.

On January 29, 2019, PG&E Corp. (“PG&E”) filed for bankruptcy under chapter 11 of the U.S. bankruptcy code. As of July 3, 2020, the Company’s total pre-bankruptcy outstanding accounts receivable from PG&E was $~~3.0~~ million. The Company currently expects to collect substantially all of the pre-bankruptcy accounts receivable from PG&E. However, due to the risks and uncertainties inherent in the bankruptcy process, the amount ultimately collected could differ from the Company’s current expectation. The Company continues to do work for PG&E post-bankruptcy filing and expects to be paid for this work in the ordinary course of business. Under the United States Bankruptcy code, PG&E is required to pay all post-bankruptcy expenses in the normal course of business. If they do not do so, the Company is eligible to have the post-bankruptcy obligation categorized as an administrative expense entitled to priority over most pre-bankruptcy creditors.

The Company has two reportable operating segments based on two primary areas of service. The Engineering and Other Scientific segment is a broad service group providing technical consulting in different practices primarily in engineering. The Environmental and Health segment provides services in the areas of environmental, epidemiology and health risk analysis. This segment provides a wide range of consulting services relating to environmental hazards and risks and the impact on both human health and the environment. Our Chief Executive Officer, the chief operating decision maker, reviews revenues and operating income for each of our reportable segments but does not review total assets in evaluating segment performance and capital allocation.

Segment information for the three ~~and six~~ months ended ~~July~~April 2, 2021 and April 3, 2020 ~~and June 28, 2019~~ follows:

	Three Months Ended				Six Months Ended				Three Months Ended
(In thousands)	July 3, 2020		June 28, 2019		July 3, 2020		June 28, 2019		April 2, 2021		April 3, 2020
Engineering and Other Scientific	$	72,123	$	86,820	$	157,009	$	167,074	$	93,609	$	84,887
Environmental and Health		19,922		19,686		40,989		38,463		22,872		21,066
Total revenues	$	92,045	$	106,506	$	197,998	$	205,537	$	116,481	$	105,953

	Three Months Ended						Six Months Ended						Three Months Ended
(In thousands)	July 3, 2020			June 28, 2019			July 3, 2020			June 28, 2019			April 2, 2021			April 3, 2020
Engineering and Other Scientific	$	20,807		$	29,252		$	47,448		$	55,226		$	34,057		$	26,641
Environmental and Health		7,049			7,039			14,302			13,235			7,918			7,253
Total segment operating income		27,856			36,291			61,750			68,461			41,975			33,894
Corporate operating expense		(18,736	)		(11,468	)		(16,642	)		(27,884	)		(17,917	)		2,094
Total operating income	$	9,120		$	24,823		$	45,108		$	40,577		$	24,058		$	35,988

Certain operating expenses are excluded from the Company’s measure of segment operating income. These expenses include costs associated with its human resources, finance, information technology, and business development groups; the deferred compensation expense/benefit due to the change in value of assets associated with its deferred compensation plan; stock-based compensation associated with restricted stock unit and stock option awards; and the change in its allowance for contract losses and doubtful accounts.

	Three Months Ended				Six Months Ended				Three Months Ended
(In thousands)	July 3, 2020		June 28, 2019		July 3, 2020		June 28, 2019		April 2, 2021		April 3, 2020
Engineering and Other Scientific	$	901	$	929	$	1,467	$	2,707	$	604	$	566
Environmental and Health		19		13		81		56		49		62
Total segment capital expenditures		920		942		1,548		2,763		653		628
Corporate capital expenditures		724		5,958		1,135		10,478		1,653		411
Total capital expenditures	$	1,644	$	6,900	$	2,683	$	13,241	$	2,306	$	1,039

~~- 17 -~~Certain capital expenditures associated with the Company’s corporate cost centers and the related depreciation are excluded from the Company’s segment information. The high level of corporate capital expenditures during the three months ended April 2, 2021 was due to construction costs associated with the Company’s office and laboratory facilities in Natick, Massachusetts.

	Three Months Ended				Six Months Ended				Three Months Ended
(In thousands)	July 3, 2020		June 28, 2019		July 3, 2020		June 28, 2019		April 2, 2021		April 3, 2020
Engineering and Other Scientific	$	1,068	$	1,170	$	2,205	$	2,291	$	1,010	$	1,137
Environmental and Health		46		48		93		93		46		47
Total segment depreciation and amortization		1,114		1,218		2,298		2,384		1,056		1,184
Corporate depreciation and amortization		587		424		1,189		848		600		602
Total depreciation and amortization	$	1,701	$	1,642	$	3,487	$	3,232	$	1,656	$	1,786

NaN ~~separate clients each~~client comprised ~~11%~~10% of the Company’s revenues during the three months ended ~~July 3, 2020. NaN single client comprised more than 10% of the Company’s revenues during the six months ended July 3, 2020.~~April 2, 2021. No other single client comprised more than 10% of the Company’s revenues during the three ~~and six~~ months ended ~~July 3, 2020.~~April 2, 2021. NaN single client comprised more than 10% of the Company’s revenues ~~during the three and six months ended June 28, 2019. NaN single client comprised more than 10% of the Company’s accounts receivable~~ at ~~July 3, 2020 and January~~April 3, 2020.

The Company determines if an arrangement is a lease at the inception of the arrangement. Operating leases are included in operating lease ROU assets, current operating lease liabilities, and long-term operating lease liabilities in the Company’s condensed consolidated balance sheet. The Company does not have any finance leases as of ~~July 3, 2020.~~

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate, based on the information available at commencement date, in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The amortization of operating lease ROU assets and the change in operating lease liabilities is disclosed as a single line item in the condensed consolidated ~~statements~~statement of cash flows.

The Company leases office, laboratory, and storage space in 13 states and the District of Columbia, as well as in China, Hong Kong, Singapore, Switzerland, and the United Kingdom. Leases for these office, laboratory, and storage facilities have terms generally ranging between one and ten years. Some of these leases include options to extend or terminate the lease, none of which are currently included in the lease term as the Company has determined that exercise of these options is not reasonably certain.

The Company has a Test and Engineering Center on 147 acres of land in Phoenix, Arizona. The Company leases this land from the state of Arizona under a 30-year lease agreement that expires in January of 2028 and has options to renew for 2 fifteen-year periods. As of ~~July 3, 2020,~~April 2, 2021, the Company has determined that exercise of the renewal options is not reasonably certain and thus the extension is not included in the lease term.

The Company’s equipment leases are included in the ROU asset and liability balances but are not material.

The Company leases excess space in its Silicon Valley ~~facility.~~and Natick facilities. Rental income of ~~$869,000~~$791,000 and ~~$741,000~~$991,000 was included in other income for the three months ended ~~July~~April 2, 2021 and April 3, 2020, ~~and June 28, 2019, respectively. Rental income of $1,861,000 and $1,482,000 was included in other income for the six months ended July 3, 2020 and June 28, 2019,~~ respectively.

The components of lease expense included in other operating expenses on the condensed consolidated ~~statements~~statement of income were as follows:

	Three Months Ended				Six Months Ended				Three Months Ended		Three Months Ended
(In thousands)	July 3, 2020		June 28, 2019		July 3, 2020		June 28, 2019		April 2, 2021		April 3, 2020
Operating lease cost	$	1,678	$	1,867	$	3,564	$	3,737	$	1,638	$	1,778
Variable lease cost		312		404		602		784		292		290
Short-term lease cost		163		134		288		229		146		125

Three Months Ended

Six Months Ended

Three Months Ended

(In thousands)

July 3, 2020

June 28, 2019

July 3, 2020

June 28, 2019

April 2,

2021

April 3,

2020

Cash paid for amounts included in the

measurement of operating lease

liabilities

1,638

1,747

4,072

4,281

2,279

2,434

Supplemental balance sheet information related to operating leases was as follows:

July 3,

2020

January 3,

2020

April 2,

2021

April 3,

2020

Weighted Average Remaining Lease Term

4.8 years

5.2 years

4.2 years

5.0 years

Weighted Average Discount Rate

4.4%

4.1%

4.4%

	Operating
(In thousands)	Leases			Operating Leases
2020 (excluding the six months ended July 3, 2020)		2,949
2021		6,118
2021 (excluding the three months ended April 2, 2021)					4,658
2022		4,848			5,748
2023		3,235			3,957
2024		2,176			2,304
2025		1,491			1,543
2026		1,507			1,507
2027		1,466			1,466
Total lease payments	$	23,790		$	21,183
Less imputed interest		(3,096	)		(2,335	)
Total lease liability	$	20,694		$	18,848

The Company is a party to various legal actions from time to time and may be contingently liable in connection with claims and contracts arising in the normal course of business, the outcome of which the Company believes, after consultation with legal counsel, will not have a material adverse effect on its financial condition, results of operations or liquidity. However, due to the risks and uncertainties inherent in legal proceedings, actual results could differ from current expected results. All legal costs associated with litigation are expensed as incurred.

On ~~July 30, 2020,~~April 29, 2021, the Company’s Board of Directors announced a cash dividend of ~~$0.19~~$0.20 per share of the Company’s common stock, payable ~~September~~June 25, ~~2020,~~2021, to stockholders of record as of ~~September~~June 11, ~~2020. The Company expects to continue paying quarterly dividends in the future, subject to declaration by the Company’s Board of Directors.~~2021.

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

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included herein and with our audited consolidated financial statements and notes thereto for the fiscal year ended January ~~3, 2020,~~1, 2021, which are contained in our fiscal ~~2019~~2020 Annual Report on Form 10-K, which was filed with the U.S. Securities and Exchange Commission on February ~~28, 2020~~26, 2021 (our ~~“2019~~“2020 Annual Report”).

This Quarterly Report on Form 10-Q contains certain “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995, and the rules promulgated pursuant to the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended) that are based on the beliefs of the Company’s management, as well as assumptions made by and information currently available to the Company’s management. Such forward-looking statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. When used in this document, the words “intend,” “anticipate,” “believe,” “estimate,” “expect” and similar expressions, as they relate to the Company or its management, identify such forward-looking statements. Such statements reflect the current views of the Company or its management with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company’s actual results, performance, or achievements could differ materially from those expressed in, or implied by, any such forward-looking statements. Factors that could cause or contribute to such material differences include the COVID-19 pandemic (including factors relating to measures implemented by governmental authorities or by us to promote the safety of our employees, vendors and clients; other direct and indirect impacts on our business and the businesses of our clients, vendors and other partners; impacts which may, among other things, adversely affect our clients’ ability to utilize our services at the levels they have previously; disruptions of access to our facilities or those of our clients or third parties; and increased and potentially significant economic uncertainty and volatility, including credit and collectability risks and potential disruptions of capital and credit markets), the possibility that the demand for our services may decline as a result of changes in general and industry specific economic conditions, the timing of engagements for our services, the effects of competitive services and pricing, the absence of backlog related to our business, our ability to attract and retain key employees, the effect of tort reform and government regulation on our business and liabilities resulting from claims made against us. Additional risks and uncertainties are discussed in this Quarterly Report under the heading “Risk Factors” and elsewhere in this report. The inclusion of such forward-looking information should not be regarded as a representation by the Company or any other person that the future events, plans, or expectations contemplated by the Company will be achieved. Due to such uncertainties and risks, you are warned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. The Company does not intend to release publicly any updates or revisions to any such forward-looking statements.

Exponent, Inc., is an engineering and scientific consulting firm that provides solutions to complex problems. Our multidisciplinary team of scientists, engineers and business consultants brings together more than 90 different technical disciplines to solve complicated issues facing industry and business today. Our services include analysis of product development, product recall, regulatory compliance, and the discovery of potential problems related to products, people, property and impending litigation.

There have been no significant changes in our critical accounting estimates during the ~~six~~three months ended ~~July 3, 2020,~~April 2, 2021, as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our ~~2019~~2020 Annual Report.

Revenues for the ~~second~~first quarter ~~of 2020 decreased 14%~~2021 increased 10% to ~~$92,045,000~~$116,481,000 as compared to ~~$106,506,000~~$105,953,000 during the same period last year. Revenues before reimbursements for the ~~second~~first quarter of ~~2020 decreased 12%~~2021 increased 10% to ~~$87,863,000~~$109,579,000 as compared to ~~$100,263,000~~$99,720,000 during the same period last ~~year. Business restrictions associated with~~year.

During the ~~COVID-19 pandemic caused project delays across multiple areas~~first quarter of 2021, our ~~business. The most substantial impact occurred to our~~results were bolstered by increased activity in human participant studies and litigation ~~support work with many~~projects. We are initiating new projects daily, and at the same time are gradually reengaging on projects that were paused due to ~~court-related delays~~coronavirus restrictions and court closures. The

~~business restrictions associated with~~ pandemic has altered many aspects of our lives, but one trend that has not abated is the ~~COVID-19 pandemic also delayed field inspections~~growing complexity of ~~sites~~our world. We continue to leverage our expertise to understand and ~~products, laboratory testing,~~enhance human-machine interactions for technologies including wearables, medical devices and ~~human participant studies.~~advanced vehicles. We advised industry and governments on their most pressing engineering and scientific challenges as society continues to raise expectations for safety, health, sustainability and reliability. These ~~business restrictions had the most substantial impact~~long-term trends that existed prior to the ~~transportation and oil and gas industries.~~pandemic are now only strengthening, driving increased demand for our services. We continued our work related to ~~see strength in integrity management advisory services~~physiological monitoring through wearable technology platforms for the ~~utilities sector~~U.S. Army and Navy and expanded the engagement to include a coordinated effort in the Department of Defense. We are uniquely positioned to advise clients as ~~our clients focus on power reliability. We also experienced growth in our chemical regulation and food safety practice as our scientists evaluated the effects of chemicals and new products on~~they leverage technology to improve human health and ~~the environment, including disinfectants for the novel coronavirus.~~enhance human performance.

Net income ~~decreased 22%~~increased 17% to ~~$16,346,000~~$30,848,000 during the ~~second~~first quarter of ~~2020~~2021 as compared to ~~$20,994,000~~$26,282,000 during the same period last year. Diluted earnings per share ~~decreased~~increased to ~~$0.31~~$0.58 per share as compared to ~~$0.39~~$0.49 in the same period last year. The ~~decreases~~increases in net income and diluted earnings per share were primarily due to the ~~12% decrease~~10% increase in revenues before ~~reimbursements.~~reimbursements and decreases in other operating expenses and general and administrative expenses.

We remain focused on selectively adding top talent and developing the skills necessary to expand our market position and providing clients with in-depth scientific research and analysis to determine what happened and how to prevent failures or exposures in the future. We also remain focused on capitalizing on emerging growth areas, managing other operating expenses, generating cash from operations, maintaining a strong balance sheet and undertaking activities such as share repurchases and dividends to enhance shareholder value.

We responded quickly and carefully to address the unprecedented challenges created by the pandemic. We have successfully adapted and will continue to evolve our business development, recruiting and operational approaches, yielding benefits both during and after this crisis. We have accelerated our sharing of in-depth scientific and regulatory knowledge through webinars and thought leadership pieces, which has fostered new client relationships and projects. We have shifted all recruiting activities online, allowing us to reach a more geographically expansive set of candidates. The health and safety of our team remain top priorities, and therefore we have leveraged our internal expertise to establish protocols that allow us to safely continue laboratory activities and ~~resume~~ human participant studies. Our business continuity plan and robust infrastructure have empowered productive remote work, and employees continue to work from home unless they are performing laboratory testing or inspections. Our leadership team has responded with enhanced internal communications to encourage increased connectivity across the firm.

We are pleased that the Company has been able to address the majority of our clients’ needs with a mostly remote workforce. The relaxation of business restrictions in June of 2020 allowed us to resume laboratory testing, inspections, and human participant studies for clients in non-essential industries. Field inspections of sites and products have increased due to lifting of travel ~~restrictions, but are still occurring at a reduced level since many businesses are not fully operational.~~

We successfully completed multiple human participant studies in June, utilizing our enhanced health and safety protocols. Demand for these studies continues to grow, but some are delayed because of uncertainty surrounding COVID-19 related restrictions. ~~We remain optimistic about the long-term growth of this area.~~

We continue to receive new retentions for litigation support, and work is ongoing for many existing matters. At the same time, trial dates continue to be delayed, removing imminent deadlines and causing some clients – in particular the automotive industry – to pause work. Courts have been experimenting with virtual bench trials as well as social distancing for in-person trials, so we expect trials will gradually increase.

We are pleased to be sharing our scientific and regulatory knowledge on health and safety issues related to the novel coronavirus through webinars and thought leadership pieces. We ~~have been engaged by~~continue to advise clients with respect to ~~provide regulatory support in the United States~~COVID-19 testing, contract tracing, and ~~Europe as they register their new or existing disinfectant products. We have also been advising clients on~~ occupational health and safety concerns including COVID-19 testing, contact tracing, and disinfecting as they strive to protect their employees, customers, and students. Furthermore, we have leveraged our breadth of disciplines from chemists and physicists to engineers to evaluate disinfectant products from hand sanitizers to ultraviolet light.

As society continues to raise its expectations for safety, health, sustainability and reliability, and products and processes continue to grow in their technological complexity, we will evolve to stay ahead of the curve. These market drivers have powered the Company’s growth for over 50 years and have led to increased demand for our interdisciplinary solutions despite periods of macroeconomic turbulence. As a result of the current business, travel and physical distancing restrictions caused by the COVID-19 pandemic, net revenues for the first three weeks of the third quarter declined approximately 5% to 8% as compared to the same period last year. While there aresafety.

opportunities for improvement, the high degree of uncertainty surrounding how and over what timeframe each region will impose or relax restrictions means that there could be further reduction to our revenues in the short term.

We remain focused on selectively adding top talent, developing the skills necessary to expand our market position and providing clients with in-depth scientific research and analysis to determine what happened and how to prevent failures or exposures in the future. We also remain focused on capitalizing on emerging growth areas, managing other operating expenses, generating cash from operations, maintaining a strong balance sheet and undertaking activities such as share repurchases and dividends to enhance shareholder value.

During the ~~second~~first quarter of ~~2020~~2021 billable hours ~~decreased 15%~~increased 2% to ~~299,000~~356,000 as compared to ~~352,000~~348,000 during the same period last year. Our utilization ~~decreased~~increased to ~~64%~~76% during the ~~second~~first quarter of ~~2020~~2021 as compared to ~~76%~~71% during the same period last year. Technical full-time equivalent employees ~~increased 1%~~decreased 3% to ~~899~~906 during the ~~second~~first quarter of ~~2020~~2021 as compared to ~~890~~938 during the same period last year. The decrease in technical full-time equivalent employees was due to the divestiture of our German subsidiary in April of 2020. We continue to selectively hire key talent to expand our capabilities.

Three Months Ended ~~July 3, 2020~~April 2, 2021 compared to Three Months Ended ~~June 28, 2019~~April 3, 2020

	Three Months Ended									Three Months Ended
(in thousands, except percentages)	July 3, 2020			June 28, 2019			Percent Change			April 2, 2021			April 3, 2020			Percent Change
Engineering and Other Scientific	$	72,123		$	86,820			-16.9	%	$	93,609		$	84,887			10.3	%
Percentage of total revenues		78.4	%		81.5	%					80.4	%		80.1	%
Environmental and Health		19,922			19,686			1.2	%		22,872			21,066			8.6	%
Percentage of total revenues		21.6	%		18.5	%					19.6	%		19.9	%
Total revenues	$	92,045		$	106,506			-13.6	%	$	116,481		$	105,953			9.9	%

The ~~decrease~~increase in revenues for our Engineering and Other Scientific segment was due to ~~a decrease~~an increase in billable hours ~~partially offset by~~and an increase in billing rates. During the ~~second~~first quarter of ~~2020,~~2021, billable hours for this segment ~~decreased~~increased by ~~19%~~2% to ~~223,000~~276,000 as compared to ~~277,000~~271,000 during the same period last year. Utilization for this segment ~~decreased~~increased to ~~62%~~77% during the ~~second~~first quarter of ~~2020~~2021 as compared to ~~77%~~71% during the same period last year. ~~Business restrictions associated with~~The increase in billable hours and utilization was driven by strong demand for our proactive and reactive services across a broad range of industries and use cases. In addition to the ~~COVID-19 pandemic caused project delays across multiple practices within this segment. The most substantial impact was on our~~steady increase in litigation support ~~work with many projects paused due to court-related delays. The business restrictions associated with the COVID-19 pandemic also delayed field inspections of sites and products, laboratory testing,~~ and human participant ~~studies. These business restrictions had the most substantial impact on~~studies, our ~~work for the transportation and oil and gas industries. We~~multidisciplinary battery team continued to see ~~strength~~demand for its solutions in electric vehicles and energy storage. Our work in international arbitrations and integrity management advisory services ~~for the utilities sector as our clients focus on power reliability.~~continued at strong levels. Technical full-time equivalent employees in this segment ~~increased 1%~~decreased 5% to ~~695~~692 during the ~~second~~first quarter of ~~2020~~2021 as compared to ~~688~~731 for the same period last ~~year~~year. The decrease in technical full-time equivalent employees was due to the divestiture of our ~~continuing recruiting and retention efforts.~~German subsidiary in April of 2020.

The increase in revenues for our Environmental and Health segment was due to an increase in billable ~~hours. Billable~~hours and an increase in billing rates. During the first quarter of 2021, billable hours for this segment increased by 1%4% to ~~76,000~~80,000 as compared to ~~75,000~~77,000 during the same period last year. Utilization in this segment ~~was 71% for both~~increased to 73% during the ~~second~~first quarter of ~~2020 and 2019.~~2021 as compared to 72% during the same period last year. The increase in billable hours and utilization was due to growth in our chemical regulation and food safety practice, where our scientists evaluated the effects of chemicals and new products on human health and the ~~environment, including disinfectants for the novel coronavirus.~~environment. This ~~growth was partially offset by delays~~segment also benefitted from increased activity in litigation related projects ~~for the transportation~~ and ~~oil and gas industries due to COVID-19 business restrictions.~~support of human participant studies. Technical full-time equivalent employees in this segment increased 3% to ~~204~~214 during the ~~second~~first quarter of ~~2020~~2021 as compared to ~~202~~207 during the same period last ~~year.~~year due to our recruiting and retention efforts.

	Three Months Ended									Three Months Ended
(in thousands, except percentages)	July 3, 2020			June 28, 2019			Percent Change			April 2, 2021			April 3, 2020			Percent Change
Compensation and related expenses	$	68,137		$	61,997			9.9	%	$	74,538		$	49,985			49.1	%
Percentage of total revenues		74.0	%		58.2	%					64.0	%		47.2	%

The increase in compensation and related expenses during the ~~second~~first quarter of ~~2020~~2021 was due to ~~an increase~~a change in the value of assets associated with our deferred compensation plan, ~~and~~ an increase in payroll expense ~~partially offset by decreases~~and an increase in bonus ~~expense and fringe benefits.~~expense. During the ~~second~~first quarter of ~~2020,~~2021, deferred compensation expense increased ~~$8,819,000~~by $20,201,000 with a corresponding increase to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plan. This increase consisted of an increase in the value of plan assets of ~~$11,003,000~~$5,579,000 during the ~~second~~first quarter of ~~2020~~2021 as compared to ~~an increase~~a decrease in the value of plan assets of ~~$2,184,000~~$14,622,000 during the same period last year. Payroll expense increased ~~$1,960,000~~by $1,022,000 during the ~~second~~first quarter of ~~2020~~2021 due to ~~the increase in technical full-time equivalent employees and~~ the impact of our annual salary ~~adjustments. Bonus expense decreased~~adjustments partially offset by ~~$3,300,000 during~~a decrease in technical full-time equivalent employees. During the ~~second~~first quarter of ~~2020~~2021 bonus expense increased by $3,781,000 due to a corresponding ~~decrease to our bonus pool which is 33% of~~increase in income before income taxes, ~~interest income,~~before bonus expense, and before stock-based compensation. Fringe benefits decreased by $1,136,000 during the second quarter of 2020 due to an employee retention credit for $1,559,000 that we claimed under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). This employee retention credit under the CARES Act is a refundable tax credit which reduced our employer payroll taxes. The impact of the retention credit was partially offset by increases in fringe benefits associated with increases in technical full-time equivalent employees and our annual salary adjustments. We expect our compensation expense, excluding the change in value of deferred compensation plan assets, to increase as we selectively add new talent and adjust compensation to market conditions.

	Three Months Ended									Three Months Ended
(in thousands, except percentages)	July 3, 2020			June 28, 2019			Percent Change			April 2, 2021			April 3, 2020			Percent Change
Other operating expenses	$	7,681		$	8,095			-5.1	%	$	7,710		$	8,216			-6.2	%
Percentage of total revenues		8.3	%		7.6	%					6.6	%		7.8	%

Other operating expenses include facilities-related costs, technical materials, computer-related expenses and depreciation and amortization of property, equipment and leasehold improvements. The decrease in other operating expenses during the ~~second~~first quarter of ~~2020~~2021 was primarily due to a decrease in occupancy expense of ~~$236,000~~$307,000 and a decrease in ~~technical materials~~office expenses of ~~$181,000. These~~$212,000. The decreases in occupancy and office expenses were primarily due to COVID-19 pandemic related business restrictions. We expect other operating expenses to grow as we selectively add new talent, ~~and~~ make investments in our corporate ~~infrastructure.~~infrastructure, and transition our workforce back to our offices as COVID-19 pandemic related business restrictions are lifted.

	Three Months Ended									Three Months Ended
(in thousands, except percentages)	July 3, 2020			June 28, 2019			Percent Change			April 2, 2021			April 3, 2020			Percent Change
Reimbursable expenses	$	4,182		$	6,243			-33.0	%	$	6,902		$	6,233			10.7	%
Percentage of total revenues		4.5	%		5.9	%					5.9	%		5.9	%

The amount of reimbursable expenses will vary from quarter to quarter depending on the nature of our projects. ~~The decrease during the second quarter of 2020 was primarily due to COVID-19 business and travel restrictions.~~

	Three Months Ended									Three Months Ended
(in thousands, except percentages)	July 3, 2020			June 28, 2019			Percent Change			April 2, 2021			April 3, 2020			Percent Change
General and administrative expenses	$	2,925		$	5,348			-45.3	%	$	3,273		$	5,531			-40.8	%
Percentage of total revenues		3.2	%		5.0	%					2.8	%		5.2	%

The decrease in general and administrative expenses ~~during the second quarter of 2020~~ was primarily due to a decrease in bad debt expense of $1,366,000 and a decrease in travel and meals of ~~$1,525,000, a~~$853,000. The decrease in ~~personnel expenses~~bad debt was due to additional reserves we booked to our allowance for doubtful accounts during the first quarter of ~~$543,000, and~~2020 as a result of the economic uncertainty associated with the COVID-19 pandemic. The decrease in ~~marketing~~travel and ~~business development expenses of $353,000. These decreases are all primarily~~meals was due to the travel restrictions put in place due to the COVID-19 ~~business and travel restrictions.~~pandemic. We expect general and administrative expenses to increase as we selectively add new talent, ~~and~~ expand our business development and staff development ~~initiatives.~~initiatives, and increase travel and meal expenses as COVID-19 pandemic related business restrictions are lifted.

The increase in operating income for our Engineering and Other Scientific segment during the first quarter of 2021 as compared to the same period last year was due to an increase in revenues. The increase in revenues was driven by strong demand for our proactive and reactive services across a broad range of industries and use cases. In addition to the steady increase in litigation support and human participant studies, our multidisciplinary battery team continued to see demand for its solutions in electric vehicles and energy storage. Our work in international arbitrations and integrity management advisory services continued at strong levels.

The increase in operating income for our Environmental and Health segment during the first quarter of 2021 as compared to the same period last year was due to an increase in revenues. The increase in revenues was due to growth in our chemical regulation and food safety practice, where our scientists evaluated the effects of chemicals and new products on human health and the environment. This segment also benefitted from increased activity in litigation related projects and support of human participant studies.

Certain operating expenses are excluded from the Company’s measure of segment operating income. These expenses include the costs associated with our human resources, finance, information technology, and business development groups; the deferred compensation expense/benefit due to the change in value of assets associated with our deferred compensation plan; stock-based compensation associated with restricted stock unit and stock option awards; and the change in our allowance for contract losses and doubtful accounts.

The increase in corporate operating expenses during the first quarter of 2021 as compared to the same period last year was primarily due to an increase in deferred compensation expense. During the first quarter of 2021, deferred compensation expense increased $20,201,000, with a corresponding increase to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plan. This increase consisted of an increase in the value of plan assets of $5,579,000 during the first quarter of 2021 as compared to a decrease in the value of plan assets of $14,622,000 during the same period last year.

	Three Months Ended									Three Months Ended
(in thousands, except percentages)	July 3, 2020			June 28, 2019			Percent Change			April 2, 2021			April 3, 2020			Percent Change
Other income, net	$	12,294		$	4,028			205.2	%	$	6,068		$	(11,933	)		-150.9	%
Percentage of total revenues		13.4	%		3.8	%					5.2	%		-11.3	%

Other income, net, consists primarily of changes in the value of assets associated with our deferred compensation plan, interest income earned on available cash, cash equivalents and short-term investments, and rental income from leasing space in our Silicon Valley ~~facility.~~and Natick facilities. The increase in other income, net, was primarily due to a change in the value of assets associated with our deferred compensation plan partially offset by a change in the realized gain/loss on foreign exchange and a decrease in interest ~~income.~~income of $846,000. During the ~~second~~first quarter of ~~2020,~~2021, other income, net, increased ~~$8,819,000~~by $20,201,000 with a corresponding increase to deferred compensation expense, as compared to the same period last year, due to a change in the value of assets associated with our deferred compensation plan. This increase consisted of an increase in the value of the plan assets of ~~$11,003,000~~$5,579,000 during the ~~second~~first quarter of ~~2020~~2021 as compared to ~~an increase~~a decrease in the value of the plan assets of ~~$2,184,000~~ $14,622,000

during the same period last year. ~~The decrease in interest income of $619,000 was due to lower interest rates for our cash equivalents and short-term investments.~~

The decrease in the effective tax rate was due to an increase in the excess tax benefit associated with stock-based awards. The excess tax benefit associated with stock-based awards increased to $898,000 during the second quarter of 2020 as compared to $18,000 during the same period last year.

~~The decrease in revenues for our Engineering and Other Scientific segment was due to a decrease in billable hours partially offset by an increase in billing rates.~~ During the first ~~six months~~quarter of 2020, billable hours for this segment decreased by 8% to 494,000 as compared to 535,000 during the same period last year. Utilization for this segment decreased to 67% during the first six months of 2020 as compared to 75% during the same period last year. Business restrictions associated with the COVID-19 pandemic caused project delays across multiple practices within this segment. The most substantial impact occurred to our litigation support work with many projects paused due to court-related delays. The business restrictions associated with the COVID-19 pandemic also delayed field inspections of sites and products, laboratory testing, and human participant studies. These business restrictions had the most substantial impact to the transportation and oil and gas industries. We continued to see strength in integrity management advisory services for the utilities sector as our clients focus on power reliability. Technical full-time equivalent employees in this segment increased 4% to 713 during the first six months of 2019 as compared to 684 for the same period last year due to our continuing recruiting and retention efforts.

The increase in revenues for our Environmental and Health segment was due to an increase in billable hours and an increase in billing rates. During the first six months of 2020, billable hours for this segment increased by 5% to 153,000 as compared to 146,000 during the same period last year. Utilization in this segment increased to 72% during the first six months of 2020 as compared to 69% during the same period last year. The increase in billable hours and utilization was due to growth in our chemical regulation and food safety practice, where our scientists evaluated the effects of chemicals and new products on human health and the environment, including disinfectants for the novel coronavirus. This growth was partially offset by delays in projects for the transportation and oil and gas industries due to COVID-19 business restrictions. Technical full-time equivalent employees in this segment increased by 1% to 205 during the first six months of 2020 as compared to 203 during the same period last year due to our continuing recruiting and retention efforts.

The decrease in compensation and related expenses during the first six months of 2020 was due to a change in the value of assets associated with our deferred compensation plan and a decrease in bonus expense partially offset by an increase in payroll expense. During the first six months of 2020, deferred compensation expense decreased $11,672,000 with a corresponding decrease to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plan. This decrease consisted of a decrease in the value of plan assets of $3,619,000 during the first six months of 2020 as compared to an increase in the value of plan assets of $8,053,000 during the same period last year. Bonus expense decreased by $3,096,000 during the first six months of 2020 due to a corresponding decrease to our bonus pool which is 33% of income before income taxes, interest income, bonus expense, and stock-based compensation. Payroll expense increased $5,412,000 during the first six months of 2020 due to the increase in technical full-time equivalent employees and the impact of our annual salary adjustments. We expect our compensation expense, excluding the change in value of

~~deferred compensation plan assets, to increase as we selectively add new talent and adjust compensation to market conditions.~~

Other operating expenses include facilities-related costs, technical materials, computer-related expenses and depreciation and amortization of property, equipment and leasehold improvements. The decrease in other operating expenses during the first six months of 2020 was primarily due to a decrease in technical materials of $370,000 and a decrease in office expenses of $114,000 partially offset by an increase in depreciation expense of $255,000. The decreases in technical materials and office expenses were primarily due to COVID-19 business restrictions. The increase in depreciation expense was due to our increase in technical full-time equivalent employees and investments in our corporate infrastructure. We expect other operating expenses to grow as we selectively add new talent and make investments in our corporate infrastructure.

The amount of reimbursable expenses will vary from quarter to quarter depending on the nature of our projects. The decrease during the first six months of 2020 was primarily due to COVID-19 business and travel restrictions.

The decrease in general and administrative expenses during the first six months of 2020 was primarily due to a decrease in travel and meals of $1,965,000 and a decrease in personnel expenses of $616,000, partially offset by an increase in bad debt expense of $1,223,000. These decreases in travel and meals and personnel expenses are primarily due to COVID-19 business and travel restrictions. The increase in bad debt was due to additional reserves we booked to our allowance for doubtful accounts as a result of the economic uncertainty associated with the COVID-19 pandemic. We expect general and administrative expenses to increase as we selectively add new talent and expand our business development and staff development initiatives.

Other income, net, consists primarily of changes in the value of assets associated with our deferred compensation plan, interest income earned on available cash, cash equivalents and short-term investments, and rental income from leasing space in our Silicon Valley facility. The decrease in other income, net, was primarily due to a change in the value of assets associated with our deferred compensation plan and a decrease in interest income of $799,000 partially offset by an increase in the realized gain on foreign exchange of $863,000 and an increase in rental income of $379,000. During the first six months of 2020,2021, other income, net, decreased ~~$11,672,000 with a corresponding decrease to deferred compensation expense,~~by $1,155,000 as compared to the same period last year due to a change in the ~~value of assets associated with our deferred compensation plan.~~realized gain/loss on foreign exchange. This decrease consisted of a ~~decrease in the value~~realized loss on foreign exchange of ~~the plan assets of $3,619,000~~$334,000 during the first ~~six months~~quarter of ~~2020~~2021 as compared to ~~an increase in the value~~a realized gain on foreign exchange of ~~the plan assets of $8,053,000~~$821,000 during the ~~same period last year.~~first quarter of 2020. The decrease in interest income was due to lower interest rates for our cash equivalents and short-term investments. ~~The increase in the realized gain on foreign exchange was due to an increase in the value of monetary assets denominated in non-functional currencies.~~

	Six Months Ended									Three Months Ended
(in thousands, except percentages)	July 3, 2020			June 28, 2019			Percent Change			April 2, 2021			April 3, 2020			Percent Change
Income taxes	$	2,841		$	8,467			(66.4	)%	$	(722	)	$	(2,227	)		-67.6	%
Percentage of total revenues		1.4	%		4.1	%					-0.6	%		-2.1	%
Effective tax rate		6.2	%		16.2	%					-2.4	%		-9.3	%

~~The decrease in the effective tax rate was due to an increase in the excess tax benefit associated with stock-based awards.~~ The excess tax benefit associated with stock-based awards ~~increased to $9,670,000~~was $8,782,000 during the first ~~six months~~quarter of ~~2020~~2021 as compared to ~~$5,688,000~~$8,772,000 during the same period last year. Excluding the impact of the excess tax benefit, the effective tax rate would have been 26.8% during the first quarter of 2021 as compared to 27.2% during the same period last year.

We believe our existing balances of cash, cash equivalents, short-term investments and cash generated from operations will be sufficient to satisfy our working capital needs, capital expenditures, outstanding commitments, stock repurchases, dividends and other liquidity requirements over at least the next twelve months. However, we continue to monitor the impact of the COVID-19 pandemic on our cash flows and on the credit and financial markets.

	Six Months Ended						Three Months Ended
(in thousands)	July 3, 2020			June 28, 2019			April 2, 2021			April 3, 2020
Net cash provided by operating activities	$	34,199		$	24,819
Net cash provided by/(used in) investing activities		18,533			(20,187	)
Net cash provided by (used in) operating activities							$	1,285		$	(13,835	)
Net cash provided by investing activities								12,488			7,707
Net cash used in financing activities		(72,906	)		(27,237	)		(27,026	)		(64,324	)

We financed our business during the first ~~six~~three months of ~~2020~~2021 through available cash. We invest our excess cash in cash equivalents and short-term investments. As of ~~July 3, 2020,~~April 2, 2021, our cash, cash equivalents and short-term investments were ~~$190,152,000~~$214,520,000 as compared to ~~$231,601,000 as of~~$242,526,000 at January 3, 2020. We believe our existing balances of cash, cash equivalents, short-term investments and cash generated from operations will be sufficient to satisfy our working capital needs, capital expenditures, outstanding commitments, stock repurchases, dividends and other liquidity requirements over at least the next twelve months.1, 2021.

Generally, our net cash provided by operating activities is used to fund our day to day operating activities. First quarter operating cash requirements are generally higher due to payment in the first quarter of our annual bonuses accrued during the prior year. Our largest source of operating cash flows is collections from our clients. Our primary uses of cash from operating activities are for employee related expenditures, leased facilities, taxes, and general operating expenses including marketing and travel. The increase in net cash provided by operating activities during the first three months of 2021, as compared to the same period last year, was due to an increase in net income and changes in operating assets and liabilities.

The increase in net cash provided by investing activities during the first ~~six~~three months of ~~2020,~~2021, as compared to the same period last year, was due to an increase in the maturity of short-term investments, partially offset by an increase in the purchase of short-term investments.

The decrease in net cash used in financing activities during the first three months of 2021, as compared to the same period last year, was due to a decrease in the purchase of short-term investments, net of maturities and a decrease in capital expenditures. The decrease in capital expenditures was due to the completion of construction of our office and laboratory facilities in Natick, Massachusetts during 2019.

~~The increase in net cash used in financing activities during the first six months of 2020, as compared to the same period last year, was due to an increase in~~ repurchases of our common ~~stock, an increase in payroll taxes for restricted stock units and an increase in dividend payments.~~stock.

We expect to continue our investing activities, including capital expenditures. Furthermore, cash reserves may be used to repurchase shares of common stock under our stock repurchase programs, pay dividends, or strategically acquire professional service firms that are complementary to our business.

For a summary of our commitments to make future payments under contractual obligations, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” in our ~~2019~~2020 Annual Report. There have been no material changes in our contractual obligations since January ~~3, 2020.~~1, 2021.

We maintain a nonqualified deferred compensation plan for the benefit of a select group of highly compensated employees. Vested amounts due under the plan of ~~$72,564,000~~$95,289,000 were recorded as a long-term liability on our unaudited condensed consolidated balance sheet at ~~July 3, 2020.~~April 2, 2021. Vested amounts due under the plan of ~~$3,243,000~~$7,199,000 were recorded as a current liability on our unaudited condensed consolidated balance sheet at ~~July 3, 2020.~~April 2, 2021. Company assets that are earmarked to pay benefits under the plan are held in a rabbi trust and are subject to the claims of our creditors. As of ~~July 3, 2020,~~April 2, 2021, invested amounts under the plan of ~~$71,895,000~~$94,395,000 were recorded as a long-term asset on our unaudited condensed consolidated balance sheet. As of ~~July 3, 2020,~~April 2, 2021, invested amounts under the plan of ~~$3,243,000~~$7,299,000 were recorded as a current asset on our unaudited condensed consolidated balance sheet.

As permitted under Delaware law, we have agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or director is, or was, serving at our request in such capacity. The indemnification period covers all pertinent events and occurrences during the officer’s or director’s lifetime. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have director and officer insurance coverage that reduces our exposure and enables us to recover a portion of any future amounts paid.

Regulation G, Conditions for Use of Non-Generally Accepted Accounting Principles ("Non-GAAP") Financial Measures, and other U.S. Securities and Exchange Commission (“SEC”) rules and regulations define and prescribe the conditions for use of Non-GAAP financial information. Generally, a Non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. We closely monitor two financial measures, EBITDA and EBITDAS, which meet the definition of Non-GAAP financial measures. We define EBITDA as net income before income taxes, net interest income, depreciation and amortization. We define EBITDAS as EBITDA before stock-based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance to complement operating income, net income and other GAAP financial performance measures. Additionally, management believes that EBITDA and EBITDAS provide meaningful comparisons of past, present and future operating results. These measures are used to evaluate our financial results, develop budgets and determine employee compensation. These measures, however, should be considered in addition to, and not as a substitute for or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. A reconciliation of the Non-GAAP measures to the nearest comparable GAAP measure is set forth below.

The following table shows EBITDA (determined as shown in the reconciliation table below) as a percentage of revenues before reimbursements for the three ~~and six~~ months ended ~~July~~April 2, 2021 and April 3, ~~2020 and June 28, 2019:~~2020:

	Three Months Ended						Six Months Ended						Three Months Ended
(in thousands, except percentages)	July 3, 2020			June 28, 2019			July 3, 2020			June 28, 2019			April 2, 2021			April 3, 2020
Revenues before reimbursements	$	87,863		$	100,263		$	187,583		$	193,664		$	109,579		$	99,720
EBITDA	$	22,810		$	29,569		$	47,776		$	53,426		$	31,753		$	24,966
EBITDA as a % of revenues before reimbursements		26.0	%		29.5	%		25.5	%		27.6	%		29.0	%		25.0	%

The ~~decrease~~increase in EBITDA as a percentage of revenues before reimbursements during the ~~second~~first quarter of ~~2020~~2021 as compared to the same period last year was primarily due to ~~the decrease~~10% growth in revenues ~~caused by~~before reimbursements and decreases in other operating expenses and general and administrative expenses. The increase in revenues was due to increased activity in human participant studies and litigation projects. The decreases in other operating expenses and general and administrative expenses were primarily due to the business and travel restrictions associated with the COVID-19 pandemic.

~~The decrease in EBITDA~~ We expect other operating expenses and general and administrative expenses to increase as ~~a percentage of revenues before reimbursements during the first six months of 2020 as compared to the same period last year was primarily due to the decrease in revenues caused by~~COVID-19 pandemic related business restrictions ~~associated with the COVID-19 pandemic.~~are lifted

The following table is a reconciliation of EBITDA and EBITDAS to the most comparable GAAP measure, net income, for the three ~~and six~~ months ended ~~July 3, 2020:~~April 2, 2021:

	Three Months Ended						Six Months Ended						Three Months Ended
(in thousands)	July 3, 2020			June 28, 2019			July 3, 2020			June 28, 2019			April 2, 2021			April 3, 2020
Net income	$	16,346		$	20,994		$	42,628		$	43,706		$	30,848		$	26,282
Add back (subtract):
Income taxes		5,068			7,857			2,841			8,467			(722	)		(2,227	)
Interest income, net		(305	)		(924	)		(1,180	)		(1,979	)		(29	)		(875	)
Depreciation and amortization		1,701			1,642			3,487			3,232			1,656			1,786
EBITDA		22,810			29,569			47,776			53,426			31,753			24,966
Stock-based compensation		3,462			4,010			9,600			9,741			6,282			6,138
EBITDAS	$	26,272		$	33,579		$	57,376		$	63,167		$	38,035		$	31,104

We are exposed to interest rate risk associated with our balances of cash, cash equivalents and short-term investments. We manage our interest rate risk by maintaining an investment portfolio primarily consisting of debt instruments with high credit quality and relatively short average effective maturities in accordance with our investment policy. The maximum effective maturity of any issue in our portfolio is 3 years and the maximum average effective maturity of the portfolio cannot exceed 12 months. If interest rates were to instantaneously increase or decrease by 100 basis points, the change in the fair market value of our portfolio of cash equivalents and short-term investments would not have a material impact on our financial statements. We do not use derivative financial instruments in our portfolio. There have not been any material changes during the period covered by this Quarterly Report on Form 10-Q to our interest rate risk exposures, or how these exposures are managed. Notwithstanding our efforts to manage interest rate risk, there can be no assurances that we will be adequately protected against the risks associated with interest rate fluctuations.

We have foreign currency risk related to our revenues and expenses denominated in currencies other than the U.S. dollar, primarily the British Pound, the Euro, the Chinese Yuan, and the Hong Kong Dollar. Accordingly, changes in exchange rates may negatively affect the revenues and net income of our foreign subsidiaries as expressed in U.S. dollars.

At ~~July 3, 2020,~~April 2, 2021, we had net assets of approximately ~~$11,600,000~~$17.9 million with a functional currency of the British Pound, net assets of approximately ~~$4,400,000~~$6.1 million with a functional currency of the Chinese Yuan, and net assets of

approximately ~~$5,300,000~~$4.8 million with a functional currency of the Hong Kong Dollar associated with our operations in the United Kingdom, China, and Hong Kong respectively.

We also have foreign currency risk related to foreign currency transactions and monetary assets and liabilities denominated in currencies that are not the functional currency. We have experienced and will continue to experience fluctuations in our net income as a result of gains (losses) on these foreign currency transactions and the remeasurement of monetary assets and liabilities. At ~~July 3, 2020,~~April 2, 2021, we had net assets denominated in the non-functional currency of approximately ~~$2,400,000.~~$8.0 million.

We do not use foreign exchange contracts to hedge any foreign currency exposures. To date, the impacts of foreign currency exchange rate changes on our consolidated revenues and consolidated net income have not been ~~material.~~significant. However, our continued international growth increases our exposure to exchange rate fluctuations and as a result such fluctuations could have a significant impact on our future results of operations.

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this quarterly report. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that, as of ~~July 3, 2020,~~April 2, 2021, the Company’s disclosure controls and procedures were effective.

We review and evaluate the design and effectiveness of our disclosure controls and procedures on an ongoing basis, to improve our controls and procedures over time and to correct any deficiencies that we may discover in the future. Our goal is to ensure that our senior management has timely access to all material financial and non-financial information concerning our business. While we believe the present design of our disclosure controls and procedures is effective to achieve our goal, future events affecting our business may cause us to significantly modify our disclosure controls and procedures.

There were no changes in our internal control over financial reporting during the three-month period ended ~~July 3, 2020~~April 2, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.~~We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 pandemic.~~

Exponent operates in a rapidly changing environment that involves a number of uncertainties, some of which are beyond our control and may have a material adverse effect on our financial condition and results of operations. These uncertainties include, but are not limited to, those mentioned elsewhere in this report and those set forth below.

The effects of the COVID-19 pandemic have materially affected our operations and those of our clients. The duration and extent to which this will impact our future financial condition and results of operations remains uncertain.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, which continues to spread throughout the U.S. and the world and has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns. While we are unable to accurately predict the full impact that COVID-19 will have on our financial condition and results of operations due to numerous uncertainties, including the duration and severity of the pandemic and containment measures, compliance with these measures has impacted our operations.

~~The vast majority of our employees~~There have been ~~working remotely since~~no material changes from risk factors as previously discussed under the implementation of government measures to contain the virus. These remote working arrangements may result in inefficiencies, delays and additional costs and risks. In addition, most of our clients are also working remotely, which may delay the initiation of new projects and the execution of on-going work. We have seen slowing of a portion of our litigation support projects due to courthouse closures and associated legal delays. Travel restrictions are delaying work that requires inspection of a site or a product that cannot be shipped. The pandemic has also negatively impacted our ability to conduct user studies.

The COVID-19 pandemic also raises the possibility of an extended global economic downturn and has caused volatility in financial markets, which could affect demand for our services and impact our financial condition and results of operations even after the pandemic is contained and the containment measures are lifted. For example, we may be unable to collect receivables from those customers significantly impacted by COVID-19. We believe that our existing balances of cash, cash equivalents, short-term investments and cash generated from operations to be sufficient to satisfy our working capital needs, capital expenditures, outstanding commitments, stock repurchases, dividends and other liquidity requirements over at least the next twelve months. However, we continue to monitor the impact of the COVID-19 pandemic on our cash flows and on the credit and financial markets.

The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus, the extent and effectiveness of containment actions, and the impact of these and other factors on our employees and clients. ~~We will continue to evaluate the nature and extent of the impact of the COVID-19 pandemic to our business.~~

~~The unpredictable and reactive nature of our business can create uneven performance in any given quarter or fiscal year.~~

Revenues are primarily derived from services provided in response to client requests or events that occur without notice, and engagements, generally billed as services are performed, are terminable or subject to postponement or delay at any time by clients. As a result, backlog at any particular time is small in relation to our quarterly or annual revenues and is not a reliable indicator of revenues for any future periods. Revenues and operating margins for any particular quarter are generally affected by staffing mix, resource requirements and timing and size of engagements.

~~Our financial results could suffer if our clients’ needs change more rapidly than we are able to secure the appropriate mix of trained, skilled and experienced personnel.~~

As our clients’ needs change, new technologies develop, and legal and regulatory processes change, we may be unable to timely hire or train personnel with the appropriate new set of skills and experience which could negatively impact our growth and profitability.

~~Failure to attract and retain key employees may adversely affect our business.~~

Exponent’s business involves the delivery of professional services and is labor-intensive. Our success depends in large part upon our ability to attract, retain and motivate highly qualified technical and managerial personnel. Qualified personnel are in great demand and are likely to remain a limited resource for the foreseeable future. We cannot provide any assurance that we can continue to attract sufficient numbers of highly qualified technical and managerial personnel and retain existing employees. We have experienced and expect to continue to experience employee turnover. The loss of key managerial employees, business generators or any significant number of employees could have a material adverse impact on our business, including our ability to secure and complete engagements.

The markets for our services are highly competitive. In addition, there are relatively low barriers to entry into our markets and we have faced, and expect to continue to face, additional competition from new entrants into our markets. Competitive pressure could reduce the market acceptance of our services and result in price reductions that could have a material adverse effect on our business, financial condition or results of operations.

~~We currently derive a significant portion of our revenues from clients~~heading “Risk Factors” in the chemical, construction, consumer products, energy, life sciences, and transportation industries. The loss of any large client could have a material adverse effect on our business, financial condition or results of operations.

If a client's financial difficulties become severe, the client may be unwilling or unable to pay our invoices in the ordinary course of business, which could adversely affect collections of both our accounts receivable and unbilled services. The COVID-19 pandemic raises the possibility of an extended global economic downturn which may impact the ability of our customers to pay for our services. On occasion, some of our clients have entered bankruptcy, which has prevented us from collecting amounts owed to us. The bankruptcy of a client with substantial accounts receivable could have a material adverse effect on our financial condition and results of operations.

~~On January 29, 2019, PG&E Corp. (“PG&E”) filed for bankruptcy under chapter 11 of the U.S. bankruptcy code. As of July 3,~~Company’s 2020 our total pre-bankruptcy outstanding accounts receivable from PG&E was $3.0 million. We currently expect to collect substantially all of the pre-bankruptcy accounts receivable from PG&E. However, due to the risks and uncertainties inherent in the bankruptcy process, the amount ultimately collected could differ from our current expectation. We continue to do work for PG&E post-bankruptcy filing and expect to be paid for this work in the ordinary course of business. Under the United States Bankruptcy code, PG&E is required to pay all post-bankruptcy expenses in the normal course of business. If they do not do so, we are eligible to have the post-bankruptcy obligation categorized as an administrative expense entitled to priority over most pre-bankruptcy creditors.Annual Report.

Our cash equivalent and short-term investment portfolio as of July 3, 2020, consisted primarily of obligations of the U.S. Treasury. We follow an established investment policy to monitor, manage and limit our exposure to interest rate and credit risk. The policy sets forth credit quality standards and limits our exposure to any one issuer, as well as our maximum exposure to various asset classes.

Investments in some financial instruments may pose risks arising from liquidity and credit concerns. As of July 3, 2020, we had no impairment charge associated with our investment portfolio relating to such adverse financial market conditions. Although we believe our current investment portfolio has a low risk of impairment, we cannot predict future market conditions or market liquidity and can provide no assurance that our investment portfolio will remain unimpaired.

The professional reputation of Exponent and its consultants is critical to our ability to successfully compete for new client engagements and attract or retain professionals. Proven or unproven allegations against us may damage our professional reputation. Any factors that damage our professional reputation could have a material adverse effect on our business.

~~Our business can be adversely impacted by deregulation or reduced regulatory enforcement.~~

Public concern over health, safety and preservation of the environment has resulted in the enactment of a broad range of environmental and/or other laws and regulations by local, state and federal lawmakers and agencies. These laws and the implementation of new regulations affect nearly every industry, as well as the agencies of federal, state and local governments charged with their enforcement. To the extent changes in such laws, regulations and enforcement or other factors significantly reduce the exposures of manufacturers, owners, service providers and others to liability, the demand for our services may be significantly reduced.

Several of our practices have a significant concentration in litigation support consulting services. To the extent tort reform reduces the exposure of manufacturers, owners, service providers and others to liability, the demand for our litigation support consulting services may be significantly reduced.

Our services typically involve difficult engineering and scientific assignments and carry risks of professional and other liability. Many of our engagements involve matters that could have a severe impact on a client's business, cause a client to lose significant amounts of money, or prevent a client from pursuing desirable business opportunities. Accordingly, if a client is dissatisfied with our performance, the client could threaten or bring litigation in order to recover damages or to contest its obligation to pay our fees. Litigation alleging that we performed negligently, disclosed client confidential information, lost or damaged evidence, infringed on patents, were forced to withdraw from a legal matter due to a conflict or otherwise breached our obligations to a client could expose us to significant liabilities to our clients or other third parties or tarnish our reputation.

~~Potential conflicts of interest may preclude us from accepting some engagements.~~

We provide litigation support consulting and other services primarily in connection with significant disputes, or other matters that are usually adversarial or that involve sensitive client information. The nature of our consulting services has and will continue to preclude us from accepting engagements with other potential clients because of conflicts. Accordingly, the nature of our business limits the number of both potential clients and potential engagements.

Although we seek to avoid litigation whenever possible, from time to time we are party to various lawsuits and claims. Disputes may arise, for example, from employment issues, regulatory actions, business acquisitions and real estate and other commercial transactions. There can be no assurances that any lawsuits or claims will be immaterial in the future. Any material lawsuits or claims could adversely affect our business and reputation.

~~We are subject to security breaches that may disrupt our operations and/or lead to the inability to protect confidential information.~~

We have experienced, and expect to continue to be subjected to, security breaches and threats, none of which have been material to us to date. Despite the implementation of security and business continuity measures, our information technology infrastructure and networks are vulnerable to electronic breaches of security. Such breaches could lead to disruptions of our operations and potential unauthorized disclosure of confidential and/or personal information, which could result in legal claims or proceedings. While we have taken reasonable steps to prevent and mitigate the damage of a security breach by continuously improving our design and coordination of security controls across our business, those steps may not be effective and there can be no assurance that any such steps can be effective against all possible risks.

~~Failure to protect client and employee data may have an adverse effect on our business.~~

We manage, utilize, and store sensitive or confidential client or employee data, including personal data and protected health information. As a result, we are subject to numerous laws and regulations designed to protect this information, such as the U.S. federal and state laws governing the protection of health or other personally identifiable information, including the Health Insurance Portability and Accountability Act, and international laws such as the European Union General Data Protection Regulation. In addition, many states, U.S. federal governmental authorities and non-U.S. jurisdictions have adopted, proposed, or are considering adopting or proposing, additional data security and/or data privacy statutes or regulations such as the California Consumer Privacy Act. These laws and regulations are increasing in complexity and number. If any person, including any of our employees, negligently disregards or intentionally breaches our established controls with respect to client or employee data, or otherwise mismanages or misappropriates that data, we could be subject to significant monetary damages, regulatory enforcement actions, fines, and/or criminal prosecution. In addition, unauthorized disclosure of sensitive or confidential client or employee data, whether through systems failure, employee negligence, fraud, or misappropriation, could damage our reputation and cause us to lose clients and their related revenue in the future. Our remote working arrangements due to the COVID-19 pandemic may increase the risks associated with protecting client and employee data.

~~Impairment of goodwill may require us to record a significant charge to earnings.~~

On our balance sheet, we have $8,607,000 of goodwill subject to periodic evaluation for impairment. Failure to achieve sufficient levels of cash flow at reporting units, the loss of key employees, changes to the scope of operations of our business or a significant and sustained decline in our stock price could result in goodwill impairment charges. The COVID-19 pandemic raises the possibility of an extended global economic downturn which increase the risk of goodwill impairment charges. During times of financial market volatility, significant judgment is required to determine the underlying cause of the decline and whether stock price declines are short-term in nature or indicative of an event or change in circumstances.

~~Impairment of long-lived assets or restructuring activities may require us to record a significant charge to earnings.~~

Our long-lived assets, including our office, laboratory and warehouse space in Menlo Park, California, our test and engineering center in Phoenix, Arizona, and our office and laboratory facilities in Natick, Massachusetts, are subject to periodic testing for impairment. Failure to achieve sufficient levels of cash flow at the asset group level could result in impairment of our long-lived assets. In addition, we have operating lease right-of-use assets for office and laboratory space. Changes in the business environment could lead to changes in the scope of operations of our business. These changes, including the closure of one or more offices, could result in restructuring and/or asset impairment charges. The COVID-19 pandemic raises the possibility of an extended global economic downturn which increase the risk of long-lived asset impairment charges.

~~Our international operations create special risks that could adversely affect our business.~~

In addition to our offices in the United States, we have physical offices in the United Kingdom, Switzerland, Hong Kong, China, Singapore, Ireland, and Canada, and conduct business in several other countries. We expect to continue to expand globally and our international revenues may account for an increasing portion of

our revenues in the future. Our international operations carry special financial, business and legal risks, including cultural and language differences; employment laws and related factors that could result in lower utilization, higher staffing costs, and cyclical fluctuations of utilization and revenues; currency fluctuations that adversely affect our financial position and operating results; burdensome regulatory requirements and other barriers to conducting business; tariffs and other trade barriers including the United Kingdom’s decision to leave the European Union; managing the risks associated with engagements with foreign officials and governmental agencies, including the risks arising from the United States Foreign Corrupt Practices Act and the United Kingdom Bribery Act of 2010; managing the risks associated with global privacy and data security laws and regulations including the General Data Protection Regulation in Europe; greater difficulties in managing and staffing foreign operations; successful entry and execution in new markets; restrictions on the repatriation of earnings; potentially adverse tax consequences; other impending legislation that could add additional risks to the business; and the COVID-19 pandemic and resulting restrictions on business activity which vary significantly by region.

~~Inherent risks related to government contracts may adversely affect our business.~~

We work for various United States and foreign governmental entities and agencies. Government entities reserve the right to audit our contracts and conduct inquiries and investigations of our business practices with respect to government contracts. Findings from an audit may result in fees being refunded to the government or prospective adjustment to previously agreed upon rates that will affect future margins. If a government client discovers improper or illegal activities in the course of audits or investigations, we may become subject to various civil and criminal penalties and administrative sanctions, which may include termination of contracts, forfeiture of profits, suspension of payments, fines and suspensions or debarment from doing business with other agencies of the government. The inherent limitations of internal controls may not prevent or detect all improper or illegal activities, regardless of the adequacy of such controls. Government contracts, and the proceedings surrounding them, are often subject to more extensive scrutiny and publicity than other commercial contracts. Negative publicity related to our government contracts, regardless of whether it is accurate, may further damage our business by affecting our ability to compete for new contracts.

~~Governments may terminate, cancel, modify or curtail our contracts at any time prior to their completion.~~

Under our government contracts, the client generally has the right not to exercise options to extend or expand our contracts and may otherwise terminate, cancel, modify or curtail our contracts at its convenience. Any decision by the client not to exercise contract options or to terminate, cancel, modify or curtail our programs or contracts would adversely affect our revenues, revenue growth and profitability.

~~We could incur significant liabilities and suffer negative publicity if people or properties are harmed by the products and systems we sell or the services we offer.~~

We, on occasion, design, develop, manufacture, sell, service and maintain various products and systems. In some instances, we also train operators of such products and systems. Many of these products and systems utilize software algorithms that are probabilistic in nature and subject to significant technical limitations. There are many factors, some of which are beyond our control, which could result in the failure of our products or systems. The failure of our products or systems could lead to injury, death, or extensive property damage and may lead to product liability, professional liability, or other claims against us. Further, if our products or systems fail, or are perceived to have failed, the negative publicity from such incident could have a material adverse effect on our business.

~~Changes in, or interpretations of, accounting principles could have a significant impact on our financial position and results of operations.~~

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles. A change in these principles can have a significant effect on our reported results and may even retroactively affect previously reported transactions. Additionally, the adoption of new or revised accounting principles may require that we make significant changes to our systems, processes and controls.

The markets that we serve are cyclical and subject to general economic conditions. The direction and relative strength of the global economy continues to be uncertain. If economic growth in the United States, where we primarily operate, slows, our clients may consolidate or go out of business and thus demand for our services could be reduced significantly.

Variations in our revenues and operating results occur from time to time, as a result of a number of factors, such as the significance of client engagements commenced and completed during a quarter, the timing of engagements, the number of working days in a quarter, employee hiring and utilization rates, and integration of companies acquired. Because a high percentage of our expenses, particularly personnel and facilities related expenses, are relatively fixed in advance of any particular quarter, a variation in the timing of the initiation or the completion of our client assignments can cause significant variations in operating results from quarter to quarter.

Many factors could cause the market price of our common stock to rise and fall. These include the risk factors listed above and below; changes in estimates of our performance or recommendations by securities analysts; future sales of shares of common stock in the public market; market conditions in the industry and economy as a whole; acquisitions or strategic alliances involving us or our competitors; restatement of financial results; and changes in accounting principles or methods. In addition, the stock market often experiences significant price fluctuations. These fluctuations are often unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the market price of our common stock. When the market price of a company's stock drops significantly, shareholders often institute securities class action litigation against that company. Any litigation against us could cause us to incur substantial costs, divert the time and attention of our management and other resources, or otherwise harm our business.

~~There can be no assurance that we will continue to declare cash dividends or repurchase our shares at all or in any particular amounts~~.

Our Board of Directors has declared quarterly dividends since March 2013. Our intent to continue to pay quarterly dividends and to repurchase our shares is subject to capital availability and, in the case of dividends, periodic determinations by our Board of Directors that cash dividends are in the best interest of our stockholders and are in compliance with all laws and agreements applicable to the declaration and payment of cash dividends by us. Future dividends and share repurchases may also be affected by, among other factors: our views on potential future capital requirements for investments, including acquisitions; legal risks; stock repurchase programs; changes in federal and state income tax laws or corporate laws; contractual restrictions; and changes to our business model. Our dividend payments and share repurchases may change from time to time, and we cannot provide assurance that we will continue to declare dividends or repurchase shares at all or in any particular amounts. A reduction or suspension in our dividend payments or share repurchase activity could have a negative effect on our stock price.

We rely on our network infrastructure and certain third-party hosted services to support our operations. Despite the implementation of business continuity measures, disruption or failure of these systems in the event of a major earthquake, fire, flood, tsunami or other weather event, power loss, telecommunications failure, software or hardware malfunctions, pandemics, or epidemics where we have operations, cyber-attack, war, terrorist attack or other catastrophic event that our disaster recovery plans do not adequately address, could have a material adverse effect on our business, financial condition or results of operations.

The areas where we conduct business are vulnerable to the effects of climate change. For example, in California, wildfire danger increases the probability of planned power outages which may impact our employees’ abilities to commute to work and to stay connected. Climate-related events, including the increasing frequency of extreme weather events and their impact on critical infrastructure, have the potential to disrupt our business.

The following table provides information on the Company’s repurchases of the Company’s common stock for the three months ended ~~July 3, 2020~~April 2, 2021 (in thousands, except price per share):

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.

delaware		77-0218904
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

149 COMMONWEALTH DRIVE, MENLO PARK, California		94025
(Address of principal executive office)		(Zip Code)

Large accelerated filer	☒		Accelerated filer	☐		Non-accelerated filer	☐		Smaller reporting company	☐
Emerging growth company	☐

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, par value $0.001 per share		EXPO		Nasdaq Global Select Market

		Page

PART I – FINANCIAL INFORMATION		3

Item 1.	Financial Statements (unaudited):	3

	Condensed Consolidated Balance Sheets as of ~~July 3, 2020~~April 2, 2021 and January ~~3, 2020~~1, 2021	3

	Condensed Consolidated Statements of Income for the Three ~~and Six~~ Months Ended ~~July~~April 2, 2021 and April 3, 2020 ~~and June 28, 2019~~	4

	Condensed Consolidated Statements of Comprehensive Income for the Three ~~and Six~~ Months Ended ~~July~~April 2, 2021 and April 3, 2020 ~~and June 28, 2019~~	5

	Condensed Consolidated Statements of Stockholders’ Equity for the Three ~~and Six~~ Months Ended ~~July~~April 2, 2021 and April 3, 2020 ~~and June 28, 2019~~	6

	Condensed Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~July~~April 2, 2021 and April 3, 2020 ~~and June 28, 2019~~	87

	Notes to Unaudited Condensed Consolidated Financial Statements	98

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2119

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3026

Item 4.	Controls and Procedures	3127

PART II – OTHER INFORMATION		3228

Item 1.	Legal Proceedings	3228

Item 1A.	Risk Factors	3228

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3828

Item 3.	Defaults Upon Senior Securities	3828

Item 4.	Mine Safety Disclosures	3928

Item 5.	Other Information	3928

Item 6.	Exhibits	4029

	Signatures	4130

	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Programs ⁽¹⁾
April 4 to May 1		-	$	-		-	$	30,455
May 2 to May 29		-		-		-	$	75,455
May 30 to July 3		-		-		-	$	75,455
Total		-	$	-		-	$	75,455

	Three and Six Months Ended July 3, 2020
	Common Stock				Additional paid-in			Accumulated other comprehensive			Retained			Treasury Stock
(In thousands)	Shares		Amount		capital			income (loss)			earnings			Shares			Amount			Total
Balance at January 3, 2020		65,707	$	66	$	244,935		$	(1,760	)	$	384,668			13,951		$	(277,658	)	$	350,251
Employee stock purchase plan		-		-		400			-			-			(7	)		73			473
Exercise of stock options		-		-		64			-			-			(60	)		608			672
Amortization of unrecognized stock-based compensation		-		-		4,095			-			-			-			-			4,095
Purchase of treasury stock		-		-		-			-			-			636			(40,049	)		(40,049	)
Foreign currency translation adjustments		-		-		-			(1,673	)		-			-			-			(1,673	)
Grant of restricted stock units to settle accrued bonus		-		-		8,645			-			-			-			-			8,645
Settlement of restricted stock units		-		-		(1,261	)		-			(4,538	)		(359	)		(9,313	)		(15,112	)
Unrealized gain on investments		-		-		-			168			-			-			-			168
Dividends and dividend equivalent rights		-		-		511			-			(10,766	)		-			-			(10,255	)
Net income		-		-		-			-			26,282			-			-			26,282
Balance at April 3, 2020		65,707	$	66	$	257,389		$	(3,265	)	$	395,646			14,161		$	(326,339	)	$	323,497
Employee stock purchase plan		-		-		374			-			-			(6	)		58			432
Exercise of stock options		-		-		390			-			-			(54	)		566			956
Amortization of unrecognized stock-based compensation		-		-		1,663			-			-			-			-			1,663
Foreign currency translation adjustments		-		-		-			71			-			-			-			71
Settlement of restricted stock units		-		-		(199	)		-			-			(17	)		48			(151	)
Unrealized loss on investments		-		-		-			(211	)		-			-			-			(211	)
Dividends and dividend equivalent rights		-		-		-			-			(10,036	)		-			-			(10,036	)
Net income		-		-		-			-			16,346			-			-			16,346
Balance at July 3, 2020		65,707	$	66	$	259,617		$	(3,405	)	$	401,956			14,084		$	(325,667	)	$	332,567
The accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.

31.1	Certification of Chief Executive Officer pursuant to Rule 13a – 14(a) under the Securities Exchange Act of 1934.

31.2	Certification of Chief Financial Officer pursuant to Rule 13a – 14(a) under the Securities Exchange Act of 1934.

32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

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	Inline XBRL Taxonomy Extension Schema Document

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

Exhibit 104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

		EXPONENT, INC.
		(Registrant)

Date: ~~August~~May 7, ~~2020~~2021
		/s/ Catherine Ford Corrigan
		Catherine Ford Corrigan, Ph.D., Chief Executive Officer


		/s/ Richard L. Schlenker ~~Jr.~~
		Richard L. Schlenker, ~~Jr.,~~ Chief Financial Officer