In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments which are necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods presented. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, these statements do not include all the disclosures normally required by accounting principles generally accepted in the United States of America for annual financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 28, 2001January 3, 2003 included in the Form 10-K filed by the Company with the Securities and Exchange Commission. The consolidated results of operations for the quarter and nine months ended September 27, 2002April 4, 2003 are not necessarily indicative of the results to be expected for any future period or for the full fiscal year. Certain prior period amounts

2. Pro Forma Impact of Employee Stock Options Plans

In December 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 148,Accounting for Stock-Based Compensation – Transition and Disclosure.SFAS No. 148 amends Statement of Financial Accounting Standards No. 123,Stock-Based Compensation,to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The disclosure provisions of SFAS No. 148 are effective for fiscal years ending after December 15, 2002.

The Company continues to apply Accounting Principles Board (“APB”) Opinion No. 25,Accounting for Stock Issued to Employeesand related interpretations in accounting for its stock option plans and has not adopted the recognition provisions of SFAS No. 123, as amended by SFAS No. 148. The Company measures compensation expense related to the grant of stock options and stock-based awards to employees (including independent directors) in accordance with the provisions of APB Opinion No. 25. In accordance with APB Opinion No. 25, compensation expense, if any, is generally based on the difference between the exercise price of an option, or the amount paid for an award, and the market price or fair value of the underlying common stock at the date of the award or at the measurement date for variable awards. Stock-based compensation arrangements involving non-employees are accounted for under Statement of Financial Accounting Standards (“SFAS”) No. 123,Accounting for Stock-Based Compensation, under which such arrangements are accounted for based on the fair value of the option or award.

Answerthink, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

2. Pro Forma Impact of Employee Stock Options Plans (continued)

Under SFAS No. 123, compensation cost for the Company’s stock-based compensation plans would be determined based on the fair value at the grant dates for awards under those plans. Had the Company adopted SFAS No. 123 in accounting for its stock option plans, the Company’s consolidated net loss and net loss per share for the quarters ended April 4, 2003 and March 29, 2002 would have been reclassified to conformadjusted to the current period presentation (see Note 3).

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. With regard to common shares issued to employees under employment agreements, the calculation includes only the vested portion of such shares. Accordingly, common shares outstanding for the basic net income (loss) per share computation are lower than actual shares issued and outstanding.

Income (loss) per common share assuming dilution is computed by dividing net income (loss) by the weighted average number of common shares outstanding, increased by the assumed conversion of other potentially dilutive securities during the period. For the quarter ended September 27, 2002 and September 28, 2001,April 4, 2003, potentially dilutive securities of 187,433 and 822,638 shares, respectively,181,007 of unvested common stock issued under employment agreements and 1,668 and 1,156,696137,828 shares respectively, of common stock issuable upon the exercise of stock options and warrants assuming the treasury stock method were excluded from the diluted loss per share calculation because their effects would have been anti-dilutive to the loss incurred by the Company. Therefore, the amounts reported for basic and diluted net loss per share for the quarter were the same forsame. For the quartersquarter ended September 27,March 29, 2002, and September 28, 2001.

The Company recorded restructuring costs of $8.5$10.9 million and $5.6 million in fiscal yearyears 2002 and 2001, respectively, for reduction in consultants and functional support personnel and for closure and consolidation of facilities and related exit costs. These actions were taken as a result of the continued decline in demand for technology services in 2001.throughout 2001 and 2002. The Company took steps to reduce its costs to better align its overall cost structure and organization with anticipated demand for its services.

The following table sets forth the detail and activity in the restructuring expense accrual during the nine monthsquarter ended September 27,April 4, 2003 (in thousands):

2001 Restructuring Accrual

2002 Restructuring Accrual

5. Discontinued Operations

As a result of a decline in the demand for interactive marketing services, during 2002 the Company discontinued the interactive marketing business which was acquired in the merger with THINK New Ideas, Inc. in 1999. In accordance with Financial Accounting Standards Board Statement No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets, the results of the interactive marketing business have been reported as discontinued operations in the consolidated statements of operations and results for prior periods have been restated.

The following table sets forth revenues, pre-tax loss, income tax benefit and loss from discontinued operations for the quarter ended March 29, 2002 (in thousands):

The Company did not recognize an income tax benefit for the first quarter of 2003 due to the establishment of a valuation allowance for the tax benefit generated on losses in the quarter. The Company’s tax benefit for the first quarter of 2002 was 40% of its pre-tax loss from both continuing and discontinued operations. The full amount of this tax benefit has been reflected within continuing operations, consistent with the tax benefit presented in the Company’s consolidated statement of operations for the year ended January 3, 2003. The Company’s effective tax rate may vary from period to period based on changes in its estimated annual taxable income or loss.

In August 2002, the Company cancelleddiscontinued its $15.0interactive marketing business which was acquired with THINK New Ideas. The discontinuance of THINK New Ideas will generate an approximate $75.0 million revolving credit facility. At the time of cancellation and at all times throughout 2002 and 2001, there were no borrowings outstanding under the facility. Letters of credit of $2.6 million were outstanding under the agreement at the time of the cancellation. The Company has deposited $2.9 million with a financial institution as collateral for these letters of credit and has classified this cash as restricted on the accompanying consolidated balance sheet at September 27, 2002.

On July 30, 2002, the Company announced that its Board of Directors approved the repurchase of up to $5.0 million of Answerthink’s common stock. Under the repurchase plan, Answerthink may buy back shares of its outstanding stock from time to time either on the open market or through privately negotiated transactions, subject to market conditions and trading restrictions. As of September 27, 2002,April 4, 2003, the Company had repurchased 777,2001,858,664 shares of its common stock at an average price of $1.91$2.08 per share. The Company holds repurchased shares of its common stock as treasury stock and accounts for treasury stock under the cost method.

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

This report and the information incorporated by reference in it include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in these sections. All statements regarding our expected financial position and operating results, our business strategy, and our financing plans and forecasted demographic and economic trends relating to our industry are forward-looking statements. These statements can sometimes be identified by our use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” or “intend” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. We cannot promise you that our expectations in such forward-looking statements will turn out to be correct. Factors that impact such forward-looking statements include, among others, our ability to attract additional business, the timing of projects and the potential for contract cancellation by our customers, changes in expectations regarding the information technology industry, our ability to attract and retain skilled employees, possible changes in collections of accounts receivable, risks of competition, price and margin trends, changes in general economic conditions changes in demand for information technology spending and interest rates.rates, the risk that the Internal Revenue Service or the courts may not accept the amount or nature of one or more items of deduction, loss, income or gain as reported by Answerthink for tax purposes and the possible outcome of pending litigation and our actions in connection with such litigation. An additional description of our risk factors is set forth in our Annual Report on Form 10-K for the year ended December 28, 2001.January 3, 2003. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Answerthink, Inc. is a leading business and technology consulting firm that enables companies to achieve world-class business performance. By leveraging the comprehensive database of The Hackett Group, the world’swith its world leading repository of enterprise best practice metrics and business process knowledge, Answerthink’s business and technology solutions help clients significantly improve performance and maximize returns on technology investments. Answerthink’s capabilities include benchmarking, business transformation, business applications, technology integration, and offshore application maintenance and support.

Our revenues are derived from fees for services generated on a project-by-project basis. Revenues for services rendered are recognized on a time and materials basis based on the number of hours worked by our consultants at an agreed upon rate per hour or on a fixed-fee or capped-fee basis. Revenues related to time and material contracts are recognized in the period in which services are performed. Revenues related to fixed-fee or capped-fee contracts are recognized based on our evaluation of actual costs incurred to date compared to total estimated costs using the percentage of completion method of accounting. The cumulative impact of any revisions in estimated total revenues and direct contract costs are recognized in the period in which they become known. Unbilled revenues represent revenues for services performed that have not been billed. If we do not accurately estimate the resources required or the scope of the work to be performed, or we do not manage our projects properly within the planned periods of time or we do not meet our clients’ expectations under the contracts, then future consulting margins may be significantly and negatively affected or losses on existing contracts may need to be recognized. Any such resulting reductions in margins or contract losses could be material to our results of operations. Revenues before reimbursements exclude reimbursable expenses charged to clients. Reimbursements, including those related to travel and out-of-pocket expenses, are included in revenues, and an equivalent amount of reimbursable expenses is included in project personnel and expenses.

The agreements entered into in connection with a project, whether time and materials based or fixed-fee or capped-fee based, are typically terminable by the client upon 30 daysdays’ notice. Upon early termination of an engagement,

the client is required to pay for all time, materials and expenses incurred by us through the effective date of the

We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our clients to make required payments. Our management makes estimates of the uncollectibility of our accounts receivables. Management critically reviews accounts receivable and analyzes historical bad debts, past-due accounts, client credit-worthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. If the financial condition of our clients were to deteriorate, resulting in an impairment of their abilityinability to make payments, additional allowances may be required.

Litigation and contingencies are reflected in our consolidated financial statements based on management’s assessment, along with legal counsel, of the expected outcome from such litigation. If the final outcome of such litigation and contingencies differs adversely from that currently expected, it would result in a charge to earnings when determined.

The following table sets forth, for the periods indicated, our results of operations and the percentage relationship to revenues of such results:

We have funded our operations primarily with cash flow generated from operations and the proceeds from our initial public offering. At September 27, 2002,April 4, 2003, we had approximately $61.4$58.0 million (including $2.9 million of restricted cash) in cash and cash equivalents compared to $59.9$63.4 million at December 28, 2001.

Net cash provided byused in operating activities was $614,000$3.4 million for the nine monthsquarter ended September 27, 2002April 4, 2003 compared to $8.8 million$19,000 provided by operating activities during the comparable period of 2001.2002. During the nine monthsquarter ended September 27,April 4, 2003, net cash used in operating activities was primarily attributable to a $5.1 million decrease in accrued expenses and other liabilities and a $1.5 million decrease in accounts payable. These effects were partially offset by a $1.7 million decrease in prepaid expenses and other assets, a $1.2 million decrease in accounts receivable and unbilled revenue and our net loss of $1.0 million adjusted for $1.4 million of non-cash expenses. During the quarter ended March 29, 2002, net cash provided by operating activities was primarily attributable to a $10.2$5.0 million decrease in accounts receivable and unbilled revenue, a $1.0 million decrease in prepaid expenses and our net loss adjusted for the non-cash expenses which include the impact of adopting SFAS 142, impairment of goodwill, depreciationother assets and deferred income taxes.an $800,000 increase in accounts payable. These effects were partially offset by a $9.7$6.6 million decrease in accrued expenses and other liabilities and a $3.6our $32.1 million increase in prepaid expenses and other assets. During the nine months ended September 28, 2001, net cash provided by operating activities was primarily attributable to an $8.1 million decrease in accounts receivable and unbilled revenue and our net loss adjusted for the$31.9 million of non-cash expenses which include depreciation and amortization, non-cash compensation expense, provision for doubtful accounts and deferred income taxes. These effects were partially offset by a $9.0 million decrease in accrued expenses and other liabilities, a $5.4 million decrease in media payable and a $3.0 million decrease in accounts payable. Media payables represent media placement costs owed to media providers on behalf of our customers. Amounts in media payables which have been billed to our customers are included in other receivables. The level of media payables and the related receivables will vary with the timing of our customers’ media campaigns.

Net cash used in investing activities was $6.6 million$278,000 for the nine monthsquarter ended September 27, 2002April 4, 2003 compared to $10.4$1.3 million used during the comparative period of 2001.2002. The uses of cash for investing activities in 2003 were primarily attributable to $273,000 of purchases of property and equipment. The uses of cash in investing activities in 2002 were attributable to $3.5$1.0 million of purchases of property and equipment an increase in restricted cash of $2.9 million and $236,000 used in the acquisition of Exult Process Intelligence Center, a business unit of Exult, Inc., in February 2002. The use of cash in investing activities in 2001 was $8.3 million for purchases of property and equipment and $2.1 million used in the acquisition of businesses.

Net cash used in financing activities was $1.7 million for the quarter ended April 4, 2003 compared to $4.1 million provided by financing activities during the comparable period of 2002. During the quarter April 4, 2003, cash used in financing activities was for repurchases of our common stock. During the quarter ended March 29, 2002, cash provided by financing activities was $4.6 million for the nine months ended September 27, 2002 compared to $3.4 million provided during the comparable period of 2001. The source of cash from financing activities during 2002 and 2001 was from the sale of common stock as a result of exercises of stock options as well as the sale of stock through our Employee Stock Purchase Plan, offset by repurchases of common stock of $1.5 million in 2002.

On July 30, 2002, we announced that our Board of Directors approved the repurchase of up to $5.0 million of our common stock. Under the repurchase plan, we may buy back shares of our outstanding stock from time to time either

on the open market or through privately negotiated transactions, subject to market conditions and trading restrictions. As of September 27, 2002,April 4, 2003, we had repurchased 777,2001,858,664 shares of our common stock at an average price of $1.91$2.08 per share. We hold repurchased shares of our common stock as treasury stock and account for treasury stock under the cost method.

We currently believe that available funds and cash flows generated by operations, if any, will be sufficient to fund our working capital and capital expenditure requirements for at least the next 12 months. We may decide to raise additional funds in order to fund expansion, to develop new or enhanced products and services, to respond to competitive pressures or to acquire complementary businesses or technologies. There is no assurance, however, that additional financing will be available when needed or desired on terms favorable to us or at all.