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

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

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

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

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

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

As of ~~November 1, 2017,~~July 31, 2020, there were ~~28,656,338~~30,060,950 shares of common stock outstanding.

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

Quarter Ended

Nine Months Ended

September 29,

September 30,

September 29,

September 30,

2017

2016

2017

2016

Revenue:

Revenue before reimbursements

$
65,947

66,810

$
198,742

196,961

Reimbursements

5,515

7,308

17,719

21,548

Total revenue

71,462

74,118

216,461

218,509

Costs and expenses:

Cost of service:

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

42,302

42,071

127,108

125,082

Reimbursable expenses

5,515

7,308

17,719

21,548

Total cost of service

47,817

49,379

144,827

146,630

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

15,771

15,732

48,039

46,994

Restructuring costs

—

—

1,293

—

Total costs and operating expenses

63,588

65,111

194,159

193,624

Income from operations

7,874

9,007

22,302

24,885

Other expense:

Interest expense

(184
)

(137
)

(401
)

(288
)
Income from operations before income taxes

7,690

8,870

21,901

24,597

Income tax expense

2,401

3,382

3,988

9,281

Net income

$
5,289

$
5,488

$
17,913

$
15,316

Basic net income per common share:

Income per common share from operations

$
0.18

$
0.19

$
0.62

$
0.52

Weighted average common shares outstanding

28,765

28,579

28,891

29,251

Diluted net income per common share:

Income per common share from operations

$
0.17

$
0.17

$
0.56

$
0.47

Weighted average common and common equivalent shares outstanding

31,958

32,375

32,254

32,870

	Quarter Ended						Six Months Ended
	June 26,			June 28,			June 26,			June 28,
	2020			2019			2020			2019
REVENUE:
Revenue before reimbursements	$	52,632		$	67,976		$	117,818		$	130,346
Reimbursements		119			5,545			4,466			10,330
TOTAL REVENUE FROM CONTINUING OPERATIONS		52,751			73,521			122,284			140,676
COSTS AND EXPENSES:
Cost of service:
Personnel costs before reimbursable expenses		38,683			40,661			79,796			79,466
Stock compensation expense		1,859			1,311			3,453			2,310
Reimbursable expenses		119			5,545			4,466			10,330
TOTAL COST OF SERVICE		40,661			47,517			87,715			92,106
Selling, general and administrative costs		11,651			15,413			25,786			29,754
Stock compensation expense		483			787			1,119			1,492
Acquisition-related contingent consideration liability		—			45			—			(1,025	)
Restructuring costs		5,034			—			5,034			—
TOTAL COSTS AND OPERATING EXPENSES		57,829			63,762			119,654			122,327
INCOME (LOSS) FROM OPERATIONS		(5,078	)		9,759			2,630			18,349

Other expense:
Interest expense		(41	)		(105	)		(78	)		(206	)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(5,119	)		9,654			2,552			18,143
Income tax (benefit) expense		(1,186	)		2,614			950			4,054
INCOME (LOSS) FROM CONTINUING OPERATIONS		(3,933	)		7,040			1,602			14,089
Loss from discontinued operations		—			(51	)		(8	)		(6	)
NET INCOME (LOSS)	$	(3,933	)	$	6,989		$	1,594		$	14,083

Basic net income (loss) per common share:
Income (loss) per common share from operations	$	(0.13	)	$	0.22		$	0.05		$	0.47
Weighted average common shares outstanding		30,015			29,823			29,952			29,753

Diluted net income (loss) per common share:
Income (loss) per common share from operations	$	(0.13	)	$	0.22		$	0.05		$	0.44
Weighted average common and common equivalent share outstanding (3)		30,015			32,374			32,301			32,334

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

	Nine Months Ended						Six Months Ended
	September 29,			September 30,			June 26,			June 28,
	2017			2016			2020			2019
Cash flows from operating activities:
Net income	$	17,913		$	15,316		$	1,594		$	14,083
Less loss from discontinued operations								(8	)		(6	)
Net income from continuing operations								1,602			14,089
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		1,841			1,875			1,683			1,435
Amortization expense		1,475			825			475			553
Amortization of debt issuance costs		68			84			47			46
Non-cash stock compensation expense		7,588			6,467			4,572			3,802
Provision (reversal) for doubtful accounts		142			(11	)
Loss (gain) on foreign currency translation		530			(566	)
Provision for doubtful accounts								211			606
Gain on foreign currency translation								(368	)		(57	)
Release of valuation allowance		1,815			2,590			362			1,714
Changes in assets and liabilities:
Increase in accounts receivable and unbilled revenue		(4,935	)		(5,474	)
Increase in prepaid expenses and other assets		(1,172	)		(405	)
Decrease (increase) in accounts receivable and unbilled revenue								13,206			(246	)
(Increase) decrease in prepaid expenses and other assets								(665	)		324
Decrease in accounts payable		(902	)		(2,090	)		(3,755	)		(661	)
Decrease in accrued expenses and other liabilities		(3,938	)		(10	)
(Decrease) increase in income tax payable		(1,474	)		2,211
Increase (decrease) in accrued expenses and other liabilities								3,557			(4,311	)
Increase in income tax payable								149			744
Net cash provided by operating activities		18,951			20,812			21,068			18,032

Cash flows from investing activities:
Purchases of property and equipment		(4,919	)		(2,068	)		(1,349	)		(2,819	)
Cash consideration paid for acquisitions		(9,268	)		—
Cash acquired in acquisitions		261			—
Net cash used in investing activities		(13,926	)		(2,068	)		(1,349	)		(2,819	)

Cash flows from financing activities:
Proceeds from ESPP		562			519
Proceeds from issuance of common stock								374			418
Proceeds from borrowings		26,000			30,000			—			1,000
Repayment of borrowings		(11,000	)		(17,000	)		—			(3,000	)
Debt issuance costs		—			(237	)
Dividends paid		(8,670	)		(7,163	)		(5,791	)		(5,407	)
Exercise of stock options		200			—
Repurchase of common stock		(15,598	)		(33,976	)		(2,983	)		(5,443	)
Net cash used in financing activities		(8,506	)		(27,857	)		(8,400	)		(12,432	)

Effect of exchange rate on cash		(3	)		(30	)		97			93

Net decrease in cash and cash equivalents		(3,484	)		(9,143	)
Net increase in cash								11,416			2,874
Cash at beginning of period		19,710			23,503			25,954			13,808
Cash at end of period	$	16,226		$	14,360		$	37,370		$	16,682

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	3,696		$	4,473		$	325		$	1,578
Cash paid for interest	$	292		$	187		$	28		$	149
Supplemental disclosure of non-cash acquisition financing activities:
Shares issued to sellers of Jibe Consulting	$	3,600,000		$	—

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

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

					Additional												Other			Total
	Common Stock				Paid in			Treasury Stock						Accumulated			Comprehensive			Shareholders'
	Shares		Amount		Capital			Shares			Amount			Deficit			Loss			Equity
Balance at December 28, 2018		56,615	$	57	$	296,955			(27,086	)	$	(136,604	)	$	(25,424	)	$	(11,394	)	$	123,590
Issuance of common stock		394		1		(2,373	)		—			—			—			—			(2,372	)
Treasury stock purchased		—		—		—			(102	)		(1,616	)		—			—			(1,616	)
Amortization of restricted stock units and common stock subject to vesting requirements		—		—		2,394			—			—			—			—			2,394
Net income		—		—		—			—			—			7,094			—			7,094
Foreign currency translation		—		—		—			—			—			—			657			657
Balance at March 29, 2019		57,009	$	58	$	296,976			(27,188	)	$	(138,220	)	$	(18,330	)	$	(10,737	)	$	129,747
Issuance of common stock		121		—		405			—			—			—			—			405
Treasury stock purchased		—		—		—			(92	)		(1,440	)		—			—			(1,440	)
Amortization of restricted stock units and common stock subject to vesting requirements		—		—		1,961			—			—			—			—			1,961
Dividends declared		—		—		—			—			—			(5,789	)		—			(5,789	)
Net income		—		—		—			—			—			6,989			—			6,989
Foreign currency translation		—		—		—			—			—			—			(672	)		(672	)
Balance at June 28, 2019		57,130	$	58	$	299,342			(27,280	)	$	(139,660	)	$	(17,130	)	$	(11,409	)	$	131,201

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

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

In the opinion of management, the accompanying consolidated financial statements reflect all normal and recurring adjustments which are necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods presented. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December ~~30, 2016,~~27, 2019, included in the Annual Report on Form 10-K filed by the Company with the SEC on March ~~10, 2017.~~5, 2020. The consolidated results of operations for the quarter and ~~nine~~six months ended ~~September 29, 2017,~~June 26, 2020, are not necessarily indicative of the results to be expected for any future period or for the full fiscal year.

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

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

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

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

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

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

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

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

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

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

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

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

Differences between the timing of billings and the recognition of revenue are recognized as either unbilled services or deferred revenue in the accompanying consolidated balance sheets. Revenue recognized for services performed but not yet billed to clients are recorded as unbilled services. Revenue recognized, but for which are not yet entitled to bill because certain events, such as the completion of the measurement period, are recorded as contract assets and included within unbilled services. Client prepayments are classified as deferred revenue and recognized over future periods as earned in accordance with the applicable engagement agreement. See Note 3 for the accounts receivable and unbilled revenue balances and see Note 4 for the deferred revenue balances. During the quarter and six months ended June 26, 2020, the Company recognized $5.4 million and $9.8 million, respectively, of revenue as a result of changes in deferred revenue liability balance, as compared to $4.3 million and $8.3 million for the quarter and six months ended June 28, 2019, respectively.

The following table reflects the Company’s disaggregation of total revenue including reimbursable expenses for the quarters and six months ended June 26, 2020 and June 28, 2019:

Sales commissions earned by the Company’s sales force are considered incremental and recoverable costs of obtaining a contract with a customer. These costs are deferred and then amortized as project revenue is recognized. The Company determined the period of amortization by taking into consideration the customer contract period, which are generally less than 12 months. Commission expense is included in Selling, General and Administrative Costs in the accompanying consolidated statements of operations. As of December 27, 2019, and December 28, 2018, the Company had $1.6 million and $1.2 million, respectively, of deferred commissions, of which $0.5million and $0.9million was amortized during the quarter and six months ended June 26, 2020, and $0.3 million and $0.5 million for the same periods in 2019. NaN impairment loss was recognized relating to the capitalization of deferred commission.

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

The Company’s financial instruments consist of cash, ~~and cash equivalents,~~ accounts receivable and unbilled revenue, accounts payable, accrued expenses and other liabilities and debt. As of ~~September 29, 2017~~June 26, 2020 and December ~~30, 2016,~~27, 2019, the carrying amount of each financial instrument approximated the instrument’s respective fair value due to the short-term nature and maturity of these instruments.

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

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

During the second quarter and first six months of 2020, the Company recorded an income tax benefit of $1.2 million and an income tax expense of $950 thousand, respectively, related to certain federal, foreign and state taxes which reflected an effective tax rate benefit of 23% and expense of 37%, respectively. In ~~May 2014,~~ the ~~Financial Accounting Standards Board (“FASB”) issued guidance on revenue recognition,~~second quarter and first six months of 2019, the Company recorded $2.6 million and $4.1 million, respectively, of income tax expense related to certain federal, foreign and state taxes which ~~provides for a single, principles-based model for revenue recognition~~reflected an effective tax rate of 27% and ~~replaces~~22%, respectively. The increase in the ~~existing revenue recognition guidance. The guidance is effective for annual~~six months ending June 26, 2020 GAAP income tax rate was primarily due to lower tax benefit related to share based compensation when compared to the same period in the prior year, restructuring charges in the current quarter in countries with lower statutory income tax rates and ~~interim periods beginning on or after December 15, 2017 and will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective. It permits~~changes in the ~~use of either a retrospective or cumulative effect transition method and early adoption is permitted, however not before December 15, 2016.~~Company’s overall profitability due to the COVID-19 economic effects.

The level of revenue the Company can achieve is based on the Company’s ability to deliver market leading services and solutions and to deploy skilled teams of professionals quickly. The Company’s results of operations are affected by economic conditions, including macroeconomic conditions and levels of business confidence. In spite of some disruption in March 2020, the COVID-19 pandemic did not have a significant impact on the Company’s consolidated results of operations during the first quarter of 2020, however, it did negatively impact net revenue and dilutive earnings per share during the second quarter of 2020, and the Company expects for negative impacts to continue until economic conditions improve. A substantial or prolonged economic downturn as a result of the COVID-19 pandemic or otherwise, weak or uncertain economic conditions or similar factors could adversely affect our clients’ financial condition which may further reduce the Company’s clients’ demand for its services.

The Company ~~has completed an initial assessment of~~is actively managing its business to respond to the impact of ~~the new guidance on~~COVID-19. The Company has reduced employee travel to only essential business needs and its ~~existing revenue recognition policies and plans to adopt the rule on December 30, 2017, using the cumulative effect method of adoption.~~employees have been working from home. The ~~guidance requires significantly expanded disclosures around the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, which the~~ Company is ~~currently compiling. While~~generally following the requirements and protocols published by the U.S. Centers for Disease Control and the World Health Organization, and state and local governments. The Company cannot predict when or how it will begin to lift the actions put in place.

As a response to the ongoing COVID-19 pandemic, the Company has ~~not fully completed~~implemented plans to manage its ~~assessment~~costs and preserve cash. The Company has significantly limited the addition of new employees and third party contracted services, eliminated all travel except where necessary to meet customer needs, and limited discretionary spending. In addition, at the end of June 2020, the Company reduced its global workforce by approximately 10% and recorded a $5.0 million restructuring cost. All client concessions and accounts receivable allowances have been appropriately reflected in the Company’s financial statements. To the extent the business disruption continues for an extended period, additional cost management actions will be considered. Any future asset impairment charges, increases in allowance for doubtful accounts, or restructuring charges will be dependent on the severity and duration of the ~~impact~~pandemic.

In light of the ~~standard, based~~evolving health, social, economic and business environment, governmental regulations or mandates, and business disruptions that could occur, the potential impact that COVID-19 could have on the ~~analysis completed to date, the Company does not currently anticipate that the new rule will have a material impact on its consolidated~~Company’s financial ~~statements.~~condition and operating results remains highly uncertain.

In ~~February 2016,~~January 2017, the FASB issued ~~guidance on leases~~ASU 2017-04, which ~~supersedes~~eliminates Step 2 from the current lease guidance. The core principle requires lessees to recognize the assets and liabilities that arise from nearly all leases on the balance sheet. Accounting applied by lessors will remain largely consistent with previous guidance. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is assessing the impact ofgoodwill impairment test. For public companies, this ~~standard on its consolidated financial statements and related disclosures.~~

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

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

In August 2016, the FASB issued guidance on the classification of certain cash receipts and cash payments. The guidance provides specific clarification on eight cash flow classification issues, including contingent consideration payments made after a business combination. The guidance isupdate was effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted for interim and annual goodwill impairment test with a measurement date after January 1, 2017. ~~Early~~The adoption ~~is permitted and the guidance requires a retrospective transition. We do~~did not ~~expect the guidance to~~ have a material impact on ~~our~~the Company’s consolidated financial statements.

In January 2020, the Company adopted ASU 2016-13 which changes how entities measure credit losses for most financial assets, including trade accounts receivable. The adoption did not have a material impact on the Company’s consolidated financial statements.

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

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

~~Dilutive~~Diluted net (loss) income per common share is computed by dividing net (loss) income by the weighted average number of common shares outstanding, increased by the assumed conversion of other potentially dilutive securities during the period. For the period in which the Company has reported a net loss, diluted net loss per common share is the same as basic net loss per share attributable to common shareholders, because dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. As such, for the quarter ended June 26, 2020, the number of shares used in the calculation of dilutive weighted average common shares outstanding excludes 126 thousand shares of unvested restricted stock units and common stock subject to vesting requirements issued to employees and non-employees and 2.2 million of common stock issuable upon the exercise of stock options and SARs.

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

Approximately ~~0.9 million~~23 thousand shares and ~~0.8 million~~16 thousand shares of common stock equivalents were excluded from the computations of diluted net (loss) income per common share for the quarter and ~~nine~~six months ended ~~September 29, 2017,~~June 26, 2020, respectively, as compared to ~~0.8 million~~9 thousand shares and ~~0.9 million~~6 thousand shares for the ~~same periods in 2016,~~quarter and six months ended June 28, 2019, respectively, as ~~their~~ inclusion would have had an anti-dilutive effect on diluted net (loss) income per common share.

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

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

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

~~Accrued expenses~~Under the Coronavirus, Aid, Relief and ~~other liabilities consisted~~Economic Security Act (the “CARES Act”), the Company has elected to defer its portion of social security tax deposits from March 27, 2020 through December 31, 2020, 50% of which is due to be paid no later than December 31, 2021 and the ~~following (in thousands):~~remaining 50% to be paid no later than December 31, 2022. As of June 26, 2020, the liability related to these deferrals was $1.8 million. In addition, the United Kingdom has deferred VAT payments between March 20, 2020 and June 30, 2020 until March 31, 2021. As of June 26, 2020, the liability related to these deferrals was $0.8 million.

InDuring the ~~prior~~second quarter ~~ended June 30, 2017,~~of 2020, the Company recorded restructuring costs of ~~$1.3~~$5.0 million, which was primarily related to the ~~transition~~reduction of ~~resources driven by our migration from on-premise software to cloud-based implementations, as well as~~staff in the ~~Jibe acquisition,~~United States and ~~the rationalization of global resources~~Europe as a result of the ~~emergence~~impact of ~~RPA (“Robotic Process Automation”) related engagements from~~ the ~~Aecus acquisition.~~COVID-19 pandemic. As of ~~September 29, 2017,~~June 26, 2020, the Company ~~did not have any~~had $2.9 million of remaining commitments related to ~~restructuring.~~the 2020 restructuring charge.

During 2019, the Company recorded restructuring costs of $3.3 million, which was primarily related to the reduction of staff in Europe and Australia. As of June 26, 2020, the Company had $0.3 million of remaining commitments related to the 2019 restructuring charge.

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

The Company has operating leases for office space and, to a much lesser extent, operating leases for equipment. The Company’s office leases are between terms of 1 year and 10 years. Rents usually increase annually in accordance with defined rent steps or are based on current year consumer price index adjustments. Some of the lease agreements contain one or more of the following provisions: tenant allowances, rent holidays, lease premiums, and rent escalation clauses. There are typically no purchase options, residual value guarantees or restrictive covenants. When renewal options exist, the Company generally does not deem them to be reasonably certain to be exercised, and therefore the amounts are not recognized as part of the Company’s lease liability, nor our right of use asset.

The weighted average remaining lease term is 4.6 years. Assuming the Company exercises its opt-out option in year 5 for the London office lease, the weighted average remaining lease term would be 3.2 years. The weighted average discount rate utilized is 4%. The discount rates applied to each lease, reflects the Company’s estimated incremental borrowing rate. This includes an assessment of the Company’s credit rating to determine the rate that the Company would have to pay to borrow, on a collateralized basis for a similar term, an amount equal to the Company’s lease payments in a similar economic environment. For the quarter and six months ended June 26, 2020, the Company paid $0.6 million and $1.2 million, respectively, from operating cash flows for operating leases.

Future minimum lease payments under non-cancellable operating leases as of June 26, 2020, were as follows (in thousands):

As of June 26, 2020, the Company does not have any additional operating leases that have not yet commenced, however the Company did extend its Miami office lease effective July 1, 2020, for an additional four years.

~~In February 2012, the~~The Company ~~entered into~~has a credit agreement with Bank of America, N.A. (“Bank of America”), ~~pursuant to~~ which ~~Bank of America agreed to lend the Company~~provides for borrowing up to ~~$20.0~~$45.0 million pursuant to a revolving line of credit (the “Revolver”) ~~and up to $47.0 million pursuant to~~which had a ~~term loan~~maturity date of May 9, 2021 (the ~~“Term Loan”~~“Credit Agreement”). ~~The Company has fully utilized and repaid its Term Loan.~~

On ~~May 9, 2016,~~April 03, 2020, the Company amended ~~and restated~~ the ~~credit agreement~~Credit Agreement with Bank of America ~~to:~~

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

~~During the quarter~~As of June 26, 2020 and ~~nine months ended September 29, 2017,~~December 27, 2019, the Company ~~had net borrowings of $2.0 million and $15.0 million, respectively,~~did 0t have an outstanding balance under the ~~Revolver and had a balance of $22.0 million outstanding as of September 29, 2017.~~ Revolver.The interest rates per annum applicable to borrowings under Revolver will be, at the Company’s option, equal to either a base rate or a LIBOR base rate, plus an applicable margin percentage. The applicable margin percentage is based on the consolidated leverage ratio, as defined in the

Credit Agreement. As of ~~September 29, 2017,~~June 26, 2020, the applicable margin percentage was 1.50% per annum based on the consolidated leverage ratio, in the case of LIBOR rate advances, and 0.75% per annum, in the case of base rate advances. The interest rate of the commitment fees as of ~~September 29, 2017,~~June 26, 2020, was ~~2.73%~~0.125%.

The Company is subject to certain covenants, including total consolidated leverage, fixed cost coverage, adjusted fixed cost coverage and liquidity requirements, each as set forth in the Credit Agreement, subject to certain exceptions. As of ~~September 29, 2017,~~June 26, 2020, the Company was in compliance with all covenants.

During the ~~nine~~quarter and six months ended ~~September 29, 2017,~~June 26, 2020, the Company issued ~~672,592~~71,997 and 628,601 restricted stock units, respectively, at a weighted average grant-date fair value of ~~$16.61~~$13.42 and $15.50 per ~~share.~~share, respectively. As of ~~September 29, 2017,~~June 26, 2020, the Company had ~~1,553,240~~1,238,577 restricted stock units outstanding at a weighted average grant-date fair value of ~~$12.81~~$16.56 per share. As of ~~September 29, 2017, $11.2~~June 26, 2020, $15.5 million of total restricted stock unit compensation expense related to unvested awards had not been recognized and is expected to be recognized over a weighted average period of approximately ~~2.0~~2.5 years.

During the nine months ended September 29, 2017, 182,279 shares of common stock subject to vesting requirements were issued. These shares were issued to settle the equity portion of the closing consideration to the sellers in the acquisition of Jibe Consulting in May 2017 and will vest over four years. See Note 12 “Acquisitions” for further details. As of ~~September 29, 2017,~~June 26, 2020, the Company had ~~531,024~~81,407 shares of common stock subject to vesting requirements outstanding at a weighted average grant-date fair value of ~~$12.85~~$18.13 per share. As of ~~September 29, 2017, $4.8~~June 26, 2020, $1.0 million of compensation expense related to common stock subject to vesting requirements had not been recognized and is expected to be recognized over a weighted average period of approximately ~~3.1~~1.2 years.

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

~~In 2012,~~As of June 26, 2020, the Company’s Chief Executive Officer (“CEO”) and Chief Operating Officer (“COO”) agreed to give up 50% of their equity incentive compensation awards under the 1998 Stock Option and Incentive Plan for the years 2012 through 2015 in exchange forCompany had 2.9 million SARs outstanding with an exercise price of $4.00 ~~only to be earned upon the achievement of 50% growth in pro forma earnings~~ per share and ~~50% growth in pro forma EBITDA from a base year~~an expiration date of ~~2011. The grants would have expired if neither target were achieved during a six-year term.~~

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

Under the Company’s share repurchase plan, the Company may ~~buy back~~repurchase shares of its outstanding common stock either on the open market or through privately negotiated transactions subject to market conditions and trading restrictions. During the quarter ended ~~September 29, 2017,~~June 26, 2020, the Company did 0t repurchase any of its common stock. During the six months ended June 26, 2020, the Company repurchased ~~182~~73 thousand sharesof its common stock at an average price of $13.79 per share for a total cost of $1.0 million. As of June 26, 2020 the Company had a total authorization remaining of $5.6 million under its repurchase plan with a total authorization of $147.2 million.

During the quarter and six months ended June 28, 2019, the Company repurchased 92 thousand and 193 thousand shares of its common stock at an average price of ~~$13.73~~$15.59 per share and $15.80 per share, respectively, for a total cost of $2.5 million. During the nine months ended September 29, 2017, the Company repurchased 748 thousand shares of its common stock at an average price of $15.11 per share for a total cost of $11.3 million. During the quarter ended September 29, 2017, the Company’s Board of Directors approved an additional $5.0$1.4 million ~~authorization under the repurchase plan increasing the total authorization to $137.2 million. As of September 29, 2017, the Company had~~and $3.1 million, ~~available under its share repurchase plan authorization.~~

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

The shares repurchased under the share repurchase plan during the quarter and ~~nine~~six months ended ~~September 29, 2017,~~June 26, 2020, do not include 682 thousand shares and ~~262~~127 thousand shares, respectively, which the Company bought back to satisfy employee net vesting obligations for a cost of ~~$1.0 million~~$25 thousand and ~~$4.3~~$2.0 million, respectively. During the quarter and ~~nine~~six months ended ~~September 30, 2016,~~June 28, 2019, the Company bought back ~~4 thousand~~825 shares and ~~288~~124 thousand shares, respectively, at a cost of ~~$50~~$14 thousand and ~~$3.9~~$2.4 million, respectively, to satisfy employee net vesting obligations.

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

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

In ~~2016,~~2019, the Company increased the annual dividend from ~~$0.20~~$0.34 per share to ~~$0.26~~$0.36 per share to be paid on a semi-annual basis and in the first quarter of 2020, the Company further increased the annual dividend to $0.38 per share. During the first quarter of 2020, the Company paid its second semi-annual dividend payment to shareholders, which ~~resulted~~was declared in ~~aggregate dividends~~the fourth quarter of ~~$4.0 million paid~~2019, for a total of $5.8 million. During the second quarter of 2020, the Company announced its transition to a quarterly dividend payment cycle, subject to declaration. During the second quarter, the Company declared its first quarterly dividend for shareholders of record onas of June 30, 2020, which was paid July ~~11, 2016 and December 22, 2016, respectively.~~10, 2020, for a total of $3.1 million. These dividends were paid from U.S. domestic sources and are accounted for as an increase to accumulated deficit. The dividend declared in December 2016 was paid in January 2017. During the quarter ended March 31, 2017, the Company increased its annual dividend to $0.30 per share to be paid on a semi-annual basis. The first semi-annual dividend for 2017 was paid on July 10, 2017, for a total of $4.6 million.

Subsequent to ~~quarter end,~~June 26, 2020 and at its most recent meeting, the ~~Company declared~~Company’s board of directors approved its ~~semi-annual~~second quarterly dividend ~~of $0.15 per share~~ for shareholders of record as of ~~December 22, 2017,~~September 25, 2020, which ~~is to~~will be paid ~~on January 5, 2018.~~October 9, 2020.

During the ~~nine~~six months ended ~~September 29, 2017,~~June 26, 2020, the Company bought back 5937 thousand shares of its common stock from members of its Board of Directors for ~~$1.2~~$0.7 million, or ~~$20.13~~$17.43 per share.

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

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

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

As of ~~September 29, 2017~~June 26, 2020 and December ~~30, 2016,~~27, 2019, foreign assets included ~~$15.0~~$13.8 million and ~~$11.9~~$14.6 million, respectively, of goodwill related to acquisitions.

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

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

The sellers’ purchase consideration was $5.4million in cash, not subject to vesting, and $3.6 million in shares of the Company’s common stock, subject to vesting. The initial cash consideration was funded from borrowings under the Revolver. The equity that was issued has a four-year vesting term and will be recorded as compensation expense over the respective vesting period. In addition, the sellers ~~have the opportunity to earn an additional $6.6~~earned contingent consideration of $0.7 million inof cash and ~~$4.4~~$1.0 million ~~in Company common stock~~of equity based on the achievement of performance targets over the 18 months ~~period~~ following ~~closing for a total of $11.0 million in contingent consideration; a portion of which will be allocated to key employees in both cash and Company stock.~~ the closing.

The cash related to the contingent consideration, which ~~is to be~~was paid to the sellers, is not subject to service vesting and has been accounted for as part of the purchase consideration. The cash related to the contingent consideration, which iswas to be paid to the key employees, is subject to service vesting and ~~is being~~was accounted for as compensation expense. ~~This~~Due to the projected earnout results, during the first quarter of 2019, the acquisition-related purchase consideration and compensation expense allocated to both the selling shareholders and key employees resulted in a benefit of $1.2 million in earnings from operations on the consolidated statement of operations related to the contingent earnout liability ~~has been~~for the Jibe acquisition. These contingent liabilities were recorded in the consolidated balance sheet as ~~non-current~~current accrued expenses and other liabilities. ~~The equity related to~~During the fourth quarter of 2019, the contingent consideration will be subject to service vesting and will be recorded as compensation expense over the respective vesting period. As of September 29, 2017, the Company had recorded $1.0 million of acquisition-related compensation expense and non-cash stock compensation related to the equity portion of the closing consideration and the equity portion of the contingent consideration. The initial cash consideration was funded from borrowings under the Company’s Revolver.

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

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

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

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

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

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

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

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

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

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements. All statements regarding our expected financial position and operating results, our business strategy, our financing plans and forecasted demographic and economic trends relating to our industry are forward-looking statements. These statements can sometimes be identified by our use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” or “intend” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. We cannot promise you that our expectations reflected in such forward-looking statements will turn out to be correct. Factors that impact such forward-looking statements include, among others, the impact of the coronavirus (COVID-19) pandemic and changes in worldwide and U.S. economic conditions that impact business confidence and the demand for our products and services, our ability to mitigate or manage disruptions posed by COVID-19 pandemic,our ability to effectively integrate acquisitions into our operations, our ability to retain existing business, our ability to attract additional business, our ability to effectively market and sell our product offerings and other services, the timing of projects and the potential for contract cancellation by our customers, changes in expectations regarding the business consulting and information technology industries, our ability to attract and retain skilled employees, possible changes in collections of accounts receivable due to the bankruptcy or financial difficulties of our customers, risks of competition, price and margin trends, foreign currency fluctuations and changes in general economic conditions, interest rates and our ability to obtain additional debt financing ~~through additional borrowings~~if needed. For a discussion of risks and actions taken in response to the coronavirus pandemic, see “Our results of operations have been adversely affected and could in the future be materially adversely impacted by the coronavirus pandemic (COVID-19)” under ~~an amendment to our existing credit facility.~~ Item 1A, “Risk Factors.”

An additional description of our risk factors is set forth in our Annual Report on Form 10-K for the year ended December ~~30, 2016.~~27, 2019. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Many of the risks, uncertainties and other factors identified in the Annual Report on Form 10-K have been amplified by the COVID-19 pandemic.

The Hackett Group, Inc. (“Hackett” or the “Company”) is a leading IP-based strategic advisory and technology consulting firm that enables companies to achieve world-class business performance. By leveraging the comprehensive Hackett database, the world’s leading repository of enterprise business process performance metrics and best practice intellectual capital, our business and technology solutions help clients improve performance and maximize returns on technology investments. Only Hackett empirically defines world-class performance in sales, general and administrative and certain supply chain activities with analysis gained through more than ~~13,000~~17,850 benchmark and performance studies over 2326 years at over ~~5,100~~6,420 of the world’s leading companies.

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

The level of revenue we achieve is ~~provided~~based on our ability to ~~enhance~~deliver market leading services and solutions and to deploy skilled teams of professionals quickly. Our results of operations are affected by economic conditions, including macroeconomic conditions and levels of business confidence. In spite of some disruption in March 2020, the ~~understanding~~COVID-19 pandemic did not have a significant impact on our consolidated results of operations during the first quarter of 2020, however, net revenue and dilutive earnings per share were negatively impacted in the second quarter of 2020, and we expect negative impacts to continue until economic conditions improve. A substantial or prolonged economic downturn as a result of the COVID-19 pandemic or otherwise, weak or uncertain economic conditions or similar factors could adversely affect our clients’ financial ~~performance~~condition which may further reduce our clients’ demand for our services.

We are actively managing our business to respond to the impact of the COVID-19. We have reduced employee headcount and employee travel to only essential business needs and our employees have been working remotely from home. We are generally following the requirements and protocols published by the U.S. Centers for Disease Control and the World Health Organization, and state and local governments. We cannot predict when or how we will begin to lift the actions put in place.

As a response to the ongoing COVID-19 pandemic, we have implemented plans to manage our costs and preserve cash. We have significantly limited the addition of new employees and third party contracted services, eliminated all travel except where necessary to meet customer needs, and limited discretionary spending. In addition, at the end of June 2020, we reduced our global workforce by approximately 10% of our global workforce and recorded a $5.0 million restructuring charge. All client concessions and accounts receivable allowances have been appropriately reflected in our financial statements. To the extent the business ~~compared to prior periods~~disruption continues for an extended period, additional cost management actions will be considered. Any future asset impairment charges, increases in allowance for doubtful accounts, or restructuring charges will be dependent on the severity and ~~is reconciled to~~duration of the pandemic.

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

For more information, see “Our results of operations have been adversely affected and could in the tables below. In our quarterly earnings announcements, we refer to adjusted non-GAAP information as “pro-forma”, which is unaudited. We also present earnings before income taxes, interest, depreciation and amortization expense (EBITDA), and other one-time acquisition-related and restructuring charges (Adjusted EBITDA), both of which are non-GAAP measures. These measures are usedfuture be materially adversely impacted by ~~management to evaluate our financial performance.~~the coronavirus pandemic (COVID-19).” under Item 1A, “Risk Factors.”

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

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

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

Quarter Ended

Nine Months Ended

September 29,

September 30,

September 29,

September 30,

2017

2016

2017

2016

Revenue:

Revenue before reimbursements

$
65,947

100.0
%

$
66,810

100.0
%

$
198,742

100.0
%

$
196,961

100.0
%
Reimbursements

5,515

7,308

17,719

21,548

Total revenue

71,462

74,118

216,461

218,509

Costs and expenses:

Cost of service:

Personnel costs before reimbursable expenses

39,807

60.4
%

40,621

60.8
%

120,906

60.8
%

120,866

61.4
%
Acquisition-related compensation expense

619

—

1,042

—

Non-cash stock compensation expense

1,082

1,135

3,440

3,318

Acquisition-related non-cash stock compensation expense

794

315

1,720

898

Reimbursable expenses

5,515

7,308

17,719

21,548

Total cost of service

47,817

49,379

144,827

146,630

Selling, general and administrative costs

14,209

21.5
%

14,664

21.9
%

43,759

22.0
%

43,918

22.3
%
Non-cash stock compensation expense

894

793

2,427

2,251

Acquisition-related costs

111

—

378

—

Amortization of intangible assets

557

275

1,475

825

Restructuring costs

—

—

1,293

—

Total selling, general, and administrative expenses

15,771

15,732

49,332

46,994

Total costs and operating expenses

63,588

65,111

194,159

193,624

Income from operations

7,874

11.9
%

9,007

13.5
%

22,302

11.2
%

24,885

12.6
%

Other expense:

Interest expense

(184
)

(137
)

(401
)

(288
)

Income from operations before income taxes

7,690

11.7
%

8,870

13.3
%

21,901

11.0
%

24,597

12.5
%
Income tax expense

2,401

3.6
%

3,382

5.1
%

3,988

2.0
%

9,281

4.7
%
Net income

$
5,289

8.0
%

$
5,488

8.2
%

$
17,913

9.0
%

$
15,316

7.8
%

Diluted net income per common share

$
0.17

$
0.17

$
0.56

$
0.47

Adjusted non-GAAP data (unaudited):

Income from operations before income taxes

$
7,690

$
8,870

$
21,901

$
24,597

Acquisition-related compensation expense

619

—

1,042

—

Non-cash stock compensation expense

1,976

1,928

5,867

5,569

Acquisition-related non-cash stock compensation expense

794

315

1,720

898

Acquisition-related costs

111

—

378

—

Restructuring costs

—

—

1,293

—

Amortization of intangible assets

557

275

1,475

825

Adjusted non-GAAP income before income taxes

11,747

11,388

33,676

31,889

Adjusted non-GAAP income tax expense

3,524

30.0
%

3,416

30.0
%

10,103

30.0
%

9,567

30.0
%
Adjusted non-GAAP net income

$
8,223

$
7,972

$
23,573

$
22,322

Adjusted non-GAAP diluted net income per share

$
0.26

$
0.25

$
0.73

$
0.68

EBITDA: (non-GAAP)

Income from operations before income taxes

7,690

8,870

21,901

24,597

Interest expense

184

137

401

288

Depreciation expense

590

618

1,841

1,875

Amortization of intangible assets

557

275

1,475

825

EBITDA (non-GAAP)

$
9,021

$
9,900

$
25,618

$
27,585

Reconciliation to adjusted non-GAAP EBITDA:

EBITDA

9,021

9,900

25,618

27,585

Acquisition-related compensation expense

619

—

1,042

—

Non-cash stock compensation expense

1,976

1,928

5,867

5,569

Acquisition-related non-cash stock compensation expense

794

315

1,720

898

Acquisition-related costs

111

—

378

—

Restructuring costs

—

—

1,293

—

Adjusted non-GAAP EBITDA

$
12,521

$
12,143

$
35,918

$
34,052

	Quarter Ended										Six Months Ended
	June 26,					June 28,					June 26,					June 28,
	2020					2019					2020					2019
REVENUE:
Revenue before reimbursements	$	52,632		100.0	%	$	67,976		100.0	%	$	117,818		100.0	%	$	130,346		100.0	%
Reimbursements		119					5,545					4,466					10,330
TOTAL REVENUE		52,751					73,521					122,284					140,676
COST AND EXPENSES:
Cost of service:
Personnel costs before reimbursable expenses		38,654		73.4	%		40,820		60.1	%		79,767		67.7	%		79,754		61.2	%
Stock compensation expense		1,600					1,022					2,941					1,942
Acquisition-related compensation expense (benefit)		29					(159	)				29					(288	)
Acquisition-related non-cash stock compensation expense		259					289					512					368
Reimbursable expenses		119					5,545					4,466					10,330
TOTAL COST OF SERVICE		40,661					47,517					87,715					92,106
Selling, general and administrative costs		11,413		21.7	%		15,159		22.3	%		25,310		21.5	%		29,201		22.4	%
Non-cash stock compensation expense		483					787					1,119					1,492
Amortization of intangible assets		238					254					476					553
Acquisition-related contingent consideration liability		—					45					—					(1,025	)
Restructuring costs		5,034					—					5,034					—
TOTAL SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		17,168					16,245					31,939					30,221
TOTAL COSTS AND OPERATING EXPENSES		57,829					63,762					119,654					122,327
INCOME (LOSS) FROM OPERATIONS		(5,078	)	-9.6	%		9,759		14.4	%		2,630		2.2	%		18,349		14.1	%
Other expense:
Interest expense		(41	)				(105	)				(78	)				(206	)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(5,119	)	-9.7	%		9,654		14.2	%		2,552		2.2	%		18,143		13.9	%
Income tax (benefit) expense		(1,186	)	-2.3	%		2,614		3.8	%		950		0.8	%		4,054		3.1	%
INCOME (LOSS) FROM CONTINUING OPERATIONS (NET OF TAXES)		(3,933	)				7,040					1,602					14,089
Loss from discontinued operations		—					(51	)				(8	)				(6	)
NET INCOME (LOSS)	$	(3,933	)	-7.5	%	$	6,989		10.3	%	$	1,594		1.4	%	$	14,083		10.8	%
Diluted net (loss) income per common share	$	(0.13	)			$	0.22				$	0.05				$	0.44

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

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

Revenue. We are a global company with operations located ~~primarily~~ in the United States and Western Europe. Our revenue is denominated in multiple currencies, primarily the U.S. Dollar, British Pound ~~Euro~~ and ~~Australian Dollar~~Euro, and as a result is affected by currency exchange rate fluctuations. The impact of currency fluctuations did not have a significant impact on comparisons between the ~~third~~ quarter and ~~first nine~~six months ~~of 2017~~ended June 26, 2020 and the comparable ~~period~~periods of ~~2016.~~2019. Revenue is analyzed based on geographical location of engagement team personnel.

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

Our total Company net revenue from continuing operations, or revenue before reimbursements, decreased ~~by 1%,~~23% to ~~$65.9~~$52.6 million,and 10% to $117.8 million in the ~~third~~second quarter and first six months of ~~2017,~~2020, respectively, as compared to ~~$66.8~~$68.0 million and $130.3 million, in the ~~third quarter~~same periods of ~~2016. Our total Company net revenue increased 1%,~~2019. Net revenues and reimbursable expenses were both affected as the economic disruption from the COVID-19 pandemic interrupted travel and as we transitioned to ~~$198.7 million in~~a remote service delivery model throughout the ~~first nine months of 2017, as compared to $197.0 million during~~US and Europe.In the ~~same period in 2016. In both the third~~second quarter and first ~~nine~~six months of ~~2017~~2020, one customer accounted for 6% and ~~2016,~~5%, respectively, of our total revenue. In both periods in 2019, no ~~one~~ customer accounted for more than 5% of our total revenue.

~~The Hackett Group~~S&BT net revenue ~~decreased less than a percent, to $56.1~~was $16.8 million and $41.3 million during the ~~third~~second quarter and first six months of ~~2017,~~2020, respectively, as compared to ~~$56.3~~$26.3 million and $50.6 million in the ~~third quarter~~same periods of ~~2016. The Hackett Group~~2019. This group’s business transformation practice was disrupted by the impact of the COVID-19 pandemic.

EEA net revenue increased ~~less than a percent,~~ to ~~$168.8~~$31.4 million and to $64.6 million during the second quarter and first ~~nine~~six months of ~~2017,~~2020, respectively, as compared to ~~$168.0~~$31.0 million and $58.7 million in the same periods of 2019, respectively. This increase was driven by strong growth from our SAP S4 HANA implementation and Reseller practices, and growth from our Oracle Cloud ERP and OneStream Practices.

Hackett US net revenue from continuing operations represented 92% and 90% of our total Company net revenue during the ~~same period in 2016. Hackett domestic revenue was down 7% during both the third~~second quarter and first ~~nine~~six months of ~~2017, as revenue was adversely impacted as a result of the transition from on- premise to cloud application migration activity~~2020, respectively, and ~~slightly lower than anticipated activity in some of our other Hackett domestic practices. The decrease of the domestic Hackett revenue was offset by strong Hackett international growth of 36%~~decreased 16% and ~~39%~~3%, ~~primarily in Europe, during the third quarter and first nine months of 2017,~~ respectively, aswhen compared to the same periods in ~~the prior year.~~ 2019.

~~SAP Solutions~~Hackett international net revenue ~~decreased 6%, to $9.8~~from continuing operations was $4.4 million ~~during~~and $11.9 million in the ~~third~~second quarter and first six months of ~~2017,~~2020, respectively, as compared to ~~$10.5~~$10.7 million ~~in the third quarter of 2016. SAP Solutions net revenue increased 3%, to $30.0 million, during the first nine months of 2017, as compared $29.0~~and $21.0 million during the same ~~period of 2016.~~

periods in 2019, respectively. Europe continues to be impacted by lengthened client decision-making from economic uncertainty, which has been further impacted by the COVID-19 pandemic. Total Company international net revenue accounted for ~~19%~~8% and 10% of total Company net revenue during both the ~~third~~second quarter and first ~~nine~~six months of ~~2017,~~2020, respectively, as compared to ~~13% and 14% during~~16% for the same periods in ~~2016, respectively.~~2019.

Reimbursements as a percentage of total net revenue were 8%0% and 9%4% during the ~~third~~second quarter and first ~~nine~~six months of ~~2017,~~2020, respectively, as compared to ~~11% during~~8.0% for both of the same periods in 2016. This decrease primarily related to lower expense ratios resulting from the recent acquisitions and the increase in IP as a service which both historically drive lower levels of reimbursable expenses.2019. Reimbursements are ~~engagement~~project travel-related expenses passed through to a client with no associated margin. As a result of COVID-19, most travel ~~related expenses which are billed~~was eliminated except where necessary to ~~clients and have no impact on profitability.~~ meet customer needs.

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

Personnel costs decreased 2%5%, to ~~$39.8~~$38.7 million from $40.8 million for the ~~third~~second quarter of ~~2017, from $40.6 million~~2020, as compared to the same period in 2019. Personnel costs were comparable between the ~~third quarter~~first six months of ~~2016.~~2020 and 2019. The decrease in ~~absolute dollar~~personnel costs in the second quarter of 2020 was primarily due to the restructuring actions that were implemented at the end of the second quarter of 2020 which included a ~~result~~reduction of ~~lower incentive compensation accruals, partially offset by higher use~~approximately 10% of ~~subcontractors during~~ the ~~quarter and higher fringe and payroll taxes. Personnel costs were $120.9 million, in both the first nine months of 2017 and 2016.~~global workforce. Personnel costs before reimbursable expenses, ~~a non-GAAP metric,~~ as a percentage of revenue before reimbursements, were 73% and 68% for the second quarter and first six months of 2020, respectively, as compared to 60% and 61% for the ~~third~~same periods of 2019, respectively.

Non-cash stock compensation expense was $1.6 million and $2.9 million for the second quarter and first ~~nine~~six months of ~~2017,~~2020, respectively, as compared to ~~61%~~$1.0 million and $1.9 million for ~~both of~~ the same periods of 2019, respectively.

~~Acquisition~~2020 and 2019 related ~~compensation costs of $0.6 million and $1.0 million for the third quarter and first nine months of 2017, respectively, relate~~ to the accrual for the cash portion of ~~the Aecus~~ contingent consideration related to ~~be paid to the selling shareholders and key personnel, and the cash portion of the Jibe contingent consideration that is to be paid to key employees,~~two acquisitions, all of which ~~are~~is subject to service vesting and as a result ishas been recorded as compensation expense. ~~See Note 12, “Acquisitions” to our consolidated financial statements included in this Quarterly Report on Form 10-Q.~~

~~Non-cash stock compensation expense was $1.1 million and $3.4 million in~~The majority of the ~~third quarter and first nine months of 2017, respectively, as compared to $1.1 million and $3.3 million~~liabilities were settled during the ~~same period in 2016.~~fourth quarter of 2019.

Acquisition related non-cash stock compensation expense in ~~2017 primarily relates~~2020 and 2019 related to ~~our EPM AMS acquisition of Technolab~~equity awards issued in ~~fiscal~~relation to acquisitions between 2014 and ~~the Jibe and Aecus acquisitions in~~ 2017. ~~See Note 12, “Acquisitions” to our consolidated financial statements included in this Quarterly Report on Form 10-Q.~~

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

Selling, General and Administrative Costs ~~(SG&A)~~(“SG&A”). SG&A ~~excluding~~primarily consists of salaries, benefits and incentive compensation for the selling, marketing, administrative and executive employees; non-cash compensation expense, ~~the~~ amortization of intangible assets, ~~and~~ acquisition related costs ~~was $14.2~~and various other overhead expenses.

SG&A costs were $11.4 million and ~~$43.8~~$25.3 million for the ~~third~~second quarter and first ~~nine~~six months of ~~2017,~~2020, respectively, as compared to ~~$14.7~~$15.2 million and ~~$43.9~~$29.2 million for the same periods in ~~2016,~~2019, respectively. The decrease in SG&A was primarily due to the reduction in travel related selling and marketing activities as a result of the COVID-19 pandemic. These SG&A costs as a percentage of revenue before reimbursements ~~was~~were 22% for ~~both~~all periods presented.

Non-cash stock compensation expense was $0.5 million and $1.1 million for the ~~third~~second quarter and first ~~nine~~six months of ~~2017~~2020, respectively, as compared to $0.8 million and ~~2016.~~$1.5 million for the same periods in 2019, respectively.

Amortization expense was ~~$0.6~~$0.2 million and ~~$1.5~~$0.5 million in the ~~third~~second quarter and first ~~nine~~six months ~~2017,~~of 2020, respectively, as compared to $0.3 million and ~~$0.8~~$0.6 million in the same periods in ~~2016.~~2019, respectively. The amortization expense in ~~2017 relates~~2020 and 2019 related to the amortization of the intangible ~~assets~~asset acquired in our ~~2014 EPM AMS acquisition~~acquisitions and the buyout of ~~Technolab and~~ our ~~acquisitions of Jibe and Aecus~~partner’s joint venture interest in the ~~second quarter of~~CGBS Training and Certification Programs in 2017. The intangible assets ~~relate~~related to the ~~customer relationship, customer backlog and non-compete agreements. The Technolab intangible assets will continue to amortize through 2018 and the Jibe and Aecus intangible assets~~acquisitions will continue to amortize until ~~2022.~~2022 and the intangible assets related to the joint venture will continue to amortize until 2021.

Acquisition-related Contingent Consideration Liability. During the first quarter of 2019, the liability related to the cash portion of the Jibe acquisition contingent consideration due to the selling shareholders, which was not subject to vesting, resulted in a benefit due to the reduction of the contingent earnout liability. This liability was settled in the fourth quarter of 2019.

Restructuring Costs. During the second quarter of 2020, we recorded restructuring costs of $5.0 million, which was primarily related to the reduction of staff in the United States and Europe as a result of the impact of the COVID-19 pandemic.

During 2019, we recorded restructuring costs of $3.3 million, which was primarily related to the reduction of staff in Europe and Australia.

Income Taxes. During the second quarter and six months of 2020, we recorded an income tax benefit of $1.2 million and income tax expense of $950 thousand, respectively, related to certain federal, foreign and state taxes which reflected an effective tax rate benefit of 23% and expense of 37%, respectively. In the second quarter of ~~2017,~~and six months of 2019, we recorded restructuring costs primarily related to the transition of resources driven by our migration from on premise software to cloud-based implementations as well as the Jibe acquisition, and the rationalization of global resources as a result of the emergence of RPA related engagements from our Aecus acquisition. There were no restructuring costs related to employee severance costs recorded in the third quarter of 2017.

~~Income Taxes.~~ ~~During the third quarter and first nine months of 2017, we recorded $2.4 million and $4.0 million, respectively, of~~ income tax expense of $2.6 million and $4.1 million, respectively, related to ~~for~~ certain federal, foreign and state taxes which reflected an effective tax rate of ~~31%~~27% and ~~18%~~22%, respectively. ~~During~~The increase in the ~~first quarter of 2017, we recorded no~~six months ending June 26, 2020 GAAP income tax ~~expense as~~rate is primarily due to a ~~result~~lower tax benefit related to share based compensation when compared to the same period in the prior year, restructuring charges in the quarter ended June 26, 2020 in countries with lower statutory income tax rates and changes in the Company’s overall profitability due to the impact of the adoption of a new pronouncement relating to the accounting on the vesting of share-based awards. Excluding the effect of the new pronouncement, the effective tax rate would have been 34% for certain federal, foreign and state taxes for the nine months ended September 29, 2017. In the third quarter and first nine months of 2016, we recorded income tax expense of $3.4 million and $9.3 million, which reflected an effective tax rate of 38% in both periods for certain federal, foreign and state taxes.COVID-19 pandemic.

As of ~~September 29, 2017~~June 26, 2020, and December ~~30, 2016,~~27, 2019, we had ~~$16.2~~$37.4 million and ~~$19.7~~$26.0 million, respectively, classified in cash on the consolidated balance sheets. We currently believe that available funds (including the cash on hand and funds available for borrowing capacity under ~~the Revolver),~~our revolving line of credit (the “Revolver”)) and cash flows generated by operations will be sufficient to fund our working capital and capital expenditure requirements for at least the next twelve months. We may decide to raise additional funds in order to fund expansion, to develop new or further enhance products and services, to respond to competitive pressures, or to acquire complementary businesses or technologies. There is no assurance ~~however,~~ that additional financing ~~will~~would be available when needed or desired.

Net cash provided by operating activities was ~~$19.0~~$21.1 million during the first ~~nine~~six months of ~~2017,~~2020, as compared to ~~$20.8~~$18.0 million during the same period in ~~2016.~~2019. In ~~2017~~2020, the net cash provided by operating activities was primarily due to net income adjusted for non-cash items, ~~offset by a decrease~~decreases in accounts receivable and unbilled revenue and increases in accrued expenses and other liabilities, partially offset by decreases in accounts payable due to the ~~payout~~timing of ~~the 2016 incentive compensation~~vendor payments and ~~a decrease~~decreases in ~~income tax payable and an increase in accounts receivable and unbilled revenue.~~ employee reimbursable expenses resulting from decreased travel. In ~~2016,~~ 2019, the net cash provided by operating activities was primarily due to total net income adjusted

for non-cash items, ~~and an increase in income taxes payable,~~ partially offset by ~~increased accounts receivable and unbilled revenue, decreases~~a decrease in accounts payable ~~related to~~and accrued expenses and liabilities after the ~~timing~~payout of ~~vendor payments and decreases in accrued income taxes resulting from the 2016 income tax payment.~~incentive compensation.

Net cash used in investing activities was ~~$13.9~~$1.3 million and ~~$2.1~~$2.8 million during the first ~~nine~~six months of ~~2017~~2020 and ~~2016,~~2019, respectively. ~~Net cash used in investing activities during the first nine months of 2017 primarily related to the cash paid for the Jibe and Aecus acquisitions. Additionally, during 2017,~~During 2020, cash flows used in investing activities ~~also~~ included investments ~~relating~~related to the development of ~~the Hackett Academy and~~ our Quantum Leap benchmark ~~technology, as well as further~~technology. In 2019, cash flows used in investing activities included investments inrelated to our internal corporate ~~systems. During 2016, investing activities related~~systems, the global rollout of new laptops which occurs every three to ~~capital expenditures on~~four years, and the ~~continued~~ development of our Quantum Leap benchmark technology.

Net cash used in financing activities was ~~$8.5~~$8.4 million and ~~$27.9~~$12.4 million during ~~2017~~the first six months 2020 and ~~2016,~~2019, respectively. The usage of cash in ~~2017~~2020 primarily related to the dividend payment of $5.8 million and the repurchase of $3.0 million of our Company common stock. The usage of cash in 2019 was primarily related to the dividend payment of $5.4 million, the repurchase of ~~$11.3~~$5.4 million of our Company common stock ~~the cost of share purchases to satisfy employee net vesting requirements of $4.3 million, the payment of the second 2016 semi-annual dividend,~~ and ~~first 2017 semi-annual dividend totaling $8.7 million. These uses of cash were partially offset by~~ the net ~~drawdown on~~payments made under the Revolver of ~~$15.0 million (as defined below).~~ ~~The usage~~$2.0 million.

As of ~~cash in 2016 was primarily related to the cost of the repurchase of $30.1 million of Company common stock~~June 26, 2020, we did not have any outstanding borrowings under the Company’s share repurchase program, $3.9 million to satisfy employee net vesting-related tax requirements, and $7.2 million was utilized to payout dividends. These uses of cash were partially offset by the net borrowings of $13.0 million.

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

For a discussion of recently issued accounting standards, see Note 1, “Basis of Presentation and General Information,” to our consolidated financial statements included in this Quarterly Report on Form 10-Q and Note 1, “Basis of Presentation and General Information,” to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December ~~30, 2016.~~27, 2019.

As of ~~September 29, 2017,~~June 26, 2020, our exposure to market risk related primarily to changes in interest rates and foreign currency exchange rate risks.

Our exposure to market risk for changes in interest rates relates primarily to the Revolver, which is subject to variable interest rates. The interest rates per annum applicable to loans under the Revolver will be, at our option, equal to either a base rate or a LIBOR rate for one-, two-, three- or nine-month interest periods chosen by us in each case, plus an applicable margin percentage. A 100-basis point increase in our interest rate under our Revolver would not have had a material impact on our results of operations for the quarter and ~~nine~~six months ended ~~September 29, 2017.~~June 26, 2020.

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

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

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

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

For a discussion of our potential risks and uncertainties, see the risk ~~factors disclosed~~factor below and the information under the heading “Risk Factors” in ~~the Company’s~~our Annual Report on Form 10-K for the year ended December ~~30, 2016.~~27, 2019 (the “Annual Report”).

Our results of operations have been adversely affected and could in the future be materially adversely impacted by the coronavirus pandemic (COVID-19).

The global spread of the coronavirus (COVID-19) has created significant volatility, uncertainty and economic disruption. Our clients, and therefore our business and revenues, are sensitive to negative changes in general economic conditions and business confidence. We expect that the negative impacts of the COVID-19 pandemic on our operating revenue may continue until economic conditions improve.

We continue to work with our clients and employees to responsibly address this global pandemic. We will continue to monitor the situation and assess possible implications to our business and our clients and employees and will take appropriate actions in an effort to mitigate adverse consequences. We cannot assure you that we will be successful in any such mitigation efforts. The extent to which the coronavirus pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration, severity and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the impact of the pandemic on economic activity and actions taken in response; the effect on our clients and client demand for our services and solutions; the ability of our clients to pay for our services and solutions; and any closures of our clients’ offices and facilities. Clients may also slow down decision making, delay planned work or seek to terminate existing agreements. Any of these events could cause or contribute to the risks and uncertainties enumerated in “Item 1A. Risk Factors” and elsewhere in the Annual Report and could materially adversely affect our business, financial condition, results of operations and/or stock price.

During the quarter ended ~~September 29, 2017,~~June 26, 2020, the Company ~~repurchased 182 thousand~~did not repurchase shares of its common stock ~~at an average price of $13.73 per share, for a total cost of $2.5 million,~~ under the repurchase plan approved by the Company's Board of Directors. During the six months ended June 26, 2020, the Company repurchased 73 thousand shares of its common stock under the repurchase plan approved by the Company's Board of Directors for $1.0 million at an average share price of $13.79. As of ~~September 29, 2017,~~June 26, 2020, the Company had ~~$3.1~~$5.6 million of authorization remaining under the repurchase plan.

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

Shares repurchased during the quarter and six months ended ~~September 29, 2017~~June 26, 2020 under the repurchase plan approved by the Company's Board of Directors do not include 682 thousand shares and 127 thousand shares, respectively, for a cost of ~~$1.0~~$25 thousand and $2.0 million, respectively, that the Company bought back to satisfy employee net vesting obligations.

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

FLORIDA		65-0750100
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1001 Brickell Bay Drive, Suite 3000 Miami, Florida		33131
(Address of principal executive offices)		(Zip Code)

Large Accelerated Filer	☐	Accelerated Filer	☒

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

		Emerging Growth Company	☐

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

PART I - FINANCIAL INFORMATION		Page

Item 1.	Financial Statements

	Consolidated Balance Sheets as of ~~September 29, 2017~~June 26, 2020 and December ~~30, 2016~~ 27, 2019 (unaudited)	3

	Consolidated Statements of Operations for the ~~Quarters~~Three and ~~Nine~~Six Months Ended ~~September 29, 2017~~June 26, 2020 and ~~September 30, 2016~~ June 28, 2019 (unaudited)	4

	Consolidated Statements of Comprehensive Income for the ~~Quarters~~Three and ~~Nine~~Six Months Ended ~~September 29, 2017~~June 26, 2020 and ~~September 30, 2016~~ June 28, 2019 (unaudited)	5

	Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September 29, 2017~~June 26, 2020 and ~~September 30, 2016~~ June 28, 2019 (unaudited)	6

	Consolidated Statements of Equity for the Three and Six Months Ended June 26, 2020 and June 28, 2019 (unaudited)	7

	Notes to Consolidated Financial Statements (unaudited)	78

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2122

Item 4.	Controls and Procedures	2122

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	2223

Item 1A.	Risk Factors	2223

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2223

Item 6.	Exhibits	23

~~SIGNATURES~~		24

SIGNATURES		25

	September 29,			December 30,			June 26,			December 27,
	2017			2016			2020			2019
ASSETS
Current assets:
Cash	$	16,226		$	19,710		$	37,370		$	25,954
Accounts receivable and unbilled revenue, net of allowance of $2,686 and $2,574 at September 29, 2017 and December 30, 2016, respectively		55,552			47,399
Accounts receivable and unbilled revenue, net of allowance of $1,138 and $743 at June 26, 2020 and December 27, 2019, respectively								36,962			49,778
Prepaid expenses and other current assets		2,897			1,704			3,719			2,895
Total current assets		74,675			68,813			78,051			78,627

Property and equipment, net		17,854			14,774			19,724			19,916
Other assets		4,679			3,336			2,052			2,652
Goodwill, net		84,966			72,376
Goodwill								83,880			84,578
Operating lease right-of-use assets								8,753			7,962
Total assets	$	182,174		$	159,299		$	192,460		$	193,735

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,597		$	9,089		$	4,739		$	8,494
Accrued expenses and other liabilities		35,971			46,725			34,810			32,482
Operating lease liabilities								2,701			2,707
Total current liabilities		44,568			55,814			42,250			43,683
Non-current accrued expenses and other liabilities		6,936			—
Long-term deferred tax liability, net		10,591			10,216
Long-term debt		22,000			7,000
Non-current deferred tax liability, net								7,577			7,183
Operating lease liabilities								6,052			5,255
Total liabilities		84,095			73,030			55,879			56,121

Commitments and contingencies

Shareholders’ equity:
Preferred stock, $.001 par value, 1,250,000 shares authorized; none issued and outstanding		—			—
Common stock, $.001 par value, 125,000,000 shares authorized; 55,600,776 and 54,785,193 shares issued at September 29, 2017 and December 30, 2016, respectively		57			55
Preferred stock, $0.001 par value, 1,250,000 shares authorized; NaN issued and outstanding								—			—
Common stock, $0.001 par value, 125,000,000 shares authorized; 57,546,958 and 57,180,616 shares issued at June 26, 2020 and December 27, 2019, respectively								58			58
Additional paid-in capital		284,628			277,100			306,935			303,707
Treasury stock, at cost, 26,945,776 and 26,197,981 shares September 29, 2017 and December 30, 2016, respectively		(134,053	)		(122,756	)
Treasury stock, at cost, 27,498,432 and 27,425,476 shares June 26, 2020 and December 27, 2019, respectively								(142,893	)		(141,887	)
Accumulated deficit		(43,301	)		(56,581	)		(15,183	)		(13,714	)
Accumulated comprehensive loss		(9,252	)		(11,549	)
Accumulated other comprehensive loss								(12,336	)		(10,550	)
Total shareholders' equity		98,079			86,269			136,581			137,614
Total liabilities and shareholders' equity	$	182,174		$	159,299		$	192,460		$	193,735

	~~Severance and Other~~
	~~Employee Costs~~
~~Accrual balance at December 30, 2016~~	$	—
~~Expenses~~		~~1,293~~
~~Payments~~		~~1,293~~
~~Accrual balance at September 29, 2017~~	$	—

						Exit, Closure and
		Severance and Other				Consolidation
		Employee Costs				of Facilities				Total
Accrual balance at December 27, 2019	$		1,247		$		337		$		1,584
Additions			—				—				—
Expenditures			(990	)			(68	)			(1,058	)
Accrual balance at March 27, 2020	$		257		$		269		$		526
Additions			5,034				—				5,034
Expenditures			(2,273	)			(56	)			(2,329	)
Accrual balance at June 26, 2020	$		3,018		$		213		$		3,231

	June 26, 2020
	Quarter		Six Months
Operating lease cost	$	605	$	1,167

Total net lease costs	$	605	$	1,167

2020 (excluding the six months ended June 26, 2020)	$	1,325
2021		2,551
2022		2,261
2023		1,295
2024		963
2025 and thereafter		1,215
Total lease payments		9,610
Less imputed interest		(857	)
Total	$	8,753

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

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

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

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

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

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

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

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

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

10.1		Amendment No. 2 to Second Amended and Restated Credit Agreement, dated April 3, 2020, among The Hackett Group, Inc., the material domestic subsidiaries of The Hackett Group, Inc. named on the signatures pages thereto, and Bank of America, N.A., as lender (incorporated herein by reference to the Registrant’s Form 8-K filed on April 3, 2020.

10.2		The Hackett Group, Inc. 1998 Stock Option and Incentive Plan (Amended and Restated as of February 12, 2020) (incorporated herein by reference to the Registrant’s Registration Statement on Form S-8 filed on June 19, 2020).

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

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

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

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

101.SCH**		Inline XBRL Taxonomy Extension Schema Document

~~101.SCH~~101.CAL**		Inline XBRL Taxonomy Extension ~~Schema~~Calculation Linkbase Document

~~101.CAL~~101.DEF**		Inline XBRL Taxonomy Extension ~~Calculation~~Definition Linkbase Document

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~~101.LAB~~101.PRE**		Inline XBRL Taxonomy Extension ~~Label~~Presentation Linkbase Document

~~101.PRE~~104**		Cover Page Interactive Data File (formatted as Inline XBRL ~~Taxonomy Extension Presentation Linkbase~~and contained in Exhibit 101)

		The Hackett Group, Inc.

Date: ~~November 8, 2017~~August 5, 2020		/s/ Robert A. Ramirez
		Robert A. Ramirez
		Executive Vice President, Finance and Chief Financial Officer