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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ~~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 ~~October~~July 31, ~~2019,~~2020, there were ~~29,896,607~~30,060,950 shares of common stock outstanding.

	September 27,			December 28,			June 26,			December 27,
	2019			2018			2020			2019
ASSETS
Current assets:
Cash	$	16,423		$	13,808		$	37,370		$	25,954
Accounts receivable and contract assets, net of allowance of $710 and $1,441 at September 27, 2019 and December 28, 2018, respectively		57,890			54,807
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		3,664			4,339			3,719			2,895
Assets related to discontinued operations		—			137
Total current assets		77,977			73,091			78,051			78,627

Property and equipment, net		21,080			19,750			19,724			19,916
Other assets		2,801			3,704			2,052			2,652
Goodwill, net		83,782			84,207
Goodwill								83,880			84,578
Operating lease right-of-use assets		8,293			—			8,753			7,962
Total assets	$	193,933		$	180,752		$	192,460		$	193,735

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,217		$	7,429		$	4,739		$	8,494
Accrued expenses and other liabilities		31,450			34,498			34,810			32,482
Operating lease liabilities		2,678			—			2,701			2,707
Liabilities related to discontinued operations		22			2,300
Total current liabilities		39,367			44,227			42,250			43,683
Long-term deferred tax liability, net		7,704			6,435
Long-term debt		2,500			6,500
Non-current deferred tax liability, net								7,577			7,183
Operating lease liabilities		5,615			—			6,052			5,255
Total liabilities		55,186			57,162			55,879			56,121

Commitments and contingencies

Shareholders’ equity:
Preferred stock, $0.001 par value, 1,250,000 shares authorized; none issued and outstanding		—			—
Common stock, $0.001 par value, 125,000,000 shares authorized 57,137,480 and 56,607,622 shares issued at September 27, 2019 and December 28, 2018, respectively		58			57
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		301,035			296,955			306,935			303,707
Treasury stock, at cost, 27,280,200 and 27,086,782 shares September 27, 2019 and December 28, 2018, respectively		(139,660	)		(136,604	)
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		(10,221	)		(25,424	)		(15,183	)		(13,714	)
Accumulated other comprehensive loss		(12,465	)		(11,394	)		(12,336	)		(10,550	)
Total shareholders' equity		138,747			123,590			136,581			137,614
Total liabilities and shareholders' equity	$	193,933		$	180,752		$	192,460		$	193,735

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

Quarter Ended

Nine Months Ended

September 27,

September 28,

September 27,

September 28,

2019

2018

2019

2018

Revenue:

Revenue before reimbursements

$
66,755

$
68,183

$
197,101

202,928

Reimbursements

5,935

5,535

16,265

16,424

Total revenue

72,690

73,718

213,366

219,352

Costs and expenses:

Cost of service:

Personnel costs before reimbursable expenses

41,183

41,123

120,649

123,086

Stock compensation expense

1,155

1,646

3,465

4,367

Reimbursable expenses

5,935

5,535

16,265

16,424

Total cost of service

48,273

48,304

140,379

143,877

Selling, general and administrative costs

14,353

15,507

44,107

45,953

Stock compensation expense

776

850

2,268

2,495

Change in acquisition-related contingent consideration liability

(108
)

803

(1,133
)

(3,750
)
Total costs and operating expenses

63,294

65,464

185,621

188,575

Income from operations

9,396

8,254

27,745

30,777

Other expense:

Interest expense

(62
)

(158
)

(268
)

(515
)
Income from operations before income taxes

9,334

8,096

27,477

30,262

Income tax expense

2,427

2,425

6,481

5,618

Income from continuing operations

6,907

5,671

20,996

24,644

Income (loss) from discontinued operations

2

(514
)

(4
)

(599
)
Net income

$
6,909

$
5,157

$
20,992

$
24,045

Basic net income per common share:

Income per common share from continuing operations

$
0.23

$
0.19

$
0.70

$
0.84

Income (loss) per common share from discontinued operations

0.00

(0.02
)

(0.00
)

(0.02
)
Basic net income per common share

$
0.23

$
0.17

$
0.70

$
0.82

Diluted net income per common share:

Income per common share from continuing operations

$
0.21

$
0.18

$
0.65

$
0.77

Income (loss) per common share from discontinued operations

0.00

(0.02
)

(0.00
)

(0.02
)
Diluted net income per common share

$
0.21

$
0.16

$
0.65

$
0.75

Weighted average common shares outstanding:

Basic

29,876

29,478

29,794

29,332

Diluted

32,571

32,593

32,413

32,214

	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.

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

Nine Months Ended

September 27,

September 28,

2019

2018

Cash flows from operating activities:

Net income

$
20,992

$
24,045

Less loss from discontinued operations

(4
)

(599
)
Net income from continuing operations

20,996

24,644

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

Depreciation expense

2,320

1,857

Amortization expense

789

1,789

Amortization of debt issuance costs

68

68

Non-cash stock compensation expense

5,733

6,932

Provision for doubtful accounts

719

313

Gain on foreign currency translation

(384
)

(425
)
Release of valuation allowance

1,277

1,565

Changes in assets and liabilities:

Increase in accounts receivable and contract assets

(3,904
)

(1,612
)
(Increase) decrease in prepaid expenses and other assets

803

(1,352
)
Decrease in accounts payable

(2,213
)

(3,317
)
Decrease in accrued expenses and other liabilities

(1,463
)

(3,033
)
Increase (decrease) in income tax payable

1,803

(2,476
)
Net cash provided by operating activities

26,540

24,354

Cash flows from investing activities:

Purchases of property and equipment

(3,719
)

(7,273
)
Net cash used in investing activities

(3,719
)

(7,273
)
Cash flows from financing activities:

Proceeds from issuance of common stock

418

387

Proceeds from borrowings

1,000

5,000

Repayment of borrowings

(5,000
)

(12,500
)
Dividends paid

(11,196
)

(10,048
)
Repurchase of common stock

(5,531
)

(4,272
)
Net cash used in financing activities

(20,309
)

(21,433
)
Effect of exchange rate on cash

103

17

Net increase (decrease) in cash and cash equivalents

2,615

(4,335
)
Cash at beginning of period

13,808

17,512

Cash at end of period

$
16,423

$
13,177

Supplemental disclosure of cash flow information:

Cash paid for income taxes

$
3,410

$
5,406

Cash paid for interest

$
227

$
450

	Quarter Ended						Six Months Ended
	June 26,			June 28,			June 26,			June 28,
	2020			2019			2020			2019
Net (loss) income	$	(3,933	)	$	6,989		$	1,594		$	14,083
Foreign currency translation adjustment		44			(672	)		(1,786	)		(15	)
Total comprehensive (loss) income	$	(3,889	)	$	6,317		$	(192	)	$	14,068

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 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

Issuance of common stock

7

—

(88
)

—

—

—

—

(88
)
Amortization of restricted stock units and common stock subject to vesting requirements

—

—

1,781

—

—

—

—

1,781

Net income

—

—

—

—

—

6,909

—

6,909

Foreign currency translation

—

—

—

—

—

—

(1,056
)

(1,056
)
Balance at September 27, 2019

57,137

$
58

$
301,035

(27,280
)

$
(139,660
)

$
(10,221
)

$
(12,465
)

$
138,747

Additional

Other

Total

Common Stock

Paid in

Treasury Stock

Accumulated

Comprehensive

Shareholders'

Shares

Amount

Capital

Shares

Amount

Deficit

Loss

Equity

Balance at December 29, 2017

55,745

$
56

$
288,297

(26,945
)

$
(134,054
)

$
(38,515
)

$
(8,509
)

$
107,275

Issuance of common stock

721

1

(3,004
)

—

—

—

—

(3,003
)
Treasury stock purchased

—

—

1,346

(126
)

(2,310
)

—

—

(964
)
Amortization of restricted stock units and common stock subject to vesting requirements

—

—

3,557

—

—

—

—

3,557

Net income

—

—

—

—

—

7,367

—

7,367

Foreign currency translation

—

—

—

—

—

—

1,152

1,152

Balance at March 30, 2018

56,466

$
57

$
290,196

(27,071
)

$
(136,364
)

$
(31,148
)

$
(7,357
)

$
115,384

Issuance of common stock

56

—

205

—

—

—

—

205

Amortization of restricted stock units and common stock subject to vesting requirements

—

—

2,264

—

—

—

—

2,264

Dividends declared

—

—

—

—

—

(5,396
)

—

(5,396
)
Net income

—

—

—

—

—

11,521

—

11,521

Foreign currency translation

—

—

—

—

—

—

(2,346
)

(2,346
)
Balance at June 29, 2018

56,522

$
57

$
292,665

(27,071
)

$
(136,364
)

$
(25,023
)

$
(9,703
)

$
121,632

Issuance of common stock

12

—

(123
)

—

—

—

—

(123
)
Amortization of restricted stock units and common stock subject to vesting requirements

—

—

2,138

—

—

—

—

2,138

Net income

—

—

—

—

—

5,157

—

5,157

Foreign currency translation

—

—

—

—

—

—

(432
)

(432
)
Balance at September 28, 2018

56,534

$
57

$
294,680

(27,071
)

$
(136,364
)

$
(19,866
)

$
(10,135
)

$
128,372

	Six Months Ended
	June 26,			June 28,
	2020			2019
Cash flows from operating activities:
Net income	$	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		1,683			1,435
Amortization expense		475			553
Amortization of debt issuance costs		47			46
Non-cash stock compensation expense		4,572			3,802
Provision for doubtful accounts		211			606
Gain on foreign currency translation		(368	)		(57	)
Release of valuation allowance		362			1,714
Changes in assets and liabilities:
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		(3,755	)		(661	)
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		21,068			18,032
Cash flows from investing activities:
Purchases of property and equipment		(1,349	)		(2,819	)
Net cash used in investing activities		(1,349	)		(2,819	)
Cash flows from financing activities:
Proceeds from issuance of common stock		374			418
Proceeds from borrowings		—			1,000
Repayment of borrowings		—			(3,000	)
Dividends paid		(5,791	)		(5,407	)
Repurchase of common stock		(2,983	)		(5,443	)
Net cash used in financing activities		(8,400	)		(12,432	)
Effect of exchange rate on cash		97			93
Net increase in cash		11,416			2,874
Cash at beginning of period		25,954			13,808
Cash at end of period	$	37,370		$	16,682
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	325		$	1,578
Cash paid for interest	$	28		$	149

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 ~~28, 2018,~~27, 2019, included in the Annual Report on Form 10-K filed by the Company with the SEC on March ~~8, 2019.~~5, 2020. The consolidated results of operations for the quarter and ~~nine~~six months ended ~~September 27, 2019,~~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.

~~We generate~~The Company’s revenue is substantially ~~all of our revenue~~generated from providing professional services to ~~our~~its clients. WeThe Company also ~~generate~~generates revenue from software licenses, software support, maintenance and subscriptions to ~~our~~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, ~~we allocate~~the Company allocates the total transaction price to each performance obligation based on its relative standalone selling price. ~~We determine~~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 ~~our~~the Company’s customers, in an amount that reflects the consideration ~~we expect~~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.

WeThe Company typically ~~satisfy our~~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.

~~We generate our~~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, ~~we agree~~the Company agrees to a pre-established fee or fee cap in exchange for a predetermined set of professional services. ~~We set~~The Company sets the fees based on ~~our~~its estimates of the costs and timing for completing the engagements. WeThe Company generally ~~recognize~~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 ~~our~~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 ~~mile-stone~~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 ~~our~~the Company’s consultants at agreed upon hourly rates. ~~We recognize~~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 isare 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-based or~~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 ~~typically~~ 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 ~~ability~~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 ~~contract liabilities~~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 ~~the Company is~~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 ~~contract liabilities~~deferred revenue and recognized over future periods as earned in accordance with the applicable engagement agreement. See Note 3 for the accounts receivable and ~~contract asset~~unbilled revenue balances and see Note 4 for the ~~contract liabilities~~deferred revenue balances. During the quarter and ~~nine~~six months ended ~~September 27, 2019,~~June 26, 2020, the Company recognized ~~$3.8~~$5.4 million and ~~$12.0~~$9.8 million, respectively, of revenue as a result of changes in ~~contract liabilities~~deferred revenue liability balance, as compared to ~~$4.2~~$4.3 million and ~~$14.0~~$8.3 million for the quarter and ~~nine~~six months ended ~~September~~June 28, ~~2018,~~2019, respectively.

The following table reflects the Company’s disaggregation of total revenue including reimbursable expenses for the quarters and ~~nine~~six months ended ~~September 27, 2019~~June 26, 2020 and ~~September~~June 28, ~~2018:~~2019:

Sales commissions earned by ~~our~~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. WeThe 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 ~~condensed~~ consolidated statements of operations. As of December ~~28, 2018,~~27, 2019, and December ~~29, 2017,~~28, 2018, the Company had ~~$1.2~~$1.6 million and ~~$1.4~~$1.2 million, respectively, of deferred commissions, of which ~~$0.4~~ $0.5million and $0.9million was amortized during the quarter and ~~nine~~six months ~~of 2019~~ended June 26, 2020, and ~~$0.1~~$0.3 million and ~~$0.7~~$0.5 million for the same periods in ~~2018. No~~2019. NaN impairment loss was recognized relating to the capitalization of deferred ~~commission during either years.~~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 European REL Working Capital group’s sales had declined over the past several years as European countries have experienced continued economic recoveries and improved cash balances. Companies are holding high cash reserves which drove working capital project sales of this group down across all of Europe. The REL practice had a limited pipeline of potential client engagements; therefore, the Company made the strategic decision to exit the business at the end of fiscal year 2018.

~~The following table includes the carrying amounts of the major classes of assets and liabilities presented in discontinued operations in our consolidated balance sheet:~~

~~The following table presents the gain and loss results for the Company’s discontinued operations:~~

The Company’s financial instruments consist of cash, ~~and cash equivalents,~~ accounts receivable and ~~contract assets,~~unbilled revenue, accounts payable, accrued expenses and other liabilities and debt. As of ~~September~~June 26, 2020 and December 27, 2019, ~~and December 28, 2018,~~ 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 ~~February 2016,~~ the ~~FASB issued guidance on leases~~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 ~~supersedes~~reflected an effective tax rate of 27% and 22%, respectively. The increase in the 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 ~~lease guidance. The core principle establishes a right-of-use (ROU) model that requires lessees~~quarter in countries with lower statutory income tax rates and changes in the Company’s overall profitability due to ~~recognize~~ the ~~assets and liabilities that arise from nearly all leases~~COVID-19 economic effects.

COVID-19 Pandemic Impact on the ~~balance sheet. Accounting applied by lessees has remain largely consistent with previous guidance.~~ Company’s Business

The ~~Company adopted the amended guidance effective December 29, 2018, including interim periods within this fiscal year, using the effective date as the date~~level of ~~initial application.~~ ~~Consequently, on adoption,~~revenue the Company ~~recognized additional operating liabilities of approximately $9.0 million, with corresponding ROU assets of approximately the same amount~~can achieve is based on the ~~present value~~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 ~~remaining minimum rental payments under current leasing standards for existing operating leases. The amended guidance~~COVID-19 pandemic did not have a ~~material~~significant impact on the Company’s consolidated ~~statements~~results of ~~comprehensive income~~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 ~~consolidated statements of cash flows. See Note 5 for additional information.~~services.

The Company is actively managing its business to respond to the impact of COVID-19. The Company has reduced employee travel to only essential business needs and its employees have been working from home. The Company is 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 implemented plans to manage its 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 pandemic.

In ~~July 2018, the FASB issued ASU 2018-09, which affects a wide variety of topics in the Codification and applies to all reporting entities within the scope~~light of the ~~affected accounting guidance. The amendments in~~evolving health, social, economic and business environment, governmental regulations or mandates, and business disruptions that could occur, the ~~ASU represent changes~~potential impact that clarify, correct errors in, or make minor improvements to the Codification. Ultimately, the amendments make the Codification easier to understand and apply by eliminating inconsistencies and providing clarifications. Some of the amendments in this ASU do not require transition guidance and are effective upon issuance of the ASU, while many of the amendmentsCOVID-19 could have ~~transition guidance with effective dates for annual periods beginning after December 15, 2018. The adoption of the amendments in this ASU did not have a material impact~~ on the Company’s ~~consolidated~~ financial ~~statements~~condition and ~~related disclosures.~~operating results remains highly uncertain.

In January 2017, the FASB issued ASU 2017-04, which eliminates Step 2 from the goodwill impairment test. For public companies, this update ~~will be~~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. The ~~Company does~~adoption did not ~~expect the guidance to~~ have a material impact on 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.

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.

~~The following table reconciles~~ For the period in which the Company has reported a net loss, diluted net loss per common share is the same as basic ~~and~~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:~~

~~Approximately 26 thousand~~ shares ~~and 39~~outstanding excludes 126 thousand shares of unvested restricted stock units and common stock ~~equivalents were excluded from~~subject to vesting requirements issued to employees and non-employees and 2.2 million of common stock issuable upon the ~~computations~~exercise of ~~diluted net income per common share for the quarter~~stock options and nine months ended September 27, 2019, respectively, as compared to 1 thousand shares and 2 thousand shares for the quarter and nine months ended September 28, 2018, respectively, as their inclusion would have had an anti-dilutive effect on diluted net income per common share. SARs.

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

Approximately 23 thousand shares and 16 thousand shares of common stock equivalents were excluded from the computations of diluted net (loss) income per common share for the quarter and six months ended June 26, 2020, respectively, as compared to 9 thousand shares and 6 thousand shares for the quarter and six months ended June 28, 2019, respectively, as inclusion would have had an anti-dilutive effect on diluted net (loss) income per common share.

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

Accounts receivable is net of uncollected advanced billings. ~~Contract assets represent~~Unbilled revenue represents revenue for services performed that have not been invoiced.

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

Under the Coronavirus, Aid, Relief and 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 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.

During the second quarter of 2020, the Company 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. As of June 26, 2020, the Company had $2.9 million of remaining commitments related to 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):

~~As described in Note 1 “Recently Issued Accounting Standards”, effective December 29, 2018, the Company adopted the new lease accounting standard.~~ 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 or clauses:~~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 ~~our~~the Company’s lease liability, nor our right of use asset.

The components of lease expense ~~during the three and nine months ended September 27, 2019,~~ were as follows (in thousands):

The weighted average remaining lease term is ~~5.1~~4.6 years. Assuming the Company exercises its opt-out option in year 5 for ~~its~~the London office lease, the weighted average remaining lease term would be ~~3.3~~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 ~~our~~the Company’s lease payments in a similar economic environment. For the quarter and ~~nine~~six months ended ~~September 27, 2019,~~June 26, 2020, the Company paid ~~$0.7~~$0.6 million and ~~$2.0~~$1.2 million, respectively, from operating cash flows for operating leases.

Future minimum lease payments under non-cancellable operating leases as of ~~September 27, 2019,~~June 26, 2020, were as follows (in thousands):

As of ~~September 27, 2019,~~June 26, 2020, the Company does not have any additional operating leases that have not yet commenced, ~~that create significant rights and obligations~~however the Company did extend its Miami office lease effective July 1, 2020, for ~~the Company.~~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”, and together with the Revolver, the~~ “Credit ~~Facility”~~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 ~~(the “Credit Agreement”) 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 28,~~December 27, 2019, the Company ~~paid down $2.0 million and a net $4.0 million~~did 0t have an outstanding balance under the ~~Revolver, respectively, which had a balance of $2.5 million outstanding as of September 27, 2019.~~ 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 27, 2019,~~June 26, 2020, the applicable margin percentage was ~~1.25%~~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 27, 2019,~~June 26, 2020, was ~~3.3%~~0.125%. ~~Subsequent to September 27, 2019, the Company paid off the remaining $2.5 million balance outstanding under the Revolver.~~

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.~~Agreement, subject to certain exceptions. As of ~~September 27, 2019,~~June 26, 2020, the Company was in compliance with all covenants.

During the ~~nine~~quarter and six months ended ~~September 27, 2019,~~June 26, 2020, the Company issued ~~430,412~~71,997 and 628,601 restricted stock units, respectively, at a weighted average grant-date fair value of ~~$18.45~~$13.42 and $15.50 per ~~share.~~share, respectively. As of ~~September 27, 2019,~~June 26, 2020, the Company had ~~948,144~~1,238,577 restricted stock units outstanding at a weighted average grant-date fair value of ~~$17.44~~$16.56 per share. As of ~~September 27, 2019, $10.5~~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 ~~2.3~~2.5 years.

~~During the nine months ended September 27, 2019, 30,773 shares of common stock subject to vesting requirements were issued at a weighted average grant-date fair value of $15.57 per share.~~ As of ~~September 27, 2019,~~June 26, 2020, the Company had ~~96,639~~81,407 shares of common stock subject to vesting requirements outstanding at a weighted average grant-date fair value of ~~$19.46~~$18.13 per share. As of ~~September 27, 2019, $1.8~~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 ~~1.6~~1.2 years.

Forfeitures for all of the Company’s outstanding equity awards are recognized as incurred.

As of ~~September 27, 2019,~~June 26, 2020, the Company had 2.9 million SARs outstanding with an exercise price of $4.00 per share and an expiration date of February 8, 2022.

Under the Company’s share repurchase plan, the Company may 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 ~~nine~~quarter ended June 26, 2020, the Company did 0t repurchase any of its common stock. During the six months ended ~~September 27,~~June 26, 2020, the Company repurchased 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 $15.80, or a total cost of $3.1 million. No shares were repurchased during the three months ended September 27, 2019. As of September 27, 2019, the Company had a total authorization remaining of $3.9 million under the repurchase plan with a total authorization of $142.2 million.

~~During the nine months ended September 28, 2018, the Company repurchased 53 thousand shares of its common stock at an average price of $18.33~~$15.59 per share and $15.80 per share, respectively, for a total cost of ~~$1.0 million.~~ $1.4 million and $3.1 million, respectively.

The shares repurchased under the share repurchase plan during the quarter and ~~nine~~six months ended ~~September 27, 2019,~~June 26, 2020, do not include 52 thousand shares and ~~129~~127 thousand shares, respectively, which the Company bought back to satisfy employee net vesting obligations for a cost of ~~$88~~$25 thousand and ~~$2.5~~$2.0 million, respectively. During the quarter and ~~nine~~six months ended ~~September~~June 28, ~~2018,~~2019, the Company bought back ~~8 thousand~~825 shares and ~~191~~124 thousand shares, respectively, at a cost of ~~$0.1 million~~$14 thousand and ~~$3.3~~$2.4 million, respectively, to satisfy employee net vesting obligations.

In ~~early~~ 2019, the Company increased ~~its 2019~~the annual dividend from $0.34 per share to $0.36 per share to be paid on a semi-annual ~~basis.~~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 was declared in the fourth quarter of 2019, for a total of $5.8 million. During the second quarter of ~~2019,~~2020, the Company announced its transition to a quarterly dividend payment cycle, subject to declaration. During the second quarter, the Company declared its ~~semi-annual~~first quarterly dividend for shareholders of ~~$0.18 per share,~~record as of June 30, 2020, which was paid on July 10, ~~2019,~~2020, for a total of ~~$5.8~~$3.1 million. These dividends were paid from U.S. domestic sources and are accounted for as an increase to accumulated deficit.

Subsequent to ~~September 27, 2019,~~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 $0.18 per share~~ for shareholders of record as of ~~record date December 20, 2019,~~September 25, 2020, which ~~is expected to~~will be paid ~~January 7,~~October 9, 2020.

During the ~~nine~~six months ended ~~September 27, 2019,~~June 26, 2020, the Company bought back 2837 thousand shares of its common stock from members of its Board of Directors for ~~$0.5~~$0.7 million, or ~~$16.25~~$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~~June 26, 2020 and December 27, 2019, ~~and December 28, 2018,~~ foreign assets included $13.8 million and ~~$14.5~~$14.6 million, respectively, of goodwill related to acquisitions. ~~As of September 27, 2019, foreign assets included $5.6 million of operating lease ROA.~~

In the following table (in thousands), U.S. Strategy and Business Transformation Group includes the results of the Company’s domestic Executive Advisory Programs, Benchmarking Services, Business Transformation Practices and IP as a Service offerings (S&BT). U.S. ERP, EPM and Analytics Solutions includes the results of the Company’s domestic Oracle EEA and SAP Solutions Practices (EEA). International includes results of the Company’s S&BT and EEA Practices, primarily in Europe. The revenue reported in the below table represents revenue following each of the Company’s consultant’s assigned Group and home domicile.

Effective May 1, 2017, the Company acquired certain assets and liabilities of Jibe Consulting, Inc. (“Jibe”), a U.S.-based Oracle E-Business Suite and Oracle Cloud Business Application implementation firm. The acquisition of Jibe ~~enhanced~~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 ~~had 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 ~~the~~ performance targets over the 18 ~~month period~~months following ~~closing for a total of $11.0 million in~~the closing.

The cash related to the contingent consideration, ~~a portion~~which 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 was to be paid to the key employees, is subject to service vesting and was accounted for as compensation expense. 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 ~~in both cash and Company common stock, subject to vesting. As of October 1, 2019, the earnout was finalized and subsequently settled, resulting~~resulted in a benefit of $0.1 million and $1.1 million during the quarter and nine months ended September 27, 2019, respectively. During the third quarter and nine months ended September 28, 2018, the Company recorded expense of $0.8 million and a benefit of $3.8$1.2 million in earnings from operations on the consolidated statement of operations related to the contingent earnout liability for the Jibe acquisition earnout expectations. The cash related to the contingent consideration, which is to be paid to the sellers, is not subject to service vesting and has been accounted for as part of the purchase consideration.

The cash related to the contingent consideration, which is to be paid to the key employees, is subject to service vesting and is being accounted for as compensation expense. During the quarter and nine months ended September 27, 2019, the Company recorded a benefit of $32 thousand and $0.2 million, respectively, in personnel costs before reimbursements on the consolidated statement of operations leading up to the finalization of the earnout. During the third quarter and nine months ended September 28, 2018, the Company recorded expense of $0.1 million and a benefit of $0.1 million in earnings from operations on the consolidated statement of operations related to the change in contingent earnout liability for the Jibe acquisition earnout expectations.

acquisition. These contingent liabilities ~~have been~~were recorded in the consolidated balance sheet as 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. The Company recorded expense of $34 thousand and a benefit of $0.2 million during the quarter and nine months ended September 27, 2019, of acquisition-related non-cash stock compensation in cost of sales on the consolidated statement of operations.

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 RPA consulting firm. This acquisition complemented the global strategy and business transformation offerings of the Hackett Group.

The sellers’ purchase consideration was £3.2 million in cash. The closing purchase consideration was funded with the Company’s available funds. In addition, the sellers had 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 had 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 in non-current accrued expenses and other liabilities. The Aecus earnout settlement was completed during the quarter ended September 27, 2019 and resulted in personnel costs before reimbursements on the consolidated statement of operations of $0.2 million and $24 thousand during the quarter and nine months ended September 27, 2019, respectively related to the cash portion of the earnout.

Effective October 2017, the Company 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.

Subsequent to September 27, 2019, the Company expects to record restructuring costs of approximately $2.5 million, primarily for employee severance costs in Europe as well as Australia. These actionsliabilities were taken as a result of the continued decline in demand in the Company’s European and Australian markets. The Company effected these changes to reduce its costs to better align the overall cost structure and organization with anticipated demand for the Company services.

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 ~~the impact of Brexit on our business~~ and changes in general economic conditions, interest rates and our ability to obtain additional debt financing 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 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 ~~28, 2018.~~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 ~~16,500~~17,850 benchmark and performance studies over 2526 years at over ~~5,900~~6,420 of the world’s leading companies.

In the following discussion, ~~U.S.~~ Strategy and Business Transformation Group includes the results of our ~~domestic~~North America IP as-a-service offerings, which include our Executive Advisory Programs and Benchmarking Services, and our Business Transformation Practices ~~and IP as a Service offerings (US S~~(S&BT). ~~U.S.~~ ERP, EPM and Analytics Solutions includes the results of our ~~domestic~~North America Oracle EEA and SAP Solutions Practices ~~(US EEA)~~(EEA). International includes results of our S&BT and EEA Practices primarily in Europe.

The level of revenue we achieve is based on our ability to 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 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 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 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 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 financial condition and operating results remains highly uncertain.

For more information, 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 Item 1A, “Risk Factors.”

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 27,

September 28,

September 27,

September 28,

2019

2018

2019

2018

Revenue:

Revenue before reimbursements

$
66,755

100.0
%

$
68,183

100.0
%

$
197,101

100.0
%

$
202,928

100.0
%
Reimbursements

5,935

5,535

16,265

16,424

Total revenue

72,690

73,718

213,366

219,352

Costs and expenses:

Cost of service:

Personnel costs before reimbursable expenses

41,026

61.5
%

40,883

60.0
%

120,780

61.3
%

123,635

60.9
%
Stock compensation expense

833

915

2,775

2,915

Acquisition-related compensation expense (benefit)

157

240

(131
)

(549
)

Acquisition-related non-cash stock compensation expense

322

731

690

1,452

Reimbursable expenses

5,935

5,535

16,265

16,424

Total cost of service

48,273

48,304

140,379

143,877

Selling, general and administrative costs

14,085

21.1
%

14,922

21.9
%

43,286

22.0
%

44,164

21.8
%
Non-cash stock compensation expense

776

850

2,268

2,495

Amortization of intangible assets

236

585

789

1,789

Acquisition-related costs

32

—

32

—

Change in acquisition-related contingent consideration liability

(108
)

803

(1,133
)

(3,750
)

Total selling, general, and administrative expenses

15,021

17,160

45,242

44,698

Total costs and operating expenses

63,294

65,464

185,621

188,575

Income from operations

9,396

14.1
%

8,254

12.1
%

27,745

14.1
%

30,777

15.2
%

Other expense:

Interest expense

(62
)

(158
)

(268
)

(515
)

Income from continuing operations before income taxes

9,334

14.0
%

8,096

11.9
%

27,477

13.9
%

30,262

14.9
%
Income tax expense

2,427

3.6
%

2,425

3.6
%

6,481

3.3
%

5,618

2.8
%
Income from continuing operations (net of taxes)

6,907

5,671

20,996

24,644

Income (loss) from discontinued operations

2

(514
)

(4
)

(599
)

Net income

$
6,909

10.3
%

$
5,157

7.6
%

$
20,992

10.7
%

$
24,045

11.8
%

Diluted net income per common share

$
0.21

$
0.16

$
0.65

$
0.75

	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

Revenue. We are a global company with operations located in ~~North~~the United States and ~~South America,~~ Western ~~Europe, Australia and India.~~Europe. Our revenue is denominated in multiple currencies, primarily the U.S. Dollar, British Pound and 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 ~~nine~~six months ended ~~September 27, 2019~~June 26, 2020 and the comparable periods of ~~2018.~~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 2.1%,~~23% to ~~$66.8~~$52.6 million,and ~~2.9%~~10% to ~~$197.1~~$117.8 million in the ~~third~~second quarter and first ~~nine~~six months of ~~2019,~~2020, respectively, as compared to ~~$68.2~~$68.0 million and ~~$202.9~~$130.3 million, in the same periods of ~~2018, respectively.~~ 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 a remote service delivery model throughout the US and Europe.In the ~~third~~second quarter and first six months of ~~2019 and 2018,~~2020, one customer accounted for 6% and 7%5%, respectively, of our total ~~revenue, respectively, and during the first nine months of 2018 and~~revenue. In both periods in 2019, no customer accounted for more than 5% of our total revenue. ~~See Footnote 11 for revenue by Service Group.~~

US S&BT net revenue ~~increased 5.5%, to $27.4~~was $16.8 million and ~~2.2%, to $78.6~~$41.3 million during the ~~third~~second quarter and first ~~nine~~six months of ~~2019,~~2020, respectively, as compared to $26.3 million and $50.6 million in the same periods of ~~2018, driven~~2019. This group’s business transformation practice was disrupted by ~~strong results across most practices.~~ the impact of the COVID-19 pandemic.

EEA net revenue increased ~~3.2%,~~ to ~~$30.9~~$31.4 million and ~~decreased less than a one percent,~~ to ~~$89.0~~$64.6 million during the ~~third~~second quarter and first ~~nine~~six months of ~~2019,~~2020, respectively, as compared to $31.0 million and $58.7 million in the same periods ~~in 2018. The~~of 2019, respectively. This increase ~~in the third quarter~~ was driven by strong growth from our SAP S4 HANA implementation and ~~Oracle ERP~~Reseller practices, ~~as well as strong cloud revenue~~and growth from our ~~EPM practices partially offsetting~~Oracle Cloud ERP and OneStream Practices.

Hackett US net revenue from continuing operations represented 92% and 90% of our ~~Oracle EPM On-Premise declines.~~

~~International~~total Company net revenue ~~decreased 31.1%, to $8.4 million, and 20.2%, to $29.4 million,~~ during the ~~third~~second quarter and first ~~nine~~six months of ~~2019,~~2020, respectively, asand decreased 16% and 3%, respectively, when compared to the same periods in ~~2018. This decrease~~2019.

Hackett international net revenue from continuing operations was ~~primarily due~~$4.4 million and $11.9 million in the second quarter and first six months of 2020, respectively, as compared to $10.7 million and $21.0 million during the ~~uncertainties surrounding Brexit~~same periods in 2019, respectively. Europe continues to be impacted by lengthened client decision-making from economic uncertainty, which ~~appears to have continued to impact client decision making. In addition to Brexit, a meaningful portion of a European engagement was discontinued when~~has been further impacted by the ~~client was acquired.~~COVID-19 pandemic. Total Company international net revenue accounted for ~~13%~~8% and ~~15%~~10% of total Company net revenue during both the ~~third~~second quarter and first ~~nine~~six months of ~~2019,~~2020, respectively, as compared to ~~18%~~16% for ~~both~~ the same periods in ~~2018, respectively.~~2019.

Reimbursements as a percentage of total net revenue were ~~8.9%~~0% and ~~8.3%~~4% during the ~~third~~second quarter and first ~~nine~~six months of ~~2019,~~2020, respectively, as compared to ~~8.1%~~8.0% for both of the same periods in ~~2018.~~2019. Reimbursements are project travel-related expenses passed through to a client with no associated margin. As a result of COVID-19, most travel was eliminated except where necessary to meet customer needs.

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

Personnel costs ~~before reimbursable expenses increased slightly to $41.0 million, and~~ decreased 2%5%, to ~~$120.8~~$38.7 million from $40.8 million for the ~~third~~second quarter ~~and~~of 2020, as compared to the same period in 2019. Personnel costs were comparable between the first ~~nine~~six months of ~~2019, respectively, from $40.9 million~~2020 and ~~$123.6 million~~2019. The decrease in personnel costs in the ~~same periods~~second quarter of ~~2018, respectively.~~2020 was primarily due to the restructuring actions that were implemented at the end of the second quarter of 2020 which included a reduction of approximately 10% of the global workforce. Personnel costs before reimbursable expenses, as a percentage of revenue before reimbursements, were ~~62%~~73% and ~~61%~~68% for the ~~third~~second quarter and first ~~nine~~six months of ~~2019,~~2020, respectively, as compared to 60% and 61% for the same periods ~~in 2018,~~of 2019, respectively.

Non-cash stock compensation expense was ~~$0.8 million and $2.8 million for the third quarter and first nine months of 2019, respectively, as compared to $0.9~~$1.6 million and $2.9 million for the second quarter and first six months of 2020, respectively, as compared to $1.0 million and $1.9 million for the same periods of ~~2018,~~2019, respectively.

The acquisition-related compensation expense and benefit in ~~all periods relates~~2020 and 2019 related 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 is subject to service vesting and as a result has been recorded as compensation expense. The ~~Aecus earnout was~~majority of the liabilities were settled during the ~~three months ended September 27, 2019 and the Jibe earnout was settled effective October 1,~~fourth quarter of 2019. ~~See Note 12, “Acquisitions” to our consolidated financial statements included in this Quarterly Report on Form 10-Q.~~

Acquisition related non-cash stock compensation expense in ~~2019~~2020 and ~~2018 primarily~~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. The equity portion of the earnout for Jibe and Aecus resulted in adjustments based on the estimated and final earnout achieved. As discussed above, both earnout achievements have been settled. See Note 12, “Acquisitions” to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further information on the Jibe and Aecus acquisitions.

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

SG&A costs were ~~$14.1~~$11.4 million and ~~$43.3~~$25.3 million for the ~~third~~second quarter and first ~~nine~~six months of ~~2019,~~2020, respectively, as compared to ~~$14.9~~$15.2 million and ~~$44.2~~$29.2 million for the same periods in ~~2018,~~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 were ~~21%~~22% for all periods presented.

Non-cash stock compensation expense was $0.5 million and ~~22% during third~~$1.1 million for the second quarter and first ~~nine~~six months of ~~2019,~~2020, respectively, as compared to ~~22%~~$0.8 million and $1.5 million for ~~both~~the same periods in ~~2018.~~2019, respectively.

Amortization expense was $0.2 million and ~~$0.8~~$0.5 million in the ~~third~~second quarter and first ~~nine~~six months of ~~2019,~~2020, respectively, as compared to ~~$0.6~~$0.3 million and ~~$1.8~~$0.6 million in the same periods in ~~2018.~~2019, respectively. The amortization expense in ~~2019~~2020 and ~~2018~~2019 related to the amortization of the intangible ~~assets~~asset acquired in our acquisitions ~~of Jibe and Aecus in the second quarter of 2017,~~ and the buyout of our partner’s joint venture interest in the CGBS Training and Certification Programs in ~~the fourth quarter of~~ 2017. ~~The 2018 amortization expense also includes the amortization of the intangible assets acquired in our 2014 EPM AMS acquisition of Technolab.~~ The intangible assets ~~relate~~related to ~~customer relationships, customer backlog and non-compete agreements. The Jibe and Aecus intangible assets~~the acquisitions will continue to amortize until 2022 and ~~CGBS Training and Certification Program~~the intangible assets related to the joint venture will continue to amortize until 2021.

Non-cash stock compensation expense was $0.8 million and $2.3 million in the third quarter and first nine months of 2019, respectively, as compared to $0.9 million and $2.5 million in the same periods in 2018, respectively.

Acquisition-related Contingent Consideration Liability. ~~The acquisition-related contingent consideration~~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, is

~~recorded as part~~resulted in a benefit due to the reduction of ~~purchase accounting. The~~the contingent earnout liability. This liability was ~~revalued during 2019 and 2018 based on earnout achievement leading up~~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 ~~final earnout settlement.~~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 ~~third~~second quarter and ~~first nine~~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 and six months of 2019, we recorded ~~$2.4~~income tax expense of $2.6 million and ~~$6.5~~$4.1 million, respectively, ~~of income tax expense~~ related to certain federal, foreign and state taxes which reflected an effective tax rate of ~~26%~~27% and ~~24%~~22%, respectively. InThe increase in the ~~third quarter and first nine~~six months ~~of 2018, we recorded $2.4 million and $5.6 million, respectively, of~~ending June 26, 2020 GAAP income tax ~~expense~~rate is primarily due to a lower tax benefit related to ~~certain federal, foreign~~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 ~~state taxes which reflected an effective tax rate~~changes in the Company’s overall profitability due to the impact of ~~30% and 19%, respectively.~~ the COVID-19 pandemic.

As of ~~September~~June 26, 2020, and December 27, 2019, ~~and December 28, 2018,~~ we had ~~$16.4~~$37.4 million and ~~$13.8~~$26.0 million, respectively, ofclassified 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 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 ~~existing~~ products and services, to respond to competitive pressures, or to acquire complementary businesses or technologies. There is no assurance that additional financing would be available when needed or desired.

Net cash provided by operating activities was ~~$26.5~~$21.1 million during the first ~~nine~~six months of ~~2019,~~2020, as compared to ~~$24.4~~$18.0 million during the same period in ~~2018.~~2019. In ~~2019,~~2020, the net cash provided by operating activities was primarily due to net income adjusted for non-cash items, ~~and an increase in income taxes payable, partially offset by an increase~~decreases in accounts receivable and ~~contract assets~~unbilled revenue and ~~a decrease~~increases in accrued expenses and other liabilities, partially offset by decreases in accounts payable due to the timing of vendor payments and ~~a decrease~~decreases in ~~accrued~~employee reimbursable expenses ~~and liabilities after the payout of 2018 incentive compensation.~~ resulting from decreased travel. In ~~2018,~~ 2019, the net cash provided by operating activities was primarily ~~driven by~~due to total net income adjusted

for non-cash items, partially offset by ~~decreases~~a decrease in accounts payable and accrued expenses and ~~other accruals~~liabilities after the payout of ~~2017~~ incentive ~~compensation, a decrease in the income tax payable accruals due to the estimated federal tax payments, and an increase in accounts receivable and contract assets.~~compensation.

Net cash used in investing activities was ~~$3.7~~$1.3 million and ~~$7.3~~$2.8 million during the first ~~nine~~six months of ~~2019~~2020 and ~~2018,~~2019, respectively. During ~~2019 and 2018,~~2020, cash flows used in investing activities included investments ~~relating~~related to the development of our Quantum Leap benchmark technology. In 2019, cash flows used in investing activities included investments inrelated to our internal corporate systems, the global rollout of new laptops which occurs every three to four years, and ~~our investments relating to~~ the development of our Quantum Leap benchmark technology.

Net cash used in financing activities was ~~$20.3~~$8.4 million and ~~$21.4~~$12.4 million during the first ~~nine~~six months of2020 and 2019, ~~and 2018,~~ respectively. The usage of cash in ~~2019~~2020 primarily related to the dividend ~~payments~~payment of ~~$11.2~~$5.8 million and the repurchase of ~~$5.5~~$3.0 million of ~~the Company’s~~our Company common ~~stock and net principal paydown under the Revolver of $4.0 million.~~stock. The usage of cash in ~~2018~~2019 was primarily related to the dividend payment of $5.4 million, the repurchase of $5.4 million of our Company common stock and the net payments ~~of $10.0 million, principal paydown~~made under the Revolver of ~~$7.5 million and the repurchase of $4.3 million of the Company’s common stock.~~$2.0 million.

As of ~~September 27, 2019,~~June 26, 2020, we ~~had $2.5 million~~did not have any outstanding borrowings under the Revolver, leaving us with a ~~remaining~~ capacity of approximately ~~$42.5~~$45.0 million. ~~Subsequent to September 27, 2019, the outstanding balance was paid off in full.~~ 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 ~~28, 2018.~~27, 2019.

As of ~~September 27, 2019,~~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 27, 2019.~~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 Chief Executive Officer and 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 Chief Executive Officer and 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 ~~28, 2018.~~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 27, 2019,~~June 26, 2020, the Company did not repurchase ~~any~~ shares of its common stock 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 27, 2019,~~June 26, 2020, the Company had ~~$3.9~~$5.6 million of authorization remaining under the repurchase plan.

Shares repurchased during the quarter and ~~nine~~six months ended ~~September 27, 2019~~June 26, 2020 under the repurchase plan approved by the Company's Board of Directors do not include 52 thousand shares and ~~129~~127 thousand shares, respectively, for a cost of ~~$88~~$25 thousand and ~~$2.5~~$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~~FLORIDA		65-0750100
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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


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

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~~June 26, 2020 and December 27, 2019 ~~and December 28, 2018~~ (unaudited)	3

	Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~September 27,~~June 26, 2020 and June 28, 2019 ~~and September 28, 2018~~ (unaudited)	4

	Consolidated Statements of Comprehensive Income for the Three and ~~Nine~~Six Months Ended ~~September 27,~~June 26, 2020 and June 28, 2019 ~~and September 28, 2018~~ (unaudited)	5

	Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September 27,~~June 26, 2020 and June 28, 2019 ~~and September 28, 2018~~ (unaudited)	6

	Consolidated Statements of Equity for the Three and ~~Nine~~Six Months Ended ~~September 27,~~June 26, 2020 and June 28, 2019 ~~and September 28, 2018~~ (unaudited)	7

	Notes to Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1917

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2422

Item 4.	Controls and Procedures	2422

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	2423

Item 1A.	Risk Factors	2423

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2523

Item 6.	Exhibits	2624

SIGNATURES		27
		25

	Quarter Ended				Nine Months Ended
	September 27,		September 28,		September 27,		September 28,
	2019		2018		2019		2018
Basic weighted average common shares outstanding		29,876,468		29,478,243		29,794,091		29,332,508

Effect of dilutive securities:
Unvested restricted stock units and common stock subject to vesting requirements issued to employees and non-employees		350,842		684,045		270,776		507,508
Common stock issuable upon the exercise of stock options and share appreciation rights (SARs)		2,343,432		2,431,071		2,348,248		2,374,403
Dilutive weighted average common shares outstanding		32,570,742		32,593,359		32,413,115		32,214,419

Large Accelerated Filer	☐	Accelerated Filer	☒

Non-Accelerated Filer	☐	Smaller Reporting Company	☐

		Emerging Growth Company	☐

						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
	Three Months		Nine Months		Quarter		Six Months
Operating lease cost	$	692	$	2,091	$	605	$	1,167

Total net lease costs	$	692	$	2,091	$	605	$	1,167

2019 (excluding the nine months ended September 27, 2019)	$	688
2020		2,362
2020 (excluding the six months ended June 26, 2020)				$	1,325
2021		1,931			2,551
2022		1,676			2,261
2023		733			1,295
2024 and thereafter		1,831
2024					963
2025 and thereafter					1,215
Total lease payments		9,221			9,610
Less imputed interest		(928	)		(857	)
Total	$	8,293		$	8,753

					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 28, 2019							$	3,877,922
June 29, 2019 to July 26, 2019		—	$	—		—	$	3,877,922
July 27, 2019 to August 23, 2019		—	$	—		—	$	3,877,922
August 24, 2019 to September 27, 2019		—	$	—		—	$	3,877,922
		—	$	—		—

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* 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 ~~1998 Stock Option and Incentive Plan (Amended and Restated as of March 16, 2015) dated October 31, 2019.~~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

~~101.DEF~~101.LAB**		Inline XBRL Taxonomy Extension ~~Definition~~Label Linkbase Document

~~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 6, 2019~~August 5, 2020		/s/ Robert A. Ramirez
		Robert A. Ramirez
		Executive Vice President, Finance and Chief Financial Officer