HCKT

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The Hackett Group, Inc.
1001 Brickell Bay Drive
Suite 3000
Miami, FL 33131
United States - Map
Phone: 305-375-8005
Fax: 305-379-8810
Web Site: http://www.answerthink.com

DETAILS  
Index Membership: N/A
Sector: Services
Industry: Management Services
Full Time Employees: 800


BUSINESS SUMMARY  
The Hackett Group, Inc. operates as a business and technology consulting company in the United States and internationally. The company offers various services, such as advisory programs, benchmarking, business transformation, working capital, business applications, and business intelligence implementation, as well as offshore application development and support. It serves automotive, consumer goods, financial services, technology, life sciences, manufacturing, media and entertainment, retail, telecommunications, utilities, and transportation industries. The company was founded in 1991. It was formerly known as Answerthink, Inc. and changed its name to The Hackett Group, Inc. in January 2008. The Hackett Group is based in Miami, Florida.

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The Hackett Group, Formerly Answerthink, Announces Fourth Quarter & Fiscal Year Results
Tuesday February 26, 4:21 pm ET 
-- Q4 Revenue Exceeds Guidance with Hackett Group (Excluding Tech Solutions) up 44%
-- Q4 Pro Forma EPS of $0.08 versus $0.01 in 06, at High End of Guidance
-- Fiscal Year Pro Forma EPS up 31%, Cash Flow from Operations of $21.6 Million
-- Stock Repurchase Program Expanded by Additional $5.0 Million


MIAMI--(BUSINESS WIRE)--The Hackett Group, Inc. (NASDAQ:HCKT - News), a global strategic advisory firm, today announced its financial results for the fourth quarter and fiscal year, which ended December 28, 2007. In January of 2008, Answerthink, Inc. was renamed The Hackett Group, Inc. and the Answerthink technology practices were renamed Hackett Technology Solutions.
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Fourth quarter 2007 revenue was $44.9 million, an 18% increase from the same period in 2006. Excluding revenues from the Lawson and SAP staff augmentation practices exited in the fourth quarter of 2006, fourth quarter revenues increased 21% from the same period in 2006.

Pro forma diluted earnings per share were $0.08 in the fourth quarter of 2007, as compared to $0.01 in the fourth quarter of 2006. Pro forma information is provided to enhance the understanding of the Company's financial performance and is reconciled to the Company's GAAP information in the accompanying tables.

Diluted earnings per share were $0.14 in the fourth quarter of 2007, as compared to a diluted loss per share of $0.03 in the fourth quarter of 2006. Diluted earnings per share for the fourth quarter of 2007 benefited by $2.2 million from the recovery of funds resulting from the previously disclosed UK misappropriation.

Fiscal year revenue was $177.0 million, a 2% decrease from the previous fiscal year. Diluted earnings per share were $0.20 in fiscal year 2007, as compared to a diluted loss per share of $0.11 for the previous fiscal year. Pro forma diluted earnings per share were $0.17 for fiscal year 2007, as compared to $0.13 for the previous fiscal year.

At the end of the fourth quarter of 2007, the Company's cash balances were $27.7 million, including $7.0 million in Bank of America's Columbia Strategic Cash Portfolio, of which $2.5 million was redeemed after year-end. During the quarter, the Company used $4.2 million to repurchase 1.03 million shares of the Company's common stock. As of the end of the fourth quarter, $6.1 million remained available under the Company's share repurchase program authorization. On February 22, 2008, the Board of Directors authorized an additional $5.0 million increase to the share buyback program.

"We are pleased to see the strong client reaction to our Hackett Group business model and value proposition reflected in our quarterly and year-end results," stated Ted A. Fernandez, Chairman & CEO of The Hackett Group. "We expect to carry this momentum into 2008, as clients continue to seek our advice and implementation assistance as they evaluate their organizational effectiveness in a slowing economy."

Based on the current economic outlook, the Company estimates total revenues for the first quarter of 2008 to be in the range of $42.0 million to $44.0 million and estimates pro forma diluted earnings per share to be in the range of $0.04 to $0.06. At the midpoint of the revenue guidance, Hackett Group revenue (excluding Hackett Technology Solutions) would be up approximately 30% on a year over year basis.

Other Highlights

Cash Masters U.S. Study – REL (Hackett's Total Working Capital Management Group) and CFO Magazine released research showing that despite a growing economy and impressive sales growth, the top 1,000 public companies in the U.S. lost ground in the battle to generate and manage cash. The new study found that U.S. companies are leaving $858 billion of cash on the table which could be used to fund acquisitions, pay down debt, invest in R&D, or fund share buy-back programs.

Compliance Cost Research – The Hackett Group issued 2007 Finance Book of NumbersTM research showing that compliance-related activities continue to prevent CFOs at typical companies from resuming more than a decade of cost reduction efforts. Hackett's research found that the typical Global 1000 company saw the cost of finance increase slightly over the past year, and is now spending 12% more than it did three years ago, in part due to increased focus and spending on compliance-related activities. World-class finance organizations, which have continued to reduce costs over Hackett's 15-year research history, are now spending less than half what typical companies do.

Evolving the Procurement Value Proposition Research – The Hackett Group issued research detailing how procurement organizations evolve from a traditional tactical sourcing focus to a comprehensive position of value management, moving through five discrete stages which help them develop new skill sets and operating models enabling them to eventually reach a point where procurement's sole agenda is to advance and support business strategy.

Representative Client Engagements

HR Transformation Blueprint for Oilfield Services Company – This client selected The Hackett Group to develop an HR organizational blueprint as a follow-on to transformational benchmarks in HR and Finance. The project is part of an overall effort to reduce G&A costs while improving service levels. The Hackett Group will help the client create a common HR platform and standardize HR processes used by seven corporate divisions, while streamlining transactional activities.

Global Customer-to-Cash Process Design for International Security Solutions Company – This company selected REL to implement a global redesign of its customer-to-cash processes. The goal is to increase the company's Cash Conversion Efficiency by standardizing activities in more than 100 countries and rolling out a single toolkit for all receivables processes.

Hyperion Business Intelligence Implementation for University Medical Center – This client selected the Hackett Technology Solutions Group to complete a Hyperion Business Intelligence implementation, including design and configuration of systems for data warehousing and financial operational reporting. The organization's goal is to enable more detailed reporting of business unit activity, driving insights into opportunities to improve profitability, enhance overall performance, and reduce costs.

PeopleSoft Implementation for a Global Footwear & Accessories Company – This client selected the Hackett Technology Solutions group to implement their PeopleSoft eProcurement applications. The eProcurement implementation will enable their distributed users to enter online requisitions and provide integration into their Purchasing and Inventory applications.

At 5:00 P.M. ET on Tuesday, February 26, 2008, the senior management of The Hackett Group will host a conference call to discuss fourth quarter earnings results for the period ending December 28, 2007.

The number for the conference call is (800) 779-0375, (Passcode: Fourth Quarter, Leader: Ted A. Fernandez). For International callers, please dial (210) 234-8000.

Please dial in at least 5-10 minutes prior to start time. If you are unable to participate on the conference call, a rebroadcast will be available beginning at 8:00 P.M. ET on Tuesday, February 26, 2008 and will run through 5:00 P.M. ET on Tuesday, March 11, 2008. To access the rebroadcast, please dial (866) 365-4119. For International callers, please dial (203) 369-0221.

In addition, The Hackett Group will also be webcasting this conference call live through the StreetEvents.com service. To participate, simply visit http://www.thehackettgroup.com approximately 10 minutes prior to the start of the call and click on the conference call link provided. An online replay of the call will be available after 8:00 P.M. ET on Tuesday, February 26, 2008 and will run through 5:00 P.M. ET on Tuesday, March 11, 2008. To access the call, visit http://www.thehackettgroup.com or http://www.streetevents.com.

About The Hackett Group

The Hackett Group (NASDAQ:HCKT - News), a global strategic advisory firm, is a leader in best practice advisory, benchmarking, and transformation consulting services, including shared services, offshoring and outsourcing advice. Utilizing best practices and implementation insights from more than 4,000 benchmarking engagements, executives use The Hackett Group's empirically based approach to quickly define and prioritize initiatives to enable world-class performance. Through its REL brand, The Hackett Group offers working capital solutions focused on delivering significant cash flow improvements. Through its Hackett Technology Solutions group, The Hackett Group offers business application consulting services that helps maximize returns on IT investments. The Hackett Group has worked with 2,700 major corporations and government agencies, including 97% of the Dow Jones Industrials, 73% of the Fortune 100, 73% of the DAX 30 and 50% of the FTSE 100.

Founded in 1991, The Hackett Group was acquired by Answerthink, Inc., which was renamed The Hackett Group in 2008. The Hackett Group has global offices in the United States, Europe and India.

More information on The Hackett Group is available: by phone at 770-225-7300; by e-mail at [email protected]; or on the Web at www.thehackettgroup.com.

Book of Numbers is a trademark of The Hackett Group.

This press release contains "forward-looking statements'' within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors that may cause The Hackett Group's actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by the forward-looking statements. Factors that impact such forward-looking statements include, among others, the ability of the products, services, or practices mentioned in this release to deliver the desired effect, our ability to effectively integrate acquisitions into our operations, 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 cancellations by our customers, changes in expectations regarding the information technology industry, our ability to attract and retain skilled employees, possible changes in collections of accounts receivable, risks of competition, price and margin trends, foreign currency fluctuations, changes in general economic conditions and interest rates as well as other risks detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2006 filed with the Securities and Exchange Commission. 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.

The Hackett Group, Inc. 
CONSOLIDATED STATEMENTS OF OPERATIONS 
(in thousands, except per share data) 
(unaudited) 
Quarter Ended     Twelve Months Ended 
               
Dec. 28,
  Dec. 29,
  Dec. 28,
  Dec. 29,

2007   2006   2007   2006 
Revenues:             
Revenues before reimbursements  $  40,473   $  34,315   $  158,973   $  162,167 
Reimbursements   4,417    3,861    18,035    18,388 
Total revenues   44,890    38,176    177,008    180,555 
             
Costs and expenses:             
Cost of service:             
Personnel costs before reimbursable expenses (includes $178 and $212 and $1,146 and $1,086 of stock compensation expense in the quarters and twelve months ended December 28, 2007 and December 29, 2006, respectively) (2)             
21,402    20,027    88,964    94,656 
Reimbursable expenses   4,417    3,861    18,035    18,388 
Total cost of service
  25,819    23,888    106,999    113,044 
             
Selling, general and administrative costs (includes $668 and $651 and $2,866 and $3,013 of stock compensation expense in the quarters and twelve months ended December 28, 2007 and December 29, 2006, respectively) (2)
           
14,726    15,917    63,635    65,499 
Restructuring costs
  -    -    -    6,313 
Loss (collections) from misappropriation, net   (2,224)    15    (2,574)    341 
Total costs and operating expenses   38,321
   39,820    168,060
   185,197 
Income (loss) from operations   6,569
   (1,644)    8,948
   (4,642) 
Other income (expense):             
Interest income   208    204    869    673 
Interest expense   -    (2)    (94)    (166) 
Loss on marketable investments
  (450)
   -
   (450)
   -

Income (loss) before income taxes   6,327    (1,442)    9,273    (4,135) 
Income tax expense (benefit)   31    (33)    278    913 
Net income (loss)  $  6,296   $  (1,409)   $  8,995   $  (5,048) 
             
Basic net income (loss) per common share:             
Net income (loss) per common share  $  0.15   $  (0.03)   $  0.20   $  (0.11) 
Weighted average common shares outstanding   42,872    44,583    44,127    44,653 
             
Diluted net income (loss) per common share (1):             
Net income (loss) per common share  $  0.14   $  (0.03)   $  0.20   $  (0.11) 
Weighted average common and common equivalent shares outstanding     
     
     
     

43,572
   44,583
   44,978
   44,653

             
Pro forma data (3):             
Income (loss) before income taxes  $  6,327   $  (1,442)   $  9,273   $  (4,135) 
Restructuring costs   -    -    -    6,313 
Stock compensation expense   846    863    4,012    4,099 
Amortization of intangible assets   296    365    1,351    2,632 
Professional fees related to the loss from misappropriation   -    700    239    700 
Loss (collections) from misappropriation, net   (2,224)    15    (2,574)    341 
Loss on marketable investments
  450    -    450    - 
Pro forma income before income taxes   5,695    501    12,751    9,950 
Pro forma income tax expense   2,278    200    5,100    3,980 
Pro forma net income  $  3,417   $  301   $  7,651   $  5,970 
             
Pro forma basic net income per common share  $  0.08   $  0.01   $  0.17   $  0.13 
Weighted average common shares outstanding   42,872    44,583    44,127    44,653 
             
Pro forma diluted net income per common share  $  0.08   $  0.01   $  0.17   $  0.13 
Weighted average common and common equivalent shares outstanding             
43,572    45,327    44,978    46,001 
             
(1) Potentially diluted shares were excluded from the diluted loss per share calculations for the three and twelve months ended December 29, 2006 as their effects would have been anti-dilutive to the loss incurred by the Company.

(2) Certain items in the quarter and twelve months ended December 29, 2006 have been reclassified to conform with the December 28, 2007 presentation.

(3) The Company provides pro forma earnings results (which exclude amortization of intangible assets, stock compensation expense, restructuring costs, loss (collections) from misappropriation, net, loss on marketable investments and professional fees related to the loss from misappropriation and include a normalized tax rate) as a complement to results provided in accordance with Generally Accepted Accounting Principles. These non-GAAP results are provided to enhance the users' overall understanding of the Company's current financial performance and its prospects for the future. The Company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses that it believes are not indicative of its core operating results. The non-GAAP measures are included to provide investors and management with an alternative method for assessing operating results in a manner that is focused on the performance of ongoing operations and to provide a more consistent basis for comparison between quarters. Further, these non-GAAP results are one of the primary indicators management uses for planning and forecasting in future periods. In addition, since the Company has historically reported non-GAAP results to the investment community, it believes the inclusion of non-GAAP numbers provides consistency in its financial reporting. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States of America.

The Hackett Group, Inc. 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(in thousands) 
(unaudited)  December 28,     December 29, 
   2007     2006 
ASSETS       
       
Current assets:       
Cash and cash equivalents  $  20,061   $  8,832 
Marketable investments   7,032    10,753 
Accounts receivable and unbilled revenue, net   29,735    35,818 
Prepaid expenses and other current assets   1,586    1,558 
Total current assets   58,414    56,961 
       
Restricted cash   600    600 
Property and equipment, net   5,709    5,183 
Other assets   2,434    3,870 
Goodwill, net   68,302    66,652 
Total assets  $  135,459   $  133,266 
       
LIABILITIES AND SHAREHOLDERS' EQUITY       
Current liabilities:       
Accounts payable  $  3,970   $  5,427 
Accrued expenses and other liabilities   29,047    24,773 
Total current liabilities   33,017    30,200 
Accrued expenses and other liabilities, non-current   3,623    4,611 
Total liabilities   36,640    34,811 
       
Shareholders' equity   98,819    98,455 
Total liabilities and shareholders' equity  $  135,459   $  133,266 
The Hackett Group, Inc. 
Supplemental Financial Data 
(unaudited) 
         
Quarter Ended 
Dec. 28, 2007
  Sept. 28, 2007
  Dec. 29, 2006

Revenue Breakdown by Group:       
(in thousands)       
       
The Hackett Group:       
Benchmarking and Business Transformation (5) (  $  26,022    $  26,477    $  17,333   
Executive Advisory Programs (6)     3,893         3,817         3,481     
Total The Hackett Group   29,915     30,294     20,814   
       
Hackett Technology Solutions (7) (     14,975         16,435         17,362     
Total Revenues  $  44,890      $  46,729      $  38,176     
       
Revenue Concentration:       
(% of total revenues)       
       
       
Top customer   5  %    3  %    3  % 
Top 5 customers   17  %    14  %    11  % 
Top 10 customers   28  %    23  %    20  % 
       
       
Key Metrics and Other Financial Data:       
The Hackett Group annualized revenue per professional (in thousands)  $  411    $  439    $  322   
Executive Advisory Programs - Annualized Contract Value (in thousands) (4)  $  16,031    $  14,495    $  13,713   
Hackett Technology Solutions consultant utilization rate (   62  %    64  %    60  % 
Hackett Technology Solutions gross billing rate per hour (  $  161    $  163    $  161   
Consultant headcount (   552     566     584   
Total headcount (   739     753     810   
Days sales outstanding (DSO)   60     59     85   
Cash provided by (used in) operating activities (in thousands)(  $  8,320    $  9,373    $  (696  ) 
Depreciation (in thousands)  $  508    $  526    $  635   
Amortization (in thousands)  $  296    $  343    $  365   
       
Share Repurchase Program:       
Shares purchased in the quarter (in thousands)   1,029     1,187     -   
Cost of shares repurchased in the quarter (in thousands)  $  4,208    $  4,116    $  -   
Average price per share of shares purchased  $  4.09    $  3.47    $  -   
Remaining authorization (in thousands)  $  6,060    $  5,268    $  -   
       
(4) We define "Annualized Contract Value" as of the beginning of the following quarter as the aggregate annualized revenue attributed to all agreements in effect on such date, without regard to the remaining duration of any such agreement.

   
(5) Comparison of a client's demand drivers, costs and practices to a peer group in order to empirically identify and define an organization's ability to improve performance at a process level and to identify and compare business practices utilized by world-class performers. Additionally, strategic consulting support that utilizes Hackett best practice implementation content and tools to enable clients to accelerate transformation to world-class performance.

   
(6) Annual or multi-year contract that provides clients with on-demand access to world-class performance metrics, best practice repository, best practice research forums and conferences, and advice.

   
(7) Best Practice Implementation of ERP Software, which is primarily Oracle and SAP, and business performance management solutions, which is primarily Hyperion.

   
( Certain items in the quarter ended December 29, 2006 have been reclassified to conform with the December 28, 2007 presentation.

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