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Item 2. Management’s Discussion and Analysis

2021-11-04 compared with 2021-08-05 · 87 added, 91 removed, 129 unchanged (58% of the section changed)

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Critical Accounting Policies and Estimates

Our critical accounting policies involving the more significant estimates and judgments used in the preparation of our financial statements as of July 3, 2021 remain unchanged from January 2, 2021.

Please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended January 2, 2021, filed with the Securities and Exchange Commission on March 4, 2021, for details on these critical accounting policies.

Our critical accounting policies involving the more significant estimates and judgments used in the preparation of our financial statements as of October 2, 2021 remain unchanged from January 2, 2021.

Please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended January 2, 2021, filed with the Securities and Exchange Commission on March 4, 2021 (the "2020 Form 10-K") for details on these critical accounting policies.

Recent Accounting Standards

Please refer to the sections captioned “Recent Accounting Standards Adopted” included in Note 1, “Summary of Significant Accounting Policies” in Part I, Item I, “Financial Statements” of this report.

Results of Operations—For the Fiscal Quarter and Fiscal Year-to-Date Periods Ended July 3, 2021, Compared to the Fiscal Quarter and Fiscal Year-to-Date Periods Ended June 27, 2020

Results of Operations—For the Fiscal Quarter and Fiscal Year-to-Date Period Ended October 2, 2021, Compared to the Fiscal Quarter and Fiscal Year-to-Date Period Ended September 26, 2020

The following table provides operating information as a percentage of revenues for the periods indicated:

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Ended Fiscal Year-to-Date

2021 September 26,

2020 October 2,

2021 September 26,

Revenues 100.0 % 100.0 % 100.0 % 100.0 %

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Net income 8.0 % 4.4 % 7.7 % 4.8 %

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(1) Percentage calculates to less than 0.1% for the fiscal quarter ended July 3, 2021.

Fiscal Quarter Ended July 3, 2021, Compared to the Fiscal Quarter Ended June 27, 2020

Revenues increased by $25.2 million, or 20.5%, to $148.2 million for the second quarter of fiscal 2021 from $123.0 million for the second quarter of fiscal 2020.

The increase in net revenue was a result of an increase in gross revenues of $25.5 million as compared to the second quarter of fiscal 2020, partially offset by an increase in write-offs and reserves of $0.3 million compared to the second quarter of fiscal 2020.

Utilization increased to 75% for the second quarter of fiscal 2021 from 66% for the second quarter of fiscal 2020, while consultant headcount grew 3.9% from 802 at the end of the second quarter of fiscal 2020 to 833 at the end of the second quarter of fiscal 2021.

Fiscal Quarter Ended October 2, 2021, Compared to the Fiscal Quarter Ended September 26, 2020

Revenues increased by $14.6 million, or 12.0%, to $136.4 million for the third quarter of fiscal 2021 from $121.8 million for the third quarter of fiscal 2020.

The increase in net revenue was a result of an increase in gross revenues of $13.7 million as compared to the third quarter of fiscal 2020, as well as a decrease in write-offs and reserves of $0.9 million compared to the third quarter of fiscal 2020.

Utilization increased to 73% for the third quarter of fiscal 2021 from 69% for the third quarter of fiscal 2020, while consultant headcount grew 6.8% from 826 at the end of the third quarter of fiscal 2020 to 882 at the end of the third quarter of fiscal 2021.

Overall, revenues outside of the U.S.

represented approximately 19% of net revenues for the second quarter of fiscal 2021 and fiscal 2020.

Revenues derived from fixed-price projects decreased to 24% of total revenues for the second quarter of fiscal 2021 compared with 25% of net revenue for the second quarter of fiscal 2020.

represented approximately 20% and 21% of net revenues for the third quarters of fiscal 2021 and fiscal 2020, respectively.

Revenues derived from fixed-price projects increased to 23% of net revenues for the third quarter of fiscal 2021 compared with 22% of net revenue for the third quarter of fiscal 2020.

The percentage of revenue derived from fixed-price projects depends largely on the proportion of our revenues derived from our management consulting business, which typically has a higher concentration of fixed-price service contracts.

Costs of Services (exclusive of depreciation and amortization).

Costs of services (exclusive of depreciation and amortization) increased by $14.8 million, or 16.5%, to $105.0 million for the second quarter of fiscal 2021 from $90.2 million for the second quarter of fiscal 2020.

The increase in costs of services was due primarily to an increase of $3.5 million in employee compensation and fringe benefit costs attributable to our increased consultant headcount, an increase in incentive and retention compensation costs of $8.8 million, and an increase in forgivable loan amortization of $0.3 million.

Additionally, client reimbursable expenses increased by $2.4 million in the second quarter of fiscal 2021 compared to the second quarter of fiscal 2020.

As a percentage of revenues, costs of services (exclusive of depreciation and amortization) decreased to 70.9% for the second quarter of fiscal 2021 from 73.3% for the second quarter of fiscal 2020.

Costs of services (exclusive of depreciation and amortization) increased by $7.7 million, or 8.7%, to $96.0 million for the third quarter of fiscal 2021 from $88.3 million for the third quarter of fiscal 2020.

The increase in costs of services was due primarily to an increase of $3.0 million in employee compensation and fringe benefit costs attributable to our increased consultant headcount, an increase in incentive and retention compensation costs of $2.3 million, and an increase in forgivable loan amortization of $0.7 million, partially offset by a decrease in the valuation expense of the contingent consideration of $0.9 million.

Additionally, client reimbursable expenses increased by $2.6 million in the third quarter of fiscal 2021 compared to the third quarter of fiscal 2020.

As a percentage of revenues, costs of services (exclusive of depreciation and amortization) decreased to 70.4% for the third quarter of fiscal 2021 from 72.5% for the third quarter of fiscal 2020.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses increased by $2.6 million, or 12.3%, to $24.0 million for the second quarter of fiscal 2021 from $21.4 million for the second quarter of fiscal 2020.

Within this category of expenses, there was a $1.8 million increase in commissions to our non-employee experts, a $0.8 million increase in employee and incentive compensation, a $0.1 million increase in bad debt expense, and a $0.8 million increase in miscellaneous and other costs.

Partially offsetting the increase in these expenses was a $0.9 million decrease in rent expense for the second quarter of fiscal 2021 as compared to the second quarter of fiscal 2020.

As a percentage of revenues, selling, general and administrative expenses decreased to 16.2% for the second quarter of fiscal 2021 from 17.4% for the second quarter of fiscal 2020.

Commissions to our non-employee experts increased to 3.2% of revenues for the second quarter of fiscal 2021 compared to 2.4% of revenues for the second quarter of fiscal 2020.

Selling, general and administrative expenses increased by $2.3 million, or 10.3%, to $24.5 million for the third quarter of fiscal 2021 from $22.2 million for the third quarter of fiscal 2020.

Within this category of expenses, there was a $0.8 million increase in commissions to our non-employee experts, a $0.4 million increase in employee and incentive compensation, a $0.7 million increase in travel and entertainment, and a $0.6 million increase in miscellaneous and other costs.

Partially offsetting the increase in these expenses was a $0.2 million decrease in bad debt expense for the third quarter of fiscal 2021 as compared to the third quarter of fiscal 2020.

As a percentage of revenues, selling, general and administrative expenses decreased to 18.0% for the third quarter of fiscal 2021 from 18.2% for the third quarter of fiscal 2020.

Commissions to our non-employee experts increased to 3.2% of revenues for the third quarter of fiscal 2021 compared to 3.0% of revenues for the third quarter of fiscal 2020.

Provision for Income Taxes.

The income tax provision was $4.0 million and the effective tax rate ("ETR") was 25.8% for the second quarter of fiscal 2021 compared to $1.9 million and 24.6% for the second quarter of fiscal 2020.

The ETR for the second quarter of fiscal 2021 was higher than the prior year primarily due to the prior year's tax impact of increased forecasted profit as compared to the fiscal quarter ended March 28, 2020, that was non-recurring in the current year.

The rate was also higher this year as a result of the remeasurement of the U.K.'s long-term deferred tax liabilities stemming from the enactment of a U.K.

statutory tax rate increase offset by an increase in the tax benefit related to the accounting for stock-based compensation.

The ETR for the second quarter of fiscal 2021 was lower than the combined federal and state statutory tax rate due to the tax benefit related to the accounting for stock-based compensation, partially offset by non-deductible items resulting primarily from limitations of compensation paid to executive officers and the impact of the U.K.

statutory tax rate change.

The ETR for the second quarter of fiscal 2020 was lower than the combined federal and state statutory tax rate due to the tax benefit related to the accounting for stock-based compensation as well as the impact of continued strong profit generation, partially offset by non-deductible items resulting primarily from limitations on the deductibility of compensation paid to executive officers and meals and entertainment.

Net income increased by $5.7 million to $11.6 million for the second quarter of fiscal 2021 from $5.9 million for the second quarter of fiscal 2020.

The net income per diluted share was $1.53 per share for the second quarter of fiscal 2021, compared to $0.75 of net income per diluted share for the second quarter of fiscal 2020.

Weighted average diluted shares outstanding decreased by approximately 381,000 shares to approximately 7,539,000 shares for the second quarter of fiscal 2021 from approximately 7,920,000 shares for the second quarter of fiscal 2020.

The decrease in weighted average diluted shares outstanding was primarily due to the repurchase of shares of our common stock since June 27, 2020, offset in part by the vesting of shares of restricted stock and time-vesting restricted stock units, the issuance of common stock for contingent consideration, and the exercise of stock options since June 27, 2020.

Fiscal Year-to-Date Period Ended July 3, 2021, Compared to the Fiscal Year-to-Date Period Ended June 27, 2020

Revenues increased by $45.6 million, or 18.3%, to $294.8 million for the fiscal year-to-date period ended July 3, 2021 from $249.2 million for the fiscal year-to-date period ended June 27, 2020.

The increase in net revenue was a result of an increase in gross revenues of $47.6 million as compared to the fiscal year-to-date period ended June 27, 2020, and a increase in write-offs and reserves of $2.0 million as compared to the fiscal year-to-date period ended June 27, 2020.

Utilization increased to 76% for the fiscal year-to-date period ended July 3, 2021 from 68% for the fiscal year-to-date period ended June 27, 2020, while consultant headcount grew 3.9% from 802 at the end of the second quarter of fiscal 2020 to 833 at the end of the second quarter of fiscal 2021.

The income tax provision was $1.9 million and the effective tax rate ("ETR") was 14.8% for the third quarter of fiscal 2021 compared to $2.1 million and 28.2% for the third quarter of fiscal 2020.

The ETR for the third quarter of fiscal 2021 was lower than the third quarter of fiscal 2020 primarily due to an increase in the tax benefit related to the accounting for stock-based compensation.

The ETR for the third quarter of fiscal 2021 was lower than the combined federal and state statutory tax rate due to the tax benefit related to the accounting for stock-based compensation, partially offset by non-deductible items resulting primarily from limitations of compensation paid to executive officers.

The ETR for the third quarter of fiscal 2020 was higher than the combined federal and state statutory tax rate due to non-deductible items resulting primarily from limitations of compensation paid to executive officers as well as the remeasurement of U.S.

deferred tax assets and liabilities, partially offset by the tax benefit related to the accounting for stock-based compensation.

Net income increased by $5.5 million to $10.9 million for the third quarter of fiscal 2021 from $5.4 million for the third quarter of fiscal 2020.

The net income per diluted share was $1.44 per share for the third quarter of fiscal 2021, compared to $0.68 of net income per diluted share for the third quarter of fiscal 2020.

Weighted average diluted shares outstanding decreased by approximately 374,000 shares to approximately 7,560,000 shares for the third quarter of fiscal 2021 from approximately 7,934,000 shares for the third quarter of fiscal 2020.

The decrease in weighted average diluted shares outstanding was primarily due to the repurchase of shares of our common stock since September 26, 2020, offset in part by the vesting of shares of restricted stock and time-vesting restricted stock units, the issuance of common stock for contingent consideration, and the exercise of stock options since September 26, 2020.

Fiscal Year-to-Date Period Ended October 2, 2021, Compared to the Fiscal Year-to-Date Period Ended September 26, 2020

Revenues increased by $60.2 million, or 16.2%, to $431.2 million for the fiscal year-to-date period ended October 2, 2021 from $371.0 million for the fiscal year-to-date period ended September 26, 2020.

The increase in net revenue was a result of an increase in gross revenues of $61.3 million as compared to the fiscal year-to-date period ended September 26, 2020, partially offset by an increase in write-offs and reserves of $1.1 million as compared to the fiscal year-to-date period ended September 26, 2020.

Utilization increased to 75% for the fiscal year-to-date period ended October 2, 2021 from 69% for the fiscal year-to-date period ended September 26, 2020, while consultant headcount grew 6.8% from 826 at the end of the third quarter of fiscal 2020 to 882 at the end of the third quarter of fiscal 2021.

Overall, revenues outside of the U.S.

represented approximately 19% and 20% of net revenues for the fiscal year-to-date periods ended July 3, 2021 and June 27, 2020, respectively.

Revenues derived from fixed-price projects were 24% of net revenues for each of the fiscal year-to-date periods ended July 3, 2021 and June 27, 2020.

represented approximately 19% and 20% of net revenues for the fiscal year-to-date periods ended October 2, 2021 and September 26, 2020, respectively.

Revenues derived from fixed-price projects increased to 24% of net revenues for the fiscal year-to-date period ended October 2, 2021 compared with 23% of net revenue for the year-to-date period ended September 26, 2020.

Costs of Services (exclusive of depreciation and amortization).

Costs of services (exclusive of depreciation and amortization) increased by $29.2 million, or 16.1%, to $210.4 million for the fiscal year-to-date period ended July 3, 2021 from $181.2 million for the fiscal year-to-date period ended June 27, 2020.

The increase in costs of services was due primarily to an increase of $8.0 million in employee compensation and fringe benefit costs associated with our increased consulting headcount, an increase in incentive and retention compensation costs of $19.0 million, an increase in forgivable loan amortization of $1.2 million, partially offset by a decrease in expense related to other compensation of $0.9 million, and a decrease in the valuation expense of the contingent consideration of $0.6 million.

Additionally, client reimbursable expenses increased by $2.5 million in the fiscal year-to-date period ended July 3, 2021 compared to the fiscal year-to-date period ended June 27, 2020.

As a percentage of revenues, costs of services (exclusive of depreciation and amortization) decreased to 71.4% for the fiscal year-to-date period ended July 3, 2021 from 72.7% for the fiscal year-to-date period ended June 27, 2020.

Costs of services (exclusive of depreciation and amortization) increased by $36.9 million, or 13.7%, to $306.4 million for the fiscal year-to-date period ended October 2, 2021 from $269.5 million for the fiscal year-to-date period ended September 26, 2020.

The increase in costs of services was due primarily to an increase of $11.0 million in employee compensation and fringe benefit costs associated with our increased consulting headcount, an increase in incentive and retention compensation costs of $20.8 million, and an increase in forgivable loan amortization of $1.9 million, partially offset by a decrease in expense related to other compensation of $0.3 million and a decrease in the valuation expense of the contingent consideration of $1.5 million.

Additionally, client reimbursable expenses increased by $5.0 million in the fiscal year-to-date period ended October 2, 2021 compared to the fiscal year-to-date period ended September 26, 2020.

As a percentage of revenues, costs of services (exclusive of depreciation and amortization) decreased to 71.1% for the fiscal year-to-date period ended October 2, 2021 from 72.6% for the fiscal year-to-date period ended September 26, 2020.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses increased by $1.8 million, or 3.8%, to $47.3 million for the fiscal year-to-date period ended July 3, 2021 from $45.5 million for the fiscal year-to-date period ended June 27, 2020.

Selling, general and administrative expenses increased by $4.0 million, or 5.9%, to $71.7 million for the fiscal year-to-date period ended October 2, 2021 from $67.7 million for the fiscal year-to-date period ended September 26, 2020.

Within this category of expenses, there was a $3.5 million increase in commissions to our non-employee experts, a $1.8 million increase in employee and incentive compensation, and a $1.3 million increase in miscellaneous and other costs.

Partially offsetting the increase in these expenses was a $1.1 million decrease in travel and entertainment, a $0.8 million decrease in legal and other professional services fees, and a $1.3 million decrease in rent expense for the fiscal year-to-date period ended July 3, 2021 as compared to the fiscal year-to-date period ended June 27, 2020.

As a percentage of revenues, selling, general and administrative expenses decreased to 16.0% for the fiscal year-to-date period ended July 3, 2021 from 18.3% for the fiscal year-to-date period ended June 27, 2020.

Commissions to our non-employee experts increased to 2.9% of revenues for the fiscal year-to-date period ended July 3, 2021 compared to 2.3% of revenues for the fiscal year-to-date period ended June 27, 2020.

Partially offsetting the increase in these expenses was a $0.5 million decrease in travel and entertainment, a $0.5 million decrease in legal and other professional services fees, a $1.4 million decrease in rent expense, and a $0.2 million decrease in bad debt expense for the fiscal year-to-date period ended October 2, 2021 as compared to the fiscal year-to-date period ended September 26, 2020.

As a percentage of revenues, selling, general and administrative expenses decreased to 16.6% for the fiscal year-to-date period ended October 2, 2021 from 18.3% for the fiscal year-to-date period ended September 26, 2020.

Commissions to our non-employee experts increased to 3.0% of revenues for the fiscal year-to-date period ended October 2, 2021 compared to 2.5% of revenues for the fiscal year-to-date period ended September 26, 2020.

Provision for Income Taxes.

For the fiscal year-to-date period ended July 3, 2021, our income tax provision was $7.4 million, and the ETR was 25.1%, compared to $4.6 million and 27.2% for the fiscal year-to-date period ended June 27, 2020.

The ETR for the fiscal year-to-date period ended July 3, 2021 was lower than the prior year due in part to the higher year-to-date profit to dilute the tax impact of non-deductible items resulting primarily from limitations of compensation paid to executive officers.

The rate was also lower due to an increase in the tax benefit related to the accounting for stock-based compensation partially offset by the impact of the U.K.

statutory tax rate increase.

The ETR in the fiscal year-to-date period ended July 3, 2021 was lower than the combined federal and state statutory tax rate due to the tax benefit related to accounting for stock-based compensation, partially offset by non-deductible items resulting primarily from limitations on the deductibility of compensation paid to executive officers and the impact of the U.K.

For the fiscal year-to-date period ended October 2, 2021, our income tax provision was $9.3 million, and the ETR was 22.0%, compared to $6.7 million and 27.5% for the fiscal year-to-date period ended September 26, 2020.

The ETR for the current fiscal year-to-date period was lower than the prior year-to-date period primarily due to an increase in the tax benefit related to the accounting for stock-based compensation, partially offset by the enactment of the U.K.

statutory tax rate increase during the second fiscal quarter whereby the U.K.'s long-term deferred tax liabilities were remeasured.

The ETR in the fiscal year-to-date period ended October 2, 2021 was lower than the combined federal and state statutory tax rate due to the tax benefit related to accounting for stock-based compensation, partially offset by non-deductible items resulting primarily from limitations on the deductibility of compensation paid to executive officers and the impact of the U.K.

statutory tax rate change.

The ETR for the fiscal year-to-date period ended June 27, 2020 was the same as the combined federal and state statutory tax rate but included the effect of offsetting adjustments primarily driven by the tax benefit on stock-based compensation and non-deductible items resulting from limitations on the deductibility of compensation paid to executive officers and meals and entertainment.

Net income increased by $9.7 million to $22.1 million for the fiscal year-to-date period ended July 3, 2021 from $12.4 million for the fiscal year-to-date period ended June 27, 2020.

The diluted net income per share was $2.86 for the fiscal year-to-date period ended July 3, 2021, compared to diluted net income per share of $1.55 for the fiscal year-to-date period ended June 27, 2020.

Weighted average diluted shares outstanding decreased by approximately 294,000 to approximately 7,685,000 shares for the fiscal year-to-date period ended July 3, 2021 from approximately 7,979,000 shares for the fiscal year-to-date period ended June 27, 2020.

The decrease in weighted average diluted shares outstanding was primarily

due to the repurchase of shares of our common stock since June 27, 2020, offset in part by the vesting of restricted stock and time-vesting restricted stock units, the issuance of common stock for contingent consideration, and the exercise of stock options since June 27, 2020.

The ETR for the fiscal year-to-date period ended September 26, 2020 was the same as the combined federal and state statutory tax rate but included increases in the rate for non-deductible compensation paid to executive officers and the remeasurement of U.S.

deferred tax assets and liabilities, offset by decreases in the rate related to the accounting for stock-based compensation.

Net income increased by $15.2 million to $33.0 million for the fiscal year-to-date period ended October 2, 2021 from $17.8 million for the fiscal year-to-date period ended September 26, 2020.

The diluted net income per share was

$4.31 for the fiscal year-to-date period ended October 2, 2021, compared to diluted net income per share of $2.23 for the fiscal year-to-date period ended September 26, 2020.

Weighted average diluted shares outstanding decreased by approximately 321,000 to approximately 7,643,000 shares for the fiscal year-to-date period ended October 2, 2021 from approximately 7,964,000 shares for the fiscal year-to-date period ended September 26, 2020.

The decrease in weighted average diluted shares outstanding was primarily due to the repurchase of shares of our common stock since September 26, 2020, offset in part by the vesting of restricted stock and time-vesting restricted stock units, the issuance of common stock for contingent consideration, and the exercise of stock options since September 26, 2020.

Liquidity and Capital Resources

Fiscal Year-to-Date Period Ended July 3, 2021

Fiscal Year-to-Date Period Ended October 2, 2021

We believe that our current cash, cash equivalents, cash generated from operations, and amounts available under our revolving credit facility will be sufficient to meet our anticipated working capital and capital expenditure requirements for at least the next 12 months.

During the fiscal year-to-date period ended July 3, 2021, cash and cash equivalents decreased by $31.7 million.

During the fiscal year-to-date period ended October 2, 2021, cash and cash equivalents decreased by $26.0 million.

We completed the period with cash and cash equivalents of $19.7 million.

The principal drivers of the reduction of cash were payment of a significant portion of our fiscal 2020 performance bonuses in the first and second fiscal quarters of fiscal 2021, the payment of the contingent consideration liability, the repurchase of shares, and the payment of dividends, offset by net borrowings of $6.0 million.

During the fiscal year-to-date period ended July 3, 2021, working capital (defined as current assets less current liabilities) decreased by $3.0 million to $16.8 million.

The decrease in working capital was principally due to a decrease in cash and cash equivalents of $31.7 million and an increase in borrowings of $45.0 million.

Partially offsetting these decreases in working capital was a decrease in accrued expenses of $36.9 million, an increase in accounts receivable and unbilled services of $21.4 million, a decrease in the current portion of our forgivable loans of $6.1 million, and a decrease in the current portion of deferred compensation of $18.1 million.

At July 3, 2021, $3.7 million of our cash and cash equivalents was held within the U.S.

During the fiscal year-to-date period ended October 2, 2021, working capital (defined as current assets less current liabilities) increased by $12.0 million to $31.8 million.

The increase in working capital was principally due to an increase in accounts receivable and unbilled services of $21.4 million, a decrease in the current portion of deferred compensation of $16.5 million, and a decrease in accrued expenses of $7.7 million.

Partially offsetting these increases to working capital was a decrease in cash and cash equivalents of $26.0 million, a decrease in the current portion of our forgivable loans of $5.1 million, and an increase in borrowings of $6.0 million.

At October 2, 2021, $1.8 million of our cash and cash equivalents was held within the U.S.

We have sufficient sources of liquidity in the U.S., including cash flow from operations and availability on our revolving credit facility to fund U.S.

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Sources and Uses of Cash.

During the fiscal year-to-date period ended July 3, 2021, net cash used in operating activities was $36.2 million.

Net income was $22.1 million for the fiscal year-to-date period ended July 3, 2021.

The primary factor in cash used in operations was the decrease in accounts payable, accrued expenses, and other liabilities of $50.2 million, due primarily to the payment of a significant portion of our fiscal 2020 performance bonuses and performance awards and the payment of the contingent consideration liability.

Other uses of cash included a $7.6 million decrease in lease liabilities, a net increase of $21.2 million in accounts receivable and unbilled receivables due primarily to the increase in revenues and the timing of billings, and a $4.1 million increase in prepaid expenses and other current assets primarily related to the timing of renewing annual subscriptions.

The decrease in forgivable loans for the period of $8.1 million was primarily driven by $4.5 million of forgivable loan issuances, offset by $12.6 million of forgivable loan amortization.

Cash used in operations included incentive cash award expense of $3.3 million, non-cash depreciation and amortization expense of $6.5 million, right-of-use amortization of $6.4 million, share-based compensation expenses of $1.8 million, and other non-cash benefits of $1.3 million.

During the fiscal year-to-date period ended July 3, 2021, net cash used in investing activities was $1.2 million for capital expenditures primarily related to purchases of office equipment.

During the fiscal year-to-date period ended July 3, 2021, net cash provided by financing activities was $5.6 million, primarily as a result of borrowings, net of repayments, under the revolving credit facility of $45.0 million and $2.5 million received upon the issuance of shares of common stock related to the exercise of stock options.

Offsetting these increases in cash were the tax withholding payments reimbursed by restricted shares of $0.6 million, payment of $4.0 million of cash dividends and dividend equivalents, $35.0 million of repurchases of common stock, and a portion of the payment of the contingent consideration classified as a financing activity in the amount of $2.4 million.

During the fiscal year-to-date period ended October 2, 2021, net cash provided by operating activities was $13.9 million.

Net income was $33.0 million for the fiscal year-to-date period ended October 2, 2021.

Uses of cash for operating activities included a $11.5 million decrease in lease liabilities, a net increase of $22.0 million in accounts receivable and unbilled receivables due primarily to the increase in revenues and the timing of billings, and a $2.9 million increase in prepaid expenses and other current assets primarily related to the timing of renewing annual subscriptions.

Other uses of cash included a decrease in accounts payable, accrued expenses, and other liabilities of $17.7 million, primarily due to the payment of a significant portion of our fiscal 2020 performance bonuses and performance awards and the payment of the contingent consideration liability, and a decrease in forgivable loans for the period of $9.3 million, which was primarily driven by $9.6 million of forgivable loan issuances offset by $18.9 million of forgivable loan amortization.

Cash provided by operations included incentive cash award expense of $5.0 million, non-cash depreciation and amortization expense of $9.7 million, right-of-use amortization of $9.7 million, share-based compensation expenses of $2.8 million, and other non-cash deductions of $1.5 million.

During the fiscal year-to-date period ended October 2, 2021, net cash used in investing activities was $1.7 million for capital expenditures primarily related to purchases of office equipment.

During the fiscal year-to-date period ended October 2, 2021, net cash used in financing activities was $37.8 million, primarily as a result of $40.0 million of repurchases of common stock, payment of $5.9 million of cash dividends and dividend equivalents, tax withholding payments reimbursed by restricted shares of $0.6 million, and a portion of the payment of the contingent consideration classified as a financing activity in the amount of $2.4 million.

Offsetting these decreases in cash used in financing activities were borrowings, net of repayments, under the revolving credit facility of $6.0 million and $5.0 million received upon the issuance of shares of common stock related to the exercise of stock options.

Lease Commitments

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Generally, we may repay any borrowings under the revolving credit facility at any time, but we must repay all borrowings no later than October 24, 2022.

There was $45.0 million in borrowings outstanding under the revolving credit facility as of July 3, 2021.

The amount available under the revolving credit facility is reduced by certain letters of credit outstanding, which amounted to $4.4 million as of July 3, 2021.

Borrowings under the revolving credit facility bear interest at a rate per annum, at our election, of either (i) the adjusted base rate, as defined in the credit agreement, plus an applicable margin, which varies between 0.25% and 1.25% depending on our total leverage ratio as determined under the credit agreement, or (ii) the adjusted eurocurrency rate, as defined in the credit agreement, plus an applicable margin, which varies between 1.25% and 2.25% depending on our total leverage ratio.

There was $6.0 million in borrowings outstanding under the revolving credit facility as of October 2, 2021.

The amount available under the revolving credit facility is reduced by certain letters of credit outstanding, which amounted to $4.2 million as of October 2, 2021.

Borrowings under the revolving credit facility bear interest at a rate per annum, at our election, of either (i) the Base Rate, as defined in the credit agreement, plus an applicable margin, which varies between 0.25% and 1.25% depending on our total leverage ratio as determined under the credit agreement, or (ii) the Adjusted Eurocurrency Rate, as defined in the credit agreement, plus an applicable margin, which varies between 1.25% and 2.25% depending on our total leverage ratio.

We are required to pay a fee on the unused portion of the revolving credit facility at a rate per annum that varies between 0.20% and 0.35% depending on our total leverage ratio.

Borrowings under the revolving credit facility are secured by 100% of the stock of certain of our U.S.

subsidiaries and 65% of the stock of certain of our foreign subsidiaries, which represent approximately $31.3 million in net assets as of July 3, 2021.

subsidiaries and 65% of the stock of certain of our foreign subsidiaries, which represent approximately $32.3 million in net assets as of October 2, 2021.

Under the credit agreement, we must comply with various financial and non-financial covenants.

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Any indebtedness outstanding under the revolving credit facility may become immediately due and payable upon the occurrence of stated events of default, including our failure to pay principal, interest or fees or a violation of any financial covenant.

The financial covenants require us to maintain an adjusted consolidated EBITDA to consolidated interest expense ratio of more than 2.5:1.0 and to comply with a consolidated debt to adjusted consolidated EBITDA ratio of not more than 3.0:1.0.

The financial covenants require us to maintain an Adjusted Consolidated EBITDA, as defined in the credit agreement, to consolidated interest expense ratio of more than 2.5:1.0 and to comply with a consolidated debt to Adjusted Consolidated EBITDA ratio of not more than 3.0:1.0.

The non-financial covenant restrictions of the senior credit agreement include, but are not limited to, our ability to incur additional indebtedness, engage in acquisitions or dispositions, and enter into business combinations.

At July 3, 2021 and currently, we are in compliance with the covenants of our credit agreement.

At October 2, 2021 and currently, we are in compliance with the covenants of our credit agreement.

Forgivable Loans

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A portion of these loans is collateralized by key person life insurance.

The forgivable loans have terms that are generally between one and eight years.

The forgivable loans have terms that are generally between two and seven years.

The principal amount of forgivable loans and accrued interest is forgiven by us over the term of the loans, so long as the employee or non-employee expert continues employment or affiliation with us and complies with certain contractual requirements.

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Increases in estimated awards are expensed prospectively over the remaining service period.

Decreases in estimated awards are recorded in the period incurred We believe that we will have sufficient funds to satisfy any obligations related to the performance awards.

Decreases in estimated awards are recorded in the period incurred.

We believe that we will have sufficient funds to satisfy any obligations related to the performance awards.

We expect to fund any cash payments from existing cash resources, cash generated from operations, or borrowings on our revolving credit facility.

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In December 2016, our compensation committee modified the long-term incentive program, or "LTIP," to allow grants of service- and performance-based cash awards in lieu of, or in addition to, equity awards to our senior corporate leaders, practice leaders, and key revenue generators.

The compensation committee of our Board of Directors is responsible for

approving all cash and equity awards under the LTIP.

The compensation committee of our Board of Directors is responsible for approving all cash and equity awards under the LTIP.

We expect to fund any cash payments from existing cash resources, cash generated from operations, or borrowings on our revolving credit facility.

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We may repurchase shares under this program in open market purchases (including through any Rule 10b5-1 plan adopted by us) or in privately negotiated transactions in accordance with applicable insider trading and other securities laws and regulations.

During the fiscal quarter ended July 3, 2021, we did not repurchase any shares under this share repurchase program.

Refer to the section titled "Self-Tender Offer" below for discussion of shares repurchased under our modified "Dutch auction" self-tender offer.

For the fiscal year-to-date period ended July 3, 2021, we repurchased and retired 166,552 shares under our share repurchase program at an average price per share of $57.93.

During the fiscal quarter ended June 27, 2020, we did not repurchase any shares under our share repurchase program.

During the fiscal year-to-date period ended June 27, 2020, we repurchased and retired 82,613 shares under our share repurchase program at an average price per share of $46.15.

As of July 3, 2021, we had approximately $40.5 million available for future repurchases under our share repurchase program.

Refer to the section titled "Self-Tender Offer" below for discussion of shares repurchased during the second quarter of fiscal 2021 under our modified "Dutch auction" self-tender offer.

During the fiscal quarter and fiscal year-to-date period ended October 2, 2021, we repurchased and retired 53,012 shares and 219,564 shares, respectively, under our share repurchase program at an average price per share of $94.32 and $66.72, respectively.

During the fiscal quarter and fiscal year-to-date period ended September 26, 2020, we repurchased and retired 110,154 shares and 192,767 shares, respectively, under our share repurchase program at an average price per share of $45.39 and $45.72, respectively.

As of October 2, 2021, we had approximately $35.5 million available for future repurchases under our share repurchase program.

We plan to finance future repurchases with available cash, cash from future operations, and funds from our revolving credit facility.

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Although we anticipate paying regular quarterly dividends on our common stock for the foreseeable future, the declaration, timing and amounts of any such dividends remain subject to the discretion of our Board of Directors.

During the fiscal quarter and fiscal year-to-date period ended July 3, 2021, we paid dividends and dividend equivalents of $1.9 million and $4.0 million, respectively.

During the fiscal quarter and fiscal year-to-date period ended June 27, 2020, we paid dividends and dividend equivalents of $1.8 million and $3.6 million, respectively.

During the fiscal quarter and fiscal year-to-date period ended October 2, 2021, we paid dividends and dividend equivalents of $1.9 million and $5.9 million, respectively.

During the fiscal quarter and fiscal year-to-date period ended September 26, 2020, we paid dividends and dividend equivalents of $1.8 million and $5.4 million, respectively.

Impact of Inflation

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Factors Affecting Future Performance

Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q, as well as a description of material risks we face, are set forth below under the heading “Risk Factors” and included in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended January 2, 2021, filed with the Securities and Exchange Commission on March 4, 2021.

If any of these risks, or any risks not presently known to us or that we currently believe are not significant, develops into an actual event, then our business, financial condition, and results of operations could be adversely affected.

Quantitative and Qualitative Disclosures About Market Risk

For information regarding our exposure to certain market risks see Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk,” of our Annual Report on Form 10-K for the fiscal year ended January 2, 2021, filed with the Securities and Exchange Commission on March 4, 2021.

For information regarding our exposure to certain market risks see Part II, Item 7A, "Quantitative and Qualitative Disclosures about Market Risk,” of our 2020 Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis