Hackett Group Inc (HCKT) 2008 Q4 法說會逐字稿

Good evening, and welcome to the Hackett group fourth quarter and year end conference call. (Operator Instructions). Please be advised that the conference is being recorded. Hosting tonight's call are Mr. Ted Fernandez, Chairman and Chief Executive Officer; and Mr. Rob Ramirez, Chief Financial Officer. Mr. Ramirez, you may begin.

Thank you, operator. Good afternoon, everyone, and thank you for joining us to discuss The Hackett Group's fourth quarter and full year 2008 results. Speaking on the call today and here to answer your questions are Ted Fernandez, Chairman and CEO of the Hackett Group and myself, Robert Ramirez, CFO. A press announcement was released over the wires at 4:07 p.m. Eastern Time. For a copy of the release, please visit our Website at www.thehackettgroup.com. We will also place any additional financial or statistical data discussed on this call that is not contained in the release on the Investor Relations page of our Website.

Before we begin, I would like to remind you that in the following comments and in the question and answer session, we will be making statements about expected future results, which may be forward-looking statements for the purposes of the federal securities laws. These statements relate to our current expectations, estimates and projections and are not a guarantee of future performance. They involve risks, uncertainties and assumptions that are difficult to predict and which may not be accurate. Actual results may vary. These forward-looking statements should be considered only in conjunction with the detailed information, particularly the risk factors contained in our SEC filings. At this point, I would like to turn it over to Ted.

Thank you, Rob. As I customarily do, I will open by commenting on the quarter and year end overview or highlights. I will then turn it back over to Rob and ask him to comment on the quarterly operating results, cash flow and also comment on outlook. Rob will turn it back over to me and I will make some market and strategic related comments. And then we will open it for Q&A.

So, let me start with the quarterly overview and highlights. And let me also welcome everyone to our fourth quarter and year end earnings call. For the quarter, we are pleased to report pro forma EPS of $0.10, which represents a year over year increase of 25%. These results were led by The Hackett Group's 13% growth, 23% on a constant currency basis, or assuming the same foreign currency rates for this same period last year. Our strong operating results, coupled with our continuing improvement in DSO, resulted in over $11 million in cash flow from operations in the quarter.

For our 2008 fiscal year, pro forma earnings per share increased 94%, which drove cash flow from operations of $27.5 million, our best in the Company's history. This allowed to us continue to increase our cash balances during the year, while returning $19 million to our shareholders through our stock buyback program. As I've mentioned throughout the year, several changes have driven our improved performance. The introduction of our transformational benchmark has expanded our initial entry point with our clients. The improved performance by our REL team has been very meaningful. And the stability of our HTS group also contributed to our improvement.

One key area where we have shown improvement has been our ability to sell other services into our executive advisory client base. We are pleased to say that over 40% of our Hackett Group 2008 sales came from our executive advisory client base. This continues to validate a key element of our strategy.

We fully understand that our long-term growth prospects lie in our ability to extend our unique market permission to help clients measure their performance improvement opportunity, utilizing our proprietary benchmark database into our other offerings. We have started to extend our permission through the strategic relationship that result from our executive advisory program. However, our most significant growth opportunity is in our ability to extend our brand and market permission into our transformation implementation offerings where our ability to expand revenue per client is exponential.

On the technology solutions front, we made great progress throughout the year, led by the results of our Hyperion or Oracle EPM group. As we head into '09, it is clear that we will face a more challenging economic environment. However, given our performance in 2008, we know that our offerings are well aligned with the tremendous pressure that all organizations face to reduce costs and optimize cash balances.

The question is whether organizations do this for themselves or who they decide to turn to for assistance. In today's environment, clients must be clearly convinced that you can help them achieve their targeted results and that the time to benefit realization is consistent with their business demands. In other words, quickly. The key for us is to continue to ensure that our clients understand that our unique intellectual capital and implementation expertise enables them to make the necessary changes in a targeted and timely manner.

It is clear that our go to market execution has improved and our branding permission continues to expand. At the same time, we recognize there is much room for improvement and the opportunity provided by our brand and the unique best practice intellectual property that we have is very meaningful. Let me now ask Rob to provide details on our operating results, cash flow and also comment on outlook.

Thank you, Ted. And again, good evening everyone. I plan to cover the following topics. An overview of our 2008 fiscal year annual results; an overview of our fourth quarter results, along with an overview of related key operating statistics; a breakdown of our fourth quarter revenue; an overview of our cash flow activities during the quarter; and I will then conclude with a discussion on our guidance for the first quarter of 2009.

For purposes of this call, any references to Hackett Group will specifically exclude Hackett Technologies Solutions. Correspondingly, I will comment separately regarding the financial results of the Hackett Group, Hackett Technology Solutions and the total Company. Please note, that references to gross revenues in my discussion represent net revenues plus reimbursable expenses. Additionally, references to pro forma net income exclude noncash stock compensation expense and intangible asset amortization expense and assume a normalized tax rate of 40%.

First, let me discuss our full year results. For the full 2008 fiscal year, total Company revenue was $192.1 million, a year over year increase of 9%, or 10% adjusting for constant currency, driven by an increase in the Hackett Group of 19%, or 21% adjusting for constant currency. For the full year, pro forma net income totaled $13.9 million or $0.33 per diluted share, an increase of $0.16 or 94% from the previous year. Full year pro forma earnings per dilutive share were favorably impacted by approximately $0.01, as a result of the net impact of fluctuations in foreign currencies. These were arguably the best operating results in the Company's history.

Pro forma operating income for fiscal 2008 was $23.1 million or 12% of gross revenues, as compared to $12.8 million or 7% of gross revenues in fiscal 2007. For the full year 2008, GAAP net income totaled $17.9 million or $0.43 per dilutive share, as compared to $9.3 million or $0.20 per dilutive share in 2007. This represents a GAAP diluted earnings per share increase of 115%. GAAP net income for 2007 benefited by $2.6 million or $0.06 per dilutive share from the recovery of funds resulting from the previously disclosed UK tax misappropriation.

Moving on to the fourth quarter results. We are pleased to report revenues, which were above our guidance range, which was $46 to $48 million, and pro forma EPS that was at the high-end of our guidance range, which was $0.07 to $0.10 per dilutive share. For the fourth quarter of 2008, total Company revenue was $48.8 million, a year over year increase of 9%, or 15% adjusting for constant currency. Driven by increase in the Hackett Group revenue of 13%, or 23% adjusting for constant currency. Our pro forma net income for the fourth quarter of 2008 totaled $4.1 million, or $0.10 per dilutive share, an increase of $0.02 or 25% from the comparable period in the prior year.

Fourth quarter pro forma earnings per dilutive share were favorably impacted by nearly $0.01, as a result of the net fluctuations in foreign currencies, as transactional gains resulting from euro to British pound fluctuations more than offset our planned translation losses. On a Company-wide basis, our pro forma gross margin, which excludes stock compensation expense was 41.3% of gross revenues in the fourth quarter of 2008, as compared to 41.7% in the same period of 2007. The gross margin percentage was slightly lower due to the impact of higher accrued bonuses, driven by the improved year over year annual results. For those of you who utilize net revenue calculations, pro forma gross margin was 46% of net revenues for the fourth quarter of 2008 and 2007.

Hackett gross margin on net revenues was 51% in the fourth quarter of 2008, as compared to 53% in the fourth quarter of 2007. And our annualized revenue per professional was $409,000 in the fourth quarter of 2008, as compared to $411,000 in the same period of 2007. Pro forma SG&A, which excludes non-cash compensation and amortization of intangibles was approximately $13.4 million, or 28% of gross revenues in the fourth quarter of 2008, as compared to 30% in the fourth quarter of 2007. Our SG&A levels have benefited from cost containment initiatives that began in early 2007 and the impact of favorable foreign currency transactions, which I covered earlier, offset by higher accrued bonuses due to increased Company performance.

Pro forma operating profit for the fourth quarter of 2008 was $6.8 million or 14% of gross revenues, as compared to 13% in the fourth quarter of 2007. GAAP earnings per share for the fourth quarter of 2008 was $0.14 per dilutive share, as compared to $0.14 cents per dilutive share for the fourth quarter of 2007. The fourth quarter of 2007 benefited by $2.2 million or $0.05 per dilutive share from the recovery of funds from the previously disclosed UK tax misappropriation.

GAAP net income included tax expense of $212,000 in the fourth quarter of 2008, as compared to $31,000 for the comparable period of 2007. As of the end of the fourth quarter of 2008, the Company had approximately $52 million and $11 million of income tax loss carry forwards remaining in the US and in foreign tax jurisdictions respectively.

Breaking down fourth quarter revenue for 2008, revenue for The Hackett Group was $33.8 million, representing a year over year increase of 13%, or 23% adjusting for constant currency. Further breaking down the Hackett Group revenue. International revenues, which are primarily based with a contracting entity is domiciled, accounted for 36% or 44% in constant currency of the Hackett Group revenues in the fourth quarter of 2008, as compared to 40% in the fourth quarter of 2007. As Ted mentioned, throughout 2008, the strategic changes that were initiated to emphasize our new transformational benchmarks and the realignment of the dedicated sales team to REL, as well as investments made in Europe and other international markets; have all contributed to our improved Hackett Group European performance.

Our Hackett Technology Solutions group revenue totaled $15 million, which was flat on a year over year basis. For the Hackett Technology Solutions group, our hourly realized billing rate was $168 for the fourth quarter of 2008, as compared to $161 in the fourth quarter of 2007. Consultant utilization was 64% for the fourth quarter of 2008, as compared to 62% in the same period of last year. Although our fourth quarter utilization is lower due to the fewer available days resulting from the increased number of holidays and vacation days, our annual utilization target, which is calculated based on 2,080 hours for year, continues to be in excess of 70% for this business.

The Company's total headcount was 547 at the end of Q4, down from 566 in the previous quarter and 552 at the end of the previous year. Higher Hackett Group headcount has been partially offset by lower headcount in our Hackett Technology Solutions group. During the fourth quarter, we made adjustment to our headcount to address excess capacity and to conform to current market demand in several practices.

Now, moving to cash balances. The Company's cash balances, including marketable investments of $1.7 million held in Bank of America's Columbia Strategic Cash Portfolio and restricted cash were $34.4 million at the end of the fourth quarter of 2008. As compared to $27.7 million at the end of the fourth quarter of 2007. During the fourth quarter of 2008, we generated $11.4 million of cash from operating activities, as compared to $8.3 million during the fourth quarter of 2007. For the fiscal year, cash flows generated from operations were $27.5 million, as compared to $21.6 million in fiscal 2007. This fiscal year improvement was driven by growth in net income, improvements in our billing and collection performance, which has resulted in a reduction in the Company's DSO's and the timing of US payroll cycles.

Our DSO, or days sales outstanding, at the end of the fourth quarter of 2008 was 51 days, as compared to 60 days at the end of the fourth quarter of 2007. This represents a nine day reduction on a year-to-date basis and a five day reduction from the third quarter of 2008. We believe that we can continue to make further improvements to our DSO.

Cash flows generated from operations was offset by our stock buyback activity in 2008. During the fourth quarter of 2008, cash was utilized to repurchase approximately 938,000 shares of the Company's common stock, at an average price of $3.08, for a total cost of $2.9 million. From a year-to-date perspective, the Company has repurchased approximately 4.5 million shares, at an average price of $4.27. For a total cost of approximately $19.1 million. Subsequent to the end of the fourth quarter of 2008, our Board of Directors authorized an additional increase to the Company's share buyback program of $5 million. Approximately $6.6 million remains available under the Company's share repurchase program authorization as of today's date.

I would now like to discuss our guidance for the first quarter of 2009. However, before I provide the Q1 2009 outlook, it is important to note a couple of important items. The first item is the seasonality of our business relating to costs throughout the year. Consistent with Q1 guidance provided in previous years, our first quarter guidance for 2009 will reflect the sequential impact of the increase in US payroll related taxes and the sequential build up of vacation accruals, which resulted in a negative sequential pro forma impact of $0.03.

Secondly and most importantly, for 2009, the recent declines in the value of Euro and British pound against the US dollar will negatively impact results. For 2009 planning purposes, we have assumed this rate decline will persist throughout the entire year. Assuming the same 2008 fiscal revenues were achieved in 2009, the impact of the current foreign currency exchange rates would reduce our reported US dollar based revenues by approximately $11 million. From an earnings perspective, this would unfavorably impact fully dilutive pro forma earnings per share by approximately $0.08 in 2009, assuming all other items being equal. Specific to Q1 2009, we expect foreign currency to unfavorably impact revenues by approximately $2 million, as compared to Q1 2008.

On a sequential basis, the expected foreign currency impact is less than $0.5 million. As Ted will discuss in his comments, in the latter part of December and early January, we experienced a stall in client decision making that impacted our momentum going into January of 2009. Pipeline activity and decision making improved in February. However, it is obviously too early to the comment on March. As a result, we expect total Company revenues for the first quarter of 2009 to be in the range of $39 to $42 million or virtually flat on a year over year basis in constant currency.

We expect Hackett Group revenues to be up on a constant currency basis but flat to down on a US dollar reported basis. We also expect our Technology Solutions group to be down. Our technology Solutions group has an immaterial amount of international revenue. Additionally, we expect our pro forma diluted earnings per share in the first quarter to be in the range of $0.01 to $0.04. This pro forma estimate excludes amortization expense and noncash stock compensation expense and includes a normalized tax rate of 40%.

From a modeling perspective, let me provide some additional commentary on our earnings per share guidance. On a sequential basis from Q4, as I have already discussed, Q1 2009 will be impacted by approximately $0.03 due to the traditional increase in US payroll related taxes and the seasonal sequential build up of vacation accruals, as compared to Q4 2008. In addition, the unfavorable variance from net foreign currency gains in Q4 2008, as compared to expected losses in Q1 2009, would be approximately $0.02 per dilutive share. These items will drive a nearly $0.05 impact on a sequential basis.

On a year over year basis, Q1 2008 pro forma results of $0.07 per dilutive share benefited from net foreign currency gains of a little over $0.01. In addition, our Q1 2009 guidance includes an unfavorable impact of foreign exchange movements of nearly $0.01. This will drive an unfavorable $0.02 impact on our forecast as compared to Q1 2008. Gross margins are expected to improve on a year over year basis due to the increase in Hackett revenue mix. We expect pro forma SG&A levels to be approximately $13 million in the first quarter of 2009. We expect our cash balances, excluding the impact of any stock buyback activities, to be down as a result of the payment of 2008 performance bonuses. At this point, I would like to turn it back over to Ted to review our market outlook and strategic priorities in the coming months.

Thank you, Rob. As we look forward, we continue to believe that the market demand for our services remains favorable. But it is also clear that the global macroeconomic environment is impacting client decision making. As I mentioned in my opening comments, a growing number of companies clearly recognize the need to reduce costs and optimize cash. However, they are being more thoughtful and involving more people in these decisions, which has lengthened decision making.

In late December through early January, we noticed an unusual delay in decision making, especially in Europe, that impacted how we started the quarter. However, we are encouraged by the pipeline activity and decision making we have experienced over the last four to five weeks. Geographically, we have seen this improvement in both European and North American clients. The question is whether this is a sustainable trend.

In 2008, we were net winners in an increasingly difficult environment. In other words, we had more clients turn to us quickly than those that either delayed or made a decision to go it alone. As we look at '09, our planning assumptions are that the US dollar will stay close to current levels or perhaps strengthen slightly against both the Euro and British pound. And will negatively impact our revenues assumptions for the year, as Rob covered earlier. It is clearly too early and market volatility too high to know whether we can continue to be net winners, as we were in '08.

However, we also know that if we are able to stay close to our '08 revenue levels, net of the expected FX impact, our business model provides us with the leverage to be strongly profitable and cash flow positive. We also believe that although we do not know the length or extent of the current economic cycle, we know that it will pass. More importantly, the long-term prospects for our organization remain unchanged.

With that demand overview as a backdrop, let me now comment on our strategic priorities for 2009. Let me first start with revenue growth. We understand that we must continue to extend our special market permission from being the premiere benchmarking organization to our other offerings. Specifically in '09, all of our research and marketing will further highlight our unique best practice implementation skills that reside in our transformation and technology groups, where our revenue per client growth is exponential.

We believe that we can increase the number of advisory clients that utilize our other services. Accordingly, in '09, we will continue to expand incentives and client briefings to further highlight our total capabilities. Our ability to better integrate the REL capabilities with other Hackett opportunities is significant and we recognize our progress has been limited to this point. The enhancement of working capital related questions and content into our benchmarking offerings and more integrated training of our teams should drive more integrated sales opportunities in this area.

And let me not shortchange the terrific REL performance in '08. It was truly exceptional. Although in '08, we made great improvements in positioning transformational benchmarks into larger implementation initiatives, we know the opportunity to improve is still significant. Most of our new recruiting and training related development efforts are directly focused on improving our execution in this area.

We also continue to see great opportunity to expand internationally. We continue to see our brand strongly resonate with both prospective clients and associates outside the markets that we currently serve. In 2008, we expanded into South Korea and Australia. In '09 we will continue to look for alliance relationships or other opportunities to continue our expansion.

Lastly, relative to revenue growth, we continue to actively look for acquisitions that would enhance and strongly leverage our existing intellectual capital, to drive and accelerate our growth. Having said that, we know that negotiating under these volatile times are more difficult.

Let me further elaborate on our executive advisory leverage. Our long-term goal is to be able to ascribe an increasing percentage of our total annual revenue to clients who are continuously engaged with us through our executive advisory program. At the end of the quarter, our membership counts approximated 760, across 230 clients. Down slightly with last quarter. We know that this area had less sales focus in '08 but in '09, we will invest in a dedicated sales team in both -- in building a dedicated sales team in both the US and in Europe.

Growing our member and client counts remains one of our key strategies but more important is how we leverage those relationships. Our clients use our advisory programs to track emerging issues and to support performance improvement initiatives that they are assessing or executing. To give you a sense of the level of activity from these programs during the year, we handled over 3,000 inquiries from our members; published over 90 pieces of research; and held over 130 Webcasts with over 2,100 participants. We believe this activity means that our members value our insight and they see us as strategic advisors, even during the toughest of times.

Secondly, we continue to expand and leverage our best practice intellectual capital. We know it defines our organization through our benchmarking capabilities but we also know that it extends to our unique implementation capabilities and skills. Our organization has always been distinct because of the proprietary data we capture through our benchmarks and the applied knowledge we have captured in our best practices repository and tools, which help clients implement proven solutions.

Key elements of our 2009 plan are further changes to our product architecture, so we continue to determine how best to avail our intellectual capital to our clients. We believe we are continuing to improve how to do this. And we believe it's reflected in our results. A key product development and training initiative for our organization are the continuing efforts to fully integrate all of our content directly into our new global delivery methodology. We believe this continues to enhance the marketability and usability of our intellectual capital, as well as enhance data and intellectual property capture.

And lastly, let me comment on talent management. As I have stated throughout the year, as we continue to grow and fully recognize the potential of our business model, it has become increasingly evident that the only limit to our progress and opportunity will be our ability to attract, retain, develop and motivate our associates. In the latter part of '08, we rolled out a new performance management program and introduced the first part of our new training curriculum. Our plans for '09 call for the expansion of these initiatives along with new mentoring and other associate development oriented programs.

In summary, the strategy we put in place several years ago has been favorable to our growth and profitability. I am especially proud of the great progress we have made during 2008 and the exceptional operating results we achieved during an increasingly difficult economic environment. Regardless of the short term impact that we may experience from the current global economic environment, we are certain that the opportunity for our organization is truly boundless. We have a powerful brand, proprietary and unmatched intellectual capital, a terrific group of talented associates and a pristine balance sheet, with strong cash balances and no debt.

In 2008, we proved these attributes are extremely valuable during increasingly challenging economic times and we believe they will allow us to optimize our market opportunity in the coming year. Let me close by thanking our associates for their numerous contributions and their tireless effort and congratulate them on a great 2008. And urge them to stay highly focused on our client and our people in 2009. Let me now open it up for Q&A.

(Operator Instructions). And our first question comes from George Sutton with Craig-Hallum.

Hi, guys. Rob, I wanted to specifically ask you with respect to 2009, I know you don't give guidance, but as we look out through the full year, is there any reason we shouldn't expect you to continue to be nicely cash flow positive?

No, I would expect to continue to cash flow nicely throughout the year.

Okay. Ted, there were several statements you made I just wanted to get a little more clarity around. The first related to the pick up that you saw in February with respect to pipeline activity both in Europe and the US. It sounds like it has improved but it's not convincing to you yet. And we've heard similar statements from other consultants who suggest they've seen improvements in February. Why are you not yet convinced? What was not convincing about it?

It's simply the consistency in decision making. We're seeing that clients are just going through different kind of hoops. And it's, I will call it, either more thorough, more thoughtful, more people involved than normal. Everyone is just being a little bit more diligent on how they spend their money and trying to be absolutely certain that they have a quick and very targeted pay back. So, it's just that.

However, I will say that given, when Rob mentions the word, stall in the pipeline, in Europe we really did feel a stall in that latter part of December, even the first ten days of January. But we saw the pipeline activity just improve just noticeably shortly thereafter. And then obviously, decision making now has given us the opportunity then to guide the way we have. We just want to see more evidence in how that happens and how that plays out, given what happened in December before we really comment out further.

You mentioned that you were expanding incentives and client briefings as a way to try to build more breadth across the customers. What did you mean by that?

Well, we know that our executive program clients, especially under these times, will turn to those offerings as an efficient way of trying to leverage our capability and know how to kind of make their decisions and make their assessments. I think, one of the things that we clearly see is that they clearly turn to us quickly. And I would say we're at the very top of almost any list, when a client is trying to gauge their opportunity to improve, given their benchmark. I think we now know that our opportunity to grow is to take those benchmark entry points for these executive advisory clients that are leveraging our intellectual capital very efficiently, to the make sure that they also know that we're able to make recommendations that we are prepared to stand by and fully implement, which drives a substantial amount of our revenue.

When we look at our total revenues, George, and look at the percentage of our clients and the percentage of our revenues that are coming from this initial assessment or high level prioritization that we do for clients. And we look at how many of those clients, given their total budgets, could significantly impact -- could significantly increase their spend with us given our capabilities. That's what we see the greatest opportunity. But we know that in order to do that, we need to make sure that the clients see beyond our intellectual capital and our benchmarking and turn to us, I will say, with the same fury or access that they provide when they're trying to quickly measure or assess their opportunity to improve. It's a big opportunity for us.

Lastly, you mentioned you were looking to build a dedicated US and European sales team. And I wasn't sure exactly what you were referring to there but I think it was with respect to some of the advisory work. Can you just give a little bit more detail behind that?

Yes, if you recall in 2007, we went to a commission program that basically incented the sales force equally for the sale of all of our services. Past then, and we expected this, the offering that sells for the lowest average selling price, which happens to be the [executive advisory] program, then (Inaudible) as a pension. So, we have seen the leverage from those clients that buy our executive advisory program into our other offerings. When I mentioned that over 40% of our total Hackett sales came from that client base. So we are saying, "Listen, even though we may have allowed that executive advisory growth rate to slip a little bit in '08, vis-a-vis our other services, we want to now take and commit a dedicated (Inaudible) sales force that will exclusively sell these advisory offerings." Because it is now clear to us that those clients that buy those executive advisory offerings are very loyal to us, have been significant users of our other offerings.

Can you put some relevant context around the size of that initiative in terms of people?

I say this with a smirk because I know all of our people are listening but never enough. But let's just say it's a meaningful commitment for us, so it will be -- it's a meaningful commitment to the total sales group that we run today.

Okay. Thanks, guys.

Thank you, George.

Our next question comes from Mr. Bill Sutherland with Boenning and Scattergood.

Thank you. Hi, guys. Following up on George's question about the dedicated salespeople for advisory. You mentioned it on the third quarter call, too, Ted, and I didn't know if it's already something you've begun to implement and whether we're already seeing it in the SG&A and direct costs or whether that's something that's going to tick up in '09?

Well, you are correct that in the latter part of the year, we took and dedicated some of the our existing salespeople fully to the sale of executive advisory programs. What -- we will be spending incremental and new dollars to expand the number of dedicated people focused both in US and Europe. In fact, we had only done that in the US. We had not done it in Europe. Given the strength of our European performance, we decided to expand that dedicated sales team into Europe. So, no, there -- I would say, probably the best thing I could say relative to the cost is that we have clearly started to build out that capability. We're not at the full headcount rate. However, it's clearly in our Q1 SG&A guidance. And as we look at all of '09, we're going to plan on spending a slightly higher amount in terms of the total sales costs, as a percentage of our planned revenue but not meaningful enough to note.

Okay.

It's simply because we had an opportunity to also reallocate some sales and marketing dollars differently into this dedicated group. So it was a combination of new dollars and a reallocation of other dollars we just didn't believe we were getting the kind of return we wanted on.

Ted, the point you were making on talent management near the end of your comments, was that for sort of like all groups or was that particularly for sales or what was that focused on?

No, it's for the entire organization. Is there an increased emphasis on sales? Yes, I would say that, clearly, we'll be spending more dollars in training and development in '09 than we did in '08. And we will be clearly, spending more in the client facing or sales and marketing side of that as well. Because, again as I mentioned, as I covered with George, we know that if we effectively present all of our capabilities to our clients at the beginning; and this is all of our market facing people, sales and our more senior people; that our revenue per client increases very quickly. So we know that those will be -- those are dollars that will be very well invested.

How about your plans for the, I call them conferences, I don't think that's what you call them, the client get-togethers, same sort of schedule as last year, even with the economy?

Same schedule. We are asking them if they want us to deliver it differently. As you saw from the comments that I made around the usage of '08 and the participation of Webcasts, there's no doubt that we're seeing an increased number of clients participate in our Webcasts, as the economic circumstances have gotten a little tougher. So, we'll continue to talk to them and ask them if they want to us deliver it in a different way. We will respond directly to them. We will not miss any opportunity to make sure that we have a chance to be in front of our clients, make sure they understand how we can help them. We know it will pay off in the long run.

And then on executive advisory, the trend there declining a bit, is that also a drop in renewal rate? I don't think you've actually that.

No, the renewal rate was really pretty consistent, both on the membership and on the client side. So, no, it was simply just the -- I would say it was probably more net new sales. But renewals didn't vary a whole lot from where we thought at the beginning of the year. We still think there's significant room for improvement. We're planning on improving in '09. We believe we can, just given everything we saw and a good understanding of where some of our turnover came from. So, no, I would say that it -- those programs just simply require the right level of dedicated sales focus. I think the clients are seeing the value and we're seeing the long-term value, both in the profitability of those programs themselves, as well as just how broadly these clients have become users of our other offerings.

Switching over to tech for a second, that group had it progressed last year to the point where they were even year over year in the back half, and I know there's no currency impact there. So, Rob said it would be down Q1 year over year. And I'm just kind of -- if you could just provide some color on the underlying trends there?

Yes, and I'm glad you asked that because the color would be slightly different. I can't say that the pipeline activity and access is favorable the way I characterized it for the Hackett and REL related businesses. I think if -- we expect it to be a little tougher times for technology oriented investments and solutions. I think it requires a little bit more time to implement and provide longer kind of ROI visibility. We just expect, we'll do worse in this environment. So in fairness, that's what we think will happen in tech.

Having said that, when we look at the nature of our tech offerings, the fact that our Hyperion group, the whole EPM and reporting space has been a hot space. And that these are solutions that we can implement within three to nine months, normally at very sophisticated clients. We think that should fair better than what we consider to be a normal Tech Solutions group. And our SAP group, which as you know focuses on small and medium businesses. And a majority of our client base is in the life science area, biotech, med tech area. Where investment in those areas kind of continue. We also expect that group to remain reasonably stable and do reasonably well in '09 or at least as we head into '09, we feel that way. The pipeline appears to be that way. And then the group where we've had the most concern really throughout all of '08, has been the Oracle group and that group is probably the one that's probably getting hurt a little bit more than the others.

Okay. And so --.

I'm sorry, our Oracle, non-Oracle EPM because I still refer to Hyperion as Hyperion instead of Oracle EPM.

Right, I understand. Okay. And then, Rob, you were saying that absent FX, assuming the same revenue kind of level in the first quarter of last year, you would be saying Hackett is pretty close to even in the first quarter in your assumption?

Yes. Hackett on a US dollar basis, would be about flat. Hackett on constant currency basis would be up.

That's not what I was thinking. In other words, just to use numbers, you did $30 million last year in Hackett, Q1. And you're saying on a constant currency basis you'd be up from $30 million.

That's correct.

Okay. All right. Thank you.

(Operator Instructions). And I'm showing no further questions. I would now like to turn it back to Ted Fernandez.

Thank you, operator. And let me thank everyone for participating on our fourth quarter and year end results call. I look forward to providing you our next update when we report the first quarter. Thank you, again, for participating.

And that concludes today's call. Please disconnect your lines at this time.