Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 28, 2018	Nov. 01, 2018
Document and Entity Information
Entity Registrant Name	Willdan Group, Inc.
Entity Central Index Key	0001370450
Document Type	10-Q
Document Period End Date	Sep. 28, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-28
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		10,935,424
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 28, 2018	Dec. 29, 2017
Current assets:
Cash and cash equivalents	$ 16,681,000	$ 14,424,000
Accounts receivable, net of allowance for doubtful accounts of $296,000 and $369,000 at September 28, 2018 and December 29, 2017, respectively	19,725,000	38,441,000
Contract assets	43,752,000	24,732,000
Other receivables	315,000	1,833,000
Prepaid expenses and other current assets	3,549,000	3,760,000
Total current assets	84,022,000	83,190,000
Equipment and leasehold improvements, net	5,042,000	5,306,000
Goodwill	40,187,000	38,184,000
Other intangible assets, net	10,454,000	10,666,000
Other assets	904,000	826,000
Total assets	140,609,000	138,172,000
Current liabilities:
Accounts payable	18,979,000	20,826,000
Accrued liabilities	21,804,000	23,293,000
Contingent consideration payable	4,020,000	4,246,000
Contract liabilities	5,001,000	7,321,000
Notes payable		383,000
Capital lease obligations	216,000	289,000
Total current liabilities	50,020,000	56,358,000
Contingent consideration payable	1,949,000	5,062,000
Notes payable		2,500,000
Capital lease obligations, less current portion	193,000	160,000
Deferred lease obligations	599,000	614,000
Deferred income taxes, net	1,582,000	2,463,000
Other noncurrent liabilities	468,000	363,000
Total liabilities	54,811,000	67,520,000
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding
Common stock, $0.01 par value, 40,000,000 shares authorized; 8,921,000 and 8,799,000 shares issued and outstanding at September 28, 2018 and December 29, 2017, respectively	89,000	88,000
Additional paid-in capital	56,739,000	50,976,000
Retained earnings	28,970,000	19,588,000
Total stockholders’ equity	85,798,000	70,652,000
Total liabilities and stockholders’ equity	$ 140,609,000	$ 138,172,000

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 28, 2018	Dec. 29, 2017
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 296,000	$ 369,000
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	8,921,000	8,799,000
Common stock, shares outstanding	8,921,000	8,799,000

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended
	Sep. 28, 2018	Sep. 29, 2017	Sep. 28, 2018	Sep. 29, 2017
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Contract revenue	$ 71,386,000	$ 69,007,000	$ 185,814,000	$ 209,191,000
Direct costs of contract revenue (inclusive of directly related depreciation and amortization):
Salaries and wages	11,233,000	11,425,000	33,358,000	33,594,000
Subcontractor services and other direct costs	36,840,000	37,310,000	86,453,000	118,881,000
Total direct costs of contract revenue	48,073,000	48,735,000	119,811,000	152,475,000
General and administrative expenses:
Salaries and wages, payroll taxes and employee benefits	11,125,000	8,691,000	31,875,000	26,092,000
Facilities and facility related	1,492,000	1,235,000	4,087,000	3,478,000
Stock-based compensation	1,705,000	896,000	4,431,000	1,992,000
Depreciation and amortization	1,117,000	1,053,000	3,292,000	2,896,000
Other	2,961,000	4,214,000	11,226,000	11,548,000
Total general and administrative expenses	18,400,000	16,089,000	54,911,000	46,006,000
Income from operations	4,913,000	4,183,000	11,092,000	10,710,000
Other income (expense):
Interest expense, net	(22,000)	(23,000)	(75,000)	(88,000)
Other, net	17,000	18,000	36,000	56,000
Total other (expense) income, net	(5,000)	(5,000)	(39,000)	(32,000)
Income before income taxes	4,908,000	4,178,000	11,053,000	10,678,000
Income tax expense	1,597,000	1,292,000	2,224,000	1,839,000
Net income	$ 3,311,000	$ 2,886,000	$ 8,829,000	$ 8,839,000
Earnings per share:
Basic (in dollars per share)	$ 0.37	$ 0.33	$ 1.00	$ 1.03
Diluted (in dollars per share)	$ 0.35	$ 0.31	$ 0.95	$ 0.97
Weighted-average shares outstanding:
Basic (in shares)	8,844,000	8,730,000	8,798,000	8,580,000
Diluted (in shares)	9,343,000	9,248,000	9,283,000	9,138,000

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY - 9 months ended Sep. 28, 2018 - USD ($)	Common Stock	Additional Paid-in Capital	Retained Earnings	Total
Balances at Dec. 29, 2017	$ 88,000	$ 50,976,000	$ 19,588,000	$ 70,652,000
Balances (in shares) at Dec. 29, 2017	8,799,000			8,799,000
Increase (Decrease) in Stockholders' Equity
Shares of common stock issued in connection with employee stock purchase plan		1,299,000		$ 1,299,000
Shares of common stock issued in connection with employee stock purchase plan (in shares)	65,000
Shares of common stock issued in connection with incentive stock plan	$ 1,000	475,000		476,000
Shares of common stock issued in connection with incentive stock plan (in shares)	51,000
Unregistered sales of equity securities and use of proceeds		(442,000)		(442,000)
Unregistered sales of equity securities and use of proceeds (in shares)	(15,000)
Restricted Stock Awards (in shares)	21,000
Stock-based compensation expense		4,431,000		4,431,000
Net income			8,829,000	8,829,000
Cumulative effect from adoption of ASC 606 \| ASC 606			553,000	553,000
Balances at Sep. 28, 2018	$ 89,000	$ 56,739,000	$ 28,970,000	$ 85,798,000
Balances (in shares) at Sep. 28, 2018	8,921,000			8,921,000

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Sep. 28, 2018	Sep. 29, 2017
Cash flows from operating activities:
Net income	$ 8,829,000	$ 8,839,000
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	3,391,000	2,976,000
Deferred income taxes, net	(1,460,000)	1,784,000
(Gain) loss on sale/disposal of equipment	(17,000)	26,000
Provision for (recovery of) doubtful accounts	317,000	(98,000)
Stock-based compensation	4,431,000	1,992,000
Accretion and fair value adjustments of contingent consideration	(713,000)	779,000
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts receivable	19,492,000	(5,061,000)
Contract assets	(18,252,000)	(8,200,000)
Other receivables	1,518,000	(1,071,000)
Prepaid expenses and other current assets	78,000	(167,000)
Other assets	(78,000)	44,000
Accounts payable	(1,960,000)	5,408,000
Accrued liabilities	(1,672,000)	(3,340,000)
Contract liabilities	(2,320,000)	(1,812,000)
Deferred lease obligations	(15,000)	(64,000)
Net cash provided by operating activities	11,569,000	2,035,000
Cash flows from investing activities:
Purchase of equipment and leasehold improvements	(720,000)	(1,826,000)
Proceeds from sale of equipment	41,000
Cash paid for acquisitions, net of cash acquired	(2,994,000)	(14,603,000)
Net cash used in investing activities	(3,673,000)	(16,429,000)
Cash flows from financing activities:
Payments on contingent consideration	(3,768,000)	(1,659,000)
Payments on notes payable	(383,000)	(3,270,000)
Repayments under line of credit	(2,500,000)
Principal payments on capital lease obligations	(321,000)	(323,000)
Proceeds from stock option exercise	476,000	1,751,000
Proceeds from sales of common stock under employee stock purchase plan	1,299,000	830,000
Unregistered sales of equity securities and use of proceeds	(442,000)
Net cash used in financing activities	(5,639,000)	(2,671,000)
Net increase (decrease) in cash and cash equivalents	2,257,000	(17,065,000)
Cash and cash equivalents at beginning of period	14,424,000	22,668,000
Cash and cash equivalents at end of period	16,681,000	5,603,000
Cash paid during the period for:
Interest	75,000	88,000
Income taxes	2,061,000	2,142,000
Supplemental disclosures of noncash investing and financing activities:
Issuance of common stock related to business acquisitions		3,099,000
Contingent consideration related to business acquisitions	943,000	5,400,000
Other payable for working capital adjustment	698,000	1,881,000
Equipment acquired under capital leases	$ 281,000	$ 263,000

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY

9 Months Ended

Sep. 28, 2018

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY

1.BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and reflect all adjustments, which consist of only normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the consolidated results for the interim periods presented. The Company operates and reports its quarterly financial results based on the 13-week period ending on the Friday closest to March 31, June 30 and September 30 and the 13 or 14-week period ending on the Friday closest to December 31, as applicable, with consideration of business days. Results for the interim periods are not necessarily indicative of results for the full year. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 29, 2017.

Nature of Business

Willdan Group, Inc. and subsidiaries (the “Company”) is a provider of professional technical and consulting services to utilities, private industry, and public agencies at all levels of government. The Company enables its clients to realize cost and energy savings by providing a wide range of specialized services without having to incur and maintain the overhead necessary to develop staffing in-house. Such services include energy and sustainability, engineering, construction management and planning, economic and financial consulting and national preparedness and interoperability. The Company operates its business through a nationwide network of offices spread across 19 states and the District of Columbia. Its clients primarily consist of public and governmental agencies, including cities, counties, public utilities, redevelopment agencies, water districts, school districts and universities, state agencies, federal agencies, a variety of other special districts and agencies, private utilities and industry and tribal governments. The Company’s business with public and private utilities is concentrated primarily in California and New York and its business with public agencies is concentrated in California, New York and Arizona.

Principles of Consolidation

The consolidated financial statements include the accounts of Willdan Group, Inc. and its wholly-owned subsidiaries, Willdan Energy Solutions (“WES”), Willdan Engineering, Willdan Infrastructure, Public Agency Resources, Willdan Financial Services and Willdan Homeland Solutions and their respective subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

The Company accounts for variable interest entities in accordance with Accounting Standards Codification (“ASC”) 810, Consolidation. Under ASC 810, a variable interest entity (“VIE”) is created when: (a) the equity investment at risk in the entity is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by other parties, including the equity holders; (b) the entity’s equity holders as a group either (i) lack the direct or indirect ability to make decisions about the entity, (ii) are not obligated to absorb expected losses of the entity or (iii) do not have the right to receive expected residual returns of the entity; or (c) the entity’s equity holders have voting rights that are not proportionate to their economic interests, and the activities of the entity involve or are conducted on behalf of the equity holder with disproportionately few voting rights. If an entity is deemed to be a VIE pursuant to ASC 810, the enterprise that has both (i) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb the expected losses of the entity or right to receive benefits from the entity that could be potentially significant to the VIE is considered the primary beneficiary and must consolidate the VIE. In accordance with ASC 810, the Company performs ongoing reassessments of whether an enterprise is the primary beneficiary of a VIE.

As of September 28, 2018, the Company had one VIE— Genesys Engineering, P.C. (“Genesys”). Pursuant to New York law, the Company does not own capital stock of Genesys and does not have control over the professional decision making of Genesys’ engineering services. The Company, however, has entered into an administrative services agreement with Genesys pursuant to which WES, the Company’s wholly-owned subsidiary, will provide Genesys with ongoing administrative, operational and other non-professional support services. The Company manages Genesys and has the power to direct the activities that most significantly impact Genesys’ performance, in addition to being obligated to absorb expected losses from Genesys. Accordingly, the Company is the primary beneficiary of Genesys and consolidates Genesys as a VIE.

Management also concluded there is no noncontrolling interest related to the consolidation of Genesys because management determined that (i) the shareholder of Genesys does not have more than a nominal amount of equity investment at risk, (ii) WES absorbs the expected losses of Genesys through its deferral of Genesys’ service fees owed to WES, and the Company has, since entering into the administrative services agreement, had to continuously defer the service fees for Genesys, and (iii) the Company believes Genesys will continue to have a shortfall on payment of its service fees for the foreseeable future, leaving no expected residual returns for the shareholder.

Segment Information

Willdan Group, Inc. is a holding company with six wholly-owned subsidiaries. The Company presents segment information externally consistent with the manner in which the Company’s chief operating decision maker reviews information to assess performance and allocate resources. Willdan Group, Inc. performs administrative functions on behalf of its subsidiaries, such as treasury, legal, accounting, information systems, human resources and certain business development activities, and earns revenue that is only incidental to the activities of the enterprise. As a result, Willdan Group, Inc. does not meet the definition of an operating segment. The Company’s two segments are Energy and Engineering and Consulting. The Company’s principal segment, Energy, consists of the business of its subsidiary, WES, which offers energy and sustainability consulting services to utilities public agencies and private industry. The Company’s Engineering and Consulting segment includes the operation of the Company’s remaining subsidiaries, Willdan Engineering, Willdan Infrastructure, Public Agency Resources, Willdan Financial Services and Willdan Homeland Solutions. Willdan Engineering provides civil engineering-related construction management, building and safety, city engineering, city planning, geotechnical, material testing and other engineering consulting services to its clients. Willdan Infrastructure, which was launched in fiscal year 2013, provides engineering services to larger rail, port, water, mining and other civil engineering projects. Public Agency Resources primarily provides staffing to Willdan Engineering. Willdan Financial Services provides economic and financial consulting to public agencies. Willdan Homeland Solutions provides national preparedness and interoperability services and communications and technology solutions. See Note 10 “Segment Information” for revised and restated segment information for the current and prior period.

Contract Assets and Liabilities

Amounts classified as “Costs and estimated earnings in excess of billings on uncompleted contracts” and “Billings in excess of costs and estimated earnings on uncompleted contracts” on the consolidated balance sheets of the Company’s Annual Report on Form 10-K for the year ended December 29, 2017 have been reclassified as “Contract assets” and “Contract liabilities”, respectively, on the condensed consolidated balance sheets and statements of cash flows.

Billing practices are governed by the contract terms of each project based upon costs incurred, achievement of milestones or pre-agreed schedules. Billings do not necessarily correlate with revenue recognized using the percentage-of-completion method of revenue recognition. Contract assets include unbilled amounts typically resulting from revenue under long-term contracts when the percentage-of-completion method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer and right to payment is not unconditional. In addition, contract assets include retainage amounts withheld from billings to the Company’s clients pursuant to provisions in the contracts. Contract liabilities consist of advance payments and billings in excess of revenue recognized and deferred revenue.

The increase in contract assets was primarily attributable to the reclassification of retainage from accounts receivable to contract assets as of December 30, 2017 due to the adoption of Accounting Standards Update (“ASU”) 2014-09, offset by normal business operations for the nine months ended September 28, 2018. The decrease in contract liabilities was primarily related to normal business operations for the nine months ended September 28, 2018.

Contract Accounting

The Company enters into contracts with its clients that contain various types of pricing provisions, including fixed price, time-and-materials, unit-based and service related provisions. The Company recognizes revenues in accordance with ASU 2014-09, Revenue from Contracts with Customer, codified as ASC Topic 606 and the related amendments (collectively “ASC 606”). As such, the Company identifies a contract with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to each performance obligation in the contract and recognizes revenues when (or as) the Company satisfies a performance obligation.

The following table reflects the Company’s two reportable segments and the types of contracts that each most commonly enters into for revenue generating activities.


Segment	Contract Type	Revenue Recognition Method
	Time-and-materials	Time-and-materials
Energy	Unit-based	Unit-based
	Software license	Unit-based
	Fixed price	Percentage-of-completion
	Time-and-materials	Time-and-materials
Engineering and Consulting	Unit-based	Unit-based
	Fixed price	Percentage-of-completion
	Service-related	Proportional performance

Revenue on the vast majority of the Company’s contracts will continue to be recognized over time because of the continuous transfer of control to the customer. Revenue on fixed price contracts is recognized on the percentage-of-completion method based generally on the ratio of direct costs incurred-to-date to estimated total direct costs at completion. The Company’s uses the percentage-of-completion method to better match the level of work performed at a certain point in time in relation to the effort that will be required to complete a project. In addition, the percentage-of-completion method is a common method of revenue recognition in the Company’s industry.

Many of the Company’s fixed price contracts involve a high degree of subcontracted fixed price effort and are relatively short in duration, thereby lowering the risks of not properly estimating the percent complete. Revenue on time-and-materials and unit-based contracts is recognized as the work is performed in accordance with the specific rates and terms of the contract. The Company recognizes revenues for time-and-materials contracts based upon the actual hours incurred during a reporting period at contractually agreed upon rates per hour and also includes in revenue all reimbursable costs incurred during a reporting period. Certain of the Company’s time-and-materials contracts are subject to maximum contract values and, accordingly, when revenue is expected to exceed the maximum contract value, these contracts are generally recognized under the percentage-of-completion method, consistent with fixed price contracts. For unit-based contracts, the Company recognizes the contract price of units of a basic production product as revenue when the production product is delivered during a period. Revenue recognition for software licenses issued by the Energy segment is generally recognized at a point in time, utilizing the unit-based revenue recognition method, upon acceptance of the software by the customer and in recognition of the fulfillment of the performance obligation. Certain additional performance obligations beyond the base software license may be separated from the gross license fee and amortized over time. Revenue for amounts that have been billed but not earned is deferred, and such deferred revenue is referred to as contract liabilities in the accompanying condensed consolidated balance sheets.

To determine the proper revenue recognition method for contracts, the Company evaluates whether two or more contracts should be combined and accounted for as one single contract and whether the combined contract should be accounted for as one performance obligation. With respect to the Company’s contracts, it is rare that multiple contracts should be combined into a single performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate a single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. Contracts are considered to have a single performance obligation if the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts, which is mainly because the Company provides a significant service of integrating a complex set of tasks and components into a single project or capability.

The Company may enter into contracts that include separate phases or elements. If each phase or element is negotiated separately based on the technical resources required and/or the supply and demand for the services being provided, the Company evaluates if the contracts should be segmented. If certain criteria are met, the contracts would be segmented which could result in revenues being assigned to the different elements or phases with different rates of profitability based on the relative value of each element or phase to the estimated total contract revenue. Segmented contracts may comprise up to approximately 2.0% to 3.0% of the Company’s consolidated contract revenue.

Contracts that cover multiple phases or elements of the project or service lifecycle (development, construction and maintenance and support) may be considered to have multiple performance obligations even when they are part of a single contract. For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract. For the periods presented, contracts with multiple performance obligations were not material. In cases where the Company does not provide the distinct good or service on a standalone basis, the primary method used to estimate standalone selling price is the expected cost plus a margin approach, under which the Company forecasts the Company’s expected costs of satisfying a performance obligation and then adds an appropriate margin for the distinct good or service.

The Company provides quality of workmanship warranties to customers that are included in the sale and are not priced or sold separately or do not provide customers with a service in addition to assurance of compliance with agreed-upon specifications and industry standards. The Company does not consider these types of warranties to be separate performance obligations.

In some cases, the Company has a master service or blanket agreement with a customer under which each task order releases the Company to perform specific portions of the overall scope in the service contract. Each task order is typically accounted for as a separate contract because the task order establishes the enforceable rights and obligations, and payment terms.

Under ASC 606, variable consideration should be considered when determining the transaction price and estimates should be made for the variable consideration component of the transaction price, as well as assessing whether an estimate of variable consideration is constrained. For certain of the Company’s contracts, variable consideration can arise from modifications to the scope of services resulting from unapproved change orders or customer claims. Variable consideration is included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on assessments of legal enforceability, the Company’s performance, and all information (historical, current and forecasted) that is reasonably available to the Company.

Due to the nature of the work required to be performed on many of the Company’s performance obligations, the estimation of total revenue and cost at completion is complex, subject to many variables and requires significant judgment. As a significant change in one or more of these estimates could affect the profitability of the Company’s contracts, the Company reviews and updates the Company’s contract-related estimates regularly through a company-wide disciplined project review process in which management reviews the progress and execution of the Company’s performance obligations and the estimate at completion (EAC). As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule and the related changes in estimates of revenues and costs. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, the performance of subcontractors, and the availability and timing of funding from the customer, among other variables.

The Company recognizes adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance is recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes the full amount of estimated loss in the period it is identified.

Contracts are often modified to account for changes in contract specifications and requirements. The Company considers contract modifications to exist when the modification either creates new rights or obligations or changes the existing enforceable rights or obligations. Most of the Company’s contract modifications are for goods or services that are not distinct from existing contracts due to the significant integration provided in the context of the contract and are accounted for as if they were part of the original contract. The effect of a contract modification that is not distinct from the existing contract on the transaction price and the Company’s measure of progress for the performance obligation to which it relates is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.

For contract modifications that result in the promise to deliver goods or services that are distinct from the existing contract and the increase in price of the contract is for the same amount as the standalone selling price of the additional goods or services included in the modification, the Company accounts for such contract modifications as a separate contract.

The Company includes claims to vendors, subcontractors and others as a receivable and a reduction in recognized costs when enforceability of the claim is established by the contract and the amounts are reasonably estimable and probable of being recovered. The amounts are recorded up to the extent of the lesser of the amounts management expects to recover or to costs incurred.

Direct costs of contract revenue consist primarily of that portion of technical and nontechnical salaries and wages that has been incurred in connection with revenue producing projects. Direct costs of contract revenue also include production expenses, subcontractor services and other expenses that are incurred in connection with revenue producing projects.

Direct costs of contract revenue exclude that portion of technical and nontechnical salaries and wages related to marketing efforts, vacations, holidays and other time not spent directly generating revenue under existing contracts. Such costs are included in general and administrative expenses. Additionally, payroll taxes, bonuses and employee benefit costs for all Company personnel are included in general and administrative expenses in the accompanying consolidated statements of operations since no allocation of these costs is made to direct costs of contract revenue. No allocation of facilities costs is made to direct costs of contract revenue. Other companies may classify as direct costs of contract revenue some of the costs that the Company classifies as general and administrative costs. The Company expenses direct costs of contract revenue when incurred.

Included in revenue and costs are all reimbursable costs for which the Company has the risk or on which the fee was based at the time of bid or negotiation. No revenue or cost is recorded for costs in which the Company acts solely in the capacity of an agent and has no risks associated with such costs.

Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts based upon a review of all outstanding amounts on a quarterly basis. Management determines allowances for doubtful accounts through specific identification of amounts considered to be uncollectible and potential write-offs, plus a non-specific allowance for other amounts for which some potential loss has been determined to be probable based on current and past experience. The Company’s historical credit losses have been minimal with governmental entities and large public utilities, but disputes may arise related to these receivable amounts. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received.

Retainage, included in contract assets, represents amounts withheld from billings to the Company’s clients pursuant to provisions in the contracts and may not be paid to the Company until specific tasks are completed or the project is completed and, in some instances, for even longer periods. At September 28, 2018 and December 29, 2017, contract assets included retainage of approximately $6.9 million and $8.6 million, respectively.

Goodwill

Goodwill represents the excess of costs over fair value of the assets acquired. The Company completes its annual testing of goodwill as of the last day of the first month of its fourth fiscal quarter each year to determine whether there is impairment. Goodwill, which has an indefinite useful life, is not amortized, but instead tested for impairment at least annually or more frequently if events and circumstances indicate that the asset might be impaired. Impairment losses for reporting units are recognized to the extent that a reporting unit’s carrying amount exceeds its fair value.

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash, cash equivalents, accounts receivable, contract assets, other receivables, prepaid expenses and other current assets, accounts payable, accrued liabilities, contingent consideration and contract liabilities, and approximate their fair values because of the relatively short period of time between the origination of these instruments and their expected realization or payment. The carrying amounts of debt obligations and contingent consideration approximate their fair values since the terms are comparable to terms currently offered by local lending institutions for loans of similar terms to companies with comparable credit risk.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Estimates also affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Liquidity

As of September 28, 2018, the Company had $16.7 million of cash and cash equivalents. The Company’s primary source of liquidity is cash generated from operations. In addition, as of September 28, 2018, the Company also had a revolving line of credit with BMO Harris Bank, N.A. (“BMO”), which was scheduled to mature on January 20, 2020 (see Note 7 “Debt”), but which was refinanced on October 1, 2018 (see Note 12 “Subsequent Events”). The Company believes that its cash and cash equivalents on hand, cash generated by operating activities and funds available under its current line of credit (if needed and if available) will be sufficient to finance its operating activities for at least the next 12 months.

Adoption of New Accounting Standards

On December 30, 2017, the Company adopted ASC 606, using the modified retrospective method applied to those contracts which were not completed as of December 29, 2017. Prior to adopting ASC 606, it established an implementation team, which included senior managers from its finance and accounting group. The implementation team evaluated the impact of adopting ASC 606 on the Company’s contracts expected to be uncompleted as of December 30, 2017 (the date of adoption). The evaluation included reviewing the Company’s accounting policies and practices to identify differences that would result from applying the requirements of the new standard. The Company identified and made changes to its processes, systems and controls to support recognition and disclosure under the new standard. The implementation team worked closely with various professional consultants and attended several formal conferences and seminars to conclude on certain interpretative issues.

The Company recognizes engineering and consulting contract revenue over time using the percentage-of-completion method, based primarily on contract cost incurred to date compared to total estimated contract cost. Revenue on the vast majority of the Company’s contracts will continue to be recognized over time because of the continuous transfer of control to the customer. Revenue recognition for software licenses issued by the Energy segment is recognized at a point in time, upon acceptance of the software by the customer and in recognition of the fulfillment of the performance obligation. Certain additional performance obligations beyond the base software license may be separated from the gross license fee and amortized over time.

Results for operating periods beginning after December 30, 2017 are presented under ASC 606, while comparative information has not been restated and continues to be reported in accordance with the accounting standards in effect for those periods.

The Company recognized the cumulative effect of initially applying ASC 606 as an adjustment to retained earnings in the balance sheet as of December 30, 2017 as follows:


		Balance at		Adjustments		Balance at
		December 29,		Due to		December 30,
		2017		ASC 606		2017
Assets
Accounts receivable, net of allowance for doubtful accounts	$	38,441,000	$	(8,560,000)	$	29,881,000
Contract assets	$	24,732,000	$	9,328,000	$	34,060,000

Liabilities
Deferred income taxes, net	$	2,463,000	$	(215,000)	$	2,248,000

Equity
Retained earnings	$	19,588,000	$	553,000	$	20,141,000

The impact of adoption on the Company’s condensed consolidated balance sheet and cash flows for the nine month period ended September 28, 2018 was as follows:


		For the nine month period ended September 28, 2018
		As		Balances Without		Effect of Change
		Reported		Adoption of ASC 606		Higher/(Lower)
Assets
Accounts receivable, net of allowance for doubtful accounts	$	19,725,000	$	26,634,000	$	(6,909,000)
Contract assets	$	43,752,000	$	36,443,000	$	7,309,000

Liabilities
Deferred income taxes, net	$	1,582,000	$	1,731,000	$	(149,000)

Equity
Retained earnings	$	28,970,000	$	28,850,000	$	120,000

		For the nine month period ended September 28, 2018
		As		Balances Without		Effect of Change
		Reported		Adoption of ASC 606		Higher/(Lower)
Cash flows from operating activities
Accounts receivable, net of allowance for doubtful accounts	$	19,492,000	$	12,583,000	$	6,909,000
Contract assets		(18,252,000)		(11,343,000)		(6,909,000)
Total cash flows used in operating activities	$	1,240,000	$	1,240,000	$	0

The impact of adoption on the Company’s opening balance sheet was primarily related to deferred revenues and unrecognized license renewals associated with software license agreements currently in force reclassified to retained earnings, net of the deferred income tax impact and reclassification of amounts between accounts receivable net of allowance for doubtful accounts and contract assets based on whether an unconditional right to consideration has been established or not.

The impact of adoption on the Company’s balance sheet at September 28, 2018 was primarily related to conforming the accounting treatment of most of the Company’s non-cancellable software license contracts, which were previously recorded over time based on prior acceptable accounting methods, and now recognize the full amount of such licenses upon acceptance of the software by the customer.

The impact of adoption on the Company’s statement of operations was not material for the nine month period ended September 28, 2018.

Recent Accounting Pronouncements

Revenue Recognition

Effective December 30, 2017, the Company adopted ASC 606 using the modified retrospective approach. See Note 1 “Basis of Presentation, Organization and Operations of the Company—Adoption of New Accounting Standards” above for a discussion of the Company’s adoption of ASC 606.

Statement of Cash Flows

In August 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-15, Statement of Cash Flows: Clarification of Certain Cash Receipts and Cash Payments, which eliminates the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows, by adding or clarifying guidance on eight specific cash flow issues. ASU 2016-15 is effective for annual and interim reporting periods beginning after December 15, 2017. ASU 2016-15 provides for retrospective application for all periods presented. Effective December 30, 2017, the Company adopted ASU 2016-15 and the impact did not have a material effect on the Company’s condensed consolidated financial statements.

Leases

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The FASB issued this update to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of the update was permitted. The Company has developed a detailed plan to implement the new standard and, through a cross functional team, is assessing contractual arrangements that may qualify as leases under the new standard. Based on initial evaluations performed by the Company, the impact of the new standard will be an increase to right of use assets and lease liabilities on the Company’s consolidated balance sheet, primarily as a result of operating leases currently not recognized on the balance sheet. The Company expects to complete its evaluations of the impact of the new standard during the fourth quarter of 2018.

Proposed Accounting Standards

A variety of proposed or otherwise potential accounting standards are currently being studied by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, the Company has not yet determined the effect, if any, that the implementation of such proposed standards would have on its consolidated financial statements.

BUSINESS COMBINATIONS

9 Months Ended

Sep. 28, 2018

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS

2.BUSINESS COMBINATIONS

Acquisition of Newcomb Anderson McCormick

On April 30, 2018, the Company, through its wholly-owned subsidiary, WES, acquired all of the outstanding equity interests of Newcomb Anderson McCormick, Inc. (“NAM”). NAM is an energy engineering and consulting company with offices in San Francisco and Los Angeles that provides clients with mechanical engineering expertise and comprehensive energy efficiency programs and services. Pursuant to the terms of the Stock Purchase Agreement, dated April 30, 2018, by and among the Company, WES and NAM, WES will pay NAM shareholders a maximum purchase price of $4.0 million, subject to potential earn-out payments plus working capital adjustments, to be paid in cash. In connection with the Company’s New Credit Facilities (as defined herein), as of October 8, 2018, the earn-out payments to NAM shareholders became subject to certain subordination provisions in favor of BMO, as the Company’s senior secured lender, under the New Credit Facilities. The Company expects to finalize the purchase price allocation with respect to this transaction by the end of the second quarter of 2019. NAM’s financial information is included within the Energy segment.

Acquisition of Integral Analytics

On July 28, 2017, the Company and the Company’s wholly-owned subsidiary, WES, acquired all of the outstanding shares of Integral Analytics, Inc. (“Integral Analytics”), a data analytics and software company, pursuant to the Stock Purchase Agreement, dated July 28, 2017 (the “Purchase Agreement”), by and among Willdan Group, Inc., WES, Integral Analytics, the stockholders of Integral Analytics (the “IA Stockholders”) and the Sellers’ Representative (as defined therein). The Company believes the addition of Integral Analytics’ capabilities will improve the ability to target locational energy savings and microgrids and can provide a clear technical advantage on energy programs. Integral Analytics’ financial information is included within the Energy segment.

Pursuant to the terms of the Purchase Agreement, WES will pay the IA Stockholders a maximum purchase price of $30.0 million, consisting of (i) $15.0 million in cash paid at closing (subject to certain post-closing tangible net asset value adjustments), (ii) 90,611 shares of common stock, par value $0.01 per share, of Willdan Group, Inc. (“Common Stock”) issued at closing, equaling $3.0 million, calculated based on the volume-weighted average price of shares of Common Stock for the ten trading days immediately prior to, but not including, the closing date of the acquisition of Integral Analytics (the “Closing Date”) and (iii) up to $12.0 million in cash for a percentage of sales attributable to the business of Integral Analytics during the three years after the Closing Date, as more fully described below (such potential payments of up to $12.0 million, being referred to as “Earn-Out Payments” and $12.0 million in respect thereof, being referred to as the “Maximum Payout”). The Company used cash on hand for the $15.0 million cash payment paid at closing. As of September 30, 2018, we finalized the purchase price allocation (as detailed in the table below) with respect to this transaction.

The size of the Earn-Out Payments to be paid will be determined based on two factors. First, the IA Stockholders will receive 2% of gross contracted revenue for new work sold by the Company in close collaboration with Integral Analytics during the three years following the Closing Date (the “Earn-Out Period”). Second, the IA Stockholders will receive 20% of the gross contracted revenue specified in each executed and/or effective software licensing agreement, entered into by the Company or one of its affiliates that contains pricing either equal to or greater than standard pricing, of software offered for licensing by Integral Analytics during the Earn-Out Period. The amounts due to the IA Stockholders pursuant to these two factors will in no event, individually or in the aggregate, exceed the Maximum Payout. Earn-Out Payments will be made in quarterly installments for each year of the Earn-Out Period. For the purposes of both of these factors credit will be given to Integral Analytics for the gross contracted revenue in the quarter in which the contract/license is executed, regardless of when the receipt of payment thereunder is expected. The amount of gross contracted revenue for contracts with unfunded ceilings or of an indeterminate contractual value will be mutually agreed upon. Further, in the event of a change of control of WES during the Earn-Out Period, any then-unpaid amount of the Maximum Payout will be paid promptly to the IA Stockholders, even if such Earn-Out Payments have not been earned at that time. The Company has agreed to certain covenants regarding the operation of Integral Analytics during the Earn-Out Period, of which a violation by the Company could result in damages being paid to the IA Stockholders in respect of the Earn-Out. In addition, as of September 28, 2018, the Earn-Out Payments were subject to certain subordination provisions in favor of BMO, as the Company’s senior secured lender, under the Prior Credit Agreement (see Note 7 “Debt” below). In connection with the Company’s New Credit Facilities, as of October 6, 2018, the Earn-Out Payments became subject to certain subordination provisions in favor of BMO, as the Company’s senior secured lender, under the New Credit Facilities.

WES has also established a bonus pool for the employees of Integral Analytics to be paid based on Integral Analytics’ performance against certain targets.

The acquisition was accounted for as a business combination in accordance with ASC 805. Under ASC 805, the Company recorded the acquired assets and assumed liabilities at their estimated fair value with the excess allocated to goodwill. Goodwill represents the value the Company expects to achieve through the operational synergies and the expansion into new markets. The Company estimates that the entire $15.9 million of goodwill resulting from the acquisition will be tax deductible. Consideration for the acquisition includes the following information:


	Integral Analytics
Cash paid	$	15,000,000
Other payable for working capital adjustment		113,000
Issuance of common stock		3,100,000
Contingent consideration		5,600,000
Total consideration	$	23,813,000

The following table summarizes the final purchase price allocation for the acquired assets recorded at their estimated fair value as of the acquisition date:


	Integral Analytics
Current assets	$	626,000
Non-current assets		2,000
Cash		397,000
Property, plant and equipment		5,000
Liabilities		(946,000)
Customer relationships		1,200,000
Tradename		990,000
Developed technology		3,410,000
In-process technology		2,220,000
Goodwill		15,909,000
Net assets acquired	$	23,813,000

The following unaudited pro forma financial information for the three and nine months ended September 28, 2018 and September 29, 2017 assumes that acquisition of all the outstanding shares of Integral Analytics occurred on December 31, 2016 as follows:


	Three Months Ended				Nine Months Ended
	September 28,		September 29,		September 28,		September 29,
In thousands (except per share data)	2018		2017		2018		2017
Pro forma revenue	$	71,386	$	69,331	$	185,814	$	211,461

Pro forma income from operations	$	4,913	$	4,071	$	11,092	$	8,997
Pro forma net income	$	3,314	$	2,812	$	8,864	$	7,076

Earnings per share:
Basic	$	0.37	$	0.32	$	1.01	$	0.82
Diluted	$	0.35	$	0.30	$	0.95	$	0.77

Weighted average shares outstanding:
Basic		8,844		8,730		8,798		8,598
Diluted		9,343		9,248		9,283		9,140

This pro forma supplemental information does not purport to be indicative of what the Company’s operating results would have been had this transaction occurred on December 31, 2016 and may not be indicative of future operating results.

During the three and nine months ended September 28, 2018, the acquisition of all of the outstanding shares of Integral Analytics contributed $2.5 million and $5.0 million in revenue and $1.0 million and $0.9 million income from operations, respectively. There were no acquisition related costs recorded during the three and nine month period ended September 28, 2018.

GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 28, 2018

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

3.GOODWILL AND OTHER INTANGIBLE ASSETS

As of September 28, 2018, the Company had $40.2 million of goodwill, which primarily relates to the Energy reporting segment and the acquisitions within this segment of NAM, Integral Analytics and Abacus Resource Management Company (“Abacus”) and substantially all of the assets of Genesys and 360 Energy Engineers, LLC (“360 Energy”). The remaining goodwill relates to the Engineering and Consulting reporting segment and the acquisition within this segment of Economists.com, LLC. The changes in the carrying value of goodwill by reporting unit for the nine months ended September 28, 2018 were as follows:


	December 29,		Additions /		September 28,
Reporting Unit	2017		Adjustments		2018
Energy	$	37,435,000	$	2,003,000	$	39,438,000
Engineering and Consulting		749,000		—		749,000
	$	38,184,000	$	2,003,000	$	40,187,000

The gross amounts and accumulated amortization of the Company’s acquired identifiable intangible assets with finite useful lives as of September 28, 2018 included in other intangible assets, net in the accompanying condensed consolidated balance sheets, were as follows:


	September 28, 2018				December 29, 2017
	Gross		Accumulated		Gross		Accumulated		Amortization
	Amount		Amortization		Amount		Amortization		Period (yrs)
Backlog	$	1,784,000	$	1,305,000	$	1,398,000	$	989,000			5.0
Tradename		3,911,000		2,696,000		3,779,000		2,050,000	2.5	-	6.0
Non-compete agreements		1,420,000		966,000		1,331,000		745,000			4.0
Developed Technology		3,410,000		497,000		2,760,000		144,000			8.0
In-process Research & Technology		2,220,000		—		1,650,000		—			—
Customer relationships		5,069,000		1,896,000		4,960,000		1,284,000	5.0	-	8.0
	$	17,814,000	$	7,360,000	$	15,878,000	$	5,212,000

The Company’s amortization expense for acquired identifiable intangible assets with finite useful lives was $0.7 million and $2.1 million for the fiscal three and nine months ended September 28, 2018 as compared to $0.7 million and $1.8 million for the fiscal three and nine months ended September 29, 2017. Estimated amortization expense for acquired identifiable intangible assets for the remainder of fiscal year 2018 is $0.9 million and the succeeding years are as follows:


Fiscal year:
2019	$	2,348,000
2020		1,936,000
2021		1,244,000
2022		1,058,000
2023		981,000
Thereafter		1,991,000
	$	9,558,000

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

EARNINGS PER SHARE (EPS)

9 Months Ended

Sep. 28, 2018

EARNINGS PER SHARE (EPS)

EARNINGS PER SHARE (EPS)

4.EARNINGS PER SHARE (EPS)

Basic EPS is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding. Diluted EPS is computed by dividing net income by the weighted-average number of common shares outstanding and dilutive potential common shares for the period. Potential common shares include the weighted-average dilutive effects of outstanding stock options and restricted stock awards using the treasury stock method.

The following table sets forth the number of weighted-average common shares outstanding used to compute basic and diluted EPS:


	Three months ended				Nine months ended
	September 28,		September 29,		September 28,		September 29,
	2018		2017		2018		2017
Net income	$	3,311,000	$	2,886,000	$	8,829,000	$	8,839,000
Weighted-average common shares outstanding		8,844,000		8,730,000		8,798,000		8,580,000
Effect of dilutive stock options and restricted stock awards		499,000		518,000		485,000		558,000
Weighted-average common shares outstanding-diluted		9,343,000		9,248,000		9,283,000		9,138,000
Earnings per share:
Basic	$	0.37	$	0.33	$	1.00	$	1.03
Diluted	$	0.35	$	0.31	$	0.95	$	0.97

For the three and nine months ended September 28, 2018, 241,000 and 215,000 options were excluded from the calculation of dilutive potential common shares, as compared to 137,000 and 89,000 options for the three and nine months ended September 29, 2017, respectively. These options were not included in the computation of dilutive potential common shares because the assumed proceeds per share exceeded the average market price per share for the 2018 and 2017 periods. Accordingly, the inclusion of these options would have been anti-dilutive.

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

9 Months Ended

Sep. 28, 2018

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

5.EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

Equipment and leasehold improvements consist of the following:


	September 28,		December 29,
	2018		2017
Furniture and fixtures	$	3,159,000	$	3,011,000
Computer hardware and software		8,815,000		8,355,000
Leasehold improvements		1,138,000		1,121,000
Equipment under capital leases		1,221,000		1,095,000
Automobiles, trucks, and field equipment		2,117,000		2,100,000
		16,450,000		15,682,000
Accumulated depreciation and amortization		(11,408,000)		(10,376,000)
Equipment and leasehold improvements, net	$	5,042,000	$	5,306,000

ACCRUED LIABILITIES

9 Months Ended

Sep. 28, 2018

ACCRUED LIABILITIES

ACCRUED LIABILITIES

6.ACCRUED LIABILITIES

Accrued liabilities consist of the following:


	September 28,		December 29,
	2018		2017
Accrued bonuses	$	2,331,000	$	2,687,000
Accrued interest		—		5,000
Paid leave bank		2,824,000		2,533,000
Compensation and payroll taxes		1,180,000		1,859,000
Accrued legal		103,000		103,000
Accrued workers’ compensation insurance		87,000		305,000
Accrued rent		233,000		192,000
Employee withholdings		995,000		1,812,000
Client deposits		152,000		92,000
Accrued subcontractor costs		12,521,000		13,103,000
Other		1,378,000		602,000
Total accrued liabilities	$	21,804,000	$	23,293,000

DEBT

9 Months Ended

Sep. 28, 2018

DEBT

DEBT

7.DEBT

Total debt obligations consist of the following:


	September 28,		December 29,
	2018		2017
Outstanding borrowings on revolving credit facility	$	—	$	2,500,000
Deferred purchase price for the acquisition of substantially all of the assets of Genesys, bearing interest at 0.650%, payable in monthly principal and interest installments of $191,667 through March 2018.		—		383,000
Total debt obligations		—		2,883,000
Less current portion		—		383,000
Debt obligations, less current portion	$	—	$	2,500,000

Credit Facility

On January 20, 2017, the Company and each of its subsidiaries, as guarantors (the “Guarantors”), entered into an Amended and Restated Credit Agreement (the “Prior Credit Agreement”) with BMO as lender. On October 1, 2018, the Company replaced the Prior Credit Agreement with the New Credit Facilities (as defined herein) as described in Note 12 “Subsequent Events”. The Prior Credit Agreement provided for a $35.0 million revolving line of credit, which included a $10.0 million standby letter of credit sub-facility, and was scheduled to mature on January 20, 2020. Subject to satisfying certain conditions described in the Prior Credit Agreement, the Company could request that BMO increase the aggregate amount under the revolving line of credit by up to $25.0 million, for a total facility size of $60.0 million; however, BMO was not obligated to do so. The revolving line of credit under the Prior Credit Agreement was not subject to a borrowing base limitation and the Prior Credit Agreement did not include a delayed draw term loan facility.

Borrowings under the Prior Credit Agreement bore interest at a rate equal to either, at the Company’s option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.5% or one-month LIBOR plus 1% (the “Base Rate”) or (ii) LIBOR, in each case plus an applicable margin ranging from 0.25% to 1.00% with respect to Base Rate borrowings and 1.25% to 2.00% with respect to LIBOR borrowings. The applicable margin was based upon the consolidated leverage ratio of the Company. The Company was also required to pay a commitment fee for the unused portion of the revolving line of credit, which ranged from 0.20% to 0.35% per annum, and fees on any letters of credit drawn under the facility, which ranged from 0.94% to 1.50%, in each case, depending on the Company’s consolidated leverage ratio.

Borrowings under the revolving line of credit were guaranteed by all of the Company’s direct and indirect subsidiaries and secured by substantially all of the Company’s and the Guarantors’ assets.

The Prior Credit Agreement contained customary representations and affirmative covenants, including certain notice and financial reporting requirements. The Prior Credit Agreement also required compliance with financial covenants that required the Company to maintain a maximum total leverage ratio and a minimum fixed charge coverage ratio.

The Prior Credit Agreement contained customary negative covenants, including (i) restrictions on the incurrence of additional indebtedness by the Company or the Guarantors and the incurrence of additional liens on property, (ii) restrictions on permitted acquisitions, including that the total consideration payable for all permitted acquisitions (including potential future earn-out obligations) could not exceed $20.0 million during the term of the Prior Credit Agreement and the total consideration for any individual permitted acquisition could not exceed $10.0 million without BMO’s consent, and (iii) limitations on asset sales, mergers and acquisitions. Further, the Prior Credit Agreement limited the payment of future dividends and distributions and share repurchases by the Company; however, the Company was permitted to repurchase up to $8.0 million of shares of common stock under certain conditions, including that, at the time of any such repurchase, (a) the Company was able to meet the financial covenant requirements under the Prior Credit Agreement after giving effect to the share repurchase, (b) the Company had at least $5.0 million of liquidity (unrestricted cash or undrawn availability under the Prior Credit Agreement’s revolving line of credit), and (c) no default existed or would arise under the Prior Credit Agreement after giving effect to such repurchase. In addition, the Prior Credit Agreement included customary events of default. Upon the occurrence of an event of default, the interest rate would be increased by 2.0%, BMO had the option to make any loans then outstanding under the Prior Credit Agreement immediately due and payable, and BMO was no longer obligated to extend further credit to the Company under the Prior Credit Agreement.

As of September 28, 2018, the Company was in compliance with the financial covenants under the Prior Credit Agreement.

Deferred Purchase Price

The Asset Purchase and Merger Agreement for the acquisition of substantially all of the assets of Genesys dated March 4, 2016, included deferred payments to Messrs. Braun and Mineo in the amount of $2.3 million (“Deferred Payments”), each. The Deferred Payments were paid in twenty-four (24) equal monthly installments in the amount of $95,834, inclusive of interest at the rate of 0.65% per annum. Payments commenced on April 4, 2016 and concluded on March 4, 2018. From March 4, 2016 through March 4, 2018, the Company made payments of $4.6 million inclusive of interest. As of September 28, 2018, there were no outstanding balances for either Messrs. Braun or Mineo.

Insurance Premiums

The Company has also financed, from time to time, insurance premiums by entering into unsecured notes payable with insurance companies. During the Company’s annual insurance renewals in the fourth quarter of its fiscal year ended December 29, 2017, the Company did not elect to finance its insurance premiums for the 2018 fiscal year. The Company has not yet completed its annual insurance renewals for the 2019 fiscal year.

COMMITMENTS	9 Months Ended
COMMITMENTS	Sep. 28, 2018
COMMITMENTS
COMMITMENTS	8.COMMITMENTS Leases The Company is obligated under capital leases for certain furniture and office equipment that expire at various dates through the year 2021. The Company also leases certain office facilities under non-cancelable operating leases that expire at various dates through the year 2023. Employee Benefit Plans The Company has a qualified profit sharing plan pursuant to Code Section 401(a) and qualified cash or deferred arrangement pursuant to Code Section 401(k) covering substantially all employees. Employees may elect to contribute up to 50% of their compensation limited to the amount allowed by tax laws. Company contributions are made solely at the discretion of the Company’s board of directors. The Company has a discretionary bonus plan for regional managers, division managers and others as determined by the president and chief executive officer of the Company. Bonuses are awarded if certain financial goals are achieved. The financial goals are not stated in the plan; rather they are judgmentally determined each year. In addition, the board of directors may declare discretionary bonuses to key employees and all employees are eligible for bonuses for outstanding performance. The Company’s compensation committee of the board of directors determines the compensation of the president and chief executive officer and other executive officers. Post-Employment Health Benefits In May 2006, the Company’s board of directors approved providing lifetime health insurance coverage for Win Westfall, the Company’s former chief executive officer and former member of the board of directors, and his spouse and for Linda Heil, the widow of the Company’s former chief executive officer, Dan Heil. These benefits relate to past services provided to the Company. Accordingly, there is no unamortized compensation cost for the benefits.

INCOME TAXES	9 Months Ended
INCOME TAXES	Sep. 28, 2018
INCOME TAXES
INCOME TAXES	9.INCOME TAXES Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial reporting basis and tax basis of the Company’s assets and liabilities, subject to a judgmental assessment of the recoverability of deferred tax assets. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded when it is more-likely-than-not that some of the deferred tax assets may not be realized. Significant judgment is applied when assessing the need for valuation allowances. Areas of estimation include the Company’s consideration of future taxable income and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in judgment about the utilization of deferred tax assets in future years, the Company would adjust the related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law, which, among other items, lowered the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018. Shortly after the Tax Act was enacted, the SEC issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) to address the application of GAAP and direct taxpayers to consider the impact of the Tax Act as “provisional” when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for the change in tax law. SAB 118 provided a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. As of September 28, 2018, the Company has completed its accounting for the income tax effects of the Tax Act. During each fiscal year, management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize existing deferred tax assets. For fiscal year 2017, the Company ultimately determined that it was more-likely-than-not that the entire California net operating loss will not be utilized prior to expiration. Significant pieces of objective evidence evaluated included the Company’s history of utilization of California net operating losses in prior years for each of its subsidiaries, as well as the Company’s forecasted amount of net operating loss utilization for certain members of the combined group. As a result, the Company recorded a valuation allowance in the amount of $87,000 at the end of fiscal year 2017 related to California net operating losses. There was no change to the valuation allowance during the nine month period ended September 28, 2018. For acquired business entities, if the Company identifies changes to acquired deferred tax asset valuation allowances or liabilities related to uncertain tax positions during the measurement period and they relate to new information obtained about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement period adjustment and the Company records the offset to goodwill. The Company records all other changes to deferred tax asset valuation allowances and liabilities related to uncertain tax positions in current period income tax expense. The Company recognizes the tax benefit from uncertain tax positions if it is more likely than not that the tax positions will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. As of September 28, 2018, the Company recorded a liability of $0.4 million for uncertain tax positions related to miscellaneous tax deductions taken in open tax years. Included in this amount are $0.4 million of tax benefits that, if recognized, would affect the effective tax rate. No interest and penalties have been recorded related to unrecognized tax benefits as of September 28, 2018. Based on management’s estimates and determination of an effective tax rate for the year, the Company recorded an income tax expense of $1.6 million and $2.2 million for the three and nine months ended September 28, 2018, as compared to an income tax expense of $1.3 million and $1.8 million for the three and nine months ended September 29, 2017, respectively. During the three and nine months ended September 28, 2018, the difference between the effective tax rate and the federal statutory rate is primarily attributable to tax deductions related to Section 179D deductions, the recognition of tax deductions related to non-qualified stock option exercises and disqualifying dispositions under the Company’s employee stock purchase plan. In accordance with ASU 2016-09 (see Note 1 “Basis of Presentation, Organization and Operations of the Company”), the income tax benefit related to these deductions has been included as a reduction of 7.6% to the Company’s effective tax rate for the nine months ended September 28, 2018. The effective tax rate also varies from the federal statutory rate due to the impact of state income tax expense and certain expenses that are non-deductible for tax purposes, including meals and entertainment, compensation expense related to employee stock purchase and incentive stock options. During the three months ended September 28, 2018, the Internal Revenue Service continued its audit of the Company’s tax return for the fiscal year ended December 30, 2016. The Company has not determined the impact of this examination due to the audit process having not been completed.

SEGMENT INFORMATION

9 Months Ended

Sep. 28, 2018

SEGMENT INFORMATION

SEGMENT INFORMATION

10.SEGMENT INFORMATION

During the three months ended March 30, 2018, the Company revised its segment reporting to conform to changes in its internal management reporting. Segment information has been revised for comparison purposes for all periods presented in the condensed consolidated financial statements. As a result, beginning with the three months ended March 30, 2018, the Company’s two segments are (i) Energy and (ii) Engineering and Consulting, and the Company’s chief operating decision maker, which continues to be its chief executive officer, receives and reviews financial information in this format.

The Company’s principal segment, Energy, which consists of the business of its subsidiary WES, remains unchanged. WES provides energy efficiency consulting services to utilities, public agencies, municipalities, private industry and non-profit organizations. The Engineering and Consulting segment includes the operation of the Company’s remaining subsidiaries, Willdan Engineering, Willdan Infrastructure, Public Agency Resources, Willdan Financial Services and Willdan Homeland Solutions. The Engineering and Consulting segment combines the Company’s previous Engineering Services segment, Public Finance Services segment and Homeland Security Services segment. The former Public Finance Services segment and former Homeland Security Services segment represent an insignificant portion of the Engineering and Consulting segment. The Engineering and Consulting segment offers a broad range of engineering and planning services to the Company’s public and private sector clients, expertise and support for the various financing techniques employed by public agencies to finance their operations and infrastructure along with the mandated reporting and other requirements associated with these financings, and national preparedness, homeland security consulting, public safety and emergency response services to cities, related municipal service agencies and other entities.

The accounting policies applied to determine the segment information are the same as those described in the summary of significant accounting policies included in the Company’s Annual Report on Form 10-K for the year ended December 29, 2017. There were no intersegment sales in the three month periods ended September 28, 2018 and September 29, 2017. The Company’s chief operating decision maker evaluates the performance of each segment based upon income or loss from operations before income taxes. Certain segment asset information including expenditures for long-lived assets has not been presented as it is not reported to or reviewed by the chief operating decision maker. In addition, enterprise-wide service line contract revenue is not included as it is impracticable to report this information for each group of similar services.

Financial information with respect to the reportable segments as of and for the fiscal three and nine months ended September 28, 2018 and as of and for the fiscal three and nine months ended September 29, 2017 is as follows:


			Engineering		Unallocated				Consolidated
	Energy		& Consulting		Corporate		Intersegment		Total
Fiscal Three Months Ended September 28, 2018
Contract revenue	$	50,085,000	$	21,301,000	$	—	$	—	$	71,386,000
Segment profit (loss) before income tax expense		4,349,000		2,395,000		(1,836,000)		—		4,908,000
Net income (loss)		2,934,000		1,616,000		(1,239,000)		—		3,311,000
Segment assets(1)		103,752,000		20,057,000		39,930,000		(23,130,000)		140,609,000
Fiscal Three Months Ended September 29, 2017
Contract revenue	$	50,031,000	$	18,976,000	$	—	$	—	$	69,007,000
Segment profit before income tax expense		825,000		2,801,000		552,000		—		4,178,000
Net income		570,000		1,934,000		382,000		—		2,886,000
Segment assets(1)		74,955,000		20,047,000		58,980,000		(23,130,000)		130,852,000
Fiscal Nine Months Ended September 28, 2018
Contract revenue	$	129,143,000	$	56,671,000	$	—	$	—	$	185,814,000
Segment profit (loss) before income tax expense		7,483,000		5,801,000		(2,231,000)		—		11,053,000
Net income (loss)		5,977,000		4,634,000		(1,782,000)		—		8,829,000
Segment assets(1)		103,752,000		20,057,000		39,930,000		(23,130,000)		140,609,000
Fiscal Nine Months Ended September 29, 2017
Contract revenue	$	153,877,000	$	55,314,000	$	—	$	—	$	209,191,000
Segment profit before income tax expense		3,519,000		7,142,000		17,000		—		10,678,000
Net income		2,913,000		5,911,000		15,000		—		8,839,000
Segment assets(1)		74,955,000		20,047,000		58,980,000		(23,130,000)		130,852,000

(1)

Segment assets represent segment assets, net of intercompany receivables.

CONTINGENCIES	9 Months Ended
CONTINGENCIES	Sep. 28, 2018
CONTINGENCIES
CONTINGENCIES	11.CONTINGENCIES Claims and Lawsuits The Company is subject to claims and lawsuits from time to time, including those alleging professional errors or omissions that arise in the ordinary course of business against firms that operate in the engineering and consulting professions. The Company carries professional liability insurance, subject to certain deductibles and policy limits, for such claims as they arise and may from time to time establish reserves for litigation that is considered probable of a loss. In accordance with accounting standards regarding loss contingencies, the Company accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and discloses the amount accrued and an estimate of any reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for the Company’s financial statements not to be misleading. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote. Because litigation outcomes are inherently unpredictable, the Company’s evaluation of legal proceedings often involves a series of complex assessments by management about future events and can rely heavily on estimates and assumptions. If the assessments indicate that loss contingencies that could be material to any one of the Company’s financial statements are not probable, but are reasonably possible, or are probable, but cannot be estimated, then the Company will disclose the nature of the loss contingencies, together with an estimate of the possible loss or a statement that such loss is not reasonably estimable. While the consequences of certain unresolved proceedings are not presently determinable, and a reasonable estimate of the probable and reasonably possible loss or range of loss in excess of amounts accrued for such proceedings cannot be made, an adverse outcome from such proceedings could have a material adverse effect on the Company’s earnings in any given reporting period. However, in the opinion of the Company’s management, after consulting with legal counsel, and taking into account insurance coverage, the ultimate liability related to current outstanding claims and lawsuits is not expected to have a material adverse effect on the Company’s financial statements.

SUBSEQUENT EVENTS

9 Months Ended

Sep. 28, 2018

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

12. SUBSEQUENT EVENTS

Merger Agreement

On October 1, 2018, the Company, through two of its wholly-owned subsidiaries, WES and Luna Fruit, Inc. (“Merger Sub”), a Delaware corporation and wholly-owned subsidiary of WES, entered into an agreement and plan of merger (the “Merger Agreement”) with Lime Energy Co. (“Lime Energy”) and Luna Stockholder Representative, LLC, as representative of the participating securityholders of Lime Energy, to acquire, subject to certain conditions, all of the outstanding shares of capital stock of Lime Energy through a merger of Merger Sub into Lime Energy, with Lime Energy to remain as the surviving corporation and the Company’s wholly-owned indirect subsidiary. The aggregate purchase price of the acquisition of Lime Energy is $120.0 million, subject to customary holdbacks and adjustments, including a portion of the purchase price to be deposited into escrow accounts to secure potential post-closing obligations of the participating securityholders.

The Company expects to close the acquisition of Lime Energy during the fourth quarter of 2018. Lime Energy’s stockholders holding more than 75% of the combined voting power of the outstanding shares of capital stock of Lime Energy have adopted the Merger Agreement by written consent. The closing is subject to the satisfaction or waiver of certain customary conditions, including obtaining clearance under the Hart-Scott-Rodino Antitrust Improvements Act. There is no assurance that the Company will complete the acquisition of Lime Energy on the terms provided for in the Merger Agreement, or at all.

Lime Energy may terminate the Merger Agreement if the Company fails to close the acquisition within two business days after the date the closing is required to take place and such failure arises from the Company’s failure to receive the proceeds from the New Credit Facilities (as defined below) described below or the Company’s refusal to accept a new financing commitment that provides for at least the same amount of financing as the New Credit Facilities and on terms that are not materially less favorable to the Company than the New Credit Facilities, provided that the closing conditions under the Merger Agreement are otherwise satisfied or waived. If Lime Energy terminates the Merger Agreement as a result of the preceding sentence, and the closing conditions under the Merger Agreement are otherwise satisfied or waived, the Company must pay Lime Energy a reverse termination fee of $3.6 million.

Either Lime Energy or the Company may terminate the Merger Agreement, among other reasons, if the acquisition is not completed by December 31, 2018 or if the other party is in breach of any representation, warranty or covenant in the Merger Agreement, which cannot be or has not been cured within thirty days after the giving of written notice.

New Credit Facilities

On October 1, 2018, in connection with signing the Merger Agreement, the Company entered into a credit agreement (the “Credit Agreement”) with a syndicate of financial institutions as lenders and BMO Harris Bank, N.A. (“BMO”), as administrative agent.

The Credit Agreement provides for up to a $90.0 million delayed draw term loan facility (the “Delayed Draw Term Loan Facility”) and a $30.0 million revolving credit facility (the “Revolving Credit Facility” and together with the Delayed Draw Term Loan Facility, the “New Credit Facilities”), each maturing on October 1, 2023. On October 9, 2018, as a result of the Company’s completed equity offering (as discussed below), the amount available for borrowing under the Delayed Draw Term Loan Facility was reduced to $70.0 million. The Company may borrow under the Delayed Draw Term Loan Facility until December 31, 2018; provided that the Company must satisfy certain conditions, including, but not limited to, that:

 no default has occurred under the Credit Agreement and is continuing or would occur as a result of the acquisition of Lime Energy and borrowings under the Credit Agreement;

 the acquisition of Lime Energy has been approved by the board of directors and the requisite percentage of stockholders of Lime Energy (both of which have already occurred), and all necessary legal and regulatory approvals with respect to the acquisition have been obtained;

 there is no injunction, temporary restraining order, or other legal action in effect that would prohibit the closing of the acquisition of Lime Energy or the closing and funding under the Credit Agreement;

 the acquisition of Lime Energy has been completed pursuant to the Merger Agreement without giving effect to any amendment, modification or waiver to the Merger Agreement that would materially and adversely affect the Company’s financial condition or the Company’s ability to perform its obligations under the Credit Agreement;

 Lime Energy and its subsidiaries (other than inactive subsidiaries) have been, or concurrently with the making of the Delayed Draw Term Loan Facility will be, added as subsidiary guarantors to the Credit Agreement;

 after giving effect to the acquisition of Lime Energy and borrowings under the Credit Agreement, the Company, on a consolidated basis, is solvent, able to pay debts as they become due, and has sufficient capital to carry on its business and all businesses in which it is about to engage;

 since December 31, 2017, there has been no change in the condition (financial or otherwise) or business prospects of Lime Energy and its subsidiaries except those occurring in the ordinary course of business, none of which individually or in the aggregate could reasonably be expected to have a material adverse effect; and

the Company has certified that its adjusted EBITDA (as defined in the Credit Agreement) for the most recently ended twelve months is at least $32.8 million and that its consolidated total leverage ratio on the closing date of the acquisition of Lime Energy does not exceed 4.00 to 1.00 calculated based on such adjusted EBITDA, provided that calculations are made on a pro forma basis after giving effect to the acquisition of Lime Energy and borrowings under the Credit Agreement in connection therewith.

If the Company is unable to satisfy the conditions precedent to borrow under the Delayed Draw Term Loan Facility and does not secure alternative financing sources, the Company would not be able to complete the acquisition of Lime Energy.

Subject to satisfying certain conditions, the Company has the right to add an incremental term loan facility or increase the aggregate commitment under the Revolving Credit Facility by an aggregate amount of up to $30.0 million. The Credit Agreement replaced the Company’s Prior Credit Agreement, which, in various forms, had been in place since 2014.

The New Credit Facilities bear interest at a rate equal to either, at the Company’s option, (i) the highest of the prime rate, the Federal Funds Rate plus 0.50% or one-month LIBOR plus 1.00% (“Base Rate”) or (ii) LIBOR, in each case plus an applicable margin ranging from 0.25% to 3.00% with respect to Base Rate borrowings and 1.25% to 4.00% with respect to LIBOR borrowings. The applicable margin is based upon the consolidated total leverage ratio of the Company. The Company will also pay a commitment fee for the unused portion of the Revolving Credit Facility, which ranges from 0.20% to 0.40% per annum depending on the Company’s consolidated total leverage ratio, and fees on the face amount of any letters of credit outstanding under the Revolving Credit Facility, which range from 0.94% to 4.00% per annum, in each case, depending on whether such letter of credit is a performance or financial letter of credit and the Company’s consolidated total leverage ratio. The Company will pay a ticking fee on the outstanding amount of commitments for the Delayed Draw Term Loan Facility of 0.40% per year from the date of the Credit Agreement until the Delayed Draw Term Loan Facility is drawn or the commitments thereunder are terminated. The Delayed Draw Term Loan Facility will amortize quarterly in an amount equal to 10% annually, with a final payment of all then remaining principal due on the maturity date on October 1, 2023.

Willdan Group, Inc. is the borrower under the Credit Agreement and its obligations under the Credit Agreement are guaranteed by its present and future domestic subsidiaries (other than inactive subsidiaries), including, if the Company completes the merger, Lime Energy and its subsidiaries (other than inactive subsidiaries). In addition, subject to certain exceptions, all such obligations are secured by substantially all of the assets of Willdan Group, Inc. and the subsidiary guarantors, including, if the Company completes the merger, Lime Energy and its subsidiaries (other than inactive subsidiaries).

The Credit Agreement requires compliance with financial covenants, including a maximum total leverage ratio and a minimum fixed charge coverage ratio. The Credit Agreement also contains customary restrictive covenants, including (i) restrictions on the incurrence of additional indebtedness and additional liens on property, (ii) restrictions on permitted acquisitions and other investments and (iii) limitations on asset sales, mergers and acquisitions. Further, the Credit Agreement limits the Company’s payment of future dividends and distributions and share repurchases by the Company. Subject to certain exceptions, the New Credit Facilities are also subject to mandatory prepayment from (a) any issuances of debt or equity securities, (b) any sale or disposition of assets, (c) insurance and condemnation proceeds (d) representation and warranty insurance proceeds related to the Merger Agreement and (e) excess cash flow. The Credit Agreement includes customary events of default.

The Company intends to use the proceeds from the New Credit Facilities, among other things, to fund a portion of the purchase price of the acquisition of Lime Energy and related transaction expenses and for general corporate purposes, which may include the repayment of debt.

Equity Offering

On October 9, 2018, the Company completed an equity offering of 2,012,500 shares of common stock (which included 262,500 shares of common stock issued upon the exercise by the underwriters of their option to purchase additional shares of common stock) at a price of $28.05 per share, after deducting underwriters discounts and commissions. The Company received $56.5 million in net proceeds, after deducting underwriters discounts and commissions.

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY (Policies)

9 Months Ended

Sep. 28, 2018

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY

Basis of Presentation

Principles of Consolidation

Segment Information

Contract Assets and Liabilities

Contract Accounting

The following table reflects the Company’s two reportable segments and the types of contracts that each most commonly enters into for revenue generating activities.


Segment	Contract Type	Revenue Recognition Method
	Time-and-materials	Time-and-materials
Energy	Unit-based	Unit-based
	Software license	Unit-based
	Fixed price	Percentage-of-completion
	Time-and-materials	Time-and-materials
Engineering and Consulting	Unit-based	Unit-based
	Fixed price	Percentage-of-completion
	Service-related	Proportional performance

Goodwill

Fair Value of Financial Instruments

Use of Estimates

Liquidity

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY (Tables)

9 Months Ended

Sep. 28, 2018

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY

Schedule of contracts by reportable segments and type of contracts


Segment	Contract Type	Revenue Recognition Method
	Time-and-materials	Time-and-materials
Energy	Unit-based	Unit-based
	Software license	Unit-based
	Fixed price	Percentage-of-completion
	Time-and-materials	Time-and-materials
Engineering and Consulting	Unit-based	Unit-based
	Fixed price	Percentage-of-completion
	Service-related	Proportional performance

Schedule of cumulative effect of initially applying ASC 606 as an adjustment to retained earnings

The Company recognized the cumulative effect of initially applying ASC 606 as an adjustment to retained earnings in the balance sheet as of December 30, 2017 as follows:


		Balance at		Adjustments		Balance at
		December 29,		Due to		December 30,
		2017		ASC 606		2017
Assets
Accounts receivable, net of allowance for doubtful accounts	$	38,441,000	$	(8,560,000)	$	29,881,000
Contract assets	$	24,732,000	$	9,328,000	$	34,060,000

Liabilities
Deferred income taxes, net	$	2,463,000	$	(215,000)	$	2,248,000

Equity
Retained earnings	$	19,588,000	$	553,000	$	20,141,000

The impact of adoption on the Company’s condensed consolidated balance sheet and cash flows for the nine month period ended September 28, 2018 was as follows:


		For the nine month period ended September 28, 2018
		As		Balances Without		Effect of Change
		Reported		Adoption of ASC 606		Higher/(Lower)
Assets
Accounts receivable, net of allowance for doubtful accounts	$	19,725,000	$	26,634,000	$	(6,909,000)
Contract assets	$	43,752,000	$	36,443,000	$	7,309,000

Liabilities
Deferred income taxes, net	$	1,582,000	$	1,731,000	$	(149,000)

Equity
Retained earnings	$	28,970,000	$	28,850,000	$	120,000

		For the nine month period ended September 28, 2018
		As		Balances Without		Effect of Change
		Reported		Adoption of ASC 606		Higher/(Lower)
Cash flows from operating activities
Accounts receivable, net of allowance for doubtful accounts	$	19,492,000	$	12,583,000	$	6,909,000
Contract assets		(18,252,000)		(11,343,000)		(6,909,000)
Total cash flows used in operating activities	$	1,240,000	$	1,240,000	$	0

BUSINESS COMBINATIONS (Tables)

9 Months Ended

Sep. 28, 2018

BUSINESS COMBINATIONS

Schedule of consideration for the acquisition


	Integral Analytics
Cash paid	$	15,000,000
Other payable for working capital adjustment		113,000
Issuance of common stock		3,100,000
Contingent consideration		5,600,000
Total consideration	$	23,813,000

Schedule of amounts for the acquired assets recorded at their estimated fair value as of the acquisition date


	Integral Analytics
Current assets	$	626,000
Non-current assets		2,000
Cash		397,000
Property, plant and equipment		5,000
Liabilities		(946,000)
Customer relationships		1,200,000
Tradename		990,000
Developed technology		3,410,000
In-process technology		2,220,000
Goodwill		15,909,000
Net assets acquired	$	23,813,000

Schedule of unaudited pro forma financial information


	Three Months Ended				Nine Months Ended
	September 28,		September 29,		September 28,		September 29,
In thousands (except per share data)	2018		2017		2018		2017
Pro forma revenue	$	71,386	$	69,331	$	185,814	$	211,461

Pro forma income from operations	$	4,913	$	4,071	$	11,092	$	8,997
Pro forma net income	$	3,314	$	2,812	$	8,864	$	7,076

Earnings per share:
Basic	$	0.37	$	0.32	$	1.01	$	0.82
Diluted	$	0.35	$	0.30	$	0.95	$	0.77

Weighted average shares outstanding:
Basic		8,844		8,730		8,798		8,598
Diluted		9,343		9,248		9,283		9,140

GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 28, 2018

GOODWILL AND OTHER INTANGIBLE ASSETS

Schedule of changes in the carrying value of goodwill by reporting unit


	December 29,		Additions /		September 28,
Reporting Unit	2017		Adjustments		2018
Energy	$	37,435,000	$	2,003,000	$	39,438,000
Engineering and Consulting		749,000		—		749,000
	$	38,184,000	$	2,003,000	$	40,187,000

Schedule of gross amounts and accumulated amortization of the Company's acquired identifiable intangible assets with finite useful lives


	September 28, 2018				December 29, 2017
	Gross		Accumulated		Gross		Accumulated		Amortization
	Amount		Amortization		Amount		Amortization		Period (yrs)
Backlog	$	1,784,000	$	1,305,000	$	1,398,000	$	989,000			5.0
Tradename		3,911,000		2,696,000		3,779,000		2,050,000	2.5	-	6.0
Non-compete agreements		1,420,000		966,000		1,331,000		745,000			4.0
Developed Technology		3,410,000		497,000		2,760,000		144,000			8.0
In-process Research & Technology		2,220,000		—		1,650,000		—			—
Customer relationships		5,069,000		1,896,000		4,960,000		1,284,000	5.0	-	8.0
	$	17,814,000	$	7,360,000	$	15,878,000	$	5,212,000

Schedule of estimated amortization expense for acquired identifiable intangible assets


Fiscal year:
2019	$	2,348,000
2020		1,936,000
2021		1,244,000
2022		1,058,000
2023		981,000
Thereafter		1,991,000
	$	9,558,000

EARNINGS PER SHARE ("EPS") (Tables)

9 Months Ended

Sep. 28, 2018

EARNINGS PER SHARE (EPS)

Schedule of number of weighted-average common shares outstanding used to compute basic and diluted EPS


	Three months ended				Nine months ended
	September 28,		September 29,		September 28,		September 29,
	2018		2017		2018		2017
Net income	$	3,311,000	$	2,886,000	$	8,829,000	$	8,839,000
Weighted-average common shares outstanding		8,844,000		8,730,000		8,798,000		8,580,000
Effect of dilutive stock options and restricted stock awards		499,000		518,000		485,000		558,000
Weighted-average common shares outstanding-diluted		9,343,000		9,248,000		9,283,000		9,138,000
Earnings per share:
Basic	$	0.37	$	0.33	$	1.00	$	1.03
Diluted	$	0.35	$	0.31	$	0.95	$	0.97

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET (Tables)

9 Months Ended

Sep. 28, 2018

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

Schedule of equipment and leasehold improvements


	September 28,		December 29,
	2018		2017
Furniture and fixtures	$	3,159,000	$	3,011,000
Computer hardware and software		8,815,000		8,355,000
Leasehold improvements		1,138,000		1,121,000
Equipment under capital leases		1,221,000		1,095,000
Automobiles, trucks, and field equipment		2,117,000		2,100,000
		16,450,000		15,682,000
Accumulated depreciation and amortization		(11,408,000)		(10,376,000)
Equipment and leasehold improvements, net	$	5,042,000	$	5,306,000

ACCRUED LIABILITIES (Tables)

9 Months Ended

Sep. 28, 2018

ACCRUED LIABILITIES

Schedule of accrued liabilities


	September 28,		December 29,
	2018		2017
Accrued bonuses	$	2,331,000	$	2,687,000
Accrued interest		—		5,000
Paid leave bank		2,824,000		2,533,000
Compensation and payroll taxes		1,180,000		1,859,000
Accrued legal		103,000		103,000
Accrued workers’ compensation insurance		87,000		305,000
Accrued rent		233,000		192,000
Employee withholdings		995,000		1,812,000
Client deposits		152,000		92,000
Accrued subcontractor costs		12,521,000		13,103,000
Other		1,378,000		602,000
Total accrued liabilities	$	21,804,000	$	23,293,000

DEBT (Tables)

9 Months Ended

Sep. 28, 2018

DEBT

Schedule of debt obligations, excluding obligations under capital leases


	September 28,		December 29,
	2018		2017
Outstanding borrowings on revolving credit facility	$	—	$	2,500,000
Deferred purchase price for the acquisition of substantially all of the assets of Genesys, bearing interest at 0.650%, payable in monthly principal and interest installments of $191,667 through March 2018.		—		383,000
Total debt obligations		—		2,883,000
Less current portion		—		383,000
Debt obligations, less current portion	$	—	$	2,500,000

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY - Fiscal Years (Details)	9 Months Ended
	Sep. 28, 2018 state
Basis of Presentation
Length of quarters ending on the Friday closest to March 31, June 30 and September 30	91 days
Nature Of Business Abstract
Number of states in which the business operates	19
Minimum
Basis of Presentation
Length of quarter ending on the Friday closest to December 31	91 days
Maximum
Basis of Presentation
Length of quarter ending on the Friday closest to December 31	98 days

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY - Accounting for Contracts (Details)	3 Months Ended		9 Months Ended
	Sep. 28, 2018 USD ($)	Sep. 29, 2017 USD ($)	Sep. 28, 2018 USD ($) subsidiary entity segment	Sep. 29, 2017 USD ($)	Dec. 30, 2017 USD ($)	Dec. 29, 2017 USD ($)
Accounting for Contracts
Number of VIE \| entity			1
Number of wholly owned subsidiaries \| subsidiary			6
Contract Assets and Liabilities
Accounts receivable, net of allowance for doubtful accounts	$ 19,725,000		$ 19,725,000		$ 29,881,000	$ 38,441,000
Contract Accounting
Number of reportable segments \| segment			2
Payroll taxes, bonuses and employee benefit costs for all Company personnel	11,125,000	$ 8,691,000	$ 31,875,000	$ 26,092,000
Facilities costs	1,492,000	$ 1,235,000	4,087,000	$ 3,478,000
Revenue or cost recorded by the entity when acting solely as an agent			0
Retained accounts receivable	$ 6,900,000		$ 6,900,000			8,600,000
Maximum
Contract Accounting
Percent of revenue (as a percent)	3.00%		3.00%
Minimum
Contract Accounting
Percent of revenue (as a percent)	2.00%		2.00%
Cost of Sales
Contract Accounting
Payroll taxes, bonuses and employee benefit costs for all Company personnel			$ 0
Facilities costs			0
ASC 606 \| Calculated Under Revenue Guidance In Effect Before Topic 606
Contract Assets and Liabilities
Accounts receivable, net of allowance for doubtful accounts	$ 26,634,000		26,634,000			$ 38,441,000
ASC 606 \| Difference Between Revenue Guidance In Effect Before And After Topic 606
Contract Assets and Liabilities
Accounts receivable, net of allowance for doubtful accounts	$ (6,909,000)		$ (6,909,000)		$ (8,560,000)

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY - Liquidity (Details) - USD ($)	9 Months Ended
	Sep. 28, 2018	Dec. 29, 2017
Liquidity
Cash and cash equivalents	$ 16,681,000	$ 14,424,000
Minimum period over which cash and cash equivalents on hand, cash generated by operating activities and funds available under line of credit will be sufficient to finance operating activities	12 months

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY - Adoption of New ASUs (Detail) - USD ($)	9 Months Ended
	Sep. 28, 2018	Sep. 29, 2017	Dec. 30, 2017	Dec. 29, 2017
Assets
Accounts receivable, net of allowance for doubtful accounts	$ 19,725,000		$ 29,881,000	$ 38,441,000
Contract assets	43,752,000		34,060,000	24,732,000
Liabilities
Deferred income taxes, net	1,582,000		2,248,000	2,463,000
Equity
Retained earnings	28,970,000		20,141,000	19,588,000
Cash flows from operating activities:
Accounts receivable, net of allowance for doubtful accounts	19,492,000	$ (5,061,000)
Contract assets	(18,252,000)	$ (8,200,000)
Total cash flows used in operating activities	1,240,000
Calculated Under Revenue Guidance In Effect Before Topic 606 \| ASC 606
Assets
Accounts receivable, net of allowance for doubtful accounts	26,634,000			38,441,000
Contract assets	36,443,000			24,732,000
Liabilities
Deferred income taxes, net	1,731,000			2,463,000
Equity
Retained earnings	28,850,000			$ 19,588,000
Cash flows from operating activities:
Accounts receivable, net of allowance for doubtful accounts	12,583,000
Contract assets	(11,343,000)
Total cash flows used in operating activities	1,240,000
Difference Between Revenue Guidance In Effect Before And After Topic 606 \| ASC 606
Assets
Accounts receivable, net of allowance for doubtful accounts	(6,909,000)		(8,560,000)
Contract assets	7,309,000		9,328,000
Liabilities
Deferred income taxes, net	(149,000)		(215,000)
Equity
Retained earnings	120,000		$ 553,000
Cash flows from operating activities:
Accounts receivable, net of allowance for doubtful accounts	6,909,000
Contract assets	(6,909,000)
Total cash flows used in operating activities	$ 0

BUSINESS COMBINATIONS (Details) $ / shares in Units, $ in Millions	Apr. 30, 2018 USD ($)	Jul. 28, 2017 USD ($) item $ / shares shares	Sep. 28, 2018 $ / shares	Dec. 29, 2017 $ / shares
BUSINESS COMBINATIONS
Common stock, par value (in dollars per share) \| $ / shares			$ 0.01	$ 0.01
NAM \| Maximum
BUSINESS COMBINATIONS
Purchase price	$ 4.0
Integral Analytics, Inc
BUSINESS COMBINATIONS
Cash paid at closing		$ 15.0
Number of trading days		10 days
Earn-out payments period		3 years
Number of factors determining size of earn-out payments \| item		2
Earn-out payments first factor		2.00%
Earn-out payments second factor		20.00%
Integral Analytics, Inc \| Maximum
BUSINESS COMBINATIONS
Purchase price		$ 30.0
Earn-out payments		$ 12.0
Common Stock \| Integral Analytics, Inc
BUSINESS COMBINATIONS
Common stock shares issued \| shares		90,611
Common stock, par value (in dollars per share) \| $ / shares		$ 0.01
Common stock value		$ 3.0

BUSINESS COMBINATIONS (Acquisitions) (Details) - USD ($) $ / shares in Units, shares in Thousands		3 Months Ended		9 Months Ended
	Jul. 28, 2017	Sep. 28, 2018	Sep. 29, 2017	Sep. 28, 2018	Sep. 29, 2017	Dec. 29, 2017
Consideration for acquisitions
Cash paid				$ 2,994,000	$ 14,603,000
Other payable for working capital adjustment				698,000	1,881,000
Allocation of acquired assets
Goodwill		$ 40,187,000		40,187,000		$ 38,184,000
Revenue and Income from operations
Revenues		71,386,000	$ 69,007,000	185,814,000	209,191,000
Loss from operations		4,913,000	4,183,000	11,092,000	10,710,000
Acquisition costs		0		0
Integral Analytics, Inc
Consideration for acquisitions
Tax deductible goodwill	$ 15,900,000
Cash paid	15,000,000
Other payable for working capital adjustment	113,000
Issuance of common stock	3,100,000
Contingent consideration	5,600,000
Allocation of acquired assets
Current assets	626,000
Non-current assets	2,000
Cash	397,000
Property, plant and equipment	5,000
Liabilities	(946,000)
Goodwill	15,909,000
Net assets acquired	23,813,000
Unaudited pro forma financial information
Pro forma revenue		71,386	69,331	185,814,000	211,461,000
Pro forma income from operations		4,913	4,071	11,092,000	8,997,000
Pro forma net income		$ 3,314	$ 2,812	$ 8,864,000	$ 7,076,000
Earnings per share:
Basic (in dollars per share)		$ 0.37	$ 0.32	$ 1.01	$ 0.82
Diluted (in dollars per share)		$ 0.35	$ 0.30	$ 0.95	$ 0.77
Weighted average shares outstanding:
Basic (in shares)		8,844	8,730	8,798	8,598
Diluted (in shares)		9,343	9,248	9,283	9,140
Revenue and Income from operations
Revenues		$ 2,500,000		$ 5,000,000
Loss from operations		$ 1,000,000		$ 900,000
Integral Analytics, Inc \| Maximum
Consideration for acquisitions
Total consideration	30,000,000
Integral Analytics, Inc \| Customer relationships
Allocation of acquired assets
Intangible assets	1,200,000
Integral Analytics, Inc \| Tradename
Allocation of acquired assets
Intangible assets	990,000
Integral Analytics, Inc \| Developed Technology
Allocation of acquired assets
Intangible assets	3,410,000
Integral Analytics, Inc \| In-process technology
Allocation of acquired assets
Intangible assets	$ 2,220,000

GOODWILL AND OTHER INTANGIBLE ASSETS - Carrying Value of Goodwill by Reporting Unit (Details)	9 Months Ended
	Sep. 28, 2018 USD ($)
Changes in carrying value of goodwill
Goodwill at beginning of period	$ 38,184,000
Additions/Adjustments	2,003,000
Goodwill at end of period	40,187,000
Energy
Changes in carrying value of goodwill
Goodwill at beginning of period	37,435,000
Additions/Adjustments	2,003,000
Goodwill at end of period	39,438,000
Engineering and Consulting
Changes in carrying value of goodwill
Goodwill at beginning of period	749,000
Goodwill at end of period	$ 749,000

GOODWILL AND OTHER INTANGIBLE ASSETS - Gross Amount and Amortization (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 28, 2018	Sep. 29, 2017	Sep. 28, 2018	Sep. 29, 2017	Dec. 29, 2017
Goodwill and other intangible assets
Gross Amount	$ 17,814,000		$ 17,814,000		$ 15,878,000
Accumulated Amortization	7,360,000		7,360,000		5,212,000
Amortization expense for acquired identifiable intangible assets	700,000	$ 700,000	2,100,000	$ 1,800,000
Remainder of fiscal year 2018	900,000		900,000
Estimated amortization expense for acquired identifiable intangible assets
2019	2,348,000		2,348,000
2020	1,936,000		1,936,000
2021	1,244,000		1,244,000
2022	1,058,000		1,058,000
2023	981,000		981,000
Thereafter	1,991,000		1,991,000
Total estimated amortization expense	9,558,000		9,558,000
Backlog
Goodwill and other intangible assets
Gross Amount	1,784,000		1,784,000		1,398,000
Accumulated Amortization	1,305,000		1,305,000		989,000
Tradename
Goodwill and other intangible assets
Gross Amount	3,911,000		3,911,000		3,779,000
Accumulated Amortization	2,696,000		$ 2,696,000		$ 2,050,000
Tradename \| Minimum
Goodwill and other intangible assets
Amortization Period (in years)					2 years 6 months
Tradename \| Maximum
Goodwill and other intangible assets
Amortization Period (in years)			6 years		6 years
Non-compete agreements
Goodwill and other intangible assets
Gross Amount	1,420,000		$ 1,420,000		$ 1,331,000
Accumulated Amortization	966,000		$ 966,000		$ 745,000
Amortization Period (in years)			4 years		4 years
Developed Technology
Goodwill and other intangible assets
Gross Amount	3,410,000		$ 3,410,000		$ 2,760,000
Accumulated Amortization	497,000		$ 497,000		$ 144,000
Amortization Period (in years)			8 years		8 years
In-process Research and Technology
Goodwill and other intangible assets
Gross Amount	2,220,000		$ 2,220,000		$ 1,650,000
Customer relationships
Goodwill and other intangible assets
Gross Amount	5,069,000		5,069,000		4,960,000
Accumulated Amortization	$ 1,896,000		$ 1,896,000		$ 1,284,000
Customer relationships \| Minimum
Goodwill and other intangible assets
Amortization Period (in years)					5 years
Customer relationships \| Maximum
Goodwill and other intangible assets
Amortization Period (in years)			8 years		8 years

EARNINGS PER SHARE (EPS) (Details) - USD ($)	3 Months Ended		9 Months Ended
EARNINGS PER SHARE (EPS) (Details) - USD ($)	Sep. 28, 2018	Sep. 29, 2017	Sep. 28, 2018	Sep. 29, 2017
Earnings per share
Net income	$ 3,311,000	$ 2,886,000	$ 8,829,000	$ 8,839,000
Weighted-average common shares outstanding (in shares)	8,844,000	8,730,000	8,798,000	8,580,000
Effect of dilutive stock options and restricted stock awards (in shares)	499,000	518,000	485,000	558,000
Weighted-average common shares outstanding-diluted (in shares)	9,343,000	9,248,000	9,283,000	9,138,000
Earnings per share:
Basic (in dollars per share)	$ 0.37	$ 0.33	$ 1.00	$ 1.03
Diluted (in dollars per share)	$ 0.35	$ 0.31	$ 0.95	$ 0.97
Stock options
Anti-dilutive securities excluded from the computation of earnings per share
Number of awards excluded from calculation of dilutive potential common shares (in shares)	241,000	137,000	215,000	89,000

EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Details) - USD ($)	Sep. 28, 2018	Dec. 29, 2017
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements, gross	$ 16,450,000	$ 15,682,000
Accumulated depreciation and amortization	(11,408,000)	(10,376,000)
Equipment and leasehold improvements, net	5,042,000	5,306,000
Furniture and fixtures
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements, gross	3,159,000	3,011,000
Computer hardware and software
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements, gross	8,815,000	8,355,000
Leasehold improvements
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements, gross	1,138,000	1,121,000
Equipment under capital leases
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements, gross	1,221,000	1,095,000
Automobiles, trucks, and field equipment
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements, gross	$ 2,117,000	$ 2,100,000

ACCRUED LIABILITIES (Details) - USD ($)	Sep. 28, 2018	Dec. 29, 2017
ACCRUED LIABILITIES
Accrued bonuses	$ 2,331,000	$ 2,687,000
Accrued interest		5,000
Paid leave bank	2,824,000	2,533,000
Compensation and payroll taxes	1,180,000	1,859,000
Accrued legal	103,000	103,000
Accrued workers' compensation insurance	87,000	305,000
Accrued rent	233,000	192,000
Employee withholdings	995,000	1,812,000
Client deposits	152,000	92,000
Accrued subcontractor costs	12,521,000	13,103,000
Other	1,378,000	602,000
Total accrued liabilities	$ 21,804,000	$ 23,293,000

DEBT OBLIGATIONS - Obligations (Details)	12 Months Ended
DEBT OBLIGATIONS - Obligations (Details)	Dec. 29, 2017 USD ($)
Debt Obligations
Total debt obligations	$ 2,883,000
Less current portion	383,000
Debt obligations, less current portion	2,500,000
Revolving line of credit
Debt Obligations
Total debt obligations	2,500,000
Notes payable for Genesys
Debt Obligations
Total debt obligations	$ 383,000
Interest rate (as a percent)	0.65%
Monthly principal and interest installment (in dollars)	$ 191,667

DEBT OBLIGATIONS - Line of credit (Details) - USD ($)			9 Months Ended
DEBT OBLIGATIONS - Line of credit (Details) - USD ($)	Jan. 20, 2017	Mar. 04, 2016	Sep. 28, 2018
Genesys \| Braun
Line of Credit
Deferred payments		$ 2,300,000
Genesys \| Mineo
Line of Credit
Deferred payments		2,300,000
Genesys \| Braun and Mineo
Line of Credit
Number of monthly installments			24 months
Amount of each installment		$ 95,834
Interest rate on deferred payment (as a percent)		0.65%
Interest and principal payments			$ 4,600,000
Deferred payments outstanding			$ 0
Revolving Credit Facility \| BMO
Line of Credit
Maximum borrowing capacity	$ 35,000,000
Revolving line of credit \| BMO
Line of Credit
Repurchase of common stock	8,000,000
Standby letter of credit sub-facility \| BMO
Line of Credit
Maximum borrowing capacity	10,000,000
Credit Agreement \| BMO
Line of Credit
The aggregate amount under the revolving line of credit	25,000,000
The aggregate amount under the revolving line of credit for a total facility	60,000,000
Total consideration for all permitted acquisitions	20,000,000
Total consideration for individual permitted acquisitions	$ 10,000,000
Percentage of increased interest rate in case of default	2.00%
Credit Agreement \| Maximum \| BMO
Line of Credit
Fee on unused commitments (as a percent)	0.35%
Commitment fee (as a percent)	1.50%
Credit Agreement \| Minimum \| BMO
Line of Credit
Fee on unused commitments (as a percent)	0.20%
Commitment fee (as a percent)	0.94%
Unrestricted cash or undrawn availability under the revolving line of credit	$ 5,000,000
Credit Agreement \| Federal Funds Effective Swap Rate \| Base rate \| BMO
Line of Credit
Spread on floating interest rate (as a percent)			0.50%
Credit Agreement \| Base rate \| LIBOR \| Maximum \| BMO
Line of Credit
Spread on floating interest rate (as a percent)			2.00%
Credit Agreement \| Base rate \| LIBOR \| Minimum \| BMO
Line of Credit
Spread on floating interest rate (as a percent)			1.25%
Credit Agreement \| LIBOR \| Base rate \| BMO
Line of Credit
Spread on floating interest rate (as a percent)			1.00%
Credit Agreement \| LIBOR \| Base rate \| Maximum \| BMO
Line of Credit
Spread on floating interest rate (as a percent)			1.00%
Credit Agreement \| LIBOR \| Base rate \| Minimum \| BMO
Line of Credit
Spread on floating interest rate (as a percent)			0.25%

COMMITMENTS - Benefit Plans (Details)	9 Months Ended
COMMITMENTS - Benefit Plans (Details)	Sep. 28, 2018 USD ($)
Employee Benefit Plans
Maximum employee contribution as a percentage of compensation under 401 (k) Plan	50.00%
Post-Employment Health Benefits
Unamortized compensation cost	$ 0

INCOME TAXES - Operating Loss Carryovers and Unrecognized Tax Benefits (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 28, 2018	Sep. 29, 2017	Sep. 28, 2018	Sep. 29, 2017	Dec. 29, 2017
INCOME TAXES
U.S. federal statutory rate (as a percent)			21.00%		35.00%
Valuation reserve related to California net operating losses					$ 87,000
Valuation allowance change			$ 0
Liability for uncertain tax positions	$ 400,000		400,000
Unrecognized tax benefits	400,000		400,000
Interest and penalties related to unrecognized tax benefits			0
Income tax expense	$ 1,597,000	$ 1,292,000	$ 2,224,000	$ 1,839,000
Reduction in effective tax rate			7.60%

SEGMENT INFORMATION (Details)	3 Months Ended		9 Months Ended
SEGMENT INFORMATION (Details)	Sep. 28, 2018 USD ($)	Sep. 29, 2017 USD ($)	Sep. 28, 2018 USD ($) segment	Sep. 29, 2017 USD ($)	Dec. 29, 2017 USD ($)
SEGMENT INFORMATION
Number of reporting segments \| segment			2
Segment reconciliation
Contract revenue	$ 71,386,000	$ 69,007,000	$ 185,814,000	$ 209,191,000
Segment profit (loss) before income tax expense	4,908,000	4,178,000	11,053,000	10,678,000
Net income (loss)	3,311,000	2,886,000	8,829,000	8,839,000
Segment assets(1)	140,609,000	130,852,000	140,609,000	130,852,000	$ 138,172,000
Reporting Segments \| Energy
Segment reconciliation
Contract revenue	50,085,000	50,031,000	129,143,000	153,877,000
Segment profit (loss) before income tax expense	4,349,000	825,000	7,483,000	3,519,000
Net income (loss)	2,934,000	570,000	5,977,000	2,913,000
Segment assets(1)	103,752,000	74,955,000	103,752,000	74,955,000
Reporting Segments \| Engineering and Consulting
Segment reconciliation
Contract revenue	21,301,000	18,976,000	56,671,000	55,314,000
Segment profit (loss) before income tax expense	2,395,000	2,801,000	5,801,000	7,142,000
Net income (loss)	1,616,000	1,934,000	4,634,000	5,911,000
Segment assets(1)	20,057,000	20,047,000	20,057,000	20,047,000
Unallocated Corporate
Segment reconciliation
Segment profit (loss) before income tax expense	(1,836,000)	552,000	(2,231,000)	17,000
Net income (loss)	(1,239,000)	382,000	(1,782,000)	15,000
Segment assets(1)	39,930,000	58,980,000	39,930,000	58,980,000
Intersegment
Segment reconciliation
Contract revenue	0	0
Segment assets(1)	$ (23,130,000)	$ (23,130,000)	$ (23,130,000)	$ (23,130,000)

SUBSEQUENT EVENTS (Details) $ / shares in Units, $ in Millions			9 Months Ended
	Oct. 09, 2018 USD ($) $ / shares shares	Oct. 01, 2018 USD ($) subsidiary	Sep. 28, 2018 shares
Common Stock
Subsequent Event [Line Items]
Stock Issued During Period, Shares, New Issues \| shares			(15,000)
Subsequent Event
Subsequent Event [Line Items]
Number of wholly-owned subsidiaries which entered into an agreement of merger \| subsidiary		2
Subsequent Event \| New Credit Facilities \| Syndicate financial institutions \| Federal Funds Effective Swap Rate \| Base rate
Subsequent Event [Line Items]
Spread on floating interest rate (as a percent)		0.50%
Subsequent Event \| New Credit Facilities \| Syndicate financial institutions \| LIBOR \| Base rate
Subsequent Event [Line Items]
Spread on floating interest rate (as a percent)		1.00%
Subsequent Event \| Delayed Draw Term Loan Facility \| Syndicate financial institutions
Subsequent Event [Line Items]
Maximum borrowing capacity		$ 90.0
Minimum borrowing capacity available in any event		$ 70.0
Ticking fee (as a percent)		0.40%
Credit facility quarterly amortization (as a percent)		10.00%
Subsequent Event \| Revolving Credit Facility \| Syndicate financial institutions
Subsequent Event [Line Items]
Maximum borrowing capacity		$ 30.0
The aggregate amount under the revolving line of credit		30.0
Subsequent Event \| Minimum \| New Credit Facilities \| Syndicate financial institutions
Subsequent Event [Line Items]
Adjusted EBITDA		$ 32.8
Commitment fee for the unused portion (as a percent)		0.20%
Commitment fee (as a percent)		0.94%
Subsequent Event \| Minimum \| New Credit Facilities \| Syndicate financial institutions \| Base rate \| LIBOR
Subsequent Event [Line Items]
Spread on floating interest rate (as a percent)		1.25%
Subsequent Event \| Minimum \| New Credit Facilities \| Syndicate financial institutions \| LIBOR \| Base rate
Subsequent Event [Line Items]
Spread on floating interest rate (as a percent)		0.25%
Subsequent Event \| Maximum \| New Credit Facilities \| Syndicate financial institutions
Subsequent Event [Line Items]
Consolidated total leverage ratio		4.00
Commitment fee for the unused portion (as a percent)		0.40%
Commitment fee (as a percent)		4.00%
Subsequent Event \| Maximum \| New Credit Facilities \| Syndicate financial institutions \| Base rate \| LIBOR
Subsequent Event [Line Items]
Spread on floating interest rate (as a percent)		4.00%
Subsequent Event \| Maximum \| New Credit Facilities \| Syndicate financial institutions \| LIBOR \| Base rate
Subsequent Event [Line Items]
Spread on floating interest rate (as a percent)		3.00%
Subsequent Event \| Lime Energy
Subsequent Event [Line Items]
Total consideration		$ 120.0
Percentage of combined voting power held by shareholders adopted merger agreement by written consent		75.00%
Number of business days to close the acquisition		2 years
Reverse termination fee		$ 3.6
Number of days to terminate merger agreement after giving written notice		30 days
Subsequent Event \| Common Stock
Subsequent Event [Line Items]
Stock Issued During Period, Shares, New Issues \| shares	2,012,500
Sale of Stock, Price Per Share \| $ / shares	$ 28.05
Proceeds from Issuance of Common Stock	$ 56.5
Subsequent Event \| Common Stock \| Over-Allotment Option
Subsequent Event [Line Items]
Stock Issued During Period, Shares, New Issues \| shares	262,500