Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 29, 2019	May 05, 2019
Document and Entity Information
Entity Registrant Name	Willdan Group, Inc.
Entity Central Index Key	0001370450
Document Type	10-Q
Document Period End Date	Mar. 29, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-28
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		11,126,933
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 29, 2019	Dec. 28, 2018
Current assets:
Cash and cash equivalents	$ 11,061,000	$ 15,259,000
Accounts receivable, net of allowance for doubtful accounts of $457,000 and $442,000 at March 29, 2019 and December 28, 2018, respectively	44,959,000	61,346,000
Contract assets	58,050,000	51,851,000
Other receivables	2,589,000	1,893,000
Prepaid expenses and other current assets	4,929,000	5,745,000
Total current assets	121,588,000	136,094,000
Equipment and leasehold improvements, net	9,573,000	7,998,000
Goodwill	110,509,000	97,748,000
Right-of-use assets	12,564,000
Other intangible assets, net	50,227,000	44,364,000
Other assets	3,651,000	3,311,000
Deferred income taxes, net	12,252,000	12,321,000
Total assets	320,364,000	301,836,000
Current liabilities:
Accounts payable	36,763,000	36,829,000
Accrued liabilities	32,615,000	37,401,000
Contingent consideration payable	1,906,000	3,113,000
Contract liabilities	4,831,000	5,075,000
Notes payable	8,100,000	8,572,000
Finance lease obligations	435,000	320,000
Lease liability	4,139,000
Total current liabilities	88,789,000	91,310,000
Contingent consideration payable	1,729,000	1,616,000
Notes payable	75,389,000	63,139,000
Capital lease obligations, less current portion	282,000	224,000
Lease liability noncurrent	9,452,000
Deferred lease obligations		724,000
Other noncurrent liabilities	729,000	534,000
Total liabilities	176,370,000	157,547,000
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; 11,126,000 and 10,968,000 shares issued and outstanding at March 29, 2019 and December 28, 2018, respectively	111,000	110,000
Additional paid-in capital	114,348,000	114,008,000
Accumulated Other Comprehensive Income (Loss), Net of Tax	(219,000)
Retained earnings	29,754,000	30,171,000
Total stockholders’ equity	143,994,000	144,289,000
Total liabilities and stockholders’ equity	$ 320,364,000	$ 301,836,000

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 29, 2019	Dec. 28, 2018
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 457,000	$ 442,000
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	11,126,000	10,968,000
Common stock, shares outstanding	11,126,000	10,968,000

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME - USD ($)	3 Months Ended
	Mar. 29, 2019	Mar. 30, 2018
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Contract revenue	$ 91,793,000	$ 54,595,000
Direct costs of contract revenue (inclusive of directly related depreciation and amortization):
Salaries and wages	14,910,000	10,998,000
Subcontractor services and other direct costs	50,948,000	24,069,000
Total direct costs of contract revenue	65,858,000	35,067,000
General and administrative expenses:
Salaries and wages, payroll taxes and employee benefits	15,744,000	10,025,000
Facilities and facility related	1,772,000	1,209,000
Stock-based compensation	1,817,000	1,064,000
Depreciation and amortization	2,654,000	1,064,000
Other	4,182,000	4,192,000
Total general and administrative expenses	26,169,000	17,554,000
(Loss) income from operations	(234,000)	1,974,000
Other(expense) income:
Interest expense, net	(1,121,000)	(23,000)
Other, net	11,000	10,000
Total other expense, net	(1,110,000)	(13,000)
(Loss) income before income taxes	(1,344,000)	1,961,000
Income tax benefit	(927,000)	(242,000)
Net (loss) income	(417,000)	2,203,000
Other comprehensive income
Loss on cash flow hedge valuations	(219,000)
Comprehensive (loss) income	$ (636,000)	$ 2,203,000
(Loss) earnings per share:
Basic (in dollars per share)	$ (0.04)	$ 0.25
Diluted (in dollars per share)	$ (0.04)	$ 0.24
Weighted-average shares outstanding:
Basic	10,974,000	8,753,000
Diluted	10,974,000	9,185,000

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY - USD ($)	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss/Gain	Retained Earnings	Total
Balances at Dec. 29, 2017	$ 88,000	$ 50,976,000		$ 20,141,000	$ 71,205,000
Balances (in shares) at Dec. 29, 2017	8,799,000
Increase (Decrease) in Stockholders' Equity
Shares of common stock issued in connection with employee stock purchase plan		616,000			616,000
Shares of common stock issued in connection with employee stock purchase plan (in shares)	30,000
Shares of common stock issued in connection with incentive stock plan	$ 1,000	278,000			279,000
Shares of common stock issued in connection with incentive stock plan (in shares)	32,000
Stock-based compensation expense		1,064,000			1,064,000
Net income (loss)				2,203,000	2,203,000
Balances at Mar. 30, 2018	$ 89,000	52,934,000		22,344,000	75,367,000
Balances (in shares) at Mar. 30, 2018	8,861,000
Balances at Dec. 28, 2018	$ 110,000	114,008,000		30,171,000	$ 144,289,000
Balances (in shares) at Dec. 28, 2018	10,968,000				10,968,000
Increase (Decrease) in Stockholders' Equity
Shares of common stock issued in connection with employee stock purchase plan		749,000			$ 749,000
Shares of common stock issued in connection with employee stock purchase plan (in shares)	28,000
Shares of common stock issued in connection with incentive stock plan		291,000			291,000
Shares of common stock issued in connection with incentive stock plan (in shares)	21,000
Unregistered sales of equity securities and use of proceeds	$ (1,000)	(2,515,000)			(2,516,000)
Unregistered sales of equity securities and use of proceeds (in shares)	(66,000)
Issuance of restricted stock award and units	$ 2,000	(2,000)
Restricted Stock Awards (in shares)	175,000
Stock-based compensation expense		1,817,000			1,817,000
Net income (loss)				(417,000)	(417,000)
Loss on cash flow hedge valuations			$ (219,000)		(219,000)
Balances at Mar. 29, 2019	$ 111,000	$ 114,348,000	$ (219,000)	$ 29,754,000	$ 143,994,000
Balances (in shares) at Mar. 29, 2019	11,126,000				11,126,000

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	3 Months Ended
	Mar. 29, 2019	Mar. 30, 2018
Cash flows from operating activities:
Net (loss) income	$ (417,000)	$ 2,203,000
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	2,739,000	1,101,000
Deferred income taxes, net	69,000	(126,000)
Gain on sale/disposal of equipment	(25,000)
Provision for doubtful accounts	27,000	96,000
Stock-based compensation	1,817,000	1,064,000
Accretion and fair value adjustments of contingent consideration	111,000	338,000
Changes in operating assets and liabilities, net of effects from business acquisitions:
Accounts receivable	18,043,000	17,747,000
Contract assets	(5,765,000)	(16,796,000)
Other receivables	(696,000)	(152,000)
Prepaid expenses and other current assets	918,000	495,000
Other assets	(315,000)	(98,000)
Accounts payable	(127,000)	(5,206,000)
Accrued liabilities	(5,799,000)	(6,592,000)
Contract liabilities	(396,000)	(863,000)
Deferred lease obligations		62,000
Right-of-use assets	303,000
Net cash provided by (used in) operating activities	10,487,000	(6,727,000)
Cash flows from investing activities:
Purchase of equipment and leasehold improvements	(1,929,000)	(144,000)
Proceeds from sale of equipment	35,000
Cash paid for acquisitions, net of cash acquired	(21,800,000)
Net cash used in investing activities	(23,694,000)	(144,000)
Cash flows from financing activities:
Payments on contingent consideration	(1,205,000)	(2,622,000)
Payments on notes payable	(472,000)	(383,000)
Borrowings under term loan facility and line of credit	14,000,000
Repayments under term loan facility and line of credit	(1,750,000)
Principal payments on finance leases	(88,000)	(90,000)
Proceeds from stock option exercise	291,000	279,000
Proceeds from sales of common stock under employee stock purchase plan	749,000	616,000
Unregistered sales of equity securities and use of proceeds	(2,516,000)
Net cash provided by (used in) financing activities	9,009,000	(2,200,000)
Net decrease in cash and cash equivalents	(4,198,000)	(9,071,000)
Cash and cash equivalents at beginning of period	15,259,000	14,424,000
Cash and cash equivalents at end of period	11,061,000	5,353,000
Cash paid during the period for:
Interest	965,000	23,000
Income taxes		36,000
Supplemental disclosures of noncash investing and financing activities:
Other working capital adjustment	579,000
Loss on cash flow hedge valuations	(219,000)
Equipment acquired under finance leases	$ 261,000	$ 162,000

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY

3 Months Ended

Mar. 29, 2019

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 fiscal year ended December 28, 2018.

The condensed consolidated statement of stockholders' equity includes unregistered sales of equity securities and use of proceeds. This amount is presented as a reduction of additional paid-in capital as we are repurchasing shares of our common stock from employees to satisfy tax withholding obligations incurred in connection with the vesting of restricted stock.

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 24 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, New York and North Carolina and its business with public agencies is concentrated in California, New York and Arizona.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Willdan Group, Inc. (“WGI”) 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 any of the following criteria are present: (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 March 29, 2019, 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

WGI 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. WGI 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, WGI 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 direct 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 11 “—Segment Information” for segment information for the current and prior period.

Contract Assets and Liabilities

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 and decrease in contract liabilities for the three months ended March 29, 2019 were primarily attributable to normal business operations.

Off‑Balance Sheet Arrangements

The Company does not have any off‑balance sheet financing arrangements or liabilities. Finally, the Company does not have any majority‑owned subsidiaries or any interests in, or relationships with, any special‑purpose entities that are not included in the condensed consolidated financial statements. The Company has, however, 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 variable interest entity.

Contract Accounting

The Company enters into contracts with its clients that contain various types of pricing provisions, including fixed price, time-and-materials and unit-based 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

Revenue on the vast majority of the Company’s contracts will 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 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 recognized on a straight-line basis 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.

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, the value of the separate performance obligations under contracts with multiple performance obligations (generally measurement and verification tasks under certain energy performance contracts) 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 in the accompanying condensed consolidated statements of comprehensive (loss) income. Additionally, payroll taxes, bonuses and employee benefit costs for all Company personnel are included in general and administrative expenses in the accompanying condensed consolidated statements of comprehensive (loss) income 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 March 29, 2019 and December 28, 2018, contract assets included retainage of approximately $5.3 million and $6.7 million, respectively.

Disaggregation of Revenue

The following tables provides information about disaggregated revenue of the Company’s two segments Energy and Engineering and Consulting by contract type, client type and geographical region for the three months ended March 29, 2019:


Contract Type	Energy		Engineering and Consulting		Total
Time-and-materials	$	4,255,000	$	13,058,000	$	17,313,000
Unit-based		56,872,000		3,571,000		60,443,000
Fixed price		13,565,000		472,000		14,037,000
Total	$	74,692,000	$	17,101,000	$	91,793,000

Client Type	Energy		Engineering and Consulting		Total
Commercial	$	9,195,000	$	1,298,000	$	10,493,000
Government		8,862,000		15,671,000		24,533,000
Utilities		56,635,000		132,000		56,767,000
Total	$	74,692,000	$	17,101,000	$	91,793,000

Geography	Energy		Engineering and Consulting		Total
Domestic	$	74,692,000	$	17,101,000	$	91,793,000

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 uses the three-tier hierarchy of fair value measurement, which prioritizes the inputs. These tiers include: Level 1 (the highest priority), defined as observable inputs, such as quoted prices in active markets, Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3 (the lowest priority), defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

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 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 other noncurrent assets and contingent consideration are discounted to their present value because the time between the origination of these instruments and their expected realization or payment is greater than one year.

The carrying amounts of derivative financial instrument is valued based on Level 2 inputs.

The carrying amounts of debt obligations 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.

On January 31, 2019, the Company entered into an interest rate swap agreement that the Company designated as cash flow hedge to fix the variable interest rate on a portion of the Term Loan Facility under its Credit Facilities. The interest rate swap agreement total notional amount of $35.0 million, has a fixed interest rate of 2.47% and expires on January 31, 2022. For further discussion of this derivative contract, see Note 13 “—Derivative Financial Instruments” below.

Use of Estimates

The preparation of condensed 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 condensed 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 March 29, 2019, the Company had $11.1 million of cash and cash equivalents. The Company’s primary source of liquidity is cash generated from operations. In addition, as of March 29, 2019, the Company had a $70.0 million term loan with $68.3 million aggregate principal amount outstanding and a $30.0 million revolving credit facility with BMO, each maturing on October 1, 2023 (see Note 7 “—Debt Obligations” below). As of March 29, 2019, $14.0 million of borrowings were outstanding under the revolving credit facility with $2.7 million in letters of credit issued and $13.3 million available for borrowing under the revolving credit facility. 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 will be sufficient to finance its operating activities for at least the next 12 months.

Adoption of New Accounting Standards

Statement of Cash Flows

In August 2016, the Financial Accounting Standards Board (“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.

Stock Compensation

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of current stock compensation recognition standards to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 became effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Effective December 29, 2018, the Company adopted ASU 2018-07 and the impact did not have a material effect on the Company’s condensed consolidated financial statements.

Recent Accounting Pronouncements

Intangibles-Goodwill and Other

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350), which eliminates the requirement to compare the implied fair value of reporting unit goodwill with the carrying amount of that goodwill (commonly referred to as Step 2) from the goodwill impairment test. The new standard does not change how a goodwill impairment is identified. The Company will continue to perform its quantitative and qualitative goodwill impairment test by comparing the fair value of each reporting unit to its carrying amount, but if the Company were required to recognize a goodwill impairment charge, under the new standard the amount of the charge would be calculated by subtracting the reporting unit’s fair value from its carrying amount. Under the prior standard, if the Company were required to recognize a goodwill impairment charge, Step 2 required us to calculate the implied value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination and the amount of the charge was calculated by subtracting the reporting unit’s implied fair value of goodwill from its actual goodwill balance. The new standard is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted, and should be applied prospectively from the date of adoption. The Company has elected to adopt the new standard for future goodwill impairment tests at the beginning of the fourth quarter of 2019 because it significantly simplifies the evaluation of goodwill for impairment.

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 condensed consolidated financial statements.

BUSINESS COMBINATIONS

3 Months Ended

Mar. 29, 2019

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS

2. BUSINESS COMBINATIONS

Acquisition of The Weidt Group

On March 8, 2019, the Company acquired substantially all of the assets and liabilities of The Weidt Group Inc.’s (the “Weidt Group”) energy practice division. The Company believes the acquisition will expand its presence in the upper Midwest and better position the Company to help utilities make their grids more resilient. Pursuant to the terms of the Asset Purchase Agreement, dated March 8, 2019, by and among the Company, WES and The Weidt Group, WES will pay a maximum aggregate purchase price of $22.4 million, subject to working capital adjustments, to be paid in cash. The Weidt Group’s financial information is included within the Energy segment. The Company expects to finalize the purchase price allocation with respect to this transaction during the first quarter of 2020.

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 $12.8 million of goodwill resulting from the acquisition will be tax deductible. Consideration for the acquisition includes the following:


	Weidt Group
Cash paid	$	21,800,000
Other working capital adjustment		579,000
Total consideration	$	22,379,000

The following table summarizes the preliminary amounts for the acquired assets recorded at their estimated fair value as of the acquisition date:


	Weidt Group
Current assets	$	2,317,000
Non-current assets (1)		25,000
Equipment and leasehold improvements, net		198,000
Right-of-use assets		1,730,000
Current lease liability		(245,000)
Non-current lease liability		(1,533,000)
Liabilities		(674,000)
Backlog		600,000
Customer relationships		3,800,000
Tradename		500,000
Developed technology		2,900,000
Goodwill		12,761,000
Net assets acquired	$	22,379,000

(1)

Excluded from non-current assets are equipment and leasehold improvements, net, customer relationships, tradename, developed technology, backlog and goodwill.

The following unaudited pro forma financial information for the three months ended March 29, 2019 and March 30, 2018 assumes that acquisition of all the assets and liabilities of The Weidt Group occurred on December 30, 2017 and that acquisition of all the outstanding shares of Lime Energy Co. occurred on December 31, 2016 as follows:


	Three Months Ended
	March 29,		March 30,
In thousands (except per share data)	2019		2018
Pro forma revenue	$	94,120	$	92,454

Pro forma (loss) income from operations	$	(288)	$	1,597
Pro forma net (loss) income (1)	$	(437)	$	541

(Loss) earnings per share:
Basic	$	(0.04)	$	0.05
Diluted	$	(0.04)	$	0.05

Weighted average shares outstanding:
Basic		10,974		10,766
Diluted		10,974		11,198

(1)

Adjustments to pro forma net income include income from operations, amortization and interest expenses.

This pro forma supplemental information does not purport to be indicative of what the Company’s operating results would have been had the acquisition of Weidt Group transaction occurred on December 30, 2017 and may not be indicative of future operating results.

There were $0.2 million in acquisition related costs associated with The Weidt Group that were included in other general and administrative expenses in the condensed consolidated statements of comprehensive (loss) income for the three months ended March 29, 2019.

During the three months ended March 29, 2019, the acquisition of Weidt Group contributed $0.9 million in revenue and $0.1 million in income from operations.

Acquisition of Lime Energy

On October 1, 2018, the Company, through two of its wholly-owned subsidiaries, WES and Luna Fruit, Inc., a Delaware corporation and wholly-owned subsidiary of WES (“Merger Sub”), entered into an agreement to acquire all of the outstanding shares of capital stock of Lime Energy Co. (“Lime Energy”), pursuant to an agreement and plan of merger dated October 1, 2018 (the “Merger Agreement”), by and among WES, Merger Sub, Lime Energy, and Luna Stockholder Representative, LLC, as representative of the participating securityholders of Lime Energy. The Company believes the addition of Lime Energy’s capabilities will significantly expand and diversify its client base within the energy efficiency services market and geographic presence across the United States. The Company expects to finalize the purchase price allocation with respect to this transaction during the fourth quarter of 2019.

On November 9, 2018, the Company completed the acquisition and, pursuant to the Merger Agreement, Merger Sub was merged with and into Lime Energy, with Lime Energy surviving as a wholly-owned indirect subsidiary of the Company. The aggregate purchase price paid in the acquisition was $120.0 million, exclusive of closing holdbacks and adjustments. A portion of the purchase price was deposited into escrow accounts to secure certain potential post-closing obligations of the participating securityholders. The Company paid the purchase price for the acquisition using a combination of cash on hand (including $50.0 million of the $56.4 million in net proceeds received from the Company’s equity offering in October 2018) and proceeds from the Company’s borrowings under its Term Loan Facility (see Note 7 “—Debt Obligations” below).

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 $57.5 million of goodwill resulting from the acquisition will not be tax deductible. Consideration for the acquisition includes the following:


	Lime Energy
Cash paid	$	122,376,000
Other working capital adjustment		63,000
Total consideration	$	122,439,000

The following table summarizes the preliminary amounts for the acquired assets and liabilities recorded at their estimated fair value as of the acquisition date:


	Lime Energy
Current assets (1)	$	45,401,000
Non-current assets (2)		13,847,000
Cash		1,090,000
Equipment and leasehold improvements, net		1,892,000
Liabilities		(33,603,000)
Customer relationships		19,400,000
Tradename		5,970,000
Developed technology		10,200,000
Backlog		730,000
Goodwill		57,512,000
Net assets acquired	$	122,439,000

(1)

Excluded from current assets is cash

(2)

Excluded from non-current assets are equipment and leasehold improvements, net, customer relationships, tradename, developed technology, backlog and goodwill.

No acquisition related costs associated with Lime Energy were included in other general and administrative expenses in the condensed consolidated statements of comprehensive (loss) income for the three months ended March 29, 2019.

The following unaudited pro forma financial information for the three months ended March 29, 2019 and March 30, 2018 assumes that acquisition of all the outstanding shares of Lime Energy occurred on December 31, 2016 and that acquisition of all the assets and liabilities of The Weidt Group occurred on December 30, 2017 as follows:


	Three Months Ended
	March 29,		March 30,
In thousands (except per share data)	2019		2018
Pro forma revenue	$	94,120	$	92,454

Pro forma (loss) income from operations	$	(288)	$	1,597
Pro forma net (loss) income (1)	$	(437)	$	541

(Loss) earnings per share:
Basic	$	(0.04)	$	0.05
Diluted	$	(0.04)	$	0.05

Weighted average shares outstanding:
Basic		10,974		10,766
Diluted		10,974		11,198

(1)

Adjustments to pro forma net income include income from operations, amortization and interest expenses.

This pro forma supplemental information does not purport to be indicative of what the Company’s operating results would have been had the acquisition of Lime Energy transaction occurred on December 30, 2017 and may not be indicative of future operating results.

During the three months ended March 29, 2019, the acquisition of Lime Energy contributed $36.6 million in revenue and $0.2 million in loss from operations.

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 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 Credit Facilities. The Company expects to finalize the purchase price allocation with respect to this transaction during the second quarter of 2019. NAM’s financial information is included within the Energy segment.

GOODWILL AND OTHER INTANGIBLE ASSETS

3 Months Ended

Mar. 29, 2019

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

3. GOODWILL AND OTHER INTANGIBLE ASSETS

As of March 29, 2019, the Company had $110.5 million of goodwill, which primarily relates to the Energy segment and the acquisitions within this segment of The Weidt Group, Lime Energy, 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 segment and the acquisition within this segment of Economists.com, LLC. The changes in the carrying value of goodwill by reporting unit for the three months ended March 29, 2019 were as follows:


	December 28,		Additional		Additions /		March 29,
Reporting Unit	2018		Purchase Cost		Adjustments		2019
Energy	$	96,999,000	$	12,761,000	$	—	$	109,760,000
Engineering and Consulting		749,000		—		—		749,000
	$	97,748,000	$	12,761,000	$	—	$	110,509,000

The gross amounts and accumulated amortization of the Company’s acquired identifiable intangible assets with finite useful lives as of March 29, 2019 included in other intangible assets, net in the accompanying condensed consolidated balance sheets, were as follows:


	March 29, 2019				December 28, 2018
	Gross		Accumulated		Gross		Accumulated		Amortization
	Amount		Amortization		Amount		Amortization		Period (yrs)
Backlog	$	3,114,000	$	2,202,000	$	2,514,000	$	2,155,000	0.1	-	5.0
Tradename		10,801,000		3,513,000		10,301,000		3,118,000	2.5	-	6.0
Non-compete agreements		1,420,000		1,118,000		1,420,000		1,042,000			4.0
Developed technology		15,820,000		1,545,000		12,920,000		944,000			8.0
In-process research and technology (1)		1,690,000		—		1,690,000		—			—
Customer relationships		29,019,000		3,259,000		25,219,000		2,441,000	5.0	-	8.0
	$	61,864,000	$	11,637,000	$	54,064,000	$	9,700,000

(1)

In-process research and technology will not be amortized until put into use.

The Company’s amortization expense for acquired identifiable intangible assets with finite useful lives was $1.9 million for the fiscal three months ended March 29, 2019 as compared to $0.7 million for the fiscal three months ended March 30, 2018. Estimated amortization expense for acquired identifiable intangible assets for the remainder of fiscal year 2019 is $6.6 million and the succeeding years are as follows:


Fiscal year:
2020	$	8,280,000
2021		7,589,000
2022		7,402,000
2023		6,757,000
2024		3,906,000
Thereafter		9,724,000
	$	43,658,000

At the time of acquisition, the Company estimates the fair value of the acquired identifiable intangible assets based upon the facts and circumstances related to the particular intangible asset. Inherent in such estimates are judgments and estimates of future revenue, profitability, cash flows and appropriate discount rates for any present value calculations. The Company preliminarily estimates the value of the acquired identifiable intangible assets and then finalizes the estimated fair values during the purchase allocation period, which does not extend beyond 12 months from the date of acquisition.

The Company tests its goodwill at least annually for possible impairment. 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. In addition to the Company’s annual test, it regularly evaluates whether events and circumstances have occurred that may indicate a potential impairment of goodwill. No impairment was recorded during the three months ended March 29, 2019.

EARNINGS PER SHARE (EPS)

3 Months Ended

Mar. 29, 2019

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
	March 29,		March 30,
	2019		2018
Net (loss) income	$	(417,000)	$	2,203,000
Weighted-average common shares outstanding		10,974,000		8,753,000
Effect of dilutive stock options and restricted stock awards		—		432,000
Weighted-average common shares outstanding-diluted		10,974,000		9,185,000
(Loss) earnings per share:
Basic	$	(0.04)	$	0.25
Diluted	$	(0.04)	$	0.24

For the three months ended March 29, 2019, no options were excluded from the calculation of dilutive potential common shares, as compared to 209,000 options for the three months ended March 30, 2018, 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 2019 and 2018 periods, respectively. Accordingly, the inclusion of these options would have been anti-dilutive.

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

3 Months Ended

Mar. 29, 2019

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

5. EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

Equipment and leasehold improvements consisted of the following at March 29, 2019 and December 28, 2018:


	March 29,		December 28,
	2019		2018
Furniture and fixtures	$	3,623,000	$	3,551,000
Computer hardware and software		12,497,000		10,874,000
Leasehold improvements		1,491,000		1,419,000
Equipment under finance leases		1,562,000		1,304,000
Automobiles, trucks, and field equipment		2,945,000		2,635,000
		22,118,000		19,783,000
Accumulated depreciation and amortization		(12,545,000)		(11,785,000)
Equipment and leasehold improvements, net	$	9,573,000	$	7,998,000

Included in accumulated depreciation and amortization is $107,000 and $374,000 of amortization expense related to equipment held under finance leases in the three months ended March 29, 2019 and fiscal year 2018, respectively.

ACCRUED LIABILITIES

3 Months Ended

Mar. 29, 2019

ACCRUED LIABILITIES

ACCRUED LIABILITIES

6. ACCRUED LIABILITIES

Accrued liabilities consist of the following:


	March 29,		December 28,
	2019		2018
Accrued bonuses	$	198,000	$	5,273,000
Accrued interest		199,000		127,000
Paid leave bank		4,171,000		3,512,000
Compensation and payroll taxes		3,911,000		2,544,000
Accrued legal		18,000		153,000
Accrued workers’ compensation insurance		144,000		273,000
Accrued rent		—		233,000
Employee withholdings		1,677,000		2,137,000
Client deposits		354,000		280,000
Accrued subcontractor costs		21,024,000		21,446,000
Other		919,000		1,423,000
Total accrued liabilities	$	32,615,000	$	37,401,000

DEBT OBLIGATIONS

3 Months Ended

Mar. 29, 2019

DEBT

DEBT OBLIGATIONS

7. DEBT OBLIGATIONS

Debt obligations, excluding obligations under finance leases (see Note 8 “—Leases” below), consist of the following at March 29, 2019 and December 28, 2018:


	March 29,		December 28,
	2019		2018
Outstanding borrowings on term loan	$	68,250,000	$	70,000,000
Outstanding borrowings on revolving credit facility		14,000,000		—
Notes payable for insurance, 11 month term, bearing interest at 4.3%, payable in monthly principal and interest installments of $92,296.24 through October 2019.		1,060,000		1,500,000
Notes payable for IBM Software, 36 month term, bearing interest at 4.656% payable in monthly principal and interest installments of $6,315.18 through November 2021.		179,000		211,000
Total debt obligations		83,489,000		71,711,000
Less current portion		8,100,000		8,572,000
Debt obligations, less current portion	$	75,389,000	$	63,139,000

Credit Facilities

In connection with the acquisition of Lime Energy, the Company entered into a new credit agreement on October 1, 2018 (the “Credit Agreement”) with a syndicate of financial institutions as lenders, and BMO Harris Bank, N.A., as administrative agent. The Credit Agreement initially provided for up to a $90.0 million delayed draw term loan facility (the “Term Loan Facility”) and a $30.0 million revolving credit facility (collectively, the “Credit Facilities”), each maturing on October 1, 2023. On October 10, 2018, as a result of the Company’s completed equity offering, the amount available for borrowing under the Term Loan Facility was reduced to $70.0 million. On November 9, 2018, in connection with the closing of the acquisition of Lime Energy, the Company borrowed $70.0 million (the “Term Loan”) under the Term Loan Facility. The proceeds of such borrowing were used to pay part of the consideration owed in connection with the acquisition along with related fees and expenses. The Credit Agreement replaced the Company’s prior $35.0 million revolving line of credit with BMO Harris Bank, N.A. In connection with the acquisition of The Weidt Group in March 2019, the Company entered into the First Amendment to the Credit Agreement, dated March 8, 2019, with a syndicate of financial institutions as lenders, and BMO Harris Bank, N.A., as administrative agent, in order to permit the acquisition under the Credit Agreement.

The 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 Company’s consolidated total leverage ratio. 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 Term Loan amortizes 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 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 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 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.

On January 31, 2019, the Company entered into an interest swap agreement for $35.0 million notional amount. The interest swap agreement was designated as a cash flow hedge to fix the variable interest rate on a portion of the outstanding principal amount under the Term Loan. The interest swap fixed rate is 2.47% and the amortization is quarterly in an amount equal to 10% annually. The interest swap agreement expires on January 31, 2022. As of March 29, 2019, the Company’s composite interest rate, exclusive of the effects of upfront fees, undrawn fees and issuance cost amortization, was 5.48%.

As of May 3, 2019, the Company had $68.3 million aggregate principal amount outstanding on the Term Loan, $14.0 million of borrowings outstanding under the revolving credit facility with $2.7 million in letters of credit issued and $13.3 million available for borrowing under the revolving credit facility.

The Company believes that, as of March 29, 2019, it was in compliance with all covenants contained in the Credit Agreement.

Prior Credit Facility

On January 20, 2017, the Company and each of its subsidiaries, as guarantors, entered into an Amended and Restated Credit Agreement (the “Prior Credit Agreement”) with BMO, as lender. The Credit Agreement amended and extended the Company’s prior Credit Agreement. The Prior Credit Agreement provided for a $35.0 million revolving line of credit, including a $10.0 million standby letter of credit sub-facility, and matures on January 20, 2020. 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 London Interbank Offered Rate (“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. On October 1, 2018, in connection with the Company entering into the Credit Agreement, the Prior Credit Agreement was terminated.

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 28, 2018, the Company elected to finance its insurance premiums for the 2019 fiscal year. Included in the Company’s insurance renewal terms are individual stop loss amount of $100,000 and an aggregate of 125%. The unpaid balance of the financed premiums totaled $1.1 million for the three months ended March 29, 2019 and $1.5 million for the fiscal year ended December 28, 2018.

LEASES

3 Months Ended

Mar. 29, 2019

Leases

Leases

8. LEASES

The Company is obligated under finance leases for certain furniture and office equipment that expire at various dates through the year 2022.

The Company also leases certain office facilities under non-cancelable operating leases that expire at various dates through the year 2027.

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.

Change in Accounting Policy

On January 1, 2019, the Company adopted ASU No. 2016-02, Leases (Topic 842) using the modified retrospective method. Under this guidance, the net present value of future lease payments are recorded as right-of-use assets and lease liabilities. In addition, the Company elected the ‘package of practical expedients’ permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. In addition, the Company elected not to utilize the hindsight practical expedient to determine the lease term for existing leases. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company did not recognize right-of-use assets or lease liabilities, including not recognizing right-of-use assets or lease liabilities for existing short-term leases of those assets in transition. The Company also elected the practical expedient to not separate lease and non-lease components for our facilities leases. Adoption of the new standard resulted in the recording of additional right-of-use assets and operating lease liabilities of approximately $10.9 million and $11.9 million, respectively, as of January 1, 2019. The adoption of Topic 842 did not impact the Company’s retained earnings, consolidated net earnings or cash flows.

From time to time, the Company enters into non-cancelable leases for some of our facility and equipment needs. These leases allow the Company to conserve cash by paying a monthly lease rental fee for the use of facilities and equipment rather than purchasing them. The Company’s leases have remaining terms ranging from one to eight years, some of which may include options to extend the leases for up to five years, and some of which may include options to terminate the leases within one year. Currently, all of the Company’s leases contain fixed payment terms. The Company may decide to cancel or terminate a lease before the end of its term, in which case we are typically liable to the lessor for the remaining lease payments under the term of the lease. Additionally, all of our month-to-month leases are cancelable by the Company or the lessor, at any time and are not included in our right-of-use asset or lease liability. As of March 29, 2019, the Company had no leases with residual value guarantees. Typically, the Company has purchase options on the equipment underlying its long-term leases. The Company may exercise some of these purchase options when the need for equipment is on-going and the purchase option price is attractive. Nonperformance-related default covenants, cross-default provisions, subjective default provisions and material adverse change clauses contained in material lease agreements, if any, are also evaluated to determine whether those clauses affect lease classification in accordance with “ASC” Topic 842-10-25. Leases are accounted for as operating or financing leases, depending on the terms of the lease.

Financing Leases

The Company leases certain equipment under financing leases. The economic substance of the leases is a financing transaction for acquisition of equipment and leasehold improvements. Accordingly, the right-of-use assets for these leases are included in the balance sheets in equipment and leasehold improvements, net of accumulated depreciation, with a corresponding amount recorded in current portion of financing lease obligations or noncurrent portion of financing lease obligations, as appropriate. The financing lease assets are amortized over the life of the lease or, if shorter, the life of the leased asset, on a straight-line basis and included in depreciation expense. The interest associated with financing lease obligations is included in interest expense.

Right-of-use assets

Operating leases are included in right-of-use assets, and current portion of lease liability and noncurrent portion of lease liability, as appropriate. Right-of-use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of the Company’s leases do not provide an implicit rate to calculate present value, the Company determines this rate, by estimating the Company’s incremental borrowing rate, at the lease commencement date. The right-of-use asset also includes any lease payments made and initial direct costs incurred at lease commencement and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The following is a summary of the lease expense recorded as of March 29, 2019:


	Three Months Ended
	March 29, 2019
Operating lease cost	$	1,089,000
Finance lease cost:
Amortization of assets	$	107,000
Interest on lease liabilities		9,000
Total net lease cost	$	1,205,000

The following is a summary of the impact of adoption on the Company’s condensed consolidated balance sheet for the three months ended March 29, 2019 were as follows:


	Three Months Ended
	March 29, 2019
Operating leases:
Right-of-use assets	$	12,564,000

Lease liability		4,139,000
Lease liability, less current portion		9,452,000
Total lease liabilities	$	13,591,000

Finance leases (included in equipment and leasehold improvements, net):
Equipment and leasehold improvements, net	$	1,562,000
Accumulated depreciation		(893,000)
Total equipment and leasehold improvements, net	$	669,000

Finance lease obligations	$	435,000
Finance lease obligations, less current portion		282,000
Total finance lease obligations	$	717,000

Weighted average remaining lease term (in years):
Operating Leases		3.63
Finance Leases		1.82

Weighted average discount rate:
Operating Leases		5.50	%
Finance Leases		4.98	%

The following is a summary of other information and supplemental cash flow information related to finance and operating leases for three months ended March 29, 2019:


	Three Months Ended
	March 29, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases	$	1,109,000
Operating cash flow from finance leases		31,000
Financing cash flow from finance leases		88,000

Right-of-use assets obtained in exchange for lease liabilities:
Operating leases		851,000

The following is a summary of the maturities of lease liabilities as of March 29, 2019 were as follows:


	Operating		Finance
Fiscal year:
Remainder of 2019	$	4,684,000		458,000
2020		3,730,000		243,000
2021		2,458,000		47,000
2022		1,943,000		—
2023		898,000		—
2024 and thereafter		1,477,000		—
Total lease payments	$	15,190,000	$	748,000
Less: Imputed interest		(1,599,000)		(31,000)
Total lease obligations		13,591,000		717,000
Less: Current obligations		4,139,000		435,000
Noncurrent lease obligations	$	9,452,000	$	282,000

The financing component for finance lease obligations represents the interest component of finance leases that will be recognized as interest expense in future periods. The financing component for operating lease obligations represents the difference between the future operating lease obligations and their unamortized fair value.

Capital Leases

Prior to the adoption of ASU No. 2016-02, Leases (Topic 842), the Company leased certain equipment under capital leases. The economic substance of these leases was a financing transaction for purchase of the equipment and leasehold improvements, accordingly, the leases were included in the balance sheets in equipment and leasehold improvement, net of accumulated depreciation, with a corresponding amount recorded in current portion of lease obligations or noncurrent portion of lease obligations, as appropriate. The capital lease assets were amortized on a straight-line basis over the life of the lease or, if shorter, the life of the leased asset, and were included in depreciation expense in the statements of operations. The interest associated with capital leases was included in interest expense in the statements of operations.

As of December 28, 2018, the Company had $0.5 million of capital lease obligations outstanding, $0.3 million of which was classified as a current liability.

As of December 28, 2018, $0.5 million of leased assets were capitalized in equipment and leasehold improvements, net of accumulated depreciation.

COMMITMENTS	3 Months Ended
COMMITMENTS	Mar. 29, 2019
COMMITMENTS
COMMITMENTS	9. COMMITMENTS 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 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 also had a defined contribution plan (the “Plan”) covering employees who have completed three months of service and who have attained 21 years of age. During the three months ended March 29, 2019, the Company elected to make matching contributions equal to 50% of the participants’ contributions to the Plan up to 6% of the individual participant’s compensation. Under the defined contribution plan, the Company may make discretionary matching contributions to employee accounts. The Company made matching contributions of approximately $0.7 million during the three months ended March 29, 2019. 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	3 Months Ended
INCOME TAXES	Mar. 29, 2019
INCOME TAXES
INCOME TAXES	10. 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. 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 2018 related to California net operating losses. There was no change to the valuation allowance during the three month period ended March 29, 2019. 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 March 29, 2019, 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 March 29, 2019. Based on management’s estimates and determination of an effective tax rate for the year, the Company recorded an income tax benefit of $0.9 million and $0.2 million for the three months ended March 29, 2019 and the three months ended March 30, 2018, respectively. During the three months ended March 29, 2019, the difference between the effective tax rate and the federal statutory rate is primarily attributable to the recognition of tax deductions related to the vesting of performance-based restricted stock units. The income tax benefit related to these deductions has been included as a reduction of 21.5% to the Company’s effective tax rate for the three months ended March 29, 2019. 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, excess compensation for covered employees and compensation expense related to employee stock purchase and incentive stock options. During the three months ended March 29, 2019, the Internal Revenue Service continued its audit of the Company’s tax return for the fiscal year ended December 30, 2016. The Company is unable to determine the impact of this examination due to the audit process having not been completed.

SEGMENT INFORMATION

3 Months Ended

Mar. 29, 2019

SEGMENT INFORMATION

SEGMENT INFORMATION

11. SEGMENT INFORMATION

The Company’s two segments are Energy and Engineering and Consulting. 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, consists of the business of its subsidiary WES. 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 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 28, 2018. There were no intersegment sales in the three month periods ended March 29, 2019 and March 30, 2018. 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 months ended March 29, 2019 and as of and for the fiscal three months ended March 30, 2018 is as follows:


			Engineering		Unallocated				Consolidated
	Energy		& Consulting		Corporate		Intersegment		Total
Fiscal Three Months Ended March 29, 2019
Contract revenue	$	74,692,000	$	17,101,000	$	—	$	—	$	91,793,000
Depreciation and amortization		2,370,000		284,000		—		—		2,654,000
Interest expense		(447,000)		(674,000)		—		—		(1,121,000)
Segment profit (loss) before income tax expense		(1,487,000)		1,605,000		(1,462,000)		—		(1,344,000)
Income tax (benefit) expense		(1,026,000)		1,107,000		(1,008,000)		—		(927,000)
Net income (loss)		(461,000)		498,000		(454,000)		—		(417,000)
Segment assets(1)		189,739,000		22,355,000		131,400,000		(23,130,000)		320,364,000
Fiscal Three Months Ended March 30, 2018
Contract revenue	$	37,332,000	$	17,263,000	$	—	$	—	$	54,595,000
Depreciation and amortization		857,000		207,000		—		—		1,064,000
Interest expense		(20,000)		(3,000)		—		—		(23,000)
Segment profit before income tax expense		263,000		1,887,000		(189,000)		—		1,961,000
Income tax (benefit) expense		(33,000)		(233,000)		24,000		—		(242,000)
Net income (loss)		296,000		2,120,000		(213,000)		—		2,203,000
Segment assets(1)		61,625,000		18,540,000		70,947,000		(23,130,000)		127,982,000

(1)

Segment assets represent segment assets, net of intercompany receivables.

CONTINGENCIES	3 Months Ended
CONTINGENCIES	Mar. 29, 2019
CONTINGENCIES
CONTINGENCIES	12. 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.

DERIVATIVE FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 29, 2019

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

13. DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses certain interest rate derivative contracts to hedge interest rate exposures on its variable rate debt. The Company’s hedging program is not designated for trading or speculative purposes.

The Company recognizes derivative instruments as either assets or liabilities on the accompanying consolidated balance sheets at fair value. The Company records changes in the fair value (i.e., gains or losses) of the derivatives that have been designated as cash flow hedges in its consolidated balance sheets as accumulated other comprehensive income (loss) and in its condensed consolidated statements of comprehensive (loss) income as a loss or gain on cash flow hedge valuation.

On January 31, 2019, the Company entered into an interest rate swap agreement that the Company designated as cash flow hedge to fix the variable interest rate on a portion of the Term Loan Facility under its Credit Facilities. The interest rate swap agreement total notional amount of $35.0 million, has a fixed interest rate of 2.47% and expires on January 31, 2022. As of March 29, 2019, the effective portion of the Company’s interest rate swap agreement designated as a cash flow hedge was $0.2 million, all of which the Company expects to be reclassified from accumulated other comprehensive income (loss) to interest expense through January 31, 2022 when the agreement expires.

The fair values of the Company’s outstanding derivatives designated as hedging instruments were as follows:


		Fair Value of Derivative
		Instruments as of
	Balance Sheet Location	March 29, 2019		December 28, 2018
		(in thousands)
Interest rate swap agreement(s)	Other current (liabilities) assets	$	(23,000)	$	—
Interest rate swap agreement(s)	Other noncurrent (liabilities) assets	$	(196,000)	$	—

The impact of the effective portions of derivative instruments in cash flow hedging relationships and fair value relationships on income and other comprehensive income was $0.2 million for the three months ended March 29, 2019.

SUBSEQUENT EVENTS	3 Months Ended
SUBSEQUENT EVENTS	Mar. 29, 2019
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS	14. SUBSEQUENT EVENTS The Company evaluates subsequent events in accordance with ASC Topic 855, Subsequent Events. The Company evaluates subsequent events up until the date the condensed consolidated financial statements are issued. As of May 6, 2019, there were no subsequent events required to be reported

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

3 Months Ended

Mar. 29, 2019

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY

Basis of Presentation

The condensed consolidated statement of stockholders' equity includes unregistered sales of equity securities and use of proceeds. This amount is pre

Principles of Consolidation

Segment Information

Contract Assets and Liabilities

The increase in contract assets and decrease in contract liabilities for the three months ended March 29, 2019 were primarily attributable to normal business operations.

Off-Balance Sheet Arrangements

Off‑Balance Sheet Arrangements

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

Disaggregation of Revenue


Contract Type	Energy		Engineering and Consulting		Total
Time-and-materials	$	4,255,000	$	13,058,000	$	17,313,000
Unit-based		56,872,000		3,571,000		60,443,000
Fixed price		13,565,000		472,000		14,037,000
Total	$	74,692,000	$	17,101,000	$	91,793,000

Client Type	Energy		Engineering and Consulting		Total
Commercial	$	9,195,000	$	1,298,000	$	10,493,000
Government		8,862,000		15,671,000		24,533,000
Utilities		56,635,000		132,000		56,767,000
Total	$	74,692,000	$	17,101,000	$	91,793,000

Geography	Energy		Engineering and Consulting		Total
Domestic	$	74,692,000	$	17,101,000	$	91,793,000

Goodwill

Fair Value of Financial Instruments

The carrying amounts of derivative financial instrument is valued based on Level 2 inputs.

Use of Estimates

Liquidity

Adoption of New Accounting Standards

Statement of Cash Flows

Stock Compensation

Recent Accounting Pronouncements

Intangibles-Goodwill and Other

Proposed Accounting Standards

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

3 Months Ended

Mar. 29, 2019

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

Schedule of disaggregation of revenue


Contract Type	Energy		Engineering and Consulting		Total
Time-and-materials	$	4,255,000	$	13,058,000	$	17,313,000
Unit-based		56,872,000		3,571,000		60,443,000
Fixed price		13,565,000		472,000		14,037,000
Total	$	74,692,000	$	17,101,000	$	91,793,000

Client Type	Energy		Engineering and Consulting		Total
Commercial	$	9,195,000	$	1,298,000	$	10,493,000
Government		8,862,000		15,671,000		24,533,000
Utilities		56,635,000		132,000		56,767,000
Total	$	74,692,000	$	17,101,000	$	91,793,000

Geography	Energy		Engineering and Consulting		Total
Domestic	$	74,692,000	$	17,101,000	$	91,793,000

BUSINESS COMBINATIONS (Tables)

3 Months Ended

Mar. 29, 2019

The Weidt Group

Schedule of consideration for the acquisition


	Weidt Group
Cash paid	$	21,800,000
Other working capital adjustment		579,000
Total consideration	$	22,379,000

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


	Weidt Group
Current assets	$	2,317,000
Non-current assets (1)		25,000
Equipment and leasehold improvements, net		198,000
Right-of-use assets		1,730,000
Current lease liability		(245,000)
Non-current lease liability		(1,533,000)
Liabilities		(674,000)
Backlog		600,000
Customer relationships		3,800,000
Tradename		500,000
Developed technology		2,900,000
Goodwill		12,761,000
Net assets acquired	$	22,379,000

(1)

Excluded from non-current assets are equipment and leasehold improvements, net, customer relationships, tradename, developed technology, backlog and goodwill.

Schedule of unaudited pro forma financial information

	Three Months Ended
	March 29,		March 30,
In thousands (except per share data)	2019		2018
Pro forma revenue	$	94,120	$	92,454

Pro forma (loss) income from operations	$	(288)	$	1,597
Pro forma net (loss) income (1)	$	(437)	$	541

(Loss) earnings per share:
Basic	$	(0.04)	$	0.05
Diluted	$	(0.04)	$	0.05

Weighted average shares outstanding:
Basic		10,974		10,766
Diluted		10,974		11,198

(1)

Adjustments to pro forma net income include income from operations, amortization and interest expenses.

Lime Energy

Schedule of consideration for the acquisition


	Lime Energy
Cash paid	$	122,376,000
Other working capital adjustment		63,000
Total consideration	$	122,439,000

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


	Lime Energy
Current assets (1)	$	45,401,000
Non-current assets (2)		13,847,000
Cash		1,090,000
Equipment and leasehold improvements, net		1,892,000
Liabilities		(33,603,000)
Customer relationships		19,400,000
Tradename		5,970,000
Developed technology		10,200,000
Backlog		730,000
Goodwill		57,512,000
Net assets acquired	$	122,439,000

(1)

Excluded from current assets is cash

(2)

Excluded from non-current assets are equipment and leasehold improvements, net, customer relationships, tradename, developed technology, backlog and goodwill.

Schedule of unaudited pro forma financial information


	Three Months Ended
	March 29,		March 30,
In thousands (except per share data)	2019		2018
Pro forma revenue	$	94,120	$	92,454

Pro forma (loss) income from operations	$	(288)	$	1,597
Pro forma net (loss) income (1)	$	(437)	$	541

(Loss) earnings per share:
Basic	$	(0.04)	$	0.05
Diluted	$	(0.04)	$	0.05

Weighted average shares outstanding:
Basic		10,974		10,766
Diluted		10,974		11,198

(1)

Adjustments to pro forma net income include income from operations, amortization and interest expenses.

GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 29, 2019

GOODWILL AND OTHER INTANGIBLE ASSETS

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


	December 28,		Additional		Additions /		March 29,
Reporting Unit	2018		Purchase Cost		Adjustments		2019
Energy	$	96,999,000	$	12,761,000	$	—	$	109,760,000
Engineering and Consulting		749,000		—		—		749,000
	$	97,748,000	$	12,761,000	$	—	$	110,509,000

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


	March 29, 2019				December 28, 2018
	Gross		Accumulated		Gross		Accumulated		Amortization
	Amount		Amortization		Amount		Amortization		Period (yrs)
Backlog	$	3,114,000	$	2,202,000	$	2,514,000	$	2,155,000	0.1	-	5.0
Tradename		10,801,000		3,513,000		10,301,000		3,118,000	2.5	-	6.0
Non-compete agreements		1,420,000		1,118,000		1,420,000		1,042,000			4.0
Developed technology		15,820,000		1,545,000		12,920,000		944,000			8.0
In-process research and technology (1)		1,690,000		—		1,690,000		—			—
Customer relationships		29,019,000		3,259,000		25,219,000		2,441,000	5.0	-	8.0
	$	61,864,000	$	11,637,000	$	54,064,000	$	9,700,000

(1)

In-process research and technology will not be amortized until put into use.

Schedule of estimated amortization expense for acquired identifiable intangible assets


Fiscal year:
2020	$	8,280,000
2021		7,589,000
2022		7,402,000
2023		6,757,000
2024		3,906,000
Thereafter		9,724,000
	$	43,658,000

EARNINGS PER SHARE ("EPS") (Tables)

3 Months Ended

Mar. 29, 2019

EARNINGS PER SHARE (EPS)

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


	Three months ended
	March 29,		March 30,
	2019		2018
Net (loss) income	$	(417,000)	$	2,203,000
Weighted-average common shares outstanding		10,974,000		8,753,000
Effect of dilutive stock options and restricted stock awards		—		432,000
Weighted-average common shares outstanding-diluted		10,974,000		9,185,000
(Loss) earnings per share:
Basic	$	(0.04)	$	0.25
Diluted	$	(0.04)	$	0.24

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET (Tables)

3 Months Ended

Mar. 29, 2019

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

Schedule of equipment and leasehold improvements


	March 29,		December 28,
	2019		2018
Furniture and fixtures	$	3,623,000	$	3,551,000
Computer hardware and software		12,497,000		10,874,000
Leasehold improvements		1,491,000		1,419,000
Equipment under finance leases		1,562,000		1,304,000
Automobiles, trucks, and field equipment		2,945,000		2,635,000
		22,118,000		19,783,000
Accumulated depreciation and amortization		(12,545,000)		(11,785,000)
Equipment and leasehold improvements, net	$	9,573,000	$	7,998,000

ACCRUED LIABILITIES (Tables)

3 Months Ended

Mar. 29, 2019

ACCRUED LIABILITIES

Schedule of accrued liabilities


	March 29,		December 28,
	2019		2018
Accrued bonuses	$	198,000	$	5,273,000
Accrued interest		199,000		127,000
Paid leave bank		4,171,000		3,512,000
Compensation and payroll taxes		3,911,000		2,544,000
Accrued legal		18,000		153,000
Accrued workers’ compensation insurance		144,000		273,000
Accrued rent		—		233,000
Employee withholdings		1,677,000		2,137,000
Client deposits		354,000		280,000
Accrued subcontractor costs		21,024,000		21,446,000
Other		919,000		1,423,000
Total accrued liabilities	$	32,615,000	$	37,401,000

DEBT OBLIGATIONS (Tables)

3 Months Ended

Mar. 29, 2019

DEBT

Schedule of debt obligations, excluding obligations under capital leases


	March 29,		December 28,
	2019		2018
Outstanding borrowings on term loan	$	68,250,000	$	70,000,000
Outstanding borrowings on revolving credit facility		14,000,000		—
Notes payable for insurance, 11 month term, bearing interest at 4.3%, payable in monthly principal and interest installments of $92,296.24 through October 2019.		1,060,000		1,500,000
Notes payable for IBM Software, 36 month term, bearing interest at 4.656% payable in monthly principal and interest installments of $6,315.18 through November 2021.		179,000		211,000
Total debt obligations		83,489,000		71,711,000
Less current portion		8,100,000		8,572,000
Debt obligations, less current portion	$	75,389,000	$	63,139,000

LEASES (Tables)

3 Months Ended

Mar. 29, 2019

Leases

Summary of the lease expense


	Three Months Ended
	March 29, 2019
Operating lease cost	$	1,089,000
Finance lease cost:
Amortization of assets	$	107,000
Interest on lease liabilities		9,000
Total net lease cost	$	1,205,000

Summary of the impact of leases adoption on the Company’s condensed consolidated balance sheet


	Three Months Ended
	March 29, 2019
Operating leases:
Right-of-use assets	$	12,564,000

Lease liability		4,139,000
Lease liability, less current portion		9,452,000
Total lease liabilities	$	13,591,000

Finance leases (included in equipment and leasehold improvements, net):
Equipment and leasehold improvements, net	$	1,562,000
Accumulated depreciation		(893,000)
Total equipment and leasehold improvements, net	$	669,000

Finance lease obligations	$	435,000
Finance lease obligations, less current portion		282,000
Total finance lease obligations	$	717,000

Weighted average remaining lease term (in years):
Operating Leases		3.63
Finance Leases		1.82

Weighted average discount rate:
Operating Leases		5.50	%
Finance Leases		4.98	%

Summary of other information and supplemental cash flow information related to finance and operating leases


	Three Months Ended
	March 29, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases	$	1,109,000
Operating cash flow from finance leases		31,000
Financing cash flow from finance leases		88,000

Right-of-use assets obtained in exchange for lease liabilities:
Operating leases		851,000

Summary of the maturities of operating lease liabilities


	Operating		Finance
Fiscal year:
Remainder of 2019	$	4,684,000		458,000
2020		3,730,000		243,000
2021		2,458,000		47,000
2022		1,943,000		—
2023		898,000		—
2024 and thereafter		1,477,000		—
Total lease payments	$	15,190,000	$	748,000
Less: Imputed interest		(1,599,000)		(31,000)
Total lease obligations		13,591,000		717,000
Less: Current obligations		4,139,000		435,000
Noncurrent lease obligations	$	9,452,000	$	282,000

Summary of the maturities of finance lease liabilities

The following is a summary of the maturities of lease liabilities as of March 29, 2019 were as follows:


	Operating		Finance
Fiscal year:
Remainder of 2019	$	4,684,000		458,000
2020		3,730,000		243,000
2021		2,458,000		47,000
2022		1,943,000		—
2023		898,000		—
2024 and thereafter		1,477,000		—
Total lease payments	$	15,190,000	$	748,000
Less: Imputed interest		(1,599,000)		(31,000)
Total lease obligations		13,591,000		717,000
Less: Current obligations		4,139,000		435,000
Noncurrent lease obligations	$	9,452,000	$	282,000

SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 29, 2019

SEGMENT INFORMATION

Schedule of financial information with respect to the reportable segments


			Engineering		Unallocated				Consolidated
	Energy		& Consulting		Corporate		Intersegment		Total
Fiscal Three Months Ended March 29, 2019
Contract revenue	$	74,692,000	$	17,101,000	$	—	$	—	$	91,793,000
Depreciation and amortization		2,370,000		284,000		—		—		2,654,000
Interest expense		(447,000)		(674,000)		—		—		(1,121,000)
Segment profit (loss) before income tax expense		(1,487,000)		1,605,000		(1,462,000)		—		(1,344,000)
Income tax (benefit) expense		(1,026,000)		1,107,000		(1,008,000)		—		(927,000)
Net income (loss)		(461,000)		498,000		(454,000)		—		(417,000)
Segment assets(1)		189,739,000		22,355,000		131,400,000		(23,130,000)		320,364,000
Fiscal Three Months Ended March 30, 2018
Contract revenue	$	37,332,000	$	17,263,000	$	—	$	—	$	54,595,000
Depreciation and amortization		857,000		207,000		—		—		1,064,000
Interest expense		(20,000)		(3,000)		—		—		(23,000)
Segment profit before income tax expense		263,000		1,887,000		(189,000)		—		1,961,000
Income tax (benefit) expense		(33,000)		(233,000)		24,000		—		(242,000)
Net income (loss)		296,000		2,120,000		(213,000)		—		2,203,000
Segment assets(1)		61,625,000		18,540,000		70,947,000		(23,130,000)		127,982,000

(1)

Segment assets represent segment assets, net of intercompany receivables.

DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 29, 2019

DERIVATIVE FINANCIAL INSTRUMENTS

Schedule of fair values of outstanding derivatives designated as hedging instuments


		Fair Value of Derivative
		Instruments as of
	Balance Sheet Location	March 29, 2019		December 28, 2018
		(in thousands)
Interest rate swap agreement(s)	Other current (liabilities) assets	$	(23,000)	$	—
Interest rate swap agreement(s)	Other noncurrent (liabilities) assets	$	(196,000)	$	—

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY (Details)	3 Months Ended
	Mar. 29, 2019 state
Basis of Presentation
Length of quarters ending on the Friday closest to March 31, June 30 and September 30	91 days
Organizations na operations of the Company
Number of states in which the business operates	24
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
	Mar. 29, 2019 USD ($) subsidiary segment	Mar. 30, 2018 USD ($)	Dec. 28, 2018 USD ($)
Accounting for Contracts
Number of reportable segments \| segment	2
Costs of contract revenue
Payroll taxes, bonuses and employee benefit costs for all Company personnel	$ 15,744,000	$ 10,025,000
Retained accounts receivable	5,300,000		$ 6,700,000
Facilities costs	1,772,000	$ 1,209,000
Revenue Or Cost Of The Entity As An Agent	$ 0
Number of Wholly Owned Subsidiaries \| subsidiary	6
Cost of Sales
Costs of contract revenue
Payroll taxes, bonuses and employee benefit costs for all Company personnel	$ 0
Facilities costs	$ 0

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY - Disaggregation of Revenue (Details)	3 Months Ended
	Mar. 29, 2019 USD ($) segment	Mar. 30, 2018 USD ($)
Disaggregation of Revenue [Line Items]
Number of Reportable Segments \| segment	2
Revenue	$ 91,793,000	$ 54,595,000
Domestic
Disaggregation of Revenue [Line Items]
Revenue	91,793,000
Energy
Disaggregation of Revenue [Line Items]
Revenue	74,692,000
Energy \| Domestic
Disaggregation of Revenue [Line Items]
Revenue	74,692,000
Engineering and Consulting
Disaggregation of Revenue [Line Items]
Revenue	17,101,000
Engineering and Consulting \| Domestic
Disaggregation of Revenue [Line Items]
Revenue	17,101,000
Commercial
Disaggregation of Revenue [Line Items]
Revenue	10,493,000
Commercial \| Energy
Disaggregation of Revenue [Line Items]
Revenue	9,195,000
Commercial \| Engineering and Consulting
Disaggregation of Revenue [Line Items]
Revenue	1,298,000
Government
Disaggregation of Revenue [Line Items]
Revenue	24,533,000
Government \| Energy
Disaggregation of Revenue [Line Items]
Revenue	8,862,000
Government \| Engineering and Consulting
Disaggregation of Revenue [Line Items]
Revenue	15,671,000
Utilities
Disaggregation of Revenue [Line Items]
Revenue	56,767,000
Utilities \| Energy
Disaggregation of Revenue [Line Items]
Revenue	56,635,000
Utilities \| Engineering and Consulting
Disaggregation of Revenue [Line Items]
Revenue	132,000
Time-and-materials
Disaggregation of Revenue [Line Items]
Revenue	17,313,000
Time-and-materials \| Energy
Disaggregation of Revenue [Line Items]
Revenue	4,255,000
Time-and-materials \| Engineering and Consulting
Disaggregation of Revenue [Line Items]
Revenue	13,058,000
Unit-based
Disaggregation of Revenue [Line Items]
Revenue	60,443,000
Unit-based \| Energy
Disaggregation of Revenue [Line Items]
Revenue	56,872,000
Unit-based \| Engineering and Consulting
Disaggregation of Revenue [Line Items]
Revenue	3,571,000
Fixed price
Disaggregation of Revenue [Line Items]
Revenue	14,037,000
Fixed price \| Energy
Disaggregation of Revenue [Line Items]
Revenue	13,565,000
Fixed price \| Engineering and Consulting
Disaggregation of Revenue [Line Items]
Revenue	$ 472,000

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY - Fair Value of Financial Instruments (Details) - Interest swap agreement - Cash flow hedge $ in Millions	Jan. 31, 2019 USD ($)
Basis of Presentation
Notional amount	$ 35.0
Fixed rate (in percent)	2.47%

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY - Liquidity (Details) - USD ($)	3 Months Ended
	Mar. 29, 2019	May 03, 2019	Dec. 28, 2018	Oct. 10, 2018	Oct. 01, 2018	Jan. 20, 2017
Liquidity
Cash and cash equivalents	$ 11,061,000		$ 15,259,000
Debt, Long-term and Short-term, Combined Amount	83,489,000		71,711,000
Amount outstanding	2,700,000
Available borrowing	$ 13,300,000
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
Revolving Credit Facility
Liquidity
Debt, Long-term and Short-term, Combined Amount	$ 14,000,000
Revolving Credit Facility \| BMO
Liquidity
Debt, Long-term and Short-term, Combined Amount		$ 14,000,000
Maximum borrowing capacity	30,000,000					$ 35,000,000
Delayed Draw Term Loan Facility
Liquidity
Debt, Long-term and Short-term, Combined Amount	68,250,000		$ 70,000,000
Delayed Draw Term Loan Facility \| BMO
Liquidity
Debt, Long-term and Short-term, Combined Amount		$ 68,300,000
Maximum borrowing capacity	$ 70,000,000			$ 70,000,000	$ 90,000,000

BUSINESS COMBINATIONS (Details) - USD ($)				3 Months Ended
BUSINESS COMBINATIONS (Details) - USD ($)	Nov. 09, 2018	Oct. 01, 2018	Apr. 30, 2018	Mar. 29, 2019	Dec. 28, 2018
BUSINESS COMBINATIONS
Par value (in dollars per share)				$ 0.01	$ 0.01
Cash paid				$ 21,800,000
Lime Energy
BUSINESS COMBINATIONS
Proceeds from equity raise	$ 50,000,000
Purchase price	120,000,000	$ 122,439,000
Cash paid at closing	$ 56,400,000
Cash paid		$ 122,376,000
NAM \| Maximum
BUSINESS COMBINATIONS
Purchase price			$ 4,000,000

BUSINESS COMBINATIONS (Acquisitions) (Details) - USD ($)				3 Months Ended
	Mar. 08, 2019	Nov. 09, 2018	Oct. 01, 2018	Mar. 29, 2019	Mar. 30, 2018	Dec. 28, 2018
Consideration for acquisitions
Cash paid				$ 21,800,000
Other working capital adjustment				579,000
Allocation of acquired assets
Goodwill				110,509,000		$ 97,748,000
Unaudited pro forma financial information
Pro forma revenue				94,120	$ 92,454
Pro forma (loss) income from operations				(288)	1,597
Pro forma net (loss) income				$ (437)	$ 541
(Loss) earnings per share:
Basic (in dollars per share)				$ (0.04)	$ 0.05
Diluted (in dollars per share)				$ (0.04)	$ 0.05
Weighted average shares outstanding:
Basic (in shares)				10,974	10,766
Diluted (in shares)				10,974	11,198
Revenue and Income from operations
Revenues.				$ 91,793,000	$ 54,595,000
Income from operations				(234,000)	1,974,000
The Weidt Group
Consideration for acquisitions
Cash paid	$ 21,800,000
Other working capital adjustment	579,000
Total consideration	22,379,000
Allocation of acquired assets
Current assets	2,317,000
Non-current assets	25,000
Equipment and leasehold improvements, net	198,000
Right-of-use asset	1,730,000
Current lease liability	245,000
Lease liability noncurrent	1,533,000
Liabilities	(674,000)
Goodwill	12,761,000
Net assets acquired	22,379,000
Revenue and Income from operations
Acquisition costs				200,000
Revenues.				900,000
Income from operations				100,000
The Weidt Group \| Customer relationships
Allocation of acquired assets
Intangible assets	3,800,000
The Weidt Group \| Tradename
Allocation of acquired assets
Intangible assets	500,000
The Weidt Group \| Developed technology
Allocation of acquired assets
Intangible assets	2,900,000
The Weidt Group \| Backlog
Allocation of acquired assets
Intangible assets	$ 600,000
Lime Energy
Consideration for acquisitions
Cash paid			$ 122,376,000
Other working capital adjustment			63,000
Total consideration		$ 120,000,000	122,439,000
Allocation of acquired assets
Current assets			45,401,000
Non-current assets			13,847,000
Cash			1,090,000
Equipment and leasehold improvements, net			1,892,000
Liabilities			(33,603,000)
Goodwill			57,512,000
Net assets acquired			122,439,000
Unaudited pro forma financial information
Pro forma revenue				94,120,000	92,454,000
Pro forma (loss) income from operations				(288,000)	1,597,000
Pro forma net (loss) income				$ (437,000)	$ 541,000
(Loss) earnings per share:
Basic (in dollars per share)				$ (0.04)	$ 0.05
Diluted (in dollars per share)				$ (0.04)	$ 0.05
Weighted average shares outstanding:
Basic (in shares)				10,974,000	10,766,000
Diluted (in shares)				10,974,000	11,198,000
Revenue and Income from operations
Revenues.				$ 36,600,000
Income from operations				200,000
Lime Energy \| Other General And Administrative Expense [Member]
Revenue and Income from operations
Acquisition costs				$ 0
Lime Energy \| Customer relationships
Allocation of acquired assets
Intangible assets			19,400,000
Lime Energy \| Tradename
Allocation of acquired assets
Intangible assets			5,970,000
Lime Energy \| Developed technology
Allocation of acquired assets
Intangible assets			10,200,000
Lime Energy \| Backlog
Allocation of acquired assets
Intangible assets			$ 730,000

GOODWILL AND OTHER INTANGIBLE ASSETS - Carrying Value of Goodwill by Reporting Unit (Details)	3 Months Ended
	Mar. 29, 2019 USD ($)
Changes in carrying value of goodwill
Goodwill at beginning of period	$ 97,748,000
Additional Purchase Cost	12,761,000
Goodwill at end of period	110,509,000
Energy
Changes in carrying value of goodwill
Goodwill at beginning of period	96,999,000
Additional Purchase Cost	12,761,000
Goodwill at end of period	109,760,000
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		12 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Dec. 28, 2018
Goodwill and other intangible assets
Gross Amount	$ 61,864,000		$ 54,064,000
Accumulated Amortization	11,637,000		9,700,000
Amortization expense for acquired identifiable intangible assets	1,900,000	$ 700,000
Remainder of fiscal year 2018	6,600,000
Estimated amortization expense for acquired identifiable intangible assets
2020	8,280,000
2021	7,589,000
2022	7,402,000
2023	6,757,000
2024	3,906,000
Thereafter	9,724,000
Total estimated amortization expense	43,658,000
Goodwill impairment
Goodwill impairment	0
Backlog
Goodwill and other intangible assets
Gross Amount	3,114,000		2,514,000
Accumulated Amortization	$ 2,202,000		$ 2,155,000
Backlog \| Minimum
Goodwill and other intangible assets
Amortization Period (in years)	1 month 6 days		1 month 6 days
Backlog \| Maximum
Goodwill and other intangible assets
Amortization Period (in years)	5 years		5 years
Tradename
Goodwill and other intangible assets
Gross Amount	$ 10,801,000		$ 10,301,000
Accumulated Amortization	$ 3,513,000		$ 3,118,000
Tradename \| Minimum
Goodwill and other intangible assets
Amortization Period (in years)	2 years 6 months		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
Accumulated Amortization	$ 1,118,000		$ 1,042,000
Amortization Period (in years)	4 years		4 years
Developed technology
Goodwill and other intangible assets
Gross Amount	$ 15,820,000		$ 12,920,000
Accumulated Amortization	$ 1,545,000		$ 944,000
Amortization Period (in years)	8 years		8 years
In-process research and technology
Goodwill and other intangible assets
Gross Amount	$ 1,690,000		$ 1,690,000
Customer relationships
Goodwill and other intangible assets
Gross Amount	29,019,000		25,219,000
Accumulated Amortization	$ 3,259,000		$ 2,441,000
Customer relationships \| Minimum
Goodwill and other intangible assets
Amortization Period (in years)	5 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 ($)	3 Months Ended
EARNINGS PER SHARE (EPS) (Details) - USD ($)	Mar. 29, 2019	Mar. 30, 2018
Earnings per share
Net (loss) income	$ (417,000)	$ 2,203,000
Weighted-average common shares outstanding (in shares)	10,974,000	8,753,000
Effect of dilutive stock options and restricted stock awards (in shares)		432,000
Weighted-average common shares outstanding-diluted (in shares)	10,974,000	9,185,000
(Loss) earnings per share:
Basic	$ (0.04)	$ 0.25
Diluted	$ (0.04)	$ 0.24
Anti-dilutive securities excluded from the computation of earnings per share
Number of awards excluded from calculation of dilutive potential common shares (in shares)	0
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)		209,000

EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET (Details) - USD ($)	Mar. 29, 2019	Dec. 28, 2018	Mar. 30, 2018
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements, net	$ 22,118,000	$ 19,783,000
Accumulated depreciation and amortization	(12,545,000)	(11,785,000)
Total equipment and leasehold improvements, net	9,573,000	7,998,000
Furniture and fixtures
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements, net	3,623,000	3,551,000
Computer hardware and software
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements, net	12,497,000	10,874,000
Leasehold improvements
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements, net	1,491,000	1,419,000
Equipment
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements, net	1,562,000	1,304,000
Automobiles, trucks, and field equipment
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Equipment and leasehold improvements, net	2,945,000	$ 2,635,000
Equipment finance lease
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Accumulated depreciation and amortization	$ (107,000)		$ (374,000)

ACCRUED LIABILITIES (Details) - USD ($)	Mar. 29, 2019	Dec. 28, 2018
ACCRUED LIABILITIES
Accrued bonuses	$ 198,000	$ 5,273,000
Accrued interest	199,000	127,000
Paid leave bank	4,171,000	3,512,000
Compensation and payroll taxes	3,911,000	2,544,000
Accrued legal	18,000	153,000
Accrued workers' compensation insurance	144,000	273,000
Accrued rent		233,000
Employee withholdings	1,677,000	2,137,000
Client deposits	354,000	280,000
Accrued subcontractor costs	21,024,000	21,446,000
Other	919,000	1,423,000
Total accrued liabilities	$ 32,615,000	$ 37,401,000

DEBT - Obligations (Details) - USD ($)	3 Months Ended
DEBT - Obligations (Details) - USD ($)	Mar. 29, 2019	May 03, 2019	Dec. 28, 2018
Debt Obligations
Total debt obligations	$ 83,489,000		$ 71,711,000
Notes payable	8,100,000		8,572,000
Debt obligations, less current portion	75,389,000		63,139,000
Revolving Credit Facility
Debt Obligations
Total debt obligations	14,000,000
Revolving Credit Facility \| BMO
Debt Obligations
Total debt obligations		$ 14,000,000
Delayed Draw Term Loan Facility
Debt Obligations
Total debt obligations	68,250,000		70,000,000
Delayed Draw Term Loan Facility \| BMO
Debt Obligations
Total debt obligations		$ 68,300,000
Notes payable for insurance
Debt Obligations
Short-term Debt	$ 1,060,000		1,500,000
Maturity term	11 months
Interest rate (as a percent)	4.30%
Monthly principal and interest installment (in dollars)	$ 92,296.24
Notes payable for IBM
Debt Obligations
Notes payable	$ 179,000		$ 211,000
Maturity term	36 months
Interest rate (as a percent)	4.656%
Monthly principal and interest installment (in dollars)	$ 6,315.18

DEBT - Line of credit (Details) - USD ($)						3 Months Ended
DEBT - Line of credit (Details) - USD ($)	Jan. 31, 2019	Dec. 28, 2018	Nov. 09, 2018	Oct. 01, 2018	Jan. 20, 2017	Mar. 29, 2019	May 03, 2019	Oct. 10, 2018	Sep. 30, 2018
Debt Instrument [Line Items]
Borrowings under term loan facility and line of credit						$ 14,000,000
Percent of annual amortization	5.48%
Amount outstanding						2,700,000
Stop loss amount		$ 100,000
Percent of stop loss		125.00%
Unpaid balance of financed premiums		$ 1,500,000				1,100,000
Prior Credit Facility [Member] \| Maximum \| BMO
Debt Instrument [Line Items]
Commitment fee (as a percent)					1.50%
Prior Credit Facility [Member] \| Minimum \| BMO
Debt Instrument [Line Items]
Commitment fee (as a percent)					0.94%
Prior Credit Facility [Member] \| Federal Funds Effective Swap Rate \| Base rate \| BMO
Debt Instrument [Line Items]
Spread on floating interest rate (as a percent)					0.50%
Prior Credit Facility [Member] \| Base rate \| LIBOR \| Maximum \| BMO
Debt Instrument [Line Items]
Spread on floating interest rate (as a percent)					1.00%
Prior Credit Facility [Member] \| Base rate \| LIBOR \| Minimum \| BMO
Debt Instrument [Line Items]
Spread on floating interest rate (as a percent)					0.25%
Prior Credit Facility [Member] \| LIBOR \| Base rate \| BMO
Debt Instrument [Line Items]
Spread on floating interest rate (as a percent)					1.00%
Prior Credit Facility [Member] \| LIBOR \| Base rate \| Maximum \| BMO
Debt Instrument [Line Items]
Spread on floating interest rate (as a percent)					2.00%
Prior Credit Facility [Member] \| LIBOR \| Base rate \| Minimum \| BMO
Debt Instrument [Line Items]
Spread on floating interest rate (as a percent)					1.25%
Revolving Credit Facility \| BMO
Debt Instrument [Line Items]
Maximum borrowing capacity					$ 35,000,000	30,000,000
Letter of credit issued							$ 13,300,000
Revolving Credit Facility \| Maximum \| BMO
Debt Instrument [Line Items]
Commitment fee (as a percent)					0.35%
Revolving Credit Facility \| Minimum \| BMO
Debt Instrument [Line Items]
Commitment fee (as a percent)					0.20%
Standby letter of credit sub-facility \| BMO
Debt Instrument [Line Items]
Maximum borrowing capacity					$ 10,000,000
New Credit Facilities \| Maximum \| BMO
Debt Instrument [Line Items]
Fee on unused commitments (as a percent)				0.40%
Commitment fee (as a percent)				4.00%
New Credit Facilities \| Minimum \| BMO
Debt Instrument [Line Items]
Fee on unused commitments (as a percent)				0.20%
Commitment fee (as a percent)				0.94%
New Credit Facilities \| Federal Funds Effective Swap Rate \| Base rate \| BMO
Debt Instrument [Line Items]
Spread on floating interest rate (as a percent)				0.50%
New Credit Facilities \| Base rate \| LIBOR \| Maximum \| BMO
Debt Instrument [Line Items]
Spread on floating interest rate (as a percent)				3.00%
New Credit Facilities \| Base rate \| LIBOR \| Minimum \| BMO
Debt Instrument [Line Items]
Spread on floating interest rate (as a percent)				0.25%
New Credit Facilities \| LIBOR \| Base rate \| BMO
Debt Instrument [Line Items]
Spread on floating interest rate (as a percent)				1.00%
New Credit Facilities \| LIBOR \| Base rate \| Maximum \| BMO
Debt Instrument [Line Items]
Spread on floating interest rate (as a percent)				4.00%
New Credit Facilities \| LIBOR \| Base rate \| Minimum \| BMO
Debt Instrument [Line Items]
Spread on floating interest rate (as a percent)				1.25%
Revolving Credit Facility Member Two
Debt Instrument [Line Items]
Maximum borrowing capacity				$ 30,000,000
Revolving line of credit \| BMO
Debt Instrument [Line Items]
Maximum borrowing capacity									$ 35,000,000
Delayed Draw Term Loan Facility \| BMO
Debt Instrument [Line Items]
Maximum borrowing capacity				$ 90,000,000		$ 70,000,000		$ 70,000,000
Borrowings under term loan facility and line of credit			$ 70,000,000
Annual amortization of debt (as a Percent)				10.00%
Delayed Draw Term Loan Facility \| Interest swap agreement
Debt Instrument [Line Items]
Notional amount	$ 35,000,000
Fixed rate (in percent)	2.47%
Percent of annual amortization	10.00%
Composite interest rate	5.48%
Letters of Credit \| BMO
Debt Instrument [Line Items]
Amount outstanding							$ 2,700,000

LEASES - Narrative (Details)	Jan. 01, 2019
Leases
Lease practical expedients package	true
Lease practical expedients use of hindsight	false

LEASES - Change in accounting policy (Details) - USD ($)	Jan. 01, 2019	Mar. 29, 2019
Leases
Right-of-use assets		$ 12,564,000
Operating lease liability		13,591,000
Operating lease, option to extend	true
Operating lease, option to terminate	true
Residual value guarantee		$ 0
Minimum
Leases
Operating lease, remaining lease term	1 year
Maximum
Leases
Operating lease, remaining lease term	8 years
Operating lease, extension term	5 years
Operating lease, terminate term	1 year
Accounting Standards Update 2016-02
Leases
Right-of-use assets	$ 10,900,000
Operating lease liability	$ 11,900,000

LEASES - Lease expense (Details)	3 Months Ended
LEASES - Lease expense (Details)	Mar. 29, 2019 USD ($)
Lease cost
Operating lease cost	$ 1,089,000
Finance lease cost:
Amortization of assets	107,000
Interest on lease liabilities	9,000
Total Lease Cost	$ 1,205,000

LEASES - Impact of Adoption (Details) - USD ($)	Mar. 29, 2019	Dec. 28, 2018
Operating leases:
Right-of-use assets	$ 12,564,000
Lease liability	4,139,000
Noncurrent lease obligations	9,452,000
Total lease obligations	13,591,000
Finance leases (included in equipment and leasehold improvements, net):
Equipment and leasehold improvements, net	22,118,000	$ 19,783,000
Accumulated depreciation and amortization	(12,545,000)	(11,785,000)
Total equipment and leasehold improvements, net	9,573,000	7,998,000
Finance lease obligations	435,000	320,000
Finance lease obligations, less current portion	282,000	224,000
Total lease obligations	$ 717,000	$ 500,000
Operating Leases	3 years 7 months 17 days
Finance Leases	1 year 9 months 26 days
Operating Leases, discount rate	5.50%
Finance Leases, discount rate	4.98%
Finance leased assets
Finance leases (included in equipment and leasehold improvements, net):
Equipment and leasehold improvements, net	$ 1,562,000
Accumulated depreciation and amortization	(893,000)
Total equipment and leasehold improvements, net	$ 669,000

LEASES - Supplemental cash flow information (Details) - USD ($)	3 Months Ended
	Mar. 29, 2019	Mar. 30, 2018
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flow from operating leases	$ 1,109,000
Operating cash flow from finance leases	31,000
Financing cash flow from finance leases	88,000	$ 90,000
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	$ 851,000

LEASES - Maturities of lease liabilities (Details) - USD ($)	Mar. 29, 2019	Dec. 28, 2018
Operating
Remainder of 2019	$ 4,684,000
2020	3,730,000
2021	2,458,000
2022	1,943,000
2023	898,000
2024 and thereafter	1,477,000
Total lease payments	15,190,000
Less: Imputed interest	(1,599,000)
Total lease obligations	13,591,000
Lease liability	4,139,000
Noncurrent lease obligations	9,452,000
Finance
Remainder of 2019	458,000
2020	243,000
2021	47,000
Total lease payments	748,000
Less: Imputed interest	(31,000)
Total lease obligations	717,000	$ 500,000
Finance lease obligations	435,000	320,000
Finance lease obligations, less current portion	$ 282,000	$ 224,000

LEASES - Capital Leases (Details) - USD ($)	Mar. 29, 2019	Dec. 28, 2018
Leases
Capital lease obligations	$ 717,000	$ 500,000
Finance lease obligations	$ 435,000	320,000
New Right of Use Assets - Finance Leases		$ 500,000

COMMITMENTS - Employee Benefit Plans (Details)	3 Months Ended
COMMITMENTS - Employee Benefit Plans (Details)	Mar. 29, 2019 USD ($)
Employee Benefit Plans
Maximum employee contribution as a percentage of compensation under 401 (k) Plan	50.00%
Service period (in months)	3 months
Attained age (in years)	21 years
Defined Contribution Plan, Employer Matching Contribution, Percent of Match	50.00%
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay	6.00%
Employer matching contributions	$ 700,000
Post-Employment Health Benefits
Unamortized compensation cost	$ 0

INCOME TAXES - Operating Loss Carryovers and Unrecognized Tax Benefits (Details) - USD ($)	3 Months Ended
	Mar. 29, 2019	Mar. 30, 2018	Dec. 28, 2018
INCOME TAXES
Valuation reserve related to California net operating losses			$ 87,000
Valuation allowance change	$ 0
Unrecognized tax benefits	400,000
Liability for uncertain tax positions	400,000
Interest and penalties related to unrecognized tax benefits	0
Income tax expense (benefit)	$ (927,000)	$ (242,000)
Reduction in effective tax rate	21.50%

SEGMENT INFORMATION (Details)	3 Months Ended
SEGMENT INFORMATION (Details)	Mar. 29, 2019 USD ($) segment	Mar. 30, 2018 USD ($)	Dec. 28, 2018 USD ($)
SEGMENT INFORMATION
Number of operating segments \| segment	2
Number of reporting segments \| segment	2
Segment reconciliation
Contract revenue	$ 91,793,000	$ 54,595,000
Depreciation and amortization	2,654,000	1,064,000
Interest expense	(1,121,000)	(23,000)
Segment profit (loss) before income tax expense	(1,344,000)	1,961,000
Income tax benefit	(927,000)	(242,000)
Net income (loss)	(417,000)	2,203,000
Segment assets(1)	320,364,000	127,982,000	$ 301,836,000
Energy
Segment reconciliation
Contract revenue	74,692,000
Engineering and Consulting
Segment reconciliation
Contract revenue	17,101,000
Reporting Segments \| Energy
Segment reconciliation
Contract revenue	74,692,000	37,332,000
Depreciation and amortization	2,370,000	857,000
Interest expense	(447,000)	(20,000)
Segment profit (loss) before income tax expense	(1,487,000)	263,000
Income tax benefit	(1,026,000)	(33,000)
Net income (loss)	(461,000)	296,000
Segment assets(1)	189,739,000	61,625,000
Reporting Segments \| Engineering and Consulting
Segment reconciliation
Contract revenue	17,101,000	17,263,000
Depreciation and amortization	284,000	207,000
Interest expense	(674,000)	(3,000)
Segment profit (loss) before income tax expense	1,605,000	1,887,000
Income tax benefit	1,107,000	(233,000)
Net income (loss)	498,000	2,120,000
Segment assets(1)	22,355,000	18,540,000
Unallocated Corporate
Segment reconciliation
Segment profit (loss) before income tax expense	(1,462,000)	(189,000)
Income tax benefit	(1,008,000)	24,000
Net income (loss)	(454,000)	(213,000)
Segment assets(1)	131,400,000	70,947,000
Intersegment
Segment reconciliation
Contract revenue	0	0
Segment assets(1)	$ (23,130,000)	$ (23,130,000)

DERIVATIVE FINANCIAL INSTRUMENTS (Details) - Interest swap agreement - USD ($) $ in Millions	3 Months Ended
	Mar. 29, 2019	Jan. 31, 2019
Delayed Draw Term Loan Facility
Derivative [Line Items]
Notional amount		$ 35.0
Fixed rate (in percent)		2.47%
Cash flow hedge
Derivative [Line Items]
Notional amount		$ 35.0
Fixed rate (in percent)		2.47%
Effective portion of interest rate swap designated as cash flow hedge before tax effect	$ 0.2

DERIVATIVE FINANCIAL INSTRUMENTS - Fair Values (Details) - Designated as hedging instruments - Interest swap agreement	Mar. 29, 2019 USD ($)
Other current (liabilities) assets
Derivatives, Fair Value [Line Items]
Fair value of Derivative Instruments	$ (23,000)
Other noncurrent (liabilities) assets
Derivatives, Fair Value [Line Items]
Fair value of Derivative Instruments	$ (196,000)

DERIVATIVE FINANCIAL INSTRUMENTS - Others (Details) $ in Millions	3 Months Ended
	Mar. 29, 2019 USD ($)
Cash flow hedge
Derivative [Line Items]
Effective portion	$ 0.2
Fair Value Hedging [Member]
Derivative [Line Items]
Effective portion	$ 0.2

BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY - Fiscal Years (Details)	3 Months Ended
	Mar. 29, 2019 entity
BASIS OF PRESENTATION, ORGANIZATION AND OPERATIONS OF THE COMPANY
Number of VIE	1