---

---

UNITED
STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

xANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL
YEAR ENDED JANUARY 2, 2004

OR

oTRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE 
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _________ TO ________

COMMISSION FILE
NUMBER 0-24343

Answerthink,
Inc.(Exact name of registrant as specified in its charter)

|FLORIDA                                                            |  | 65-0750100                                  
|------------------------------------------------------------------ |  | --------------------------------------------
|(State
  or other jurisdiction of
  incorporation or organization) |  | (I.R.S.
  Employer 
  Identification Number)
|                                                                   |  |                                             
|1001
  Brickell Bay Drive, Suite 3000
  Miami, Florida             |  | 33131                                       
|(Address
  of principal executive offices)                         |  | (Zip
  Code)                                

(305)
375-8005(Registrants telephone number, including area code)

Securities
registered pursuant to Section 12(b) of the Act: None

Securities
registered pursuant to Section 12(g) of the Act: Common Stock, par value $.001
per share

Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YESx 
NO o

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. o

Indicate
by check mark whether the registrant is an accelerated filer (as defined in
Exchange Act Rule 12b-2 of the Securities Exchange Act of 1934). YESx NO o

The
aggregate market value of the common stock held by non-affiliates of the
registrant was $105,874,553 on July 3, 2003 based on the last reported sale
price of the registrants common stock on the Nasdaq National Market.

The
number of shares of the registrants common stock outstanding on March 5, 2004
was 44,872,006.

DOCUMENTS
INCORPORATED BY REFERENCE

Part III of the Form 10-K incorporates by reference certain portions of the
registrants proxy statement for its 2004 Annual Meeting of Stockholders to be
filed with the Commission not later than 120 days after the end of the fiscal
year covered by this report.

---

---

ANSWERTHINK,
INC.

FORM
10-K

TABLE
OF CONTENTS

|                  |                                                                                         | Page
|----------------- | --------------------------------------------------------------------------------------- | ----
|                  |                                                                                         |     
|PART I           
|                  |                                                                                         |     
|ITEM 1.           | Business                                                                                | 3   
|                  |                                                                                         |     
|ITEM 2.           | Properties                                                                              | 14  
|                  |                                                                                         |     
|ITEM 3.           | Legal Proceedings                                                                       | 14  
|                  |                                                                                         |     
|ITEM 4.           | Submission of Matters to a Vote of
  Security Holders                                   | 15  
|                  |                                                                                         |     
|PART II          
|                  |                                                                                         |     
|ITEM 5.           | Market for Registrants Common
  Equity and Related Stockholder Matters                 | 16  
|                  |                                                                                         |     
|ITEM 6.           | Selected Consolidated Financial Data                                                    | 17  
|                  |                                                                                         |     
|ITEM 7.           | Managements Discussion and Analysis
  of Financial Condition and Results of Operations | 18  
|                  |                                                                                         |     
|ITEM 7A.          | Quantitative and Qualitative
  Disclosures about Market Risk                            | 25  
|                  |                                                                                         |     
|ITEM 8.           | Financial Statements and
  Supplementary Data                                           | 26  
|                  |                                                                                         |     
|ITEM 9.           | Changes in and Disagreements with
  Accountants on Accounting and Financial Disclosures | 48  
|                  |                                                                                         |     
|ITEM 9A.          | Control and Procedures                                                                  | 48  
|                  |                                                                                         |     
|PART III         
|                  |                                                                                         |     
|ITEM 10.          | Directors and Executive Officers of
  the Registrant                                    | 48  
|                  |                                                                                         |     
|ITEM 11.          | Executive Compensation                                                                  | 48  
|                  |                                                                                         |     
|ITEM 12.          | Security Ownership of Certain
  Beneficial Owners and Management                        | 48  
|                  |                                                                                         |     
|ITEM 13.          | Certain Relationships and Related
  Transactions                                        | 48  
|                  |                                                                                         |     
|ITEM 14.          | Principal Accounting Fees and
  Services                                                | 49  
|                  |                                                                                         |     
|PART IV          
|                  |                                                                                         |     
|ITEM 15.          | Exhibits, Financial Statement
  Schedules and Reports on Form 8-K                       | 49  
|                  |                                                                                         |     
|Signatures        | 50                                                                                     
|                  |                                                                                         |     
|Index to Exhibits | 51                                                                                     

-2-

---

---

CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS

This
report and the information incorporated by reference in it include
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
We intend the forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements in these sections. All statements
regarding our expected financial position and operating results, our business
strategy, our financing plans and forecasted demographic and economic trends
relating to our industry are forward-looking statements.  These statements can sometimes be identified
by our use of forward-looking words such as may, will, anticipate,
estimate, expect, or intend and similar expressions. These statements
involve known and unknown risks, uncertainties and other factors that may cause
our actual results, performance or achievements to be materially different from
the results, performance or achievements expressed or implied by the
forward-looking statements. We cannot promise you that our expectations in such
forward-looking statements will turn out to be correct. Factors that impact
such forward looking statements include, among others, our ability to attract
additional business, the timing of projects and the potential for contract
cancellation by our customers, changes in expectations regarding the
information technology industry, our ability to attract and retain skilled
employees, possible changes in collections of accounts receivable, risks of
competition, price and margin trends, changes in general economic conditions
and interest rates, and the risk that the Internal Revenue Service or the
courts may not accept the amount or nature of one or more items of deduction,
loss, income or gain as reported by Answerthink for tax purposes. An additional
description of our risk factors is described in Part 1  Item 1 Business 
Risk Factors. We undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise.

PART I

ITEM 1.  BUSINESS

GENERAL

Answerthink,
Inc. is a leading business and technology consulting firm that provides services designed to enable
companies to achieve world-class business performance. By leveraging the
comprehensive database of the Hackett Group, the worlds leading repository of
enterprise best practice metrics and business process knowledge, our business
and technology solutions help clients improve performance and maximize returns
on technology investments. Our capabilities include benchmarking, business
transformation, business applications, business intelligence, and offshore
application development and support.

In
this Form 10-K, unless the context otherwise requires, Answerthink, the
Company, we, us, and our refer to Answerthink, Inc. and its
subsidiaries and predecessors.

INDUSTRY
BACKGROUND

For
the first time in the past four years, business and technology consultancies
experienced a very slight increase in business activity in 2003 due to the
economic recovery. For 2004, market observers are predicting a moderate rebound
in IT spending, though a return to the high growth years of the late 1990s is
unlikely. Throughout the last few years, companies have placed heavy emphasis
on risk management and tangible return on their business and technology
investments. As the economy begins to recover, we believe large enterprises will center
their IT spending on tools that help them generate more value from past
investments. Specifically, we believe they will be looking to derive maximum value from
their existing enterprise applications. We believe, enabling technologies will be used to
complement and extend the capabilities of enterprise and key functional
systems. For example, Business Process Management (BPM) tools will give
companies increased visibility into key business processes that reach across
functional and organizational boundaries. Not only may BPM help reduce error
rates and cycle times by automating workflow, it may also increase the
efficiency and productivity of all the people and systems that collaborate on
individual processes.

We believe there
will also be market opportunity around the need for better real-time
performance measurement and strategic decision-making. Many companies are
seeking to link optimized processes directly to technology and consolidate the
gains of their business process re-engineering efforts. Enterprise applications
and BPM software will play a key role. We expect companies to embed optimized processes
directly into Enterprise Resource Planning (ERP) systems, and use BPM and other
enabling technologies to improve ongoing management and control, so they can
ensure that streamlined or re-

-3-

---

---

engineered processes continue to deliver cost and
performance improvements in the future. Business intelligence, analytics and
knowledge management applications
 are expected to also play an increasingly significant role in the future as companies seek
to generate more valuable insight and analysis from their operational and
financial data. We believe that these enabling technologies point the way to tomorrows
real-time enterprises which will be capable of nearly instantaneous views of
current performance and more accurate and efficient planning, forecasting and
reporting.

OUR
APPROACH

Answerthink
provides services designed to enable companies to achieve world-class business
performance by combining intellectual capital from The Hackett Group, with its
extensive database of business process best practices and performance
measurement results, and Answerthinks proprietary Best Practice Implementation
(BPI) approach, which is based on proven implementation techniques. Hacketts
services help clients understand how well they are performing today compared
with the worlds most effective companies, while Answerthink specialists have
the skills and experience to implement solutions, based on client performance
measurement results, to drive them toward world-class performance. Hackett
provides deep insight into how top-performing companies operate, and
Answerthink applies those best practices to generate cost and performance gains
for clients. Specifically, Answerthink uses best practice process flows and
configuration guides to integrate Hacketts empirically proven best practices
directly into enterprise applications and enabling technologies.

Because
our solutions are based on Hackett-certified best practices, clients gain a
significant advantage. They can have confidence that their solutions are based
on strategies from the worlds leading companies. This clearly defined path to
world-class performance delivers enhanced efficiency, improved effectiveness,
increased flexibility, optimized return on investment and reduced
implementation risk.

The
BPI approach begins with a clear understanding of current performance, which is
gained through measuring key processes and comparing the results to world-class
levels and industry standards captured in the Hackett database. We then help
clients prioritize and select the appropriate best practices to implement
through a coordinated performance improvement strategy. Without a coordinated
strategy that addresses the four key business drivers of people, process,
technology and information, companies risk losing a significant portion of
business case benefits. Based on Hacketts deep knowledge of world-class
business performance, we have designed detailed best practice process flows
which enable clients to streamline and automate key processes, and generate
performance improvements quickly and efficiently at both the functional and
enterprise level.

Similarly,
we integrate Hackett Best Practices directly into technology solutions. Because
todays business applications are flexible, it is imperative to simplify and
automate processes to meet best practice standards before new technology
implementations and upgrades are completed. Otherwise, old, inefficient
processes will simply be automated and continue to drive up costs, cycle times
and error rates. Answerthink has completed detailed fit-gap analyses, in most
functional areas of major business application packages from Lawson, Oracle,
Hyperion, PeopleSoft and SAP to determine their ability to support best
practices. Application-specific tools, implementation guides and process flows
allow us to optimize the configuration of ERP software, while limiting customization.
These best practice implementations establish the foundation for improved
performance. Building on that foundation a new breed of enabling technologies
complement enterprise systems to drive further performance gains. These
technologies, which include business process management software, portals,
business intelligence and analytics, and knowledge management, enhance
real-time business process management, visibility and decision-making.

This
combination of optimized processes, a best practices-based business application
environment and the right enabling technologies allows our clients to achieve
and sustain significant business performance improvement.

COMPETITION

Even
as the economy has slowed these last few years, competition in the technology
consulting marketplace has heated up. 
It will be even more intense as the economy rebounds and as new
opportunities are created as companies begin to spend more on their
business and IT infrastructure.  Our
competitors include international, national and regional systems consulting and
implementation firms, and the IT services divisions of application software
firms. Mergers, consolidation and bankruptcies throughout our industry have
resulted in higher levels of competition. There is great pressure to complete
projects quickly, control costs and maintain efficient operations.

-4-

---

---

Still,
we believe our competitive position is strong. Because of our Hackett
intellectual capital and its direct link to our BPI approach, we believe we can
assist clients better than our competitors. Our ability to apply best practices
to client operations via proven techniques further strengthens our competitive
standing.

Answerthinks
culture of collaboration leverages the power of our cross-functional and
service line teams to increase revenue and strengthen relationships. We believe
that this culture, along with our multidisciplinary approach, allows us to
compete favorably.

STRATEGY

Moving
forward, Answerthinks focus is on executing the following strategies:

| |  | The integration of our Hackett best practices
  knowledge database into our business and technology solutions. This
  initiative was started at the end of 2002 and continued throughout 2003 with
  the introduction of our innovative Best Practice Implementation (BPI) service
  delivery approach. Formally launched in the fourth quarter of 2002, BPI
  continues to receive very favorable reaction from clients. For this reason,
  BPI and our expanded Hackett offerings will be the focus of our marketing and
  communications programs for 2004.  We
  believe that this will drive both greater understanding of and demand for
  this approach. We will continue to train associates in all of our practices
  about BPI so they are equipped with the knowledge and tools necessary to
  share our vision with existing and prospective clients. BPI incorporates
  intellectual capital from The Hackett Group into our proven implementation
  tools and techniques. For clients, the end results are tangible cost and
  performance gains and the improved return on investment they are seeking in
  this difficult economic environment. We will continue to enhance and expand
  the BPI toolkit, which includes best practice process flows and
  application-specific configuration guides. 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | Enhancement of our Hackett offerings with new and
  renewable services. In 2003, we continued to expand and aggressively grow the
  Hackett offerings by reorganizing our benchmarking products and launching our
  business advisory services. We have also developed renewable collaborative
  learning products that allow executives to compare performance and share
  insights and learn from their peers in a confidential environment. Our
  benchmarking offerings help companies identify and quantify opportunities
  for operational improvements in functional areas and efficiently measure and
  track the degree of improvement against specific internal and peer
  performance targets over multi-year periods. We also launched our business
  advisory service (BAS) in 2003 which targets executives seeking guidance and
  proven strategies on operational and strategic issues.  We continue to develop advisory products
  that will allow clients to efficiently realize the benefits identified in the
  Hackett benchmarking services.                                                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | Further leveraging our unique best practice knowledge
  through strategic alliances. Because of Answerthinks understanding of how to
  optimize processes and software configuration with proven best practices, a
  relationship with a larger provider of comprehensive business and IT services
  represents a logical opportunity to expand our client base. Our strategic
  relationship with Accenture, L.L.P., a leading provider of consulting services,
  gives them the exclusive right to collaborate with Answerthink and The
  Hackett Group in offering to their clients business process and best
  practices benchmarking services in designated functional areas, including
  finance, accounting, performance management, and business intelligence.  In situations where Accenture uses Hackett
  or Answerthink intellectual capital, Answerthink has an opportunity to staff
  up to 15% of the project positions of each engagement jointly pursued.  If Hackett or Answerthink is the lead
  source on jointly pursued opportunities with Accenture, then Answerthink will
  have the opportunity to staff up to 25% of the positions.  Our strategy is to execute on this current
  alliance and expand to other functional areas as well as geographic locations
  outside of North America.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | Strategic Acquisitions. We will continue to pursue
  strategic acquisitions that strengthen our ability to compete. In 2003, we
  acquired Beacon Analytics, Inc., a business performance management consulting
  company focused on the implementation of Hyperion software. Given our current
  financial position and distinct value proposition, Answerthink is well
  positioned to pursue acquisition opportunities such as Beacon Analytics, Inc. in
  the U.S., as well as offshore firms in India.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

-5-

---

---

THE
ANSWERTHINK SOLUTION

Answerthink
offers a comprehensive range of services, including benchmarking and business
advisory services, business transformation, enterprise business applications,
business intelligence and offshore application development support. With
strategic and functional knowledge in finance, human resources, information
technology, procurement supply chain management, customer service and sales and
marketing, our expertise extends across the enterprise. We have completed
successful engagements in a variety of industries, including automotive,
consumer goods, financial services, high tech, life sciences, manufacturing,
media and entertainment, retail, telecommunications, transportation and
utilities.

Service
Capabilities

        The Hackett Group

The
Hackett Group has measured and evaluated the efficiency and effectiveness of
enterprise functions at over 2,000 global organizations since 1991. Since
Hacketts inception, it has served 97 percent of the Dow Jones Industrials, 81
percent of the Fortune 100, and 92 percent of the Dow Jones Global Titans
Index. Ongoing studies are conducted in a wide range of areas, including
finance, human resources, information technology, procurement, SG&A and
shared service centers. Hackett has identified nearly 1,200 best practices for
approximately 100 processes in these key functional areas. Hackett uses
proprietary performance measurement tools and a data collection software that
enables companies to complete the performance measurement cycle and identify
and quantify improvement opportunities in as little as four weeks.
Additionally, Hackett offers a full range of services to executives such as
advisory inquiries, peer interaction, and access to an online repository of
best practices data.  Topics range from
finance and ERP optimization to forecasting and accounts payable.

        Business Transformation

Answerthinks
Business Transformation services help clients develop a coordinated strategy
for process improvements across the enterprise. Our experienced teams use
reliable performance measurement data to link performance gains to industry
best practices. Our strategic capabilities include operational planning,
process and organization design, change management and the effective application
of technology.  Answerthink combines
best practices knowledge with business expertise and broad technology
capabilities, which we believe enables our solutions to optimize return on
client investments in people, processes, technology and information.

        Business Applications

Our
Business Applications professionals help clients choose and deploy the software
applications that best meet their needs and objectives. The group offers
comprehensive services from planning, architecture, and vendor evaluation and
selection through implementation, customization, testing and integration. Our
expertise is focused on the following application providers: Lawson, Oracle,
PeopleSoft, SAP, Siebel, and several leading time and attendance providers.
Furthermore, comprehensive fit-gap analyses of all major packages against
Hackett Best Practices have been completed. Proven tools and templates help
integrate best practices into business applications. The group also offers
post-implementation support, change management, system documentation and end-user
training, all of which are designed to enhance return on investment.

        Business Intelligence

Based
on our extensive best practices knowledge, our Business Intelligence group
designs, develops and implements IT solutions for more effective enterprise
performance management (EPM) and business intelligence (BI). Our BI experts
know how to apply and implement custom or packaged analytical applications such
as Hyperion and Cognos to increase process transparency, exception management,
and create continuous improvement environments. Similarly, our BI services are
designed to increase visibility into current performance, improve access to key
financial and operational data, and enhance strategic decision making. The
group offers strategy and management services, including operational
diagnostics and planning and enterprise architecture. Further, we assist
clients in improving business performance by rationalizing IT infrastructures,
and selecting the right enabling technologies, such as Web services, portals
and BPM software, to complement enterprise systems and facilitate information
sharing and process integration inside and outside the enterprise.

-6-

---

---

        Off-Shore Application Development and Support

Through strategic alliance partners,
Answerthink provides offshore application development and support services.
Services include post-implementation support for enterprise systems, legacy
system and custom application maintenance, custom development and application
reporting services.

CLIENTS

Answerthink
focuses on long-term client relationships with Global 2000 firms and other
sophisticated buyers of business and IT consulting. During 2003, our ten most
significant clients accounted for approximately 39% of revenues. No clients
generated more than 10% of total revenues.

We
believe that we have achieved a high level of satisfaction across our client
base in 2003. The responses to the surveys we send to clients continue to be
extremely positive. During 2003, we received surveys from a significant number
of our engagements with a weighted average score of 4.5 on a 5.0 scale. The
direct feedback and suggestions we receive on surveys are captured and used to
continuously improve our delivery execution, sales processes, methodologies and
training.

BUSINESS DEVELOPMENT AND MARKETING

Our
extensive client base and relationships with Global 2000 firms remain our most
significant sources of new business. Our revenue generation strategy is
formulated to ensure we are addressing the multiple facets of business
development. The categories below define our business development resources and
market segmentation. Our primary goal in 2004 is to increase
awareness of our brand that we have created around Hackett and BPI.  Our Hackett and BPI message will be the
focus of our marketing and communications programs this year as we drive both
an understanding of and demand for this approach. Similarly, we have increased
our Hackett sales resources and established compensation programs that reward
the linkage between sales of Hackett services and Answerthink implementation
solutions.

BUSINESS
DEVELOPMENT RESOURCES

Although
virtually all of our consultants have the ability to contribute to new revenue
opportunities, our primary internal business development resources are
comprised of the following:

| |  | The Leadership Team            
| | - | -------------------------------
| |  | The Sales Organization         
| |  | The Solution Strategist Network
| |  | Lead Generation Specialists    
| |  | The Delivery Organization      

| | The Leadership Team
  is comprised of the senior leaders within Answerthink who have a combination
  of executive, functional, practice and anchor account responsibilities. In
  addition to their management responsibilities, this group of associates is
  responsible for growing business by fostering executive level relationships
  within accounts and leveraging their existing contacts in the
  marketplace.                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The Sales Organization
  is comprised of associates who are 100% dedicated to generating sales. They
  are deployed geographically in key markets and are primarily focused on
  developing new relationships within their target accounts. Each sales
  associate has between two and ten target accounts split between existing
  clients and select Global 2000 prospects. They represent the entire
  Answerthink offering. They also handle geographic-related opportunities as
  they arise.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | The Solution Strategist Network
  is comprised of associates throughout our various practices who are primarily
  dedicated to developing new business. Solution strategists possess deep
  subject matter expertise within a specific discipline and receive incentive
  compensation on the amount of revenue they generate in addition to other
  criteria.                                                                                                                                    

-7-

---

---

| | Solution strategists sell new business in geographic
  accounts and collaborate with the sales organization on target account
  opportunities to provide content expertise.                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                        
| | Lead Generation Specialistsare comprised of
  trained groups of lead development specialists who are conversant with
  its various solution areas. Lead generation is coordinated with our marketing
  and sales groups to ensure that our inbound and outbound efforts are
  synchronized with targeted marketing and sales programs.  This group is targeted for expansion in
  2004.
| |                                                                                                                                                                                                                                                                                                                                                                                        
| | The Delivery Organizationis
  comprised of our billable associates who work at client locations. We
  encourage associates to pursue additional business development opportunities
  through their normal course of delivering existing projects, thereby helping
  the company expand our business within existing accounts.                                                          

In
addition to our business development team, we have a corporate marketing and
communications organization responsible for overseeing Answerthinks marketing
programs, public relations and employee communications activities.

MARKET
SEGMENTATION

We
have segmented our market focus into the following categories:

| |  | Top 25 Accounts            
| | - | ---------------------------
| |  | Target Accounts            
| |  | Geographic Focus Accounts  
| |  | Strategic Alliance Accounts

| | Top 25 Accountsare
  a mix of our largest existing clients and our most strategic prospects. To
  facilitate proper account management, each top 25 account has a leadership
  team member assigned to perform the role of client executive, an associate
  from the sales, solution strategist or delivery organizations to perform the
  role of account manager, and an associate from the delivery organizations to
  perform the role of delivery leader.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Target Accountsare
  comprised of prospects and clients who are geographically situated where a
  sales representative resides. Criteria for inclusion as a target account
  includes the size of the company, industry affiliation, propensity to buy
  external consulting services and contacts within the account. The sales
  representative is primarily responsible to identify business opportunities in
  the account, act as the single point of coordination for the client and
  perform the general duties of account manager.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Geographic Focus Accountsare
  accounts within a specified geography that fall neither within the top 25 or
  target account lists. These accounts can include large prospects, dormant
  clients, existing medium-sized clients and mid-tier market accounts. This
  account set is handled primarily on an opportunistic basis, except for active
  clients where delivery teams are focused on driving additional revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Strategic Alliance Accountsare
  accounts that allow Answerthink and The Hackett Group to partner with
  organizations with greater scale or different skill sets or with software
  developers so that all parties can jointly market their products and services
  to prospective clients.  An example of
  this type of alliance is the agreement with Accenture that was signed in 2003.
  This agreement gives Accenture the exclusive right to collaborate with
  Answerthink and The Hackett Group in offering its clients business process
  and best practice benchmarking services provided by Answerthink and The
  Hackett Group in designated functional areas, including finance, accounting,
  performance management, and business intelligence.  Under the agreement, we have the ability to expand into
  additional enterprise functional areas and geographies.  The agreement gives Answerthink access to
  Accentures global client base and sales distribution channel and by working
  with more clients, Hackett will be able to broaden the base of critical
  metrics and best practices, thereby creating even richer benchmark data to
  help companies achieve world-class performance. But most importantly this
  type of alliance allows Answerthink to staff a portion of the consulting
  positions for each engagement that is jointly closed with Accenture.  Answerthink continues to seek alliances
  that broaden its distribution channel.

-8-

---

---

MANAGEMENT
SYSTEMS

Our
management control systems are comprised of various accounting, billing,
financial reporting, human resources, marketing and resource allocations
systems, many of which are integrated with our knowledge management system,
Mind~Share. We continuously work to improve Mind~Share, as well as our
infrastructure and management control systems, which we believe represents a
competitive advantage for us. We believe that Mind~Share significantly enhances
our ability to serve our clients efficiently by allowing our knowledge base to
be shared by all of our consultants worldwide on a real-time basis. Our
well-developed, flexible, scalable infrastructure has allowed us to quickly
integrate the new employees and systems of businesses we have acquired.

HUMAN
RESOURCES

We
believe that our culture fosters intellectual rigor and creativity,
collaboration and innovation. We believe in building relationships with our
clients. We believe the best solutions come from teams of diverse individuals
addressing problems collectively and from multiple dimensions, including the
business, technological and human dimensions. We believe that the most
effective working environment is one where everyone is encouraged to
contribute.

We
believe that Answerthinks central values are the strongest expression of our
working style. They represent the behavior we want to encourage and the people
we want to develop. They are what, at our core, we really stand for. These
central values are:

| |  | Diversity: of backgrounds, skills and
  experiences                      
| | - | -------------------------------------------------------------------------
| |  | Knowledge: as individuals and a system of
  individuals                  
| |  | Collaboration: with one another, with our partners
  and with our clients

Our
human resources staff includes dedicated resources to recruit consultants with
both business and technology expertise. Our recruiting team drives our hiring
process by focusing on the highest demand solution areas of our business to
ensure an adequate pipeline of resources. We also have an employee referral
program, which rewards existing employees who source new hires.

The
benefits package that we provide includes comprehensive health and welfare
insurance, work/life balance programs, a 401(k) program including a company
match for associates below the level of senior director, stock options for
directors and above and a stock purchase program. Our associates are paid
competitive salaries and incentive pay. Incentive pay for delivery resources is
based on an individuals utilization while incentive pay for management is based
on company performance.

As
of January 2, 2004, we had approximately 620 associates, approximately 80% of
whom were billable professionals. None of our associates are subject to
collective bargaining arrangements. We have entered into nondisclosure and
non-solicitation agreements with virtually all of our personnel. We engage
consultants as independent contractors from time to time.

COMMUNITY
INVOLVEMENT

One
important way we put our values into action is through our commitment to the
communities where we work. The mission of Answerthinks Community Council,
which operates in each of the cities where we have offices, is to strive to
leave the markets, communities and clients we serve better than we found them.
We do it by building a strong sense of community, collaboration and personal
interaction among all of our associates, through both volunteer and service
programs and social gatherings. Answerthinks associates are actively involved
in many valuable and high-impact community programs, including United Way,
Ronald McDonald House, Big Brothers & Sisters, Race for the Cure,
Make-A-Wish Foundation, Habitat for Humanity, the National Adoption Center, the
National Heart Association and Special Olympics.

-9-

---

---

AVAILABLE
INFORMATION

We
make our public filings with the Securities and Exchange Commission, including
our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K and all exhibits and amendments to these reports, available free of
charge at our web site http://www.answerthink.com as soon as reasonably
practicable after we electronically file such material with, or furnish it to,
the Securities and Exchange Commission. Any material that we file with the
Securities and Exchange Commission may be read and copied at the Securities and
Exchange Commissions Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C.  20549. Information on
the operation of the Public Reference Room may be obtained by calling the
Securities and Exchange Commission at 1-800-SEC-0330.

Also
available on our web site, free of charge, are copies of our Code of Conduct
and Ethics, and the charter for our audit committee of our Board of
Directors.  We intend to disclose any
amendment to, or waiver from, a provision of our Code of Conduct and Ethics on
our web site within five business days following the date of the amendment or
waiver.

RISK
FACTORS

The
following important factors, among others, could cause actual results to differ
materially from those contained in forward-looking statements made in this
Annual Report on Form 10-K or printed elsewhere by management from time to
time.

Our quarterly operating results may vary.

Our
financial results may fluctuate from quarter to quarter.  In future quarters, our operating results
may not meet public market analysts and investors expectations.  If that happens, the price of our common
stock may fall. Many factors can cause these fluctuations, including:

| |  | the number, size, timing and scope of client
  engagements;                 
| | - | ----------------------------------------------------------------------------
| |   |                                                                             
| |  | customer concentration;                                                     
| |   |                                                                             
| |  | long and unpredictable sales cycles;                                        
| |   |                                                                             
| |  | contract terms of client engagements;                                       
| |   |                                                                             
| |  | degrees of completion of client engagements;                                
| |   |                                                                             
| |  | client engagement delays or cancellations;                                  
| |   |                                                                             
| |  | competition for and utilization of employees;                               
| |   |                                                                             
| |  | how well we estimate the resources we need to
  complete client engagements;
| |   |                                                                             
| |  | the integration of acquired businesses;                                     
| |   |                                                                             
| |  | pricing changes in the industry;                                            
| |   |                                                                             
| |  | economic conditions specific to information
  technology consulting; and    
| |   |                                                                             
| |  | general economic conditions.                                                

A
high percentage of our operating expenses, particularly personnel and rent, are
fixed in advance of any particular quarter. As a result, if we experience
unanticipated changes in client engagements or in employee utilization rates,
we could

-10-

---

---

experience large
variations in quarterly operating results and losses in any particular quarter.
Due to these factors, we believe you should not compare our quarter-to-quarter
operating results to predict future performance.

| | If we are unable
  to maintain our reputation and expand our name recognition, we may have
  difficulty attracting new business and retaining current clients and
  employees.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We
believe that establishing and maintaining a good reputation and name
recognition are critical for attracting and retaining clients and employees. We
also believe that the importance of reputation and name recognition is
increasing and will continue to increase due to the number of providers of IT
services. If our reputation is damaged or if potential clients are not familiar
with us or with the solutions we provide, we may be unable to attract new, or
retain existing, clients and employees. Promotion and enhancement of our name
will depend largely on our success in continuing to provide effective
solutions.  If clients do not perceive
our solutions to be effective or of high quality, our brand name and reputation
will suffer. In addition, if solutions we provide have defects, critical
business functions of our clients may fail, and we could suffer adverse
publicity as well as economic liability.

| | We depend heavily
  on a limited number of clients.
| | ---------------------------------------------------

We
have derived, and believe that we will continue to derive, a significant
portion of our revenues from a limited number of clients for which we perform
large projects. In 2003, our ten largest clients accounted for approximately
39% of our revenues in the aggregate. 
In addition, revenues from a large client may constitute a significant
portion of our total revenues in a particular quarter. The loss of any
principal client for any reason, including as a result of the acquisition of
that client by another entity, our failure to meet that clients expectations,
or that clients decision to reduce spending on technology-related projects,
could have a material adverse effect on our business, financial condition and
results of operations.

| | We have risks
  associated with potential acquisitions or investments.
| | ----------------------------------------------------------------------

Since
we were founded, we have significantly expanded through acquisitions.  In the future, we plan to pursue additional
acquisitions as opportunities arise. We may not be able to integrate
successfully businesses which we may acquire in the future without substantial
expense, delays or other operational or financial problems. We may not be able
to identify, acquire or profitably manage additional businesses. Also,
acquisitions may involve a number of risks, including:

| |  | diversion of managements attention;                 
| | - | -----------------------------------------------------
| |   |                                                      
| |  | failure to retain key personnel;                     
| |   |                                                      
| |  | failure to retain existing clients;                  
| |   |                                                      
| |  | unanticipated events or circumstances;               
| |   |                                                      
| |  | unknown claims or liabilities; and                   
| |   |                                                      
| |  | amortization of certain acquired intangible
  assets.

We
cannot assure you that client satisfaction or performance problems at a single
acquired firm will not have a material adverse impact on our reputation as a
whole. Further, we cannot assure you that our recent or future acquired
businesses will generate anticipated revenues or earnings.

| | Difficulties in
  integrating businesses we may acquire in the future may demand time and
  attention from our senior management.
| | ---------------------------------------------------------------------------------------------------------------------------------

Integrating
businesses we may acquire in the future may involve unanticipated delays, costs
and/or other operational and financial problems. In integrating acquired
businesses, we may not achieve expected economies of scale or profitability or
realize sufficient revenues to justify our investment. If we encounter
unexpected problems at one of the acquired businesses as we try to integrate it
into our business, our management may be required to expend time and attention
to address the problems, which would divert their time and attention from other
aspects of our business.

-11-

---

---

Our markets are highly competitive.

We
may not be able to compete effectively with current or future competitors. The
IT services market is highly competitive. We expect competition to further
intensify as this market continues to evolve. Some of our competitors have
longer operating histories, larger client bases, longer relationships with
their clients, greater brand or name recognition and significantly greater
financial, technical and marketing resources than we do. As a result, our
competitors may be in a stronger position to respond more quickly to new or
emerging technologies and changes in client requirements and to devote greater
resources than we can to the development, promotion and sale of their services.
Competitors could lower their prices, potentially forcing us to lower our
prices and suffer reduced operating margins. We face competition from
international accounting firms; international, national and regional systems
consulting and implementation firms; the IT services divisions of application
software firms; and marketing and communication firms.

In addition, there are relatively low
barriers to entry into the IT services market. We do not own any patented
technology that would stop competitors from entering this market and providing
services similar to ours. As a result, the emergence of new competitors may
pose a threat to our business. Existing or future competitors may develop and
offer services that are superior to, or have greater market acceptance, than
ours, which could significantly decrease our revenues and the value of your
investment.

| | We may not be
  able to hire, train, motivate, retain and manage professional staff.
| | ------------------------------------------------------------------------------------

To
succeed, we must hire, train, motivate, retain and manage highly skilled
employees. Competition for skilled employees who can perform the services we
offer is intense. We might not be able to hire enough of them or to train,
motivate, retain and manage the employees we hire. This could hinder our
ability to complete existing client engagements and bid for new client
engagements.  Hiring, training,
motivating, retaining and managing employees with the skills we need is time
consuming and expensive.

We
could lose money on our contracts.

As
part of our strategy, we enter into capped or fixed-price contracts, in
addition to contracts based on payment for time and materials. Because of the
complexity of many of our client engagements, accurately estimating the cost,
scope and duration of a particular engagement can be a difficult task. We maintain
an office of risk management that evaluates and attempts to mitigate delivery risk
associated with complex projects. In connection with their review, the office of risk
management analyzes the critical estimates associated with these projects. If we
fail to make these estimates accurately, we could be forced to devote
additional resources to these engagements for which we will not receive
additional compensation. To the extent that an expenditure of additional
resources is required on an engagement, this could reduce the profitability of,
or result in a loss on, the engagement. In the past, we have, on occasion,
engaged in negotiations with clients regarding changes to the cost, scope or
duration of specific engagements. To the extent we do not sufficiently
communicate to our clients, or our clients fail to adequately appreciate, the
nature and extent of any of these types of changes to an engagement, our
reputation may be harmed and we may suffer losses on an engagement.

| | Lack of detailed
  written contracts could impair our ability to collect fees, protect our
  intellectual property and protect ourselves from liability to others.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

We try to protect ourselves by entering into
detailed written contracts with our clients covering the terms and
contingencies of the client engagement. In some cases, however, consistent with
what we believe to be industry practice, work is performed for clients on the
basis of a limited statement of work or verbal agreements before a detailed
written contract can be finalized. To the extent that we fail to have detailed
written contracts in place, our ability to collect fees, protect our
intellectual property and protect ourselves from liability to others may be
impaired.

| | Our corporate
  governance provisions may deter a financially attractive takeover attempt.
| | ------------------------------------------------------------------------------------------

Provisions of our charter and by-laws may
discourage, delay or prevent a merger or acquisition that stockholders may
consider favorable, including transactions in which stockholders would receive
a premium for their shares. These provisions include the following:

-12-

---

---

| |  | stockholders must comply with advance notice
  requirements before raising a matter at a meeting of stockholders or
  nominating a director for election;                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                          
| |  | our board of directors is staggered into three
  classes and the members may be removed only for cause upon the affirmative
  vote of holders of at least two-thirds of the shares entitled to vote;                                                     
| |   |                                                                                                                                                                                                                                                          
| |  | we would not be required to hold a special meeting
  to consider a takeover proposal unless holders of more than a majority of the
  shares entitled to vote on the matter were to submit a written demand or
  demands for us to do so; and             
| |   |                                                                                                                                                                                                                                                          
| |  | our board of directors may, without obtaining
  stockholder approval, classify and issue up to 1,250,000 shares of preferred
  stock with powers, preferences, designations and rights that may make it more
  difficult for a third party to acquire us.

In
addition, our board of directors has adopted a shareholder rights plan. Subject
to certain exceptions, in the event that a person or group in the future
becomes the beneficial owner of 15% or more of our common stock or commences,
or publicly announces an intention to commence, a tender or exchange offer
which would result in its ownership of 15% or more of our outstanding common
stock (or in the case of Liberty Wanger Asset Management, L.P. (now known as
Columbia Wanger Asset Management, L.P.) and its affiliates, 20%) then the rights
issued to our shareholders in connection with this plan will allow our
shareholders to purchase shares of our common stock at 50% of its then current
market value.  In addition, if we are
acquired in a merger, or 50% or more of our assets are sold in one or more
related transactions, our shareholders would have the right to purchase the
common stock of the acquiring company at half the then current market price of
such common stock.

We
may lose large clients or significant client engagements.

Our
client engagements are generally short-term arrangements, and most clients can
reduce or cancel their contracts for our services with 30 days notice and
without penalty. As a result, if we lose a major client or large client engagement,
our revenues will be adversely affected. We perform varying amounts of work for
specific clients from year to year. A major client in one year may not use our
services in another year. In addition, we may derive revenue from a major
client that constitutes a large portion of total revenue for particular
quarters.  If we lose any major clients
or any of our clients cancel or significantly reduce the scope of a large
client engagement, our business, financial condition and results of operations
could be materially and adversely affected. Also, if we fail to collect a large
account receivable, we could be subjected to significant financial exposure.
Consequently, you should not predict or anticipate our future revenue based
upon the number of clients we currently have or the number and size of our
existing client engagements.

If
we are unable to protect our intellectual property rights or infringe on the
intellectual property rights of third parties, our business may be harmed.

We
rely upon a combination of nondisclosure and other contractual arrangements and
trade secret, copyright and trademark laws to protect our proprietary rights
and the proprietary rights of third parties from whom we license intellectual
property. Although we enter into confidentiality agreements with our employees
and limit distribution of proprietary information, there can be no assurance
that the steps we have taken in this regard will be adequate to deter
misappropriation of proprietary information or that we will be able to detect
unauthorized use and take appropriate steps to enforce our intellectual property
rights.

Although
we believe that our services do not infringe on the intellectual property
rights of others and that we have all rights necessary to utilize the
intellectual property employed in our business, we are subject to the risk of
claims alleging infringement of third-party intellectual property rights. Any
claims could require us to spend significant sums in litigation, pay damages,
develop non-infringing intellectual property or acquire licenses to the
intellectual property that is the subject of asserted infringement.

The
market price of our common stock may fluctuate widely.

The
market price of our common stock could fluctuate substantially due to:

-13-

---

---

| |  | future announcements concerning us or our competitors;          
| | - | ----------------------------------------------------------------
| |   |                                                                 
| |  | quarterly fluctuations in operating results;                    
| |   |                                                                 
| |  | announcements of acquisitions or technological
  innovations; or
| |   |                                                                 
| |  | changes in earnings estimates or recommendations by
  analysts. 

In
addition, the stock prices of many technology companies fluctuate widely for
reasons which may be unrelated to operating results. Fluctuations in our common
stocks market price may impact our ability to finance our operations and
retain personnel.

| | Our recent and
  planned initiatives that leverage The Hackett Groups best practices
  knowledge may not be successful.
| | ------------------------------------------------------------------------------------------------------------------------

The
BPI tools that we developed using Hackett best practice knowledge are still
being introduced to our existing client base and to client prospects.  We do not have enough experience with them
to ensure that clients and prospects will perceive any additional benefit
associated with the BPI tools versus other traditional implementation
methodologies.  As such, BPI may not
enable us to differentiate ourselves in the marketplace, and we may not achieve
any benefits from this new methodology.

The
recent and planned enhancements to the Hackett Groups product and service
offerings represent a departure from its traditional offerings.  We may not be able to adequately support
these new offerings.  Clients or
prospects may view The Hackett Group as a new and unproven entrant into this
space.  As such, clients and client
prospects may choose to purchase these types of products and services from
companies with a longer track record of providing these types of offerings.

| | The anticipated
  benefits from the Joint Marketing and Alliance Agreement with Accenture LLP
  may not be achieved.
| | --------------------------------------------------------------------------------------------------------------------

We
are still in the early stages of our relationship with Accenture.  Accenture client partners may choose not to
involve Answerthink or The Hackett Group in their client pursuits.  This would have an adverse affect on our
ability to achieve the participation entitlements contained in the
agreement.  The client engagements won
jointly may be of a complex nature and very large in scale.  We may not be able to staff all of the
positions that we would have a right to staff on a timely basis, and Accenture
may not be satisfied with the quality or performance of the resources that we
staff.  This may lead to the termination
of the agreement, which either party can seek upon ninety days notice.

ITEM 2.  PROPERTIES

Our
principal executive offices currently are located at 1001 Brickell Bay Drive,
Suite 3000, Miami, Florida 33131.   The
lease on these premises covers 10,780 square feet and expires June 30, 2005. We
also have offices in Atlanta, Boston, Chicago, Cleveland, Frankfurt, New York,
Philadelphia, and London. We believe that we will be able to obtain suitable
space as needed.  We own no real estate
and do not intend to invest in real estate or real estate-related assets.

ITEM 3.  LEGAL PROCEEDINGS

Between
November 2002 and January 2003, six class actions seeking unspecified damages
were filed against Answerthink and certain of its current and former officers
and directors alleging violations of the Securities and Exchange Act of 1934.
The complaints alleged misstatements and omissions concerning, among other
things, related party transactions during the alleged class period of February
8, 2000 to April 25, 2002. On January 7, 2003 the federal district court
entered an order closing and consolidating these cases and any subsequently
filed related cases into Druskin, et al. v. Answerthink, Inc., et al., Case No.
02-23304-CIV-GOLD.  A consolidated
amended complaint was filed on May 9, 2003. The Company filed a

-14-

---

---

motion to
dismiss the consolidated amended complaint on July 15, 2003. The court granted
the Companys motion to dismiss the consolidated and amended complaint on
January 5, 2004 and allowed the plaintiffs leave to amend the consolidated amended complaint.  The plaintiffs did not file an amended
complaint within the time allowed by the court.  On February 11, 2004, the court entered a final judgement
dismissing the case against all parties with prejudice and closed the
case.   The time for appeal has
expired.  This matter is concluded.

Between
September and October 1998, seven purported class action suits were filed
against THINK New Ideas, Inc. (THINK New Ideas) and certain of its then
current and former officers and directors alleging violations of the Securities
Exchange Act of 1934. All seven of these lawsuits were consolidated by order of
the court.  On November 5, 1999, THINK
New Ideas merged with and into a wholly owned subsidiary of the Company. On
April 18, 2002, the parties reached an agreement in principle to settle this
action. On September 16, 2002 the court approved the terms of the settlement in
all respects and dismissed the complaint with prejudice. The time for appeal
has expired and the settlement has become final. The full amount of the
settlement has been paid by THINK New Ideas insurance carrier.  On November 10, 2003, the court issued its
final order approving the distribution of the net settlement funds in this
case.  This matter is concluded.

We
are involved in legal proceedings, claims, and litigation arising in the
ordinary course of business not specifically discussed herein. In the opinion
of management, the final disposition of such other matters will not have a
material adverse effect on our financial position or results of operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No
matters were submitted to a vote of security holders during the fourth quarter
of 2003.

-15-

---

---

PART II

ITEM 5.  MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

Our
common stock has been traded on the Nasdaq National Market since our initial
public offering on May 28, 1998 under the Nasdaq symbol ANSR. The following
table sets forth for the fiscal periods indicated the high and low sales prices
of the common stock, as reported on the Nasdaq National Market.

|               |  | High |      | Low
|-------------- |  | ---- | ---- | ---
|               |  |      |      |    
|               |  |      |      |    
|2003           |  |      |      |    
|Fourth Quarter |  | $    | 6.35 |    
|Third Quarter  |  | $    | 4.03 |    
|Second Quarter |  | $    | 2.59 |    
|First Quarter  |  | $    | 2.97 |    
|               |  |      |      |    
|2002           |  |      |      |    
|Fourth Quarter |  | $    | 3.29 |    
|Third Quarter  |  | $    | 3.91 |    
|Second Quarter |  | $    | 7.30 |    
|First Quarter  |  | $    | 8.34 |    

The
closing sale price for the common stock on March 5, 2004 was $7.71 .

As
of March 5, 2004, there were approximately 325 holders of record of our common
stock and 44,872,006 shares of common stock outstanding.

Company
Dividend Policy

We
do not expect to pay any cash dividends on our common stock in the foreseeable
future. Our present policy is to retain earnings, if any, for use in the
operation of our business.

-16-

---

---

ITEM 6.   SELECTED CONSOLIDATED FINANCIAL DATA

The
following selected consolidated financial data sets forth selected financial
information for Answerthink as of and for each of the years in the five-year
period ended January 2, 2004, and has been derived from our audited financial
statements. The selected consolidated financial data should be read together
with our consolidated financial statements and related notes thereto and with
Managements Discussion and Analysis of Financial Condition and Results of
Operations.

|                                                                                                                                                                   |                                                               | Year
  Ended                          |       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------- | ------------------------------------- | ------
|                                                                                                                                                                   |                                                               |                                       |       
|                                                                                                                                                                   |                                                               | January 2,
  2004                     |       
|                                                                                                                                                                   |                                                               |                                       |       
|                                                                                                                                                                   |                                                               | (in thousands, except per share data) |       
|Consolidated Statement of Operations
  Data:                                                                                                                       |                                                               |                                       |       
|Revenues:                                                                                                                                                          |                                                               |                                       |       
|                                                                                                                                                                   | Revenues before reimbursements                                |                                       | $     
|                                                                                                                                                                   | Reimbursements                                                |                                       |       
|                                                                                                                                                                   |                                                               |                                       |       
|                                                                                                                                                                   | Total revenues                                                |                                       |       
|                                                                                                                                                                   |                                                               |                                       |       
|Costs and expenses:                                                                                                                                                |                                                               |                                       |       
|                                                                                                                                                                   | Project personnel and expenses:                               |                                       |       
|                                                                                                                                                                   | Project personnel and expenses before reimbursable
  expenses |                                       |       
|                                                                                                                                                                   | Reimbursable expenses                                         |                                       |       
|                                                                                                                                                                   |                                                               |                                       |       
|                                                                                                                                                                   | Total project personnel and expenses                          |                                       |       
|                                                                                                                                                                   |                                                               |                                       |       
|Selling, general and administrative expenses                                                                                                                       |                                                               |                                       | 43,951
|Impairment of goodwill                                                                                                                                             |                                                               |                                       |      
|Restructuring costs                                                                                                                                                |                                                               |                                       | 4,875 
|Stock compensation expense                                                                                                                                         |                                                               |                                       | 1,236 
|                                                                                                                                                                   |                                                               |                                       |       
|                                                                                                                                                                   | Total costs and operating expenses                            |                                       |       
|                                                                                                                                                                   |                                                               |                                       |       
|Income (loss) from operations                                                                                                                                      |                                                               |                                       | (5,178
|Other income (expense):                                                                                                                                            |                                                               |                                       |       
|                                                                                                                                                                   | Litigation settlement                                         |                                       |       
|                                                                                                                                                                   | Non-cash investment losses                                    |                                       |       
|                                                                                                                                                                   | Interest income (expense), net                                |                                       |       
|                                                                                                                                                                   |                                                               |                                       |       
|Income (loss) before income taxes, loss from
  discontinued operations,
       extraordinary loss and cumulative effect of
  change in accounting
       principle |                                                               |                                       | (4,472
|Income taxes                                                                                                                                                       |                                                               |                                       | 350   
|                                                                                                                                                                   |                                                               |                                       |       
|Income (loss) from continuing operations                                                                                                                           |                                                               |                                       | (4,822
|Loss from discontinued operations, net of income
  taxes                                                                                                           |                                                               |                                       |      
|                                                                                                                                                                   |                                                               |                                       |       
|Income (loss) before extraordinary loss and
  cumulative effect of change 
       in accounting principle                                                          |                                                               |                                       | (4,822
|Extraordinary loss on early extinguishment of debt,
  net of taxes                                                                                                 |                                                               |                                       |      
|Cumulative effect of change in accounting principle                                                                                                                |                                                               |                                       |      
|                                                                                                                                                                   |                                                               |                                       |       
|Net income (loss)                                                                                                                                                  |                                                               | $                                     | (4,822
|                                                                                                                                                                   |                                                               |                                       |       
|                                                                                                                                                                   |                                                               |                                       |       
|Basic net income (loss) per common share:                                                                                                                          |                                                               |                                       |       
|                                                                                                                                                                   | Income (loss) from continuing operations                      |                                       | $     
|                                                                                                                                                                   | Loss from discontinued operations, net of income
  taxes      |                                       | $     
|                                                                                                                                                                   | Extraordinary loss on early extinguishment of debt            |                                       | $     
|                                                                                                                                                                   | Cumulative effect of change in accounting principle           |                                       | $     
|                                                                                                                                                                   | Net income (loss) per common share                            |                                       | $     
|Weighted average common shares outstanding                                                                                                                         |                                                               |                                       | 45,140
|                                                                                                                                                                   |                                                               |                                       |       
|Diluted net income (loss) per common share:                                                                                                                        |                                                               |                                       |       
|                                                                                                                                                                   | Income (loss) from continuing operations                      |                                       | $     
|                                                                                                                                                                   | Loss from discontinued operations, net of income
  taxes      |                                       | $     
|                                                                                                                                                                   | Extraordinary loss on early extinguishment of debt            |                                       | $     
|                                                                                                                                                                   | Cumulative effect of change in accounting principle           |                                       | $     
|                                                                                                                                                                   | Net income (loss) per common share                            |                                       | $     
|Weighted average common shares and common share
  equivalents                                                                                                      |                                                               |                                       | 45,140
|                                                                                                                                                                   |                                                               |                                       |       

-17-

---

---

|                                 |  | January 2,
  2004 |         | January 3,
  2003 |   | December 28,
  2001 |  | December 29,
  2000 |         | December 31,
  1999 |  
|-------------------------------- |  | ----------------- | ------- | ----------------- | - | ------------------- |  | ------------------- | ------- | ------------------- | -
|                                 |  |                   |         |                   |   |                     |  |                     |         |                     |  
|                                 |  | (in thousands)    |        
|Consolidated Balance Sheet Data: |  |                   |         |                   |   |                     |  |                     |         |                     |  
|Cash and cash equivalents        |  | $                 | 54,441  |                   | $ | 63,419              |  | $                   | 59,888  |                     | $
|Restricted cash                  |  | $                 | 3,000   |                   | $ | 2,909               |  | $                   |        |                     | $
|Marketable investments           |  | $                 | 10,000  |                   | $ |                    |  | $                   |        |                     | $
|Working capital                  |  | $                 | 53,590  |                   | $ | 72,851              |  | $                   | 81,313  |                     | $
|Total assets                     |  | $                 | 135,223 |                   | $ | 145,361             |  | $                   | 211,919 |                     | $
|Shareholders equity             |  | $                 | 105,235 |                   | $ | 113,047             |  | $                   | 177,701 |                     | $

|ITEM 7. | MANAGEMENTS
  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | ---------------------------------------------------------------------------------------

Overview

Answerthink
is a leading business and technology consulting firm that provides services designed to enable companies to
achieve world-class business performance. By leveraging the comprehensive
database of The Hackett Group, the worlds leading repository of enterprise
best practice metrics and business process knowledge, Answerthinks business
and technology solutions help clients improve performance and maximize returns
on technology investments. Answerthinks capabilities include benchmarking,
business transformation, business applications, business intelligence, and
offshore application development and support. 
Answerthink was formed on April 23, 1997.

Critical
Accounting Policies

In
the ordinary course of business, we make a number of estimates and assumptions
relating to the reporting of results of operations and financial position in
conformity with generally accepted accounting principles. Actual results could
differ significantly from those estimates under different assumptions and
conditions. We believe the following discussion addresses our most critical
accounting policies. These policies require management to exercise judgements
that are often difficult, subjective and complex due to the necessity of
estimating the effect of matters that are inherently uncertain.

Revenue
Recognition

Our
revenues are derived from fees for services generated on a project-by-project
basis. Revenues for services rendered are recognized on a time and materials
basis based on the number of hours worked by our consultants at an agreed upon
rate per hour or on a fixed-fee or capped-fee basis.  Revenues related to time and material contracts are recognized in
the period in which services are performed. Revenues related to fixed-fee or
capped-fee contracts are recognized based on our evaluation of actual costs
incurred to date compared to total estimated costs using the percentage of
completion method of accounting. The cumulative impact of any revisions in
estimated total revenues and direct contract costs are recognized in the period
in which they become known. Unbilled revenues represent revenues for services
performed that have not been invoiced. If we do not accurately estimate the
resources required or the scope of the work to be performed, or we do not
manage our projects properly within the planned periods of time or we do not
meet our clients expectations under the contracts, then future consulting
margins may be significantly and negatively affected or losses on existing
contracts may need to be recognized. Any such resulting reductions in margins
or contract losses could be material to our results of operations. Revenues
before reimbursements exclude reimbursable expenses charged to clients.
Reimbursements, which include travel and out-of-pocket expenses, are included
in revenues and an equivalent amount of reimbursable expenses is included in
project personnel and expenses.

The
agreements entered into in connection with a project, whether time and
materials based or fixed-fee or capped-fee based, are typically terminable by
the client upon 30 days notice.  Upon
early termination of an engagement, the client is required to pay for all time,
materials and expenses incurred by us through the effective date of the termination.  In addition, from time to time we enter into
agreements with our clients that limit our right to enter into business
relationships with specific competitors of that client for a specific time
period.  These provisions typically
prohibit us from performing a defined range of our services that we might
otherwise be willing to perform for potential clients.  These provisions are generally limited to
six to twelve months and usually apply only to specific employees or the
specific project team.

-18-

---

---

Accounts
Receivable and Allowances for Doubtful Accounts

We
maintain allowances for doubtful accounts for estimated losses resulting from
the inability of our clients to make required payments. Periodically, we review
accounts receivable to assess our estimates of collectibility. Management
critically reviews accounts receivable and analyzes historical bad debts,
past-due accounts, client credit-worthiness and current economic trends when
evaluating the adequacy of the allowance for doubtful accounts. If the
financial condition of our clients were to deteriorate, resulting in their
inability to make payments, additional allowances may be required.

Goodwill

We
assess goodwill for impairment when events or circumstances indicate that the
carrying value may not be recoverable, or, at a minimum, on an annual basis. We
have made determinations as to what our reporting units are and what amounts of
goodwill and intangible assets should be allocated to those reporting units.

In
assessing the recoverability of long-lived identifiable assets and goodwill, we
must make assumptions regarding estimated future cash flows, discount rates and
other factors to determine if impairment tests are met. These estimates contain
managements best estimates, using appropriate and customary assumptions and
projections at the time. If these estimates or their related assumptions change
in the future, we may be required to record additional impairment charges.

Restructuring
Reserves

Restructuring
reserves reflect judgements and estimates of our ultimate costs of severance,
closure and consolidation of facilities and settlement of contractual
obligations under our operating leases, including sublease rental rates,
absorption period to sublease space and other related costs. We reassess the
reserve requirements to complete each individual plan under our restructuring
programs at the end of each reporting period. If these estimates change in the
future or actual results are different than our estimates, we may be required
to record additional charges in the future.

Income
Taxes

We
record income taxes using the liability method. Under this method, we record
deferred taxes based on temporary taxable and deductible differences between
the tax bases of our assets and liabilities and our financial reporting bases.
The liability method of accounting for deferred income taxes requires a
valuation allowance against deferred tax assets if, based on the weight of
available evidence, it is more likely than not that some or all of the deferred
tax assets will not be realized.

Contingent
Liabilities

We
have certain contingent liabilities that arise in the ordinary course of our
business activities. We accrue contingent liabilities when it is probable that
future expenditures will be made and such expenditures can be reasonably
estimated. Reserves for contingent liabilities are reflected in our
consolidated financial statements based on managements assessment, along with
legal counsel, of the expected outcome of the contingencies. If the final
outcome of our contingencies differs adversely from that currently expected, it
would result in a charge to earnings when determined.

The
foregoing list is not intended to be a comprehensive list of all of our
accounting policies. In many cases, the accounting treatment of a particular
transaction is specifically dictated by accounting principles generally accepted
in the United States, with no need for us to judge the application. There are
also areas in which our judgment in selecting any available alternative would
not produce a materially different result. Please see our consolidated financial
statements and related notes thereto included elsewhere in this Annual Report on
Form 10-K, which contain accounting policies and other disclosures required by
accounting principles generally accepted in the United States.

-19-

---

---

Results
of Operations

Our
fiscal year generally consists of a 52-week period and periodically consists of
a 53-week period because the fiscal year ends on the Friday closest to December
31. Fiscal years 2003, 2002 and 2001 ended on January 2, 2004, January 3, 2003
and December 28, 2001, respectively. 
Our fiscal year 2002 was a 53-week period. References to a year included
in this section refer to a fiscal year rather than a calendar year.

The
following table sets forth, for the periods indicated, our results of
operations and the percentage relationship to net revenues of such results:

|                                                                                                                                     |                                                               | Year
  Ended                          
|------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------- | --------------------------------------
|                                                                                                                                     |                                                               |                                       
|                                                                                                                                     |                                                               | January
  2, 2004                     
|                                                                                                                                     |                                                               |                                       
|                                                                                                                                     |                                                               | (in thousands, except percentage data)
|Revenues:                                                                                                                            |                                                               |                                       
|                                                                                                                                     | Revenues before reimbursements                                |                                       
|                                                                                                                                     | Reimbursements                                                |                                       
|                                                                                                                                     |                                                               |                                       
|                                                                                                                                     | Total revenues                                                |                                       
|                                                                                                                                     |                                                               |                                       
|Costs and expenses:                                                                                                                  |                                                               |                                       
|                                                                                                                                     | Project personnel and expenses:                               |                                       
|                                                                                                                                     | Project personnel and expenses before reimbursable
  expenses |                                       
|                                                                                                                                     | Reimbursable expenses                                         |                                       
|                                                                                                                                     |                                                               |                                       
|                                                                                                                                     | Total project personnel and expenses                          |                                       
|                                                                                                                                     |                                                               |                                       
|                                                                                                                                     | Selling, general and administrative expenses                  |                                       
|                                                                                                                                     | Impairment of goodwill                                        |                                       
|                                                                                                                                     | Restructuring costs                                           |                                       
|                                                                                                                                     | Stock compensation expense                                    |                                       
|                                                                                                                                     |                                                               |                                       
|                                                                                                                                     | Total costs and operating expenses                            |                                       
|                                                                                                                                     |                                                               |                                       
|Income (loss) from operations                                                                                                        |                                                               |                                       
|Other income (expense):                                                                                                              |                                                               |                                       
|                                                                                                                                     | Interest income (expense), net                                |                                       
|                                                                                                                                     |                                                               |                                       
|Income (loss) before income taxes, loss from
  discontinued operations 
     and cumulative effect of change in accounting principle |                                                               |                                       
|Income taxes                                                                                                                         |                                                               |                                       
|                                                                                                                                     |                                                               |                                       
|Loss from continuing operations                                                                                                      |                                                               |                                       
|Loss from discontinued operations, net of income
  taxes                                                                             |                                                               |                                       
|                                                                                                                                     |                                                               |                                       
|Loss before cumulative effect of change in accounting
  principle                                                                    |                                                               |                                       
|Cumulative effect of change in accounting principle                                                                                  |                                                               |                                       
|                                                                                                                                     |                                                               |                                       
|Net loss                                                                                                                             |                                                               | $                                     
|                                                                                                                                     |                                                               |                                       
|                                                                                                                                     |                                                               |                                       

Comparison
of 2003 to 2002

Overview.We reported a net loss of
$4.8 million in 2003 compared to a net loss of $69.0 million in 2002. Our $4.8
million loss during 2003 included restructuring costs of $4.9 million and
non-cash stock compensation expense of $1.2 million.  The restructuring costs related to increases in previously
established reserves in 2002 and 2001 for the closure and consolidation of
facilities.  The compensation expense
was primarily related to the issuance of restricted stock units to employees at
a senior director level or above pursuant to a voluntary stock option exchange program which ended on
July 14, 2003.  Our $69.0 million net
loss during 2002 included a $31.2 million cumulative effect of change in accounting
principle as a result of the adoption of Statement of Financial Accounting
Standards (SFAS) No. 142, Goodwill and
Other Intangible Assets,a non-cash goodwill impairment charge of
$20.0 million, restructuring costs of $10.9 million and a loss from
discontinued operations of $8.9 million related to our interactive marketing
business during those years.

Revenues.Revenues decreased 25.1%
to $132.4 million in 2003 from $176.8 million in 2002. The decrease in revenues
was primarily attributable to lower revenues from a few of our larger customers
due to the completion of some of their larger projects, as well as lower demand
for information technology services as clients continued to reduce or defer
expenditures for these services in 2003. Reimbursements as a percentage of revenues
were 11% and 12% during fiscal years 2003 and 2002, respectively.  In fiscal year 2003, three customers had
revenues greater than 5% of total revenues, which, in the aggregate, accounted
for approximately 20% of total revenues. In fiscal year 2002, three customers
had revenues greater than 5% of total revenues, which, in the aggregate,
accounted for 36% of total revenues.

-20-

---

---

Project
Personnel and Expenses.Project
personnel costs and expenses consist primarily of salaries, benefits and
incentive compensation for consultants. Project personnel costs and expenses
decreased 30.3% to $87.5 million in 2003 from $125.5 million in 2002. The
decrease in project personnel and expenses was primarily due to the reduction
in the number of consultants in order to balance workforce capacity with market
demand for services. Consultant headcount was 483 as of January 2, 2004 compared
to 620 as of January 3, 2003. Project personnel and expenses as a percentage of
revenues decreased to 66.1% in 2002 from 71.0% in 2002. This decrease was
primarily the result of higher utilization of consultants during 2003 compared
to 2002, partially offset by slightly higher average cost per consultant
attributable to a greater percentage of senior resources during 2003 compared
to 2002.

Selling,
General and Administrative.Selling,
general and administrative expenses decreased 17.7% to $44.0 million in 2003
from $53.4 million in 2002. The overall decrease in selling, general and
administrative expenses were primarily due to our continued cost control
initiatives and reduced discretionary spending.  We reduced functional support headcount and as a result incurred
$755,000 of severance costs in 2003 compared to $202,000 in 2002.  Additionally, we incurred lower recruiting,
selling, marketing and bad debt expenses and reduced property and facility
expenses as a result of a decrease in the number of offices from 12 at the end
of 2002 to 9 at the end of 2003.  These
reductions in expenses were partially offset by an increase in selling, general
and administrative expenses for The Hackett Group related to an increased sales
force and other administrative personnel. 
Selling, general and administrative expenses as a percentage of revenues
increased to 33% in 2003 from 30% in 2002. 
This is primarily attributable to increased Hackett Group selling,
general and administrative expenses and the impact of fixed expenses on a lower
level of revenues in 2003 compared to 2002.

Impairment
of Goodwill and Cumulative Effect of Change in Accounting Principle.We adopted Statement of
Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, during the first
quarter of 2002. The new accounting rule eliminated the amortization of
goodwill and changed the method of determining whether there is a goodwill
impairment from an undiscounted cash flow method to a fair value method. As a
result of the adoption of this standard, we incurred a non-cash transitional
impairment charge of $31.2 million in the first quarter of 2002 due to the
cumulative effect of a change in accounting principle. The new statement also
requires that goodwill be tested for impairment on an annual basis and between
annual tests in certain circumstances. We performed an impairment test
primarily as a result of the decline in our stock price and that of our peer
group during the third quarter of 2002 and recorded a non-cash impairment
charge of $20.0 million.

Restructuring
Costs.Restructuring
costs were $4.9 million and $10.9 million in 2003 and 2002, respectively.
Restructuring costs in 2003 relate to an increase in previously established
reserves recorded in the fourth quarters of 2002 and 2001 for the closure and
consolidation of facilities. Existing reserves were increased to account for
potentially higher estimated losses on the sublease of facilities as a result
of lower than expected sublease rates and longer than expected time estimates
to sublease facilities.  The 2002 costs
consisted of $1.5 million for reduction in consultants and functional support
personnel and $9.4 million for closure and consolidation of facilities and
related exit costs, including a $5.0 million write-off of leasehold
improvements and other assets. The 2002 restructuring plan involved the
termination of approximately 100 employees. These actions were
taken as a result of the continued decline in demand for technology services
throughout 2002 and 2003. We took steps to reduce our costs to better align our
overall cost structure and organization with anticipated demand for our
services.

Stock
Compensation Expense.Stock
compensation expense in 2003 primarily related to the issuance of restricted
stock units under a voluntary stock option exchange program, which ended on July 14, 2003. This
program involved voluntary stock option exchanges for employees at a senior
director level or above who had been with the Company since July 4, 2002.  We recorded a non-cash compensation charge
of $1.1 million for the year ended January 2, 2004 based on the vesting
provisions of the restricted stock units and the fair market value of the stock
on the grant date.

Income
Taxes.In 2003, we recorded $350,000 of income tax expense
for state and foreign taxes, which represented 7.8% of our pre-tax income. We
did not recognize an income tax benefit for federal and state taxes due to the
establishment of a valuation allowance for the tax benefit generated on losses
during 2003. The liability method of accounting for deferred income taxes
requires a valuation allowance against deferred tax assets if, based on the
weight of available evidence, it is more likely than not that some or all of
the deferred tax assets will not be realized. We recorded an income tax benefit
of $3.5 million in 2002, which represented 10.8% of our 2002 loss before
discontinued operations and cumulative effect of change in accounting
principle. The low effective tax rate for 2002 was primarily due to the $20.0
million charge for the impairment of goodwill which was not deductible for tax
purposes and to the establishment of a valuation allowance on our net deferred
tax assets that existed at the end of the year.

-21-

---

---

In
2002, we discontinued our interactive marketing business which we acquired with
THINK New Ideas. We claimed a
$92.0 million worthless stock deduction for our investment in THINK New Ideas
in our 2002 tax return as a result of the discontinuance of THINK New Ideas. We voluntarily requested that the Internal Revenue
Service (IRS) review this position on an expedited basis. This review is
currently in process. Although we believe our tax position is sustainable,
there is no assurance that the IRS will agree with our conclusion or the amount
of the deduction. The final resolution of this matter could result in a deduction materially less than the
amount claimed.

At
the end of 2003, we had a net operating loss carryforward available for tax
purposes of $92.0 million, which we will use in future years to offset future
taxable income.

Loss
from Discontinued Operations.Results
for 2002 included a net loss of $8.9 million from the discontinued operations
of our interactive marketing business. The operating results of the interactive
marketing business have been reported as discontinued operations and results
for prior periods have been restated. The 2002 loss from discontinued
operations includes restructuring costs of $3.4 million for reduction in
consultants and for closure and consolidation of facilities and related exit costs.
For the year ended January 3, 2003, total revenues for discontinued operations
were $7.2 million.

Comparison
of 2002 to 2001

Overview.We reported a net loss of
$69.0 million in 2002 compared to a net loss of $8.5 million in 2001. Our $69.0
million net loss during 2002 included a $31.2 million cumulative effect of
change in accounting principle as a result of the adoption of SFAS No. 142,a non-cash goodwill impairment charge of
$20.0 million, restructuring costs of $10.9 million and a loss from
discontinued operations of $8.9 million related to our interactive marketing
business. Our $8.5 million net loss during 2001 included a loss from
discontinued operations of $8.1 million, restructuring costs of $5.6 million
and $4.9 million of non-cash compensation expense. The compensation expense was
primarily related to the granting of in-the-money stock options to
participants in our Employee Stock Purchase Plan in lieu of the Employee Stock
Purchase Plan shares that could not be issued because the plan was
oversubscribed for the purchase periods ending December 31, 2000 and June 30,
2001.

Revenues.Revenues decreased 29.4%
to $176.8 million in 2002 from $250.3 million in 2001. The decrease in revenues
was primarily attributable to a decrease in the number of customers and the
average size of our projects resulting from the decreased demand for
information technology services due to weak economic conditions. In fiscal year
2002, three customers had revenues greater than 5% of total revenues, which, in
the aggregate, accounted for 36% of total revenues. In fiscal year 2001, three
customers had revenues greater than 5% of total revenues, which, in the
aggregate, accounted for approximately 39% of total revenues.

Project Personnel and Expenses.Project personnel costs and
expenses consist primarily of salaries, benefits and incentive compensation for
consultants. Project personnel costs and expenses decreased 22.7% to $125.5
million in 2002 from $162.2 million in 2001. The decrease in project personnel
and expenses was primarily due to the reduction in the number of consultants in
order to balance workforce capacity with market demand for services. Consultant
headcount was 620 as of January 3, 2003 compared to 887 as of December 28,
2001. Project personnel and expenses as a percentage of revenues increased to
71.0% in 2002 from 64.8% in 2001. This increase in project personnel costs and
expenses as a percentage of  revenues
was primarily the result of lower per hour billing rates charged to customers
and a higher average cost per consultant attributable to a greater percentage
of senior associates working on projects during 2002 compared to 2001.

Selling,
General and Administrative.Selling,
general and administrative expenses decreased 30.7% to $53.4 million in 2002
from $77.1 million in 2001. The decrease in selling, general and administrative
expenses were primarily due to our continued cost control initiatives, reduced
discretionary spending and the adoption of SFAS No. 142, which eliminated
amortization expense of goodwill in 2002. Goodwill amortization for the year
2001 was $3.9 million. In addition to the change in goodwill amortization, we
reduced functional support headcount, incurred lower recruiting, selling and
bad debt expenses, and reduced property and facility expenses as a result of a
decrease in the number of offices from 14 at the end of 2001 to 12 at the end
of 2002. Sales and functional support headcount was 133 as of January 3, 2003
compared to 168 as of December 28, 2001. Selling, general and administrative
expenses as a percentage of revenues were comparable between 2002 and 2001 at
30.2% and 30.8%, respectively.

-22-

---

---

Impairment
of Goodwill and Cumulative Effect of Change in Accounting Principle.We adopted SFAS No. 142
during the first quarter of 2002. As a result of this adoption, we eliminated
the amortization of goodwill and incurred a non-cash transitional impairment
charge of $31.2 million in the first quarter of 2002 due to the cumulative
effect of a change in accounting principle. In the third quarter of 2002, we
performed an impairment test primarily as a result of the decline in our stock
price and that of our peer group and recorded a non-cash impairment charge of $20.0
million.

Restructuring
Costs.Restructuring
costs were $10.9 million and $5.6 million in 2002 and 2001, respectively. In
2002, costs consisted of $1.5 million for reduction in consultants and
functional support personnel and $9.4 million for closure and consolidation of
facilities and related exit costs, including a $5.0 million write-off of
leasehold improvements and other assets. The 2001 costs consisted of $3.7
million for reduction in consultants and functional support personnel and $1.9 million
for closure and consolidation of facilities and related exit costs. The 2001
restructuring plan involved the involuntary termination of approximately 200
employees. These actions were taken as a result of the continued decline in
demand for technology services throughout 2001 and 2002. We took steps to
reduce our costs to better align our overall cost structure and organization
with anticipated demand for our services.

Stock
Compensation Expense.Stock
compensation expense in 2001 primarily related to the granting of stock options
to participants in our Employee Stock Purchase Plan. These stock options were
granted in lieu of the Employee Stock Purchase Plan shares that could not be
issued because the plan was oversubscribed for the purchase periods ending on
December 31, 2000 and June 30, 2001. We recorded a non-cash compensation charge
of $4.2 million in 2001 for the difference between the fair market value of the
stock on the option grant date and the exercise price.

Income
Taxes.We recorded an income tax benefit of $3.5
million in 2002, which represented 10.8% of our 2002 loss before discontinued
operations and cumulative effect of change in accounting principle. In 2001, we
recorded income tax expense of $1.8 million, which represented 128.6% of our
2001 pre-tax income from continuing operations. The low effective tax rate for
2002 was primarily due to the $20.0 million charge for the impairment of
goodwill which was not deductible for tax purposes and to the establishment of
a valuation allowance on our net deferred tax assets that existed at the end of
the year. The high effective tax rate for 2001 was the result of the impact of
permanent differences on a very low level of pretax income.

Loss
from Discontinued Operations.Results
for 2002 included a net loss of $8.9 million from the discontinued operations
of our interactive marketing business. The operating results of the interactive
marketing business have been reported as discontinued operations and results
for prior periods have been restated. For the years ended January 3, 2003 and
December 28, 2001 the losses from discontinued operations were $8.9 million and
$8.1 million, respectively, and included restructuring costs of $3.4 million
and $2.9 million, respectively, for reduction in consultants and for closure
and consolidation of facilities and related exit costs. For the years ended
January 3, 2003 and December 28, 2001, total revenues for discontinued
operations were $7.2 million and $28.9 million, respectively.

Liquidity
and Capital Resources

We
have funded our operations primarily with cash flow generated from operations
and the proceeds from our initial public offering. At January 2, 2004, we had
$54.4 million of cash and cash equivalents compared to $63.4 million at January
3, 2003. We had $3.0 million and $2.9 million at January 2, 2004 and January 3,
2003, respectively, on deposit with a financial institution as collateral for
letters of credit and have classified these deposits as restricted cash on the
accompanying consolidated balance sheets. At January 2, 2004 the Company also
had $10 million in marketable investments.

In
August 2002, we cancelled our $15.0 million revolving credit facility. At the
time of cancellation and at all times throughout 2002, we had no borrowings
outstanding under the facility.

There
were no material capital commitments at January 2, 2004. The following
summarizes our lease commitments under non-cancelable operating leases for
premises at January 2, 2004 (in thousands):

-23-

---

---

|Less than 1 year      |                                                    | $ | 6,367  |       
|--------------------- | -------------------------------------------------- | - | ------ | ------
|1-3 years             |                                                    |   | 10,467 |       
|4-5 years             |                                                    |   | 9,231  |       
|After 5 years         |                                                    |   | 18,506 |       
|                      |                                                    |   |        |       
|                      |                                                    |   | 44,571 |       
|Less: sublease income |                                                    |   | 13,328 |       
|                      |                                                    |   |        |       
|                      | Total minimum lease payments, less sublease income |   | $      | 31,243
|                      |                                                    |   |        |       

Net
cash provided by operating activities was $9.9 million for 2003 compared to
$7.0 million during 2002. During 2003, net cash provided by operating
activities was primarily attributable to $6.0 million of non-cash expenses, a
$10.1 million decrease in prepaid expenses and other assets primarily related
to an $8.5 million tax refund received in the second quarter of 2003, and a
$1.3 million decrease in accounts receivable and unbilled revenue. These
effects were partially offset by our net loss of $4.8 million, a $2.1 million
decrease in accounts payable and a $600 thousand decrease in accrued expenses
and other liabilities. During 2002, net cash provided by operating activities
was primarily attributable to a $18.9 million decrease in accounts receivable
and unbilled revenue. This was partially offset by a $5.4 million increase in
prepaid expenses and other assets, a $3.9 million decrease in accrued expenses
and other liabilities and our $69.0 million net loss adjusted for non-cash
expenses of $67.5 million. Non-cash expenses included the impact of adopting
SFAS No. 142, impairment of goodwill, write-off of leasehold improvements,
depreciation, deferred income taxes and provision for doubtful accounts.

Net
cash used in investing activities was $14.6 million for 2003 compared to $7.8
million used during 2002. The uses of cash for investing activities in 2003
were attributable to the purchase of $10.0 million of marketable securities,
$1.2 million for purchases of property and equipment and $3.3 million used in
the acquisition of a business. The uses of cash for investing activities in
2002 were attributable to $4.0 million of purchases of property and equipment,
an increase in restricted cash of $2.9 million and $851 thousand used in
acquisitions of businesses.

Net
cash used in financing activities was $4.2 million in 2003 compared to cash
provided of $4.3 million during 2002. Cash used in financing activities during
2003, consisted of $5.5 million for repurchases of our common stock, offset by
$1.3 million of proceeds from the sale of stock through our Employee Stock
Purchase Plan, and from exercises of stock options. Cash provided by financing
activities during 2002 consisted of $6.5 million of proceeds from the sale of
common stock through our Employee Stock Purchase Plan and from exercises of
stock options, offset by repurchases of our common stock of $2.2 million.

On
June 11, 2003, we commenced two tender offer programs involving voluntary stock
option exchanges for our employees. The offering periods for the two stock
option exchange programs ended on July 14, 2003. One program was offered to
employees at a director level or below. Under this exchange program, employees
holding nonqualified or incentive stock options to purchase our common stock
with an exercise price of $4.50 or more were given the opportunity to exchange
their existing options for new options to purchase shares of our common stock equal
to an amount depending on the exercise price of the surrendered options.
Options for 521,991 shares were tendered on July 14, 2003 in the exchange
program. On January 15, 2004, the Company granted 163,995 options to purchase shares of the
Companys common stock in exchange for the options tendered. The new options
were granted six months and one day after acceptance of the old options for
exchange and cancellation. The exercise price of the new options was $6.34,
which was the last reported sale price of the Companys common stock on the
Nasdaq Stock Markets National Market on January 15, 2004. The new options will
vest over a two-year period from the date of grant. The other program was
offered to employees at a senior director level or above, who had been with the
Company since July 4, 2002. Under this exchange program, employees holding
nonqualified options to purchase our common stock with an exercise price of
$2.80 or more were given the opportunity to exchange their existing options for
restricted stock units which were granted on a one-to-one ratio and are subject
to a new four-year vesting schedule. On July 14, 2003, we accepted for
cancellation options to purchase 3,826,561 shares of our common stock
representing 95% of the 4,045,182 options that were eligible to be tendered in
the exchange program.  Pursuant to the
terms of the exchange program, we issued 3,826,561 restricted stock units on
July 14, 2003 in exchange for the options surrendered. The issuance of these
restricted stock units resulted in $1.1 million of stock compensation expense
for the year ended January 2, 2004 and is expected to result in approximately
$580 thousand of stock compensation expense per quarter over the next four
years.  The remaining 218,621 eligible
options that were not exchanged are required to be accounted for under variable
plan accounting under APB Opinion No. 25.  The weighted average exercise price of these
remaining eligible options is $4.01. 
Variable plan accounting resulted in approximately $103 thousand of
stock compensation expense for the year ended January 2, 2004.

-24-

---

---

On
July 30, 2002, we announced that our Board of Directors approved the repurchase
of up to $5.0 million of our common stock. During the second quarter of 2003,
our Board of Directors approved the repurchase of an additional $5.0 million of
our common stock. Under the repurchase plans, we may buy back shares of our
outstanding stock from time to time either on the open market or through
privately negotiated transactions, subject to market conditions and trading
restrictions. As of January 2, 2004, we had repurchased 3,550,279 shares of our
common stock at an average price of $2.16 per share. The amount of shares
repurchased to date includes 465,120 shares purchased from our president, who
is also a director, at $2.15 per share. We hold repurchased shares of our
common stock as treasury stock and account for treasury stock under the cost
method.

In
July 2003, we purchased the assets of Beacon Analytics, Inc., a business
performance management consulting company focusing on the implementation of
Hyperion software. The purchase price for this acquisition was $4.0 million in
cash and approximately $2.5 million of contingent consideration due over the
next three years if certain earnings goals are achieved.  This acquisition is expected to add
approximately $8.0 million in annualized revenues.

We
currently believe that available funds and cash flows generated by operations,
if any, will be sufficient to fund our working capital and capital expenditures
requirements for at least the next twelve months. We may decide to raise
additional funds in order to fund expansion, to develop new or enhanced
products and services, to respond to competitive pressures or to acquire
complementary businesses or technologies. There is no assurance, however, that
additional financing will be available when needed or desired.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

At January 2, 2004, our exposure to market risk related primarily to
changes in interest rates on our investment portfolio. Our marketable
investments consist primarily of short-term fixed income securities. We invest
only with high credit quality issuers and we do not use derivative financial
instruments in our investment portfolio. We do not believe that a significant
increase or decrease in interest rates would have a material adverse impact on
the fair value of our investment portfolio.

-25-

---

---

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ANSWERTHINK,
INC.

INDEX
TO FINANCIAL STATEMENTS

|                                                                                                                               | Page
|------------------------------------------------------------------------------------------------------------------------------ | ----
|                                                                                                                               |     
|                                                                                                                               |     
|                                                                                                                               |     
|Report of Independent Certified
  Public Accountants                                                                           | 27  
|                                                                                                                               |     
|Consolidated Balance Sheets as of
  January 2, 2004 and January 3, 2003                                                        | 28  
|                                                                                                                               |     
|Consolidated Statements of
  Operations for the Years Ended January 2, 2004, January 3, 2003 and 
  December 28, 2001          | 29  
|                                                                                                                               |     
|Consolidated Statements of
  Shareholders Equity for the Years Ended January 2, 2004, January 3, 2003
  and December 28, 2001 | 30  
|                                                                                                                               |     
|Consolidated Statements of Cash
  Flows for the Years Ended January 2, 2004, January 3, 2003 and 
  December 28, 2001          | 31  
|                                                                                                                               |     
|Notes to Consolidated Financial
  Statements                                                                                   | 32  
|                                                                                                                               |     
|Schedule II -- Valuation and Qualifying
  Accounts and Reserves                                                                | 47  

-26-

---

---

Report of Independent Certified Public Accountants

To the Board of Directors
and Shareholders of 
Answerthink, Inc.

In our opinion, the
consolidated financial statements listed in the accompanying index present
fairly, in all material respects, the financial position of Answerthink, Inc. and its subsidiaries at January 2, 2004 and January 3, 2003, and the results of
their operations and their cash flows for each of the three years in
the period ended January 2, 2004 in conformity with accounting principles
generally accepted in the United States of America.  In addition, in our opinion, the financial statement schedule
listed in the accompanying index presents
fairly, in all material respects, the information set forth therein when read
in conjunction with the related consolidated financial
statements.  These financial statements
and financial statement schedule are
the responsibility of the Companys management; our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits.  We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation.  We believe that our
audits provide a reasonable basis for our opinion.

As discussed in Note 1 to
the consolidated financial statements, pursuant to the adoption of Financial
Accounting Standards Board Statement No. 142, Goodwill and Other Intangible
Assets, the Company changed its method of accounting for goodwill in the year
ended January 3, 2003.

/s/
PricewaterhouseCoopers LLP

Miami, Florida 
March 1, 2004

-27-

---

---

ANSWERTHINK,
INC.CONSOLIDATED BALANCE SHEETS(in
thousands, except share data)

|                                       |                                                                                                                                                             | January 2,
  2004 |        |          | January 3,
  2003 | 
|-------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | ------ | -------- | ----------------- | 
|                                       |                                                                                                                                                             |                   |        |          |                   | 
|ASSETS                                 |                                                                                                                                                             |                   |        |          |                   | 
|                                       |                                                                                                                                                             |                   |        |          |                   | 
|Current assets:                        |                                                                                                                                                             |                   |        |          |                   | 
|                                       | Cash and cash equivalents                                                                                                                                   |                   | $      | 54,441   |                   | 
|                                       | Restricted cash                                                                                                                                             |                   |        |         |                   | 
|                                       | Accounts receivable and unbilled revenue, net of
  allowance of $1,757 and $3,526
       in 2003 and 2002, respectively                                     |                   |        | 24,877   |                   | 
|                                       | Prepaid expenses and other assets                                                                                                                           |                   |        | 4,260    |                   | 
|                                       |                                                                                                                                                             |                   |        |          |                   | 
|                                       | Total current assets                                                                                                                                        |                   |        | 83,578   |                   | 
|                                       |                                                                                                                                                             |                   |        |          |                   | 
|Marketable investments                 |                                                                                                                                                             |                   | 10,000 |          |                   | 
|Restricted cash                        |                                                                                                                                                             |                   | 3,000  |          |                   | 
|Property and equipment, net            |                                                                                                                                                             |                   | 8,714  |          |                   | 
|Other assets                           |                                                                                                                                                             |                   | 3,211  |          |                   | 
|Goodwill, net                          |                                                                                                                                                             |                   | 26,720 |          |                   | 
|                                       |                                                                                                                                                             |                   |        |          |                   | 
|                                       | Total assets                                                                                                                                                |                   | $      | 135,223  |                   | 
|                                       |                                                                                                                                                             |                   |        |          |                   | 
|                                       |                                                                                                                                                             |                   |        |          |                   | 
|LIABILITIES AND SHAREHOLDERS
  EQUITY |                                                                                                                                                             |                   |        |          |                   | 
|Current liabilities:                   |                                                                                                                                                             |                   |        |          |                   | 
|                                       | Accounts payable                                                                                                                                            |                   | $      | 3,793    |                   | 
|                                       | Accrued expenses and other liabilities                                                                                                                      |                   |        | 26,195   |                   | 
|                                       |                                                                                                                                                             |                   |        |          |                   | 
|                                       | Total current liabilities                                                                                                                                   |                   |        | 29,988   |                   | 
|                                       |                                                                                                                                                             |                   |        |          |                   | 
|                                       |                                                                                                                                                             |                   |        |          |                   | 
|Commitments and contingencies          |                                                                                                                                                             |                   |        |          |                   | 
|                                       |                                                                                                                                                             |                   |        |          |                   | 
|Shareholders equity:                  |                                                                                                                                                             |                   |        |          |                   | 
|                                       | Preferred stock, $.001 par value, 1,250,000 shares
  authorized, none issued and 
       outstanding                                                        |                   |        |         |                   | 
|                                       | Common stock, $.001 par value, authorized
  125,000,000 shares; issued: 48,290,640
       shares at January 2, 2004; 47,728,129 shares at
  January 3, 2003 |                   |        | 48       |                   | 
|                                       | Additional paid-in capital                                                                                                                                  |                   |        | 274,481  |                   | 
|                                       | Unearned compensation                                                                                                                                       |                   |        | (8,367   | )                 | 
|                                       | Treasury stock, at cost, 3,550,279 shares at January
  2, 2004 and 1,146,000 shares at 
       January 3, 2003                                              |                   |        | (7,686   | )                 | 
|                                       | Accumulated deficit                                                                                                                                         |                   |        | (153,241 | )                 | 
|                                       |                                                                                                                                                             |                   |        |          |                   | 
|                                       | Total shareholders equity                                                                                                                                  |                   |        | 105,235  |                   | 
|                                       |                                                                                                                                                             |                   |        |          |                   | 
|                                       | Total liabilities and shareholders equity                                                                                                                  |                   | $      | 135,223  |                   | 
|                                       |                                                                                                                                                             |                   |        |          |                   | 
|                                       |                                                                                                                                                             |                   |        |          |                   | 

The accompanying notes
are an integral part of the consolidated financial statements.

-28-

---

---

ANSWERTHINK,
INC. CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per
share data)

|                                                                                                                                         |                                                               | Year
  Ended        |       
|---------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------- | ------------------- | ------
|                                                                                                                                         |                                                               |                     |       
|                                                                                                                                         |                                                               | January
  2,
  2004 |       
|                                                                                                                                         |                                                               |                     |       
|                                                                                                                                         |                                                               |                     |       
|Revenues:                                                                                                                                |                                                               |                     |       
|                                                                                                                                         | Revenues before reimbursements                                |                     | $     
|                                                                                                                                         | Reimbursements                                                |                     |       
|                                                                                                                                         |                                                               |                     |       
|                                                                                                                                         | Total revenues                                                |                     |       
|                                                                                                                                         |                                                               |                     |       
|Costs and expenses:                                                                                                                      |                                                               |                     |       
|                                                                                                                                         | Project personnel and expenses:                               |                     |       
|                                                                                                                                         | Project personnel and expenses before reimbursable
  expenses |                     |       
|                                                                                                                                         | Reimbursable expenses                                         |                     |       
|                                                                                                                                         |                                                               |                     |       
|                                                                                                                                         | Total project personnel and expenses                          |                     |       
|                                                                                                                                         |                                                               |                     |       
|                                                                                                                                         | Selling, general and administrative expenses                  |                     |       
|                                                                                                                                         | Impairment of goodwill                                        |                     |       
|                                                                                                                                         | Restructuring costs                                           |                     |       
|                                                                                                                                         | Stock compensation expense                                    |                     |       
|                                                                                                                                         |                                                               |                     |       
|                                                                                                                                         | Total costs and operating expenses                            |                     |       
|                                                                                                                                         |                                                               |                     |       
|Income (loss) from operations                                                                                                            |                                                               |                     | (5,178
|Other income (expense):                                                                                                                  |                                                               |                     |       
|                                                                                                                                         | Interest income                                               |                     |       
|                                                                                                                                         | Interest expense                                              |                     |       
|                                                                                                                                         |                                                               |                     |       
|Income (loss) before income taxes, loss from
  discontinued operations and 
       cumulative effect of change in accounting
  principle |                                                               |                     | (4,472
|Income taxes                                                                                                                             |                                                               |                     | 350   
|                                                                                                                                         |                                                               |                     |       
|Loss from continuing operations                                                                                                          |                                                               |                     | (4,822
|Loss from discontinued operations, net of income
  taxes                                                                                 |                                                               |                     |      
|                                                                                                                                         |                                                               |                     |       
|Loss before cumulative effect of change in
  accounting principle                                                                        |                                                               |                     | (4,822
|Cumulative effect of change in accounting principle                                                                                      |                                                               |                     |      
|                                                                                                                                         |                                                               |                     |       
|Net loss                                                                                                                                 |                                                               | $                   | (4,822
|                                                                                                                                         |                                                               |                     |       
|                                                                                                                                         |                                                               |                     |       
|Basic net loss per common share:                                                                                                         |                                                               |                     |       
|                                                                                                                                         | Loss from continuing operations                               |                     | $     
|                                                                                                                                         | Loss from discontinued operations, net of income
  taxes      |                     | $     
|                                                                                                                                         | Cumulative effect of change in accounting principle           |                     | $     
|                                                                                                                                         | Net loss per common share                                     |                     | $     
|                                                                                                                                         |                                                               |                     |       
|Weighted average common shares outstanding                                                                                               |                                                               |                     | 45,140
|                                                                                                                                         |                                                               |                     |       
|Diluted net loss per common share:                                                                                                       |                                                               |                     |       
|                                                                                                                                         | Loss from continuing operations                               |                     | $     
|                                                                                                                                         | Loss from discontinued operations, net of income
  taxes      |                     | $     
|                                                                                                                                         | Cumulative effect of change in accounting principle           |                     | $     
|                                                                                                                                         | Net loss per common share                                     |                     | $     
|                                                                                                                                         |                                                               |                     |       
|Weighted average common and common equivalent shares
  outstanding                                                                       |                                                               |                     | 45,140
|                                                                                                                                         |                                                               |                     |       

The accompanying notes
are an integral part of the consolidated financial statements.

-29-

---

---

ANSWERTHINK,
INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY(in thousands)

|                                                         |  | Common Stock |        | Additional
  Paid-in
  Capital |        | Treasury Stock |    | Unearned
  Compensation |  | Accumulated
   Deficit |         | Total
  Shareholders
  Equity
|-------------------------------------------------------- |  | ------------ | ------ | ------------------------------ | ------ | -------------- | -- | ----------------------- |  | ---------------------- | ------- | ------------------------------
|                                                         | 
|Shares                                                   |  | Amount       | Shares |                                | Amount
|                                                         |  |              |        |                                |        |                |    |                         |  |                        |         |                               
|                                                         |  |              |        |                                |        |                |    |                         |  |                        |         |                               
|Balance at December 29, 2000                             |  |              | 44,235 |                                |        | $              | 44 |                         |  | $                      | 243,299 |                               
|Issuance of common stock                                 |  |              | 890    |                                |        |                | 1  |                         |  |                        | 4,366   |                               
|Issuance of stock options                                |  |              |       |                                |        |                |   |                         |  |                        | 4,218   |                               
|Issuance of common stock for business acquisitions       |  |              | 755    |                                |        |                | 1  |                         |  |                        | 5,232   |                               
|Amortization of deferred compensation expense            |  |              |       |                                |        |                |   |                         |  |                        |        |                               
|Net loss                                                 |  |              |       |                                |        |                |   |                         |  |                        |        |                               
|                                                         |  |              |        |                                |        |                |    |                         |  |                        |         |                               
|Balance at December 28, 2001                             |  |              | 45,880 |                                |        | $              | 46 |                         |  | $                      | 257,115 |                               
|Issuance of common stock                                 |  |              | 1,848  |                                |        |                | 2  |                         |  |                        | 6,511   |                               
|Treasury stock purchased                                 |  |              |       |                                |        |                |   |                         |  |                        |        |                               
|Net loss                                                 |  |              |       |                                |        |                |   |                         |  |                        |        |                               
|                                                         |  |              |        |                                |        |                |    |                         |  |                        |         |                               
|Balance at January 3, 2003                               |  |              | 47,728 |                                |        | $              | 48 |                         |  | $                      | 263,626 |                               
|Issuance of common stock                                 |  |              | 563    |                                |        |                |   |                         |  |                        | 1,252   |                               
|Treasury stock purchased                                 |  |              |       |                                |        |                |   |                         |  |                        |        |                               
|Issuance of restricted stock units, net of cancellations |  |              |       |                                |        |                |   |                         |  |                        | 9,487   |                               
|Amortization of restricted stock units                   |  |              |       |                                |        |                |   |                         |  |                        |        |                               
|Stock compensation expense                               |  |              |       |                                |        |                |   |                         |  |                        | 13      |                               
|Variable stock options                                   |  |              |       |                                |        |                |   |                         |  |                        | 103     |                               
|Net loss                                                 |  |              |       |                                |        |                |   |                         |  |                        |        |                               
|                                                         |  |              |        |                                |        |                |    |                         |  |                        |         |                               
|Balance at January 2, 2004                               |  |              | 48,291 |                                |        | $              | 48 |                         |  | $                      | 274,481 |                               
|                                                         |  |              |        |                                |        |                |    |                         |  |                        |         |                               

The accompanying notes
are an integral part of the consolidated financial statements.

-30-

---

---

ANSWERTHINK,
INC. CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)

|                                                                       |                                                                                   | Year
  Ended     |       
|---------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ---------------- | ------
|                                                                       |                                                                                   |                  |       
|                                                                       |                                                                                   | January
  2,2004 |       
|                                                                       |                                                                                   |                  |       
|                                                                       |                                                                                   |                  |       
|Cash flows from operating
  activities:                                |                                                                                   |                  |       
|                                                                       | Net loss                                                                          |                  | $     
|                                                                       | Adjustments to reconcile net loss
  to net cash provided by operating activities: |                  |       
|                                                                       | Cumulative effect of change in
  accounting principle                             |                  |       
|                                                                       | Impairment of
goodwill                                                            |                  |       
|                                                                       | Write-off of leasehold improvements
  and other assets                            |                  |       
|                                                                       | Depreciation and
  amortization                                                   |                  |       
|                                                                       | Non-cash compensation
  expense                                                   |                  |       
|                                                                       | Provision for doubtful
  accounts                                                 |                  |       
|                                                                       | Deferred income taxes                                                             |                  |       
|Changes in assets and liabilities,
  net of effects from acquisitions: |                                                                                   |                  |       
|                                                                       | Decrease in accounts receivable and
  unbilled revenue                            |                  |       
|                                                                       | Decrease (increase) in prepaid
  expenses and other assets                        |                  |       
|                                                                       | Decrease in accounts
  payable                                                    |                  |       
|                                                                       | Decrease in accrued expenses and
  other liabilities                              |                  |       
|                                                                       |                                                                                   |                  |       
|                                                                       | Net cash provided by operating
  activities                                       |                  |       
|Cash flows from investing
  activities:                                |                                                                                   |                  |       
|                                                                       | Purchases of property and
  equipment                                             |                  |       
|                                                                       | Increase in restricted
  cash                                                     |                  |       
|                                                                       | Purchases of marketable
  investments                                             |                  |       
|                                                                       | Cash used in acquisition of
  businesses, net of cash acquired                    |                  |       
|                                                                       |                                                                                   |                  |       
|                                                                       | Net cash used in investing
  activities                                           |                  |       
|Cash flows from financing
  activities:                                |                                                                                   |                  |       
|                                                                       | Proceeds from issuance of common
  stock                                          |                  |       
|                                                                       | Repurchases of common
  stock                                                     |                  |       
|                                                                       |                                                                                   |                  |       
|                                                                       | Net cash provided by (used in)
  financing activities                             |                  |       
|                                                                       |                                                                                   |                  |       
|Net increase (decrease) in cash and
  cash equivalents                 |                                                                                   |                  | (8,978
|Cash and cash equivalents at
  beginning of year                       |                                                                                   |                  | 63,419
|                                                                       |                                                                                   |                  |       
|Cash and cash equivalents at end of
  year                             |                                                                                   | $                | 54,441
|                                                                       |                                                                                   |                  |       
|Supplemental disclosure of cash
  flow information:                    |                                                                                   |                  |       
|                                                                       | Cash paid for
interest                                                            |                  | $     
|                                                                       | Cash paid for income
  taxes                                                      |                  | $     
|                                                                       |                                                                                   |                  |       

The accompanying notes
are an integral part of the consolidated financial statements.

-31-

---

---

ANSWERTHINK,
INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Nature of Business and Significant Accounting Policies

Nature
of Business

Answerthink,
Inc. (the Company or Answerthink) is a leading business and technology
consulting firm. Answerthinks capabilities include benchmarking, business
transformation, business applications, business intelligence, and offshore
application development and support.

Principles
of Consolidation

The
consolidated financial statements and information herein include the accounts
of Answerthink and its subsidiaries. All material intercompany accounts and
transactions have been eliminated in consolidation.

Fiscal
Year

The
Companys fiscal year generally consists of a 52-week period and periodically
consists of a 53-week period because the fiscal year ends on the Friday closest
to December 31. Fiscal years 2003, 2002 and 2001 ended on January 2, 2004,
January 3, 2003 and December 28, 2001, respectively.  Fiscal year 2002 was a 53-week period. References to a year
included in this section refer to a fiscal year rather than a calendar year.

Cash
and Cash Equivalents

The
Company considers all short-term investments with maturities of three months or
less when purchased to be cash equivalents. The Company places its temporary
cash investments with high credit quality financial institutions. At times,
such investments may be in excess of the F.D.I.C. insurance limits. The Company
has not experienced any loss to date on these investments.

Marketable
investments

Marketable
investments are available-for-sale securities which are recorded at fair market
value. Unrealized gains and losses on these investments are reported in
comprehensive income or loss and accumulated as a separate component of
stockholders equity, net of any related tax effect.  The difference between fair market value and cost was not
material at January 2, 2004.  Declines
in value that are judged to be other than temporary result in a reduction of
the carrying amount of the investment to fair value and the recognition of an
impairment charge in other income (expense).

Accounts
Receivables and Allowances for Doubtful Accounts

The
Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of our clients to make required payments.
Management makes estimates of the uncollectibility of the accounts receivables.
Management critically reviews accounts receivable and analyzes historical bad
debts, past-due accounts, client credit-worthiness and current economic trends
when evaluating the adequacy of the allowance for doubtful accounts.

Property
and Equipment, Net

Property
and equipment are recorded at cost, less accumulated depreciation. Depreciation
is provided using the straight-line method over the estimated useful life of
the assets ranging from three to five years. Leasehold improvements are
amortized on a straight-line basis over the term of the lease or the estimated
useful life of the improvement, whichever is shorter. Expenditures for repairs
and maintenance are charged to expense as incurred. Expenditures for
betterments and major improvements are capitalized. The carrying amount of
assets sold or retired and related accumulated depreciation are removed from
the accounts in the year of disposal and any resulting gains or losses are
included in the statement of operations.

-32-

---

---

ANSWERTHINK,
INC. 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  Nature
of Business and Significant Accounting Policies (continued)

The Company capitalizes
the costs of internal-use software in accordance with Statement of Position No.
98-1 (SOP 98-1), Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use. SOP
98-1 provides guidance on applying generally accepted accounting principles in
addressing whether and under what conditions the costs of internal-use software
should be capitalized.

Goodwill and Other Intangible Assets

Effective
December 29, 2001, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 142, Goodwill and
Other Intangible Assets. Under SFAS No. 142, goodwill and intangible
assets deemed to have indefinite lives are no longer amortized but are reviewed
at least annually for impairment. Other intangible assets will continue to be
amortized over their estimated useful lives. Prior to the adoption of SFAS No.
142, the Company amortized goodwill over 15 years. SFAS No. 142 requires that
goodwill be tested for impairment at the reporting unit level at adoption and
at least annually thereafter, utilizing a fair value methodology versus an
undiscounted cash flow method required under previous accounting rules. The
Company evaluates the fair values of its reporting units utilizing various
valuation techniques including discounted cash flow analysis. Based on the new
method for recording impairment, the Company recognized a transitional
impairment loss of $31.2 million as the cumulative effect of a change in
accounting principle in the first quarter of 2002.

The
new statement also requires that goodwill be tested for impairment on an annual
basis and between annual tests in certain circumstances. The Company performed
an impairment test primarily as a result of the decline in stock prices for the
Company and its peer group during the quarter ended September 27, 2002 and recorded
a non-cash impairment charge of $20.0 million. 
In our fiscal 2003 annual analysis conducted in the fourth quarter of
fiscal 2003, we concluded that we did not have any additional impairment of
goodwill.

Goodwill
amortization for the year ended December 28, 2001 was $6.7 million, of which,
$2.8 million is included in the loss from discontinued operations in the
consolidated statements of operations. The following schedule reconciles net
loss and per share amounts for the year ended December 28, 2001 adjusted for
SFAS No. 142 (in thousands, except per share data):

|                                |                             | Year
  Ended      |       
|------------------------------- | --------------------------- | ----------------- | ------
|                                |                             |                   |       
|                                |                             | January 2,
  2004 |       
|                                |                             |                   |       
|                                |                             |                   |       
|Net loss as reported            |                             | $                 | (4,822
|Add back: Goodwill amortization |                             |                   |      
|                                |                             |                   |       
|Adjusted net loss               |                             | $                 | (4,822
|                                |                             |                   |       
|                                |                             |                   |       
|Basic net loss per share:       |                             |                   |       
|                                | Net loss as reported        |                   | $     
|                                | Goodwill amortization       |                   |       
|                                |                             |                   |       
|                                | Adjusted net loss per share |                   | $     
|                                |                             |                   |       
|                                |                             |                   |       
|Diluted net loss per share:     |                             |                   |       
|                                | Net loss as reported        |                   | $     
|                                | Goodwill amortization       |                   |       
|                                |                             |                   |       
|                                | Adjusted net loss per share |                   | $     
|                                |                             |                   |       

-33-

---

---

ANSWERTHINK,
INC. 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  Nature
of Business and Significant Accounting Policies (continued)

Revenue
Recognition

The
Company recognizes revenues for services as work is performed on a
project-by-project basis adjusted for any anticipated losses in the period in
which any such losses are identified. For projects charged on a time and
materials basis, revenue is recognized based on the number of hours worked by
consultants at an agreed-upon rate per hour. The Company also undertakes
projects on a fixed-fee or capped-fee basis for which revenues are recognized
on the percentage of completion method of accounting based on the evaluation of
actual costs incurred to date compared to total estimated costs.

Reimbursable
Expenses

During
the first quarter of 2002, the Company adopted Emerging Issues Task Force
(EITF) Issue No. 01-14, Income Statement
Characterization of Reimbursements Received for Out of Pocket Expenses
Incurred.In accordance with the provisions of EITF Issue No. 01-14,
reimbursements received from customers for out-of-pocket expenses incurred by
employees are classified as revenue in the statement of operations. The Company
has historically accounted for reimbursements received for out-of-pocket
expenses incurred as a reduction to project personnel and expenses in the
statement of operations. The statement of operations for the year ended
December 28, 2001 was reclassified to comply with the guidance in EITF Issue
No. 01-14. Adoption of the provisions had no impact on the reported net loss or
net loss per share.

Stock
Compensation

The
Company applies Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employeesand
related interpretations in accounting for its stock option plans. The Company
measures compensation expense related to the grant of stock options and
stock-based awards to employees (including independent directors) in accordance
with the provisions of APB No. 25. In accordance with APB Opinion No. 25,
compensation expense, if any, is generally based on the difference between the
exercise price of an option, or the amount paid for an award, and the market
price or fair value of the underlying common stock at the date of the award or
at the measurement date for variable awards. Stock-based compensation
arrangements involving non-employees are accounted for under Statement of
Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, under which such
arrangements are accounted for based on the fair value of the option or
award.

Under
SFAS No. 123, compensation cost for the Companys stock-based compensation
plans would be determined based on the fair value at the grant dates for awards
under those plans. The assumptions underlying the fair value calculations of
the stock option grants are presented in Note 8. Had the Company adopted SFAS
No. 123 in accounting for its stock option plans, the Companys consolidated
net loss and net loss per share for the years ended January 2, 2004, January 3,
2003 and December 28, 2001 would have been adjusted to the pro forma amounts
indicated as follows (in thousands, expect per share data):

| |                                                                                                                                                            |             | Year
  Ended      |        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | ----------------- | -------
| |                                                                                                                                                            |             |                   |        
| |                                                                                                                                                            |             | January 2,
  2004 |        
| |                                                                                                                                                            |             |                   |        
| | Net loss, as reported                                                                                                                                      |             | $                 | (4,822 
| | Total stock-based employee pro forma compensation
  expense
    determined under fair value based method for all awards, net of
  related
    tax benefits |             | $                 | (5,466 
| | Pro forma net loss                                                                                                                                         |             | $                 | (10,288
| | Basic net loss per common share                                                                                                                            |             |                   |        
| |                                                                                                                                                            | As reported |                   | $      
| |                                                                                                                                                            | Pro forma   |                   | $      
| | Diluted net loss per common share                                                                                                                          |             |                   |        
| |                                                                                                                                                            | As reported |                   | $      
| |                                                                                                                                                            | Pro forma   |                   | $      

-34-

---

---

ANSWERTHINK,
INC. 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  Nature of Business and Significant Accounting Policies
(continued)

Included
in the pro forma net loss for the year ended January 3, 2003 is $10.6 million
of expense related to the reversal of pro forma accumulated deferred tax
benefits established in previous years to provide a pro forma valuation
allowance on all deferred tax assets.

Income
Taxes

The
Company records income taxes using the liability method. Under this method, the
Company records deferred taxes based on temporary taxable and deductible
differences between the tax bases of the Companys assets and liabilities and
their financial reporting bases. The liability method of accounting for
deferred income taxes requires a valuation allowance against deferred tax
assets if, based on the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized.

Net
Income (Loss) Per Common Share

Basic
net income (loss) per common share is computed by dividing net income (loss) by
the weighted average number of common shares outstanding during the period.
With regard to restricted stock or restricted stock units issued to employees,
the calculation includes only the vested portion of such stock.

Net
income (loss) per share assuming dilution is computed by dividing the net
income (loss) by the weighted average number of common shares outstanding,
increased by the assumed conversion of other potentially dilutive securities
during the period.

Potentially
dilutive shares were excluded from the diluted loss per share calculation for
the years ended January 2, 2004, January 3, 2003 and December 28, 2001 because
their effects would have been anti-dilutive to the loss incurred by the
Company. Therefore, the amounts reported for basic and diluted net loss per
share were the same for those years. Potentially dilutive shares which were not
included in the diluted loss per share calculation for the years ending January
2, 2004, January 3, 2003 and December 28, 2001 included 1,806,963 shares,
333,644 shares and 1,444,392 shares, respectively, of unvested restricted stock
issued to employees and 289,647 shares, 310,478 shares, and 860,751 shares,
respectively, of common stock issuable upon the exercise of stock options and
warrants assuming the treasury stock method.

Fair Value of Financial Instruments

The
Companys financial instruments consist of cash and cash equivalents,
restricted cash, marketable investments, accounts receivable and unbilled
revenue, accounts payable, and accrued expenses and other liabilities. At
January 2, 2004, and January 3, 2003, the fair value of these instruments
approximated their carrying value.

Concentration
of Credit Risk

The
Company provides services primarily to Global 2000 companies and other
sophisticated buyers of business consulting and IT services. The Company
performs ongoing credit evaluations of its major customers and maintains
reserves for potential credit losses. In fiscal year 2003, three customers had
revenues greater than 5% of total revenues, which, in the aggregate, accounted for
approximately 20% of total revenues. In fiscal year 2002, three customers had
revenues greater than 5% of total revenues, which, in the aggregate, accounted
for approximately 36% of total revenues. In fiscal year 2001, three customers
had revenues greater than 5% of total revenues, which, in the aggregate,
accounted for approximately 39% of total revenues.

-35-

---

---

ANSWERTHINK,
INC. 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  Nature
of Business and Significant Accounting Policies (continued)

Managements Estimates

The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Segment
Reporting

The
Company engages in business activities in one operating segment, which provides
technology-enabled business solutions.

Reclassifications

Certain
prior year amounts in the consolidated financial statements have been
reclassified to conform with the current year presentation.

2.  Acquisitions and Investing Activities

During
the three year period ended January 2, 2004, the Company acquired four
businesses providing information technology services (collectively, the
Acquired Entities) in separate transactions. 
One was completed in 2003, two were completed in 2002 and one was
completed in 2001. Aggregate consideration for the Acquired Entities was $6.3
million. This amount has been allocated, on an entity-by-entity basis, to the
assets acquired and liabilities assumed based on their respective fair values
on the dates of acquisition. During 2000, the Company recorded a liability of
$5.2 million for an earned contingent consideration paid in the Companys
common stock in March 2001, when the Company issued 755,374 shares of the
Companys common stock for the earned contingent consideration.

The
components of the purchase price allocation for the Acquired Entities,
contingent consideration earned for previous acquisitions, and fees and
expenses incurred are as follows (in thousands):

| |                                                                 |  | 2003 |       | 2002 |  | 2001 |    
| | --------------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ---
| |                                                                 |  |      |       |      |  |      |    
| | Fair value of net assets (excluding cash) acquired              |  | $    | 1,264 |      |  | $    | 851
| | Goodwill                                                        |  |      |      |      |  |      |   
| | Intangible assets                                               |  |      | 2,287 |      |  |      |   
| | Common stock issued                                             |  |      |      |      |  |      |   
| | Accrued earn-out                                                |  |      | (250  | )    |  |      |   
| |                                                                 |  |      |       |      |  |      |    
| | Cash used in acquisitions of businesses, net of cash
  acquired |  | $    | 3,301 |      |  | $    | 851
| |                                                                 |  |      |       |      |  |      |    

These
acquisitions have been accounted for using the purchase method of accounting.
Accordingly, the results of the acquisitions are included in the Companys
consolidated results of operations from the respective dates of acquisition. For
each acquisition, the excess of the purchase price including any contingent
consideration over the estimated fair value of the net identifiable assets
acquired has been recorded as goodwill and/or intangible assets. The pro forma
impact of the acquisitions completed in 2003, 2002 and 2001 was not significant
to the results of the Companys consolidated operations for the years ended
January 2, 2004, January 3, 2003 and December 28, 2001.

-36-

---

---

ANSWERTHINK,
INC. 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2.  Acquisitions
and Investing Activities (continued)

In
July 2003, the Company purchased the assets of Beacon Analytics, Inc., a
business performance management consulting company focusing on the
implementation of Hyperion software. The purchase price for this acquisition
was $4.0 million in cash and approximately $2.5 million of contingent cash
consideration due over the next three years if certain earnings goals are
achieved. The excess of the purchase price of the acquisition over the
estimated fair value of the net identifiable assets acquired which totaled $2.0
million has been recorded as intangible assets and are being amortized over
periods ranging from 6 months to 3 years.

The
Company includes its acquired intangible assets with definitive lives in other
assets in the accompanying consolidated balance sheets. As of January 2, 2004,
and January 3, 2003 intangible assets totaled approximately $2.4 million and
$953 thousand, respectively, net of accumulated amortization of $1.1 million
and $208 thousand, respectively. Acquired intangible assets with definite lives
are amortized over periods ranging from 6 months to 3 years. Amortization
expense for such intangible assets was $893 thousand and $208 thousand for the fiscal
years ended January 2, 2004 and January 3, 2003, respectively. As of January 2,
2004 the Company estimates remaining amortization expense to be approximately
$1.3 million, $800 thousand and $300 thousand in fiscal years 2004, 2005 and
2006, respectively.

3.
  Property and Equipment

Property
and equipment consists of the following (in thousands):

| |                               |  | January
  2,
  2004 |         | January
  3,
  2003 | 
| | ----------------------------- |  | ------------------- | ------- | ------------------- | 
| |                               |  |                     |         |                     | 
| |                               |  |                     |         |                     | 
| | Equipment                     |  | $                   | 12,736  |                     | 
| | Furniture and fixtures        |  |                     | 385     |                     | 
| | Software                      |  |                     | 6,892   |                     | 
| | Leasehold improvements        |  |                     | 5,123   |                     | 
| |                               |  |                     |         |                     | 
| |                               |  |                     | 25,136  |                     | 
| | Less accumulated depreciation |  |                     | (16,422 | )                   | 
| |                               |  |                     |         |                     | 
| |                               |  | $                   | 8,714   |                     | 
| |                               |  |                     |         |                     | 

During
fiscal year 2002, write-offs of $5.0 million for leasehold improvements and
other assets were recorded as part of the restructuring costs.

Depreciation
expense for the years ended January 2, 2004, January 3, 2003 and December 28,
2001 was $4.1 million, $5.1 million and $5.5 million, respectively. Of these
amounts, $1.0 million and $2.0 million for the years ended January 3, 2003 and
December 28, 2001, respectively, are included in the loss from discontinued
operations in the consolidated statements of operations.

4.  Accrued
Expenses and Other Liabilities

Accrued
expenses and other liabilities consists of the following (in thousands):

| |                                        |  | January
  2,
  2004 |        | January
  3,
  2003 | 
| | -------------------------------------- |  | ------------------- | ------ | ------------------- | 
| |                                        |  |                     |        |                     | 
| |                                        |  |                     |        |                     | 
| | Accrued compensation and benefits      |  | $                   | 5,364  |                     | 
| | Accrued restructuring related expenses |  |                     | 10,071 |                     | 
| | Deferred revenue                       |  |                     | 4,850  |                     | 
| | Other accrued expenses                 |  |                     | 5,910  |                     | 
| |                                        |  |                     |        |                     | 
| |                                        |  | $                   | 26,195 |                     | 
| |                                        |  |                     |        |                     | 

-37-

---

---

ANSWERTHINK,
INC. 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5.  
Revolving Credit Facility

In
August 2002, the Company cancelled its $15.0 million revolving credit facility.
At the time of cancellation and at all times throughout 2002 and 2001, there
were no borrowings outstanding under the facility. Letters of credit of $2.6
million were outstanding under the agreement at the time of the cancellation.
The Company has deposited $3.0 million and $2.9 million at January 2, 2004 and
at January 3, 2003, respectively, with a financial institution as collateral
for these letters of credit and has classified these as restricted cash on the
accompanying consolidated balance sheets.

6.  Lease
Commitments

The
Company has operating lease agreements for its premises that expire on various
dates through 2015. Rent expense for the years ended January 2, 2004, January
3, 2003 and December 28, 2001 was $2.2 million, $4.9 million and $6.5 million,
respectively.

Future
minimum lease commitments under non-cancelable operating leases for premises
having a remaining term in excess of one year at January 2, 2004 are as follows
(in thousands):

| | 2004                  |                                                    | $ | 6,367  |       
| | --------------------- | -------------------------------------------------- | - | ------ | ------
| | 2005                  |                                                    |   | 5,356  |       
| | 2006                  |                                                    |   | 5,111  |       
| | 2007                  |                                                    |   | 4,721  |       
| | 2008                  |                                                    |   | 4,510  |       
| | Thereafter            |                                                    |   | 18,506 |       
| |                       |                                                    |   |        |       
| |                       |                                                    |   | 44,571 |       
| | Less: sublease income |                                                    |   | 13,328 |       
| |                       |                                                    |   |        |       
| |                       | Total minimum lease payments, less sublease income |   | $      | 31,243
| |                       |                                                    |   |        |       

7.  Income Taxes

The
components of the tax expense (benefit) for income taxes are as follows (in
thousands):

| |                               |         | Year
  Ended        |    
| | ----------------------------- | ------- | ------------------- | ---
| |                               |         |                     |    
| |                               |         | January
  2,
  2004 |    
| |                               |         |                     |    
| | Current tax expense (benefit) |         |                     |    
| |                               | Federal |                     | $  
| |                               | State   |                     |    
| |                               | Foreign |                     |    
| |                               |         |                     |    
| |                               |         |                     | 350
| | Deferred tax expense          |         |                     |    
| |                               | Federal |                     |    
| |                               | State   |                     |    
| |                               | Foreign |                     |    
| |                               |         |                     |    
| |                               |         |                     |   
| |                               |         |                     |    
| |                               |         |                     |    
| | Income taxes                  |         | $                   | 350
| |                               |         |                     |    

-38-

---

---

ANSWERTHINK,
INC. 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7.  Income
Taxes (continued)

A
reconciliation of the Federal statutory tax rate with the effective tax rate is
as follows:

| |                                                         |  | Year
  Ended      |       
| | ------------------------------------------------------- |  | ----------------- | ------
| |                                                         |  |                   |       
| |                                                         |  | January 2,
  2004 |       
| |                                                         |  |                   |       
| |                                                         |  |                   |       
| | U.S. statutory rate                                     |  |                   | (35.0 
| | State income taxes, net of Federal income tax
  benefit |  |                   | 3.8   
| | Loss on investment in subsidiary                        |  |                   | (129.6
| | Valuation allowance                                     |  |                   | 166.4 
| | Goodwill amortization                                   |  |                   |      
| | Other, net                                              |  |                   | 2.2   
| |                                                         |  |                   |       
| | Effective rate                                          |  |                   | 7.8   
| |                                                         |  |                   |       

The
components of the net deferred income tax asset are as follows (in thousands):

| |                                 |                                                 | January
  2,
  2004 |        | January
  3,
  2003 |  
| | ------------------------------- | ----------------------------------------------- | ------------------- | ------ | ------------------- | -
| |                                 |                                                 |                     |        |                     |  
| |                                 |                                                 |                     |        |                     |  
| | Deferred income tax assets      |                                                 |                     |        |                     |  
| |                                 | Purchased research and development              |                     | $      | 1,267               |  
| |                                 | Allowance for doubtful accounts                 |                     |        | 615                 |  
| |                                 | Net operating loss and tax credits carryforward |                     |        | 33,742              |  
| |                                 | Accrued expenses and other liabilities          |                     |        | 5,420               |  
| |                                 |                                                 |                     |        |                     |  
| |                                 |                                                 |                     | 41,044 |                     |  
| |                                 | Valuation allowance                             |                     |        | (38,459             | )
| |                                 |                                                 |                     |        |                     |  
| |                                 |                                                 |                     | 2,585  |                     |  
| |                                 |                                                 |                     |        |                     |  
| | Deferred income tax liabilities |                                                 |                     |        |                     |  
| |                                 | Depreciation and amortization                   |                     |        | (1,973              | )
| |                                 | Other items                                     |                     |        | (612                | )
| |                                 |                                                 |                     |        |                     |  
| |                                 |                                                 |                     | (2,585 | )                   |  
| |                                 |                                                 |                     |        |                     |  
| | Net deferred income tax asset   |                                                 | $                   |       |                     |  
| |                                 |                                                 |                     |        |                     |  

An
income tax receivable of $199,000 and $11.0 million is included in prepaid
expenses and other assets in the consolidated balance sheets as of January 2,
2004 and January 3, 2003, respectively. Net deferred tax assets of $-0- were
reflected in the consolidated balance sheets as of January 2, 2004 and January
3, 2003. At January 2, 2004 and January 3, 2003, the Company had $92.0 million
and $68.0 million, respectively, of net operating loss carryforwards available
for tax purposes, most of which expire in 2023 if not utilized.

In
2002, the Company discontinued its interactive marketing business which was
acquired with THINK New Ideas. The Company claimed a $92.0 million worthless stock deduction for its
investment in THINK New Ideas in its 2002 tax return as a result of the discontinuance of THINK New Ideas. The Company voluntarily
requested that the Internal Revenue Service (IRS) review this position on an
expedited basis. This review is currently in process. Although the Company
believes its tax position is sustainable, there is no assurance that the IRS
will agree with the Companys conclusion or the amount of the deduction. The final resolution of this matter
could result in a deduction materially less than the amount claimed.

The
liability method of accounting for deferred income taxes requires a valuation
allowance against deferred tax assets if, based on the weight of available
evidence, it is more likely than not that some or all of the deferred tax
assets will not be realized.  At January
2, 2004 and January 3, 2003, the Company had established a valuation allowance
of $38.5 million and $30.1 million, respectively, to reduce deferred income tax
assets primarily related to net operating loss carryforwards.

-39-

---

---

ANSWERTHINK, INC. 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8.  Shareholders Equity

Securities
Purchase Agreement

In
March 1999, THINK New Ideas entered into a securities purchase agreement (the
Securities Purchase Agreement) with Capital Ventures International and
Marshall Capital Management, Inc. (the Purchasers) whereby the Purchasers
agreed to purchase shares of common stock and warrants to acquire shares of
common stock. Pursuant to the Securities Purchase Agreement, on March 5, 1999,
THINK New Ideas issued, for proceeds of $6 million, 609,799 shares of its
common stock at $9.84 per share and warrants to purchase an additional 121,961
shares of common stock exercisable for a five-year term, at an exercise price
of $14.76. All of these warrants were outstanding as of January 2, 2004.

At
any time prior to March 5, 2000 the Purchasers also had the right but not the
obligation to purchase 371,353 additional shares of common stock at $13.46 per
share, together with warrants for 1/5 share for each additional share
purchased, exercisable at an exercise price of 150% of the market price on the
date the related additional shares were purchased. Pursuant to the Securities
Purchase Agreement, the additional shares were sold in March 2000 for $5.0
million and warrants to acquire 74,270 shares of common stock, exercisable for
a five-year term, were issued at an exercise price of $36.94. All of these
warrants were outstanding as of January 2, 2004.

Stock Plans

Effective
July 1, 1998, the Company adopted an Employee Stock Purchase Plan to provide
substantially all employees who have completed three months of service as of
the beginning of an offering period an opportunity to purchase shares of its
common stock through payroll deductions. Purchases on any one grant are limited
to 10% of eligible compensation. Participant account balances are used to
purchase shares of stock at the lesser of 85 percent of the fair market value
of shares on the first trading day of the six-month offering period or on the
last trading day of such offering period. The aggregate fair market value,
determined as of the first trading date of the offering period, as to shares
purchased by an employee may not exceed $25,000 annually. The Employee Stock
Purchase Plan expires on July 1, 2008. A total of 2,750,000 shares of common
stock are available for purchase under the plan with a limit of 400,000 shares
of common stock to be issued per offering period. For plan years 2003, 2002 and
2001, 455,482 shares, 734,047 shares and 298,210 shares, respectively, were
issued.

In
2001, the Company granted stock options to participants in the Companys
Employee Stock Purchase Plan. These options were granted in lieu of the
Employee Stock Purchase Plan shares that could not be issued because the plan
was oversubscribed for the purchase periods ending December 31, 2000 and June
30, 2001. The Company recorded a non-cash compensation charge of $4.2 million
in the year ended December 28, 2001 based on the vesting provisions of the
options for the difference between the fair market value of the stock on the
option grant date and the exercise price. These options fully vested on June
30, 2001.

The
Company has granted stock options to employees and directors of the Company at
exercise prices equal to the market value of the stock at the date of
grant.  The options generally vest
ratably over four years with a maximum term of 10 years.  The number of shares available for future
issuance at January 2, 2004 is 11,345,018 shares.

On
June 11, 2003, the Company commenced two tender offer programs involving
voluntary stock option exchanges for the Companys employees. The offering
periods for the two stock option exchange programs ended on July 14, 2003.

-40-

---

---

ANSWERTHINK,
INC.NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8.  Shareholders
Equity (continued)

One
program was offered to employees at a director level or below. Under this
exchange program, employees holding nonqualified or incentive stock options to
purchase the Companys common stock with an exercise price of $4.50 or more
were given the opportunity to exchange their existing options for new options
to purchase shares of the Companys common stock equal to an amount depending on
the exercise price of the surrendered options. Options for 521,991 shares were
tendered on July 14, 2003 in the exchange program. On January 15, 2004, the
Company granted 163,995 options to purchase shares of the Companys common stock in exchange for
the options tendered. The new options were granted six months and one day after
acceptance of the old options for exchange and cancellation. The exercise price
of the new options was $6.34, which was the last reported sale price of the
Companys common stock on the Nasdaq Stock Markets National Market on January
15, 2004. The new options will vest over a two-year period from the date of
grant.

The
other program was offered to employees at a senior director level or above who
had been with the Company since July 4, 2002. Under this exchange program,
employees holding nonqualified options to purchase the Companys common stock
with an exercise price of $2.80 or more were given the opportunity to exchange
their existing options for restricted stock units which were granted on a
one-to-one ratio and are subject to a new four-year vesting schedule. On July
14, 2003, the Company accepted for cancellation options to purchase 3,826,561
shares of the Companys common stock representing 95% of the 4,045,182 options
that were eligible to be tendered in the exchange program.  Pursuant to the terms of the exchange
program, the Company issued 3,826,561 restricted stock units in exchange for
the options surrendered. The issuance of these restricted stock units resulted
in approximately $1.1 million of stock compensation expense for the year ended
January 2, 2004 and is expected to result in approximately $580 thousand of
stock compensation expense per quarter over the next four years. As of January
2, 2004, there were 3,585,636 restricted stock units outstanding under this
exchange program. The remaining 218,621 eligible options that were not
exchanged are required to be accounted for under variable plan accounting under
APB Opinion No. 25. The weighted average exercise price of these remaining
eligible options is $4.01. Variable plan accounting resulted in approximately
$103 thousand of stock compensation expense for the year ended January 2, 2004.

On
June 27, 2001, the Company filed with the Securities and Exchange Commission a Schedule
TO describing a program offering a voluntary stock option exchange for the
Companys employees. The offering period for the stock option exchange ended on
August 8, 2001. Under the program, employees holding nonqualified options to
purchase the Companys common stock or incentive stock options to purchase the
Companys common stock with an exercise price of $10.00 per share or more were
given the opportunity to exchange their existing options for new options to
purchase shares of the Companys common stock equal in number to 66 2/3% of the
number of options tendered and accepted for exchange. The new options were
granted on February 9, 2002, which was six months and one day after acceptance
of the old options for exchange and cancellation. The exercise price of the new
options was $6.03, which was the last reported sale price of the Companys
common stock on the Nasdaq Stock Markets National Market on February 8, 2002.
Options for 4,400,893 shares  were tendered
on August 8, 2001 in the exchange program. On February 9, 2002, the Company
granted 2,479,699 shares of the Companys common stock in exchange for the
shares tendered.

Stock
option activity under the Companys stock option plans is summarized as
follows:

| |                                                                        |           | Year
  Ended     
| | ---------------------------------------------------------------------- | --------- | -----------------
| |                                                                        |           |                  
| |                                                                        |           | January
  2, 2004
| |                                                                        |           |                  
| |                                                                        |           | Option
  Shares  
| |                                                                        |           |                  
| | Outstanding at beginning of year                                       |           |                  
| |                                                                        | Granted   |                  
| |                                                                        | Exercised |                  
| |                                                                        | Canceled  |                  
| |                                                                        |           |                  
| | Outstanding at end of year                                             |           |                  
| |                                                                        |           |                  
| | Weighted average fair value of options
      granted during the period |           | $                
| |                                                                        |           |                  

-41-

---

---

ANSWERTHINK,
INC.NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8.  Shareholders
Equity (continued)

The
following assumptions were used by the Company to determine the fair value of
stock options granted using the Black-Scholes options-pricing model:

| |                                      |  | Year
        Ended             
| | ------------------------------------ |  | -------------------------------
| |                                      |  |                                
| |                                      |  | January
        2,
        2004
| |                                      |  |                                
| | Expected volatility                  |  | 100%                           
| | Average expected
        option life |  | 4 years                        
| | Risk-free rate                       |  | 2.5%                           
| | Dividend yield                       |  | 0%                             

The
following table summarizes information about the Companys stock options
outstanding at January 2, 2004:

| |                            |  | Options
  Outstanding |           | Options
  Exercisable                                      
| | -------------------------- |  | --------------------- | --------- | -----------------------------------------------------------
| |                            |  |                       |           |                                                            
| | Range of Exercise
  Prices |  | Number
  Outstanding  |           | Weighted
  Average
  Remaining
  Contractual Life
  (Years)
| |                            |  |                       |           |                                                            
| | $1.45 - $2.74              |  |                       | 619,037   |                                                            
| | $2.80 - $3.79              |  |                       | 715,108   |                                                            
| | $4.66 - $5.98              |  |                       | 571,854   |                                                            
| | $6.00 - $6.86              |  |                       | 652,790   |                                                            
| | $7.08 - $9.97              |  |                       | 186,763   |                                                            
| | $10.46 - $12.38            |  |                       | 103,237   |                                                            
| | $16.25 - $18.50            |  |                       | 105,139   |                                                            
| | $19.25 - $25.25            |  |                       | 30,155    |                                                            
| | $25.94 - $32.56            |  |                       | 29,542    |                                                            
| |                            |  |                       |           |                                                            
| |                            |  |                       | 3,013,625 |                                                            
| |                            |  |                       |           |                                                            

Treasury Stock

On
July 30, 2002, the Company announced that its Board of Directors approved the
repurchase of up to $5.0 million of the Companys common stock. During the second
quarter of 2003, the Board of Directors approved the repurchase of an additional
$5 million of the Companys common stock. Under the repurchase plans, the
Company may buy back shares of its outstanding stock from time to time either on
the open market or through privately negotiated transactions, subject to market
conditions and trading restrictions. As of January 2, 2004, the Company had
repurchased 3,550,279 shares of its common stock at an average price of $2.16
per share. The amount of shares repurchased to date includes 465,120 shares
purchased from our president, who is also a director, at $2.15 per share. The
Company holds repurchased shares of its common stock as treasury stock and
accounts for treasury stock under the cost method.

Shareholder
Rights Plan

On
February 13, 2004, the Board of Directors of the Company adopted a Shareholder
Rights Plan. Under the plan, a dividend of one preferred share purchase right (a
Right) was declared for each share of common stock of the Company that was
outstanding on February 26, 2004. Each right entitles the holder to purchase
from the Company one one-thousandth of a share of Series A Junior Preferred Stock
at a purchase price of $32.50, subject to adjustment.

-42-

---

---

ANSWERTHINK,
INC.NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8.  Shareholders
Equity (continued)

The
Rights will trade automatically with the common stock and will not be
exercisable until a person or group has become an acquiring person by
acquiring 15% or more of the Companys outstanding common stock, or a person or
group commences or publicly announces a tender offer that will result in such a
person or group owning 15% or more of the Companys outstanding common
stock.  However, Liberty Wanger Asset
Management, L.P. (now known as Columbia Wanger Asset Management, L.P.),
together with its affiliates and associates will be permitted to acquire up to
20% or more of the common stock without making the rights exercisable. Upon
announcement that any person or group has become an acquiring person, each
Right will entitle all rightholders (other than the acquiring person) to
purchase, for the exercise price of $32.50, a number of shares of the Companys
common stock having a market value equal to twice the exercise price.
Rightholders would also be entitled to purchase common stock of the acquiring
person having a value of twice the exercise price if, after a person had become
an acquiring person, the Company were to enter into certain mergers or other
transactions. If any person becomes an acquiring person, the Board of Directors
may, at its option and subject to certain limitations, exchange one share of
common stock for each right.

The rights have certain anti-takeover
effects, in that they would cause substantial dilution to a person or group
that attempts to acquire a significant interest in the Company on terms not
approved by the Board of Directors. In the event that the Board of Directors
determines a transaction to be in the best interests of the Company and its
stockholders, the Board of Directors may redeem the Rights for $0.001 per share
at any time prior to a person or group becoming an acquiring person. The Rights
will expire on February 13, 2014.

Equity
Related Commitments

Pursuant
to an agreement with the Chief Executive Officer (CEO) of the Hackett Group,
Inc. (Hackett), one of our wholly owned subsidiaries, in the event of an
initial public offering (IPO) of common stock or sale of Hackett, the CEO
will receive a 5% pre-sale/distributed equity ownership interest in Hackett. This
ownership interest will be given in exchange for the surrender of Answerthink
stock options held by the CEO. The equity value distributed will vest 50% at
the IPO or sale and 50% on the first anniversary of such IPO or sale.

In addition,
in the event of an IPO or sale of Hackett and subject to meeting certain
performance criteria, certain employees of Hackett may elect to convert on a 1:1 to 3:1
basis, the in-the-money cash value of each of their Answerthink options or restricted stock
units to an equivalent number of options or shares of Hackett common stock at the IPO price.

9.  Benefit
Plan

The
Company maintains a 401(k) plan covering all eligible employees. Subject to
certain dollar limits, eligible employees may contribute up to 15% of their
pre-tax annual compensation to the plan. The Company may make discretionary
contributions on an annual basis. During fiscal years 2003 and 2002, the
Company made matching contributions of 25% of employee contributions up to 4%
of their gross salaries.  The Companys
matching contributions were $169,000, $656,000 and $736,000 for the years ended
January 2, 2004, January 3, 2003 and December 28, 2001, respectively.

10.  Restructuring
Costs

The
Company recorded restructuring costs of 
$10.9 million and $5.6 million in fiscal years 2002 and 2001,
respectively, for reductions in consultants and functional support personnel
and for closure and consolidation of facilities and related exit costs. These
actions were taken as a result of the continued decline in demand for
technology services throughout 2001 and 2002. The Company took steps to reduce its
costs to better align its overall cost structure and organization with
anticipated demand for its services. In 2003 the Company recorded restructuring
costs of $4.9 million to increase existing reserves to account for potentially
higher estimated losses on the sublease of facilities as a result of lower than
expected sublease rates

-43-

---

---

ANSWERTHINK,
INC.NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10.  Restructuring
Costs (continued)

and longer than expected time estimates to sublease
excess facilities. The 2003 restructuring costs consisted of additions to the
2002 and 2001 restructuring accruals of $3.1 million and $1.8 million,
respectively.

The
following table sets forth the detail and activity in the restructuring expense
accruals during the years ended January 2, 2004, January 3, 2003 and December
28, 2001 (in thousands):

2001
Restructuring Accrual

|                                                                           |  | Accrual
        Balance at
        December 29,
        2000 |  | Additions
        to
        Accrual from 
        Continuing
        Operations |  | Additions
        to
        Accrual from
        Discontinued
        Operations |  | 2001
        Expenditures             |  | 2002
        Expenditures |  | 2003
        Expenditures |  | Accrual
        Balance at
        January 2,
        2004
|-------------------------------------------------------------------------- |  | ------------------------------------------------------------ |  | -------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------- |  | ------------------------------------- |  | ------------------------- |  | ------------------------- |  | ----------------------------------------------------------
|                                                                           |  |                                                              |  |                                                                                  |  |                                                                                   |  |                                       |  |                           |  |                           |  |                                                           
|Severance
        and other employee costs                                 |  | $                                                           |  | $               3,694                                                            |  | $                    559                                                          |  | $               (3,186)               |  | $               (1,067)   |  | $                        |  | $                                                        
|Closure and consolidation of facilities
            and related exit costs |  |                                                             |  | 3,675                                                                            |  | 2,311                                                                             |  | (248)                                 |  | (1,965)                   |  | (933)                     |  | 2,840                                                     
|                                                                           |  |                                                              |  |                                                                                  |  |                                                                                   |  |                                       |  |                           |  |                           |  |                                                           
|Total
        restructuring accrual                                        |  | $                                                           |  | $               7,369                                                            |  | $                 2,870                                                           |  | $               (3,434)               |  | $               (3,032)   |  | $                 (933)   |  | $                  2,840                                  
|                                                                           |  |                                                              |  |                                                                                  |  |                                                                                   |  |                                       |  |                           |  |                           |  |                                                           
|                                                                           |  |                                                              |  |                                                                                  |  |                                                                                   |  |                                       |  |                           |  |                           |  |                                                           
|2002 Restructuring
        Accrual                                         |  |                                                              |  |                                                                                  |  |                                                                                   |  |                                       |  |                           |  |                           |  |                                                           
|                                                                           |  |                                                              |  |                                                                                  |  |                                                                                   |  |                                       |  |                           |  |                           |  |                                                           
|                                                                           |  | Accrual
        Balance at
        December 28,
        2001 |  | Additions
        to
        Accrual from
        Continuing
        Operations  |  | Additions
        to
        Accrual from
        Discontinued
        Operations |  | 2002
        Asset
        Write-offs |  | 2002
        Expenditures |  | 2003
        Expenditures |  | Accrual
        Balance at
        January 2,
        2004
|                                                                           |  |                                                              |  |                                                                                  |  |                                                                                   |  |                                       |  |                           |  |                           |  |                                                           
|Severance
        and other employee costs                                 |  | $                                                           |  | $               1,528                                                            |  | $                     616                                                         |  | $                                    |  | $                  (855)  |  | $             (1,289)     |  | $                                                        
|Closure and consolidation of facilities
            and related exit costs |  |                                                             |  | 12,483                                                                           |  | 2,747                                                                             |  | (5,217)                               |  | (584)                     |  | (2,198)                   |  | 7,231                                                     
|                                                                           |  |                                                              |  |                                                                                  |  |                                                                                   |  |                                       |  |                           |  |                           |  |                                                           
|Total
        restructuring accrual                                        |  | $                                                           |  | $             14,011                                                             |  | $                  3,363                                                          |  | $                 (5,217)             |  | $               (1,439)   |  | $             (3,487)     |  | $                  7,231                                  
|                                                                           |  |                                                              |  |                                                                                  |  |                                                                                   |  |                                       |  |                           |  |                           |  |                                                           

11.  Discontinued
Operations

As
a result of a decline in the demand for interactive marketing services, during
2002, the Company discontinued the interactive marketing business which was
acquired in the merger with THINK New Ideas in 1999. In accordance with
Financial Accounting Standards Board Statement No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, the results of the interactive marketing business
have been reported as discontinued operations in the consolidated statements of
operations and results for prior periods have been restated.

The
following table sets forth revenues, pre-tax loss, income tax benefit and loss
from discontinued operations for the years ended January 3, 2003, and December
28, 2001 (in thousands):

| |                                             |  | January 3,
  2003 |        | December 28,
  2001
| | ------------------------------------------- |  | ----------------- | ------ | -------------------
| |                                             |  |                   |        |                    
| | Revenues                                    |  | $                 | 7,235  |                    
| |                                             |  |                   |        |                    
| | Pre-tax loss from
  discontinued operations |  | $                 | (8,911 | )                  
| | Income tax benefit                          |  | $                 |       |                    
| | Loss from
  discontinued operations         |  | $                 | (8,911 | )                  

-44-

---

---

ANSWERTHINK,
INC.NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Included
in the loss from discontinued operations for fiscal years 2002 and 2001 were
restructuring costs of $3.4 million and $2.9 million, respectively, for
reduction in consultants and for closure and consolidation of facilities and
related exit costs.

12.  
Litigation

Between
November 2002 and January 2003, six class actions seeking unspecified damages
were filed against Answerthink and certain of its current and former officers
and directors alleging violations of the Securities and Exchange Act of 1934.
The complaints alleged misstatements and omissions concerning, among other
things, related party transactions during the alleged class period of February
8, 2000 to April 25, 2002. On January 7, 2003 the federal district court
entered an order closing and consolidating these cases and any subsequently
filed related cases into Druskin, et al. v. Answerthink, Inc., et al., Case No.
02-23304-CIV-GOLD.  A consolidated
amended complaint was filed on May 9, 2003. The Company filed a motion to
dismiss the consolidated amended complaint on July 15, 2003. The court granted
the Companys motion to dismiss the consolidated and amended complaint on
January 5, 2004 and allowed the plaintiffs leave to amend the consolidated
amended complaint.  The plaintiffs did
not file an amended complaint within the time allowed by the court.  On February 11, 2004, the court entered a
final judgement dismissing the case against all parties with prejudice and
closed the case.   The time for appeal
has expired.  This matter is concluded.

Between
September and October 1998, seven purported class action suits were filed
against THINK New Ideas, Inc. (THINK New Ideas) and certain of its then
current and former officers and directors alleging violations of the Securities
Exchange Act of 1934. All seven of these lawsuits were consolidated by order of
the court.  On November 5, 1999, THINK
New Ideas merged with and into a wholly owned subsidiary of the Company.   On April 18, 2002, the parties reached an
agreement in principle to settle this action. On September 16, 2002 the court
approved the terms of the settlement in all respects and dismissed the
complaint with prejudice. The time for appeal has expired and the settlement
has become final. The full amount of the settlement has been paid by THINK New
Ideas insurance carrier.  On November
10, 2003, the court issued its final order approving the distribution of the
net settlement funds in this case.  This
matter is concluded.

The
Company is involved in legal proceedings, claims, and litigation arising in the
ordinary course of business not specifically discussed herein. In the opinion
of management, the final disposition of such other matters will not have a
material adverse effect on the Companys financial position or results of
operations.

13.
 Related Party Transactions

During
2002, the Company and HCL Technologies Limited, an Indian information technology
services and product engineering firm, formed HCL-Answerthink, Inc. to provide
offshore custom application development and support services. The Company has a
non-controlling equity interest of 50% in this joint venture. For the year
ended January 2, 2004 and January 3, 2003, the Companys net equity income
(loss) from the joint venture was $30,000 and ($687,000), respectively. During
2003 and 2002, the Company sold services of $232,000 and $233,000,
respectively, to the joint venture. The Company also incurred costs of $194,000
and $230,000 for consulting services provided by the joint venture to
Answerthink in 2003 and 2002, respectively. In addition, the Company reduced
general and administrative expenses by $14,000 and $856,000 for administrative
services billed to the joint venture during 2003 and 2002, respectively. At
January 2, 2004 and January 3, 2003, the Company had receivables of $258,000
and $550,000, respectively, due from the joint venture and payables of $193,000
and $230,000, respectively, due to the joint venture.

-45-

---

---

ANSWERTHINK,
INC.NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14.  
Quarterly Financial Information (unaudited)

The
following table presents unaudited supplemental quarterly financial information
for the years ended January 2, 2004 and January 3, 2003 (in thousands, except
per share data):

|                                                                                                                                         | Quarter
        Ended        
|---------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------
|                                                                                                                                         |                              
|                                                                                                                                         | April
        4,
        2003
|                                                                                                                                         |                              
|Total
        revenues                                                                                                                   | $                            
|Income
        (loss) from operations                                                                                                    |                              
|Income
        (loss) before income taxes                                                                                                |                              
|Net
        income (loss)                                                                                                                | $                            
|                                                                                                                                         |                              
|Basic
        and diluted net income (loss) per common share                                                                             | $                            
|                                                                                                                                         |                              
|                                                                                                                                         | Quarter
        Ended        
|                                                                                                                                         |                              
|                                                                                                                                         | March 29,
        2002       
|                                                                                                                                         |                              
|Total
        revenues                                                                                                                   | $                            
|Loss
        from operations                                                                                                             |                              
|Loss
        before income taxes, loss from discontinued operations and 
            cumulative effect of change in accounting principle |                              
|Income
        (loss) from continuing operations                                                                                         |                              
|Loss
        from discontinued operations, net of income taxes                                                                           |                              
|Cumulative
        effect of change in accounting principle                                                                              |                              
|Net
        loss                                                                                                                         | $                            
|                                                                                                                                         |                              
|Basic
        and diluted income (loss) per common share:                                                                                |                              
|Income
        (loss) from continuing operations                                                                                         | $                            
|Loss
        from discontinued operations, net of income taxes                                                                           | $                            
|Cumulative
        effect of change in accounting principle                                                                              | $                            
|Net
        loss per common share                                                                                                        | $                            

Quarterly
basic and diluted net income or loss per common share were computed
independently for each quarter and do not necessarily total to the year to date
basic and diluted net income (loss) per common share.

The
results of the interactive marketing business have been reported as
discontinued operations in the consolidated statements of operations (see Note
11).

-46-

---

---

ANSWERTHINK,
INC.

SCHEDULE II   --  VALUATION AND QUALIFYING ACCOUNTS AND
RESERVES

YEARS
ENDED JANUARY 2, 2004, JANUARY 3, 2003 AND DECEMBER 28, 2001

(in
thousands)

|Allowance for Doubtful Accounts |  | Balance
  at
  Beginning of 
  Year |        | Charge
  to
  Expense |  | Write-offs |       | Balance
  at
  Ending of
  Year
|------------------------------- |  | ----------------------------------- | ------ | --------------------- |  | ---------- | ----- | -------------------------------
|                                |  |                                     |        |                       |  |            |       |                                
|Year Ended January 2, 2004      |  | $                                   | 3,526  |                       |  | $          | (235  | )                              
|                                |  |                                     |        |                       |  |            |       |                                
|Year Ended January 3, 2003      |  | $                                   | 6,810  |                       |  | $          | 779   |                                
|                                |  |                                     |        |                       |  |            |       |                                
|Year Ended December 28, 2001    |  | $                                   | 11,122 |                       |  | $          | 5,279 |                                
|                                |  |                                     |        |                       |  |            |       |                                

-47-

---

---

|ITEM 9. | CHANGES IN AND
  DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
|------- | ---------------------------------------------------------------------------------------

None.

|ITEM 9A. | CONTROL AND PROCEDURES
|-------- | ----------------------

Evaluation of Disclosure Controls and
Procedures

As
of the end of the period covered by this report, we carried out an evaluation,
under the supervision and with the participation of management, including our
Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the
effectiveness of the design and operation of our disclosure controls and
procedures (Disclosure Controls) pursuant to Rule 13a-14(c) and Rule
15d-14(c) under the Securities Exchange Act of 1934. Based upon that evaluation,
the CEO and CFO concluded that, subject to the limitations noted below, our
Disclosure Controls are effective in timely alerting them to material
information required to be included in our periodic SEC filings.

Changes
in Internal Controls

Subsequent
to the date we carried out our evaluation, there have been no significant
changes in our internal controls or other factors that could significantly
affect these internal controls.

Limitations
on the Effectiveness of Controls

Our
management, including our CEO and CFO, does not expect that our Disclosure
Controls and internal controls will prevent all error and all fraud. A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been detected. These
inherent limitations include the realities that judgements in decision-making
can be faulty, and that breakdowns can occur because of simple error or
mistake. Additionally, controls can be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management override of
the control.

PART III

|ITEM 10. | DIRECTORS AND
  EXECUTIVE OFFICERS OF THE REGISTRANT
|-------- | ----------------------------------------------------

Information
responsive to this Item is incorporated herein to the Companys definitive 2004
proxy statement for the 2004 Annual Meeting of Shareholders.

|ITEM 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------

Information
responsive to this Item is incorporated herein to the Companys definitive 2004
proxy statement for the 2004 Annual Meeting of Shareholders.

|ITEM 12. | SECURITY OWNERSHIP OF
  CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|-------- | ----------------------------------------------------------------

Information
responsive to this Item is incorporated herein to the Companys definitive 2004
proxy statement for the 2004 Annual Meeting of Shareholders.

|ITEM 13. | CERTAIN RELATIONSHIPS
  AND RELATED TRANSACTIONS
|-------- | ------------------------------------------------

Information
responsive to this Item is incorporated herein to the Companys definitive 2004
proxy statement for the 2004 Annual Meeting of Shareholders.

-48-

---

---

|ITEM 14. | PRINCIPAL ACCOUNTING FEES AND
  SERVICES
|-------- | ----------------------------------------

Information
appearing under the captions Fees to Independent Auditors for fiscal 2003 and
2002 in the 2004 Proxy Statement is hereby incorporated by reference.

PART IV

|ITEM 15. | EXHIBITS, FINANCIAL
  STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
|-------- | -----------------------------------------------------------------

(a)           The following documents
are filed as a part of this Form:

1.            Financial
Statements

The
Consolidated Financial Statements filed as part of this report are listed and
indexed on page 26. Schedules other than those listed in the index have been
omitted because they are not applicable or the required information has been
included elsewhere in this report.

2.
           Financial
Statement Schedules.

Schedule
II  
Valuation and Qualifying Accounts and Reserves are included in this
report. Schedules other than those listed in the index have been omitted
because they are inapplicable or the information required to be set forth
therein is contained, or incorporated by reference, in the Consolidated
Financial Statements of Answerthink or notes thereto.

3.
           Exhibits:  See Index to Exhibits on page 51.

The
Exhibits listed in the accompanying Index to Exhibits are filed or incorporated
by reference as part of this report.

(b)
          Reports
on Form 8-K:

A
Current Report on Form 8-K was furnished with the Securities and Exchange
Commission on October 14, 2003 in connection with the announcement of the Joint
Marketing and Alliance Agreement dated October 7, 2003 by and among Answerthink
Inc., The Hackett Group, Inc. and Accenture, L.L.P.

-49-

---

---

SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Miami, State of
Florida, on the 15th day of March, 2004.

| | ANSWERTHINK, INC.
| | -----------------
| |                  
| | By:              
| |                  
| |                  
| |                  

Pursuant
to the requirements of the Securities Act of 1934, this Form 10-K has been
signed by the following persons in the capacities and on the date
indicated.

|Signatures              |  | Title                                                                                                          |  | Date          
|----------------------- |  | -------------------------------------------------------------------------------------------------------------- |  | --------------
|                        |  |                                                                                                                |  |               
|                        |  |                                                                                                                |  |               
|/s/ Ted A. Fernandez    |  | Chief Executive Officer and Chairman (Principal
  Executive Officer)                                           |  | March 15, 2004
|                        |  |                                                                                                                | 
|Ted A. Fernandez        |  |                                                                                                                | 
|                        |  |                                                                                                                |  |               
|/s/ John F. Brennan     |  | Executive Vice President, Finance and Chief
  Financial Officer (Principal Financial and Accounting
  Officer) |  | March 15, 2004
|                        |  |                                                                                                                | 
|John F. Brennan         |  |                                                                                                                | 
|                        |  |                                                                                                                | 
|                        |  |                                                                                                                |  |               
|/s/ Allan R. Frank      |  | President and Director                                                                                         |  | March 15, 2004
|                        |  |                                                                                                                |  |               
|Allan R. Frank          |  |                                                                                                                |  |               
|                        |  |                                                                                                                |  |               
|/s/ David N. Dungan     |  | Chief Operating Officer and Director                                                                           |  | March 15, 2004
|                        |  |                                                                                                                |  |               
|David N. Dungan         |  |                                                                                                                |  |               
|                        |  |                                                                                                                |  |               
|/s/ Richard Hamlin      |  | Director                                                                                                       |  | March 15, 2004
|                        |  |                                                                                                                |  |               
|Richard Hamlin          |  |                                                                                                                |  |               
|                        |  |                                                                                                                |  |               
|/s/ Edwin A. Huston     |  | Director                                                                                                       |  | March 15, 2004
|                        |  |                                                                                                                |  |               
|Edwin A. Huston         |  |                                                                                                                |  |               
|                        |  |                                                                                                                |  |               
|/s/ Jeffrey E. Keisling |  | Director                                                                                                       |  | March 15, 2004
|                        |  |                                                                                                                |  |               
|Jeffrey E. Keisling     |  |                                                                                                                |  |               
|                        |  |                                                                                                                |  |               
|/s/ Alan T. G. Wix      |  | Director                                                                                                       |  | March 15, 2004
|                        |  |                                                                                                                |  |               
|Alan T. G. Wix          |  |                                                                                                                |  |               

-50-

---

---

INDEX TO EXHIBITS

|Exhibit
    No. | Exhibit
  Description                                                                                                                                                                                                                                                     
|--------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                |                                                                                                                                                                                                                                                                           
|3.1++++         | Second Amended and Restated Articles of
  Incorporation of the Registrant, as amended                                                                                                                                                                                     
|3.2++++         | Amended and Restated Bylaws of the Registrant, as
  amended                                                                                                                                                                                                               
|9.1+            | Shareholders Agreement dated April 23, 1997 among
  the Registrant, GTCR V, MG, the Miller Group,                                                                                                                                                                         
|                | Messrs. Fernandez, Frank, Knotts and Miller and
  certain other shareholders of the Registrant parties thereto                                                                                                                                                            
|9.2+            | Amendment No. 1 to Shareholders Agreement dated
  February 24, 1998                                                                                                                                                                                                       
|9.3+            | Letter Agreement dated as of March 15, 1998 to amend
  Shareholders Agreement                                                                                                                                                                                             
|9.4+            | Form of Restricted Securities Agreement dated April
  23, 1997 among the Initial Investors and each of Messrs. Fernandez, Frank,
  Knotts and Miller                                                                                                                      
|10.1+           | Purchase Agreement dated April 23, 1997 among the
  Registrant, GTCR V, MG, Gator and Tara                                                                                                                                                                                
|10.2+           | Series A Preferred Stock Purchase Agreement dated
  February 24, 1998 among the Registrant, GTCR V, GTCR Associates and Miller Capital                                                                                                                                    
|10.3+           | Stock Purchase Agreement dated March 5, 1998 between
  the Registrant and FSC                                                                                                                                                                                             
|10.4+           | Second Amended and Restated Registration Rights
  Agreement dated as of May 5, 1998 among the Registrant, GTCR V, MG, GTCR
  Associates, Miller Capital, FSC, Messrs. Fernandez, Frank, Knotts and Miller
  and certain other shareholders of the Registrant named therein
|10.5+           | Second Amended and Restated Registration Rights
  Agreement dated as of May 5, 1998 among the Registrant and the eight former
  shareholders of RTI                                                                                                                       
|10.6*+          | Registrants 1998 Stock Option and Incentive Plan                                                                                                                                                                                                                         
|10.7*+++++      | Amendment to Registrants 1998 Stock Option and
  Incentive Plan                                                                                                                                                                                                          
|10.8*+          | Form of Senior Management Agreement dated April 23,
  1997 between the Registrant and each of Messrs. Fernandez, Frank and Knotts                                                                                                                                         
|10.9*++++       | Senior Management Agreement dated July 11, 1997
  between Registrant and Mr. Dungan                                                                                                                                                                                       
|10.10*+++++     | Form of Employment Agreement entered into between
  the Registrant and Mr. Dungan                                                                                                                                                                                         
|10.11*+         | Form of Employment Agreement entered into between
  the Registrant and each of Messers. Fernandez, Frank and Knotts                                                                                                                                                       
|10.12+          | Amendment No. 2 dated as of May 5, 1998 to Purchase
  Agreement dated April 23, 1997 among the Registrant, GTCR V, MG, Gator and
  Tara                                                                                                                                   
|10.13+          | Amendment No. 2 dated as of May 5, 1998 to Stock Purchase
  Agreement dated March 5, 1998 between the Registrant and FSC                                                                                                                                                  
|10.14*+         | Amendment to Certain Senior Management Agreements
  dated March 27, 1998 among the Company, the Board of Directors and each of
  Messrs. Fernandez, Frank, Knotts and Dungan                                                                                              
|10.15*+         | Second Amendment to Certain Senior Management
  Agreements dated May 26, 1998 among the Company, the Board of Directors and
  each of Messrs. Fernandez, Frank, Knotts and Dungan                                                                                         
|10.16*++        | AnswerThink Consulting Group, Inc. Employee Stock
  Purchase Plan                                                                                                                                                                                                         
|10.17*+++++     | Amendment to Registrants Employee Stock Purchase
  Plan dated February 16, 2001                                                                                                                                                                                          
|10.18*+++       | Employment Agreement dated March 23, 1999 between
  the Registrant and Mr. Brennan                                                                                                                                                                                        
|10.19*+++       | Restricted Stock Agreement dated July 31, 1997
  between the Registrant and Mr. Brennan                                                                                                                                                                                   
|10.20*+++       | Amendment to Restricted Stock Agreement dated March
  27, 1998 between the Registrant and Mr. Brennan                                                                                                                                                                     
|10.21*+++       | Form of Senior Management Agreement dated July 31,
  1997 between the Registrant and Mr. Brennan                                                                                                                                                                          
|10.22++++++     | Securities Purchase Agreement by and among THINK New
  Ideas, Inc., Capital Ventures International and Marshall Capital Management,
  Inc.                                                                                                                                
|10.23++++++     | Registration Rights Agreement dated as of March 3,
  1999 by and among THINK New Ideas, Inc., Capital Ventures International and
  Marshall Capital Management, Inc.                                                                                                      
|10.24+++++++    | Joint Marketing and Alliance Agreement, dated
  October 7, 2003, by and among Answerthink, Inc., The Hackett Group, Inc. and
  Accenture, L.L.P.                                                                                                                          
|21.1^           | Subsidiaries of the Registrant                                                                                                                                                                                                                                            
|23.1^           | Consent of PricewaterhouseCoopers LLP                                                                                                                                                                                                                                     
|31.1^           | Certification by CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                            
|31.2^           | Certification by CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                            
|32^             | Certification Pursuant To 18 U.S.C. Section 1350, As
  Adopted Pursuant to Section 906 Of The Sarbanes- Oxley Act of 2002                                                                                                                                                 

-51-

---

---

|*       | Management agreement or compensatory plan or
  arrangement                                         
|------- | ---------------------------------------------------------------------------------------------------
|^       | Exhibits filed herewith.                                                                           
|+       | Incorporated herein by reference to the Companys
  Registration Statement on Form S-1 (333-48123).
|++      | Incorporated herein by reference to the Companys
  Registration Statement on Form S-8 (333-69951).
|+++     | Incorporated herein by reference to the Companys
  Form 10-K for the year ended January 1, 1999.  
|++++    | Incorporated herein by reference to the Companys
  Form 10-K for the year ended December 29, 2000.
|+++++   | Incorporated herein by reference to the Companys
  Form 10-K for the year ended December 28, 2001.
|++++++  | Incorporated herein by reference to THINK New Ideas,
  Inc.s Form 8-K dated March 12, 1999.       
|+++++++ | Incorporated herein by reference to the Companys
  Form 8-K dated October 14, 2003.               

-52-

---

---