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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended October 1, 2021

OR

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

For the transition period from ____________ to___________

Commission File Number 0-18655

EXPONENT, INC.

(Exact name of registrant as specified in its charter)

delaware |  | 77-0218904
(State or other jurisdiction of |  | (I.R.S. Employer Identification No.)
incorporation or organization) |  |
149 COMMONWEALTH DRIVE, MENLO PARK, California |  | 94025
(Address of principal executive office) |  | (Zip Code)

(650) 326-9400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol |  | Name of each exchange on which registered
Common Stock, par value $0.001 per share |  | EXPO |  | Nasdaq Global Select Market

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.

Yes |  | ☒ |  | No |  |  |

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes |  | ☒ |  |  | No |  |

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☒ |  | Accelerated filer | ☐ |  | Non-accelerated filer | ☐ |  | Smaller reporting company | ☐
Emerging growth company | ☐ |  |  |  |  |  |  |  |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes |  |  |  | No |  | ☒ |

As of October 29, 2021, the latest practicable date, the registrant had 52,111,508 shares of common stock outstanding.

EXPONENT, INC.

FORM 10-Q

TABLE OF CONTENTS

|  |  |  | Page
PART I – FINANCIAL INFORMATION |  | 3
Item 1. |  | Financial Statements (unaudited): |  | 3
|  | Condensed Consolidated Balance Sheets as of October 1, 2021 and January 1, 2021 |  | 3
|  | Condensed Consolidated Statements of Income for the Three and Nine Months Ended October 1, 2021 and October 2, 202 0 |  | 4
|  | Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended October 1, 2021 and October 2, 2020 |  | 5
|  | Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended October 1, 2021 and October 2, 202 0 |  | 6
|  | Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 1, 2021 and October 2, 202 0 |  | 8
|  | Notes to Unaudited Condensed Consolidated Financial Statements |  | 9
Item 2. |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations |  | 20
Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk |  | 31
Item 4. |  | Controls and Procedures |  | 31
PART II – OTHER INFORMATION |  | 33
Item 1. |  | Legal Proceedings |  | 33
Item 1A. |  | Risk Factors |  | 33
Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds |  | 33
Item 3. |  | Defaults Upon Senior Securities |  | 33
Item 4. |  | Mine Safety Disclosures |  | 33
Item 5. |  | Other Information |  | 33
Item 6. |  | Exhibits |  | 34
|  | Signatures |  | 35

- 2 -

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

EXPONENT, INC.

Condensed Consolidated Balance Sheets

October 1, 2021 and January 1, 2021

(in thousands, except par value)

(unaudited)

|  | October 1, 2021 |  |  | January 1, 2021 |
Assets |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 229,785 |  |  | $ | 197,525 |
Short-term investments |  |  | 24,998 |  |  |  | 45,001 |
Accounts receivable, net of allowance for contract losses and doubtful accounts of $4,815 and $3,995 at October 1, 2021 and January 1, 2021, respectively |  |  | 144,039 |  |  |  | 111,565 |
Prepaid expenses and other current assets |  |  | 18,738 |  |  |  | 12,741 |
Total current assets |  |  | 417,560 |  |  |  | 366,832 |
Property, equipment and leasehold improvements, net |  |  | 60,082 |  |  |  | 59,823 |
Operating lease right-of-use assets |  |  | 15,777 |  |  |  | 19,322 |
Goodwill |  |  | 8,607 |  |  |  | 8,607 |
Deferred income taxes |  |  | 42,561 |  |  |  | 40,539 |
Deferred compensation plan assets |  |  | 92,048 |  |  |  | 83,731 |
Other assets |  |  | 1,670 |  |  |  | 1,242 |
Total assets |  | $ | 638,305 |  |  | $ | 580,096 |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |
Accounts payable and accrued liabilities |  | $ | 21,443 |  |  | $ | 16,327 |
Accrued payroll and employee benefits |  |  | 87,179 |  |  |  | 83,194 |
Deferred revenues |  |  | 12,192 |  |  |  | 11,800 |
Operating lease liabilities |  |  | 5,604 |  |  |  | 5,987 |
Total current liabilities |  |  | 126,418 |  |  |  | 117,308 |
Other liabilities |  |  | 3,078 |  |  |  | 2,986 |
Deferred compensation plan liabilities |  |  | 93,111 |  |  |  | 83,961 |
Operating lease liabilities |  |  | 10,709 |  |  |  | 14,343 |
Total liabilities |  |  | 233,316 |  |  |  | 218,598 |
Stockholders’ equity: |  |  |  |  |  |  |  |
Common stock, $0.001 par value; 120,000 shares authorized; 65,707 shares issued at October 1, 2021 and January 1, 2021 |  |  | 66 |  |  |  | 66 |
Additional paid-in capital |  |  | 279,250 |  |  |  | 265,328 |
Accumulated other comprehensive income (loss) |  |  |  |  |  |  |  |
Investment securities, available-for-sale |  |  | - |  |  |  | 65 |
Foreign currency translation adjustments |  |  | (2,052 | ) |  |  | (1,997 | )
|  |  | (2,052 | ) |  |  | (1,932 | )
Retained earnings |  |  | 468,578 |  |  |  | 421,809 |
Treasury stock, at cost; 13,595 and 13,903 shares held at October 1, 2021 and January 1, 2021, respectively |  |  | (340,853 | ) |  |  | (323,773 | )
Total stockholders’ equity |  |  | 404,989 |  |  |  | 361,498 |
Total liabilities and stockholders’ equity |  | $ | 638,305 |  |  | $ | 580,096 |

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

- 3 -

EXPONENT, INC.

Condensed Consolidated Statements of Income

For the Three and Nine Months Ended October 1, 2021 and October 2, 2020

(in thousands, except per share data)

(unaudited)

|  | Three Months Ended |  |  | Nine Months Ended |
|  | October 1, 2021 |  |  | October 2, 2020 |  |  | October 1, 2021 |  |  | October 2, 2020 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Revenues before reimbursements |  | $ | 108,467 |  |  | $ | 93,499 |  |  | $ | 330,514 |  |  | $ | 281,082 |
Reimbursements |  |  | 7,938 |  |  |  | 5,164 |  |  |  | 22,249 |  |  |  | 15,579 |
Revenues |  |  | 116,405 |  |  |  | 98,663 |  |  |  | 352,763 |  |  |  | 296,661 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Compensation and related expenses |  |  | 64,138 |  |  |  | 62,419 |  |  |  | 210,491 |  |  |  | 180,541 |
Other operating expenses |  |  | 8,017 |  |  |  | 7,839 |  |  |  | 23,848 |  |  |  | 23,736 |
Reimbursable expenses |  |  | 7,938 |  |  |  | 5,164 |  |  |  | 22,249 |  |  |  | 15,579 |
General and administrative expenses |  |  | 4,193 |  |  |  | 2,834 |  |  |  | 10,626 |  |  |  | 11,290 |
Total operating expenses |  |  | 84,286 |  |  |  | 78,256 |  |  |  | 267,214 |  |  |  | 231,146 |
Operating income |  |  | 32,119 |  |  |  | 20,407 |  |  |  | 85,549 |  |  |  | 65,515 |
Other income, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest income, net |  |  | 13 |  |  |  | 316 |  |  |  | 54 |  |  |  | 1,496 |
Miscellaneous income (expense), net |  |  | 257 |  |  |  | 3,915 |  |  |  | 11,579 |  |  |  | 3,096 |
Total other income, net |  |  | 270 |  |  |  | 4,231 |  |  |  | 11,633 |  |  |  | 4,592 |
Income before income taxes |  |  | 32,389 |  |  |  | 24,638 |  |  |  | 97,182 |  |  |  | 70,107 |
Income taxes |  |  | 7,815 |  |  |  | 6,554 |  |  |  | 16,360 |  |  |  | 9,395 |
Net income |  | $ | 24,574 |  |  | $ | 18,084 |  |  | $ | 80,822 |  |  | $ | 60,712 |
Net income per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 0.47 |  |  | $ | 0.35 |  |  | $ | 1.54 |  |  | $ | 1.16 |
Diluted |  | $ | 0.46 |  |  | $ | 0.34 |  |  | $ | 1.52 |  |  | $ | 1.14 |
Shares used in per share computations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 52,618 |  |  |  | 52,316 |  |  |  | 52,597 |  |  |  | 52,383 |
Diluted |  |  | 53,312 |  |  |  | 53,209 |  |  |  | 53,316 |  |  |  | 53,342 |
Cash dividends declared per common share |  | $ | 0.20 |  |  | $ | 0.19 |  |  | $ | 0.60 |  |  | $ | 0.57 |

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements

- 4 -

EXPONENT, INC.

Condensed Consolidated Statements of Comprehensive Income

For the Three and Nine Months Ended October 1, 2021 and October 2, 2020

(in thousands)

(unaudited)

|  | Three Months Ended |  |  | Nine Months Ended |
|  | October 1, 2021 |  |  | October 2, 2020 |  |  | October 1, 2021 |  |  | October 2, 2020 |
Net income |  | $ | 24,574 |  |  | $ | 18,084 |  |  | $ | 80,822 |  |  | $ | 60,712 |
Other comprehensive income (loss): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments, net of tax |  |  | (266 | ) |  |  | 550 |  |  |  | (55 | ) |  |  | (1,052 | )
Unrealized losses on available- for-sale investment securities arising during the period, net of tax |  |  | - |  |  |  | (129 | ) |  |  | (65 | ) |  |  | (172 | )
Comprehensive income |  | $ | 24,308 |  |  | $ | 18,505 |  |  | $ | 80,702 |  |  | $ | 59,488 |

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements

- 5 -

EXPONENT, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

(unaudited)

|  | Three and Nine Months Ended October 1, 2021 |
|  | Common Stock |  |  | Additional paid-in |  |  | Accumulated other comprehensive |  |  | Retained |  |  | Treasury Stock |  |  |  |  |
(In thousands) |  | Shares |  |  | Amount |  |  | capital |  |  | income (loss) |  |  | earnings |  |  | Shares |  |  | Amount |  |  | Total |
Balance at January 1, 2021 |  |  | 65,707 |  |  | $ | 66 |  |  | $ | 265,328 |  |  | $ | (1,932 | ) |  | $ | 421,809 |  |  |  | 13,903 |  |  | $ | (323,773 | ) |  | $ | 361,498 |
Employee stock purchase plan |  |  | - |  |  |  | - |  |  |  | 909 |  |  |  | - |  |  |  | - |  |  |  | (12 | ) |  |  | 114 |  |  |  | 1,023 |
Amortization of unrecognized stock-based compensation |  |  | - |  |  |  | - |  |  |  | 5,676 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,676 |
Purchase of treasury stock |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 79 |  |  |  | (7,000 | ) |  |  | (7,000 | )
Foreign currency translation adjustments |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 211 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 211 |
Grant of restricted stock units to settle accrued bonus |  |  | - |  |  |  | - |  |  |  | 7,637 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7,637 |
Settlement of restricted stock units |  |  | - |  |  |  | - |  |  |  | (3,269 | ) |  |  | - |  |  |  | (1,679 | ) |  |  | (322 | ) |  |  | (10,718 | ) |  |  | (15,666 | )
Unrealized loss on investments |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (65 | ) |  |  | 61 |  |  |  | - |  |  |  | - |  |  |  | (4 | )
Dividends and dividend equivalent rights |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (21,856 | ) |  |  | - |  |  |  | - |  |  |  | (21,856 | )
Net income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 56,248 |  |  |  | - |  |  |  | - |  |  |  | 56,248 |
Balance at July 2, 2021 |  |  | 65,707 |  |  | $ | 66 |  |  | $ | 276,281 |  |  | $ | (1,786 | ) |  | $ | 454,583 |  |  |  | 13,648 |  |  | $ | (341,377 | ) |  | $ | 387,767 |
Employee stock purchase plan |  |  | - |  |  |  | - |  |  |  | 471 |  |  |  | - |  |  |  | - |  |  |  | (5 | ) |  |  | 47 |  |  |  | 518 |
Exercise of stock options |  |  | - |  |  |  | - |  |  |  | 658 |  |  |  | - |  |  |  | - |  |  |  | (48 | ) |  |  | 477 |  |  |  | 1,135 |
Amortization of unrecognized stock-based compensation |  |  | - |  |  |  | - |  |  |  | 1,840 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,840 |
Foreign currency translation adjustments |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (266 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (266 | )
Dividends and dividend equivalent rights |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (10,579 | ) |  |  | - |  |  |  | - |  |  |  | (10,579 | )
Net income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 24,574 |  |  |  | - |  |  |  | - |  |  |  | 24,574 |
Balance at October 1, 2021 |  |  | 65,707 |  |  | $ | 66 |  |  | $ | 279,250 |  |  | $ | (2,052 | ) |  | $ | 468,578 |  |  |  | 13,595 |  |  | $ | (340,853 | ) |  | $ | 404,989 |

- 6 -

EXPONENT, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

(unaudited)

|  | Three and Nine Months Ended October 2, 2020 |
|  | Common Stock |  |  | Additional paid-in |  |  | Accumulated other comprehensive |  |  | Retained |  |  | Treasury Stock |  |  |  |  |
(In thousands) |  | Shares |  |  | Amount |  |  | capital |  |  | income (loss) |  |  | earnings |  |  | Shares |  |  | Amount |  |  | Total |
Balance at January 3, 2020 |  |  | 65,707 |  |  | $ | 66 |  |  | $ | 244,935 |  |  | $ | (1,760 | ) |  | $ | 384,668 |  |  |  | 13,951 |  |  | $ | (277,658 | ) |  | $ | 350,251 |
Employee stock purchase plan |  |  | - |  |  |  | - |  |  |  | 774 |  |  |  | - |  |  |  | - |  |  |  | (13 | ) |  |  | 131 |  |  |  | 905 |
Exercise of stock options |  |  | - |  |  |  | - |  |  |  | 454 |  |  |  | - |  |  |  | - |  |  |  | (114 | ) |  |  | 1,174 |  |  |  | 1,628 |
Amortization of unrecognized stock-based compensation |  |  | - |  |  |  | - |  |  |  | 5,758 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,758 |
Purchase of treasury stock |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 636 |  |  |  | (40,049 | ) |  |  | (40,049 | )
Foreign currency translation adjustments |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,602 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (1,602 | )
Grant of restricted stock units to settle accrued bonus |  |  | - |  |  |  | - |  |  |  | 8,645 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 8,645 |
Settlement of restricted stock units |  |  | - |  |  |  | - |  |  |  | (1,460 | ) |  |  | - |  |  |  | (4,538 | ) |  |  | (376 | ) |  |  | (9,265 | ) |  |  | (15,263 | )
Unrealized loss on investments |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (43 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (43 | )
Dividends and dividend equivalent rights |  |  | - |  |  |  | - |  |  |  | 511 |  |  |  | - |  |  |  | (20,802 | ) |  |  | - |  |  |  | - |  |  |  | (20,291 | )
Net income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 42,628 |  |  |  | - |  |  |  | - |  |  |  | 42,628 |
Balance at July 3, 2020 |  |  | 65,707 |  |  | $ | 66 |  |  | $ | 259,617 |  |  | $ | (3,405 | ) |  | $ | 401,956 |  |  |  | 14,084 |  |  | $ | (325,667 | ) |  | $ | 332,567 |
Employee stock purchase plan |  |  | - |  |  |  | - |  |  |  | 405 |  |  |  | - |  |  |  | - |  |  |  | (7 | ) |  |  | 74 |  |  |  | 479 |
Amortization of unrecognized stock-based compensation |  |  | - |  |  |  | - |  |  |  | 1,691 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,691 |
Foreign currency translation adjustments |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 550 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 550 |
Unrealized loss on investments |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (129 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (129 | )
Dividends and dividend equivalent rights |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (10,045 | ) |  |  | - |  |  |  | - |  |  |  | (10,045 | )
Net income |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 18,084 |  |  |  | - |  |  |  | - |  |  |  | 18,084 |
Balance at October 2, 2020 |  |  | 65,707 |  |  | $ | 66 |  |  | $ | 261,713 |  |  | $ | (2,984 | ) |  | $ | 409,995 |  |  |  | 14,077 |  |  | $ | (325,593 | ) |  | $ | 343,197 |

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

- 7 -

EXPONENT, INC.

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended October 1, 2021 and October 2, 2020

(in thousands)

(unaudited)

|  | Nine Months Ended |
|  | October 1, 2021 |  |  | October 2, 2020 |
Cash flows from operating activities: |  |  |  |  |  |  |  |
Net income |  | $ | 80,822 |  |  | $ | 60,712 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization of property, equipment and leasehold improvements |  |  | 4,943 |  |  |  | 5,176 |
Amortization of premiums and accretion of discounts on short-term investments |  |  | (11 | ) |  |  | (150 | )
Provision for contract losses and doubtful accounts |  |  | 1,197 |  |  |  | 2,890 |
Stock-based compensation |  |  | 15,239 |  |  |  | 13,326 |
Deferred income tax provision |  |  | (2,020 | ) |  |  | (2,505 | )
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable |  |  | (33,671 | ) |  |  | 7,284 |
Prepaid expenses and other current assets |  |  | (4,878 | ) |  |  | (8,439 | )
Change in operating leases |  |  | (472 | ) |  |  | (331 | )
Accounts payable and accrued liabilities |  |  | 5,784 |  |  |  | 311 |
Accrued payroll and employee benefits |  |  | 3,053 |  |  |  | (12,507 | )
Deferred revenues |  |  | 392 |  |  |  | (3,320 | )
Net cash provided by operating activities |  |  | 70,378 |  |  |  | 62,447 |
Cash flows from investing activities: |  |  |  |  |  |  |  |
Capital expenditures |  |  | (5,437 | ) |  |  | (4,144 | )
Purchase of short-term investments |  |  | (34,994 | ) |  |  | - |
Maturity of short-term investments |  |  | 55,000 |  |  |  | 35,000 |
Net cash provided by investing activities |  |  | 14,569 |  |  |  | 30,856 |
Cash flows from financing activities: |  |  |  |  |  |  |  |
Payroll taxes for restricted stock units |  |  | (15,666 | ) |  |  | (15,263 | )
Repurchase of common stock |  |  | (7,000 | ) |  |  | (40,049 | )
Exercise of stock-based payment awards |  |  | 2,675 |  |  |  | 3,013 |
Dividends and dividend equivalents rights |  |  | (32,775 | ) |  |  | (29,936 | )
Net cash used in financing activities |  |  | (52,766 | ) |  |  | (82,235 | )
Effect of foreign currency exchange rates on cash and cash equivalents |  |  | 79 |  |  |  | 128 |
Net change in cash and cash equivalents |  |  | 32,260 |  |  |  | 11,196 |
Cash and cash equivalents at beginning of period |  |  | 197,525 |  |  |  | 176,436 |
Cash and cash equivalents at end of period |  | $ | 229,785 |  |  | $ | 187,632 |

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

- 8 -

EXPONENT, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Basis of Presentation

Exponent, Inc. (referred to as the “Company” or “Exponent”) is an engineering and scientific consulting firm that provides solutions to complex problems. The Company operates on a 52-53 week fiscal year ending on the Friday closest to the last day of December.

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission. Accordingly, they do not contain all the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments which are necessary for the fair presentation of the condensed consolidated financial statements have been included and all such adjustments are of a normal and recurring nature. The operating results for the three and nine months ended October 1, 2021 are not necessarily representative of the results of future quarterly or annual periods. The following information should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 1, 2021, which was filed with the U.S. Securities and Exchange Commission on February 26, 2021.

The unaudited condensed consolidated financial statements include the accounts of Exponent, Inc. and its subsidiaries, which are all wholly owned. All intercompany accounts and transactions have been eliminated in consolidation.

Use of 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 period. Items subject to such estimates and assumptions include accounting for revenue recognition and estimating the allowance for contract losses and doubtful accounts. Actual results could differ from those estimates.

Note 2: Revenue Recognition

Substantially all of the Company’s engagements are performed under time and materials or fixed-price arrangements. For time and materials contracts, the Company utilizes the practical expedient under Accounting Standards Codification 606 – Revenue from Contracts with Customers, which states, that if an entity has a right to consideration from a customer in an amount that corresponds directly with the value of the entity’s performance completed to date (for example, a service contract in which an entity bills a fixed amount for each hour of service provided), then the entity may recognize revenue in the amount to which the entity has a right to invoice.

The following table discloses the percentage of the Company’s revenue generated from time and materials contracts:

|  | Three Months Ended |  |  | Nine Months Ended |
|  | October 1, 2021 |  |  | October 2, 2020 |  |  | October 1, 2021 |  |  | October 2, 2020 |
Engineering & Other Scientific |  |  | 62 | % |  |  | 59 | % |  |  | 62 | % |  |  | 62 | %
Environmental and Health |  |  | 16 | % |  |  | 19 | % |  |  | 17 | % |  |  | 20 | %
Total time and materials revenues |  |  | 78 | % |  |  | 78 | % |  |  | 79 | % |  |  | 82 | %

- 9 -

For fixed-price contracts, the Company recognizes revenue over time because of the continuous transfer of control to the customer. The customer typically controls the work in process as evidenced either by contractual termination clauses or by the Company’s rights to payment for work performed to date to deliver services that do not have an alternative use to the Company. Revenue for fixed-price contracts is recognized based on the relationship of incurred labor hours at standard rates to the Company’s estimate of the total labor hours at standard rates it expects to incur over the term of the contract. The Company believes this methodology achieves a reliable measure of the revenue from the consulting services it provides to its customers under fixed-price contracts given the nature of the consulting services the Company provides.

The following table discloses the percentage of the Company’s revenue generated from fixed price contracts:

|  | Three Months Ended |  |  | Nine Months Ended |
|  | October 1, 2021 |  |  | October 2, 2020 |  |  | October 1, 2021 |  |  | October 2, 2020 |
Engineering & Other Scientific |  |  | 21 | % |  |  | 21 | % |  |  | 20 | % |  |  | 17 | %
Environmental and Health |  |  | 1 | % |  |  | 1 | % |  |  | 1 | % |  |  | 1 | %
Total fixed price revenues |  |  | 22 | % |  |  | 22 | % |  |  | 21 | % |  |  | 18 | %

Deferred revenues represent amounts billed to clients in advance of services provided. During the third quarter of 2021, $4,517,000 of revenues were recognized that were included in the deferred revenue balance at July 2, 2021. During the first nine months of 2021, $7,724,000 of revenues were recognized that were included in the deferred revenue balance at January 1, 2021.

Reimbursements, including those related to travel and other out-of-pocket expenses, and other similar third- party costs such as the cost of materials and certain subcontracts, are included in revenues, and an equivalent amount of reimbursable expenses are included in operating expenses. Any mark-up on reimbursable expenses is included in revenues before reimbursements. The Company reports revenues net of subcontractor fees for certain subcontracts where the Company has determined that it is acting as an agent because its performance obligation is to arrange for the provision of goods or services by another party. The total amount of subcontractor fees not included in revenues because the Company was acting as an agent were $1,219,000 and $347,000 during the third quarter of 2021 and 2020, respectively, and $9,923,000 and $7,718,000 during the first nine months of 2021 and 2020, respectively.

- 10 -

Note 3: Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including available-for-sale fixed income securities, trading fixed income and equity securities held in its deferred compensation plan and the liability associated with its deferred compensation plan. There were no transfers between fair value measurement levels during the three and nine months ended October 1, 2021 and October 2, 2020. Any transfers between fair value measurement levels would be recorded on the actual date of the event or change in circumstances that caused the transfer. The fair value of these certain financial assets and liabilities was determined using the following inputs at October 1, 2021:

|  | Fair Value Measurements at Reporting Date Using |
(In thousands) |  | Total |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market securities (1) |  | $ | 76,579 |  |  | $ | 76,579 |  |  | $ | - |  |  | $ | - |
Fixed income available for sale securities (2) |  |  | 24,998 |  |  |  | - |  |  |  | 24,998 |  |  |  | - |
Fixed income trading securities held in deferred compensation plan (3) |  |  | 24,789 |  |  |  | 24,789 |  |  |  | - |  |  |  | - |
Equity trading securities held in deferred compensation plan (3) |  |  | 79,490 |  |  |  | 79,490 |  |  |  | - |  |  |  | - |
Total |  | $ | 205,856 |  |  | $ | 180,858 |  |  | $ | 24,998 |  |  | $ | - |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred compensation plan (4) |  |  | 105,342 |  |  |  | 105,342 |  |  |  | - |  |  |  | - |
Total |  | $ | 105,342 |  |  | $ | 105,342 |  |  | $ | - |  |  | $ | - |

(1) Included in cash and cash equivalents on the Company’s unaudited condensed consolidated balance sheet.

(2) Included in short-term investments on the Company’s unaudited condensed consolidated balance sheet.

(3) | Included in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet.

(4) | Included in accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheet.

- 11 -

The fair value of these certain financial assets and liabilities was determined using the following inputs at January 1, 2021:

|  | Fair Value Measurements at Reporting Date Using |
(In thousands) |  | Total |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market securities (1) |  | $ | 51,442 |  |  | $ | 51,442 |  |  | $ | - |  |  | $ | - |
Fixed income available for sale securities (2) |  |  | 45,001 |  |  |  | - |  |  |  | 45,001 |  |  |  | - |
Fixed income trading securities held in deferred compensation plan (3) |  |  | 26,274 |  |  |  | 26,274 |  |  |  | - |  |  |  | - |
Equity trading securities held in deferred compensation plan (3) |  |  | 62,473 |  |  |  | 62,473 |  |  |  | - |  |  |  | - |
Total |  | $ | 185,190 |  |  | $ | 140,189 |  |  | $ | 45,001 |  |  | $ | - |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred compensation plan (4) |  |  | 88,977 |  |  |  | 88,977 |  |  |  | - |  |  |  | - |
Total |  | $ | 88,977 |  |  | $ | 88,977 |  |  | $ | - |  |  | $ | - |

(1) | Included in cash and cash equivalents on the Company’s unaudited condensed consolidated balance sheet.

(2) | Included in short-term investments on the Company’s unaudited condensed consolidated balance sheet.

(3) | Included in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet.

(4) | Included in accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheet.

Fixed income available-for-sale securities as of January 1, 2021 represent obligations of the United States Treasury. Fixed income and equity trading securities represent mutual funds held in the Company’s deferred compensation plan. See Note 6 for additional information about the Company’s deferred compensation plan.

Cash, cash equivalents and short-term investments consisted of the following as of October 1, 2021:

|  |  |  |  |  | Gross |  |  | Gross |  |  |  |  |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Estimated |
(In thousands) |  | Cost |  |  | Gains |  |  | Losses |  |  | Fair Value |
Classified as current assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | 153,206 |  |  | $ | - |  |  | $ | - |  |  | $ | 153,206 |
Cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market securities |  |  | 76,579 |  |  |  | - |  |  |  | - |  |  |  | 76,579 |
Total cash equivalents |  |  | 76,579 |  |  |  | - |  |  |  | - |  |  |  | 76,579 |
Total cash and cash equivalents |  |  | 229,785 |  |  |  | - |  |  |  | - |  |  |  | 229,785 |
Short-term investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and agency securities |  |  | 24,998 |  |  |  | - |  |  |  | - |  |  |  | 24,998 |
Total short-term investments |  |  | 24,998 |  |  |  | - |  |  |  | - |  |  |  | 24,998 |
Total cash, cash equivalents and short-term investments |  | $ | 254,783 |  |  | $ | - |  |  | $ | - |  |  | $ | 254,783 |

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Cash, cash equivalents and short-term investments consisted of the following as of January 1, 2021:

|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Estimated |
(In thousands) |  | Cost |  |  | Gains |  |  | Losses |  |  | Fair Value |
Classified as current assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | 146,083 |  |  | $ | - |  |  | $ | - |  |  | $ | 146,083 |
Cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market securities |  |  | 51,442 |  |  |  | - |  |  |  | - |  |  |  | 51,442 |
Total cash equivalents |  |  | 51,442 |  |  |  | - |  |  |  | - |  |  |  | 51,442 |
Total cash and cash equivalents |  |  | 197,525 |  |  |  | - |  |  |  | - |  |  |  | 197,525 |
Short-term investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and agency securities |  |  | 44,993 |  |  |  | 8 |  |  |  | - |  |  |  | 45,001 |
Total short-term investments |  |  | 44,993 |  |  |  | 8 |  |  |  | - |  |  |  | 45,001 |
Total cash, cash equivalents and short-term investments |  | $ | 242,518 |  |  | $ | 8 |  |  | $ | - |  |  | $ | 242,526 |

At October 1, 2021 and January 1, 2021, the Company did not have any assets or liabilities valued using significant unobservable inputs.

The following financial instruments are not measured at fair value on the Company’s unaudited condensed consolidated balance sheet at October 1, 2021 and January 1, 2021 but require disclosure of their fair values: accounts receivable, other assets and accounts payable. The estimated fair value of such instruments at October 1, 2021 and January 1, 2021 approximates their carrying value as reported on the Company’s unaudited condensed consolidated balance sheet.

There were no other-than-temporary impairments or credit losses related to available-for-sale securities during the three and nine months ended October 1, 2021 and October 2, 2020.

Note 4: Net Income Per Share

Basic per share amounts are computed using the weighted-average number of common shares outstanding during the period. Diluted per share amounts are calculated using the weighted-average number of common shares outstanding during the period and, when dilutive, the weighted-average number of potential common shares from the issuance of common stock to satisfy outstanding restricted stock units and the exercise of outstanding options to purchase common stock using the treasury stock method.

The following schedule reconciles the shares used to calculate basic and diluted net income per share:

|  | Three Months Ended |  |  | Nine Months Ended |
(In thousands) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | October 1, 2021 |  |  | October 2, 2020 |
Shares used in basic per share computation |  |  | 52,618 |  |  |  | 52,316 |  |  |  | 52,597 |  |  |  | 52,383 |
Effect of dilutive common stock options outstanding |  |  | 245 |  |  |  | 331 |  |  |  | 239 |  |  |  | 351 |
Effect of dilutive restricted stock units outstanding |  |  | 449 |  |  |  | 562 |  |  |  | 480 |  |  |  | 608 |
Shares used in diluted per share computation |  |  | 53,312 |  |  |  | 53,209 |  |  |  | 53,316 |  |  |  | 53,342 |

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Common stock options to purchase 0 and 40,000 shares were excluded from the diluted per share calculation for the three months ended October 1, 2021 and October 2, 2020, respectively, due to their anti-dilutive effect. Common stock options to purchase 0 and 34,139 shares were excluded from the diluted per share calculation for the nine months ended October 1, 2021 and October 2, 2020, respectively, due to their anti-dilutive effect.

Note 5: Stock-Based Compensation

Restricted Stock Units

Restricted stock unit grants are designed to attract and retain employees, and to better align employee interests with those of the Company’s stockholders. For a select group of employees, up to 40% of their annual bonus is settled with fully vested restricted stock unit awards. Under these fully vested restricted stock unit awards, the holder of each award has the right to receive one share of the Company’s common stock for each fully vested restricted stock unit four years from the date of grant. Each individual who receives a fully vested restricted stock unit award is also granted a matching number of unvested restricted stock unit awards. Unvested restricted stock unit awards are also granted for select new hires and promotions. These unvested restricted stock unit awards generally cliff vest four years from the date of grant, at which time the holder of each award will have the right to receive one share of the Company’s common stock for each restricted stock unit award provided the holder of each award has met certain employment conditions. In the case of retirement at 59½ years or older, all unvested restricted stock unit awards will continue to vest, provided that the holder of each award does all consulting work through the Company and does not become an employee for a past or present client, beneficial party or competitor of the Company.

The value of these restricted stock unit awards is determined based on the market price of the Company’s common stock on the date of grant. The value of fully vested restricted stock unit awards issued is recorded as a reduction to accrued bonuses. The portion of bonus expense that the Company expects to settle with fully vested restricted stock unit awards is recorded as stock-based compensation during the period the bonus is earned. The Company recorded stock-based compensation expense associated with accrued bonus awards of $2,525,000 and $2,035,000 during the three months ended October 1, 2021 and October 2, 2020, respectively. For the nine months ended October 1, 2021 and October 2, 2020, the Company recorded stock-based compensation expense associated with accrued bonus awards of $7,723,000 and $5,876,000, respectively. The value of the unvested restricted stock unit awards granted is recognized on a straight-line basis over the shorter of the four-year vesting period or the period between the grant date and the date the award recipient turns 59½. If the award recipient is 59½ years or older on the date of grant, the value of the entire award is expensed upon grant. The Company recorded stock-based compensation expense associated with the unvested restricted stock unit awards of $1,654,000 and $1,519,000 during the three months ended October 1, 2021 and October 2, 2020, respectively. The Company recorded stock-based compensation expense associated with the unvested restricted stock unit awards of $6,967,000 and $6,922,000 during the nine months ended October 1, 2021 and October 2, 2020, respectively.

Stock Options

Stock options are granted for terms of ten years and generally vest 25% per year over a four-year period from the grant date. Unvested stock option awards will continue to vest in the case of retirement at 59½ years or older, provided that the holder of each award does all consulting work through the Company and does not become an employee for a past or present client, beneficial party or competitor of the Company. The value of the unvested stock option awards granted is recognized on a straight-line basis over the shorter of the four-year vesting period or the period between the grant date and the date the award recipient turns 59½. If the award recipient is 59½ years or older on the date of grant, the value of the entire award is expensed upon grant. The Company recorded stock-based compensation expense associated with stock option grants of $186,000 and $173,000 during the three months ended October 1, 2021 and October 2, 2020, respectively. The Company recorded stock-based compensation expense associated with stock option grants of $549,000 and $528,000 during the nine months ended October 1, 2021 and October 2, 2020, respectively.

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The Company uses the Black-Scholes option-pricing model to determine the fair value of options granted. The determination of the fair value of stock option awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include expected stock price volatility over the term of the award, actual and projected employee stock option exercise behaviors, the risk-free interest rate and expected dividends.

The Company used historical exercise, forfeiture, and post-vesting expiration data to estimate the expected term of options granted. The historical volatility of the Company’s common stock over a period of time equal to the expected term of the options granted was used to estimate expected volatility. The risk-free interest rate used in the option-pricing model was based on United States Treasury zero-coupon issues with remaining terms similar to the expected term of the options. The dividend yield assumption considers the expectation of continued declaration of dividends, offset by option holders’ dividend equivalent rights.

The Company accounts for forfeitures of stock-based awards when they occur. All stock-based payment awards are recognized on a straight-line basis over the requisite service periods of the awards.

Note 6: Deferred Compensation Plans

The Company maintains nonqualified deferred compensation plans for the benefit of a select group of highly compensated employees. Under these plans, participants may elect to defer up to 100% of their compensation. Company assets that are earmarked to pay benefits under the plans are held in a rabbi trust and are subject to the claims of the Company’s creditors. As of October 1, 2021, and January 1, 2021, the invested amounts under the plans totaled $104,279,000 and $88,747,000, respectively, and are recorded in prepaid expenses and other current assets and deferred compensation plan assets on the Company’s unaudited condensed consolidated balance sheet. These assets are classified as trading securities and are recorded at fair value with changes recorded as adjustments to miscellaneous income, net.

As of October 1, 2021, and January 1, 2021, vested amounts due under the plans totaled $105,342,000 and $88,977,000, respectively, and are recorded within accrued payroll and employee benefits and deferred compensation plan liabilities on the Company’s unaudited condensed consolidated balance sheet. Changes in the liability are recorded as adjustments to compensation expense. During the three months ended October 1, 2021, the Company recognized a reduction to compensation expense of $258,000. The change in compensation expense was recorded due to changes in the market valve of the trust assets with the same amount being recorded as an expense in miscellaneous income, net. During the three months ended October 2, 2020, the Company recognized additional compensation expense of $3,220,000 as a result of changes in the market value of the trust assets with the same amount being recorded as income in miscellaneous income, net. During the nine months ended October 1, 2021, the Company recognized additional compensation expense of $9,997,000 as a result of changes in the market value of the trust assets with the same amount being recorded as income in miscellaneous income, net. During the nine months ended October 2, 2020, the Company recognized a reduction to compensation expense of $399,000. The change in compensation expense was recorded due to changes in the market value of the trust assets with the same amount being recorded as expense in miscellaneous income, net.

Note 7: Supplemental Cash Flow Information

The following is supplemental disclosure of cash flow information:

|  | Nine Months Ended |
(In thousands) |  | October 1, 2021 |  |  | October 2, 2020 |
Cash paid during period: |  |  |  |  |  |  |  |
Income taxes |  | $ | 16,481 |  |  | $ | 9,370 |
Non-cash investing and financing activities: |  |  |  |  |  |  |  |
Unrealized loss on short-term investments |  | $ | (65 | ) |  | $ | (172 | )
Vested stock unit awards issued to settle accrued bonuses |  | $ | 7,637 |  |  | $ | 8,645 |
Accrual for capital expenditures as of period end |  | $ | 368 |  |  | $ | 322 |
Right-of-use asset obtained in exchange for operating lease obligations |  | $ | 792 |  |  | $ | 1,802 |

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Note 8: Accounts Receivable, Net

At October 1, 2021 and January 1, 2021, accounts receivable, net, was comprised of the following:

|  | October 1, |  |  | January 1, |
(In thousands) |  | 2021 |  |  | 2021 |
Billed accounts receivable |  | $ | 102,812 |  |  | $ | 80,298 |
Unbilled accounts receivable |  |  | 46,042 |  |  |  | 35,262 |
Allowance for contract losses and doubtful accounts |  |  | (4,815 | ) |  |  | (3,995 | )
Total accounts receivable, net |  | $ | 144,039 |  |  | $ | 111,565 |

The Company maintains allowances for estimated losses over the remaining contractual life of its receivables resulting from the inability of customers to meet their financial obligations or for disputes that affect the Company’s ability to fully collect amounts due. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations or aware of a dispute with a specific customer, a specific allowance is recorded to reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers the Company recognizes allowances for doubtful accounts based upon historical write-offs, customer concentration, customer creditworthiness, current economic conditions, aging of amounts due and future expectations.

A reconciliation of the beginning and ending amount of the contract losses and doubtful accounts is as follows (in thousands):

Balance at January 1, 2021 |  | $ | 3,995 |
Provision for contract losses and doubtful accounts |  |  | 1,197 |
Write-offs |  |  | (377 | )
Balance at October 1, 2021 |  | $ | 4,815 |

Note 9: Segment Reporting

The Company has two reportable operating segments based on two primary areas of service. The Engineering and Other Scientific segment is a broad service group providing technical consulting in different practices primarily in engineering. The Environmental and Health segment provides services in the areas of environmental, epidemiology and health risk analysis. This segment provides a wide range of consulting services relating to environmental hazards and risks and the impact on both human health and the environment. Our Chief Executive Officer, the chief operating decision maker, reviews revenues and operating income for each of our reportable segments, but does not review total assets in evaluating segment performance and capital allocation.

Segment information for the three and nine months ended October 1, 2021 and October 2, 2020 follows:

Revenues

|  | Three Months Ended |  |  | Nine Months Ended |
(In thousands) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | October 1, 2021 |  |  | October 2, 2020 |
Engineering and Other Scientific |  | $ | 97,100 |  |  | $ | 79,230 |  |  | $ | 288,848 |  |  | $ | 236,239 |
Environmental and Health |  |  | 19,305 |  |  |  | 19,433 |  |  |  | 63,915 |  |  |  | 60,422 |
Total revenues |  | $ | 116,405 |  |  | $ | 98,663 |  |  | $ | 352,763 |  |  | $ | 296,661 |

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Operating Income

|  | Three Months Ended |  |  | Nine Months Ended |
(In thousands) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | October 1, 2021 |  |  | October 2, 2020 |
Engineering and Other Scientific |  | $ | 36,676 |  |  | $ | 25,952 |  |  | $ | 108,646 |  |  | $ | 73,400 |
Environmental and Health |  |  | 5,851 |  |  |  | 6,449 |  |  |  | 21,265 |  |  |  | 20,751 |
Total segment operating income |  |  | 42,527 |  |  |  | 32,401 |  |  |  | 129,911 |  |  |  | 94,151 |
Corporate operating expense |  |  | (10,408 | ) |  |  | (11,994 | ) |  |  | (44,362 | ) |  |  | (28,636 | )
Total operating income |  | $ | 32,119 |  |  | $ | 20,407 |  |  | $ | 85,549 |  |  | $ | 65,515 |

Certain operating expenses are excluded from the Company’s measure of segment operating income. These expenses include the costs associated with our human resources, finance, information technology, and business development groups; the deferred compensation expense/benefit due to the change in value of assets associated with our deferred compensation plan; stock-based compensation associated with restricted stock unit and stock option awards; and the change in our allowance for contract losses and doubtful accounts.

Capital Expenditures

|  | Three Months Ended |  |  | Nine Months Ended |
(In thousands) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | October 1, 2021 |  |  | October 2, 2020 |
Engineering and Other Scientific |  | $ | 563 |  |  | $ | 594 |  |  | $ | 1,981 |  |  | $ | 2,061 |
Environmental and Health |  |  | 57 |  |  |  | 22 |  |  |  | 136 |  |  |  | 103 |
Total segment capital expenditures |  |  | 620 |  |  |  | 616 |  |  |  | 2,117 |  |  |  | 2,164 |
Corporate capital expenditures |  |  | 778 |  |  |  | 1,005 |  |  |  | 3,086 |  |  |  | 2,140 |
Total capital expenditures |  | $ | 1,398 |  |  | $ | 1,621 |  |  | $ | 5,203 |  |  | $ | 4,304 |

Depreciation and Amortization

|  | Three Months Ended |  |  | Nine Months Ended |
(In thousands) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | October 1, 2021 |  |  | October 2, 2020 |
Engineering and Other Scientific |  | $ | 1,089 |  |  | $ | 1,043 |  |  | $ | 3,074 |  |  | $ | 3,248 |
Environmental and Health |  |  | 49 |  |  |  | 48 |  |  |  | 141 |  |  |  | 141 |
Total segment depreciation and amortization |  |  | 1,138 |  |  |  | 1,091 |  |  |  | 3,215 |  |  |  | 3,389 |
Corporate depreciation and amortization |  |  | 507 |  |  |  | 598 |  |  |  | 1,728 |  |  |  | 1,787 |
Total depreciation and amortization |  | $ | 1,645 |  |  | $ | 1,689 |  |  | $ | 4,943 |  |  | $ | 5,176 |

One client comprised 15% of the Company’s revenues during the three months ended October 1, 2021. The same client comprised 13% of the Company’s revenues during the nine months ended October 1, 2021. No other single client comprised more than 10% of the Company’s revenues during the three and nine months ended October 1, 2021. No single client comprised more than 10% of the Company’s revenues during the three months and nine months ended October 2, 2020.

Note 10: Leases

The Company determines if an arrangement is a lease at the inception of the arrangement. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and long-term operating lease liabilities in the Company’s condensed consolidated balance sheet. The Company does not have any finance leases as of October 1, 2021.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

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As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate, based on the information available at commencement date, in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The amortization of operating lease ROU assets and the change in operating lease liabilities is disclosed as a single line item in the condensed consolidated statements of cash flows.

The Company leases office, laboratory, and storage space in 13 states and the District of Columbia, as well as in China, Hong Kong, Singapore, Switzerland and the United Kingdom. Leases for these office, laboratory, and storage facilities have terms generally ranging between one and ten years. Some of these leases include options to extend or terminate the lease, none of which are currently included in the lease term as the Company has determined that exercise of these options is not reasonably certain.

The Company has a Test and Engineering Center on 147 acres of land in Phoenix, Arizona. The Company leases this land from the state of Arizona under a 30-year lease agreement that expires in January of 2028 and has options to renew for two 15-year periods. As of October 1, 2021, the Company has determined that exercise of the renewal options is not reasonably certain and thus the extension is not included in the lease term.

The Company’s equipment leases are included in the ROU asset and liability balances, but are not material.

The Company leases excess space in its Silicon Valley facility. Rental income of $624,000 and $750,000 was included in other income for the three months ended October 1, 2021 and October 2, 2020, respectively. Rental income of $2,030,000 and $2,611,000 was included in other income for the nine months ended October 1, 2021 and October 2, 2020, respectively.

The components of lease expense included in other operating expenses on the condensed consolidated statements of income were as follows:

|  | Three Months Ended |  |  | Nine Months Ended |
(In thousands) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | October 1, 2021 |  |  | October 2, 2020 |
Operating lease cost |  | $ | 1,635 |  |  | $ | 1,706 |  |  | $ | 4,896 |  |  | $ | 5,162 |
Variable lease cost |  |  | 246 |  |  |  | 280 |  |  |  | 793 |  |  |  | 882 |
Short-term lease cost |  |  | 68 |  |  |  | 146 |  |  |  | 319 |  |  |  | 434 |

Supplemental cash flow information related to operating leases was as follows:

|  | Three Months Ended |  |  | Nine Months Ended |
(In thousands) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | October 1, 2021 |  |  | October 2, 2020 |
Cash paid for amounts included in the measurement of operating lease liabilities |  | $ | 1,566 |  |  | $ | 1,508 |  |  | $ | 5,381 |  |  | $ | 5,522 |

Supplemental balance sheet information related to operating leases was as follows:

|  | October 1, 2021 |  |  | January 1, 2021 |
Weighted Average Remaining Lease Term |  | 4.2 years |  |  | 4.5 years |
Weighted Average Discount Rate |  | 4.1% |  |  | 4.2% |

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Maturities of operating lease liabilities as of October 1, 2021:

|  | Operating |
(In thousands) |  | Leases |
2021 (excluding the nine months ended October 1, 2021) |  |  | 1,581 |
2022 |  |  | 5,805 |
2023 |  |  | 4,067 |
2024 |  |  | 2,355 |
2025 |  |  | 1,539 |
2026 |  |  | 1,531 |
2027 |  |  | 1,466 |
Total lease payments |  | $ | 18,344 |
Less imputed interest |  |  | (2,031 | )
Total lease liability |  | $ | 16,313 |

Note 11: Contingencies

The Company is a party to various legal actions from time to time and may be contingently liable in connection with claims and contracts arising in the normal course of business, the outcome of which the Company believes, after consultation with legal counsel, will not have a material adverse effect on its financial condition, results of operations or liquidity. However, due to the risks and uncertainties inherent in legal proceedings, actual results could differ from current expected results. All legal costs associated with litigation are expensed as incurred.

Note 12: Subsequent Events

On October 28, 2021, the Company’s Board of Directors announced a cash dividend of $0.20 per share of the Company’s common stock, payable December 17, 2021, to stockholders of record as of December 3, 2021. The Company expects to continue paying quarterly dividends in the future, subject to declaration by the Company’s Board of Directors.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included herein and with our audited consolidated financial statements and notes thereto for the fiscal year ended January 1, 2021, which are contained in our fiscal 2020 Annual Report on Form 10-K, which was filed with the U.S. Securities and Exchange Commission on February 26, 2021 (our “2020 Annual Report”).

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains certain “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995, and the rules promulgated pursuant to the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended) that are based on the beliefs of the Company’s management, as well as assumptions made by and information currently available to the Company’s management. Such forward-looking statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. When used in this document, the words “intend,” “anticipate,” “believe,” “estimate,” “expect” and similar expressions, as they relate to the Company or its management, identify such forward-looking statements. Such statements reflect the current views of the Company or its management with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, the Company’s actual results, performance, achievements, or actions could differ materially from those expressed in, or implied by, any such forward-looking statements. Factors that could cause or contribute to such material differences include the COVID-19 pandemic (including factors relating to measures implemented by governmental authorities or by us to promote the safety of our employees, vendors and clients; other direct and indirect impacts on our business and the businesses of our clients, vendors and other partners; impacts which may, among other things, adversely affect our clients’ ability to utilize our services at the levels they have previously; disruptions of access to our facilities or those of our clients or third parties; and increased and potentially significant economic uncertainty and volatility, including credit and collectability risks and potential disruptions of capital and credit markets), the possibility that the demand for our services may decline as a result of changes in general and industry specific economic conditions, the timing of engagements for our services, the effects of competitive services and pricing, the absence of backlog related to our business, our ability to attract and retain key employees, the effect of tort reform and government regulation on our business and liabilities resulting from claims made against us. Additional risks and uncertainties are discussed in this Quarterly Report under the heading “Risk Factors” and elsewhere in this report. The inclusion of such forward-looking information should not be regarded as a representation by the Company or any other person that the future events, plans, or expectations contemplated by the Company will be achieved. Due to such uncertainties and risks, you are warned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. The Company does not intend to release publicly any updates or revisions to any such forward-looking statements.

Business Overview

Exponent, Inc., is an engineering and scientific consulting firm that provides solutions to complex problems. Our multidisciplinary team of scientists, engineers and business consultants brings together more than 90 different technical disciplines to solve complicated issues facing industry and business today. Our services include analysis of product development, product recall, regulatory compliance, and the discovery of potential problems related to products, people, property and impending litigation.

CRITICAL ACCOUNTING ESTIMATES

There have been no significant changes in our critical accounting estimates during the nine months ended October 1, 2021, as compared to the critical accounting estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2020 Annual Report.

RESULTS OF CONSOLIDATED OPERATIONS

Executive Summary

Revenues for the third quarter of 2021 increased 18% to $116,405,000 as compared to $98,663,000 during the same period last year. Revenues before reimbursements for the third quarter of 2021 increased 16% to $108,467,000 as compared to $93,499,000 during the same period last year. During the third quarter of 2021, our reactive business further benefitted from the acceleration of litigation throughput in our court systems, and at the same time, our proactive engagements, such as user and machine learning data studies, remained a key driver of

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growth. Our work continued to be robust and diverse, with climate vulnerability assessments with utilities, risk assessments in chemicals, ongoing energy storage-related work, and projects in the automotive and consumer products industries.

Net income increased 36% to $24,574,000 during the third quarter of 2021 as compared to $18,084,000 during the same period last year. Diluted earnings per share increased to $0.46 per share as compared to $0.34 in the same period last year. The increases in net income and diluted earnings per share were primarily due to the 16% increase in revenues before reimbursements and slower growth in compensation and related expenses and other operating expenses.

We remain focused on selectively adding top talent, developing the skills necessary to expand our market position and providing clients with in-depth scientific research and analysis to determine what happened and how to prevent failures or exposures in the future. We also remain focused on capitalizing on emerging growth areas, managing other operating expenses, generating cash from operations, maintaining a strong balance sheet and undertaking activities such as share repurchases and dividends to enhance shareholder value.

COVID-19 Update

We responded quickly and carefully to address the unprecedented challenges created by the pandemic. We have successfully adapted and will continue to evolve our business development, recruiting and operational approaches, yielding benefits both during and after this crisis. We have accelerated our sharing of in-depth scientific and regulatory knowledge through webinars and thought leadership pieces, which has fostered new client relationships and projects. We have shifted all recruiting activities online, allowing us to reach a more geographically expansive set of candidates. The health and safety of our team remain top priorities, and therefore we have leveraged our internal expertise to establish protocols that allow us to safely continue laboratory activities and resume human participant studies. Our business continuity plan and robust infrastructure have empowered productive remote work. Our leadership team has responded with enhanced internal communications to encourage increased connectivity across the firm.

We are pleased that the Company has been able to address the majority of our clients’ needs with a mostly remote workforce. The relaxation of business restrictions in June 2020 allowed us to resume laboratory testing, inspections, and human participant studies for clients in non-essential industries. Field inspections of sites and products have increased due to lifting of travel restrictions.

We are pleased to be sharing our scientific and regulatory knowledge on health and safety issues related to the novel coronavirus through webinars and thought leadership pieces. We continue to advise clients with respect to COVID-19 testing, contract tracing, and occupational health and safety.

Overview of the Three Months Ended October 1, 2021

During the third quarter of 2021, billable hours increased 13% to 348,000 as compared to 308,000 during the same period last year. Our utilization increased to 76% during the third quarter of 2021 as compared to 66% during the same period last year. Technical full-time equivalent employees decreased 2% to 883 during the third quarter of 2021 as compared to 901 during the same period last year. We continue to selectively hire key talent to expand our capabilities.

Three Months Ended October 1, 2021 compared to Three Months Ended October 2, 2020

Revenues

|  | Three Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
Engineering and Other Scientific |  | $ | 97,100 |  |  | $ | 79,230 |  |  |  | 22.6 | %
Percentage of total revenues |  |  | 83.4 | % |  |  | 80.3 | % |  |  |  |
Environmental and Health |  |  | 19,305 |  |  |  | 19,433 |  |  |  | -0.7 | %
Percentage of total revenues |  |  | 16.6 | % |  |  | 19.7 | % |  |  |  |
Total revenues |  | $ | 116,405 |  |  | $ | 98,663 |  |  |  | 18.0 | %

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The increase in revenues for our Engineering and Other Scientific segment was due to an increase in billable hours and an increase in billing rates. During the third quarter of 2021, billable hours for this segment increased by 17% to 275,000 as compared to 236,000 during the same period last year. Utilization for this segment increased to 78% during the third quarter of 2021 as compared to 65% during the same period last year. Growth during the quarter was broad-based, with continued strong demand for our services across a number of industries and use cases, which includes a steady increase in litigation support, human participant studies for the consumer products industry, work with wearable technologies, as well as asset integrity and risk management engagements for utilities. On the automotive side, we have further progressed our work supporting advanced driver assistance systems and the implementation of safety frameworks for advanced vehicles and energy storage. Technical full-time equivalent employees in this segment decreased 3% to 675 during the third quarter of 2021 as compared to 693 for the same period last year.

The slight decrease in revenues for our Environmental and Health segment was due to a decrease in realized billing rates. Billable hours for this segment increased to 73,000 during the third quarter of 2021 as compared to 72,000 during the same period last year. Utilization for this segment increased to 68% during the third quarter of 2021 as compared to 67% during the same period last year. Our chemical regulation and food safety practice continued to grow as our scientists evaluated the effects of chemicals and new products on human health and the environment. This growth was offset by a decrease in demand for services in our health sciences practice. Technical full-time equivalent employees in this segment were 208 during both the third quarter of 2021 and 2020.

Compensation and Related Expenses

|  | Three Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
Compensation and related expenses |  | $ | 64,138 |  |  | $ | 62,419 |  |  |  | 2.8 | %
Percentage of total revenues |  |  | 55.1 | % |  |  | 63.3 | % |  |  |  |

The increase in compensation and related expenses during the third quarter of 2021 was due to an increase in payroll expense, an increase in fringe benefits, and an increase in bonus expense partially offset by a change in the value of assets associated with our deferred compensation plan. Payroll expense increased $885,000 during the third quarter of 2021 due to the impact of our annual salary adjustments partially offset by a decrease in technical full-time equivalent employees. Fringe benefits increased by $338,000 during the third quarter of 2021 due to an increase in payroll taxes. Bonus expense increased by $3,857,000 during the third quarter of 2021 due to a corresponding increase to our bonus pool, which is 33% of income before income taxes, interest income, bonus expense, and stock-based compensation. During the third quarter of 2021, deferred compensation expense decreased $3,478,000 with a corresponding decrease to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plan. This decrease consisted of a decrease in the value of plan assets of $258,000 during the third quarter of 2021 as compared to an increase in the value of plan assets of $3,220,000 during the same period last year. We expect our compensation expense, excluding the change in value of deferred compensation plan assets, to increase as we selectively add new talent and adjust compensation to market conditions.

Other Operating Expenses

|  | Three Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
Other operating expenses |  | $ | 8,017 |  |  | $ | 7,839 |  |  |  | 2.3 | %
Percentage of total revenues |  |  | 6.9 | % |  |  | 7.9 | % |  |  |  |

Other operating expenses include facilities-related costs, technical materials, computer-related expenses and depreciation and amortization of property, equipment and leasehold improvements. The increase in other operating expenses during the third quarter of 2021 was primarily due to an increase in information technology expenses of $221,000. The increase in information technology expenses was due to continued investments in our corporate infrastructure. We expect other operating expenses to grow as we selectively add new talent, make

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investments in our corporate infrastructure, and transition our workforce back to our offices as COVID-19 pandemic-related business restrictions are lifted.

Reimbursable Expenses

|  | Three Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
Reimbursable expenses |  | $ | 7,938 |  |  | $ | 5,164 |  |  |  | 53.7 | %
Percentage of total revenues |  |  | 6.8 | % |  |  | 5.2 | % |  |  |  |

The amount of reimbursable expenses will vary from quarter to quarter depending on the nature of our projects. The increase in reimbursable expenses during the third quarter of 2021 was primarily due to an increase in project-related travel and other project-related expenses as COVID-19 business and travel restrictions eased.

General and Administrative Expenses

|  | Three Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
General and administrative expenses |  | $ | 4,193 |  |  | $ | 2,834 |  |  |  | 48.0 | %
Percentage of total revenues |  |  | 3.6 | % |  |  | 2.9 | % |  |  |  |

The increase in general and administrative expenses during the third quarter of 2021 was primarily due a contribution to an endowed scholarship fund of $250,000, an increase in travel and meals of $202,000, an increase in bad debt of $181,000, an increase in employee relocation of $135,000, an increase in outside consulting of $109,000, and an increase in insurance premiums of $91,000. We expect general and administrative expenses to increase as we selectively add new talent, expand our business development and staff development initiatives, and increase travel and meal expenses as COVID-19 pandemic-related business restrictions are lifted.

Operating Income

|  | Three Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
Engineering and Other Scientific |  | $ | 36,676 |  |  | $ | 25,952 |  |  |  | 41.3 | %
Environmental and Health |  |  | 5,851 |  |  |  | 6,449 |  |  |  | -9.3 | %
Total segment operating income |  |  | 42,527 |  |  |  | 32,401 |  |  |  | 31.3 | %
Corporate operating expense |  |  | (10,408 | ) |  |  | (11,994 | ) |  |  | -13.2 | %
Total operating income |  | $ | 32,119 |  |  | $ | 20,407 |  |  |  | 57.4 | %

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The increase in operating income for our Engineering and Other Scientific segment during the third quarter of 2021 as compared to the same period last year was due to an increase in revenues. The increase in revenues was due to an increase in billable hours and an increase in billing rates. Growth during the quarter was broad-based, with continued strong demand for our services across a number of industries and use cases, which includes a steady increase in litigation support, human participant studies for the consumer products industry, work with wearable technologies, as well as asset integrity and risk management engagements for utilities. On the automotive side, we have further progressed our work supporting advanced driver assistance systems and the implementation of safety frameworks for advanced vehicles and energy storage.

The decrease in operating income for our Environmental and Health segment during the third quarter of 2021 as compared to the same period last year was due to a slight decrease in revenues before reimbursements and an increase in compensation and related costs for our health sciences practice. The slight decrease in revenues for our health sciences practice was due to a decrease in realized billing rates. The increase in compensation and related costs for our health sciences practice was due to our continued investment in the pharmaceutical industry which we believe is a significant opportunity to leverage our multidisciplinary approach across the full product life cycle.

Certain operating expenses are excluded from our measure of segment operating income. These expenses include the costs associated with our human resources, finance, information technology, and business development groups; the deferred compensation expense/benefit due to the change in value of assets associated with our deferred compensation plan; stock-based compensation associated with restricted stock unit and stock option awards; and the change in our allowance for contract losses and doubtful accounts.

The decrease in corporate operating expenses during the third quarter of 2021 as compared to the same period last year was primarily due to a decrease in deferred compensation expense partially offset by an increase in fringe benefits and increases in costs associated with our human resources, finance, information technology, and business development groups. During the third quarter of 2021, deferred compensation expense decreased $3,478,000, with a corresponding decrease to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plan. This decrease consisted of a decrease in the value of plan assets of $258,000 during the third quarter of 2021 as compared to an increase in the value of plan assets of $3,220,000 during the same period last year. During the third quarter of 2020 we claimed an employee retention credit for $538,000 under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). This credit was excluded from fringe benefits in our measure of segment operating income. There was no CARES Act credit claimed during the third quarter of 2021.

Other Income, Net

|  | Three Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
Other income, net |  | $ | 270 |  |  | $ | 4,231 |  |  |  | -93.6 | %
Percentage of total revenues |  |  | 0.2 | % |  |  | 4.3 | % |  |  |  |

Other income, net, consists primarily of changes in the value of assets associated with our deferred compensation plan, interest income earned on available cash, cash equivalents and short-term investments, and rental income from leasing space in our Silicon Valley and Natick facilities. The decrease in other income, net, was primarily due to a change in the value of assets associated with our deferred compensation plan and a decrease in interest income. During the third quarter of 2021, other income, net, decreased $3,478,000 with a corresponding decrease to deferred compensation expense, as compared to the same period last year, due to a change in the value of assets associated with our deferred compensation plan. This decrease consisted of a decrease in the value of the plan assets of $258,000 during the third quarter of 2021 as compared to an increase in the value of the plan assets of $3,220,000 during the same period last year. The decrease in interest income of $303,000 was due to lower interest rates for our cash equivalents and short-term investments.

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Income Taxes

|  | Three Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
Income taxes |  | $ | 7,815 |  |  | $ | 6,554 |  |  |  | 19.2 | %
Percentage of total revenues |  |  | 6.7 | % |  |  | 6.6 | % |  |  |  |
Effective tax rate |  |  | 24.1 | % |  |  | 26.6 | % |  |  |  |

The excess tax benefit associated with stock-based awards was $1,066,000 during the third quarter of 2021 as compared to $0 during the same period last year. Excluding the impact of the excess tax benefit, the effective tax rate would have been 27.4% during the third quarter of 2021 as compared to 26.6% during the same period last year.

Nine Months Ended October 1, 2021 compared to Nine Months Ended October 2, 2020

Revenues

|  | Nine Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
Engineering and Other Scientific |  | $ | 288,848 |  |  | $ | 236,239 |  |  |  | 22.3 | %
Percentage of total revenues |  |  | 81.9 | % |  |  | 79.6 | % |  |  |  |
Environmental and Health |  |  | 63,915 |  |  |  | 60,422 |  |  |  | 5.8 | %
Percentage of total revenues |  |  | 18.1 | % |  |  | 20.4 | % |  |  |  |
Total revenues |  | $ | 352,763 |  |  | $ | 296,661 |  |  |  | 18.9 | %

The increase in revenues for our Engineering and Other Scientific segment was due to an increase in billable hours and an increase in billing rates. During the first nine months of 2021, billable hours for this segment increased by 15% to 838,000 as compared to 730,000 during the same period last year. Utilization for this segment increased to 79% during the first nine months of 2021 as compared to 66% during the same period last year. Growth was driven by strong demand for our services across a broad range of industries and use cases. In addition to the steady increase in litigation support and human participant studies, our multidisciplinary battery team continued to see demand for its solutions in electric vehicles and energy storage. Our work in international arbitrations and integrity management advisory services continued at strong levels. Technical full-time equivalent employees in this segment decreased 4% to 682 during the first nine months of 2021 as compared to 707 for the same period last year. The decrease in technical full-time equivalent employees was due in part to the divestiture of our German subsidiary in April of 2020.

The increase in revenues for our Environmental and Health segment was due to an increase in billable hours and an increase in billing rates. During the first nine months of 2021, billable hours for this segment increased by 3% to 232,000 as compared to 225,000 during the same period last year. Utilization in this segment was 70% during the first nine months of 2021 and 2020. This segment also benefited from increased activity in litigation-related projects and support of human participant studies. The chemical regulation and food safety practice continued to grow as our scientists evaluated the effects of chemicals and new products on human health and the environment. This growth was partially offset by a decrease in demand for services in our health sciences practice. Technical full-time equivalent employees in this segment increased by 2% to 211 during the first nine months of 2021 as compared to 206 during the same period last year.

Compensation and Related Expenses

|  | Nine Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
Compensation and related expenses |  | $ | 210,491 |  |  | $ | 180,541 |  |  |  | 16.6 | %
Percentage of total revenues |  |  | 59.7 | % |  |  | 60.9 | % |  |  |  |

The increase in compensation and related expenses during the first nine months of 2021 was due to a change in the value of assets associated with our deferred compensation plan, an increase in payroll expense, an

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increase in fringe benefits, and an increase in bonus expense. During the first nine months of 20 2 1, deferre d c ompensation expense in creased $1 0,396,000 with a corresponding in crease to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred c ompensation plan. This in crease consisted of a n in crease in the value of plan assets of $9,997,000 during the first nine months of 20 2 1 as compared to a de crease i n the value of plan assets of $3 99,000 during the same period last ye ar. Payroll expense increased $2,718,000 during the first nine months of 2021 due to the impact of our annual salary adjustments partially offset by a decrease in technical full-time equivalent employees. Fringe benefits increased by $2,501,000 during the first nine months of 2021 due to an employee retention credit for $2,097,000 that we claimed under the CARES Act during the first nine months of 2020. There was no CARES Act credit claimed during the first nine months of 2021. Bonus expense increased by $1 4,257,000 during the first nine months of 2021 due to a corresponding increase to our bonus pool which is 33% of income before income taxes, interest income, bonus expense, and stock-based compensation. We expect our compensation expense, excluding the change in value of deferred compensation plan assets, to increase as we selectively add new talent and adjust compensation to market conditions.

Other Operating Expenses

|  | Nine Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
Other operating expenses |  | $ | 23,848 |  |  | $ | 23,736 |  |  |  | 0.5 | %
Percentage of total revenues |  |  | 6.8 | % |  |  | 8.0 | % |  |  |  |

Other operating expenses include facilities-related costs, technical materials, computer-related expenses and depreciation and amortization of property, equipment and leasehold improvements. We expect other operating expenses to grow as we selectively add new talent, make investments in our corporate infrastructure, and transition our workforce back to our offices as COVID-19 pandemic-related business restrictions are lifted.

Reimbursable Expenses

|  | Nine Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
Reimbursable expenses |  | $ | 22,249 |  |  | $ | 15,579 |  |  |  | 42.8 | %
Percentage of total revenues |  |  | 6.3 | % |  |  | 5.3 | % |  |  |  |

The amount of reimbursable expenses will vary from quarter to quarter depending on the nature of our projects. The increase in reimbursable expenses during the first nine months of 2021 was primarily due to an increase in project-related travel and other project-related expenses as COVID-19 business and travel restrictions eased.

General and Administrative Expenses

|  | Nine Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
General and administrative expenses |  | $ | 10,626 |  |  | $ | 11,290 |  |  |  | -5.9 | %
Percentage of total revenues |  |  | 3.0 | % |  |  | 3.8 | % |  |  |  |

The decrease in general and administrative expenses during the first nine months of 2021 was primarily due to a decrease in bad debt expense of $1,184,000 and a decrease in travel and meals of $724,000. The decrease in bad debt was due to additional reserves we booked to our allowance for doubtful accounts during the first nine months of 2020 as a result of the economic uncertainty associated with the COVID-19 pandemic. The decrease in travel and meals was due to the travel restrictions put in place due to the COVID-19 pandemic. These decreases were offset by an increase in insurance premiums of $322,000, an increase in charitable contributions of $200,000, an increase in marketing and development of $108,000 and other increases in general and administrative expenses. We expect

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general and administrative expenses to increase as we selectively add new talent, expand our business development and staff development initiatives, and increase travel and meal expenses as COVID-19 pandemic-related business restrictions are lifted.

Operating Income

|  | Nine Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
Engineering and Other Scientific |  | $ | 108,646 |  |  | $ | 73,400 |  |  |  | 48.0 | %
Environmental and Health |  |  | 21,265 |  |  |  | 20,751 |  |  |  | 2.5 | %
Total segment operating income |  |  | 129,911 |  |  |  | 94,151 |  |  |  | 38.0 | %
Corporate operating expense |  |  | (44,362 | ) |  |  | (28,636 | ) |  |  | 54.9 | %
Total operating income |  | $ | 85,549 |  |  | $ | 65,515 |  |  |  | 30.6 | %

The increase in operating income for our Engineering and Other Scientific segment during the first nine months of 2021 as compared to the same period last year was due to an increase in revenues. The increase in revenues was due to an increase in billable hours and an increase in billing rates. Growth was driven by strong demand for Exponent’s services across a broad range of industries and use cases. In addition to the steady increase in litigation support and human participant studies, our multidisciplinary battery team continued to see demand for its solutions in electric vehicles and energy storage. Our work in international arbitrations and integrity management advisory services continued at strong levels.

The increase in operating income for our Environmental and Health segment during the first nine months of 2021 as compared to the same period last year was due to an increase in revenues. The increase in revenues was due to an increase in billable hours and an increase in billing rates. This segment also benefited from increased activity in litigation-related projects and support of human participant studies. The chemical regulation and food safety practice continued to grow as our scientists evaluated the effects of chemicals and new products on human health and the environment. This growth was partially offset by a decrease in demand for services in our health sciences practice.

Certain operating expenses are excluded from our measure of segment operating income. These expenses include the costs associated with our human resources, finance, information technology, and business development groups; the deferred compensation expense/benefit due to the change in value of assets associated with our deferred compensation plan; stock-based compensation associated with restricted stock unit and stock option awards; and the change in our allowance for contract losses and doubtful accounts.

The increase in corporate operating expenses during the first nine months of 2021 as compared to the same period last year was primarily due to an increase in deferred compensation expense and an increase in fringe benefits. During the first nine months of 2021, deferred compensation expense increased $10,396,000, with a corresponding increase to other income, net, as compared to the same period last year, due to the change in value of assets associated with our deferred compensation plan. This increase consisted of an increase in the value of plan assets of $9,997,000 during the first nine months of 2021 as compared to a decrease in the value of plan assets of $399,000 during the same period last year. During the first nine months of 2020 we claimed an employee retention credit for $2,097,000 under the CARES Act. This credit was excluded from fringe benefits in our measure of segment operating income. There was no CARES Act credit claimed during the first nine months of 2021.

Other Income, Net

|  | Nine Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
Other income, net |  | $ | 11,633 |  |  | $ | 4,592 |  |  |  | 153.3 | %
Percentage of total revenues |  |  | 3.3 | % |  |  | 1.5 | % |  |  |  |

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Other income, net, consists primarily of changes in the value of assets associated with our deferred compensation plan, interest income earned on available cash, cash equivalents and short-term investments, and rental income from leasing space in our Silicon Valley and Natick facilities. The increase in other income, net, was primarily due to a change in the value of assets associated with our deferred compensation partially offset by a decrease in interest income, a change in the realized gain/loss on foreign exchange, and a decrease in rental income. During the first nine months of 2021, other income, net, increased $10,396,000 with a corresponding increase to deferred compensation expense, as compared to the same period last year, due to a change in the value of assets associated with our deferred compensation plan. This increase consisted of an increase in the value of the plan assets of $9,997,000 during the first nine months of 2021 as compared to a decrease in the value of the plan assets of $399,000 during the same period last year. During the first nine months of 2021, other income, net, decreased by $1,309,000 as compared to the same period last year due to a change in the realized gain/loss on foreign exchange. This decrease consisted of a realized loss on foreign exchange of $442,000 during the first nine months of 2021 as compared to a realized gain on foreign exchange of $867,000 during the same period last year. During the first nine months of 2021 interest income decreased by $1,442,000 as compared to the same period last year due to lower interest rates for our cash equivalents and short-term investments. During the first nine months of 2021 rental income decreased $580,000 as compared to the same period last year due to an increase in our vacancy rate.

Income Taxes

|  | Nine Months Ended |  |  |  |  |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | Percent Change |
Income taxes |  | $ | 16,360 |  |  | $ | 9,395 |  |  |  | 74.1 | %
Percentage of total revenues |  |  | 4.6 | % |  |  | 3.2 | % |  |  |  |
Effective tax rate |  |  | 16.8 | % |  |  | 13.4 | % |  |  |  |

The excess tax benefit associated with stock-based awards was $9,889,000 during the first nine months of 2021 as compared to $9,670,000 during the same period last year. Excluding the impact of the excess tax benefit, the effective tax rate would have been 27.0% during the first nine months of 2021 as compared to 27.2% during the same period last year.

LIQUIDITY AND CAPITAL RESOURCES

We believe our existing balances of cash, cash equivalents and cash generated from operations will be sufficient to satisfy our working capital needs, capital expenditures, outstanding commitments, stock repurchases, dividends and other liquidity requirements over at least the next 12 months. However, we continue to monitor the impact of the COVID-19 pandemic on our cash flows and on the credit and financial markets.

|  | Nine Months Ended |
(in thousands) |  | October 1, 2021 |  |  | October 2, 2020 |
Net cash provided by operating activities |  | $ | 70,378 |  |  | $ | 62,447 |
Net cash provided by investing activities |  |  | 14,569 |  |  |  | 30,856 |
Net cash used in financing activities |  |  | (52,766 | ) |  |  | (82,235 | )

We financed our business during the first nine months of 2021 through available cash. We invest our excess cash in cash equivalents and short-term investments. As of October 1, 2021, our cash, cash equivalents and short-term investments were $254,783,000 compared to $242,526,000 as of January 1, 2021.

Generally, our net cash provided by operating activities is used to fund our day-to-day operating activities. First quarter operating cash requirements are generally higher due to payment in the first quarter of our annual bonuses accrued during the prior year. Our largest source of operating cash flows is collections from our clients. Our primary uses of cash from operating activities are for employee-related expenditures, leased facilities, taxes, and general operating expenses including marketing and travel. The increase in net cash provided by operating activities during the first nine months of 2021, as compared to the same period last year, was primarily due to an increase in net income partially offset by changes in operating assets and liabilities.

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The de crease in net cash provided by investing activities during the first n ine m onths of 20 2 1, as compared to the same period last year, was due to a n increase in the purchase of short-term investments partially offset by an increase in the maturity of short-term investments.

The decrease in net cash used in financing activities during the first nine months of 2021, as compared to the same period last year, was due to a decrease in repurchases of our common stock partially offset by an increase in dividends paid.

We expect to continue our investing activities, including capital expenditures. Furthermore, cash reserves may be used to repurchase shares of common stock under our stock repurchase programs, pay dividends or strategically acquire professional service firms that are complementary to our business.

For a summary of our commitments to make future payments under contractual obligations, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” in our 2020 Annual Report. There have been no material changes in our contractual obligations since January 1, 2021.

We maintain a nonqualified deferred compensation plan for the benefit of a select group of highly compensated employees. Vested amounts due under the plan of $93,111,000 were recorded as a long-term liability on our unaudited condensed consolidated balance sheet at October 1, 2021. Vested amounts due under the plan of $12,231,000 were recorded as a current liability on our unaudited condensed consolidated balance sheet at October 1, 2021. Company assets that are earmarked to pay benefits under the plan are held in a rabbi trust and are subject to the claims of our creditors. As of October 1, 2021, invested amounts under the plan of $92,048,000 were recorded as a long-term asset on our unaudited condensed consolidated balance sheet. As of October 1, 2021, invested amounts under the plan of $12,231,000 were recorded as a current asset on our unaudited condensed consolidated balance sheet.

As permitted under Delaware law, we have agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or director is, or was, serving at our request in such capacity. The indemnification period covers all pertinent events and occurrences during the officer’s or director’s lifetime. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have director and officer insurance coverage that reduces our exposure and enables us to recover a portion of any future amounts paid.

Non-GAAP Financial Measures

Regulation G, Conditions for Use of Non-Generally Accepted Accounting Principles ("Non-GAAP") Financial Measures, and other U.S. Securities and Exchange Commission (“SEC”) rules and regulations define and prescribe the conditions for use of Non-GAAP financial information. Generally, a Non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. We closely monitor two financial measures, EBITDA and EBITDAS, which meet the definition of Non-GAAP financial measures. We define EBITDA as net income before income taxes, net interest income, depreciation and amortization. We define EBITDAS as EBITDA before stock-based compensation. The Company regards EBITDA and EBITDAS as useful measures of operating performance to complement operating income, net income and other GAAP financial performance measures. Additionally, management believes that EBITDA and EBITDAS provide meaningful comparisons of past, present and future operating results. These measures are used to evaluate our financial results, develop budgets and determine employee compensation. These measures, however, should be considered in addition to, and not as a substitute for or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. A reconciliation of the Non-GAAP measures to the nearest comparable GAAP measure is set forth below.

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The following table shows EBITDA (determined as shown in the reconciliation table below) as a percentage of revenues before reimbursements for the three and n ine m onths ended October 1, 2021 and October 2, 2020:

|  | Three Months Ended |  |  | Nine Months Ended |
(in thousands, except percentages) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | October 1, 2021 |  |  | October 2, 2020 |
Revenues before reimbursements |  | $ | 108,467 |  |  | $ | 93,499 |  |  | $ | 330,514 |  |  | $ | 281,082 |
EBITDA |  | $ | 34,021 |  |  | $ | 26,011 |  |  | $ | 102,071 |  |  | $ | 73,787 |
EBITDA as a % of revenues before reimbursements |  |  | 31.4 | % |  |  | 27.8 | % |  |  | 30.9 | % |  |  | 26.3 | %

The increase in EBITDA as a percentage of revenues before reimbursements during the third quarter of 2021 as compared to the same period last year was primarily due to the 16% increase in revenues before reimbursements and slower growth in compensation and related expenses and other operating expenses. During the third quarter of 2021, our reactive business further benefitted from the acceleration of litigation throughput in our court systems, and at the same time, our proactive engagements, such as user and machine learning data studies, remained a key driver of growth. Our work continued to be robust and diverse, with climate vulnerability assessments with utilities, risk assessments in chemicals, ongoing energy storage-related work, and projects in the automotive and consumer products industries. The slower growth in compensation and related expenses during the third quarter of 2021 was due to a decrease in technical full-time equivalent employees. Due to our recruiting efforts, hiring has picked up over the last few months despite the competitive market for engineering and scientific talent. As such we expect compensation and related expenses to increase. The slower growth in other operating expenses was primarily due to the continued business restrictions associated with the COVID-19 pandemic. We expect other operating expenses to increase as COVID-19 pandemic-related business restrictions are eased.

The increase in EBITDA as a percentage of revenues before reimbursements during the first nine months of 2021 as compared to the same period last year was primarily due to the 18% growth in revenues before reimbursements, slower growth in compensation and related expenses and other operating expenses, and a decrease in general and administrative expenses. The increase in revenues was due to broad-based strength across the business as pandemic-related restrictions eased, which supported a robust level of new assignments as well as ongoing work. The slower growth in compensation and related expenses during the first nine months of 2021 was due to a decrease in technical full-time equivalent employees. Due to our recruiting efforts, hiring has picked up over the last few months despite the competitive market for engineering and scientific talent. As such we expect compensation and related expenses to increase. The slower growth in other operating expenses and the decrease in general and administrative expenses were primarily due to the business and travel restrictions associated with the COVID-19 pandemic. We expect other operating expenses and general and administrative expenses to increase as COVID-19 pandemic-related business restrictions are eased.

The following table is a reconciliation of EBITDA and EBITDAS to the most comparable GAAP measure, net income, for the three and nine months ended October 1, 2021:

|  | Three Months Ended |  |  | Nine Months Ended |
(in thousands) |  | October 1, 2021 |  |  | October 2, 2020 |  |  | October 1, 2021 |  |  | October 2, 2020 |
Net income |  | $ | 24,574 |  |  | $ | 18,084 |  |  | $ | 80,822 |  |  | $ | 60,712 |
Add back (subtract): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income taxes |  |  | 7,815 |  |  |  | 6,554 |  |  |  | 16,360 |  |  |  | 9,395 |
Interest income, net |  |  | (13 | ) |  |  | (316 | ) |  |  | (54 | ) |  |  | (1,496 | )
Depreciation and amortization |  |  | 1,645 |  |  |  | 1,689 |  |  |  | 4,943 |  |  |  | 5,176 |
EBITDA |  |  | 34,021 |  |  |  | 26,011 |  |  |  | 102,071 |  |  |  | 73,787 |
Stock-based compensation |  |  | 4,365 |  |  |  | 3,726 |  |  |  | 15,239 |  |  |  | 13,326 |
EBITDAS |  | $ | 38,386 |  |  | $ | 29,737 |  |  | $ | 117,310 |  |  | $ | 87,113 |

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to interest rate risk associated with our balances of cash, cash equivalents and short-term investments. We manage our interest rate risk by maintaining an investment portfolio primarily consisting of debt instruments with high credit quality and relatively short average effective maturities in accordance with our investment policy. The maximum effective maturity of any issue in our portfolio is three years and the maximum average effective maturity of the portfolio cannot exceed 12 months. If interest rates were to instantaneously increase or decrease by 100 basis points, the change in the fair market value of our portfolio of cash equivalents and short-term investments would not have a material impact on our financial statements. We do not use derivative financial instruments in our portfolio. There have not been any material changes during the period covered by this Quarterly Report on Form 10-Q to our interest rate risk exposures, or how these exposures are managed. Notwithstanding our efforts to manage interest rate risk, there can be no assurances that we will be adequately protected against the risks associated with interest rate fluctuations.

We have foreign currency risk related to our revenues and expenses denominated in currencies other than the U.S. dollar, primarily the British Pound, the Chinese Yuan, and the Hong Kong Dollar. Accordingly, changes in exchange rates may negatively affect the revenues and net income of our foreign subsidiaries as expressed in U.S. dollars.

At October 1, 2021, we had net assets of approximately $9.5 million with a functional currency of the British Pound, net assets of approximately $3.7 million with a functional currency of the Chinese Yuan, and net assets of approximately $8.5 million with a functional currency of the Hong Kong Dollar associated with our operations in the United Kingdom, China, and Hong Kong, respectively.

We also have foreign currency risk related to foreign currency transactions and monetary assets and liabilities denominated in currencies that are not the functional currency. We have experienced and will continue to experience fluctuations in our net income as a result of gains (losses) on these foreign currency transactions and the remeasurement of monetary assets and liabilities. At October 1, 2021, we had net assets denominated in non-functional currencies of approximately $4.0 million.

We do not use foreign exchange contracts to hedge any foreign currency exposures. To date, the impacts of foreign currency exchange rate changes on our consolidated revenues and consolidated net income have not been material. However, our continued international growth increases our exposure to exchange rate fluctuations and as a result such fluctuations could have a significant impact on our future results of operations.

Item 4. Controls and Procedures

| (a) | Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this quarterly report. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that, as of October 1, 2021, the Company’s disclosure controls and procedures were effective.

We review and evaluate the design and effectiveness of our disclosure controls and procedures on an ongoing basis, to improve our controls and procedures over time and to correct any deficiencies that we may discover in the future. Our goal is to ensure that our senior management has timely access to all material financial and non-financial information concerning our business. While we believe the present design of our disclosure controls and procedures is effective to achieve our goal, future events affecting our business may cause us to significantly modify our disclosure controls and procedures.

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| (b) | Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three-month period ended October 1, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Exponent is not engaged in any material legal proceedings.

Item 1A. Risk Factors

There have been no material changes from risk factors previously discussed under the heading “Risk Factors” in the Company’s 2020 Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information on the Company’s repurchases of the Company’s common stock for the three months ended October 1, 2021 (in thousands, except price per share):

|  | Total Number of Shares Purchased |  |  | Average Price Paid Per Share |  |  | Total Number of Shares Purchased as Part of Publicly Announced Programs |  |  | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Programs (1) |
July 3 to July 30 |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | 68,455 |
July 31 to August 27 |  |  | - |  |  |  | - |  |  |  | - |  |  | $ | 68,455 |
August 28 to October 1 |  |  | - |  |  |  | - |  |  |  | - |  |  | $ | 68,455 |
Total |  |  | - |  |  | $ | - |  |  |  | - |  |  | $ | 68,455 |

(1) | On January 31, 2019, the Company’s Board of Directors announced $75.0 million for the repurchase of the Company’s common stock. On May 29, 2020, the Company’s Board of Directors announced an additional $45.0 million for the repurchase of the Company’s common stock. These repurchase programs have no expiration date.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. E xhibits

(a) | Exhibit Index

31.1 | Certification of Chief Executive Officer pursuant to Rule 13a – 14(a) under the Securities Exchange Act of 1934.
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a – 14(a) under the Securities Exchange Act of 1934.
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH | Inline XBRL Taxonomy Extension Schema Document
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements 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.

|  | EXPONENT, INC.
|  | (Registrant)
Date: November 5, 2021 |  |
|  | /s/ Catherine Ford Corrigan
|  | Catherine Ford Corrigan, Ph.D., Chief Executive Officer
|  | /s/ Richard L. Schlenker, Jr.
|  | Richard L. Schlenker, Jr., Chief Financial Officer

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